SSR Mining Inc (SSRM) 2007 Q1 法說會逐字稿

Good morning, Ladies and Gentlemen. Welcome to the Silver Standard First Quarter 2007 financial results and corporate update. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded, today, May 14, 2007.

It is now my pleasure to introduce your host Mr. Robert Quartermain. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and welcome to Silver Standard's first quarter results phone call. With me on the call this morning from Management I have Ross Mitchell, our Vice President of Finance; Ken McNaughton, our Vice President of Exploration; Mike Robb, our VP for Corporate Development; and Paul LaFontaine, Director of Investor Relations. I will comment on our financial results and then update you on our project activities. In the first quarter, we lost $1.65 million or $0.03 a share, compared to $1.081 million in Q1 of 06. The loss in the Q1 of this year is due to an increased expenses and this can be attributed to treatment of stock based compensation, and increased staffing in Vancouver due to our increased activity level. We had project expenditures for the first quarter of $17.4 million with the major expenditures going for $3.1 million on engineering related to the Pirquitas project as well as $6.1 million on the purchase of mining equipment for Pirquitas.

We spent $7.1 million for San Luis joint venture in Peru and approximately $4 million was spent at our Pitarrilla project. We ended the quarter with $270 million in working capital, which includes $214 million in cash; marketable securities of $43 million; and silver bullion, which we carried a cost of $15.8 million, which would have had a market value of closer to about $29 million at the end of the quarter. Our marketable securities are largely made up of our interest in Esperanza Silver and [Adinco] Silver.

On the project side, we are moving Pirquitas forward to meet our Q4 2008 start up for production. To date, we have ordered or acquired equipment totaling about $31.5 million and these are prices similar to those quoted in the Hatch Feasibility Study Update, which was completed last year in April of 2006. That study also projected total capital cost of $146 million plus recoverable VAT.

The Techint Group, which is a large Argentine multinational engineering firm, has been selected as the EPCM for the project. And they are commencing detailed project engineering, with construction slated to commence in the third quarter of this year. Since the feasibility study update was completed last year, there have been some cost estimates impacted certainly by higher global material costs and we will be updating capital costs for the project once detailed engineering is completed for the third quarter.

Pirquitas oil reserves from the feasibility study update were calculated using a $5.35 silver price as well as a $0.42 zinc price. The pit at Pirquitas is zoned as a higher grade silver tin core and then a zinc halo around it, so we are redoing the mine model using a $9.35 silver price and $1 pound of zinc. And we would expect to have an updated reserve estimate to accompany the capital cost estimate during the third quarter.

The other project where we're expending cash, of course, is on the San Luis joint venture in Peru with Esperanza Silver. Diamond drilling is continuing on the Ayelén vein, as well as the five other veins that have been identified to date on this large, approximately 250 square kilometer, rental concession. The Ayelén vein is host to a high grade gold/silver zone that has been outlined over 550 meters along strike and 200 meters to depth. And we also released additional high grade encouraging results earlier this morning.

The vein remains open along strike and to depth. We are commencing a program of mapping and sampling on the rest of the property to aim at identifying the source of a number of stream sedimentary chem. anomalies, which we discovered as a result of a 2006 sampling program. During the fourth quarter, Silver Standard became Operator of the joint venture and we have elected to increase our interest to 70% by completing a feasibility study.

At the Pitarrilla project in Mexico, subsequent to the first quarter, we reported a 28% increase in silver resources, as well as significant zinc and lead resources. All of this increase came from drilling at the Breccia Ridge zone. And I would refer you to our news release of April 10 for those results. Drilling is ongoing with five diamond drills in the property. We are doing infield drilling and extension drilling in and around the Breccia Ridge zone and we continue to intersect silver and base metal mineralization at depth.

On Friday, the Board of Directors of the Company approved a $12.5 million underground program that will go in and look at this sulfitic and silver mineralization in the Breccia Ridge zone. To prioritize other targets on this fairly large property, it's about 139 square kilometers in total. We completed an airborne survey and we are also looking to see if we can get two additional rigs into the property to test other zones in and around the main Pitarrilla mineralization as well as new targets on the property. With extensive surface program and the underground program slated or attempted to be commenced this year, we hope to be starting a feasibility certainly later this year or into the start of next year.

A couple of other project highlights, we'll be commencing a 15,000 meter program of diamond drilling during the second quarter on the Diablillos project in Argentina. It's about 250 kilometers south of the Pirquitas Project. The objective of this project is better to define the inferred resources of about 94 million ounces of silver and 800,000 ounces of gold on the property. And we'll report on that through the year.

We also are planning to do a 15,000 meter follow-up program at the wholly owned Snowfield property located in Canada. In 2006, we recorded an initial measured indicated gold resource of 2.35 million ounces of gold with another inferred 650,000 ounces of gold. There's also molybdenum on this property. And we think it has excellent potential to increase the gold resources and we would expect to have updated resource estimates for both Diablillos and Snowfield some time during the fourth quarter of this year.

We did follow our first full quarter 2007 report, which includes a management discussion and I would refer you both to our Website on that as well as our SEDAR filings. And with that, those are the comments that I have with respect to the quarter and I would now like to open up for any questions, which you may have.

Thank you. (OPERATOR INSTRUCTIONS) Your first question comes from Richard Gray, Blackmont Capital. Please go ahead.

