SSR Mining (NASDAQ, TSX: SSRM; ASX: SSR) saw a slight bump in its stock price Tuesday after adding another world-class project in Türkiye to its development pipeline, and potentially its fifth producing asset. Its shares were up 0.3% by 1 p.m. EDT, for a market capitalization of C$4.7 billion ($3.5bn).
On Monday, the Canadian miner announced it has reached an agreement to acquire up to a 40% interest along with operational control of the Hod Maden gold-copper development project from Lidya Mines, its joint venture partner on the Çöpler gold mine. The Hod Maden project is 70% owned by Lidya Mines, with the other 30% held by Horizon Copper.
As consideration, SSR will make cash payments totalling $270 million, of which $120 million has been paid upfront for a 10% interest in the project as well as its sole operatorship. The remaining $150 million will be structured milestone payments for an additional 30% interest, payable at the start of construction.
Commenting on the latest addition to its growth pipeline, the company said Hod Maden represents one of the “highest margin and lowest capital intensity development projects” globally, and is expected to deliver an estimated after-tax internal rate of return (IRR) in excess of 15% after acquisition costs.
According to a 2021 feasibility study published by Horizon Copper, Hod Maden features a 13-year mine life averaging (on a 100% basis) approximately 195,000 ounces of gold-equivalent production annually at first quartile co-product AISC of $588/oz., generating $164 million of annual free cash flow and a 36% after-tax IRR.
Based on these figures, the project is expected to provide SSR Mining with approximately an expected attributable 80,000 gold-equivalent ounces and $66 million in free cash flow annually once in production, expected in 2027.
The 3,500-hectare Hod Maden property is located in northeastern Türkiye, approximately 330 km from the company’s Çöpler mine and 260 km from the Copper Hill development prospect. As such, SSR Mining believes this transaction allows for potential synergies and builds on a long-standing partnership with Lidya Mines.
“We have been closely monitoring Hod Maden for well over seven years as it has progressed through critical development and permitting milestones, largely de-risking the project as it approaches a construction decision in 2024,” Rod Antal, president and CEO of SSR Mining, commented in Monday’s news release.
Following review and after discussions with joint venture partners, the company believes there are several positive operational value levers as well as exploration potential beyond the existing life of mine plan that was presented in the 2021 feasibility study.
“We will now spend the next twelve months updating the existing technical report for these value enhancing opportunities, as well as to account for changes in market conditions,” Antal said, adding that the project development team will work to advance Hod Maden to a full construction decision in 2024 with a goal of delivering first production in 2027.
“The same principles and discipline that enabled our team to deliver the Çöpler sulfide plant project in Türkiye on time and under budget will be applied to Hod Maden to help us maximize the value of the project,” he noted.
Following completion of the earn-in milestone payments, SSR Mining will own 40% of the project, Lidya Mines will retain a 30% ownership and Horizon will own the remaining 30%.
Horizon previously acquired its 30% ownership interest from Sandstorm Gold in August 2022 in exchange for a gold stream on the project. SSR Mining said its attributable production and free cash flow are not encumbered by the gold streaming agreement between Horizon and Sandstorm.
As an upside sharing mechanism with Lidya Mines, if an additional 500,000 ounces of gold equivalent mineral reserves beyond those currently identified in feasibility study are delineated, SSR Mining said it will make an $84 million payment to Lidya.
