SSR Mining’s Improving Operational Profile Should Lead to More Upside

SSR Mining (SSRM.TO) is stepping on the gas to take advantage of an improving gold price scenario. The company was not in great shape last year as output declined year over year, but it seems to have put those problems behind itself and in good time.

SSR Mining is on track to perform better-than-anticipated this year after a solid quarterly report that clearly shows the company heading in the right direction. So don’t be surprised to see SSR Mining stock build on the 24% gains it has clocked so far this year.

There’s a lot to like about SSR Mining

SSR Mining delivered second-quarter gold production of 98,334 ounces, and its cash costs came in at $775 per ounce of gold sold. The company’s output in the year-ago period stood at 85,082 gold equivalent ounces at cash costs of $758 per ounce of gold sold.

So SSR did well to increase its output in the double digits year over year and kept its costs under control at the same time. What’s more, SSR’s average realized price of gold at its flagship Marigold mine increased slightly year over year to $1,309 an ounce as compared to $1,304 an ounce in the year-ago period. The Marigold mine accounts for around 56% of the company’s total production.

Higher production, improved pricing, and controlled costs led to an improvement in SSR Mining’s key metrics in the second quarter of 2019. The company’s revenue shot up to $155 million as compared to $104 million in the year-ago period. Its net income increased to $12.4 million as compared to just $2.6 million a year ago.

But this is just the beginning for SSR Mining as gold prices have shot up further of late and SSR Mining has been pulling the right strings to boost growth.

Making the right moves to take advantage of the gold price rally

SSR Mining is on track to exceed its production guidance for the year. The company now estimates that it will deliver 400,000 gold equivalent ounces of production in 2019 at cash costs of $710 to $760 per ounce of gold.

Now, SSR Mining’s output in the first six months of the year came in at 210,000 ounces of gold, so it is quite capable of exceeding its targets. Given that SSR had produced 345,000 ounces of gold last year at cash costs of $736 per ounce, the 2019 outlook seems good enough to help the company deliver strong financial growth.

With gold prices now at more than $1,500 an ounce, SSR Mining’s financial performance is all set to get better in the coming quarters. So investors should not be surprised to see the stock deliver more gains in the coming quarters, which is why it makes sense to keep holding the stock despite its recent gains.

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.


Please enter your comment!
Please enter your name here