Ssr Mining Inc. Q3 FY2021 Earnings Call

Hello everyone. And welcome to SSR Mining's Third Quarter 2021 Conference Call. At this time for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining.

Thank you, operator, and hello, everyone. Thank you for joining SSR Mining's third quarter 2021 conference call, during which we will provide an update on our business and a review of our financial performance. Our financial statements and management's discussion and analysis have been filed on SEDAR, EDGAR, the ASX and are also available on our website. To accompany our call, there is an online webcast, and you 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. All references to cash costs and all sustaining costs are per payable ounce of metal sold. We'll be making forward-looking statements today. So please read the disclosures in the relevant documents. Joining us on the call today are Rod Antal, President and CEO; Alison White, CFO; and Stewart Beckman, COO. Now I'd like to turn the call over to Rod for opening remarks.

Thanks, Alex, and good afternoon and good morning to you all, and thanks for joining us today. I’m going to speak first on our strong third quarter performance. Once again, we are performing at a high level and setting quarterly operating records across the portfolio. These operational milestones contributed to the gold equivalent production of 197,000 ounces of gold at an all in sustaining cost of $1,006 per ounce. For the year-to-date period, we have produced 583,000 gold equivalent ounces, and an all in sustaining cost of $990 per ounce. Given the strong year-to-date production and cost performance, we are lowering our all in sustaining cost guidance to $1,000 to $1,040 per ounce. The fact that we're able to accomplish this outstanding cost performance in the face of well-documented industry cost pressures is a testament to the efforts of our teams to deliver on a number of cost saving initiatives this year. With respect to production, we remain on track to deliver against our 720,000 to 800,000 gold equivalent ounce guidance range that is tracking between the midpoint and the higher end of guidance. We're extremely pleased with the operating performance today, as we continue to showcase the quality of the combined operating assets. Our strong performance has directly translated to free cash flow generation of $129 million in the third quarter and $306 million in the year-to-date period. The cash flow generation supports our capital returns program. We have returned nearly $150 million to shareholders through the share repurchase since April via our NCIB program. Additionally, our Board approved another quarterly-based dividend bringing our year-to-date capital returns to approximately $190 million and we remain on track to deliver a total capital returns yield in excess of 5.5% in 2021. In the third quarter, we announced exploration updates for both Ardich and Seabee and expect additional exploration updates from Marigold, Copper Hill and Amisk by year end. At Çöpler, the approval of the updated EIA that included the flotation plant in October is a significant and positive milestone. Looking further ahead, we expect updated technical reports from Çöpler, Marigold and Seabee in 2022 that incorporate our recent exploration success and provide a welcome and comprehensive refresh for SSR. Turning to the next slide on ESG. ESG is and has long been a core value and focus for SSR Mining, as it firmly underpins the success of our business. We continue to see positive health and safety trends in our operations reflecting the efforts we have applied to improving the well-being of our employees, contractors and communities. We have successfully navigated the pervasive challenges of COVID globally, and our mitigation efforts have enabled us to avoid any COVID-related shutdowns at our operations in 2021. We are committed to our communities and to the environment, and we continue to deliver against the priorities outlined in our 2020 sustainability report. This will lead us to review and refresh our priorities as we move into 2022, including our commitment to begin establishing an action plan to achieve net zero greenhouse gas emissions by 2050. We've also begun to improve disclosures on climate and water and are aligning our reporting with the requirements of the Task Force on Climate-related Financial Disclosures. Moving on to Slide number five, we're proud to showcase our continuous efforts to improve our approach to ESG. And while it is not the driver of our ESG efforts, we are pleased to see our results have been recognized by some of the industry's leading ESG research providers. Notably, SSR Mining was recently upgraded to an A rating by MSCI and we remain ranked in the top quartile amongst our peers by ISS. Moving on to the next slide. On top of our excellent operational ESG performance, SSR Mining has an established track record of adding value for our shareholders. This was most recently evidenced by the sale of our non-core royalty portfolio for $100 million, which was significantly higher than the consensus valuation ascribed to the portfolio by analysts. Our company has a proven history of delivering complex capital projects on time and on budget, as well as accretive and disciplined M&A as shown in this slide. Our strategic review of the silver portfolio continues following on from the successful sale of our royalty portfolio. With the recent operating and financial strength of Puna and the broad outlook ahead, we have recently determined that Puna will remain core to SSR. The review of the rest of the silver portfolio continues. Moving on to Slide seven. As I noted our year-to-date production of 583,000 gold equivalent ounces compares favorably to the full year guidance, while year-to-date all in sustaining costs of $990 per ounce has allowed us to reduce the all in sustaining cost guidance. At the asset level, we received approval for the updated Çöpler EIA in October and will begin ramp up of the flotation plant upon completion of provincial-level permitting by year end. Çöpler remains on track to meet its full year production guidance with gold production tracking to the midpoint for the original guidance. Marigold remains on track for the midpoint of full year production guidance while Seabee is trending towards the upper end of its production guidance. And Puna is on track to exceed the full year silver production guidance. We continue to invest in high-return growth opportunities across our business including capital projects like Ardich, exploration drilling across the business and investing in the work to complete a number of technical reports, all designed to improve both the longevity and value of SSR. Alison is going to touch on all these initiatives in a minute. Moving on to Slide eight on our quarterly highlights. We've already covered another of the main quarterly highlights, so I won't spend much time elaborating here. Alison and Stew will provide a more detailed overview in a minute. However, a few highlights that are relevant to consider this quarter: year-to-date, safety performance remains on a positive trend; operationally we continue to deliver records across all our four assets with five consecutive quarters of delivery since the merger closed; financially, we delivered an adjusted EPS of $0.40 in the quarter, and our robust margins and low-cost production translated to $129 million in free cash flow. Despite the $150 million in year-to-date share repurchases and our quarterly dividend payments and continued debt servicing, we remain in a net cash position of over $500 million. That provides us with the required flexibility to advance our large organic growth pipeline well into the future. So with that, I'm going to hand the call over to Alison, who will discuss our financial performance in more detail on Slide number nine.

