Title

Presentation

SSR Mining Inc. beats earnings expectations. Reported EPS is $0.3, expectations were $0.15.

Operator: Hello, everyone, and welcome to SSR Mining’s Second Quarter 2023 Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I’d like to turn the call over to Alex Hunchak with SSR Mining.

Alex Hunchak: Thank you, operator, and hello, everyone. Thank you for joining SSR Mining’s second quarter 2023 conference call, during which we will provide an update on our business and a review of our financial performance. Our second quarter 2023 consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR, SEDAR, the ASX and are also available on our website. To accompany our call, there is an online webcast, and you will find the information to access the webcast in our news release relating to this call. Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated. Today’s discussion will include forward-looking statements.

So please read the disclosures in the relevant documents. Joining us on the call today are Rod Antal, Executive Chairman; Alison White, Chief Financial Officer; and Bill MacNevin, Executive Vice President, Operations and Sustainability. Now I will turn the call over to Rod for his opening remarks.

Rodney Antal: Great. Thanks, Alex, and hello to you all, and thanks for joining us. Before I get started, I wanted to introduce Bill MacNevin, who is joining us for his first quarterly earnings call. It’s a pleasure to have him finally join us. He’s been in the field for the last six months and welcome to the call, Bill. As we close out the first half of 2023, it is pleasing to report that our consolidated operational results to-date have been generally well aligned to our expectations. Production from Çöpler, Marigold and Puna have been solid, partially offsetting the slower start to the year at Seabee. Looking forward, and as we guided at the beginning of the year, we expect the second half to provide the majority of our ounce production and free cash flow generation.

Our portfolio is expected to deliver strong production of approximately 400,000 GEOs split relatively evenly between the third and fourth quarters at reduced costs, generating positive free cash flow. Given our outlook for a strong second half of the year, and our recent share price, we repurchased over $45 million of shares in the first half of the year. Combined with our base dividend, we are on track to exceed $100 million in capital returns in 2023 or a 3.4% yield. This is a strong message that should confirm our free cash flow outlook for the second half of the year. It was a busy quarter advancing our organic production growth and announcing a strategic acquisition. At Çöpler’s Çakmaktepe Extension, we began pre-stripping that will allow access to the first oxide ore this year and is aligned to our original timetable.

For our team, this progress is obviously very exciting. Also, during the quarter, we announced a highly accretive acquisition of the world-class Hod Maden project in Turkey, which provides us operatorship and an up to 40% interest in the project. We have been busy completing the handover from our partner Lidya Mines, who has been doing a tremendous job advancing the project and establishing sustainable relationships with all the key stakeholders, including the local communities. We’ve been focused on recruiting the project team to complement the team already on the ground and progressing the initial site works, which are underway. Finally, we anticipate the release of an updated technical report and subsequent construction decision for the project during 2024.

We also have a number of key value-driving catalysts on the horizon. This includes the first production from the Çakmaktepe Extension and the technical report update that showcase the future of Marigold, Çöpler and again, Hod Maden. These technical reports are the next step in our continued derisking of the long-term 700,000 ounce production platform that forms the foundation of SSR. We have a proud history as explorers, mine builders and operators as well as a long track record of prudent value-additive M&A. Our business is in a strong position, supported by our solid balance sheet, including the more than $700 million in total liquidity. I’m going to move on to Slide number 4, and I’ll talk about ESG. ESG is and has long been a core value and focus for the company has firmly underpins our success.

We continue to prioritize the health and safety of our employees and business partners. And on the 14th of April this year, we published our fifth annual ESG and sustainability report, marking another step in SSR Mining’s continued efforts to operate responsibly and sustainably while maximizing the benefits to our stakeholders. In 2023, and as an improvement opportunity, we reinvigorated a focused in formal leadership in the field initiative to drive engagement and improve safety performance across the operations, which has been met with enthusiasm from our teams. Additional key initiatives this year include continued development of an action plan on our journey towards decarbonization, including evaluating options to incorporate renewable energy and technologies into our operating platforms.

