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FOURTH QUARTER FREE CASH FLOW OF $157 MILLION AND ADJUSTED ATTRIBUTABLE EPS OF $0.50 PER SHARE
DENVER, Feb. 17, 2021 /PRNewswire/ - SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) (ASX: SSR) ("SSR Mining" or "the Company") reports consolidated financial results for the fourth quarter and year ended December 31, 2020.
Rod Antal, President and CEO said, "We exited 2020 with strong operational and financial momentum across all four of our operating assets. The fourth quarter represented the first full quarter following the completion of the Alacer merger, and the results demonstrated the strength of the business with 220,000 gold-equivalent ounces produced at $976 per ounce AISC and $157 million in free cash flow. Given our strong balance sheet we declared our first quarterly dividend in line with our recently instituted capital allocation policy. Our peer leading free cash flow will also provide us the opportunity to assess additional capital returns to shareholders in the form of supplemental dividends and/or share buy-back programs in the future.
In 2021, we remain focused on execution and delivery with the goal of demonstrating our organic ability to sustain 700,000 to 800,000 gold-equivalent ounces of production for the next 5+ years. Our large brownfield growth and exploration pipeline will take center-stage this year as we advance projects and provide clarity on their potential scale and timelines."
Fourth Quarter and Year-End 2020 Highlights:(All figures are in U.S. dollars unless otherwise noted)
(1) | SSR Mining reports the non-GAAP financial measures of all-in sustaining costs ("AISC") per ounce of gold, silver and gold equivalent sold, adjusted attributable net income, adjusted attributable net income per share, free cash flow and consolidated cash to manage and evaluate the Company's operating performance. See "Non-GAAP Financial Measures" in Section 13. |
(2) | Includes full year 2020 production from Çöpler. SSR Mining is not entitled to the economic benefits from Çöpler prior to acquisition. |
Çöpler, Turkey(amounts presented on 100% basis)
Three months ended December 31 | Period from acquisition to December 31, 2020 | Year ended December 31 | ||||
Operating Data | 2020 | 2020 (1) | 2020 (2) | |||
Gold produced - oxide (oz) | 21,200 | 26,458 | 87,548 | |||
Gold produced - sulfide (oz) | 61,830 | 76,158 | 239,360 | |||
Total gold produced (oz) | 83,029 | 102,616 | 326,908 | |||
Gold sold (oz) | 80,388 | 108,283 | 321,272 | |||
Ore mined - oxide (kt) | 1,354 | 1,501 | 2,823 | |||
Ore mined - sulfide (kt) | 935 | 1,034 | 2,255 | |||
Total material mined (kt) | 7,045 | 8,108 | 25,861 | |||
Waste removed (kt) | 4,756 | 5,573 | 20,783 | |||
Strip ratio | 2.1 | 2.2 | 4.1 | |||
Ore stacked - oxide (kt) | 1,292 | 1,413 | 2,841 | |||
Gold grade stacked - oxide (g/t) | 1.20 | 1.20 | 1.13 | |||
Ore processed - sulfide (kt) | 584 | 669 | 2,158 | |||
Gold grade processed - sulfide (g/t) | 3.61 | 3.62 | 3.74 | |||
Gold recovery - sulfide (%) | 90.3 | 90.1 | 90.7 | |||
Average realized gold price ($/oz sold) | $ | 1,876 | $ | 1,887 | $ | 1,763 |
Cash costs ($/oz gold sold) (3, 4) | $ | 619 | $ | 614 | $ | 625 |
AISC ($/oz gold sold) (3, 4) | $ | 748 | $ | 743 | $ | 752 |
Financial Data ($000s) | ||||||
Revenue | $ | 151,970 | $ | 205,536 | N/A | |
Production costs | $ | 79,948 | $ | 120,618 | N/A | |
Depletion and depreciation | $ | 25,158 | $ | 34,053 | N/A | |
Income from mine operations | $ | 46,864 | $ | 50,865 | N/A | |
Exploration and evaluation expenses | $ | 2,605 | $ | 3,558 | N/A | |
Capital expenditures | $ | 18,463 | $ | 22,883 | N/A | |
(1) | The data presented in this column is for the period from September 16, 2020 to December 31, 2020, the period for which the Company was entitled to all economic benefits of Çöpler following the Company's acquisition of Alacer. |
(2) | The operating data presented in this column includes operating results for Çöpler for the entire year ended December 31, 2020, including the period prior to the Company's acquisition of Alacer on September 16, 2020. As the Company was not entitled to the economic benefits of Çöpler prior to the acquisition, financial data for the periods prior to September 16, 2020 are not provided. |
(3) | The Company reports the non-GAAP financial measures of cash costs and AISC per ounce of gold sold to manage and evaluate operating performance at Çöpler. For further information, please refer to Non-GAAP Financial Measures" in Section 13. |
(4) | Cash costs and AISC per ounce of gold sold exclude the impact of any fair value adjustment on acquired inventories as at the date of the Company's acquisition of Alacer. |
Production
During the fourth quarter of 2020, Çöpler produced 83,029 ounces of gold, which included 21,200 ounces of gold production from the Çöpler oxide plant and 61,830 ounces of gold production from the sulfide plant. Production was in line with guidance despite the impacts of COVID-19. The mine plan was revised and other actions taken to mitigate the impacts of COVID-19.
