SSR Mining Inc

NASDAQ:SSRM

Earnings Call Transcript 2021-Q4

[Operator]

Hello, everyone and welcome to SSR Mining's Fourth Quarter 2021 Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference call over to Alex Hunchak from SSR Mining.

[Alex Hunchak]

Thank you, operator and hello everyone. Thank you for joining SSR Mining's fourth quarter 2021 conference call. During which we will provide an update on our business and a review of our financial performance. Beginning with the fourth quarter and annual 2021 financial results, our consolidated financial statements have been presented in accordance with U.S. GAAP. These statements, along with the comparative restated financial statements for the two years prior, 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 Stu Beckman, COO. Now, I would like to turn the call over to Rod for opening remarks.

[Rodney Antal, President & Chief Executive Officer]

Thanks Alex and hello to everyone and thanks for joining us today. We're going to take our time, as there is a lot of positive information that we are excited to share with you today. The highlights include; firstly, our record full-year production, lower costs and significant free cash flow generation. Second, our substantial organic growth opportunities within our portfolio have now delivered a 14% increase to our reserves which is a phenomenal success. Three, the publishing of our new technical reports which lay out an incredibly positive 700,000 ounce a year baseline for our business. And finally, our upcoming execution plans for the near-term growth opportunities which represent some of the highest returning projects in our sector. So, first starting off with our performance. 2021 which was our first year post-merger, allowed us to showcase the quality and resilience of our globally diversified asset base. We delivered nearly 800,000 ounces of production at the top-end in our guidance range, while our all-in sustaining costs of $955 an ounce, beat our previously lowered all-in sustaining cost guidance, bucking the inflationary trends. These results were a testament to our exceptional operational performance and proactive supply chain management and that our performance resulted in peer-leading 2021 free cash flow generation of $444 million or a 12% yield. As we have committed to our shareholders, this free cash flow has translated directly into capital returns and we distributed nearly $200 million to shareholders last year or about a 5% yield. Given the robust outlook for free cash flow generation for years to come, we will continue to deliver against our capital allocation strategy and the recently announced 40% base dividend increase is evidence of that commitment. Second, in addition to our full year results, we released our updated resource and reserve statements. They included an impressive reserve growth of 14% or 1.1 million ounces year-over-year. This was a direct result of our successful resource to reserve conversion at both Ardich and Seabee Gap Hanging Walls. This achievement is even more remarkable, given the cut-off -- for our technical reports did not give us the opportunity to incorporate much of the drilling that occurred last year. We now sit with over 10 million ounces in reserves with a weighted average mine life in excess of 17 years, anchored of course, by Copler's 22-plus year mine life. Third, as part of our transition to becoming an SEC issuer, we are obligated to issue the SK-1300 technical report summaries at all 4 of our operating assets. As I mentioned, while the timing was not ideal, given much of the positive drilling results in 2021 did not yet make it into the update, we're excited by the outcome of the new production base line for SSR. Together, the new technical reports have added more than 2.5 million ounces of gold production, over what was represented in the previous iterations. This means, our vision to sustain a production base of over 700,000 ounces of gold production for at least the next decade has just become a reality. Finally, on this point, we're excited by the prospect in improving this even further from the drill bit. The fourth highlight is in respect to our upcoming growth projects. As part of the Copler technical report update, we showcase both the maiden reserves and development plan to Cakmaktepe Extension, or Ardich, an initial resource and development plan at Copler Copper Gold Project, or C2. This report highlighted how the abundant growth opportunities at Copler can significantly add value and deliver high return, low capital intensity projects. Both Ardich and C2 will add at least 1 million ounces of production for modest capital investments. C2, for example, will provide us with 1 million ounces of production in it's initial iteration for about $220 million of capital and an impressive IRR of 60%, while Ardich will deliver 1.2 million ounces for about $70 million of capital. Overall, we had fantastic results across the board during 2021. Just moving on to slide 4 which is ESG and I want to reiterate our commitment to our ESG priorities and initiatives. But before we do, I want to take a minute to reflect on a sad loss of one of our team members in Argentina. On January 26, Melina Estrada passed away when the vehicle she was traveling in was washed off a river crossing on Highway 70, while on the way home from the mine site. The 3 other occupants of the vehicle were rescued but sadly, Melina was not. Actions were taken to prevent a repeat incident and to support her family and those who have been affected. Our thoughts have and continue to be with her family, friends and work colleagues. ESG has long been a core value of focus for SSR Mining, as it firmly underpins the success of our business. We are committed to the communities and to the environment and we continue to deliver against our priorities outlined in our 2020 sustainability report. We will review and refresh those priorities, as we move into 2022 and are finalizing an updated sustainability report for release in the coming months. Importantly, we continue to work towards our commitment to an action plan for achieving net zero greenhouse gas emissions by 2050. We take this commitment and have passed forward seriously and baking it into our project development cycle, ensuring the longevity and quality of our assets. Additionally, we have already started to enhance our disclosures on climate and water and disclosed for the first time to the carbon disclosure project. We are proud of our efforts to improve our approach to ESG and will continue to evolve as a sustainable business in the future. Then moving on to the next slide and our performance highlights. I just want to highlight a few that are relevant to consider for the quarter. Operationally, we had another strong quarter with more than 210,000 ounces of