Thanks, Rod, and hello, everyone. I'm pleased to comment on another positive financial quarter for the business as shown here on Slide nine. It was a solid quarter operationally as we produced 186,941 gold equivalent ounces during the quarter. Sales were impacted slightly towards the end of the quarter by a work stoppage at a port in Uruguay that delayed concentrate shipments from Puna. We reported gold equivalent sales of 176,299 ounces, for a total of $323 million in revenue for Q3. Year-to-date revenues now total $1.1 billion in 2021. We continue to deliver in all aspects of our business and are proud of the cash flow and returns that are generated as a result. Attributable net income for the quarter was $57 million, or $0.27 per share, and adjusted attributable net income was $85 million, with adjusted attributable earnings per share of $0.40, demonstrating the continued strong operational performance, cost discipline and execution of the company's strategy. In the first nine months of the year, attributable net income was $164 million, or $0.76 per share, and adjusted attributable net income was $288 million, or $1.33 per share. On the right side of the slide, I'd like to provide some commentary on our reported $0.40 in adjusted earnings per share that is calculated based on our definition of adjusted attributable net income per share. We start with our attributable net income of $0.27 per share, and then make adjustments to exclude the after-tax impacts of specific items that are not reflective of the company's ongoing operations. Each of those items is outlined in a waterfall chart on the right of this slide, with the largest of the adjustments for $0.12 related to the amortization of fair value bumps as a result of the adjustments to inventory and mineral properties at Çöpler at the time of acquisition. Other adjustments include COVID-19 related costs and foreign exchange adjustments, along with the associated tax impacts of those adjustments. Additionally, I'm excited to be able to provide some information on our lowered AISC guidance in the face of pervasive inflationary pressures to-date in 2021. As noted earlier in the call, we have lowered our 2021 AISC to $1,000 to $1,040 per gold equivalent ounce from $1,050 to $1,110 per gold equivalent ounce incorporating the strong operational performance, which has cash costs trending to the lower end of guidance. To-date, we've managed costs in the business as demonstrated through the Q3 AISC of $1,006 per ounce. As we noted in our second quarter call and are reiterating again today, we have managed inflationary headwinds, in part through the continuous improvement practices that we have pushed forward since the closing of the merger in 2020. That work is ongoing within the business. And while it will continue into the future, we do anticipate that cost pressures for the U.S. and Canada will be higher, especially as we move forward into 2022. In some other jurisdictions, we benefit where inflation is largely offset by currency devaluation, and we expect this trend to continue. Turning to Slide 10, we can talk about SSR's continued balance sheet strength. SSR Mining closed the quarter with $900 million in consolidated cash, with continued debt servicing, quarterly dividend payments, and execution of our share repurchases bringing year-to-date capital returns to shareholders of more than $180 million. We remain well positioned to continue our capital allocation policy going forward, fully funding our portfolio of organic growth opportunities while maintaining our significant capital returns to shareholders. Our net cash to EBITDA ratio has increased to 0.7x demonstrating our results and placing us in the top quartile of our peer group. Further, our cash balance is 95% held in U.S. dollars. On Slide 11, we can talk more about SSR's position as a free cash flow leader and our capital returns. Our continued operational outperformance translated to robust cash flows in Q3, including operating cash flows of $188 million and free cash flow of $129 million during the quarter. Year-to-date, we have generated free cash flow in excess of $300 million reinforcing our full-year consensus free cash flow yield of 11% that remains well above our peers. We have aligned that free cash flow performance with our capital returns initiatives, returning nearly $150 million to shareholders through share repurchases, and an additional $33 million in year-to-date dividend payments. We are well on track to end 2021 with a capital returns yield of 5.8%, given we are closing Q3 with returns that already exceed 5%. As we look ahead into 2022, our capital allocation priorities include investing in growth, returning cash to shareholders, and maintaining balance sheet strength. The combination of our leading returns and significant free cash flow generation differentiates SSR Mining. We will continue to execute on our priorities, both financially and operationally as we move through the final quarter of 2021 while we also evaluate shareholder returns for 2022. Lastly, before I turn the call over to Stew, I want to touch on another initiative for SSR Mining that will lead to changes in 2022. Turning to Slide 12, effective as of January 1, 2022, SSR Mining will transition to U.S. GAAP reporting as a large accelerated filer under the SEC. As a result, our full year 2021 financial results will be released under U.S. GAAP requirements and will be reported along with restated 2019 and 2020 financial results. This transition will also include the restatement of existing technical reports under S-K 1300 requirements in addition to the current NI 43-101 reports. The updated Çöpler district master plan will be released under S-K 1300 requirements. And it's important to note that the S-K 1300 reports released from Marigold and Seabee will be followed by updated master plan technical reports at both assets later in 2022. What that means is that while the Çöpler Technical Report will incorporate the totality of the exploration success up to the last release, the initial reports for Çöpler and Marigold will not represent the full value drivers that we believe exist for the properties and updates will be forthcoming as the work is completed. We expect this transition will improve our access to U.S. investors and view the change as an opportunity to strengthen our already robust shareholder base. A full review and analysis of the required changes to become an SEC filer remains ongoing and will be reported to the market as required. Stew will now walk you through the operational highlights starting on Page 13.