From September 16, 2020, the date of the Company's acquisition of Alacer, to December 31, 2020, Çöpler produced 102,616 ounces of gold, which included 26,458 ounces of gold production from the Çöpler oxide plant and 76,158 ounces of gold production from the sulfide plant.
For the year ended December 31, 2020, Çöpler produced 326,908 ounces of gold, which included 87,548 ounces of gold production from the Çöpler oxide plant and 239,360 ounces of gold production from the sulfide plant. Production was in line with the revised mine plan that was adopted to diversify ore sources and optimize production in light of the shortfall in mine operator numbers resulting from COVID-19.
For the three months and year ended December 31, 2020, oxide ore tonnes mined were 1.4 million and 2.8 million tonnes, respectively. The oxide ore mined grade was 1.16 g/t and 1.06 g/t, respectively.
For the three months and year ended December 31, 2020, sulfide ore tonnes mined were 0.9 million and 2.3 million tonnes, respectively, in line with the revised mine plan.
For the three months and year ending December 31, 2020, the sulfide plant treated 0.6 million and 2.2 million tonnes of sulfide ore, respectively. The sulfide plant continued to efficiently operate above design throughput. Plant gold recovery averaged approximately 91% for the year ended December 31, 2020. Recovery improvement projects continued in the fourth quarter of 2020, some of which continue into 2021.
Mine operator availability suffered in 2020 due to COVID-19 restrictions. The revised mine plan reduced the haulage of material to the tailings storage facility ("TSF"), stockpiling this material for 2021, and allowed for available mining resources to be focused on the Manganese pit cutback. The TSF is approximately 5 kilometers from the mine and is constructed from competent mine waste. Despite the reduced construction rate in 2020 as a result of the impacts from COVID-19, the TSF is advancing ahead of operational requirements. A mining area was also brought into production in the Main Pit to diversify ore sources, in part, as a risk management strategy should COVID-19 related restrictions increase. Total mined tonnes for the fourth quarter and full year 2020, with the revised mine plan, were above the original mine plan.
For the three months and year ended December 31, 2020, the total waste tonnes mined were 4.8 million and 20.8 million tonnes, respectively, in line with the revised mine plan.
The Çöpler District Master Plan 2020 ("CDMP2020"), issued in November 2020, updated the operating parameters of the sulfide plant and includes the results of optimization studies and programs, including the supplemental flotation circuit.
The flotation circuit included in the recent amendment to the Çöpler Environmental Impact Assessment application and incorporated into the CDMP2020 was approved for construction by the Board of Directors. The flotation circuit will treat a side stream from the grinding circuit, with the concentrate reporting to autoclave feed and the tails to leaching. The flotation circuit is anticipated to increase the gold and sulfur grades processed through the autoclaves (increasing autoclave and oxygen utilization), reduce unit costs, and increase total sulfide plant throughput and gold production. Overall recovery declines modestly due to lower float tails recovery. The currently-installed grinding mills have demonstrated significant latent capacity, sufficient to support an increase in sulfide plant throughput capacity up to approximately 3 million tonnes per annum. The capital cost estimate for the flotation circuit is approximately $18 million. At December 31, 2020, the detailed engineering designs for the flotation circuit were 89% complete and the civil construction was 95% complete. The fabrication of the steel work is in progress, with tank delivery at 75% and assembly at 55% completion. The flotation circuit commissioning is targeted for mid-year 2021.
