SSR Mining Inc

NASDAQ:SSRM

Earnings Call Transcript 2021-Q3

[Operator]

Hello everyone. And welcome to the SSR Mining's Third Quarter 2021 Conference Call. [Operator Instructions]. At this time for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining.

[Alex Hunchak, Investor Relations]

Thank you, operator, and hello, everyone. Thank you for joining SSR Mining's third quarter 2021 conference call, during which we will provide an update on our business and a review of our financial performance.

Our financial statements and management's discussion and analysis have been filed on SEDAR, EDGAR, 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. All references to cash costs and all sustaining costs are per payable ounce of metal sold.

We'll be making forward-looking statements today. 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 Stewart Beckman, COO.

Now I'd like to turn the call over to Rod for opening remarks.

[Rodney Antal, President and Chief Executive Officer]

Thanks, Alex, and good afternoon and good morning to you all, and thanks for joining us today.

I’m going to speak first on our strong third quarter performance. Once again, we are performing at a high level and setting quarterly operating records across the portfolio. These operational milestones contributed to the gold equivalent production of 197,000 ounces of gold at an all in sustaining cost of $1,006 per ounce. For the year-to-date period, we have produced 583,000 gold equivalent ounces, and an all in sustaining costs of $990 per ounce. Given the strong year-to-date production and cost performance, we are lowering our all in sustaining cost guidance to 1000 to $1,040 per ounce.

The fact that we're able to accomplish this outstanding cost performance that meets the well documented industry cost pressures is a testament to the efforts of our teams to deliver on a number of cost saving initiatives this year. With respect to production, we remain on track to deliver against our 720,000 to 800,000 gold equivalent ounce guidance range that is tracking between the midpoint and the higher end of guidance.

We're extremely pleased with the operating performance today. As we continue to showcase the quality of the combined operating assets. Our strong performance has directly translated to free cash flow generation of $129 million in the third quarter and 306 million in the year-to-date period.

The cash flow generation supports our capital returns program. We have returned nearly $150 million to shareholders through the share repurchase since April via our NCIB program. Additionally, our Board approved another quarterly based dividend bringing our year-to-date capital returns to approximately 190 million and we remain on track to deliver a total capital returns yield in excess of 5.5% in 2021.

In the third quarter, we announced exploration updates for both Ardich and Seabee and expect additional exploration updates from Marigold, Copper Hill and Amisk by year end. At Çöpler, the approval of the updated EIA included the flotation plant and in October is a significant and positive milestone.

Looking further ahead, we expect updated technical reports from Çöpler, Marigold and Seabee in 2022 that incorporate our recent exploration success and provide a welcome and comprehensive refresh for SSR.

Turning to the next slide on ESG. ESG is and has long been a core value and focus for SSR Mining, as it firmly underpins the success of our business. We continue to see positive health and safety trends in our operations reflecting the efforts we have applied to improving the well being of our employees, contractors and communities. We have successfully navigated the pervasive challenges of COVID globally, and our mitigation efforts have enabled us to avoid any COVID- related shutdowns at our operations in 2021. We are committed to our communities and to the environment, and we continue to deliver against the priorities outlined in our 2020 sustainability report. This will lead us to review and refresh our priorities as we move into 2022, including our commitment to begin establishing an action plan to achieve net zero greenhouse gas emissions by 2050. We've also begun to improve disclosures on Climate and Water and aligning our reporting with requirements of the task force on climate related financial disclosures.

Moving on to Slide number five, we're proud to showcase our continuous efforts to improve our approach to ESG. And while is not a driver of our ESG efforts, we are pleased to see our results have been recognized by some of the industry's leading ESG research providers. Notably SSR mining was recently upgraded to an A rating by the MSCI and we remained ranked in the top quartile amongst our peers by ISS.

Moving on to the next slide. On top of our excellent operational ESG performance, SSR Mining has an established track record of adding value for our shareholders. This was most recently evidenced by the sale of our non-core royalty portfolio for $100 million, which was significantly higher than it consensus valuation of ascribed to the portfolio by our analysts. This is our mining -- has a proven history of delivering complex capital projects on time and on budget, as well as accretive and disciplined M&A as shown in this slide.

Our strategic review of the Silver portfolio continues following on from the successful sale of our royalty portfolio. With the recent operating and financial strength of Puna and the broad outlook ahead, we have recently determined that Puna will remain core to SSR. The review of the rest of the Silver portfolio continues.

Moving on to Slide seven. As I noted our year-to-date production of 583,000 gold equivalent ounces compares favorably to the full year guidance, while year-to-date all in sustaining costs of $990 per ounce has allowed us to reduce the all in sustaining cost guidance.

At the asset level, we received approval for the updated Çöpler EIA in October and will begin ramp up of the flotation plant upon completion at the provincial level permitting by year end. Çöpler remains on track to meet its full year production guidance with gold production tracking to the midpoint for the original guidance. Marigold remains on track for the midpoint of full year production guidance while Seabee is trending towards the upper end of its production guidance. And Puna on track to exceed the full year Silver production guidance.

