SSR Mining Stock: Expecting A Strong Q4 2022 (NASDAQ:SSRM)

Introduction

Denver-based SSR Mining Inc. (NASDAQ:SSRM) released its third quarter 2022 results on November 8, 2022. This article aims to look at the company’s recent history, including the third quarter earnings, and find a way to invest profitably in this company through fundamental and technical analysis. All charts in this article give several years of history.

Important note: This article is an update of my article published on August 5, 2022. I have been following SSRM on Seeking Alpha since 2021.

1 – 3Q22 results snapshot and commentary

The company reported adjusted earnings of $13.5 million or $0.07 per share, missing analysts’ expectations.

Gold equivalent production dropped to 106,919 GEOs, and the company sold 96,885 GEOs at production costs of $1,099 per gold equivalent ounce and AISC of $1,901 per gold equivalent ounce, reflecting the inclusion of $31.1 million of cash costs incurred at Çöpler during the suspension. The gold was sold at $1,710 per GEO.

For the three months that ended September 30, 2022, revenue decreased to $166.63 million, compared to $322.85 million for the three months that ended September 30, 2021.

The company revised full-year guidance to 637.5K GEOs (midpoint) at an AISC of $1,330 per ounce (midpoint).

Below is the production per mine 2Q22 versus 3Q22.

As we see above, Marigold did very well this quarter, but Seabee and Çöpler showed a weaker production, especially Çöpler, producing only 3,723 Au oz in 3Q22.

Consequently, the company revised 2022 guidance to 637.5K Oz (mid-point) and raised AISC between $1,310 and $1,345 per ounce due to inflationary pressures and issues at Çöpler.

The investment thesis remains unchanged from the preceding article. SSRM is a possible candidate for the long term, despite the hiccup experienced at Çöpler affecting the third quarter significantly.

The balance sheet and the quality of the assets are indisputable, and the company should deliver growth for the next few years. Furthermore, most of the company’s assets are located in North America, which is extra security. Finally, SSRM pays a dividend yield of 1.73%.

However, as we can see this quarter, it’s paramount to trade short-term LIFO a minimum of 50% of your SSRM position to take advantage of the gold price volatility that will continue in 2023.

The gold and silver prices are now bullish after the market expectation of lower inflation and milder FED action in 2023. Gold and silver are up 3% and 6% on a one-year basis.

CEO Rodney Antal said in the conference call:

our business was clearly impacted by the suspension of the Çöpler mine. I am pleased to report that operations restarted at the end of September and ramped up smoothly. Despite the Çöpler bump in the road, our business remains in incredibly strong position with a robust balance sheet that has enabled us a capital return yield of more than 5% over 2 consecutive years.

2 – Stock performance

SSRM follows tightly the VanEck Vectors Gold Miners ETF (GDX) and Eldorado Gold (EGO) which owns two mines in Turkiye. However, SSRM is now down 5.5% on a one-year basis after a sharp recovery from its October lows.

SSR Mining – Financial Snapshot Ending 3Q22: The Raw Numbers

SSRM	3Q21	4Q21	1Q22	2Q22	3Q22
Total Revenues $ million	322.85	407.92	355.45	319.58	166.63
Quarterly Earnings of $ million	57.18	203.91	67.56	58.49	-25.79
EBITDA $ million	154.95	149.46	170.96	116.68	-15.93
EPS (diluted) $ per share	0.26	0.89	0.31	0.27	-0.12
Operating Cash Flow $ million	187.87	127.29	62.19	32.84	-52.23
CapEx in $ million	58.69	-10.69	34.49	41.84	39.83
Free Cash Flow	129.18	137.98	27.70	-9.00	-92.05
Total Cash in $ million	881.57	1,057.99	1,033.22	964.55	802.31
Total Debt in $ million	343.13	371.45	353.71	331.93	228.01
Shares Outstanding (diluted)	226.83	220.76	224.74	225.08	207.98
Dividend $/share	0.05	0.07	0.07	0.07	0.07

Click to enlarge

Source: Company 10-Q

SSR Mining – Gold Production and Balance Sheet Details

1 – Revenues and trends. Revenues were $166.63 million in 3Q22

The company posted weak revenues of $166.63 million in the third quarter of 2022, down significantly compared with 3Q21 and down 47.9% sequentially.

