In a June 27 research note, CIBC analyst Cosmos Chiu reported that SSR Mining Inc. (SSRM:NASDAQ) acquired two past-producing mines adjacent to its Nevada project Marigold for $22 million in cash plus the assumption of $23.1 million in long-term environmental and reclamation requirements and a 0.5% net smelter royalty.
"We view today's transaction favorably from SSR Mining's perspective as a lower risk and a lower cost way to grow the company's assets," Chiu commented. "We expect the company to be able to leverage its existing infrastructure to grow its production n while lowering costs in the Marigold region."
The analyst described the two acquired properties, including their size, location and past production history. Together spanning 8,900 hectares, they take the SSR Mining's total land ownership in the region to 19,800 hectares.
One of the assets, Trenton Canyon, 7,350 hectares in size and immediately south from Marigold, was previously run by Newmont Goldcorp Corp. (NEM:NYSE) as an open-pit run of mine, heap-leach operation from 1996 to 2001. Past production totaled about 290,000 ounces of gold.
The other asset, Buffalo Valley, comprises 1,550 hectares and sits to the southwest of Marigold. Production, which occurred there from 1989 to 1991, amounted to about 50,000 ounces of gold. The project was a joint venture between Newmont and Fairmile Gold Mining.
Both Trenton Canyon and Buffalo Valley "host the same rock formations as the Marigold mine while displaying more intense host rock alteration," Chiu highlighted.
He noted that upcoming potential catalysts for SSR Mining's stock include a technical study, expected mid-year, determining whether Red Dot can expand or extend production at Marigold. Others are a successful ramp-up at Chinchillas and a possible decision by SSR Mining on whether to divest of or increase its 9.7% ownership stake in SilverCrest Metals Inc. (SIL:TSX.V) and its Las Chispas project in Mexico.
CIBC has an Outperformer rating and a $16.25 per share target price on SSR Mining, whose stock is now trading at around $13.56 per share.
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Disclosures from CIBC, SSR Mining Inc., Company Update, June 27, 2019
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Important Disclosure Footnotes for SSR Mining Inc. (SSRM)
• SSR Mining Inc. is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months.
• CIBC World Markets Inc. has received compensation for investment banking services from SSR Mining Inc. in the past 12 months.
• CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from SSR Mining Inc. in the next 3 months.