Thanks, Alison, and thanks Rod. I’m going to lead off with ESG. Our sites continue to operate safely, each with bespoke COVID protocols tailored to their situation. Immunization rates at all of the sites are above those of their host communities, in the 80s and 90s at Çöpler, Seabee and Puna. Following the merger a year ago, we focused our immediate efforts on updating our ESG policies and building out our integrated ESG management and information systems in line with contemporary industry best practice. This along with good old-fashioned line leadership is delivering good and improving results. As you know, the work and effort in the ESG space never eases as we expect and drive towards ever higher standards. Our improved operational discipline is delivering results that exceeded our expectations for improvement with recordable injury frequency rates year-to-date, which is about a 60% improvement on our 2020 figures. We strongly believe that driving and delivering better performance in ESG builds a stronger, more productive and profitable business. Moving on to operations and growth, the third quarter continued the performance trend from H1 with throughput records at all the mines and good cost control. We had reduced gold pour at both Çöpler and Marigold for the quarter, but neither of these are the result of enduring issues. Marigold had a problem with the elution vessels, and so gold was held in inventory at the end of the quarter. And the delay in the EIA at Çöpler meant that the flotation plant commissioning was delayed. We managed the things that are in our control and so all the sites are focused on operational excellence, which includes productivity improvement and cost control. These improvements are being built into our plans and budgets for 2022, helping to offset some of the inflationary pressures. Moving on to the slides with Çöpler, on Slide 14. The Çöpler sulfide plant delivered another record quarterly throughput; all the major shutdowns are complete for 2021. The delay of the flotation plant commissioning negatively impacted production but was partially offset by higher throughput rates, positive mine reconciliation and good mine planning to optimize sulfide ore presentation to the plant. The flotation plant construction and operational readiness activities were completed on time and on budget. As mentioned previously, we have received the EIA, made the applications for the local permits, and expect to receive these before the end of the year. The startup team is assembled and ready to go. The flotation plant allows us to take advantage of the latent capacity in the sulfide plant and increase the overall plant throughput. It will also reduce reagent consumption and lower the unit cost of ore treated. We released exploration results for Ardich in the quarter and these very good results will be incorporated into the updated Technical Report which we will issue in Q1 2022, which we will call the Çöpler District Master Plan 2022 abbreviated to CDMP22. Ardich will move to the reserve case and be a significant feature of CDMP22. In the last Technical Report, the RSPA showed the potential to add about a million ounces of production starting 2023. Exploration continues at Ardich and we expect the value of this project will continue to grow beyond what will be presented in CDMP22. The Board approved funding to progress a Çöpler copper C2 order-of-magnitude study to a PEA level for inclusion into CDMP22 Technical Report. This work aims to leverage off the considerable copper-driven mineral value within and immediately adjacent to the reserve and resource shells that the current mine plan does not exploit. Moving to Slide 15 for Marigold. Mined tons were another record for Marigold. Production was delayed by unscheduled maintenance issues that resulted in an increase of gold in the circuit. In particular repair work to the elution vessels in the carbon stripping circuit increased the gold on carbon; the elution vessels were repaired late in the quarter and the gold will be poured from inventory in Q4. We also had some reduced flow rates on the heap leach, while some circulation blockages were cleaned; work to drill and equip dewatering bores continued and the water drawdown rates are looking pretty good. This will provide access to higher grade ores from the Mackay pits later in 2022. Stripping of the five end pits to the north of the property continues and ore is starting to be accessed now. We plan to provide an exploration release for the greater Marigold property before the end of the year. Exploration is mostly focused around the existing pits and is ramping up at Trenton Canyon. Overall, we drilled just over 24,000 meters for the quarter. As part of our SEC filings, we are required to provide an updated S-K 