We continue to invest in high growth return opportunities across our business including capital projects like Ardich, exploration drilling across the business and investing in the work to complete a number of technical reports, all designed to improve both the longevity and value of SSR. She is going to touch on all these initiatives in a minute.

And just moving on to Slide eight on our quarterly highlights. We've already covered another of the main quarterly highlights, I'm not going to spend much time elaborating here. Alison and Stew will provide a more detailed overview in a minute. However, a few highlights that are relevant to consider this quarter.

A year-to-date, safety performance remains on a positive trend, operationally we continue to deliver records across all our four assets with five consecutive quarters of delivery since the merger closed. Financially, we delivered an adjusted EPS of $0.40 in the quarter, and our robust margins and low-cost production translated to $120 million in free cash flow.

And despite the $150 million in year-to-date, share repurchases and our quarterly dividend payments and continued debt servicing, we remain in a net cash position of over $500 million. That provides us with the required flexibility to advance our large organic growth pipeline well into the future.

So with that, I'm going to hand the call over to Alison, who will discuss our financial performance in more details on Slide number nine.

[Alison White, Chief Financial Officer]

Thanks, Rod, and hello, everyone. I'm pleased to comment on another positive financial quarter for the business as shown here on Slide nine.

It was a solid quarter operationally as we produced 186,941 gold equivalent ounces during the quarter. Sales were impacted slightly towards the end of the quarter by a now results strike at a port in Uruguay that deleted concentrate shipments from Puna. We reported gold equivalent sales of 176,299 ounces, for a total of $323 million in revenue for Q3. Year-to-date revenues now total $1.1 billion in 2021. We continue to deliver in all aspects of our business and are proud of the cash flow and returns that are generated as a result.

Attributable net income for the quarter was 57 million, or $0.27 cents per share, and adjusted attributable net income was 85 million, with adjusted attributable earnings per share of $0.40, demonstrating the continued strong operational performance, cost discipline and execution of the company's strategy.

In the first nine months of the year, attributable net income was 164 million, or $0.76 per share, and adjusted attributable net income was 288 million, or $1.33 per share.

On the right side of the slide, I'd like to provide some commentary on our reported $0.40 in adjusted earnings per share that is calculated based on our definition of adjusted attributable net income per share.

We start with our attributable net income of $0.27 per share, and then make adjustments to exclude the after-tax impacts of specific items that are not reflective of the company's ongoing operations. Each of those items is outlined in a waterfall chart on the right of this slide, with the largest of the adjustments for $0.12 related to the amortization of fair value bumps as a result of the adjustments to inventory and mineral properties at Çöpler at the time of acquisition.

Other adjustments include COVID-19 related costs, and forex adjustments, along with the associated tax impacts of those adjustments. Additionally, I'm excited to be able to provide some information on our lowered AISC guidance in the face of pervasive inflationary pressures to-date in 2021.

As noted earlier in the call, we have lowered our 2021 AISC to $1,000 $1,040 per gold equivalent ounce from $1,050 to $1,110 per gold equivalent ounces incorporating the strong operational performance, which has cash costs trending to the lower end of guidance. To-date, we've managed costs in the business as well as demonstrated through the Q3 AISC of $1,006 per ounce.

As we noted in our second quarter call and are reiterating again today, we have managed inflationary headwinds, in part through the continuous improvement practices that we have pushed forward since the closing of the merger in 2020. That work is ongoing within the business. And while it will continue into the future, we do anticipate that cost pressures for the U.S. and Canada will be higher, especially as we move forward into 2022. In some other jurisdictions, we benefit where inflation is largely offset by currency devaluation, and we expect this trend to continue.

Turning to Slide 10, we can talk about SSRs continued balance sheet strength. SSR Mining closed the quarter with 900 million in consolidated cash, with continued debt servicing quarterly dividend payments, and execution of our share repurchases bringing year-to-date capital returns to shareholders of more than 180 million. We remain well positioned to continue our capital allocation policy going forward, fully funding our portfolio of organic growth opportunities while maintaining our significant capital returns to shareholders.

Our net cash to EBITDA ratio has increased to 0.7x demonstrating our results and placing us in the top quartile of our peer group. Further our cash balance is 95% held in U.S. dollars.

On Slide 11, we can talk more about SSRs position as a free cash flow leader and our capital returns. Our continued operational outperformance translated to robust cash flows in Q3, including operating cash flows of 188 million and free cash flow of 129 million during the quarter. Year-to-date, we have generated free cash flow in excess of 300 million reinforcing our full year consensus free cash flow yield of 11% that remains well above our peers.

We have a line that free cash flow performance with our capital returns initiatives, returning nearly 150 million to shareholders through share repurchases, and an additional 33 million in year-to-date dividend payments. We are well on track to end 2021 with a capital returns yield of 5.8%, given we are closing Q3 with returns that already exceeds 5%.

