fbpx

Updated Marigold Life of Mine Plan Confirms Near-Term Production Growth and Robust Economics

VANCOUVER, June 18, 2018 /PRNewswire/ – SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) ("SSR Mining") is pleased to report results of an updated life of mine plan for the Marigold mine in Nevada, U.S., evaluating a sustained mining rate from the additional haul trucks added in 2016 and 2018 as well as year-end 2017 Mineral Reserves, for over ten years of mining to 2028.

Paul Benson, President and CEO said, "This life of mine plan builds on our exploration success and Operational Excellence track record at Marigold. Annual gold production is forecast to exceed 265,000 ounces in 2021 and 2022, a more than 30% increase over 2017. The new reserve supports mining for over ten years and gold production for fifteen years, with significant resources and exploration potential existing beyond the currently defined reserves.

Marigold opened in 1989 with an initial estimated eight-year mine life and next year celebrates its 30th year of continuous operation. We continue to invest in exploration at the site and expect to continue to increase reserves and resources."

Marigold Life of Mine Plan Highlights
(All references to "dollars" or "$" are to U.S. dollars and all technical data are presented with an effective date of December 31, 2017 unless otherwise noted.)

  • Robust economics: After-tax net present value of $552 million based on a $1,300 per ounce gold price, a 5% discount rate and the 2017 year-end Mineral Reserves.
  • Large gold reserve base in Nevada: Mineral Reserves of 3.2 million ounces of gold for over ten years of mining to 2028 and gold production through to 2032.
  • Near-term production growth: Average annual production for the period 2019 to 2020 increases to 218,000 ounces of gold, in-line with the 5-Year Outlook announced in 2016.
  • Increased production scale: Average annual production is 236,000 ounces of gold in the first six years, with peak gold production of more than 265,000 ounces of gold in 2021 and 2022.
  • Competitive life of mine cost position: Life of mine cash costs of $730 per payable ounce of gold and all-in sustaining costs of $966 per payable ounce of gold.
  • Low capital intensity: Capital expenditures of $284 million or $120 per ounce of gold over the life of mine.
  • Potential for further mine life extension: Incremental Indicated Mineral Resources of 2.5 million ounces of gold provides potential to extend mine life or increase annual production.

Marigold Project Overview

The Marigold mine is located in southeastern Humboldt County, in the northern foothills of the Battle Mountain Range of Nevada, U.S. The mine is situated approximately five kilometers south-southwest of the town of Valmy, Nevada via a public road emanating from Interstate Highway 80 approximately 325 kilometers east of Reno. The Marigold mine currently encompasses approximately 10,570 hectares. We hold a 100% interest in the Marigold mine through our wholly-owned subsidiary, Marigold Mining Company. The mine has been in continuous production since 1989.

Mineral Resources Estimate

The Mineral Resources estimate is based on all available data for the Marigold mine as at December 31, 2017.

Table 1: Marigold Mine Mineral Resources Estimate (as at December 31, 2017)

Category

Tonnes

Gold Grade

Gold Contained  

(Mt)

(g/t)

Moz

Indicated

Marigold

370.2

0.46

5.47

Marigold Leach Pad Inventory

0.19

Inferred

Marigold

49.7

0.41

0.63

Notes:

Mineral Resources estimate was prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards on Mineral Reserves and Mineral Resources (the "CIM Standards") adopted by the CIM Council on May 10, 2014 and National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") under the supervision of James Carver, SME Registered Member (#509390), our Chief Geologist at the Marigold mine, and Karthik Rathnam, MAusIMM (CP), our Chief Engineer at the Marigold mine, each a qualified person.

Mineral Resources estimate is reported below the as-mined surface as at December 31, 2017 and is inclusive of Mineral Reserves.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of the Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration.

Mineral Resources estimate is reported based on an optimized pit shell at a cut-off grade of 0.065 g/t payable gold (gold assay factored for recovery, royalty and net proceeds per mineral resource block), with a gold price assumption of $1,400 per ounce of gold.