We are progressing water management plans for each of our assets and finally, progressing our efforts on integrated mine closure plans to ensure that we leave a positive enlisting legacy for our local communities. As we have done previously, we will work hard to advance our ESG initiatives and look forward to sharing continued updates on that journey throughout the year. So moving on to Slide number 5. As I mentioned, we have established a pathway to maintaining a stable production platform of at least 700,000 ounces over the remainder of the decade. That platform was further supported by the acquisition of the Hod Maden project, adding one of the highest return development projects in the world to our near-term growth profile. We continue to advance drilling and technical work ahead of the updated technical reports for Marigold, Çöpler and Hod Maden.

Additionally, exploration continuously be in Puna with the goal of building reserves and extending mine lives at each one of those assets. We intend to convert these efforts into updated life of mine plans, providing a full refresh of each asset’s long-term production profile as well as highlighting opportunities for future growth. We are in a good position to build on the existing production profile demonstrated on this slide. By delivering low capital intensity, high return organic growth, we aim to continue demonstrating our position as a strong and consistent operator with a commitment to free cash flow generation. Moving on to Slide 6, and just to talk a little bit about Hod Maden. As I mentioned in the second quarter, we announced and closed a transaction that provided SSR Mining operatorship and up to a 40% interest in the world-class Hod Maden project in Northeastern Türkiye.

Hod Maden perfectly complement our portfolio with best-in-class gold equivalent grades of over 11 grams per ton at an average life of mine co-product all-in sustaining cost of less than $600 an ounce. We have a proven track record of success in the country and are advancing site preparation activities at the project as we speak. Our technical teams are hard at work, optimizing the design project execution and production plans developed by our partner while also evaluating additional upside opportunities. This year, we are spending a total of $21 million and are working to arrange financing for the construction decision. Next year, we expect to issue an updated technical report for the project, which will inform the construction decision for our Board.

This first quarter cost, Hod Maden is expected to generate in excess of $160 million in free cash flow annually or more than $65 million in attributable free cash flow using the $1,600 per ounce base case gold price. The structured transaction limited our upfront capital outlay, and we expect it will help preserve a better than a 15% all-in acquisition internal rate of return for our shareholders by the time the project is in production. Overall, the transaction was a material positive for our business, our existing partnership with Lidya Mines and our new partners Horizon, and we look forward to updating you on the progress as we continue along that journey. So just moving on to Slide 7. We are confident in our ability to deliver shareholder value with the Hod Maden transaction because, as you can see, it is something we have done before.

The same project development team and strategies have successfully delivered the Çöpler sulfide plant project on time and under budget is currently being deployed – were redeployed to the Hod Maden project, further derisking the project build. In addition to that experience as mine builders, we have a clear track record of adding value through M&A and continue to see further upside across the portfolio that delivers additional value to our shareholders. Our approach to M&A remains unchanged. We will continue to actively consider and evaluate opportunities to add value to our business through transactions that fit our strategy of disciplined growth in core jurisdictions and that complement our focus on free cash flow. So with that, I’m going to turn it over to Slide number 8 and hand the presentation over to Alison.

Alison White: Thanks, Rod, and good afternoon, everyone. I’d like to first focus on our capital returns program, which remained active in the second quarter and is one of the three pillars of our capital allocation strategy, complemented by reinvesting in our business and ensuring balance sheet strength. Through the end of June, we have returned approximately $74 million to shareholders, and through our base dividend and share buyback program, we are on track to return over $100 million to shareholders for the third consecutive year. In total, we have returned more than $400 million over the last three years, which is something we are very proud of. The company is positioned for a minimum full-year capital return yield of at least 3.4% based on the activity that we’ve already had this year.

