SSR Mining Inc

NASDAQ:SSRM

Earnings Call Transcript 2022-Q2

[Operator]

Hello, everyone, and welcome to SSR Mining’s Second Quarter 2022 Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead.

[Alex Hunchak]

Thank you, operator, and hello, everyone. Thank you for joining SSR Mining’s second quarter 2022 conference call, during which we will provide an update on our business and a review of our financial performance. Our second quarter 2022 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, President and CEO; Alison White, CFO; and Stew Beckman, COO.

Now, I will turn the call over to Rod for his opening remarks.

[Rod Antal, President and Chief Executive Officer]

Thanks, Alex, and hello to you all, and thanks for joining us. I’d like to start by providing a brief summary of our positive first half results. The first half of 2022 demonstrated the continued resilience of our business in the face of supply chain constraints and inflation pressures as our consolidated production and cost metrics track well against our year-to-date targets. Our four operating assets produced 333,000 ounces of gold at all-in sustaining costs of $11.77 per ounce, with solid margins and attributable net income of $126 million.

Our financial strength drive us to continue our peer-leading capital return program. During the quarter, we announced a buyback program that enables us to repurchase up to 10.6 million shares. This, together with our 40% dividend increase earlier this year resulted in year-to-date returns to nearly $100 million to shareholders or equivalent to a 2.8% yield and growing.

Despite the positive performance in the first half of the year and numerous strategic milestones, we are continuing to face increased cost pressures across the portfolio, especially in fuel, electricity, reagents and labor costs. While we have been successfully bucking the cost inflation trend over the past 18 months, we have seen costs now outpace our mitigation efforts. As a result, we are reaffirming our production guidance, albeit at the bottom end of the guidance range, and we are revising our cost guidance higher for the first -- for the year to reflect the macroeconomic pressures and the temporary suspension of Çöpler, which we’ll discuss during the presentation.

So just moving on to Slide 4. And on this next slide, I want to highlight our core values in relation to our ESG initiatives. ESG is, and has long been a core value and focus for the company as it underpins the success of our business. We released our fourth annual Sustainability Report in April, which highlighted a number of achievements during 2021 and some of the new initiatives for the company.

During 2021, amongst other things, we progressed our efforts to establish a science-based action plan to support our commitment of net zero greenhouse gas emissions by 2050. In 2022, we’ll continue to roll out our integrated safety management system with full implementation expected this year. Furthermore, we’ll complete third-party closure reviews across all our operating assets to ensure a positive post-mining future for our stakeholders and are also developing a water stewardship strategy as we see continuing to reduce our environmental footprint going forward.

On to the next slide, which is Slide 5. As we continue through 2022, it is worth highlighting our impressive track record of execution. While the suspension of Çöpler has impacted our full year projections, we’re advancing opportunities to ensure the business exceeds the low end of production guidance. Looking towards the future, the key message is that we have established a baseline production platform where we see clear opportunity to deliver plus 700,000 ounces of gold production annually through 2030. The solid foundation, coupled with the abundant growth targets being progressed across the portfolio means that this is just the baseline for the company to continue to build from.

Moving on to Slide 6. And on top of our track record of operational delivery, we’ve also established a proven history of disciplined and accretive M&A as well as project development. This includes the acquisition of Taiga Gold, which closed in the second quarter and expands our exploration platform in Saskatchewan. We also closed the sale of Pitarrilla in July, and our noncore asset sale have now generated $245 million in proceeds over the last four quarters, more than two times the straight consensus values drive to those assets. Given our track record of strong operations and project execution as well as the robust balance sheet. We continue to thoughtfully evaluate strategic opportunities across the sector and will remain disciplined with respect to any future transactions.

So on the Slide 7. Over the last 18 months we have ensured our strong free cash flow generation is reflected in our capital returns program to that effect, we returned $191 million to shareholders in 2021 and effective 5% capital returns yield. Early this year, we increased our base dividend by 40%, which by itself is yielding 1.8% annually. Subsequently to the second quarter, we announced a share buyback that permits the repurchase of 10.6 million shares. And over the year-to-date period, we’ve already returned nearly $70 million through that program. Combined with the two quarterly dividend payments year-to-date, our capital returns are already $100 million or a 2.8% yield.