Gold values have been estimated using ordinary kriging for in situ material and Inverse Distance cubed for stockpile material.

Domain-based outlier restriction on gold values ranging between 1.37 g/t and 8.57 g/t has been used for the Mineral Resources estimate.

Densities for different lithological units have been calculated based on detailed test work carried out by SSR Mining and corresponds to historical mine production.

Mineral Resources estimate includes all mineralized material that has the potential for economic recovery of gold from an open pit supply to a run-of-mine heap leach operation.

The Marigold drillhole database, including collar survey, assay, lithology, oxidation and densities, used for the Mineral Resources estimate has been verified by James N. Carver, SME Registered Member, and Karthik Rathnam, MAusIMM (CP), by conducting detailed verification checks, including quality assurance/quality control of location, geological, density and assay data.

The cost, recovery and design parameters considered by optimization calculations for the Mineral Resources estimate are considered appropriate based on the current mine production.

Indicated Mineral Resources estimate that forms a portion of the Probable Mineral Reserves is regarded as appropriate for medium- to long-term production open pit planning and mine scheduling on a quarterly basis.

There are no known legal, political or environmental risks that could materially affect the potential development of the Mineral Resources estimate.

Although Measured Resources, Indicated Resources and Inferred Resources are Mineral Resources confidence classification categories defined by CIM and are recognized and required to be disclosed by NI 43-101, the U.S. Securities and Exchange Commission ("SEC") does not recognize them. Please see "Cautionary Note to U.S. Investors".

Tonnage and grade measurements are in metric units. Contained gold ounces are reported as millions of troy ounces (Moz), and "g/t" represents grams per tonne.

Figures may not total exactly due to rounding.

Mineral Reserves Estimate

The Mineral Reserves estimate is based on all available data for the Marigold mine as at December 31, 2017.

Table 2: Marigold Mine Mineral Reserves Estimate (as at December 31, 2017)

Category

Tonnes

Gold Grade

Gold Contained

(Mt)

(g/t)

Moz

Probable Mineral Reserves

Marigold

205.1

0.46

3.00

Marigold Leach Pad Inventory

0.19

Notes:

Mineral Reserves estimate was prepared in accordance with the CIM Standards and NI 43-101 under the supervision of Thomas Rice, SME Registered Member (#2693800), our Technical Services Manager at the Marigold mine, a qualified person. Trevor J. Yeomans, ACSM, P. Eng, our Director, Metallurgy, is the qualified person who provided metallurgical parameters that were incorporated in the Mineral Reserves estimate.

Mineral Reserves estimate is reported below the as-mined surface as at December 31, 2017.

Mineral Reserves estimate is contained within pit designs generated using Indicated Mineral Resources only and a gold price assumption of $1,250 per ounce.

Mineral Reserves estimate is reported at a cut-off grade of 0.065 g/t payable gold.

Mineral Reserves estimate is reported within a pit design that uses geotechnical parameters proven from actual performance and reviewed by Call & Nicholas, Inc., Geotechnical Consultants. The design is created using a geometry guideline from a Lerchs-Grossman algorithm.

No mining dilution is applied to the grade of the Mineral Reserves. Dilution intrinsic to the Mineral Reserves estimate is considered sufficient to represent the mining selectivity considered.

Mining costs are based on historical values and budgeted costs with an incremental haulage component based on estimated haul cycle times and pit depths. Processing and General & Administrative costs are estimated based on historical values and budgeted costs.

Average LOM strip ratio is 3.2:1 waste to ore.

Metallurgical recovery is calculated using a formula derived through historical information and laboratory test work. The formula is cyanide soluble gold grade divided by total gold grade multiplied by 0.92.

There are no known legal, political or environmental risks that could materially affect the potential development of the Mineral Reserves estimate.

Tonnage and grade measurements are in metric units. Contained gold ounces are reported as millions of troy ounces (Moz), and "g/t" represents grams per tonne.

Figures may not total exactly due to rounding.

