A High-Flying Gold Miner You Shouldn’t Miss


SSR Mining stock [stock_market_widget type="inline" template="generic" color="default" assets="SSRM" markup="(TSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has risen as much as 75% in the past six months thanks to a string of positive developments. The gold and silver mining company has been taking steps to boost its output, which would allow it to take advantage of a rise in gold prices going forward. Let’s take a closer look at the key reasons why SSR Mining could be a solid bet for your portfolio.

Better Times Ahead

SSR delivered 345,000 ounces of annual gold equivalent production for 2018 at a cash cost of $736 per gold equivalent ounce sold. This was better than the company’s original guidance that called for 340,000 gold equivalent ounces in 2018 at cash costs between $715 and $770 per ounce.

However, SSR’s 2018 operational performance compares unfavourably to last year’s output of 370,000 gold equivalent ounces, though investors are willing to overlook that in light of the company’s forward-looking guidance.

SSR has guided for consolidated gold production of 400,000 equivalent ounces for 2019, driven by higher production at all three of its operations and the ramp up of its newest mine – Chinchillas. More importantly, the production profile is expected to get better with time, with SSR forecasting 440,000 gold equivalent ounces of production in 2021.

What’s Working for SSR?

This gradual improvement in the company’s production profile has given investor confidence a nice shot in the arm after a period of struggle in 2018, when lower gold production hurt the company’s financial profile. SSR’s revenue declined just over 6% in 2018 and it turned in a small net loss as compared to a profit of $71.4 million in 2017.

The company anticipates 30% production growth at the critical Marigold mine through 2021.

A slight increase in the realized gold price wasn’t enough to drive the company’s results, so it needed to take steps to increase production. That’s exactly what SSR has done as its outlook suggests. The company anticipates 30% production growth at the critical Marigold mine through 2021.

Additionally, the company has begun commercial production at the Chinchillas mine, and has picked up a 9.7% stake in SilverCrest Metals for a price of $23 million. The SilverCrest stake gives SSR access to the Las Chispas project that supposedly holds high grades in a favourable mining jurisdiction.

Moreover, SSR’s production outlook for the next couple of years doesn’t include any further discoveries, as management is expected to use its solid balance sheet to drive exploration programs. According to CEO Paul Benson:

With nearly $420 million of cash and an outlook of increasing production and higher margins, we are well positioned to continue our track record of creating value for shareholders.

So it won’t be surprising to see SSR exceed estimates going forward as it tries to find new ways to bolster its production profile. That’s why analysts are expecting a major upturn in the company’s financial performance this year, with revenue expected to rise nearly 25% and earnings per share expected to increase by more than 50%. As such, SSR Mining looks well-placed to sustain its impressive momentum going forward, making it a solid bet for anyone looking to invest in mining stocks.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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