The attributable net loss in the third quarter was $25.8 million, or $0.12 per diluted share. The adjusted net loss was $13.53 million or $0.07 per diluted share (or an income of $88.27 million or $0.40 per diluted share in 3Q21).

Revenues from gold represent 73.1% of the total revenues. The percentage was down significantly this quarter due to the lack of production at Çöpler. However, the issue is now resolved.

2 – Free cash flow was a loss of $92.05 million in 3Q22

Trailing 12-month free cash flow was $75.37 million, with the third-quarter 2022 free cash flow loss of $92.05 million.

The company declared a quarterly dividend of $0.07 per share or a dividend yield of 1.73%. Also, the company has a share buyback program:

In the third quarter, SSR Mining returned nearly $100.0 million to shareholders, consisting of $14.3 million in dividends and $85.4 million in share repurchases. Since the Normal Course Issuer Bid (“NCIB”) program’s inception on June 20, 2022, the Company purchased a total of 6,053,126 shares at an average price of $16.53 per share for total consideration of approximately $100.0 million.

3 – An impressive debt profile with no net debt

On September 30, 2022, cash and cash equivalents and others were $802.31 million, down from the $881.57 million in 3Q21. Total Debt is $228.01 million-net debt to EBITDA ratio of 0.9x.

4 – Gold equivalent production details. The company produced 106,919 Au Equivalent Oz in 3Q22

Gold equivalent produced dropped 42.8% year over year to 106,919 oz in the third quarter and was down 32.9% sequentially. Also, the gold equivalent sold was 96,885 GEOs. This quarter was a particularly weak production, with Çöpler and Seabee underperforming.

Note: Puna mine in Argentina only produces silver, lead, and zinc.

The average realized gold price decreased by 4.6% to $1,710 per ounce from the year-ago quarter. The average realized silver price was $18.98 per ounce in the quarter, down year-over-year by 21.1%. However, I expect a rebound starting Q4 2022 with gold averaging $1,736 per ounce.

5 – All-in sustaining costs and cash costs

AISC per gold equivalent ounce sold decreased to $1,901 per ounce in 3Q22 from $1,006 a year ago. The whopping jump was due to the situation at Çöpler mine, which indicated an AISC of $14,972 per ounce in 3Q22. According to the company, the AISC will drop to about $1,393 in 4Q22.

6 – 2022 guidance lower by 14% due to Çöpler hiccup

The company expects a consolidated production of 620K to 655K Oz with an AISC of $1,315-$1,345 per GEO.

Technical Analysis (Short Term) and Commentary

Note: The graph has been adjusted for the dividend.

SSRM forms an ascending channel pattern, with resistance at $16.7 and support at $15.25.

Ascending channel patterns or rising channels are short-term bullish in that a stock moves higher within an ascending channel, but these patterns often form within longer-term downtrends as continuation patterns. The ascending channel pattern is often followed by lower prices

The short-term trading strategy has not changed since my preceding article. I suggest trading LIFO (see note below) about 45%-50% of your position and keeping a core long-term amount for a much higher payday.

I suggest selling between $16.5 and $16.75 with the next higher resistance at $16.9 and waiting patiently for a retracement between $15.25 and $14.8 with possible lower support at $14.

Watch the price of gold like a hawk.

Warning: The TA chart must be updated frequently to be relevant. It is what I am doing in my stock tracker. The chart above has a possible validity of about a week. Remember, the TA chart is a tool only to help you adopt the right strategy. It is not a way to foresee the future. No one and nothing can.

Author’s note: If you find value in this article and would like to encourage such continued efforts, please click the “Like” button below as a vote of support. Thanks.