Overall, the combination of our strong operating results, accretive and strategic M&A initiatives and peer-leading capital return programs has driven significant out performance for our shareholders a trend we expect to continue with a multitude of catalysts over the coming six months to 12 months.

So on the next slide to discuss the quarter. Just a few of the key points to consider relevant for the quarter. First half production at 333,000 ounces of gold and all-in sustaining cost of $11.77 per ounce was in line with our internal budgets and guidance. However, on June 21, we had an incident in Çöpler heap leach resolving in a suspension of operations pending the completion of improvement initiatives. We have now completed these initiatives is pending verification and inspection work by the regulators. After inspection and verification, we’ll move towards the required approvals to restart the operations, which is anticipated during the third quarter of 2022. We remain closely aligned with the regulators, and we’ll provide further updates as required.

So with that, I’ll now turn the call over to Alison, who is going to discuss the financial performance and updated 2022 outlook on Slide 9.

[Alison White, Chief Financial Officer]

Thanks, Rod. Good evening and afternoon, everyone. This quarter we produced over 159,000 gold equivalent ounces and over 333,000 gold equivalent ounces in the first half of the year, in line with our expectations for back half weighted production profile.

As mentioned earlier, we revised our guidance for all-in sustaining costs to $1,230 to $1,290 per gold equivalent ounce and are targeting the lower end of our existing production guidance range. We are aggressively pursuing continuous improvement and cost management initiatives aiming to mitigate inflationary pressures where possible while also diligently working to ensure higher costs do not remain a permanent feature of the business moving forward.

Gold equivalent sales of 167,000 ounces in the quarter drove revenue of $320 million. Attributable net income for the quarter was $58 million or $0.27 per diluted share and adjusted attributable net income was $57 million or $0.30 per diluted share.

Second quarter operating cash flow was $33 million, and first half operating cash flow was $95 million. First half free cash flow of $19 million was impacted by the timing of tax and royalty payments, capital expenditures and working capital outlays as previously guided.

Looking to the back half of the year, we expect a strong Q4 to influence free cash flow distribution with 80% to 90% of the forecasted second half free cash flow expected during Q4.

On the right side of Slide 9, I’d like to provide some commentary on our reported $0.30 in diluted earnings per share that is calculated based on the company’s definitions of adjusted attributable net income per share.

Attributable net income of $0.27 per share with adjusted for foreign currency fluctuations during the quarter as the Argentinian peso and Turkish lira devalued against the U.S. dollar along with minor adjustments for tax impact and adjustments for the mark-to-market of our marketable security portfolio.

Let’s move on to Slide 10 as we discuss the outlook for the remainder of the year. As we’ve now seen and heard from Rod, we have increased our 2022 cost guidance as a result of the temporary suspension and the persistent and pervasive inflationary pressures across the business that I had also talked about in the first quarter call. While our production guidance remains unchanged, we expect to finish the year at the lower end of this range, again reflecting the temporary suspension at Çöpler.

Our all-in sustaining cost guidance range is now $1,230 to $1,290 per ounce. And the largest driver of our increased cost guidance includes lower silver prices for the conversion of gold equivalent ounces as well as lower production volumes and higher diesel, electricity and reagent prices at all of our locations. We continue to focus on business improvement and cost savings initiatives that help limit the duration and impact some of these cost pressures. While some items like higher wages will remain with the business in coming years, we remain confident in our ability to deliver on our operating track record while incorporating cost improvements.

Moving now to the second quarter results in more detail. On Slide 11, we’ll talk about SSR’s financial position. At the end of the quarter, the company maintained a cash and cash equivalent balance of nearly $940 million, while net cash is nearly $640 million. With that strong cash position in mind, I would like to reiterate our priorities with respect to capital allocation within the business. First and foremost, we will continue to reinvest in growth, including our exceptionally high return outage and C2 project, which will account for approximately $300 million in total growth capital through 2025.

