SSR Mining Inc (SSRM) 2007 Q3 法說會逐字稿

Good morning, ladies and gentlemen and welcome to the Silver Standard Third Quarter 2007 Financial Results and project update. (OPERATOR INSTRUCTIONS). Please note that today's conference is being recorded.

It is now my pleasure to introduce your host, Mr. Robert Quartermain.

Thank you, and good morning, ladies and gentlemen. Welcome to this Silver Standard's Third Quarter Conference Call. With me on the call this morning, we have Joe Ovsenek, our Senior Vice President, Corporate, George Paspalas, our Senior Vice President, Operations, Tom Yip, our Vice President, Finance, and Chief Financial Officer, Ken McNaughton, our Vice President of Exploration, and Paul LaFontaine, our Director of Investor Relations. In my remarks this morning, I will deal with our financial performance to update you on project activities and then answer any questions which you may have.

For the quarter ended September 30th, 2007, we reported a net loss of $12.9 million or $0.21 per share. The loss for the nine months ended September 30th, 2007 was $19.4 million or $0.31 per share with earnings -- this is compared to earnings of $18.1 million in the first three quarters of 2006, which reflected a gain of $35 million for the sale of a joint venture interest.

The third quarter 2007 results were impacted by a combination of stock-based compensation expenses of $4.5 million. A write down for estimates of asset-backed commercial paper exposure of $4 million. Foreign exchange losses due to the strengthening Canadian dollar of $2 million and unrealized losses for U.S. dollar hedges of $1.9 million.

If we look at our cash position at the end of December 2006 of $229 million, approximately $77 million has been expended since then, comprised of $44.5 million at Pirquitas, $12.6 million at Pitarrilla, $6.5 million at San Luis, and $8 million at our other projects. Administration costs exclusive of currency losses and stock options were $5.8 million.

These expenditure levels, along with the write down of $4 million reclassification of the remaining $53 million in asset-backed commercial paper as now other investments, bring us to our current cash position of approximately $109 million. Of this $109 million, $76 million in Canadian currency with $33 million in U.S. currency. We also have exposure to an additional $40 million in U.S. dollars based on hedges that were put in place over the summer to meet our six-month projected capital expenditures at Pirquitas. We have reported an unrealized loss of $1.9 million for these hedges.

Turning now to project activities, I will highlight our current areas of primary focus. At Pirquitas, project development is progressing well with the projected schedule for commissioning in the fourth quarter of 2008. The operational and construction management personnel are in place and we continue to train and hire individuals for operations.

We have recently completed our training in truck drivers and now have qualified truck drivers, both male and female on site. The mining fleet has been [delivered] to site and we're currently developing access ways in preparation for pre-stripping the open pit and mine waste disposable areas.

The construction team and the EPCM contractor have commenced mobilization to site and civil works and construction of the gas pipeline have commenced. An updated reserve using higher metal prices is in progress. This updated reserve will use the existing database, which formed the basis for the 107 million resource reserve ounce of the Hatch Feasibility Study update.

In preparing this updated reserve, it became apparent to us that there is significant zinc mineralization peripheral to the silver core, but within areas which previously had been identified as potential waste. We have commenced drilling both in the pit and pit foot wall and our plan is to prepare an updated reserve during the first half of 2008 incorporating this new data.

By way of example drill results received to date include Hole AR-183 drilled into an area classified as waste within the pit. It intersected 98 meters grading 2.17% zinc. Hole AR-174 drilled into the pit wall intersected 31 meters grading 75 grams of silver, 0.4% tin and 27.7 grams of indium, followed by a further 91 meter intersection grading 1.14% zinc, which included a slightly higher grade zone of 27 meters at 1.8% zinc.

We currently have one drill testing this potential. We're also working on an updated capital cost estimate for the project. As you can imagine with continuing changes in energy costs as well as material costs, we are focused on finalizing this cost estimate.