1300 technical report based on our existing resources early in 2022. Unfortunately, this does not provide time for the development of some of the prospects. So we will aim to deliver a subsequent more comprehensive technical report later in 2022. Marigold will have a strong quarter for finishing well within guidance. Move on to Slide 16 for Seabee. Seabee continues to improve its performance in both ESG and production. In the quarter, we replaced some gears on the mills in a major plant shutdown. The Seabee operation is mill-limited. As a result of the plant shutdown, the mine moved further ahead of the plant, adding to the plant feedstock which we built in Q2 as a result of the higher grades in Q2. After the shutdown, we operated at almost 40% above the average annual processing rate — a record monthly mill throughput, demonstrating the significant latent capacity in the plant. With the mill taking feed from both the mine and the stockpile for the quarter, we expect the mill will be mostly unconstrained in Q4, and a record quarterly processing throughput. Underlying mine production metrics have also been steadily improving at Seabee. We have a positive view of the potential at Seabee and are beavering away on improving conditions for our team and on our production continuous improvement projects across the whole site. The Q2 unexpected very high-grade zone was at the edge of the resource model in the bottom of Santoy Lower Nine zone. Of course, we are exploring the area and working to regain access to mining operations which we are targeting for early next year. We released an exploration update for Seabee during the quarter highlighting the potential of the greater Seabee property, including the Fisher 80:20 JV to the south. Drilling continues at Seabee Santoy and at the distal exploration sites of Mac North, Joker and Fisher. Our exploration team are aiming to hand over Joker and Mac North this year to the resource development team to further define the resources to the extent needed to allow development. The exploration team then continue on generative work, and the long prioritized list of targets. Like Marigold, Seabee will be required to provide an updated S-K 1300 technical report based on our existing resources in early 2022, which will be followed by a subsequent and more comprehensive Seabee technical report later in 2022. We are also preparing an exploration release in this quarter for Amisk, our other active Saskatchewan exploration site. Move to Slide 17 and we'll discuss Puna. Puna is settling into quarter-on-quarter delivery at about a 4,500 ton-a-day rate which was above our expectation when we started this year. Good production and cost control is keeping the AISC down. The changeover on hauling from the mine to the plant started in April and the performance has been much better than expected, helping to further reduce our operating costs. Planning for Puna is now being redone assuming this better performance in the mine, higher throughput rates and a lower cost base. Those parameters will form the basis of the S-K 1300, which will also be issued in February 2022. Aiming to extend the life of the operations, the exploration team has been at Puna reinterpreting and reanalyzing some of the targets and deposits around the current operations along with the generative soil geochem program. Move to Slide 18 for the explanation. I'm not going to repeat the commentary from the previous slides and just draw your attention to a couple of points. We have a considerable portfolio of exploration targets in the Americas and Western Europe. We also have some small generative programs in North America and Turkey and remain opportunistic and receptive to imbalance. Since the merger, we've been improving our active management of the portfolio focusing on the higher probability and value opportunities and shedding the others. New mine projects and targets close to installed infrastructure offer the fastest, lowest-cost development opportunities and are getting the lion's share of exploration effort, which you can see clearly around Çöpler, Marigold and Seabee. That said the concurrent greenfields exploration work is important as a pathway to step-change business value by organically building out the portfolio of operating mines. Drilling at Copper Hill in the Black Sea region of Turkey is delivering more encouraging results. In April 2020, we released exploration results for eight holes, a number of which had very clean high-grade copper mineralization intercepts close to the surface, including 40 meters at 2.6% copper. We aim to release this year's drill results within this quarter. Wrapping up, it was another solid quarter for the business and the operations and growth teams. Thank you very much. And back to you, Rod.