As Rod mentioned, we see a number of positive and value-additive catalysts on the horizon as well as positive operational tailwinds and as such, we view the buyback as an accretive way to return capital to shareholders. During the last month of the quarter, we also renewed our share buyback program, enabling us to repurchase up to an additional 10.2 million shares over the next 12 months. Slide 9 will provide a review of the second quarter, so let’s turn to that and take a look at our results. Second quarter production of 157,000 gold equivalent ounces and first half production of 304,000 gold equivalent ounces were in line with our expectations for a second half-weighted production profile. Sales in the second quarter were 148,000 gold equivalent ounces.

The approximately 9,000 ounces produced, but not sold in the quarter was driven by a closure of the banks and metal markets during the last week of June for a Turkish holiday and a late arrival of a vessel at our port where we ship concentrates for Puna. These are timing differences and the ounces were sold in the third quarter. All-in sustaining costs of $1,633 an ounce is slightly high, but in line with expectations and reflects our guidance of a first half-weighted sustaining capital profile, where we placed four new haul trucks into service at Marigold. Our first half of sustaining capital at Seabee is also always high due to purchases made for transport on the ice road that supports operations at that location for the entire year. The all-in sustaining cost denominator was also impacted by the 9,000 ounces in unsold inventory at Çöpler and Puna, which decreased the ounces sold for the calculation and would have improved our overall all-in sustaining costs.

Earnings per share was $0.35 per diluted share. Attributable net income and adjusted attributable net income were both approximately $75 million. Deferred tax benefits were net at about $46 million during the quarter after considering the non-controlling interest. With the acquisition of Kartaltepe late last year and Hod Maden this year, our deferred tax liabilities increased by more than $200 million. This increase in the total base value of liabilities is then subject to the currency devaluation that has occurred thus far in 2023, driving the net benefit after consideration of non-controlling interest reductions. In the quarter, we delivered positive free cash flow of $22 million or $46 million before working capital adjustments. Over the remainder of 2023, our production remains relatively evenly split between the third and the fourth quarters, with a decline in the pace of the spend on sustaining capital driving improved free cash flow throughout the rest of the year.

With respect to inflation, we have seen an improvement in diesel and power prices across the portfolio, but note that consumable pricing and labor cost pressures do remain a headwind. Overall, however, we remain on track for our full-year consolidated capital and cost guidance. On July 15, [Sircaii] announced a 5% increase in the corporate tax rate from 20% to 25% that is retroactive to January 1, 2023. While we are still working to evaluate the financial impact of the change, deferred tax expense will increase during Q3 when we record the 5% increase. For cash taxes, we do not anticipate a material change in the short-term, due to existing incentive tax credits in the country that are currently in use. Any additional benefits, such as the one we had in the second quarter resulting from devaluation will continue to offset additional expense expected as a result of the rate change to 25%.

Now turning to Slide 10, we can talk about SSR Mining’s financial position. Our balance sheet remains another of our key strengths and a pillar of our capital allocation strategy. Our cash position currently stands at more than $410 million, reflecting our continued delivery of peer-leading capital returns, and $120 million in upfront consideration paid as a part of the Hod Maden transaction, which was also paid during the quarter. Total liquidity is currently more than $700 million, and we expect positive free cash flow into the end of 2023 that will further reinforce our financial position. We are committed to maintaining a robust balance sheet to weather volatility in the commodity price environment, ensuring all of our capital commitments, debt servicing requirements and base dividend payments are fully funded even in the event of a potential downturn in the gold price.

As such, the quarterly base dividend of $0.07 a share is payable to our $1,350 an ounce gold reserve price. Our third key pillar of the capital allocation strategy is that we will continue to reinvest in growth, including our internal exceptionally high return Çakmaktepe Extension, Çöpler expansion and Hod Maden projects as well as the exciting exploration programs across the portfolio that we have dedicated more than $80 million in spend to this year. We will remain dynamic in our approach to our share buyback and have capacity to repurchase up to 10.2 million additional shares on the recently announced buyback program before its expiration in June of 2024. Our company remains in a strong financial position, and we expect further improvement into year-end.