production at an all-in sustaining costs at $961 per ounce. Financially, we delivered adjusted EPS of $0.46 in the quarter. Our robust margins and low cost production translated to $149 million in free cash flow and $444 million for the full year. After $191 million in capital returns and our continued debt repayments, we maintained a net cash position of $681 million, providing us with the required flexibility to advance our large organic pipeline, while delivering continued capital returns in the future. We highlighted our growth portfolio with a number of positive exploration updates across the business and we continue our successful track record in accretive and strategic M&A transactions. We increased our presence in core jurisdictions, including the announcement of the acquisition of Taiga Gold in Saskatchewan and an increase in our ownership in the Copper Hill prospect in Turkey. Additionally, our portfolio rationalization continued and we realized over $235 million in total consideration through the sale of non-core assets, including our royalty portfolio and the recently announced sale of Pitarrilla project in Mexico. Moving on to the next slide; as we look to 2022, it's worth highlighting our impressive track record of growth and execution. In January, we released the inaugural 3-year guidance, that shows our strong production platform, where we expect to produce over 700,000 gold equivalent ounces annually through 2024. This is a level that we believe we can maintain over the longer time horizon, given the wealth of exploration and growth opportunities which Stu will discuss in greater detail and is supported by the suite and new technical reports we released today. Moving on to our outlook for 2022; I want to highlight some of the priorities for the business this year. We expect our stable production base and cost profile will allow us to generate significant free cash flow, while continuing to return capital to shareholders through our increased base dividend and share buybacks. As announced last month, our portfolio rationalization progressed with the sale of Pitarrilla and we continue to evaluate other opportunities to surface value within the portfolio. We've now completed the SEC transition, including the new technical reports that showcase our baseline production platform and we've budgeted a 45% increase in year-over-year exploration spend to further accelerate some of the growth opportunities. And on the cost front, we will continue with our continuous improvement efforts in supply chain management initiatives in order to limit the escalating impact of inflation. At the asset level, we continue to invest across the business in several high-growth opportunities; including breaking ground at Ardich later this year and advancing the C2 project towards prefeasibility study and ultimately targeting first production in 2025. Overall, we're in a fortunate position, with a plethora of exciting growth opportunities underway and on the horizon. As we look to improve even further the new baseline production profile contained in today's technical reports. A couple of highlights on the SK-1300s and we recognize there's a lot of information in the technical reports to digest. So I'll summarize some of the high-level details here and Stu's going to elaborate further in a few minutes. To start, we are proud to showcase the 14% year-on-year increase in gold mineral reserves, driven by maiden mineral reserve at Ardich Seabee's Gap Hanging Wall conversion. Our current total gold reserves are now more than 9 million ounces, while gold equivalent reserves increases to 10 million ounces. With respect to the technical reports, it's important to note that these documents are requirement of the SEC -- of all SEC issuers under the new SK-1300 regulations. While we had expected to release the new master plan for Copler around this time line, a lot of the exploration and study work at Seabee and Marigold in particular, was not yet advanced to a level to be included in these tech reports. At Copler, we have released production scenarios with both the reserve case mine plan as well as an initial assessment case of the C2 project which is similar to the PEA case for those used to this terminologies. The reserve case incorporates maiden reserves from Ardich, delivering a 21-year mine life with a total production with 4.4 million ounces of gold. This represents a 37% increase in life of mine production as compared to the CD MP20 reserve case, driven by Ardich which adds 1.2 million ounces in total production, starting in 2023 to just $69 million in development CapEx. On top of the reserve case, the initial assessment case outlines the potential development of the C2 project. SGN [ph] resource provides us the opportunity to further increase and extend the production profile, by adding a copper concentrator to the existing flow sheets, unlocking additional gold production from sulfide material. The initial assessment case showcases an overall 5.4 million ounces of gold production profile, with average production over 300,000 ounces per year in the first 10 years. With total CapEx of about $220 million, this production scenario drives a strong overall after-tax NPV of $2 billion and an internal rate of return of around 60% which I'm sure you will understand, are stunning returns. At Marigold, the life of mine planning includes 2.5 million ounces in total gold production over an 11-year mine life. We see opportunities to optimize the production profile in the near term, from targets like new Millennium as well as a potential further upside by incorporating exploration success at Buffalo Valley and Trenton Canyon. At Seabee, the mineral reserve production profile results in a 6-year mine life. In 2021, mineral reserves increased 18% year-over-year, driven by the conversion of the Gap Hanging Wall and we see further opportunities to add additional reserves alongside the current mine development to complement and extend future production profiles. At Puna, the tech report reflects the recent outperformance at the mine, including throughputs, nearly plus 4,500 tonnes per day. We are ramping up exploration activities, with opportunities to complement the existing production profile to in-pit drilling and targeting other brownfield opportunities. And finally, the key message is the combined technical reports establish a baseline production platform, where we see clear opportunity to deliver plus 700,000 ounces of gold equivalent production annually through 2020. However, we're not done yet and with the abundant growth targets in all 4 operations progressing, we're excited about the ability to build on this incredible result today. So with that, I'm going to turn the call over to Alison, who is going to discuss the financial performance more on slide number 9.