As we look ahead into 2022, our capital allocation priorities include investing in growth, returning cash to shareholders, and maintaining balance sheet strength. The combination of our leading returns and significant free cash flow generation differentiates SSR Mining. We will continue to execute on our priorities, both financially and operationally as we move through the final quarter of 2021 while we also evaluate shareholder returns for 2022.

Lastly, before I turn the call over to Stew, I want to touch on another initiative for SSR Mining that will lead to changes in 2022.

Turning to Slide 12, effective as of January 1, 2022, SSR Mining will transition to U.S. GAAP reporting as a large accelerated filer under the SEC. As a result, our full year 2021 financial results will be released under U.S. GAAP requirements and will be reported along with restated 2019 and 2020 financial results. This transition will also include the restatement of existing technical reports under S-K 1300 requirements in addition to the current NI 43-101 reports. The updated Çöpler district master plan will be released under S-K 1300 requirements. And it's important to note that the S-K 1300. reports released from Marigold and Seabee will be followed by updated Master Plan technical reports at both assets later in 2022.

What that means is that while the Çöpler Technical Report will incorporate the totality of the exploration success up to the last release. The initial reports for CB and Marigold will not represent the full value drivers that we believe exists for the properties and updates will be forthcoming as the work is completed.

We expect this transition will improve our access to U.S. investors and view the change as an opportunity to strengthen our already robust shareholder base. A full review and analysis of the required changes to become an SEC filer remains ongoing and will be reported to the market as required.

Stew will now walk you through the operational highlights starting on Page 13.

[Stewart Beckman, Chief Operating Officer]

Thanks, Alison, and thanks Rod. I’m going to lead off with ESG.

Our sites continue to operate safely, each with bespoke COVID protocols tailored to their situation. Immunization rates at all of the sites are above that of their host communities, and in the 80s and 90s at Çöpler, Seabee and Puna that remain stubbornly low in the data.

Following the merger a year ago, we focused our immediate efforts on updating our ESG policies and building out our integrated ESG management and information systems in line with contemporary industry best practice. This along with good old fashioned line leadership is delivering good and improving results. As you know the work and effort in ESG space never eases as we expect and drive towards ever higher standards.

Our improved operational discipline is delivering results that exceeded our expectations for improvement with recordable injury frequency rates year-to-date that too, which is about 60% of improvement on our 2020 fingers. We strongly believe that driving and delivering better performance in ESG builds a stronger, more productive and profitable business.

Moving on to operations and growth, the third quarter continued performance trend from H1 with throughput records at all the mines and good cost control. We had reduced gold port at both Çöpler and Marigold for the quarter, but neither of these are the result of enduring issues. Marigold had a problem with the strip vessels, and so gold was held in inventory at the end of the quarter. And the delay in the EIA at Çöpler meant that the flotation plant commissioning was delayed.

We managed the things that are in our control and so all the sites are focused on operational excellence, which includes productivity improvement and cost control. These improvements are being built into our plans and budgets for 2022, helping to offset some of the inflationary pressures.

Moving on to the slides with Çöpler, on Slide 14. The Çöpler sulfide plant delivered another record quarterly throughput, all the major shutdowns are complete to 2021. The delay of the site plant negatively impacted on production but was partially offset by higher throughput rates, positive mine reconciliation and good mine planning to optimize sulfide ore presentation to the plant. The flotation plant construction and operational readiness activities were completed on time and on budget. As mentioned previously, we have received the EIA, made the applications for the local permits, and expect to receive these before the end of the year. The startup team is assembled and ready to go.

The flotation plant allows us to take advantage of the latent capacity in the sulfide plant and increased the overall plant throughput. It will also reduce reagent consumption and lower the unit cost of ore treated. Released exploration results Ardich in the quarter and these very good results will be incorporated into the updated Technical Report which we will issue in Q1 '22, which we will call a Çöpler district master plan 2022 abbreviated to CDMP 22.

Ardich will move to the reserved case and be the significant feature of CDMP 22. In the last Technical Report, the RSPA showed the potential to add about a million ounces of production starting 2023, exploration continues at Ardich and we expected the value of this project will continue to grow beyond what will be presented in CDMP 22.

The Board approved funding to progress Çöpler copper C2 order of magnitude study to a PEA level for inclusion into CDMP 22 Technical Report. This work aims to leverage off the considerable copper driven mineral value within and immediately adjacent to the reserve and resource shells that the current mine plan does not exploit.

We jump to Slide 15 for Marigold. Mine tons were another record for Marigold production was delayed by unscheduled maintenance issues that resulted in an increase of gold in the circuit. In particular repair work to the illusion vessels in the carbon stripping circuit increased the carbon -- the gold on carbon illusion vessels were repaired late in the quarter and the gold will be port from inventory in Q4. We also had some reduced flow rates on the heap leach, while some circulation blockages were cleaned, work to drill and equip dewatering bores continued and the water drawdown rates are looking pretty good.