And now I’ll turn the call over to Bill, our Executive Vice President of Operations and Sustainability, to review the operations.

William MacNevin: Thanks, Alison. It’s a pleasure to be here with you today on my first conference call with SSR Mining. Since joining the company at the beginning of the year, I’ve been focused on operational improvement and efficiency and have spent the majority of my time at each of our four core operations. Already, I’ve come to respect the impressive talent and diversity of skill we have throughout the company. I’m very appreciative of all the hard work that has brought SSR Mining where it stands today. At the same time, I see areas for improvement, and we will continue to define and prioritize these as we update our operating practices going forward. Before I dive into the individual assets, I want to start with a brief discussion about safety.

Most important thing we do each and every day is getting our people home safe. As a core SSR value, this has always been a focus. Now we are driving increased leadership engagement and implementing simple tools to enable our people. Whilst this is improving safety, it is also improving the quality of work and results in the field, as safe production delivery is an integral approach to our long-term success. So now on the Çöpler. The mine delivered Q2 production of 52,000 ounces at an AISC of 1,384 per ounce. The sulfide plant delivered another strong quarter of production, the throughput is averaging nearly 7,500 tons per day, showcasing the continued optimization of this asset. The planned autoclave maintenance currently underway is on track to be completed this month.

As usual, we continue to operate the second autoclave at higher capacity during the maintenance period, limiting the impact to production in the third quarter. Other key work programs at Çöpler continue as scheduled, including first production from Çakmaktepe extension where pre-stripping was initiated in the second quarter and first gold production of 10,000 to 15,000 ounces is expected this year. We’re also advancing work on the updated technical report. Work to date has built on the TRS published in 2022. With work significantly advanced we are now awaiting assay results to support this technical report update, which means we will be in a position to publish the report in the first quarter of 2024 rather than late in fourth quarter of this year.

Exploration work continues across Çöpler district, including the regional targets where we expanded our ownership to 80% in Q4 of 2022. We have a full suite of near and long-term growth opportunities across the district that we will continue to advance. Now on to Slide 14. Marigold produced 60,000 ounces in the second quarter, in line with the planned production profile at an AISC of $1,656 per ounce in the second quarter, reflected the planned spend on new haul truck purchases to support waste stripping activities. Sustaining capital will trend downwards significantly in the third and fourth quarters, in line with full-year guidance. Marigold remains on track for 2023 with leach cycles now return to normal as the mine continues stacking more durable that was typical for the operation.

We’re advancing technical work ahead of an updated life of mine plan for Marigold, where we aim to capture upside. This includes incorporating more than two years of drilling, in particular at New Millennium, into updated resource models for Marigold. Work is also underway to evaluate potential longer-term production pathways at the Trenton Canyon and Buffalo Valley targets at the southern end of the Marigold property. Now moving on to Slide 15, Seabee. Seabee second quarter production was below plan as the mine worked to overcome the first quarter mining shortfall resulting from their unplanned maintenance outage. Accordingly, grades remain below our original expectations of the mine focused on getting the stoping sequence on plan to open up access to high-grade stopes in the second half.

Positively in the month of July, Seabee’s head grade increased and the mine produced just under 8,000 ounces, positioning the operation for a much stronger second half. In addition to improved mine performance, we expect cost to improve in the second half given the completion of spend on the winter road in the second quarter. We continue to advance our near-mine exploration at Seabee as we prioritize mineral resource conversion activities to ensure growth and mine life extensions in the future. And moving on to Slide 16, Puna. Puna delivered another strong quarter with 2.3 million ounces of production at AISC of $17.40 per ounce. Puna [indiscernible] is well on track for its full-year guidance, and we anticipate improving cost performance in the second half.