[Alison White]

Thanks, Rod and hello, everyone. It's incredibly exciting to comment on another positive financial quarter for the business, as shown on slide 9. I'd like to preface this slide with the fact, that this is the first time SSR reported results under U.S. GAAP which is the basis of the accounting for the numbers shown here. I also want to take a minute to thank our team members for what was a major undertaking over the last month. This was an incredible effort across the business and involves almost every function in the company to get us where we are today, filed for the first time as an SEC large accelerated filer. As we take our first look at the U.S. GAAP results, Q4 was another solid quarter operationally for the company. We produced over 211,000 gold equivalent ounces and had gold equivalent sales of over 218,000 ounces, for a total of $408 million in revenue for Q4, bringing total 2021 revenues to over $1.4 billion. Attributable net income for the quarter was $127 million or $0.60 per basic share and adjusted attributable net income was $98 million or $0.46 per basic share. For the full year, attributable net income was $368 million or $1.70 per share and adjusted attributable net income was $402 million or $1.86 per share. As Rod highlighted, 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, including $609 million in operating cash flow and $444 million in free cash flow during 2021, equivalent to a peer-leading 12% free cash flow yield. On the right side of the slide, I'd like to provide you some commentary on our reported $0.46 in adjusted earnings per share, that are calculated based on the company's definition of adjusted attributable net income per share. We start with our attributable net income of $0.60 per share and then make adjustments to exclude the after-tax impact of specific items that are not reflective of the company's ongoing operations. Each of those items is outlined in the waterfall chart on the right of the slide, with the largest of the adjustment for $0.28, primarily related to the removal of the FX impact on non-monetary assets for the purchase price adjustment recorded as a result of the Alacer transaction. We will get into more details of this on the next slide, as it's a new adjustment as a result of the U.S. GAAP conversion. The remaining material adjustment is one you've seen before for $0.14 due to the fair value adjustment for inventory assets at Copler. This adjustment will not continue in 2022. The smaller adjustments are for COVID related costs, other tax impacts and transaction or integration expenses. Turning to Slide 10, we can talk about SSR's SEC transition. Effective as of January 1st, 2022, SSR Mining transitioned to U.S. GAAP reporting as a large accelerated filer under the SEC. As a result, our full year 2021 financial results were released under U.S. GAAP and were reported along with restated 2019 and 2020 financial results. On this slide, we have highlighted some of the more material changes to our financial reporting, as a result of the U.S. GAAP transition. As we have spoken about previously, our underlying business remains the same. Our basis of accounting has changed and overall, despite performing a very thorough analysis of the details underlying the business that make up our financial position and evaluating the accounting positions necessary to complete the transition, we only have a few material adjustments to highlight. A few key points to consider that are also listed on this slide. First, the equity component of convertible debt is reclassified from equity to debt and is amortized under U.S. GAAP. Under U.S. GAAP, changes in the fair value of marketable securities are reclassified from other comprehensive income to net income. This is adjusted out of adjusted attributable net income. Our reclamation and closure cost assets and liabilities have been updated to reflect the use of the company's specific discount rate under U.S. GAAP and the concept of tranche layering required to complete the discounting analysis. This results in lower liability, lower depreciation of the asset retirement assets but higher accretion expense. The net impact to the income statement for the higher accretion and lower depreciation is not expected to be material. U.S. GAAP does not allow for the write-up of impaired assets. Prior to 2019, under IFRS, the Pirquitas mill at Puna that had previously been impaired, was written up when the Chinchillas mine presented an opportunity to extend the mill's operating life. This subsequent write-up has been reversed under U.S. GAAP to reflect the original impairment. U.S. GAAP also removes foreign exchange impact on deferred taxes. However, under U.S. GAAP in the functional currency, such as the U.S. dollar, is not the local currency or the Lira in Turkey, remeasurement of nonmonetary assets and liabilities is required. For example, purchase price accounting for mineral properties and equipment of approximately $1.2 billion which was the adjustment created at the time of the Alacer acquisition, is considered a nonmonetary asset that is remeasured, resulting in a book basis, deferred tax liability that will never be deducted for tax purposes. This item is adjusted out of the adjusted attributable net income, as it is only a book entry for foreign exchange on nonmonetary assets. Deferred stripping is no longer capitalized and instead, is expensed through production costs which increases cash costs and holds AASC relatively steady, dependent on gold prices and the total inventory value. Finally, based on the U.S. GAAP conversion, we have removed the GAAP-related impact attributable to the 20% non-controlling interest in Turkey. Overall, the changes associated with U.S. GAAP regulations do not impact our underlying business and outside of deferred stripping, are largely immaterial, with respect to analysts' estimates and forecasts. On Slide 11, we can talk about SSR's continued balance sheet strength. At the end of 2021, the company had cash and cash equivalent balance of over $1 billion, after returning over $191 million to shareholders and $70 million in debt repayments that occurred during 2021. 96% of that cash balance is held in U.S. dollars. We remain well positioned to continue our capital allocation policy going forward, fully funding our portfolio, focused on additional explorations and growth opportunities, that align with our business. We continue to maintain a peer-leading net cash to EBITDA ratio of 1.1 and the magnitude of our capital returns that's illustrated on slide 12. We've returned more than $190 million to shareholders through the inaugural 2021 share repurchase program and our base dividend payment in 2021, yielding capital returns of more than 5%. As we have noted, our continued operational outperformance translated to robust cash flows in 2021 and we clearly aligned that free cash flow performance with our capital return initiatives. With our inaugural 3-year guidance announced in January, we illustrated a strong production profile. Our Board declared a dividend which increased our base dividend by 40% to $0.28 per share annually, furthering our commitment of significant capital returns to our shareholders. As we continue through 2022 and look beyond, our capital allocation priorities remain; investing in growth, maintaining balance sheet strength and returning cash to shareholders. We will continue to be disciplined, when executing on our priorities, both financially and operationally, as we move through 2022. And now I'm going to turn it over to Stu for an operational update.