Next, we are committed to maintaining a robust balance sheet to whether volatility in the commodity price environment and ensure all of our capital commitments, debt servicing requirements and base dividend payments are fully funded even in the event of a potential downturn in gold price. Third, we remain committed to capital returns, as evidenced by the recent share repurchases totaling nearly $70 million during the year, an impressive total given the announcement of the 2022 buyback program, which just over a month ago.

This renewed buyback program further strengthens our capital returns coupled with a 40% dividend increase announced earlier this year between the year-to-date buyback activities and an annualized dividend of $60 million or $0.28 per share. This resulted in a minimum capital return of approximately 3.7% for the year.

Most importantly, we continue to be disciplined in our approach, while ensuring our returns appropriately reflects our company’s strong free cash flow generation.

And with that, I’ll turn it over to Stew for an operational update.

[Stew Beckman, Chief Operating Officer]

Thanks, Alison. And as always, I’ll start with EHSS. [ph] We saw an improvement in our injury rate in the quarter, but it remains above where we want it to be and as always, an area of considerable effort and focus. We were disappointed by the incident, which caused the suspension at Çöpler and are working to review and reinforce our underlying systems and practices across the business. I’ll talk a little more on Çöpler mine. Safety and the care for our teams, communities in the environment are core values, and we believe also found foundational to business performance.

Moving on to Slide 13 and we’ll talk about Çöpler. As I noted on the Q1 call, we completed our first scheduled major autoclave shutdown with re-bricking of the five courses of autoclave number 2 in early Q2. This is impressive performance from the autoclaves given we started them back in 2018.

The planned maintenance shutdown took about three weeks to complete, which along with lower mine grades resulted in a slightly softer in higher-cost quarter. We delivered production of over 51,000 ounces at an all-in sustaining cost of $1,253 an ounce. We also continue to ramp up the flotation plant in the quarter.

Our overall performance is good, though we are still presenting more carbonate to the order plays than we had hoped, meaning we are using more asset in line. We are working to improve this carbonate split including a collaboration with one of the Turkish [ph] universities. Obviously, the restart of operations is an overhang for the business, but I’m pleased to report that all of the improvement initiatives required by the Türkiye Ministry of Environment have been completed, and we are awaiting verification and approval by the relevant authorities.

Today, we had a visit from a local director to inspect finalized work. Improved process control of pumps feeding the heap leach and improvements to the burns and runoff was completed under the oversight of regulatory officials. The team has learned a lot from the incident, and we remain in close contact with the regulators and are aiming to restart the operations at Çöpler within the quarter.

On a more positive note, during the temporary suspension, we have been able to bring forward much of the three week maintenance for Autoclave 1 that was previously planned for the fourth quarter. Enabling a stronger close to the year once the Çöpler returns to full operations. With respect to our growth initiatives, we've progressed the Çakmaktepe Extension or Ardich remains on track to deliver first production in 2023. We're also progressing the C2 project through PFS in 2022 and expect to release these results of this more optimized project to the market in 2023. We are excited by the potential of both of these high return, low capital cost projects.

Moving on to Slide 14 and we can talk about Marigold. Marigold delivered quarter-over-quarter improvement, though production timing continues to be impacted by stacking of fine material from the north pit, production of almost 46,000 ounces at an all-in sustaining cost of $1,458 an ounce was largely in line with expectations of back half weighted production profile. Towards the end of the second quarter, we began staking a higher grade material, and we expect a significantly stronger production in half two, especially in the fourth quarter. We expect 71,000 ounces in Q2 and of that 30,000 ounces just in June as a result of the higher grades. Permitting continued to advance at Valmy and we expect to receive the EIA for the expanded Valmy pit in 2024 and with advanced work for the Marigold District Master Plan and expect to release this report to the market in 2023.