Revenue
Revenue for the fourth quarter of 2020 was $152.0 million as 80,388 ounces of gold were sold at an average realized gold price of $1,876 per ounce.
Revenue for the period from September 16, 2020, the date of the Company's acquisition of Alacer, to December 31, 2020, was $205.5 million as 108,283 ounces of gold were sold at an average realized gold price of $1,887 per ounce.
Gold ounces sold in the fourth quarter of 2020 were lower than production due to the timing of gold pours at year end. Gold ounces sold from the date of acquisition to December 31, 2020 were higher than production due to the sale of finished goods inventory acquired on the acquisition date.
Operating Costs
Cash costs and AISC per ounce of gold sold are non-GAAP financial measures. Please see the discussion under "Non-GAAP Financial Measures" in Section 13.
Unit operating costs remained stable as a weaker local currency offset by the impacts associated with COVID-19. The impact of fair value adjustments on acquired inventories and mineral interests are reflected in production costs and depletion and depreciation, respectively. These impacts have been removed in the calculation of cash costs and AISC per ounce of gold sold (refer to Section 13).
In the fourth quarter of 2020, cash costs per ounce of gold sold were $619. Royalty expense included in cash costs increased due to a combination of higher rate and higher gold prices.
In the fourth quarter of 2020, AISC per ounce of gold sold was $748, which was also affected by increased royalty expense.
Marigold, USA
Three months ended December 31, | Year ended December 31, | |||||||||
Operating Data | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||
Gold produced (oz) | 76,941 | 59,186 | 30% | 234,443 | 220,227 | 6% | ||||
Gold sold (oz) | 73,927 | 61,088 | 21% | 230,043 | 226,957 | 1% | ||||
Total material mined (kt) | 22,699 | 18,457 | 23% | 85,594 | 74,039 | 16% | ||||
Waste removed (kt) | 15,946 | 11,736 | 36% | 62,038 | 48,364 | 28% | ||||
Total ore stacked (kt) | 6,753 | 6,721 | —% | 23,556 | 25,676 | (8)% | ||||
Gold stacked grade (g/t) | 0.48 | 0.36 | 33% | 0.39 | 0.40 | (3)% | ||||
Strip ratio | 2.4 | 1.7 | 41% | 2.6 | 1.9 | 37% | ||||
Average realized gold price ($/oz sold) | $ | 1,885 | $ | 1,478 | 28% | $ | 1,783 | $ | 1,391 | 28% |
Cash costs ($/oz gold sold) (1) | $ | 838 | $ | 778 | 8% | $ | 852 | $ | 811 | 5% |
AISC ($/oz gold sold) (1) | $ | 1,070 | $ | 1,117 | (4)% | $ | 1,222 | $ | 1,034 | 18% |
Financial Data ($000s) | ||||||||||
Revenue | $ | 139,183 | $ | 90,198 | 54% | $ | 409,798 | $ | 315,320 | 30% |
Production costs | $ | 62,228 | $ | 47,472 | 31% | $ | 196,409 | $ | 183,782 | 7% |
Depletion and depreciation | $ | 15,752 | $ | 12,463 | 26% | $ | 47,844 | $ | 52,291 | (9)% |
Income from mine operations | $ | 61,203 | $ | 30,263 | 102% | $ | 165,545 | $ | 79,247 | 109% |
Exploration and evaluation expenses | $ | 427 | $ | 319 | 34% | $ | 2,462 | $ | 936 | 163% |
Capital expenditures | $ | 15,833 | $ | 20,754 | (24)% | $ | 80,161 | $ | 53,702 | 49% |
(1) | The Company reports the non-GAAP financial measures of cash costs and AISC per ounce of gold sold to manage and evaluate operating performance at Marigold. For further information, please refer to "Non-GAAP Financial Measures" in Section 13. |
Production
In the fourth quarter of 2020, 22.7 million tonnes of material were mined, a 23% increase compared to the fourth quarter of 2019. For the year ended December 31, 2020, 85.6 million tonnes of material were mined, a 16% increase over the year ended December 31, 2019. These increases are attributable to shorter haulage cycles coupled with increased fleet capacities in load, haul and drilling.