[Stewart Beckman]

Thank you very much, Alison. Before I dive into the detail, let me just comment on our composite production profile from the technical reports on Slide 13. It is just the next step and a great foundation for us to leverage from. Remember that this slide includes C2 but does not include any production upside from our extensive near-mine and in-mine exploration portfolio. This year, we've made a considerable commitment to increase our organic growth spend, to make sure that we can define and show what we believe to be a much longer, stronger future production profile. I'll share my positivity with you, as we work through the slides for each of the properties. Let's start the discussion with Copler on Slide 14. We started building the Copler District masterplan a number of years ago, to help direct and focus this strategic mine development. We published CDNP 20 in November 2020, outlining Ardich as the PEA case, with an intent to convert it to a feasibility level reserve in the following year's technical report. As promised, in this year's CDMP21 report, Ardich added 1.6 million ounces of reserves and 1.2 million ounces to our production profile which was even better than the case that we laid out in the PEA. The production and development group and the Copler team, have been busy with permitting and preparations and we plan to start work on the ground later this year. The cost of the project is very low, limited to infrastructure work and expansion of the Copler heap leach. The order of Ardich will be trucked to Copler for treatment. We are still exploring at Ardich and it is still open. Based on the ongoing drilling, we expect that the resource and reserve will continue to grow. We also have some ideas and studies underway, on how to extract more value from the deposit by improving recoveries, so there is still more value to be expected to come from Ardich. Additional to the success at Ardich, we have showcased an initial assessment or PA case, with a first look at the next development of the Copler deposit C2 projects. I'm going to take a minute to describe the C2 project. Copler has a large amount of copper in the deposit, both in and surrounding the resource and reserve. In the past, this copper was assigned little or no economic value. After some successful drilling and metallurgical test work, we changed the paradigm and relooked at the mine, assuming that we could leverage value from the copper. The outcome of this study was the highly accretive food project outlined in the initial assessment case. In the initial assessment case, we added a small 1.8 million tonne per annum copper concentrate to Copler. This will make both a gold-rich copper concentrate for sale to the smelters and a gold-rich pyrite concentrate which we will use as supplemental fuel and gold fee into the autoclaves. We are also adding a copper recovery circuit within the sulfide plant that will make the copper concentrate for sale. Adding the copper concentrator and sulfide copper recovery circuit has 2 big impacts, the first and really obvious one, is that it adds direct value from the copper and gold recovered from a -- from the copper gold ore, as copper concentrates. And secondly, the extra value from the copper allows us to make a much bigger pit. As we dig this bigger pit, we uncover a lot more sulfide and oxide gold ore, to feed the existing oxide and sulfide gold plants, giving a longer life and higher production from these plants. The C2 project is being accelerated into feasibility study. We expect to leverage more value out of the project, as we optimize the metallurgy and the mine scheduling. Copler is a fantastic asset and in addition to Ardich and C2 upside outlined in the technical report, Copler and the Copler District has a number of exciting and active exploration targets. Let's get to Marigold on Slide 15; given the accelerated filing of the technical report, the recently announced exploration results at Marigold were not ready for inclusion. Marigold still delivered a strong base technical report, with a couple of poignant features. As we mine out the existing high-grade areas, there is a dip in production, especially in about 2026 and '27, before Red Dot comes into production with a big jump in production in 2028. Much of the recent and ongoing exploration you saw in our December release is aimed at drilling the production date 2024 through 2027, especially the near mine exploration within the existing plan of operation and the current application to extend Valmy, including much of the new Millennium exploration. In the longer term, we have extensive targets at Marigold, including Trenton Canyon and Buffalo Valley which we do have some historic permitting which may make them easier to accelerate. Most of our exploration is focused on delivering high-grade oxide ores which provide the lowest cost, easier development pathways. However, we have had some really interesting sulfide intercepts at Marigold, for example, most recently at Trenton Canyon and have a hypothesis on a potential for significant sulfide deposits. Given this potential and the company's skillset with building plants and treating refractory sulfidic ores, we do maintain some exploration effort on the sulfide ore targets. This year, we'll see significant increase in funding for exploration and resource at Marigold, of about 20%. Please move to Slide 16 and we'll discuss Seabee. A couple of key takeaways from the technical report, it more than doubles the life of Seabee. We had record production in 2021 of 119,000 ounces at Seabee and are budgeting for '22 and '23 to be successive record years. Both of these years will be over 120,000 kilo ounces -- 120,000 ounces, the new normal for Seabee. While the technical report schedules the production to drop off in years '24 and on, we expect to add higher grade ore from Santoy 8 and 9, the current source of high-grade ore to the production profile in the later years. Santoy 9, for example, delivered some wonderful upside production surprises in 2021, continuing into this year, as a great reminder of the potential for in-mine exploration. We are increasing exploration and resource development drilling at Seabee by more than 20%, to make sure that we maintain the current production profile at this new normal. Additionally, we have managed to achieve good production performance improvements at Seabee and are baking those into the plan. Even with those improvements, we still have excess capacity at the mill which we can take advantage on, by building production rates in the mine. So the operation is well positioned to leverage up production on the back of exploration success in the mine and at very little cost. Outside of the active mining area, the Seabee district has a spectacular endowment of exploration targets at various stages of evaluation. We have a multiyear exploration strategy that incorporates the Tiger Holdings. Our focus is primarily on near-mine low-cost development, with a modest spend still going to generative and target evaluation. One area that is bubbling to the top of our list right now, is the Shane target which sits just off the Haulage Road close to the Seabee plant. You will hear more about Shane through the year. Please move to Slide 17 and I'll give a brief update on Puna. Puna delivered a solid base technical report which assumes the recently demonstrated improved mill performance of 4,500 tonnes per day. In 2021, we were busy at Puna, revisiting the exploration database some extensive field geochemical sampling and relogging and reassaying some of the historic drill core. We have some very good targets and we'll start drill testing imminently. First, within and adjacent to the Chinchillas pit, we think that there is good opportunity for expansion of the resource and we'll start drilling soon. After reassaying some of the Cortaderas drill core, we have some hypothesis on potential extension of the deposit and value. As with the depleted San Miguel pit, we are seeing gold starting to develop at depth in addition to the silver and zinc. The geo is busy developing a drill program that tests possible extension and value proposition. We also have some regional targets that came from last year's work and we will put some effort into developing these as well. Please move to Slide 18 for close; SSR has a very high-quality and extensive exploration portfolio which we are aiming to leverage value in a structured manner. As we did with the Copler district masterplan, we are strengthening strategic mine planning and charting pathways to a growing and long-term production profile. In closing, 2021 was a great year for the operations and development teams at SSR. We cared for our communities and teammates through another tough year of the pandemic. We delivered improved ESG performance, more than halving our total recordable injury frequency rate and improved our ESG reporting which was recognized by improved ESG ratings. The results, as always, from this improved ESG and operational discipline, comes better production performance -- better production performance and in 2021, we delivered the top end of guidance in a merger year, on the back of a lot of work, bucked the industry trend and managed to keep the costs down below guidance, grew our resources and reserves and delivered a number of highly accretive projects for the business which you can see showcased in our technical reports. We have a great team, great exploration portfolio, you can see on this slide and a solid base which we'll continue to develop and leverage value from. With that, I'll turn the call back to Rod for his closing remarks.

