Silver Standard Resources Reports 2016 Results

The Canadian miner reported solid growth in earnings and cash flow

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Silver Standard Resources Inc. (SSRI, Financial) closed 2016 with a record in gold equivalent output and strong growth in earnings and cash flow.

During the fourth quarter, the Vancouver-based miner generated adjusted EPS of 26 cents, a 388.9% increase from a loss of nine cents reported in fourth-quarter 2015, beating analysts’ expectations by eight cents. The difference between the estimated EPS and actual EPS generated a positive surprise of 44.40%.

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Source: Yahoo Finance

Revenue came in at $127.317 million for the quarter, a 40.53% increase on a year-over-year basis. The increase was attributed “to 15% and 14% higher realized prices of gold and silver, respectively, combined with a 13% increase in gold equivalent ounces sold to 110,130, largely due to sales from the acquired Seabee Gold Operation and stronger sales from the Pirquitas mine.”

At the end of the comparable period in 2015, the company reported revenue of $90.592 million.

Silver Standard Resources closed full-year 2016 with adjusted EPS of $100.3 million (97 cents per share), a 1,070% increase on a year-over-year basis. In 2015, the company witnessed a loss of $8.2 million (10 cents per share).

In 2016, the miner achieved a record in the production of gold. The company produced 393,325 ounces of gold equivalent at cash costs of $653 and all-in sustaining costs of $923.

Higher silver and gold prices, together with lower cost of sales compared to the previous year, enabled the company to achieve a 31% improvement in the gross margin and a 258.5% improvement in the operating income to $112.61 million. The company said the operating income “was negatively impacted by a $48.4 million impairment of the Pirquitas mine” in 2015. That year, the company incurred a loss of $71.063 million.

In 2016, Silver Standard Resources generated cash flow of $170.7 million from its operations, a 130.3% increase from 2015, due to “improved margins at Marigold and Pirquitas and the addition of the strong cash producing Seabee Gold Operation in May 2016.”

After allocating $48.07 million for capital expenditures, funds the company used for underground activities at the Seabee Gold Operation and maintenance purposes, the free cash Ă‚ flow was $122.63 million in 2016 versus a cash flow of $24.15 million generated in 2015.

The company closed the last quarter of 2016 with approximately $476.071 million in cash on hand and securities that can be readily converted into cash. In 2015, the company had $300.046 million in cash and equivalents.

The total debt amounted to $220.05 million at the end of fiscal year 2016.

The company forecasts producing 355,000 gold-equivalent ounces in 2017. As of Dec. 31, 2016, it had 3.49 million ounces of gold and 16.8 million ounces of silver in provan and probable mineral reserves.

The company's shares are currently trading around $11.10 per share at 1.44 times the book value and at 5.47 times the EBITDA.

The analysts’ average target price per share is $12.85 and the recommendation rating is 2.6. The recommendation rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).

Disclosure: I have no positions in Silver Standard Resources Inc.

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