Mining and Processing

Marigold uses a standard open pit mining method with a current mining rate of approximately 200,000 tonnes per day, expected to increase beginning 2019 to an annual average of over 225,000 tonnes per day through 2028. The property undertakes conventional drilling and blasting activities to liberate ore and waste. Mining is conducted on 50-foot (15.2 meter) benches for pre-stripping waste and 25-foot (7.6 meter) benches for ore. Loading operations take place with three loading shovels. In February 2018, we approved the purchase of four additional 300 tonne class haul trucks for expected service in the third quarter of 2018, which will expand our truck fleet to 25-300 tonne class haul trucks.

The Marigold processing plant and facilities operate using standard industry run-of-mine heap leaching, carbon adsorption, carbon desorption and electro-winning circuits to produce a final precious metal product in the form of doré. All processing of ore, which is oxide in nature, is completed via run-of-mine heap leach pads, and is a cost effective method to recover gold. Waste is hauled to locations near mining pits to minimize haulage costs. Ore is delivered to the leach pads and stacked in 40-foot (12.2 meter) lifts. In 2018, we expect to complete the construction of an additional leach pad and pumping upgrades, in-line with previous guidance.

Based on the growth of Mineral Reserves since 2014 and updated operating assumptions encompassing the additional haul trucks purchased in 2016 and 2018, the Marigold mine is expected to produce in excess of 235,000 ounces of gold per year on average over the first six years in the updated life of mine plan. Peak production exceeds 265,000 ounces of gold in both 2021 and 2022.  Certain estimated operating, production and cost statistics are detailed in Tables 3, 4 and 5.

Table 3: Operating and Production Statistics

Units

2018-2023

Annual
Average

2018-2027

Annual

Average

Total

Total Material Mined

Mt

82

82

863

Waste Removed

Mt

58

62

657

Ore Stacked

Mt

23

20

205

Strip Ratio

waste:ore

2.48

3.21

Operating Life

years

15

Gold Grade to Leach Pad

g/t

0.42

0.46

Gold Recovery

%

75.1%

74.6%

Gold Production

oz

236,073

211,394

2,373,651

Notes: Annual averages exclude the partial year of mining in 2028.

Table 4: Operating Statistics Per Annum

Year

Ore Mined

Waste Removed

Strip Ratio

Gold Grade

Gold Recovery

(Mt)

(Mt)

(waste:ore)

(g/t)

(%)

2018

28.6

41.7

1.5

0.33

72.4%

2019

21.9

56.3

2.6

0.39

74.0%

2020

20.6

67.0

3.3

0.42

75.3%

2021

23.6

58.1

2.5

0.52

76.0%

2022

21.7

63.1

2.9

0.53

76.8%

2023

24.2

63.3

2.6

0.36

74.7%

2024

11.7

71.3

6.1

0.40

74.0%

2025

7.4

85.0

11.5

0.89

77.0%

2026

18.0

46.6

2.6

0.53

71.9%

2027

20.5

69.4

3.4

0.41

71.9%

2028

6.7

35.5

5.3

0.68

77.3%

Total

205.1

657.5

3.2

0.46

74.6%

Note: Figures may not total exactly due to rounding.

Table 5: Production and Cost Statistics Per Annum

Year

Recoverable Gold
Stacked
on Leach Pads

Gold
Produced

Cash
Costs

All-In Sustaining
Costs

(oz)

(oz)

($/payable ounce of
gold sold)

($/payable ounce of
gold sold)

2018

222,987

196,052

$726

$936

2019

205,947

210,424

$847

$1,062

2020

207,767

225,307

$744

$1,125

2021

300,024

266,101

$603

$940

2022

281,831

266,102

$623

$796

2023

209,683

252,455

$712

$844

2024

112,050

146,198

$924

$1,305

2025

161,894

145,487

$674

$1,426

2026

221,105

201,614

$679

$807

2027

195,903

204,198

$771

$835

2028

113,748

136,637

$712

$787

2029

61,966

$823

$839

2030

20,370

$920

$956

2031

20,370

$1,013

$1,046

2032

20,370

$1,193

$1,219

Total

2,232,938

2,373,651

$730

$966

Notes: Figures may not total exactly due to rounding. Cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold are non-GAAP financial measures. Please see "Cautionary Note Regarding Non-GAAP Measures".

