Çöpler And Hod Maden Will Secure A Bright Future

Key Takeaways

• Restarting operations at Çöpler and integrating CC&V mine are expected to boost production, lower costs, and improve revenues and margins.
  
• Advancing projects and exploration successes position the company for future growth, extended mine life, and enhanced cash flow and earnings.
  
• Ongoing issues at Çöpler and rising costs at Marigold threaten SSR Mining's financial stability, with new projects increasing execution risk and pressure on liquidity.

Catalysts

Engages in the acquisition, exploration, and development of precious metal resource properties in the United States, Türkiye, Canada, and Argentina.

• The planned restart of operations at Çöpler, pending regulatory approval, is a significant catalyst. Once Çöpler resumes operations, it should lower average costs, and increase overall production, thus positively impacting the company's revenues and net margins.
  
• The acquisition and integration of the Cripple Creek & Victor (CC&V) mine is expected to increase SSR Mining's scale and free cash flow, enhancing portfolio diversification and earnings potential in 2025.
  
• Advancing the Hod Maden project towards a construction decision signals growth potential. Once operational, Hod Maden can contribute significantly to production and earnings.
  
• Expansion of reserves and exploration successes at existing sites, such as the Buffalo Valley at Marigold, the Porky targets at Seabee, and the Cortaderas project at Puna, are likely to lead to extended mine life and increased production, boosting future revenues.
  
• Achieving record production at Puna, along with ongoing evaluations for life extension at sites like Chinchillas and Cortaderas, suggests continued strong cash flow generation and potential improvements in earnings.

SSR Mining Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming SSR Mining's revenue will grow by 17.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from -26.2% today to 26.1% in 3 years time.
• Analysts expect earnings to reach $419.2 million (and earnings per share of $1.99) by about April 2028, up from $-261.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 7.7x on those 2028 earnings, up from -8.2x today. This future PE is lower than the current PE for the CA Metals and Mining industry at 13.5x.
• Analysts expect the number of shares outstanding to grow by 0.15% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.27%, as per the Simply Wall St company report.

SSR Mining Future Earnings Per Share Growth

Risks

• The tragic incident at Çöpler has impacted operations, and while remediation efforts are ongoing, any further delays could hinder revenue and net margins as Çöpler contributes significantly to the company’s overall output.
  
• The company incurred high reclamation and remediation costs of $128 million for Çöpler in 2024, which have affected net income and free cash flow, and upcoming costs could continue to pressure operating margins.
  
• Dependence on a speedy restart at Çöpler to support free cash flow is critical, and prolonged regulatory negotiations or additional requirements could exacerbate earnings uncertainty.
  
• Marigold faces continued elevated costs due to royalties and additional operational pressures, affecting net margins and overall profitability.
  
• As Çöpler’s future remains uncertain, new project developments, such as Hod Maden, involve major expenditures, and this could draw on current liquidity and impact earnings if execution risks materialize.

Valuation

• The analysts have a consensus price target of CA$17.763 for SSR Mining based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$22.03, and the most bearish reporting a price target of just CA$13.76.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.6 billion, earnings will come to $419.2 million, and it would be trading on a PE ratio of 7.7x, assuming you use a discount rate of 7.3%.
  
• Given the current share price of CA$14.68, the analyst price target of CA$17.76 is 17.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.