On Friday, Aug. 10, SSR Mining Inc. (SSRM, Financial) closed at $10.27 per share on the Nasdaq stock exchange, up 1.8% from the previous trading day, following the financial results for the second quarter of fiscal 2018, which were released by the company the day before after the closing bell.
On a consolidated basis, the miner produced 85,082 ounces of gold equivalent. For the same quarter of 2017 the company reported a consolidated output of 102,930 ounces of gold equivalent. The cash cost was $758 per payable ounce of gold sold, up 10.3% compared to the prior-year quarter.
However, on a quarter over quarter basis the company performed well thanks to the Marigold mine in Nevada where the mill facility was provided with more material to process and at a higher grade. With its higher than first half of 2018 guidance on production, Puna Operations in Argentina underpinned second quarter output. While the production from Seabee Gold Operation in Canada was flat compared to the previous quarter of the current year.
SSR Mining says that now she is on track to reach the guidance on gold output for full fiscal 2018.
For the entire year of 2018, the company expects to produce about 340,000 ounces of gold equivalent on a consolidated basis, at a cash cost of $715 to $760 per payable ounce of equivalent gold sold.
On an attributable basis, the miner is targeting a gold equivalent output of about 325,000 ounces at a cash cost of $705 to $750 per payable ounce of gold equivalent sold.
Compared to the same quarter of 2017, the company placed on the market a lower volume of metal. Therefore, the revenue came in at $104.3 million, which was a nearly 11% decline year over year. A higher gold price wasn’t enough to offset the negative effect from a decline in the sales volume.
The adjusted net income declined to $12.08 million, a 7.2% decrease year over year, or to 10 cents. On a per share basis, the decline in the net profit was a 9% decrease from the comparable of 2017.
SSR Mining beat consensus on adjusted net earnings by 5 cents.
The cash flow from operations also decreased to $17.1 million but the amount of cash on hand in the balance sheet increased by 7.3% to $493.6 million.
Instead, the value of short-term investments went down by 92.3% to $7.75 million in six months to June 30, 2018.
The stock in SSR Mining has a market capitalization of $1.24 billion and the share price is – as illustrated by the below chart powered by GuruFocus – above the 200, 100 and 50-SMA lines:
The remainder of 2018 is going to be full of catalysts for shareholders of SSR Mining Inc. However, to those investors who may be interested in this stock, I would suggest waiting for any significant depreciation.
At Marigold mine, an increase in the material to be mined and the completion of the new leach pad should give a boost in the production of gold during the second part of 2018. A higher throughput is anticipated from the mill facility at Seabee Gold. Hopefully, the extraction of zinc from the ore stockpiled at Puna Operations for the production of zinc in concentrate, which started at the end of the second trimester, will push the silver recovery rate up enough to sustain the production of the grey metal.
Paul Benson, the President and Chief Executive Officer of SSR Mining Inc., is confident that the company is well positioned to accomplish her targets of near-term growth.
The recommendation rating is 2.3 out of 5 and the average target price is $11.75 per share.
(Disclosure: I have no positions in any security mentioned in this article.)
