SSR Mining Inc. (SSRM, Financial) jumped nearly 4% to $10.84 per share on the heels of the financial results for the first quarter of fiscal 2018.
The market positively welcomed an adjusted net profit of $5 cents per share, or $5.662 million, with which SSR Mining beat consensus by $5 cents and generated a positive surprise of 500%.
However, compared to the same quarter of 2017, the adjusted net income and the operating cash flow of $11 million went both down 71.3% and 64.1% respectively.
Revenue came in at $97.9 million in the first quarter, a 17% decline from 2017, and the company missed expectations by $2.44 million.
The main causes of those declines, despite a higher price realized from the sale of the yellow metal, were lower production and sales volumes. Higher costs at the Marigold Mine in Canada and at Puna operations in Argentina also impinged on the bottom line and cash flow from operations.
In the first quarter, the miner produced 66,677 ounces of gold, a 12.5% decrease from the year quarter, and 938,000 ounces of silver, a 38.3% decline from the comparable quarter of fiscal 2017. Approximately 75% of the total silver output was attributable production.
During the quarter the company sold 62,090 ounces of gold, a 17.1% decline year over year, and 1.064 million ounces of silver, a 26.3% decline from the comparable of 2017.
First quarter volumes were affected by lower grades at Marigold and by the realization of a stockpile dome of crushed ore, bad weather conditions and the processing of lower grade ore stashes at Puna.
As of May 13, the stock in SSR Mining Inc. is not cheap since it is trading above the 200, 100 and 50-SMA lines.
The share price is also 42% off the 52-weeks low of $7.64 per share and only 5.5% far from the 52-weeks high of $11.44 per share.
For the 52 weeks of trading through May 11, the stock is 5% up.
As of May 2018, Wall Street still sees SSR Mining as a buy since 3 analysts out of a total of 4 recommend buying shares of the miner and one analyst suggests holding the stock.
The target price is $11.75, which represents a slim 8.4% growth from the current valuation.
Paul Benson, the President and Chief Executive Officer of SSR Mining, highlights some catalysts to watch in the following quarters: “With development at Chinchillas remaining on track for delivery in the second half of the year, and production at Seabee and Marigold ramping up through the year, our operating and financial performance positions us well for growth in 2018 and 2019."
As of March 31, 2018, the company has $516,741 in cash on hand and securities and $731,444 worth fixed assets.
(Disclosure: I have no positions in SSR mining.)