This will provide access to higher grade ores from the Mackay pits later in 2022. Stripping of the five end pits to the north of the property continues and ore is starting to be accessed now. We plan to provide an exploration release for the Great Marigold property before the end of the year. Exploration is mostly focused around the existing pits and is ramping up a Trenton Canyon. Overall, we drilled just over 24,000 meters for the quarter.

As part of our SEC filings, we are required to provide an updated S-K 1300 technical report based on our existing resources early in 2022. Unfortunately, this does not provide time for the development of some of the prospects. So we will aim to deliver a subsequent more comprehensive technical report later in 2022. Marigold will have a strong quarter for finishing well within guidance.

Move on to Slide 16 for Seabee. Seabee continues to improve its performance in both ESG and production. In the quarter, we replaced some gears on the mills in a major plant shutdown. The Seabee operation is mind limited. As a result of the plant shutdown in the plant, the mine moved further ahead of the plant, adding to the plant feedstock call which we built in Q2 as a result of the higher grades in q2.

After the shutdown, we operated at almost 40% above the average annual processing rate a record monthly mill throughput, demonstrating the significant lightened capacity in the plant. With the plant taking fee from both the mine and the stockpile for the quarter, we expect the mill will be mostly unconstrained in Q4, and a record quarterly processing throughput. Underlying mine production metrics have also been steadily improving in Seabee. We have a positive view of the potential at Seabee and a beavering away on improving conditions for our team and on our production continuous improvement projects across the whole site. The Q2 unexpected very high grade zone or was at the edge of the resource model in the bottom of Santoy lower nine zone. Of course, we are exploring the area and working to regain access to mining operations which we are targeting for early next year.

We released an exploration update to Seabee during the quarter highlighting the potential of the greatest Seabee property, including Fisher 80:20 JV to the South. Drilling continues at Seabee Santoy and at the distill exploration sites of Mac North, Joker and Fisher. Our exploration team are aiming to hand over the Joker and Mac North this year to the resource development team to further design the resources to the extent needed to allow development. The exploration team then continue on generative work, and the long prioritized list of targets.

Like Marigold Seabee will be required to provide an updated S-K 1300 technical report based on our existing resources in early 2022, which will be followed by a subsequent and more comprehensive Seabee technical report later in 2022. We are also preparing an exploration release in this quarter for Amisk, our other active Saskatchewan exploration site.

Move to Slide 17 and we'll discuss Puna. Puna is settling into quarter-on-quarter delivery about 4,500 ton a day rate which was above our expectation when we started this year. Good production and cost control is keeping the AISC down. The changeover on a haulage from the mine to the plant started in April and the performance has been much better than expectation, helping to further reduce our operating costs.

Planning for Puna is now being redone assuming this better performance in the mine, higher throughput rates and lower cost base. Those parameters will form the basis of the S-K 1300, which will also be issued in February 2022. Aiming to extend the life of the operations, the exploration team has been at Puna reinterpreting and reanalyzing some of the targets and deposits around the current operations along with the Generative soil Geochem program.

Please move to Slide 18 for the explanation. I'm not going to repeat the commentary from the previous slides and just draw your attention to a couple of points. We have considerable portfolio of exploration targets in the Americas and Western Europe. We also have some small generative programs in North America and Turkey and remain opportunistic and receptive to imbalance. Since the merger, we've been improving our active management of the portfolio focusing on the higher probability and value opportunities and shedding the others.

New mine projects and targets close to installed infrastructure offer the fastest lowest cost development opportunities and are getting the lion's share of exploration effort, which you can see clearly around Çöpler, Marigold and Seabee. That said the concurrent greenfields exploration work is important as a pathway to step chains to business value by organically building out the portfolio of operating mines.

Drilling at Copper Hill in the Black Sea region of Turkey is delivering more encouraging results. In April 2020, we released exploration results for eight holes, a number of which had very clean high grade copper mineralization intercepts close to the surface, including 40 meters at 2.6% Copper. We aim to release this year's drill results within this quarter.

Wrapping up, it was another solid quarter for the business and the operations and growth teams. Thank you very much. And back to you, Rod.

[Rodney Antal, President and Chief Executive Officer]

Well, thank you, Stew and thank you, Alison.

So to summarize 2021 has been an impressive year, reiterating the strength of our business and our commitment to shareholder returns. Since the merger, we have delivered record productivity across the portfolio reinforcing SSR Mining's appeal as a leading mid-tier gold producer.

We have an exceptional portfolio organic growth opportunities and expect to provide additional exploration updates for the market through the remainder of the year. It is our belief that our strong free cash flow, leading capital returns and significant growth optionality will continue to be a key positive differentiator for SSR moving forward.

So with that, I will pass the line now to the operator to take any questions you may have.