Well, thank you, Stew and thank you, Alison. So to summarize, 2021 has been an impressive year, reiterating the strength of our business and our commitment to shareholder returns. Since the merger, we have delivered record productivity across the portfolio reinforcing SSR Mining's appeal as a leading mid-tier gold producer. We have an exceptional portfolio of organic growth opportunities and expect to provide additional exploration updates for the market through the remainder of the year. It is our belief that our strong free cash flow, leading capital returns and significant growth optionality will continue to be a key positive differentiator for SSR moving forward. So with that, I will pass the line now to the operator to take any questions you may have.

Thank you, Mr. Antal. We will now begin the question-and-answer. Your first question is from Tyler Langton with JPMorgan. Please go ahead.

Maybe just to start, can you talk about the levels of inflation that you're seeing now, what items they are coming from? And then, for 2022, you mentioned that those pressures could accelerate a little bit. I guess could you give a little more detail on what level you expect inflation to be at, and then, if you still have some room to offset them with items like continuous improvement that are benefiting you now? This is more geared towards the U.S. and Canada.

Yes, Tyler, thank you for the question. I mispronounced your name earlier; I meant Tyler. Apologies. To answer your question, focusing on the U.S. and Canadian inflationary pressures we've seen: most of those, particularly in the Canadian market, have come through as a result of some labor cost increases that we've seen within the business. The offsets to those are coming from other areas within the business in terms of our continuous improvement activities, primarily in the supply chain area overall. We are anticipating that in 2022 we will likely see some additional costs, or inflationary pressures, primarily in the supply chain area based on inputs for diesel and other large consumables that we use. We will continue to try and offset those in other areas where we can, but we are still working through what some of those offsets might look like for 2022.