Next to Slide 15. Seabee had another fantastic quarter producing over 38,000 ounces at an all-in sustaining cost of $628 an ounce. Following the record first quarter, the mine produced a record first half production of nearly 91,000 ounces at $611 an ounce. We are advancing exploration of the extension to the very high-grade zone that drove the first half out performance. The good news is that we think that we have more, but we don't expect that we'll be able to mine this area until 2023 and However, we have accelerated development to access another high-grade area of Santoy reserves. And accordingly, we've increased 2022 production guidance to 150,000 to 160,000 ounces.

A phenomenal outcome for the asset and the team. I'll touch on the exploration work that continued in the quarter in a few moments, but would highlight the progress of the Seabee District Master Plan that we also expect to release in the first half of 2023, which John can start to present itself soon. There were some really exciting targets for future development that we're accelerating and intent to include in this and the subsequent master plan documents. We've been drilling at Porky West, target, which is showing possess potential open pit option for Seabee. If successful, this could provide a foundation to reframe the development pathway for Seabee.

Please move to Slide 16. We're going to bounce back from a soft first quarter with production of nearly 2 million ounces of silver at an all-in sustaining cost of $1,523 - $15.23 an ounce. Production is expected to increase in the back half of the year with better growth, while costs continue to be impacted by high inflation in Argentina.

Lastly, before we turn it over for questions. I want to jump to Slide 17 and highlight some of the exploration initiatives that we progressed during the quarter. We progressed exploration programs across the business in the second quarter and are preparing to release the results of some of these efforts in the second half of this year. At Ardich resource development and expansion drilling continues as we add additional growth to the ore body that could further complement the production profile outlined in the CDMP21 earlier this year. Also in Turkey, we have restarted drilling at the Copper Hill project, which is our pure copper prospect in the Black Sea region. In Saskatchewan, the team progressed definition drilling at the Shane target, which is just off the whole road between the mine and the processing plant. As I noted, we are also very excited about Porky West and main target to the northwest of the Seabee plant, where recent drilling and reinterpretation of the existing resource modeling indicates the potential for an open pit target, which could operate simultaneously with the underground operation in the future.

Such an additional tonnage allows us to reimagine the operation such as the process plan expansion or upgrade and the potential for an all-season road to the operation. In Nevada, exploration progress, both near mine and more regionally. Drilling is currently underway at Trenton Canyon and Buffalo Valley and near-pit drilling at New Millennium is showing encouraging results. We've now increased the rig count for exploration to six, illustrating the significant number of targets and the excitement for the asset. Some portion of the New Millennium drilling should be included in our annual resource update later this year.

Lastly, at Puna, we started drilling for the first time since 2018. The exploration team has identified a number of in-pit and near mine targets that if successful could provide mine-life extension and opportunities. We plan to release exploration updates for Çöpler, which of course, includes Aldrich, Copper Hill, Seabee, Marigold and Puna by the end of the year, and we'll look to incorporate as much as possible of the extensions, the exploration success into the new technical reports at Çöpler, Seabee and Marigold in 2023. Thank you very much, and back to you, Rod.

[Rod Antal, President and Chief Executive Officer]

Great. Thanks, Stew, and thanks Alison. Certainly, as an industry, we're facing significant external challenges in 2022, for which we remain vigilant and proactive to mitigate the impacts. We remain on track to deliver our full year production guidance and have a number of potentially positive catalysts ahead from the asset base. We look forward to the restart of operations at Çöpler and we'll keep the market updated with any further developments regarding the required approvals.

Finally, I do want to welcome John Ebbett to the executive team at Stewart's continued contribution to the business while we go through this planned transition of the senior leadership.

So with that, Ariel, I'm going to hand it over to you for Q&A.

[Operator]

Thank you. [Operator Instructions] Our first question comes from Cosmos Chiu of CIBC. Please go ahead.

[Cosmos Chiu, CIBC]

Thanks, Rod, Alison, Stew and team for the presentation. Maybe my first questions are around Çöpler to confirm or to clarify, Stew or Rod, it sounds like the inspector has now been on site. And is it hazy or is she? And are you now just awaiting the receipt of the regulatory approvals?

[Stew Beckman, Chief Operating Officer]

So today, we finished the work over the weekend. And today, we have the local inspector come out. There's a series of approvals that have to happen. And we'll also receive visits from the – inspector as well. And it's a bit of a process that we'll go through it.