[Operator]

Thank you, Mr. Antal. We will now begin the question-and-answer. [Operator Instructions] Your first question is from Tyler Langton with JPMorgan. Please go ahead.

[Tyler Langton, JPMorgan]

Maybe just to start, can you talk about the levels of inflation, that you're seeing now kind of what items are coming from? And then, for 2022, you mentioned that those pressures could accelerate a little bit, I guess, get a little bit more detail kind of to what level you kind of expect inflation to be at, and then negatively, if you still sort of have some room that's offset them with sort of the items like continuous improvement that are benefiting you now, and I guess it's more geared towards the U.S. and Canada.

[Alison White, Chief Financial Officer]

Yes, Tyler, thank you for the question. Certainly appreciate that. And we are definitely seeing some, I said Taylor, and I meant Tyler. So apologies. So anyhow, so to answer your question, primarily to focus on the U.S. and Canadian inflationary pressures that we've seen. Most of those, particularly in the Canadian market have come through as a result of some labor cost increases that we've seen within the business. And the offsets to those are coming from other areas within the business in terms of our continuous improvement activities that we have primarily in this supply chain area overall. And so we are anticipating, as I mentioned that in 2022, we will likely see some additional costs, or inflationary pressures, really, primarily in the supply chain area based on inputs for diesel and other large consumables that we use. And we will, continue to try and offset those in other areas where we can, but we are still working through what some of those offsets might look like for 2022.

[Tyler Langton, JPMorgan]

Perfect. And then, I guess second question is for Rod. You've kind of largely completed the share buyback, this as you kind of look forward, can you just talk about your thoughts and preferences for capital allocation in terms of returning cash to shareholders, sort of organic growth projects, M&A, just kind of how you're thinking about those right now?

[Rodney Antal, President and Chief Executive Officer]

Yes. Look, I think what we've been able to do this year is actually execute against what we said, which I think was an important placeholder for the company to do. There's too many times you've see capital returns promised in the form of share buybacks and never executed against them. I think what we've done this year is not only continue to pay our base dividend, but also execute against the share buyback program at the rate that you've seen release today. So I think that was an important sort of start for us as a business. Our approach to capital allocation holistically hasn't changed color in terms of the way we're going to approach it. It's a continuation of reinvesting in the business. Some of the exciting options as Stew outlined in the presentation around growth that we have within the portfolio around all of our assets actually, will continue to be a key focus for us, as well as one of the key areas where we'll have capital allocation put to. We'll continue to look at and evaluate supplementing our base dividend, which is set around that $0.20 per share per annum. And we'll look at the methods of supplementing that as the time comes around, so next year, as we were resetting, we'll have a look at whether it's a more of adding to the base dividends in terms of a dividend and/or a share buyback.

So we haven't set that yet but in principle that the framework hasn't changed and that's why we were very clear to put it out there as a holistic approach to capital allocation for SSR going forward. But it will feature part of it, we want to be seen as a company that can really do it all. Continue to invest in growth and return yield to our shareholders.

[Operator]

The next question comes from Cosmos Chiu with CIBC. Please go ahead.

[Cosmos Chiu, CIBC]

So Rod, Alison, Stew, and team and congrats on a very good Q3. Maybe my first question is on, as you talked about your silver portfolio, as you said, you've reviewed your silver portfolio and Puna is now core. I don't know how much you can share with us but what criteria are you using in terms of looking at your silver portfolio. And one asset that I get asked quite a bit of late in your sort of growth portfolio and on your silver side is Pitarilla, and I did a CTRL F on your MD&A? I couldn't I was kind of surprised I couldn't find Pitarilla. And could you maybe give us an update on that as well?

[Rodney Antal, President and Chief Executive Officer]

Because I think what was said from day one is across the portfolio, we'll continue to be very disciplined around the way that we'll manage the extensive holdings that we have. And, the first kind of rank for in that regard was obviously the South of the Royalty portfolio. We've made no secret of the fact that as we go through, even our expiration assets that we will remove things from the portfolio that don't belong and replace it as time goes on.

In terms of the silver assets, again, they were in the same category in that review and we look at a number of factors in terms of their longevity in the portfolio, do they belong? How do they contribute to the success of SSR? Do they contribute free cash flow, obviously, importantly, as well as any upside potential that might exist within the within the assets themselves? So having a look at Puna in particular, it's obviously clearly in right now, a cash harvesting mode. Many years of hard work have turned that asset around to where it is today. It's been a significant outperformance for us through the hard work of the team in 2021. And we do expect that to continue into 22 and beyond. So from that perspective, it's a valuable asset, it has meaningful cash contributions. And we like the full potential of what that asset might be for us.

When we look at other assets, like Pitarilla, as you mentioned, some of the other criteria that we look at is, new jurisdictions, taking a step out into new countries size, scale, fit and to the rest of the portfolio. And obviously, clearly Pitarilla is a new jurisdiction for us in Mexico. And size and scale is probably not of the type that we'd want to keep it into to the portfolio. So it’s a part of the review that we'll look at, is to understand whether there would be a number that we will be willing to part ways with that asset in the future. So and we'll continue to look at that. And if we have any more information as that process unfolds, and we'll obviously keep the market informed.