Perfect. And then, I guess second question is for Rod. You've kind of largely completed the share buyback. As you look forward, can you talk about your thoughts and preferences for capital allocation in terms of returning cash to shareholders, sort of organic growth projects, M&A, and how you're thinking about those right now?

Yes. I think what we've been able to do this year is actually execute against what we said, which I think was an important placeholder for the company to do. There's too many times you've seen capital returns promised in the form of share buybacks and never executed against them. I think what we've done this year is not only continue to pay our base dividend, but also execute against the share buyback program at the rate that you've seen disclosed today. I think that was an important start for us as a business. Our approach to capital allocation holistically hasn't changed: it's a continuation of reinvesting in the business. Some of the exciting options, as Stew outlined in the presentation around growth that we have within the portfolio across all of our assets, will continue to be a key focus for us, as well as one of the key areas where we'll allocate capital. We'll continue to look at and evaluate supplementing our base dividend, which is set around that $0.20 per share per annum. We'll look at methods of supplementing that next year as we reset; we'll have a look at whether it's more adding to the base dividend and/or share buybacks. We haven't set that yet but in principle the framework hasn't changed and that's why we were very clear to put it out there as a holistic approach to capital allocation for SSR going forward. We want to be seen as a company that can really do it all: continue to invest in growth and return yield to our shareholders.

The next question comes from Cosmos Chiu with CIBC. Please go ahead.

So Rod, Alison, Stew, and team, congrats on a very good Q3. Maybe my first question is on, as you talked about your silver portfolio: you said you've reviewed your silver portfolio and Puna is now core. I don't know how much you can share with us, but what criteria are you using in terms of reviewing the silver portfolio? And one asset that I get asked quite a bit about in your growth portfolio on the silver side is Pitarilla. I did a CTRL-F on your MD&A and I couldn't find Pitarilla; I was kind of surprised I couldn't find it. Could you maybe give us an update on that as well?

We have been very disciplined around the way that we'll manage our extensive holdings. The first rank in that regard was obviously the non-core royalty portfolio. We've made no secret of the fact that as we go through our asset portfolio we will remove things that don't belong and replace them as time goes on. In terms of the silver assets, they were in the same category in that review and we look at a number of factors: their longevity in the portfolio, whether they belong, how they contribute to the success of SSR, whether they contribute free cash flow, and any upside potential that might exist within the assets themselves. Looking at Puna in particular, it's clearly in a cash-harvesting mode. Many years of hard work have turned that asset around to where it is today. It's been a significant outperformance for us through the hard work of the team in 2021, and we do expect that to continue into 2022 and beyond. From that perspective, it's a valuable asset with meaningful cash contributions and potential upside. When we look at other assets like Pitarilla, some other criteria we consider are new jurisdictions, size, scale and fit with the rest of the portfolio. Pitarilla is in a new jurisdiction for us in Mexico and its size and scale are probably not of the type we'd want to retain in the portfolio long term. So it's part of the review to understand whether there would be a number at which we'd be willing to part ways with that asset in the future. We'll continue to look at that and if we have any more information as that process unfolds, we'll keep the market informed.

Thanks. Maybe switching gears a little bit, as you mentioned, 2022 will be fairly busy in terms of technical reports — I think two sets each for Marigold and Seabee. Likely, as you said, the first set will not incorporate some of the upside potential. But how about the second set? More specifically, at Marigold there's a lot of exploration potential: Trenton Canyon, Buffalo Valley, the Millennium model. And at Seabee there's the Gap Hanging Wall, Fisher, Joker. At this point in time, do you know how much of that exploration upside could potentially be incorporated into your technical reports?

