SSR Mining Inc

NASDAQ:SSRM

Earnings Call Analysis

Çöpler Operations Halted; Dividend Suspended

The Çöpler operation experienced a significant disruption when 18 to 20 million tonnes of material slipped, causing full operations to halt and affecting nine personnel. This has led to an anticipated impairment on the heap leach inventory and long-lived asset room, with evaluation and assessments ongoing. The company has proactively suspended their dividend and share purchase plan to preserve cash reserves while other operations at Marigold, Seabee, and Puna continue amid challenges following the February 13 incident.

Tragedy Strikes SSR Mining's Çöpler Operations

SSR Mining's recent earnings call was overshadowed by a somber reflection on the tragic incident at the Çöpler mine on February 13, 2023. At around 6:30 a.m. Eastern Time, a catastrophic slip occurred from the heap leach pad, tumbling an estimated 18 to 20 million tonnes of material into the nearby Sabirli Valley and Manganese Pit. This unexpected event led to the immediate suspension of all operations at Çöpler and initiated an intensive search and rescue operation, resulting in the confirmation that nine personnel were unaccounted for. The urgency of the situation was heightened by the rescue efforts, initially stalled by the instability of the heap leach pad, but are now continuing in hopes of locating the missing workers.

Financial Sturdiness Amidst Crisis

Despite the crisis at Çöpler, SSR Mining reported a robust financial standing at the end of 2023. The company's liquidity position included total cash reserves of $492 million and no debt maturing in the near term. Operations at the three remaining mines continue to contribute to cash flow generation. However, the Çöpler incident bears a shadow of uncertainty over the financial results expected in 2024. The potential aftermath includes expected impairments of the heap leach inventory directly affected by the slip and an evaluation of the long-lived assets at Çöpler for further impairments. As a precaution, and in light of these uncertain conditions, SSR Mining has decided to suspend the quarterly dividend and an automatic share purchase plan that was established last year, underlining a cautious approach to preserve cash until a clearer picture emerges.

Looking Ahead: Operational and Insurance Implications

Moving forward, SSR Mining is closely collaborating with government officials and regulators to address the situation at Çöpler and to outline the future course of action as more information becomes available. The company has approached the situation with transparency and commitment to keeping the market updated. One key aspect yet to be fully understood is the potential recoverability from insurance. SSR Mining has notified their insurers about the incident as per normal procedures. The implications of the slip in terms of insurance coverage will unfold as the investigation progresses and more facts come to light.

Earnings Call Transcript 2023-Q4

[Operator]

Hello, everyone, and welcome to SSR Mining's Fourth Quarter and Full Year 2023 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead.

[Alex Hunchak, executive]

Thank you, operator, and hello, everyone. Thank you for joining today's conference call. during which we'll provide an update on the ÇÖPLER incident as well as a brief review of our fourth quarter and full year financial results.

Our 2023 consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR, SEDAR, the ASX and are also available on our website. To accompany our call, there is an online webcast who 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.

Additionally, we will refer to non-GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measure. ROD Antal, Executive Chairman, will lead today's call.

I will now turn the line over to Rob for his opening remarks.

[Rodney Antal, executive]

Thank you, Alex. [indiscernible] to speak to the ongoing situation at ÇÖPLER. Firstly, I want to pass on our deepest sympathies and condolences to the families, friends, colleagues and communities of the nine personnel who remain missing. It is an incredibly difficult time for everyone who has been impacted by the incident, and we are still processing this tragic loss and will be for some time.

In a sign of respect, I would like to take a moment silence. Thank you. I'm sure you can appreciate that the situation at ÇÖPLER is dynamic. And while I will provide some detail today, there are many more questions you may have that I'm not able to answer at this time. I would appreciate your understanding during the Q&A.

The focus of the discussion today will be on the incident itself in the activities and priorities of ÇÖPLER at this time. So let's walk through the facts as they currently stand. At approximately 6:30 a.m. Eastern Time on the 13 of February, a significant slip occurred from the heap leach pad. With an estimated 18 million to 20 million tonnes, sliding into Sabirli Valley and the Manganese Pit. Full operations at ÇÖPLER were immediately suspended.

It was confirmed that 9 personnel around accounted for once the confirmatory headcounts were completed in the hours following the incident. Immediate efforts were focused on safely conducting search and rescue. Various government agencies were immediately deployed to ÇÖPLER, including the search and rescue teams. [indiscernible], we have been supporting the activities at site under the direction of the various government agencies.

I would like to recognize and thank the Turkish authorities for the rapid response and overwhelming support to the [indiscernible]. Rather than repeat all the details contained in the press releases that are available on our website, let me summarize the current situation and focus of ÇÖPLER.

The immediate focus was on the search and rescue efforts. This was initially suspended due to the instability of the heap leach pad, but efforts to locate the personnel have since resumed. Our priority is to safely recover and return our people to their families.

In addition, efforts have been focused on 3 other areas. First, to agree on an initial plan to stabilize the heap leach pad allowing work to safely continue on the recovery of our missing people. Initial work began on February 23, the stabilized portion of the heap leach pad and extensive monitoring is taking place using drones and radar.

[ The ] work to determine the final overall plan and approach to stabilize the bad, including the use of remote equipment is continuing to advance.