[Cosmos Chiu, CIBC]

Got it. And after you've received all your approvals, could you maybe outline or kind of give us a bit more detail in terms of how long it would take to get the autoclaves and everything else sort of restarted again?

[Stew Beckman, Chief Operating Officer]

All up will take it, about four days to restart the close on coal [ph] start.

[Cosmos Chiu, CIBC]

Great. And then in terms of the plant maintenance, a bit of a silver lining, I guess, that you are able to push forward some of the scheduled maintenance from the second half into the shutdown period. So to confirm, I guess, previously, you had scheduled about three weeks in terms of a planned shutdown in the second half. So those three weeks will no longer be necessary, and that will help you in terms of making up for lost time, when we talk about second half production. Is that correct?

[Stew Beckman, Chief Operating Officer]

Yes. So we've done all the mechanical work on the autoclaves, and we'll be able to push it out into next year to do the phased courses on the bricks.

[Cosmos Chiu, CIBC]

And on that, Stew I guess, as you said, you're re-breaking the one autoclave next year. How long is that going to take in 2023? Are we talking about one week or 1.5 weeks? Or is it going to take the full through the...

[Stew Beckman, Chief Operating Officer]

It'll be the critical part. So it'll be about two or three weeks.

[Cosmos Chiu, CIBC]

Okay.

[Stew Beckman, Chief Operating Officer]

We don't do the whole autoclave, just part of it.

[Cosmos Chiu, CIBC]

Okay, you're going to open it up and see if everything is sort of okay and then go from there, I guess.

[Stew Beckman, Chief Operating Officer]

Yes. There are certain regions that get more aware than others, and those are the ones that that we've been redoing phase course of it, was the same in the other…

[Cosmos Chiu, CIBC]

Great. And then maybe switching gears a little bit on Seabee here. Good to see that I think you've brought up the guidance for the year as you talked about production guidance. You kind of mentioned that on the call in your prepared remarks as well. But the increase is that based on the fact that you've outperformed in Q1 and Q2? Or is there some element to it whereby you're also depending on some kind of out performance in the second half as well to hit those – the updated guidance, production guidance for Seabee.

[Stew Beckman, Chief Operating Officer]

Yes, there’s a little – we pulled forward a little bit of high rate, but it's within the reserves. So it's part of the mine lease scheduling. I wouldn't say it's high risk, those – our normal plan.

[Cosmos Chiu, CIBC]

Of course. And then one last question just to wrap things up. As you mentioned, you've had to up your cost guidance for the year a bit. I know you've kind of talked about that in your prepared remarks, but could you maybe talk about what had been factored in, in terms of inflation in the previous guidance? What is now that you're factoring in? I only ask, given that, as we talked about, the composition for guidance, it's now a bit different. Çöpler guidance has come down in terms of production. Seabee production has increased. So far, Seabee, Santoy the cost is a bit lower.

So I would imagine that helped in terms of offsetting some of the inflationary pressure, but indeed, inflation still caused your guidance to go up. So did you put quite a bit of conservatism into your cost guidance? Maybe just some comments on that.

[Alison White, Chief Financial Officer]

Hi, Cosmos, I'll take that one.

[Cosmos Chiu, CIBC]

Hi, Alison.

[Alison White, Chief Financial Officer]

Hi, good to hear from you today. So we did not put an additional factor into the inflation, we've seen a steady run rate through the course of the year where inflation has certainly outpaced what we had initially budgeted. And so we said our remainder of the year and our cost guidance based on what we've already seen come through this year. And some of the – to elaborate a little bit further as well, you – the number of ounces that are increasing at Seabee are driving down some of the costs there. But overall, we're certainly seeing a track record of inflation increasing the cost base across the organization.

[Cosmos Chiu, CIBC]

Great. Thanks again, Alison, Stew and Rod. Of course and those are all the questions I have.

[Stew Beckman, Chief Operating Officer]

Thanks, Cosmos.