I'll answer that. Hi, Chiu. Obviously, I can't quantify because that would be too early, but I can outline what we are looking to achieve. At Marigold, we'll be looking to pull the materials around the Valmy pit and the other operating pits where it's within the operating permitted areas into production as early as we can, and then step out subsequently. The Millennium area and those areas that were drilled are being evaluated for indicative timelines and the levels at which we could pull them in. Out at Buffalo, Trenton Canyon and Buffalo Valley, we're still looking at the levels of definition across the resources. We're drilling now and our ambition is that where we can pull some of it in at a PFS level we will, and some of it may come in at a scoping or prefeasibility level, but we'll certainly describe our plans for the whole property. The intent of the master development plans, like we did at Çöpler, is to map strategies for the properties. Unfortunately, given the timing required for S-K 1300, we'll probably pull a few bits in where they're close to existing resources and reserves as we normally would on an annual basis, but we won't capture the big chunks in that initial filing. At Seabee, it will be to get the Gap Hanging Wall as much as possible into reserves where we haven't already, probably include some extensions where we're drilling, better define the Santoy hanging wall and then start to define the story down towards Fisher, Joker and other deposits. We're pretty excited about that. We just won't get as much of the new work completed by the end of this year to get into the initial technical report for publication in early 2022. Does that help?

Yes, for sure. It's been a while since I've been to Seabee Santoy. Can you remind me in terms of Joker and some of those other exploration targets: are they reachable from the current decline, or do you need additional infrastructure?

Joker looks like it's an extension on Santoy, so we are hoping to be able to access it from there. We might need to put a decline in further down; we're still early and it's still exploration drilling. We haven't really done the resource definition drilling yet, so it will take a little while to be able to answer that comprehensively. When you look at those results, we've only drilled down to about 200 meters and the experience in Santoy was that grade increased at depth. We hope to see the same trend in Joker and Mac North, but it will take time to determine whether that holds up.

Great. And then maybe one last question: on accounting, Alison, as you mentioned you're switching over to U.S. GAAP. It might be too early, but what are some of the key differences between IFRS, which you use now, versus U.S. GAAP? I recall IFRS might be more flexible and more open to interpretation versus U.S. GAAP. I also recall IFRS is more balance-sheet-focused versus U.S. GAAP being more earnings-focused. What should we be looking for?

We are working through valuation right now to understand all the different implications. In general, as you look across IFRS in comparison to U.S. GAAP, three areas where we might see some of the biggest changes are deferred stripping, taxes, and also some of the share-based compensation accounting. We don't yet have numbers on that, but when we do we'll be providing that out to everyone. At the end of the day, we've got a lot of work to do between now and when those financials go out, so we need a little more time to work through that at this point.

Just to finish that: we'll spend time with folks to take them through those changes once Alison and the team have done the work. As soon as we've got clarity, we'll make sure everyone's aware of whatever changes end up happening so we're all on the same page moving into 2022.

One quick follow-up: in terms of being an SEC registrant and using U.S. GAAP, do you foresee any changes in terms of how you disclose non-GAAP measures? I'm wondering if there are additional restrictions on how you can present adjusted earnings, production guidance, cost guidance or anything like that, or do you anticipate that not being an issue?

We will have to revisit all of those items as part of the review and we're currently working through that now.

The next question comes from Ovais Habib with Scotiabank.

Thanks, operator. Hi, everyone in the SSR team and congrats on a good quarter and receipt of the Çöpler EIA. Just a couple of questions: now that the EIA obviously includes the flotation circuit, from what I understand you need some additional provincial permits to start commissioning of the flotation plant. Are you looking to get these permits in the next couple of weeks? And if so, would you look to start the plant in mid-Q4, or should we expect to start up in early 2022?

Hi Ovais. We applied for the permits immediately on getting the EIA. This is pretty typical: you get your EIA and then you apply to the local municipality or province to operate your facility. They were on site last week and we're expecting the permit imminently. Our team is there ready to go. So as soon as we get the permit, we will start and we expect to get it sometime in this quarter. We never know exactly because it's a permit with a municipality or province, but we expect it soon.

Thanks, Stewart. And in terms of ramp-up, how long do you expect the plant commissioning to take?

It will be pretty quick. It's a very simple flotation plant and we've had lots of time to complete all the water testing and have it ready. We do expect it to ramp up quickly. Of course, with commissioning there's always the potential for surprises so we've made allowances for those things.