[Rodney Antal, President & Chief Executive Officer]

Well, thanks, Stu and Allison. Definitely a lot to get through today. To summarize, 2021 was a year of outperformance for SSR with respect to our operating results, our free cash flow generation, our capital returns and, of course, the outstanding results from growth. In today's technical reports, we have now delivered a robust baseline production profile, with a clear opportunity to sustain our 700,000 ounces of production profile into the next decade. We'll continue to build on that base in the near and medium term. 2022 will be another year of strength for our business, including continued robust capital returns and free cash flow generation. With a robust portfolio of organic growth opportunities, we expect our expanded exploration budget to help further identify and delineate an even brighter future that we've outlined today. So with that, I'm going to pass the call back to Eileen to take any questions you may have.

[Operator]

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

[Tyler Langton, J.P. Morgan]

Yes, good evening, Rod. Thanks for taking my question. I guess Stu, just to start, I guess, with Copler -- for Ardich, I think you're kind of talking about production starting in 2023. Could you just provide a little more info on sort of -- if you need certain permits or other items to kind of -- to hit that production date? And then with C2, I think you said the next step was maybe a PFS and I'm just kind of wondering, sort of the timing that you're expecting for that?

[Stewart Beckman]

Okay, this is Stewart. I'll answer that. So we've been permitting Ardich for some time. And you may remember, if you've been on some of these calls, about half of Ardich was covered by the Cakmaktepe EIA which is why in a lot of the documentation and you'll see it called the Cakmaktepe extension. So the application for the extension for Cakmaktepe, the first stage of Cakmak for the start of pits is in process and we're expecting to see that come out in the next couple of months. And then we'll have a number of local earnings that come on the back of that. At this stage, we see our way to having those permitted to allow us to start work in the fourth quarter of this year and then progressing in line with what you see in the technical report. And as always, with the permitting, there's a series of subsequent permits that come about. We're riding the scope of work for the feasibility study for C2 now. We do have work, obviously, ongoing that came out of the order of magnitude of scoping study work that we were doing through last year, that's ongoing. And we're at the stage now -- we did use Senko [ph] to do the capital cost estimates and then we factor those based on the numbers that we had from the recent construction of both the Float plant and the CEC treat plant. So we think that we've got pretty solid numbers there. And we're at the stage now for a much more detailed scheduling and engineering work which we expect to have approved at the beginning of April and start work in earnest, directly after that.