Second priority has been on the containment of the Sabirli Creek area. In this regard, the containment pond was immediately constructed and the installation of a concrete curtain at the bottom of the valley is underway.

Order diversion systems at the top of the Sabirli valley are also underway. The Turkish government is conducting environmental monitoring of surface water, ground water, soil and air quality in the region. Couple of comments from the Turkish government today indicate that test results have been negative with respect to potential contamination in the locations being monitored. These results are preliminary and additional testing will continue.

Finally, and number 3 is the ongoing discussion with the various government ministries to determine the permanent storage location for the heap leach material.

Moving on to just a few other facts. As a result of the incident for ÇÖPLER [indiscernible] has been revoked. 6 personnel are being detained and are facing charges in relation to the incident and we're ensuring they receive the necessary support while respecting the Turkish legal process.

Investigations led by the Turkish government are underway. To determine the cause of factors leading to the slip. We expect this to take some time to complete and until then have no further comments to make. As we look ahead, we continue to work closely with government officials and regulators, and we'll update the market as facts present themselves moving forward.

With respect to our financial results, given a lot of the information was prereleased with the technical reports on the 13th of February, I intend only to highlight a couple of key points.

First, the business ended 2023 with a strong liquidity position with total cash of $492 million, no near-term debt maturities and continued cash flow generation from our 3 other operations. Looking forward, the ÇÖPLER incident will have an impact on our financial results in 2024. We continue to evaluate and assess these potential impacts as laid out in today's 10-K filings.

In the first quarter of '24 and as noted in the 10-K, we anticipate recording an impairment at the heap leach inventory directly impacted by the ÇÖPLER incident and will also evaluate the ÇÖPLER long-lived asset room for any additional impairment. Given the uncertainty surrounding these items, we are taking some steps to preserve our cash position until we have more fidelity around the forward-looking cash requirements of the business. As a result, we have suspended our quarterly dividend and automated share purchase plan we put in place last year.

Given our focus is on Turkey, is of ÇÖPLER. We've also temporarily placed further investment at [indiscernible] on hold at this time. We will revisit the time line and approach in due course. This has obviously been a very difficult time for everyone impacted by the events of February 13, and we are doing everything we can to support our colleagues and the various stakeholders on the ground in Turkiye.

Clearly, we are in a period of some uncertainly, and there is no doubt that we have some challenges ahead as we focus on the recovery efforts at ÇÖPLER. In the meantime, operations are continuing at Marigold, Seabee and Puna. As I turn the line back to the operator for any questions. I will again note that we'll keep the discussions on the incident to my prepared remarks. That said, we will do our utmost to the answer questions related to the 2023 operating and financial results of the other properties. So operator, please go ahead with questions.

[Operator]

Thank you, Mr. Antal. [Operator Instructions] The first question comes from Don DeMarco with National Bank Financial. Please go ahead.

[Don DeMarco, analyst]

First of all, my condolences to everyone with the company and in particular, the missing personnel and their families and colleagues. Now Rod, I don't want to overstep what your intentions were for this call. But maybe if you could just clarify, did you want no questions on the ÇÖPLER incident? Or am I able to ask a few questions. to get additional color on some of the points that you made.

[Rodney Antal, executive]

Yes, Don, you can ask questions. just be respectful to the fact that the incident is only 2 weeks old. And clearly, we're focused on those areas that I mentioned in the call, but I'll do my best to answer anything else. .

[Don DeMarco, analyst]

Is there any chance that the slip -- could you talk about your insurance? Is it the potential that the slip might be insured? .

[Rodney Antal, executive]

As normal course, we have notified our insurers of the slip and will continue to work with them in the ordinary course as the final investigations and facts come to hand. But at this stage, they're being notified. .

[Don DeMarco, analyst]

Okay. And so as you described, there's -- one of the big efforts right now is in containing the extent of the contamination is a big earthworks process underway. Do you have any sense about the cost per ton to move the material? And is the material accessible? Or is there parts where some of the slipped heap might be difficult to reach given steep slopes and other factors?

[Rodney Antal, executive]

Yes. At this stage, Don, there's really no fidelity around the numbers. I'll just tell you what the areas of focus are for us is, we continue to work actively on the heap leach pad stabilization. That's really the key priority so we can continue with those efforts to recover the missing people to return to their families.

The containment area around the Sabirli Valley and particularly is well advanced, as I mentioned, and will continue until we finished that work. And then really, the last piece around the discussions with the various go minorities around the final area for the material to be placed is really -- haven't really just got out of way. So too early to put any more color on that.

[Don DeMarco, analyst]

Okay. Fair enough. And then maybe just as a final question. In the release this afternoon, it mentioned that there's a potential impairment charge in Q1 and it stated $73 million, and it referenced that, that makes up of the ÇÖPLER total gold inventory. I just want to clarify, does that represent 19% of the heap leach gold inventory or the total deep leach and sulfide gold inventory?

[Rodney Antal, executive]

It is the total of both the oxides and sulphides, Don. It's all the [indiscernible] of ÇÖPLER and the amount that we're referring to is the [indiscernible].

[Operator]

This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Antal for any closing remarks. Please go ahead.

[Rodney Antal, executive]

Great. Thank you, operator. And again, thank you all for joining us, and goodbye. now. .

[Operator]

This concludes the conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.