Near-mine exploration continued in the second quarter, predominantly focused on resource and reserve expansion efforts as we aim to extend the life of mine plan. We have also returned additional exploration success at Cortaderas target near the Pirquitas mill presenting a potential longer-term growth target for the operation. Moving on to Slide 17. Before I hand back to Rod, I want to reiterate my optimism for our portfolio and longer-term trajectory. We have an accomplished team and a very solid portfolio of operations and growth opportunities, and I’m thrilled to have a role in helping further improve and grow SSR Mining.

Rodney Antal: Great. Thanks, Bill, and thanks, Alison. As you’ve heard, we’re in a good position as we move into the second half of 2023. Generally, the second quarter was aligned to expectations and positively also included the highly accretive acquisition of the up to 40% interest in the Hod Maden project. While we are tracking to the lower end of our consolidated production guidance due to the first half results at Seabee, we expect significant improvement in our operating and financial results in the second half of the year. We’re also keen to share the updated technical reports to showcase the organic growth potential across the portfolio. So in short, with a key number of value-enhancing catalysts on the horizon and the anticipation of improving production and free cash flow in the coming quarters, we remain extremely optimistic about the business.

So with that, I’m going to hand the call back over to the operators for any questions you may have. Thank you, operator.

Operator: Thank you, Mr. Antal. [Operator Instructions] Our first question is from Cosmos Chiu with CIBC. Please go ahead.

Cosmos Chiu: Thank you Rod, Allison, Bill and Alex. Maybe my first question is on your guidance. Rod, you’ve maintained your guidance at 700,000 to 780,000 ounces GEOs, but you’ve also said you’re now trending towards the lower end. I just want to confirm, I think you’ve already kind of answered my question here, but the one sort of factor that you had not anticipated would have been the slower start to see. Is that why it’s now trending to a lower end. Everything else is on target, all the other assets just really Seabee?

Rodney Antal: Yes, I think that’s right, Cos. If you remember in the first quarter, we talked about the underperformance at Seabee and the reasons why. And clearly, that put us on the back foot. And if you remember, I can’t maybe you actually asked the question, but I did say it would probably be difficult for us to claw back to the original guidance for Seabee, and that’s held true during the second quarter as well. So as we look across the assets and how they’re performing, we’re actually quite fortunate. I think that we’re in the position we’re in, given that performance at Seabee were right on track for the first half and expect if we can maintain that sort of momentum moving into half two, we’ll be able to meet our production guidance at the lower end.

Cosmos Chiu: Great. And maybe more specifically on Çöpler. You’ve done 107,000 ounces now in the first half. You’re targeting 240,000 to 270,000 ounces for the year. If I work it out correctly, the math, it looks like you have to improve in Q3 and also Q4 as well, you’ve said Q4 is going to be 55% of the second half of production, but if I work it out, Q3 has to improve as well. I guess my question is, Rod, it sounds like there’s some maintenance that still needs to be completed in Q3. Can you help me understand how Q3 is going to be better than Q2? Is it a combination of Çakmaktepe coming in? Or is it higher throughput. Could you just give me a bit more color?

Rodney Antal: As I’m going to – since we’ve got Bill in the room now, and I can deflect some of these questions to the team. I’m going to deflect this one to Bill.

Cosmos Chiu: Thank you.

William MacNevin: Yes. Appreciate the question. We have several drivers heading into Q3 and then into Q4. We’ve done some work with the autoclave hubs on the throughput rate. So there’s – we’ve been improving there. The other thing that impacted the first half of the year was the – our oxide performance that we didn’t actually end up stacking as much material as we planned for. Moving forward, we’ve got plans to have that material be stacked, and that will help increase as well. And also, we’ve got some very good work going on in terms of improving the operating time in the autoclave. So that’s the maintenance I talk about going to be finished this month, it’s going to come in on a less time than we’ve traditionally done, and there’s also been some changes in what we do with maintenance with that oxidization circuit. So several things there. So it is an increase, but we’re very focused on working to deliver against it.