During the fourth quarter of 2020, 6.8 million tonnes of ore was stacked at a gold grade of 0.48 g/t. This compares to 6.7 million tonnes of ore stacked at a gold grade of 0.36 g/t in the fourth quarter of 2019. The higher grades delivered in the fourth quarter of 2020 as compared to the fourth quarter 2019 are associated with the planned mining of the higher-grade portions of Mackay 4 and Mackay 8. In the fourth quarter of 2019, mining activities focused on the lower grade portions of Mackay 5 and stripping of Mackay 4.
For the year ended December 31, 2020, 23.6 million tonnes of ore was stacked at a gold grade of 0.39 g/t compared to 25.7 million tonnes of ore stacked at a gold grade of 0.40 g/t for the year ended December 31, 2019. The reduction in both ore tonnes stacked and gold grade are associated with the transition from mining higher grade Mackay 5 ore in 2019 to the stripping and mining of Mackay Phases 4 and 8 in 2020.
During the fourth quarter of 2020, Marigold produced a quarterly record 76,941 ounces of gold, an increase of 30% compared to the fourth quarter of 2019 and 15% higher than the previous quarterly record. Production benefited from higher grades stacked at lower lifts on the heap leach pads. A decrease in electrowinning cell inventory also contributed to ounces produced in the fourth quarter of 2020.
Annual production in 2020 of 234,443 ounces was a record for the mine's 32-year history. This was 6% higher than the 220,227 ounces of gold for the year ended December 31, 2019. The increase was due to low stacking elevations throughout 2020 which contributed to faster leach times and a decrease in electrowinning cell inventory during 2020.
Revenue
Revenue increased by 54% to $139.2 million in the fourth quarter of 2020 compared to the fourth quarter of 2019, due to a 28% increase in the average realized gold price and 21% more ounces sold.
Revenue increased by 30% for the year ended December 31, 2020 compared to the year ended December 31, 2019, due to an increase of 28% in the average realized gold price.
Gold ounces sold in the fourth quarter and for the year ended December 31, 2020 were lower than production due to the timing of gold pours at year end.
Operating Costs
Cash costs and AISC per ounce of gold sold are non-GAAP financial measures. Please see the discussion under "Non-GAAP Financial Measures" in Section 13.
Cash costs per ounce of gold sold for the fourth quarter of 2020 was $838, an 8% increase compared to the fourth quarter of 2019, primarily due to an increase in per unit royalty costs due to higher realized gold prices. Cash costs per ounce of gold sold for the full year 2020 were $852, a 5% increase compared to the full year 2019 for the same reason.
In the fourth quarter of 2020, AISC per ounce of gold sold was $1,070, a 4% decrease compared to the fourth quarter of 2019, due to lower capital expenditures per gold ounce sold partially offset by higher cash costs. Capital spend was lower in the fourth quarter of 2020 primarily due to the purchase of a hydraulic shovel in the fourth quarter of 2019 with no comparable purchase in 2020.
AISC per ounce of gold sold for the year ended December 31, 2020 was $1,222, an 18% increase compared to the year ended December 31, 2019 due to higher cash costs and an increase in capital expenditures per gold ounce sold. Capital expenditures were higher than the year ended December 31, 2019, due to mobile mine equipment replacements, increased leach pad construction, dewatering construction costs and higher deferred stripping.
Seabee, Canada
Three months ended December 31, | Year ended December 31, | |||||||||
Operating Data | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||
Gold produced (oz) | 31,915 | 22,069 | 45% | 81,686 | 112,137 | (27)% | ||||
Gold sold (oz) | 28,013 | 24,362 | 15% | 75,837 | 104,915 | (28)% | ||||
Total ore milled (t) | 99,487 | 87,394 | 14% | 255,178 | 344,039 | (26)% | ||||
Ore milled per day (t/day) | 1,081 | 950 | 14% | 697 | 943 | (26)% | ||||
Gold mill feed grade (g/t) | 9.85 | 7.89 | 25% | 10.10 | 9.56 | 6% | ||||
Gold recovery (%) | 98.4 | 97.9 | 1% | 98.4 | 98.2 | —% | ||||
Average realized gold price ($/oz sold) | $ | 1,877 | $ | 1,484 | 26% | $ | 1,790 | $ | 1,398 | 28% |
Cash costs ($/oz sold) (1) | $ | 531 | $ | 505 | 5% | $ | 534 | $ | 464 | 15% |
AISC ($/oz sold) (1) | $ | 787 | $ | 751 | 5% | $ | 939 | $ | 812 | 16% |
Financial Data ($000s) | ||||||||||
Revenue | $ | 52,498 | $ | 36,142 | 45% | $ | 135,230 | $ | 146,141 | (7)% |
Production costs | $ | 15,583 | $ | 12,283 | 27% | $ | 41,308 | $ | 48,470 | (15)% |
Depletion and depreciation | $ | 11,148 | $ | 10,124 | 10% | $ | 28,233 | $ | 36,368 | (22)% |
Income from mine operations | $ | 25,767 | $ | 13,735 | 88% | $ | 65,689 | $ | 61,303 | 7% |
Exploration and evaluation expenses | $ | 2,088 | $ | 1,210 | 73% | $ | 6,108 | $ | 8,770 | (30)% |
Capital expenditures | $ | 8,201 | $ | 5,946 | 38% | $ | 33,758 | $ | 33,559 | 1% |
(1) | The Company reports the non-GAAP financial measures of cash costs and AISC per ounce of gold sold to manage and evaluate operating performance at Seabee. For further information, please refer to "Non-GAAP Financial Measures" in Section 13. |
Production
In response to the COVID-19 pandemic, Seabee was voluntarily placed into temporary care and maintenance on March 25, 2020 as a precautionary measure to protect the Company's employees, their families and communities. Through this period, employees maintained the mine in a state of operational readiness.