[Tyler Langton, J.P. Morgan]

Great, that's helpful. Thanks. And then I guess just on sort of capital returns, Rod. I mean I know the dividend recently the increase in the dividend. Just any thoughts on buybacks? And then, obviously, last year, you had a fair number of noncore asset sales. Is there anything else that you're potentially looking at, or have you kind of divested mostly what you wanted to?

[Rodney Antal, President & Chief Executive Officer]

I'll answer the second part, Tyler, I'll let Alison answer the first question. So from the portfolio review process, it's still ongoing and we are looking within, just to make sure that there's obviously -- the obvious targets that you could ask about, like San Luis and others. But we're also taking that same discipline across the exploration portfolio. So we're land rich. We have a lot of land around our asset bases and we sort of continue to churn through that, where the hypothesis might not [indiscernible] in terms of our exploration efforts and we'll turn those over and replace those as well. So that churn will continue, it's a normal course of business for us as 2022 rolls on. But we did do a heavy lift in '21, so I think the sort of larger scale opportunities have pretty much been done now.

[Alison White]

And Tyler, I'll answer the first part of that on the share buyback plan. So you may recall earlier in 2021, we announced a plan to be able to repurchase 10 million shares and we still have about 1.2 million shares outstanding on that plan. And our intention is to execute against it, as long as it would be accretive for us to do so. So we will take a look at what that valuation constitutes and act accordingly.

[Tyler Langton, J.P. Morgan]

Great. Thanks so much.

[Alison White]

Thank you.

[Operator]

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

[Cosmos Chiu, CIBC]

Thanks, Rod and team. Maybe my first question is on Copler and the growth potential here. As you talked about, the copper rich ore will allow you to open up the pit. How much of that potentially additional sulfide and oxide material have you included in your technical report today?

[Stewart Beckman]

So Cosmos, all of the material that's mined that's above the cut-off grade for feeding to the plants, when we've made the larger pit, is included in the feed to the plant. So the value of C2, although the copper drove us to be able to make the bigger pit, most of the value comes from gold. And in fact, the concentrates that we make from the from the concentrator runs about 2 ounces. So it's predominantly a gold concentrate as far as our read [ph] goes.

[Cosmos Chiu, CIBC]

Great. And then...

[Rodney Antal, President & Chief Executive Officer]

I think -- you can go ahead, Cosmos.

[Cosmos Chiu, CIBC]

Okay. Yes. And I just want to follow up on the CapEx here, $218 million at C2. You have a very good track record in terms of delivering on budget and on time. But I'm just wondering how much inflation have you factored into your CapEx estimates. Stu, you kind of touched on it but I just want to get a bit more granularity on it, in terms of how have you factored that in? There has also been volatility in the Turkish lira, how have we accounted for that potential risk, as you come up with these CapEx numbers?

[Stewart Beckman]

Yes. So remember, this is an initial assessment case. So the -- so the estimate is sort of a plus or minus 50% estimate. However, I would say we've got a pretty good handle on what the costs are. We just finished building the flotation plant. So concrete steel costs, particularly those which we can source locally in Turkey, it's a very cost efficient place to build things. We did have, as I said, Senko [ph] supported us with the engineering work and then we factored that with good factoring numbers. So as far as an estimate goes, it's a good estimate, a really solid estimate for a project at this stage. But we do have a lot of work to do. I think there's actually quite a lot of opportunity for what we end up with ultimately in the plant and how we might be able to leverage value out of the plant going forward. We've been looking at whether or not we would be -- get a significant advantage by bringing Ardich and some of the high-grade Ardich ores, the oxide ores and treating those through the sulfide plant, either just grinding or augmenting them with sulfide to increase the recoveries and leveraging quite a lot of value out of that. But that's quite a large exercise and scheduling which will happen subsequent to this piece of work. So I think there's a lot more to come from it yet, Cosmos.

[Cosmos Chiu, CIBC]

No, it's great that you brought it up, because that kind of connects well to my next question in terms of leveraging the infrastructure, the copper concentrate. And as you mentioned, you've increased your ownership at Copper Hill. Things like that, is that -- was that taken into consideration as well? Could you leverage that later on down the road in terms of some of these other sort of copper, richer areas?

[Stewart Beckman]

No. There will be tough synergies from the business, of course. But the distance between the operations is going to preclude us sort of moving any of the material around. And with Copper Hill, what we see at Copper Hill is a very clean chalcopyrite ore, that's really just chalcopyrite. And it's close to the coast and it's actually very close to the smelter. So we'll move a little bit there. Copler is also blessed with sort of amazing infrastructure as well. So you might remember when you were there, we have a railway directly underneath the mine which sits right next to the hydroelectric power stations on the other side of the highway. So as far as the infrastructure for building a copper concentrate could be in a better place. A little bit more flatground would have been handy.

[Cosmos Chiu, CIBC]

For sure. Maybe moving on to Marigold. As you mentioned, today's technical report was really just a base case, just based on reserves. Could you remind us, as you showed on the map, there's quite a few targets here, New Millennium, Buffalo Valley, Trenton Canyon and Valmy, just to name a few. What has been included in this base case? And what can we expect in terms of what's being included in the, I believe, another technical report may be coming out later on this year?