[Cosmos Chiu, CIBC]

Of course, that's great. Thanks, Rod. Maybe switching gears a little bit, as you mentioned, 2022 will be fairly busy in terms of technical reports, I think two sets each for Marigold and also Seabee. Likely, as you said, the first set will not incorporate some of the upside potential here. But how about the second set, more specifically, say at Marigold there's a lot of exploration potential. You have pointed out Trenton Canyon, you pointed out Buffalo Valley have pointed out the Millennium model. And Seabee, there's the Gap hanging wall. There's Fisher, there's Joker. At this point in time, like, do you know how much of that exploration upside could potentially be incorporated into your technical reports?

[StewartBeckman]

Okay. I'll answer that. Hi, Chiu. It’s Stew. Yes, so obviously, I can't quantify because that would be, I guess way too early. But I could give you an outline of what it is that we're looking to achieve. So at Marigold, we'll be looking to pull the materials around the Valmy Pit and the other operating pits where it's within the operating permitted areas into sort of the production as early as we can, and then stepping out to subsequent to that. That sort of the new Millennium and those areas that were drilling out providing some sort of indicative timeline of what we're trying to achieve there, where we can actually pull them in yet, but we'll be able to describe what we can.

And then out of Buffalo and -- Trenton Canyon and buffalo Valley. We're still looking at what levels of definition we've got across the resources. And the work that we've gotten, we're obviously out there drilling at the moment. Our ambition is to where we can pull some of it in sort of at a PFS level. And then, some of it may come in at PA, but certainly be able to describe what our plans are for the whole of the property. And the intent of the master development plans like we did at Çöpler sort of to map along with strategies out for the properties -- for all of the properties.

Unfortunately, given the timing of the SEC, we'll probably pull a few bits in where it's close to the existing resource and reserve type we normally would do on an annual basis, but we won't get the big chunks.

At Seabee, it will be to get the Gap Hanging Wall as much as possible into the reserves, where we haven't managed to do that already probably some extensions, where we're drilling it, the centroid nine, get the centroid hanging wall better defined and pull that in, and then be able to start to define the story down along down towards Fisher, so Joker and then into the top of Fisher and then some of the other deposits there. So we're pretty excited about that. We just won't get as much of the work done and completed by really at the end of this year to be able to get it into a technical report for publishing in the first month or two of next year. Does that help?

[Cosmos Chiu, CIBC]

Yes, for sure. It's been a while since I've been to Seabee Santoy. Can you remind me in terms of like Joker and some of those other exploration targets? Are they reachable from the current decline? Or do you need additional infrastructure here?

[StewartBeckman]

So, Joker looks like it's the extension sort of on that Santoy. So we are hoping to be able to access it from there. We might need to put a decline in further down. We are still pretty early. So we're still -- it's still exploration drilling, we haven't really done the resource definition drilling. Yep. So just, it's going to take us a little while to be able to answer that comprehensively.

And the other thing I would say about that, when you look at those results, we've only really drilled those down to about 200 meters and the experience in Santoy was that the grade went up at depth. So we hope that we see the same trend in Joker and Mac North, but it's going to take us a little while to find out whether that holds up or not.

[Cosmos Chiu, CIBC]

Great. And then maybe one last question saving the best for last, on accounting here. Alison as you mentioned, you're switching over to U.S. GAAP. Maybe it's too early at this point in time, but I'm trying to figure out what are some of the key differences use, IFRS, right now versus U.S. GAAP? And my understanding is that IFRS might be more flexible and more room for interpretation versus U.S. GAAP, which is more U.S. based. I think I seem to remember that IFRS is also more balance sheet focused, versus U.S. GAAP, which is more earnings focused. And so, I guess hopefully it doesn't take too long and to the level that you can, what are some of the key differences that we should be looking for?

[Alison White, Chief Financial Officer]

We are working through valuation right now to understand all the different implications. In general, as you look across IFRS in comparison to U.S. GAAP, three of the areas that we might see some of the biggest changes are in deferred stripping taxes, and then also in relation to some of the share-based compensation accounting. And so we don't yet have numbers on that. But when we do we'll be providing that out to everyone. At the same time and we sharing what that looks like. But at the end of the day, we've got a lot of work to do between now and when those financials go out. So we need a little bit more time to work through that at this point.

[StewartBeckman]

Just to finish it. You actually say like you're well versed on accounting standards anyway, so you might be in the wrong industry, but we'll as soon as we've got the clarity and Alison and the team have done the work. We'll come out and spend time with folks to take them through those changes -- whatever changes end up happening, just to make sure everyone's well aware of what they are and what they might be to ensure everyone's on the same page moving into 2022.