[Operator]

Our next question comes from Michael Siperco of RBC Capital Markets. Please go ahead.

[Michael Siperco, RBC Capital Markets]

Thanks very much for taking my questions. And if I can try to push a little bit more on Çöpler. Is there a schedule and planned visits in place? Should we be thinking days, weeks? Or is it possible that the operation could be off-line through the end of September, just depending on the government's schedule.

[Rod Antal, President and Chief Executive Officer]

Yes. Look, Michael, I think we outlined it well in all the written documents as well as our opening remarks and Stew just elaborate a bit more in terms of just more physical activities on site. Here in the sort of last 72 hours. At this stage, we've built into our planning a start-up in quarter three. And based on what we know today, that's our best estimate.

[Michael Siperco, RBC Capital Markets]

Okay. Copy and then maybe following up as well on the previous question about cost and maybe cost beyond 2022, can you elaborate on how you're seeing trends across your business? Are you seeing costs starting to stabilize? Are you seeing some stabilized others continuing to trend higher? Any kind of visibility into what you're seeing?

[Alison White, Chief Financial Officer]

Michael, we are definitely starting to see a little bit of, I would say, is the peak on fuel, but we are not necessarily looking to – into, sorry. So, we’re definitely just past the peak on fuel. And as we look to the future, we are definitely seeing that there will be some sticky costs that we’re experiencing now that will continue into next year. But with the rapid pace that we’ve seen the rate of inflation change over the past few months, we aren’t necessarily positive of what that exact rate is going to be going forward, but we do expect that we will have some going into early next year.

[Michael Siperco, RBC Capital Markets]

Okay. Great. And then in terms of mitigation and future mitigation, are you considering changes to your plans with respect to stockpiling, hedging, supply chains, I imagine you’re looking at these things on an ongoing basis, but have you come to any conclusions about changing strategies going forward?

[Stew Beckman, Chief Operating Officer]

Michael, I think we bet to undertake our normal planning cycle, as a business. We always look to improve our cost base, either through supply chain opportunities. It could be – there could be continuous improvement, some operational effectiveness initiatives that we have, that’s just normal cause for us. So, we will build those into our planning cycle. But as Alison sort of mentioned, some of those costs sort of have definitely outpaced the work that we already anticipated for 2022. So, we’ll wrap that up in the next few months, and that will tell us where we netted out.

[Michael Siperco, RBC Capital Markets]

Okay. And maybe last one, just back to and the Çöpler and the Ardich start-up next year, should be improving costs. Can you expand a little bit about how you see costs at Çöpler trending going forward with the addition of Ardich in 2023?

[Stew Beckman, Chief Operating Officer]

I think the best guide to what our expectations with Ardich [ph] is the CDMP21 that we issued the technical report earlier in the year.

[Michael Siperco, RBC Capital Markets]

Okay. Great. Thanks, very much. Appreciated the responses.

[Stew Beckman, Chief Operating Officer]

Thanks Michael.

[Operator]

Our next question comes from Ovais Habib of Scotiabank. Please go ahead.

[Ovais Habib, Scotiabank]

Hi, good morning. Just a couple of questions for me. Maybe some of the questions I had regarding restart as well as cost inflation, I guess, have been answered. So just maybe a follow-up on Ardich. Are there any permits or anything pending regarding any regulatory requirements to advance Ardich production in 2023?

[Stew Beckman, Chief Operating Officer]

Yes. The permits have always been the credit for hard for having [ph] for us. So from a technical perspective, it’s relatively easy. So far, all of the permits have been and the progress towards those because as with all mining projects, there’s multiple permits required have been moving in line or a little bit faster than our schedule. So, we’re still on track for what we thought on the issue of the technical report.

[Ovais Habib, Scotiabank]

Perfect. And just then moving on to exploration front, I mean, you mentioned, obviously, there’s a lot of deprogram play all across. Are you looking out with some exploration update and then kind of research updates and then kind of moving into these mine plans or these master plans that you’re looking to come out with in early 2023. Maybe if you can give a little bit color on that?