[Stewart Beckman]

So pretty much the reserves as they were, all that's remained at Marigold, so just the existing deposits. The areas that we're looking to leverage going forward, are the areas around the existing pits. And remember, we also have an application in -- for an extension to Valmy and that the extension to Valmy was done at a much larger pit shell, with regards to the application. So it takes in pretty much all of the New Millennium and that will pretty much make it into that new pit. So we're busy focusing on drilling out that area, so that in the next year or so, we'll be able to include that into the reserve and then show that value and fill that gap, that I referred to, in the production profile before we get to Seabee -- not Seabee, to Red Dot.

[Cosmos Chiu, CIBC]

Maybe one last question, just a follow-up here. I read in the MD&A that there's a potential for separate infrastructure for Buffalo Valley and Trenton Canyon. Maybe could you elaborate on that? Is that just getting it to a bigger size, or are you alluding to potentially for the sulfides? Could you elaborate a little bit?

[Stewart Beckman]

One of the opportunities that has come up to really drive some efficiency and maybe some significant rescheduling at Marigold would be, to build a heap leach at the southern end of the property, where the current pits are and reduce the haul and then be able to use that also for Buffalo Valley and also for the southern pits from the existing Marigold deposits. And that we would take the carbon from there and then take it up to the existing desorption circuit. So we're just running through that at the moment but we think that we might able us squeeze some real value out of Marigold by doing that. But we haven't done enough work yet, to really wrap our arms around what it might be worth.

[Cosmos Chiu, CIBC]

Great. Thanks Stu and Rod and team and once again and looking forward to all these different growth opportunities.

[Stewart Beckman]

Thanks, Cosmos.

[Operator]

The next question is from Ovais Habib with Scotiabank. Please go ahead.

[Ovais Habib, Scotiabank]

Thanks, operator. Hi, Rod and SSR team and congrats on a strong quarter and really thanks for updating all the mine plans, with all the tech reports that you released today. Most of my questions have been answered but maybe a bit of a follow-up question from last question asked by Cosmos. In regards to tech reports released today, you pointed out that these are all base case scenarios and do not include drilling that took place in 2021. Now based on the endpoint and your exploration team's expectations which operating asset do you see the most potential upside in the near term?

[Stewart Beckman]

That's a difficult question. There was some inclusion. So for us, for example, the cut-off date was sort of at the end of May, beginning of June for the drilling. And we had about, I think, a subsequent 104 holes there. So I think Ardich will continue to grow. We're sure that we're going to see growth around the existing pits at Marigold. So we'll leverage that over time. We're really excited about what's in Seabee. And I think when you look at the numbers at Seabee, sort of Seabee's high production rate than a step off, we're quite sure that we'll be able to fill that, as we've been able to do with the extensions on Santoy 8 and 9, extending those laterally from where the mine currently is. And given that we do have so much headboard free capacity in the mill, then we can put the slightly lower grade, 5 or 6 grams lower grade at Seabee. We will use that to top up, where we've got spare capacity in the mine. Ultimately, in the future and there's a long way to go to get there, we'd like to see maybe another decline at Seabee, an all-weather road and a material increase, that's perfectly conceivable at Seabee. But we've got a lot of work to do and a bit of exploration like to go with it as well. But indications are good.

[Rodney Antal, President & Chief Executive Officer]

Yes. I think you can take [indiscernible] when you look at it, it's across the across the portfolio, they're different but they're all just as exciting as each other, as we work through. I think what Stu's outlined here and what the team have done, during 2021 has just been terrific in terms of prioritizing and being very methodical and thoughtful in the way we've approached it. That's going to continue into this year and if we have time and obviously success, you can see what we can do -- if we have the focus on the right areas and we do expect that to come from the rest of the portfolio as Copler did, so.

[Stewart Beckman]

I think you should start to get excited about Copper Hill at some point, too. If you look at the drilling assets we have there and that it's open around, it's a nice high-grade copper deposit, relatively easy, looks like it will be easy to treat at daylights; so relatively easy access. So we're hoping we can develop that site pretty quickly as well. But that will rely on getting access to drill.

[Ovais Habib, Scotiabank]

Perfect. Thanks for that. And just a follow-up on that. I mean, obviously, we've talked about all this offsite, apparent in your current portfolio. Any thoughts on M&A? Any thoughts on projects that you're looking at, extensions to your existing assets or anything that's out in the market?

[Rodney Antal, President & Chief Executive Officer]

Look Ovais, it's the same issue, as I think we've always given as -- we'll be thoughtful. We will look at opportunities. We won't stop looking at opportunities that aren't in our portfolio, that would stay on strategy for us to ensure they sort of complement the great asset base we have but also the great fundamentals of the business that we've built and we'll progress them. And the less we talk about them and obviously not interesting to us and we're not talking about a lot. So there's really nothing else to talk about at this stage. But we will look into it.

[Ovais Habib, Scotiabank]

Okay, perfect. Thanks Rod, thanks Stu for this and that's all for me.

[Rodney Antal, President & Chief Executive Officer]

All right. Thank you.

[Operator]

The next question is from Mike Parkin with National Bank Financial. Please go ahead.

[Mike Parkin, National Bank Financial]

Hey, guys. Really, everything has kind of been asked but just in terms of the exploration work that you're doing at Trenton Canyon and Buffalo Valley, can you give us and kind of walk us through -- you've given us some pretty good information in terms of what you're thinking. But how can we kind of think in terms of updates beyond exploration updates -- like where do you kind of target seeing resources starting to kind of come together there, if drill programs kind of continue to show success?