[Cosmos Chiu, CIBC]

For sure. And maybe just one quick follow up in terms of being SEC registrant, and then using U.S. GAAP, do you foresee any changes in terms of how you disclose, say, non-GAAP measures? I'm just wondering if there's additional restrictions on how you can present just say, adjusted earnings, production guidance, cost guidance or anything like that, or what do you anticipate that not being an issue?

[Alison White, Chief Financial Officer]

So, I do think that we're going to have to revisit all of those items as a part of the review. And we're currently again, just working through that right now.

[Operator]

The next question comes from Ovais Habib with Scotiabank.

[Ovais Habib, Scotiabank]

Thanks, operator. Hi, everyone in SSR team and congrats on a good quarter in receipt of the Joker EIA. Just a couple of questions from me, just starting off with the Joker EIA. Now that obviously includes the flotation circuit. Now, from what I understand you need some additional provincial permits to start commissioning of the flotation plant. Are you looking to get these permits in the next couple of weeks? And if so, would you like, would you look to start the plant in mid-Q4, or we should we expect to start up in early 2022?

[Stewart Beckman, Chief Operating Officer]

Yes. Hi, Ovais. It’s Stewart. So we applied for the permits immediately on getting the EIA. This is sort of pretty typical, you get your EIA, and then you have to apply to the local municipality to be able to operate your facility. They were on site last week, and we're expecting it imminently. And our team is there ready to go. So as soon as we get the permit, we will start and we expect to get it sometime in this quarter. We never know exactly because it's a permit with a municipality or in this case -- the local province.

[Ovais Habib, Scotiabank]

Thanks, Stewart. And in terms of the ramp up, how long are you looking at the ramp up of -- to get the plant commissioned?

[Stewart Beckman, Chief Operating Officer]

Yes, it'll be pretty quick. It's a very simple plant. So it's just a simple flotation plant. We've had lots of time to complete all the water testing and have it ready, ready to go. So, we do have, of course, when we put these in, and we had for the first quarter reduce to about 70% impact. And we're pretty confident it will come up quickly. But like always with commissioning, it's the thing that you don't expect that it always gives you a surprise. So we made allowances for those things.

[Ovais Habib, Scotiabank]

Sounds good. Good luck on that. So just moving on. So just on the production side, so year-to-date, you guys have produced approximately 583,000 gold equivalent ounces, essentially implying Q4 production, up 177,000 ounces to achieve the midpoint of guidance. Now, how should we look at Q4 compared to Q3, I mean, are you expecting similar quarter to Q3 and maybe if you could just give us some color on how you expect, the mines to go and operate in Q4.

[Stewart Beckman, Chief Operating Officer]

We don't normally break it down individually, but I'll just give you sort of in generic terms. So you know, we expect a good finish from Marigold given that we had what we had in [indiscernible] coming out. We've got Seabee has a clear run to the end of the period has stockpiles in front of the mill and whereas normally as mill limited waiting on the mind, it's not going to be waiting on the mine. So as I said earlier, we're expecting sort of production throughput there at Seabee and at Çöpler we will be commissioning the flotation circuit during the period and have benefited a little bit from some positive reconciliation in the mine and good work by the mine planning crew to mitigate a little bit the impact on the business. And then, Puna has been, as I said, it's really settled into this sort of around a 4500 ton of tire a little bit north of that production. And we would expect that to continue.

[Ovais Habib, Scotiabank]

Perfect. And thanks for the color on that Stewart. And just follow up to Cosmos's question on the tech reports on Seabee and Marigold. Now, I believe you're looking to release a three-year guidance in early 2022. I just want to be clear, I believe this guidance is looking to include the new Joker mine plant, but is it the plant to also include Marigold and Seabee plans as well, or technical reports as well?

[Stewart Beckman, Chief Operating Officer]

Yes. So we'll issue the guidance. We'll be issuing at about the same time or slightly later the technical reports and obviously those numbers for the first years again to align to each other.

[Rodney Antal, President and Chief Executive Officer]

So we're still on track for two or three-year guidance. And so yes, financial equation.

[Operator]

The next question comes from Michael Siperco with RBC Capital Markets.

[Michael Siperco, RBC Capital Markets]

Thanks very much, guys. So going back to the balance sheet and capital allocation, can you expand a bit about how you think about things going forward here, maybe aside from M&A? I mean, obviously, you've returned a lot of cash visibility into more subject to the buyback limits, but longer term, given the cash you should be generating? How are you thinking about deploying or managing it in a very fantastic problem to have I guess? So should we be thinking about a higher payout or paying down more debt? And does growing cash concern you at all from a capital efficiency perspective?

[Rodney Antal, President and Chief Executive Officer]

So I think it is, as you said, Michael, it's a fantastic problem we have. And I think, as we think about it, we don't look at it as a problem, we actually look at it as an opportunity. So the other business clearly within it has a number of newer informative growth opportunities in some of these things will require us to think about capital investments in the future, new mines, new territories, in fact, outside of our current districts surrounding the mine.

