SSR Mining (SSRM) is a Top Pick for 2023 that falls into the speculative and growth-oriented camps, explains Philip MacKellar, contributing editor to Contra the Heard.
SSR Mining had a terrible 2022: in June a cyanide leak occurred at its flagship Çöpler Mine in Türkiye, prompting the country’s Ministry of Environment to halt production.
This rare operational, but material, mishap crushed the organization’s third quarter production results, generated an uncharacteristic net profit loss, and forced management to reduce its full year outlook. Finally, in late September, SSR was given the green light to restart operations.
While this was certainly an unwelcome event, the operating team was proactive and used the downtime to conduct site maintenance that would have resulted in idle time later in the year. Moreover, the projection for next year looks promising, and gold — which has been flat this year — is returning to form as the US dollar gives back some previous gains.
Supporting SSRM’s thesis is a solid balance sheet, a history of strong revenue growth, and even a modest dividend. It has one of the longest mine life cycles in the industry, and a handful of low-cost assets scattered across Türkiye, Canada, the US, and Argentina.
These operating mines have upside development opportunities and exploration potential too. SSR’s executive team is attempting to make the most of these development and exploration sites by consolidating its land base with the acquisitions of Taiga Gold in Canada and Lidya Mining’s stake in Çöpler.
In 2017, I was fortunate enough to be invited to Çöpler and to see the development firsthand; the scale of what they achieved is truly impressive. Though staff certainly erred with the cyanide spill in June, this is the first significant operational misstep I can recall since we became interested in the name nearly a decade ago.
The company also has a strong operating team, having completed the Çöpler development project on time and under budget years ago. These underlying strengths, plus restarting operations at Çöpler and gold’s potential to rally, should bode well for SSRM owners in 2023.
This outlook has risks along with it too, however, which is why SSRM is my speculative pick for 2023. Gold, for example, may not pan out as I am projecting. Türkiye, where the Çöpler mine is based, faces many economic and socio-political challenges, and insiders (the people most in the know) have been net sellers of stock over the past year. But if the stars align, SSR could shine in 2023.