[Stewart Beckman]

I think that will probably become more clear through this year -- probably into next year. Buffalo Valley is -- we did do a sort of a lot of geochemical work, making sure that we were -- that we haven't missed anything. We were looking in the right places and using some different techniques. We have been drilling to extend the known resource that's there. We're also seeing some interesting things at Trenton Canyon and we're seeing a bit more sort of narrow vein high-grade material there compared to sort of the larger placements of low grade that we see in other parts. And that would be sort of consistent with the way it was mined in the past as well which was relatively narrower compared to the way we mine that now. So we do have a bit more work to do, before we come out with sort of a clear development pathway there...

[Mike Parkin, National Bank Financial]

Okay. And do you have access to the historical drill core, that the legacy pits were based on?

[Stewart Beckman]

Yes. So all of that data was handed over. As is the case when these things happen, a lot of those are quite old. So I wouldn't say that's perfect. But we do have all the delta.

[Mike Parkin, National Bank Financial]

From my understanding, it was kind of done on a smaller scale, smaller benches, so cut-off grade is probably elevated. So do you see potential that some of that data could be kind of low-hanging fruit for you, that you probably, I guess -- maybe just given the age of it, look to confirm with some holes but is that some of your thoughts that maybe low grade but actually very good in terms of what you mine at Marigold today and make lots of cash doing on a bigger scale?

[Stewart Beckman]

Yes. Well, I think if you're thinking about that, we'd probably think more about outflow value. We do get some anomalies in that part of the world with the drilling, because when it was done, certainly, we see this as at Trenton Canyon when it was done some time ago, where the grade was below the cut-off, the grades weren't reported in some of the data sets, it was just reported as no report. So we've got the going back and redoing analysis of some of those samples. And that's -- that, in part, drives the drill plans that we're putting together for those projects.

[Mike Parkin, National Bank Financial]

Okay. And just last question. We're seeing some tightness in drill crew availability in -- mostly Canada. Are you seeing any of that kind of constraint in Turkey or in Nevada?

[Stewart Beckman]

We're doing okay. We've got all of what we want in Turkey. Certainly, the laboratories are struggling. Jim, the manager in Nevada has managed to secure the drills he needs for this year but it wasn't easy on health. So we have seen that there is some tightness there.

[Mike Parkin, National Bank Financial]

That's it for me, guys. Thanks very much and looking forward to our next years.

[Rodney Antal, President & Chief Executive Officer]

Yes, sir.

[Operator]

Our final question is from Michael Siperco with RBC Capital Markets. Please go ahead.

[Michael Siperco, RBC Capital Markets]

Thanks very much and thanks for staying late for me here. Maybe just looking at the 3-year guidance. Obviously, you had a great year in 2021 and almost at that $800,000 mark but the outlook is lower over the next couple of years. Understandably, on sequencing things you've discussed. How concerned are you about that lower headline production number? And are there any levers you can pull maybe in '23 or '24? Is an 800,000-ounce a year possible from the base you've established, or are you fussed about it at all?

[Stewart Beckman]

Look, Michael, I think it's really just a consequence of the mine sequencing that we have. And particularly, at Copler, if you look at the aggregation of all the operations. We had telegraphed in the last tech reports, the Life of Mine production profiles for it and it does take a step down, while we bring Cakmaktepe online. So it's as expected and no, we're not worried about it. Our job has really been focused on creating a longer-dated future and trying to set that next decade out, where we can sustain at least 700,000 ounces and give ourselves a very stable plate form. If it goes to 750,000 and then 800,000 and down to 750,000, we're okay with that as well and our priority has really been around targeting a 10-year plus 700,000 ounce production profile. Today, with the tech reports that have been published. You heard us say probably now 4 times during the call that, we feel very confident that we're going to achieve that. So that's really been a priority for us.

[Michael Siperco, RBC Capital Markets]

Okay, great. And then very quickly on capital allocation, apologies if I missed it earlier in the call but you're hitting your 52-week high or close to it now. Can you update any guidance on how you're thinking about buying back stock, where you'll be active and maybe is there a point at which you'd rather do a special dividend than a buyback?

[Alison White]

Yes. So thanks for the question. We do have intention to continue on with the share buyback program that we had started in 2021. We still have a few months left on that program to repurchase shares and we also still have some shares left on that program to repurchase. There's about 1.2 million shares left. And then in addition to that, we will take into consideration the current market prices, as well as the valuation for the company and reassess, does it make sense to have another share buyback program? Or would we look at other options like a special dividend or even something else. So we'll definitely be taking a look at that and just need some time to kind of work through all that, based on everything that's come out today and all the information that we have.

[Michael Siperco, RBC Capital Markets]

Okay, great. Thanks very much. Have a good evening.

[Rodney Antal, President & Chief Executive Officer]

All right. Thanks, Michael.

[Operator]

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

[Rodney Antal, President & Chief Executive Officer]

Well, thanks everyone. Obviously a lot to get to today. So appreciate your patience, as we trolled through a bit. Obviously, a huge amount -- really interesting exciting news, building on a fantastic '21. So look forward to keeping you up to date during the year and talk more, as '22 unfolds. Thanks, everyone.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.