In June 2020, a phased restart of the operation commenced. The first phase focused on underground ventilation raises and capital development within the mine while COVID-19-related protocols were assessed. Limited ore extraction was initiated at the end of June. In early July, Seabee commenced the second phase, which involved increasing underground development rates and mine production while continuing to monitor COVID-19 related protocols. In August, the third and final phase commenced, which involved a restart of milling operations and ramp-up to full mine production with a complete workforce, while continuing to maintain effective COVID-19-related protocols. The mine has operated at full capacity since completion of the final phase in August.
During the fourth quarter of 2020, Seabee produced 31,915 ounces of gold, a 45% increase compared to the fourth quarter of 2019, due to increases in tonnes and grade mined and milling of stockpiled ore. Mill feed grade was 9.85 g/t gold during the fourth quarter of 2020, a 25% increase compared to the fourth quarter of 2019, due to the scheduled sequencing of the mine.
For the year ended December 31, 2020, Seabee produced 81,686 ounces of gold, a 27% decrease compared to the year ended December 31, 2019, reflecting that the mill was shut down from March through August 2020, whereas the mill was fully operational in 2019.
Revenue
Revenue increased by 45% in the fourth quarter of 2020 compared to the fourth quarter of 2019 due to a 15% increase in gold ounces sold and a 26% increase in the average realized gold price.
Revenue decreased by 7% for the year ended December 31, 2020 compared to the year ended December 31, 2019, due to a 28% decrease in gold ounces sold, partially offset by a 28% increase in the average realized gold price. The decrease in gold ounces sold is due to the temporary suspension of operations as a result of COVID-19.
Gold ounces sold in the fourth quarter and for the year ended December 31, 2020 were lower than production due to the timing of shipments of gold on carbon fines and the timing of gold pours at year end.
Operating Costs
Cash costs and AISC per ounce of gold sold are non-GAAP financial measures. Please see the discussion under "Non-GAAP Financial Measures" in Section 13.
In the fourth quarter of 2020, cash costs per ounce of gold sold were $531, a 5% increase compared to the fourth quarter of 2019, due to higher general and administrative costs associated with the ramp up to full production.
In the fourth quarter of 2020, AISC per ounce of gold sold was $787, a 5% increase compared to the fourth quarter of 2019, due to higher cash costs. Capital expenditures in the fourth quarter of 2020 related mainly to the tailings expansion project. Full construction activities at the tailings expansion project resumed in early August 2020.
For the year ended December 31, 2020, cash costs per ounce of gold sold were $534, a 15% increase compared to the year ended December 31, 2019, due to higher unit mining and general and administrative costs, driven by the temporary suspension of operations for all of the second quarter and beginning of the third quarter.
For the year ended December 31, 2020, AISC per ounce of gold sold was $939, a 16% increase compared to the year ended December 31, 2019, due to higher cash costs.