Sounds good. Good luck on that. Just moving on: year-to-date, you guys have produced approximately 583,000 gold equivalent ounces, essentially implying Q4 production of about 177,000 ounces to achieve the midpoint of guidance. How should we look at Q4 compared to Q3? Are you expecting a similar quarter to Q3 and can you give some color on how you expect the mines to operate in Q4?

We don't normally break down production by quarter in granular detail, but generally we expect a good finish from Marigold given the inventory and elution work coming out. Seabee has a clear run to the end of the period with stockpiles in front of the mill; the mill is not expected to be constrained by the mine. As I said earlier, we're expecting strong throughput at Seabee. At Çöpler we will be commissioning the flotation circuit during the period and have benefited from positive reconciliation in the mine and good mine planning to mitigate the earlier impact. Puna has really settled into around a 4,500 ton-a-day production rate, and we would expect that to continue.

Perfect, thanks for the color. One follow-up: about the tech reports for Seabee and Marigold in early 2022, I believe you're looking to release a three-year guidance in early 2022. Will this guidance include the new mine plans and the S-K 1300 technical reports for Marigold and Seabee as well?

Yes. We'll issue the guidance and the technical reports at about the same time or slightly later, and those numbers will align with each other.

So we're still on track for two- or three-year guidance and financials to be aligned with the technical reports.

The next question comes from Michael Siperco with RBC Capital Markets.

Thanks very much, guys. Going back to the balance sheet and capital allocation, can you expand a bit about how you think about things going forward, maybe aside from M&A? You've returned a lot of cash and visibility into more subject to buyback limits, but longer term, given the cash you should be generating, how are you thinking about deploying or managing it? Should we be thinking about a higher payout or paying down more debt? Does growing cash concern you at all from a capital efficiency perspective?

It's a fantastic position to be in. We view it as an opportunity, not a problem. We have a number of organic growth opportunities that will require capital investment, including new mines and extensions around our existing districts. Maintaining balance sheet integrity to tackle those opportunities is important. We'll assess capital deployment on a yearly basis within the framework we've set: invest in the business, return cash to shareholders and maintain balance sheet strength. We may change the mix year-to-year between dividends and buybacks, and in some years, if we have a large capital allocation need, we'll prioritize that and revert to the base dividend. Flexibility is important. Also, this is a cyclical business, so maintaining balance sheet strength through cycles is critical, and it also positions us to pursue attractive opportunities as they arise.

Thanks. And maybe one follow up: more philosophically, given the consolidation in the sector like the Kirkland-Agnico transaction, how do you position yourselves and differentiate to investors? Or is whatever others do largely irrelevant to your business plan?

We can't ignore what's going on in the market. We've shown we are a dynamic group both operationally and strategically. We were one of the first to execute a meaningful merger combining portfolios, and that experience helps inform our view on consolidation. There remains a lot of stranded, single-asset companies in the sector, so consolidation can be rational. We will keep looking and evaluating opportunities that make strategic sense for SSR. If attractive opportunities arise, we'll pursue them, but strategic deals can be harder than they seem and must align with our objectives.

The next question comes from Mike Jalonen with Bank of America.

I just had a question on the transition to SEC reporting and U.S. GAAP. Does this mean SSR is going to be redomiciled as a U.S. corporation?

No, it doesn't mean we're redomiciling. There are tests around retaining foreign private issuer status in the U.S., including shareholder base and location of management and decision-making. With our U.S. shareholder base being over 50% and much of management based in the U.S., we likely would not meet the foreign private issuer test. So part of the decision was to view this as an opportunity to become a full SEC filer and report under U.S. GAAP, which should improve our access to U.S. investors. It doesn't mean we lose our Canadian entity or presence; it means our primary reporting will be under SEC rules and U.S. GAAP.

Okay. Maybe you're setting a template for other Canadian gold producers to do the same thing. Interesting. Thanks for that.

We see it as a significant opportunity for better visibility into the U.S. investor market and for our shareholders. There's a heavy lift to convert, and we have a lot to do, but we view it positively.

This concludes the question-and-answer session. I will now turn the call back to Mr. Antal.

Great. Thank you. Thanks everyone. Thanks for joining us today. Another solid quarter and look forward to the next update in the new year. Until then, thank you.

Thank you.