Good morning, guys. A couple questions at San Luis. You said the drilling was now going to target the extensions along strike. Why didn't you keep going at depth? Is it a drill rig restraint?

No. We'll continue to drill at depth, Richard. And then we are bringing in a second drill, which has greater capacity to drill at depth as well, the rig there that had some challenges. So, we'll be continuing to drill at depth while we have it in. So, we'll be doing both a long strike and a depth, to the extent that we can.

So, there's no indication that the mineralization is disappearing at depth?

Not yet, no. It's still open at depth and basically, we have reached the capacity of the rig that's on site right now.

Okay. And also, I know I should know this, but when is the first resource coming from San Luis, the first resource estimate?

First resource estimate, we'll probably shoot for the fourth quarter of this year. We want to get in and, like I say, Richard, get the drill in and continue to drill this both along strike and at depth for the Ayelén vein. And then of course, we do want to test some of the other veins, which are on there and see if they might be Incorporated into a resource number. But certainly, with the Ayelén let's look for Q4.

Okay. And just at Pitarrilla, what is the timeline for the underground program? How long do you expect for the permits and then how long before you are able to actually do some drilling from underground?

Well, the permits are in place now. We're still waiting for our explosives storage permit, but we understand that will be coming in the next few weeks. We have been talking to underground contractors, so we would hope within six to eight weeks be underground. We've been doing a lot of the preparation in terms of enlarging the camp and engineering already, so we're actually quite a ways along and we're just waiting for Board approval.

Okay. Sounds pretty good, and just one last question on Pirquitas. Is there any more drilling that's going into the resource update or is it basically just a playing around with the pit models and different prices?

We're going to see on that, Richard. I don't know if you recall, we were doing an underground program just to look at some of the high-grade veins, which were outside of the pit. In doing that, in doing some exploration drifts, we have encountered interesting zinc mineralization, let's say. And so we had done some previously drilling and we're going to talk about that and whether or not we'll be able to mobilize the drill in and do some additional work that could then incorporate potential mineralization into the pit. So currently, we're looking at planning -- the pit envelope is currently outlined but because of additional data, we'll just see whether or not that could be incorporated into a review.

Okay. Thanks a lot. That's it for me.

Your next question comes from Craig West, GMP Securities. Please go ahead.

Good morning, gentlemen. Just a quick question on Snowfield. Wondering if you can give us an update there? I understand you've got drilling probably starting at some point soon here and going through the summer?

Yes. We're trying to get in a bit earlier. We -- our consulting geologist, who will be running the program, was on site last week. And although it is a fairly heavy snow pack this year, that part of the world actually got quite a bit of wind scour. So our temp frames are showing up from under the snow and he feels we can get in possibly as early as mid-June rather than mid-July. So we're hoping to have one drill in mid-June and then the second drill showing up mid-July. And weather, the way it is there, we'll be able to work through the end of September.

Okay. And how much more drilling is to be done there? Do you think you can get things pretty much wrapped up by the end of the summer and then another resource update in the fall?

Yes. We'll do another resource update in the fall. We have 15,000 meters planned, which is basically all we think we can accomplish within the weather window, and whether that actually closes the zone off or not, we'll wait and see. The [gaussian] and the target area is quite large, so it may still be open at the end of the season.

And the other thing there as well, Craig, I think we commented that at the base of the gold/moly. in some of the deeper holes, we were starting to intersect some copper mineralization and base metal mineralization. So we're going to put in a few deep holes just to see what may be depth and whether this is a kind of a classic zoned mineral system. And so, we'll also be able to have some discussion around that once we have those drill results coming out in the third quarter.

So, this it still assumed to be sort of a non-core project but in maximizing value for this project, it's going to depend on what you find there with some of that copper mineralization then?

True, and we probably take it away from being described now as a non-core project. I think it's certainly a project which can add value for our shareholders. The fact that it's gold dominant rather than silver dominant doesn't fit entirely within our model but it's not a property that we're actively looking at doing anything with until we at least get this next phase of drilling in and being able to determine what the true potential could be there. And then see; How do we get that value maximized for our shareholders?

Great. Thank you very much.

Thank you, Ladies and Gentlemen. (OPERATOR INSTRUCTIONS) Your next question comes from Ian Howat, National Bank Financial.

Good morning. With regards to the non-core assets, some of the smaller silver projects, are you sort of aggressively trying to do something with those or are you still more focused on sort of your growth projects and that's sort of something just in the background?

It's something we're focusing a little bit more on, Ian, is how to try and get some maximum value for those for shareholders. As you know, some of these projects, the tail we might call them, are a loss because of the main focus we have on the larger projects. And are we getting full NAB recognition for those properties? And so, we are having some internal discussions around how best to achieve that. Whether one might try to look at monetizing some of those non-core ones or if there are other ways in order to get some additional value out of it. It's not a priority because we've certainly got our plate full with Pirquitas, Pitarrilla and San Luis. But it's some discussion we're having and I would suggest through the rest of the year, we'll come up with some kind of a game plan around some of those specific projects.

Okay, thank you.

Thank you. There are no further questions at this time. Mr. Quartermain, there are no further questions.

No further questions? Well, listen, thank you very much, ladies and gentlemen, for joining us this morning. And we'll look forward to keeping you updated by way of our press release and our next call, which of course occur some time in August. Have a good day, thank you.

Thank you. Ladies and Gentlemen this concludes the conference call for today. You may now disconnect your line and have a great day.