Puna, Argentina(amounts presented on 100% basis)
Three months ended December 31, | Year ended December 31, | |||||||||
Operating Data | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||
Silver produced ('000 oz) | 2,165 | 2,132 | 2% | 5,581 | 7,674 | (27)% | ||||
Silver sold ('000 oz) | 1,010 | 2,584 | (61)% | 4,661 | 7,695 | (39)% | ||||
Lead produced ('000 lb) (1) | 6,529 | 7,985 | (18)% | 17,193 | 23,957 | (28)% | ||||
Lead sold ('000 lb) (1) | 3,158 | 9,371 | (66)% | 14,903 | 24,119 | (38)% | ||||
Zinc produced ('000 lb) (1) | 2,932 | 3,007 | (2)% | 6,988 | 8,392 | (17)% | ||||
Zinc sold ('000 lb) (1) | 1,898 | 3,067 | (38)% | 6,039 | 14,072 | (57)% | ||||
Total material mined (kt) | 2,750 | 3,244 | (15)% | 5,696 | 12,282 | (54)% | ||||
Waste removed (kt) | 2,440 | 2,725 | (10)% | 4,879 | 10,839 | (55)% | ||||
Strip ratio | 7.9 | 5.3 | 49% | 6.0 | 7.5 | (20)% | ||||
Ore milled (kt) | 416 | 400 | 4% | 1,118 | 1,394 | (20)% | ||||
Silver mill feed grade (g/t) | 170 | 174 | (2)% | 164 | 184 | (11)% | ||||
Lead mill feed grade (%) | 0.78 | 0.99 | (21)% | 0.77 | 0.89 | (13)% | ||||
Zinc mill feed grade (%) | 0.52 | 0.63 | (17)% | 0.51 | 0.54 | (6)% | ||||
Silver recovery (%) | 95.2 | 95.1 | —% | 94.6 | 93.2 | 2% | ||||
Lead recovery (%) | 90.8 | 91.9 | (1)% | 90.2 | 85.8 | 5% | ||||
Zinc recovery (%) | 61.4 | 54.3 | 13% | 55.5 | 49.2 | 13% | ||||
Average realized silver price ($/oz) | $ | 24.78 | $ | 17.32 | 43% | $ | 21.23 | $ | 16.26 | 31% |
Cash costs ($/oz silver sold) (2) | $ | 8.92 | $ | 8.90 | —% | $ | 11.43 | $ | 10.38 | 10% |
AISC ($/oz silver sold) (2) | $ | 15.90 | $ | 11.18 | 42% | $ | 15.22 | $ | 14.06 | 8% |
Financial Data ($000s) | ||||||||||
Revenue | $ | 27,078 | $ | 51,263 | (47)% | $ | 102,525 | $ | 145,389 | (29)% |
Production costs | $ | 11,822 | $ | 29,424 | (60)% | $ | 60,317 | $ | 97,558 | (38)% |
Depreciation and depletion | $ | 2,634 | $ | 6,924 | (62)% | $ | 15,665 | $ | 17,498 | (10)% |
Income from mine operations | $ | 12,622 | $ | 14,915 | (15)% | $ | 26,543 | $ | 30,333 | (12)% |
Exploration, evaluation and reclamation expense | $ | (2,337) | $ | 492 | (575)% | $ | (2,144) | $ | 786 | (373)% |
Capital expenditures | $ | 6,480 | $ | 5,557 | 17% | $ | 17,690 | $ | 33,819 | (48)% |
(1) | Data for lead production and sales relate only to lead in lead concentrate. Data for zinc production and sales relate only to zinc in zinc concentrate. |
(2) | The Company reports the non-GAAP financial measures of cash costs and AISC per ounce of silver sold to manage and evaluate operating performance at Puna. For further information, please refer to "Non-GAAP Financial Measures" in Section 13. |
Production
On March 20, 2020, Puna temporarily suspended operations as a result of government-mandated restrictions due to the COVID-19 pandemic. Subsequently, the Government of Argentina reinstated mining as an essential business activity. During the second quarter of 2020, a phased restart complying with government regulations and guidelines was implemented with the recommencement of mining, hauling and milling operations. During the third quarter of 2020, COVID-19 infection rates in the Province of Jujuy escalated, resulting in further interruptions to operations. In September, operations were suspended in order to manage camp occupancy, conduct testing and reduce the risk of transmission. Due to the significant ore stockpiles at Puna, milling operations were prioritized over mining operations through restarts. As a result, tonnes mined in the third quarter of 2020 were impacted due to COVID-19 related interruptions. Mining and milling activities were operating at expected levels by the beginning of October 2020.