Capital Costs Summary

Capital expenditures over the life of mine are estimated to be $284 million and are consistent with historical operating and maintenance practices. These capital expenditures, which include the addition of the four 300 tonne class haul trucks, are detailed in Table 6. 

Table 6: Summary of Capital Expenditures ($M)

Capital Expenditures

Value

Mining Equipment

$105

Capitalized Equipment Maintenance

$130

Processing

$37

Administration & Permitting

$12

Total Capital Expenditures

$284

Note: Figures may not total exactly due to rounding.

In addition to the capital expenditures outlined above, capitalized stripping during active mining is estimated to be $277 million.

Operating Costs Summary

Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see "Cautionary Note Regarding Non-GAAP Measures".

Total estimated operating costs for the Marigold mine are presented in Table 7. These costs were developed based on actual operating experience and adjusted to consider future operating conditions.

Table 7: Summary of Operating Costs

Operating Costs

Units

Value

Mining

$/t mined

$1.50

$/t processed

$6.32

Processing

$/t processed

$1.22

General and Administrative

$/t processed

$0.67

Total

$/t processed

$8.20

Note: Figures may not total exactly due to rounding.

Estimated cash costs and AISC per payable ounce sold over the life of mine are presented in Table 8.

Table 8: Cash Costs and AISC per Payable Ounce of Gold Sold ($/oz)

Value

Mine Operations (including capitalized stripping)

$544

Processing

$105

General and Administrative

$58

Inventory Adjustment

$36

Royalties & Refining (net of silver credits)

$104

Capitalized Stripping

($117)

Total Cash Costs

$730

Capitalized Stripping

$117

Sustaining Capital

$110

Reclamation and exploration

$9

All-In Sustaining Costs

$966

Note:  Figures may not total exactly due to rounding.

Financial Analysis

Estimated cash flows, as well as Net Present Value ("NPV"), over the life of mine are presented in Tables 9 and 10.

Table 9: Key Financial Estimates

Units

Value

Net Revenue

$M

$3,090

Mining Costs (excluding capitalized stripping)

$M

($1,018)

Processing Costs

$M

($250)

General and Administrative Costs

$M

($137)

Royalties and Other

$M

($247)

Change in Net Working Capital

$M

($14)

Operating Cash Flow

$M

$1,424

Capitalized Stripping

$M

($277)

Capital Expenditures

$M

($284)

Reclamation and Severance

$M

($48)

Salvage Value

$M

$8

Pre-Tax Cash Flow

$M

$823

Tax

$M

($81)

Post-tax Cash Flow

$M

$741

Pre-Tax NPV (5%)

$M

$611

Post-Tax NPV (5%)

$M

$552

Note: Figures may not total exactly due to rounding.

Table 10: Key Economic Assumptions

Assumption

Units

Value

Gold Price

$/oz

$1,300

Oil Price

$/bbl

$65

Average NSR Royalty Rate

%

7.9%

Sensitivity Analysis

The Marigold mine is most sensitive to the gold price. Estimated NPV sensitivities for key operating and economic metrics are presented in Table 11.

Table 11: After-Tax Net Present Value Sensitivity Analysis

Units

-10%

Base Case

+10%

Gold Price

$/oz

$1,170

$1,300

$1,430

NPV (5%)

$M

$392

$552

$737

Operating Costs

$/tonne

$7.38

$8.20

$9.02

NPV (5%)

$M

$664

$552

$437

Capital Expenditures

$M

$256

$284

$312

NPV (5%)

$M

$573

$552

$530

Oil Price

$/bbl

$58.50

$65.00

$71.50

NPV (5%)

$M

$567

$552

$536

Discount Rate           

%

0%

5%

10%

NPV

<span class="prnews_spa