So there's clearly a portfolio that's starting to come to life here. And for us to ensure that we keep the integrity in the balance sheet to tackle those opportunities in the future is very important to us. The other thing that I'd say we will assess it on a yearly basis, like we always said, the framework set, the capital allocation strategy won't change will stay fairly consistent toward year-to-year, we may change the mix of what we do in terms of either it's more dividends or more share buybacks.

I mean, in some years, then we might actually pull back if we had a big capital allocation in front of us. We'll just go back to the base dividends. I think that flexibility within it's very important. And the only thing I will say, Alison might want to add something to what it is. I always remind folks, this is a cyclical business. And maintaining some balance sheet strength through cycles is very important to us. So while folks might say, well, you've got net cash, above $500 million now, is a more to come. Clearly, yes, with the free cash flow generation we have. But we also want to maintain that balance sheet strength, so we can survive through those cycles. And in some cases, there's sometimes the best time to look at other opportunities outside our current portfolio as well. So it's a very holistic approach. It's flexible and it provides us with an ability to shift and adapt.

[Michael Siperco, RBC Capital Markets]

Well, that's great. That's a good answer. Thanks. And maybe just one follow up for me, and maybe more philosophically, maybe too philosophically for a Wednesday afternoon, but in terms of the Kirkland Agnico transaction, and more consolidation at the top of the sector or in general how the sector continues to evolve. Can you talk a bit about how you position yourselves and differentiate yourself in the market and to investors or in fairness is whatever anyone else does completely irrelevant to you and the business plan?

[Rodney Antal, President and Chief Executive Officer]

Look, I don't think we can put it in the sand and ignore what's going on in the market. I think that'd be wrong. I think we've proven over a long time now that we are a dynamic group not only in terms of our operational performance, but the way that we think around strategy, and the way we execute against our strategy. I like to think in the other way, Michael, that we're actually probably one of the first ones to do with the merger of Alacer, SSR in a very meaningful way, when we bought the companies together with no value leakage to whether shareholder groups has probably paved the way for others, and one that you've just mentioned, clearly there's other folks thinking around the same. So, when our mindset is right, the industry does, maybe need consolidation. There are still too many stranded assets, single assets and too many management companies running smaller portfolios.

So, I think with that backdrop, I think there is clearly an opportunity there for industry consolidation. But I think it's really going to come down to what's right. And when you sit down and you put companies together on paper and look at them, and sometimes it doesn't make sense, because there is no strategy to what or the in might be outside of, what's core strategy from one company to another company going forward. Or indeed, there could be of the fact that, some folks are quite happy to keep on managing their businesses. So for us, it's on a -- we'll keep looking, we'll keep on reviewing them opportunities as they come along. And if anything, is interesting to us, I will obviously pursue it. But it's some of these strategic deals are much harder to do than say.

[Operator]

The next question comes from Mike Jalonen with Bank of America.

[Mike Jalonen, Bank of America]

I just had a question. This transition SEC reporter, I have been analyst for 34 years, I've actually I can't remember, for a covered company -- I've covered seen this done before. Does this mean SSR is going to be redomiciled as a U.S. Corporation?

[Rodney Antal, President and Chief Executive Officer]

No, it doesn't Jalonen. Look, I think it's simply a couple of things. There are tests that you have to run around retaining your FPI status or foreign private issuer status in the U.S., where your shareholder base is, where management -- where decisions are made. And clearly, there's coming a point for us with our U.S. shareholder base being plus 50%. And the fact that we know we've got the management team in the U.S., there's a point where we're probably going to fail that test. So part of that, for us was actually looking at as an opportunity for us to become a full issuer in terms of SEC and U.S. GAAP, that we can, actually probably service our U.S. investors better, and hopefully open up the market to us, for some of those U.S. investors who can't invest in companies that don't have, full issuer compliance. So, it might be unusual, but it doesn't mean we redomicile, it doesn't mean we lose our Canadian entity basis. It just means that we're going to be reporting under SEC rules as our primary focus.

[Mike Jalonen, Bank of America]

Okay. Maybe you're setting the template here for other Canadian gold producers to do the same thing. And just looks very interesting. So okay, well, thanks for that.

[Rodney Antal, President and Chief Executive Officer]

I agree with Jalonen. From our perspective, while there's obviously a heavy lift here and there's -- we have a lot of things that need to be done, as you can understand, and you heard us describe today. Having the opportunity for us to really tackle and get visibility into the U.S. investor market, with the fact that we've got this full compliance around U.S. GAAP and others is fantastic, actually. So we're actually looking forward to -- I think it is a real opportunity for us and our shareholders.

[Operator]

This concludes the question-and-answer session. I will now turn the call back to Mr. Antal.

[Rodney Antal, President and Chief Executive Officer]

Great. Thank you. Thanks everyone. Thanks for joining us today. Another solid quarter and look forward to the next update in the new year. Until then, thank you.