[Rod Antal, President and Chief Executive Officer]

Yes. So we’ll issue exploration updates later this year for the projects and where we will be a typical exploration updates of the world provide details of the holes and the steps that we’ve received to those. We will then build those depending on how quickly it evolves and what drill density, which deposit is in, whether it’s part of the existing resource or a new resource. Some of those will be incorporated in our normal updates. And then we build as much as we can into when we do the next technical reports. But as has happened, for example, with Ardich over the years, we’re continuing to explore Ardich. So, we’ll get as many holes into this next generation as we can. And we’ll continue to drill that to our prospect going forward.

[Ovais Habib, Scotiabank]

Okay, perfect. That’s it for me. Again thanks for taking my questions.

[Rod Antal, President and Chief Executive Officer]

Thanks, Ovais.

[Operator]

Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.

[Lawson Winder, Bank of America Securities]

Hi good evening, Rod, Alison and Steve. Nice to hear from you both. Thanks for the update. Could I maybe ask about Çöpler one more time. And just I was curious, why not finished the maintenance at the Çöpler now instead of pushing it into 2023. So, I’m referring to the relining of the second autoplay. Is that a function of your expectation that the restart could come kind of any moment? Or is there something else?

[Rod Antal, President and Chief Executive Officer]

It has to do with we scheduled for November and the bricks are just arriving. So, we don’t have enough bricks to do all the work. They are arriving over the next week. And if we’re not up and running, we will at that time, we will do some work. If not, we’ll carry the cost for next year.

[Lawson Winder, Bank of America Securities]

Okay. Excellent. And then just in light of the cost inflation, have you given any thought to potentially increasing the reserve gold price assumption for Marigold and perhaps other assets?

[Rod Antal, President and Chief Executive Officer]

We’ll do that as normal course when we come to the technical reports and the resource and reserve calculations by in the year.

[Lawson Winder, Bank of America Securities]

Okay. Do you guys...

[Rod Antal, President and Chief Executive Officer]

As we normally would do.

[Lawson Winder, Bank of America Securities]

You guys normally do that in November. Is that right?

[Stew Beckman, Chief Operating Officer]

Yes. We do it at the end of the year. Look, I don’t think we haven’t anticipated anything to answer your question at this stage, Lawson. We’ll review it. We do a sort of market review and consensus pricing anyway. So it won’t be driven arbitrarily by us just to raise the reserve price of that your question. It will be just part of our over course reserve reviews.

[Lawson Winder, Bank of America Securities]

Okay. That’s clear. And then maybe just a bit of a broader question. You mentioned M&A and definitely valuations are quite historically low. Maybe you could just update us on your thinking in terms of geography, target metal mix and development stage?

[Stew Beckman, Chief Operating Officer]

Look, nothing has really changed, Lawson, in terms of where we are and the types of opportunities that we would consider appropriate for SSR. And so I think the previous discussions that we’ve been very open about with the market about the jurisdictional mix. The rationale, the strategic drivers haven’t changed in the current environment. But we’re obviously going to be very cautious like I’ve mentioned in terms of anything that we look at or anything that comes in across the desk to ensure it sort of fits. So we haven’t changed any of the drivers, the market hasn’t driven us to pick up speed or to slow down. Again, we do this as a matter of course, and always sort of assessing different opportunities and permutations to ensure we don’t miss something, but to this stage, that’s it.

[Lawson Winder, Bank of America Securities]

Okay. Sure. Great. Thank you for your comment today.

[Rod Antal, President and Chief Executive Officer]

Good. Thank you.

[Operator]

Our next question comes from Levi Spry of UBS Australia. Please go ahead.

[Levi Spry, UBS Australia]

Hi guys. Thanks for call. Maybe just an exploration question. I might have missed it, but is there an exploration update due and can you, this Porky [indiscernible] how important is that? Can you take us through what you found there?

[Stew Beckman, Chief Operating Officer]

So Porky had been drilled previously. There has been, I guess when we’ve been exploring around area, a real focus on looking at sort of underground and our senior geologists had a look at it and had a thesis that perhaps would work as pit, and we’ve been exploring that. So we’ve had some relatively wide, but lower grade intercepts, relatively close to surface. It seems that it has reasonable extent. So we are pretty excited about it. We will dialogue with all of that we’ve got when we do a release before the end of this year.