During the fourth quarter of 2020, Puna produced 2.2 million ounces of silver, a 2% increase compared to the fourth quarter of 2019, due to higher tonnage milled at modestly lower grades. Lead and zinc production decreased 18% and 2% respectively, due to lower base metal head grades with zinc benefiting from a significant increase in recovery due to achieving finer ore grind. Ore milled was 0.4 million tonnes, a 4% increase compared to the fourth quarter of 2019 due to an increase in throughput and shorter shutdowns for scheduled maintenance. Processed ore contained an average silver grade of 170 g/t, a 2% decrease compared to the fourth quarter of 2019, which was in-line with the mine plan. The mill averaged approximately 4,517 tonnes per day during the fourth quarter of 2020, demonstrating an improved performance on plant throughput and tailings pumping system capacity achieved through continuous improvements.
For the year ended December 31, 2020, Puna produced 5.6 million ounces of silver, a 27% decrease compared to the year ended December 31, 2019, due to the temporary suspension of operations in response to COVID-19 during the second and third quarters of 2020. Lead and zinc production was similarly affected by the COVID-19 related shutdowns. Ore milled was 1.1 million tonnes, a 20% decrease compared to the year ended December 31, 2019, also as a result of COVID-19 related shutdowns. Processed ore contained an average silver grade of 164 g/t, an 11% decrease compared to the year ended December 31, 2019, but in-line with the mine plan.
Revenue
Revenue decreased by 47% in the fourth quarter of 2020 compared to the fourth quarter of 2019, due to a 61% decrease in silver ounces sold, partially offset by a 43% increase in the average realized silver price. Sales in the fourth quarter and for the year ended December 31, 2020 were significantly below production due to the normal transport and refining cycles associated with ramp-up after the COVID-19 related shutdowns.
Revenue decreased by 29% for the year ended December 31, 2020 compared to the year ended December 31, 2019, due to a 39% decrease in silver ounces sold as a result of the COVID-19 operational shutdowns, partially offset by a 31% increase in the average realized silver price.
Operating Costs
Cash costs and AISC per ounce of silver sold are non-GAAP financial measures. Please see the discussion under "Non-GAAP Financial Measures" in Section 13.
In the fourth quarter of 2020, cash costs per ounce of silver sold were $8.92, consistent with the fourth quarter of 2019.
In the fourth quarter of 2020, AISC per ounce of silver sold was $15.90, an increase of 42% compared to the fourth quarter of 2019. The increase in AISC was primarily due to higher capital expenditures per silver ounce sold, driven by silver ounces sold well below production due to normal ramp-up times for shipping and selling concentrates.
For the year ended December 31, 2020, cash costs per ounce of silver sold were $11.43, an increase of 10% compared to the year ended December 31, 2019, primarily due to higher mining unit costs, offset by lower processing and general and administrative unit costs as a result of higher average daily plant throughput and the positive impact of the renegotiation of the natural gas contract. Mining costs were higher due to operating inefficiencies through shutdown and start-up phases and an increase in maintenance work performed during the temporary suspensions.
For the year ended December 31, 2020, AISC per ounce of silver sold was $15.22, an increase of 8% compared to the year ended December 31, 2019, due to higher cash costs per ounce sold, offset partially by lower sustaining capital expenditures, mainly due to lower deferred stripping costs and the deferral of capital projects due to impacts of COVID-19.
Exploration and Development
The Company holds a portfolio of prospective exploration tenures across Turkey, the USA, Canada, Mexico and Peru both near or adjacent to the existing operations (near-mine) and greenfield standalone prospects. The Company continues exploring both near-mine and greenfield prospects with a focus on the near-mine targets. Near-mine expansion projects can leverage existing mine infrastructure and capability to generate lower cost, faster development opportunities.
Çöpler District Exploration
The Company takes a disciplined approach to exploration at the Çöpler District, optimizing the historical exploration database, remapping and reinterpreting data, and judiciously drill testing new targets.
A primary focus in the Çöpler District is to fast-track exploration of oxide ore to take advantage of spare oxide plant capacity.
The Çöpler Saddle prospect and the Ardich and Çakmaktepe deposits represent the priorities as near–mine development projects with potential to add to the Company's production profile within the next two to three years.
Çöpler (80% owned)
The operating mine is the center for district exploration activities, with established infrastructure for treating both oxide and sulfide gold ores.