Cosmos Chiu: Great. And I don’t know if this is related. From other companies, we’ve heard there was heavy rainfall in Turkey and parts of Turkey in Q2. Is that part of why your stacking of the oxides was impacted or is Çöpler a bit different?

William MacNevin: We didn’t – we weren’t heavily impacted by the weather in Q2. Our oxide stack was purely about blending and having the right material at the right time. So weather wasn’t an impact for us.

Cosmos Chiu: Got it. Maybe switching gears a little bit. Same question on Marigold, solid quarter, solid Q2 as expected. You’ve done 112,000 ounces now in the first half, slightly over, you’re targeting 260,000 to 290,000. Once again, it sounds like the leach cycle is now more normalized without some of the fines that you saw last year. But what’s driving that increase again into Q3 and Q4? Is it the stocking rate? Is it the recovery that’s coming out from what you’ve already stacked in Q1 and Q2? Could you maybe, again, give us a bit more color in terms of the increase that we’re anticipating?

William MacNevin: Stacking rate is the big driver. So obviously, Q3 is very important to us. So it’s mining through in the material we’re getting coming towards us. As you say that we’ve normalized, we’re through we had a positive return relative to – we were challenged with that area that needed work with the fines material. We’re virtually through that. So now it’s just really about the timing of the ore release and the stacking rate.

Cosmos Chiu: Great. And maybe one last question. Again, on something else here. Hod Maden, I’ve always said, I think that’s a very complementary acquisition that you’ve made, Rod. I know you’re looking – working on the technical report. It’s going to come out next year alongside a decision in terms of building it or not. But in the meantime, should we anticipate, Rod, any kind of news flow between now and then? And then maybe, again, specifically, you talked about financing options, could you give us some insight in terms of what some of those options might be?

Rodney Antal: Yes. Look, Cos, it’s really the work that we’re doing to put us into a position to make a go decision on the project is just improving the fidelity that we have around the project itself. So we are doing some infill drilling. We’re doing the work around the flow sheet’s validation work. We’re also looking at validating our own thoughts on ways to improve the flow sheets, et cetera. So there won’t really be a lot of news flow to talk about here in the next little while moving into next year because it will all be pieces of work that we’ll be running in parallel together to come to a conclusion for us. But – it really is just simply thinking about as confirmatory work from our DD that we overlay our experience of building the Çöpler sulfide plant and the approach that we took to building that plan with the same team that we’ve now deployed in some positions over to Hod Maden, et cetera, et cetera.

So when we get going and start to bring it out of the ground, we have a high level of confidence to be, very successful for it. So that’s really what the emphasis will be. There will be some small works going on. As we sort of mentioned, there is some early-stage infrastructure works. We’ve got some tunneling going on to access the site, some tunneling work that will be going on at site itself to put the access over to the TSF area. But beyond that, there won’t be a whole lot more activity. So it’s ramping up. It’s getting the teams in place, some drilling, et cetera. So really look forward to next year. From a financial perspective, Alison is really busy at the moment, as you can imagine, I think she’s made a couple of trips to London already to pick up on the work that was already sort of underway by our joint venture partners, and we expect to pick that work up to try to progress through to a project financing.

And if there’s obviously any news flow coming from that between now and the actual decision time, we’ll obviously let you know. But that work will just quietly progress here to try to get the best terms as possible for the partners that we now have on the Hod Maden project. So I don’t expect anything to come out of that here in the next couple of months. It will probably be, at best, late in the year or probably early next year.

Cosmos Chiu: Of course. Thanks Rod and team. Understood. And thanks again for answering all my questions.

Rodney Antal: Thanks, Cos.

Operator: [Operator Instructions] This concludes the question-and-answer session. I’ll turn the call back over to Mr. Antal for any closing remarks.

Rodney Antal: Great. Thank you, and thanks, everyone, again for joining us today and participating in our call. Have a great day, and look forward to talking to you again in another quarter. Thank you. Bye-bye.

Operator: This concludes your conference call. Please feel free to disconnect.