[Levi Spry, UBS Australia]

Okay, thanks Stew. So that’s on all of the exploration, is it? I didn’t notice much in today.

[Rod Antal, President and Chief Executive Officer]

Yes. We’re going to do them for each of the sites. So in Çöpler [indiscernible] Ardich and some other drilling that we’ve done within Çöpler, Seabee. A number of the targets that Seabee, Marigold which has the Buffalo Valley, Trenton Canyon and the work around the New Millennium. I don’t think we’ll get anything in from our units. We’ve literally just started poking holes on the ground there now.

[Levi Spry, UBS Australia]

Rod, Okay. Thank you. Thanks very much.

[Rod Antal, President and Chief Executive Officer]

Good. Thank you.

[Operator]

Our next question comes from Mike Parkin of National Bank. Please go ahead.

[Mike Parkin, National Bank]

Hey guys. I may have missed this, but for Seabee, the talk about potentially back into high grades, higher than normal, is that kind of in the same area that you pulled that high grade pocketed earlier this year that had the really drove the really good Q1?

[Rod Antal, President and Chief Executive Officer]

Yes, so that high grade of Çöpler, so we stepped out and we’ve been drilling that because we were hoping to get back into it straight away. It looks like it pinches out directly below where we are now, but then opens up a couple of level, a level or so down. And we’re pretty excited about what it looks like below that. However, when – this year, so my expectation is that we’ll get that in 2023. But we need to work out while we’ve actually got first. And the other area that we’re going to is another area that’s in reserve and we’ve juggled the mine plan a bit to get us back there.

[Mike Parkin, National Bank]

Is it kind of the same thing where just some infill work kind of highlights that little sweet spot in the mine plans?

[Rod Antal, President and Chief Executive Officer]

The one that we’re going to that we’ve got planned in this is since within the reserve that very high grade Çöpler exploring extending it’s outside the resource reserve and we’re chasing it down.

[Mike Parkin, National Bank]

Okay. And can you remind maybe this is better for that exploration update, but as you move South into like the Fisher property, I recall that the vein structure is kind of prevalent at surface discovery through a force fire or something like that. Are you kind of allocating to the South versus up near the hanging wall area? Do you have a lot of rigs evenly distributed or do you still see kind of low hanging fruit more to the North and putting more of your focus there?

[Rod Antal, President and Chief Executive Officer]

No, we’ve been drilling both here. Obviously, the work that we’ve got the exploration within the mine is about pulling things in that at Çöpler. And then, the quantum of work we do, so most of the work Çöpler to convert to make sure that we can feed the plant, the medium term targets get a bit more work and then we still testing these other areas. We’re still pretty excited about Fisher. And we think that there’s a good probability. We’re going to get something out of that immediately to the South of Çöpler. The thing that we find at Santo is that, it seems to develop grade and volume at depth and gets better at depth. So we’ve decided not to advance Çöpler into sort of resource development until where we get some deeper holes and test a hypothesis that will probably develop at depth.

[Mike Parkin, National Bank]

Okay. And just with respect to Turkey region, there’s obviously it’s pretty going through Europe, or can you comment on any impact of regional force fires or are you guys kind of far away from anything that’s active right now?

[Rod Antal, President and Chief Executive Officer]

Look, there’s been no impact for us Mike. We’re in and around the mine. So that’s a good news.

[Mike Parkin, National Bank]

All right. Excellent. Looking forward to that exploration update guys. Thanks very much.

[Rod Antal, President and Chief Executive Officer]

Good. Thank you.

This concludes the question-and-answer session. I’d like to turn the conference back over to Mr. Antal.

[Rod Antal, President and Chief Executive Officer]

Great. Well, thanks everyone. Thanks for joining us. And look forward to next quarter and continue updates around Çöpler, until then goodbye.

[Operator]

This concludes our conference call. Please feel free to disconnect.