Commencing in 2017, a Çöpler in–pit exploration program successfully provided additional oxide ore to the processing facilities. The in–pit exploration program is ongoing, targeting both oxide and sulfide ore. Recently, the in-pit exploration program identified the possibility of a copper-gold porphyry system below the Main pit. Designated C2, drill testing of the target commenced at the end of the second quarter of 2020 and continued through the third quarter. Initial drill results are encouraging and are described in detail below.
C2 Porphyry Copper-Gold (80% owned)
The C2 target lies directly below the Main pit of the Çöpler mine. In 2020, four diamond drill holes were completed along a line of approximately 730 meters, with all holes intersecting gold-rich copper porphyry mineralization. Chalcopyrite is visible in the drill core with mineralization starting at or close to the bottom of the currently defined Çöpler Main pit.
Some of the newly discovered porphyry intrusive has been exposed in parts of the lower benches. The porphyry has well-developed stockwork and sheeted sulfide-quartz veins. Where exposed in the pit benches, these veins are locally overprinted by thicker quartz-sericite-sulfide veins. The copper mineralization is predominantly chalcopyrite formed as disseminations in the matrix and as thin veins associated with quartz accompanied with rare molybdenite mineralization. There is elevated arsenic in some zones, but this does not seem to be directly correlated to the copper mineralization. The gold mineralization is not visible.
In 2020, the Company drilled eleven diamond core holes totaling 5,379 meters, with results of the first four holes announced in a news release dated November 25, 2020.
Significant results were returned from the initial four holes:
(1) | Copper equivalent calculated as CuEq = [Cu ppm + ((Au ppm*Au price(g) / Cu price(g)) /10,000)]. Based upon metal prices of $1,750/oz gold and $3.00/pound copper with recovery assumed to be 100% as no metallurgical test work has been completed. CuEq will change proportionally to the metal's relative recoveries once metallurgical test work is complete. Intervals reported are sections with more than 0.2%CuEq (and a minimum 0.1%Cu) and less than of 5 meters contiguous dilution. |
Metallurgical test work commenced at a contract laboratory in Canada on C2 diamond drill core samples. Preliminary indications from the metallurgical flotation test work is encouraging. The Company is currently drilling with three diamond drill rigs and plans to increase the number of rigs to nine in the first quarter of 2021.
Ardich Gold Deposit (80% owned)
The Ardich gold deposit is six kilometers northeast of the Çöpler processing facilities and is accessible by the nearby haul road to Çakmaktepe. The deposit mostly forms a tabular flat-lying gold-rich oxide and sulfide zone at the contact between an overlying assemblage of ultramafic rocks and underlying clastic and limestone rock types. The deposit is predominantly oxide mineralization.
A total of 175 drill holes were included in the maiden Ardich Mineral Resource estimate announced November 22, 2019. Since the cut-off date for the November 2019 Mineral Resource, data has been obtained for an additional 129 drill holes for a total of 304 drill holes. Based on the additional drill data, the Company provided an updated Ardich Mineral Resource estimate on November 30, 2020 within the CDMP2020, a summary of which is provided in the table below.
The CDMP20 includes an alternative PEA case including the development of Ardich.
Drilling continues at Ardich as the Mineral Resource remains open for expansion. Subsequent to the November 2020 Mineral Resource estimate published in the Technical Report which included drilling data up to February 2020, a total of 147 additional diamond drill holes totaling 35,147 meters have been drilled in the Ardich project. Development work including additional technical studies and permitting also continues.
Mineral Resource Estimate for the Ardich Deposit (as at the Effective Date) | ||||
Material Type | Resource Category Material | Tonnes (kt) | Au (g/t) | Contained Gold(koz) |
Oxide (LS+HS) | Measured | 4,707 | 1.63 | 246 |
Indicated | 12,817 | 1.62 | 666 | |
Measured + Indicated | 17,524 | 1.62 | 912 | |
Inferred | 4,713 | 1.62 | 246 | |
Sulfide | Measured | 695 | 2.56 | 57 |
Indicated | 2,231 | 3.71 | 266 | |
Measured + Indicated | 2,926 | 3.43 | 323 | |
Inferred | 782 | 4.24 | 107 | |
Total | Measured | 5,402 | 1.75 | 303 |
Indicated | 15,048 | 1.93 | 932 | |
Measured + Indicated | 20,451 | 1.88 | 1,235 | |
Inferred | 5,495 | 1.99 | 352 | |
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