SSR Mining: BMO Lowers Price Target Due To Rising Costs

On January 31st, SSR Mining Inc. (TSX: SSRM) announced full-year 2021 production, a three-year outlook, and a 40% increase to the current dividend. First, the company produced 794,456 gold equivalent ounces for the full year, almost beating their high-end 800,000-ounce guidance. The company had all-in sustaining costs of $982 per ounce, below their $1,000 low-end estimate.

For the 2022 guidance, the company expects gold production to come in at 585,000 to 655,000 ounces and 8,000,000 to 9,000,000 million ounces of silver produced for the full year 2022. This would bring the total gold equivalent ounces produced to 700,000 to 780,000 ounces, with a cash cost of $790 to $850 per ounce and an all-in sustaining cost of $1,120 to $1,180. The company also expects to spend a total of $76 million, with $22 million earmarked for growth CAPEX and the other $54 million for exploration and development.

You can see SSR’s three-year production outlook below.

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SSR Mining currently has 4 analysts covering the stock with an average 12-month price target of US$25.44, or a 52% upside to the current stock price. All four analysts have buy ratings on the stock. The street high sits at US$29.75, or a 78% upside while the lowest price target comes in at US$21.

In BMO Capital Markets’ note, they reiterate their outperform rating but lower their 12-month price target to C$24 from C$27, saying that the company reported better than average production numbers, and in-line forward guidance for everything other than costs. This is why BMO lowered the company’s 12-month price target.

For the fourth quarter production results, SSR beat BMO’s estimates by 9% total, with gold production coming in 8% higher and silver production coming in 20% higher. BMO says that Seabee was the attributing mine for the beat, as it beat BMO’s estimates by 58%, while Puna also beat their estimates by 20%.

The all-in sustaining costs came in below the company’s 2021 guidance at $982 per ounce, while in the company 2022 guidance, they say the costs will be between $1,120 to $1,180 per ounce. Due to this increase, BMO says that they have lowered their net twelve-month operating cash flow on higher costs.

For the three-year production guidance, BMO says that it was in line with all their estimates. The 40% increase in dividends also bumps their yield to 1.7% and notes that SSR returned roughly $200 million to investors in 2021, which equates to a greater than 5% yield.

Below you can see updated fourth quarter, full-year 2021, and 2022 estimates.

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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