Canadian mining stocks have historically contributed to a substantial portion of the exchange’s market capitalization. In fact, as of 2023, the mining sector accounts for approximately 10-15% of the TSX’s total market value. These stocks are known for their cyclical nature, often experiencing strong price fluctuations in response to changes in commodity prices.
With their significant upside potential during commodity bull markets these stocks have become a key focus for investors looking to capitalize on global economic trends. So, let’s get into a one strong mining stock to keep on your radar.
SSR Mining
SSR Mining (TSX:SSRM) is a mid-tier, diversified mining company primarily focused on the production of precious metals, including gold and silver. Based out of Vancouver, SSR Mining operates several mines across the Americas and Turkey. Its most notable assets include the Marigold mine in Nevada, the Seabee Gold Operation in Saskatchewan, and the Çöpler Gold Mine in Turkey.
Financially, SSR Mining has delivered a solid performance characterized by strong cash flow generation and a robust balance sheet. The company focuses on cost efficiency, aiming to deliver consistent production at low all-in sustaining costs (AISC). This financial discipline allows SSR Mining to maintain profitability even in fluctuating commodity markets.
What’s on deck
SSR Mining’s future outlook is mixed, primarily influenced by the challenges at its Çöpler mine in Turkey. The February 2024 incident at Çöpler, which led to a significant loss of life and operational suspension, remains unresolved, creating uncertainty around the mine’s restart timeline. The company has since undertaken substantial remediation efforts. However, the high associated costs, estimated between $250 to $300 million, and ongoing investigations make it difficult to predict when full operations will resume.
Despite the challenges at Çöpler, SSR Mining’s other operations—Marigold, Seabee, and Puna—are performing in line with expectations. The company reaffirmed its full-year 2024 production guidance of 340,000 to 380,000 gold equivalent ounces, primarily driven by these mines. The Marigold mine is expected to see improved performance in the second half of 2024, with production ramping up and costs decreasing. Also, Seabee and Puna are on track to meet their respective production targets. This should help with some of the financial impacts of the Çöpler suspension.
Looking ahead
In the future, SSR Mining’s strong liquidity position, with over $850 million in available liquidity, provides a cushion to make it through these ongoing challenges. The company’s focus on cost efficiency and maintaining production levels at its other mines will be crucial in sustaining profitability while Çöpler remains offline.
However, the timing and outcome of the Çöpler incident resolution will be pivotal in shaping SSR Mining’s overall performance in the coming quarters. Investors will need to closely monitor developments related to Çöpler and the company’s ability to manage its remediation costs and potential legal liabilities.
Value available
For now, SSR Mining presents a mixed picture as an investment. On the positive side, the company looks undervalued relative to its assets. With a price-to-book ratio of just 0.30, investors are paying only a fraction of the company’s book value per share at $15.28. This suggests that the market might be undervaluing SSR Mining’s underlying assets. Additionally, the forward price-to-earnings (P/E) ratio of 8.35 implies that the stock is relatively inexpensive compared to its earnings potential. This makes it attractive for value-focused investors.
Still, there are several red flags that potential investors should consider. The company’s profitability is a major concern. It holds a trailing 12-month profit margin of -39.15% and a return on equity of -14.67%. So, SSR Mining is currently losing money and not generating sufficient returns for its shareholders.
Bottom line
Despite its attractive dividend yield of 6.11% as of writing, the underlying operational issues and negative profitability metrics suggest that SSR Mining carries significant risk. Yet, it also holds the potential for immense rewards. Investors looking for value might find the stock appealing at its current low valuation. However, they should be aware of the potential for continued volatility and financial challenges. A clear recovery strategy and improvement in profitability would be ideal for SSR Mining — especially if it’s going to be considered a safe and growing investment.