With respect to project financing for Pirquitas, we are in advanced discussions with the bank syndicate, for a syndicated project loan for up to $75 million. At the San Luis project in Peru, we have completed over 24,000 meters of diamond drilling in the property and sufficient in-fill drilling on the [Aileen vein] to estimate a resource, which we expect to have completed during this quarter.

For 2008 with our joint venture partner Esperanza Silver, we are planning to commence underground work in the property and a feasibility study to advance this high grade silver/gold project as quickly as possible to production. In addition, exploration continues on the remainder of this largely unexplored 250 square kilometer concession. At the Pitarrilla project in Mexico, drilling continues to add resource ounces. We have now completed over 280 diamond drill holes and 180 reverse circulation drill holes in the property.

Yesterday, we released our most recent resource estimate updated to Hole PD-244. This was successful in two ways. Our infield drilling was able to move 32 million ounces of silver from the inferred category into the indicated category and our exploration drilling around known mineralization identified an additional 32 million ounces of inferred resources, replacing those that have been upgraded to the indicated category.

We continue with six drills in the property, five of these are infilling. The Breccia Ridge Zone where one drill is well [cadding] for additional mineralized horizons elsewhere in the 100 square kilometer property. We have completed our drill program in the Snowfields property for this year. Due to a high spring snow pack and an early winter, we were not able to complete as much drilling as planned. We did, however, complete more than 7,000 meters of drilling, including both infield drilling as well as resource expansion on the main Snowfield Zone.

We also completed one drill hole a long strike, the Mitchell Zone which is currently being explored by Seabridge adjacent to our property boundary. Drill holes are currently for assaying and will be released once assay results are in. A resource update is expected in the first quarter of 2008.

At the Diablillos project in Northern Argentina, we are continuing with the 15,000 meter program, which is infield drilling and testing new areas in the property. We expect to have more commentary on this project as well as an update of the resource during the first half of 2008.

We also have two other drill programs underway, one at Challacollo, a high grade silver project in Chile. There are, however, occasions for large bulk tonnage [corified] copper mineralization which we are testing. We're also testing our Bowdens property in Australia based on geological modeling and data learned from our exploration at Pitarrilla. Drilling is expected to be completed by the end of the year and any significant results will be reported early next year.

As you can see, we are progressing well in a wide variety of fronts. We plan to move into production next year with the commissioning at Pirquitas late in 2008, advance the San Luis project as quickly as possible through to production, and follow that with the development of the Pitarrilla project.

We will also add value through further exploration programs on Diablillos and Snowfields. Some of our non-core assets such as Shafter, Sunrise Lake, San Marcial and San Agustin have been or will be monetized to redeploy that capital back to our balance sheet.

With our cash currently in hand, debt funding planned for Pirquitas and resolution of the Canadian asset-backed commercial paper issue, we have sufficient funds to meet our current program objectives through 2008. With that, those are my formal remarks.

I would now like to answer any questions which you may have and Sylvia, if you could line questions up please?

Certainly, sir. (OPERATOR INSTRUCTIONS).

And our first question will come from Richard Gray of Blackmont Capital.

Hi, Bob.

Good morning, Richard.

Thanks for the answers on some of those other questions, but on Pirquitas, I mean, you started construction on the pipeline. Does that mean all permits are now in hand?

Yes, and I'll just turn that over to George. Will you take that question please?

Sure, thanks Bob. Thanks for the question, Richard. Yes, all the principal permits that we have to build the project are obtained from all the relevant authorities. We're on a daily basis, we're getting small rights to some of the construction permits we need to take rock from river basins that are a mere formality. So, we can essentially say that we are essentially fully permitted now.

Okay, fair enough. And at Pitarrilla, I mean, by the end of this year, you're saying going to a feasibility study, is that full feasibility study so you're basically skipping scoping, study pre-fees, all that?

No, that would be -- sorry, that would be San Luis would certainly go along with that. I think with Pitarrilla, we're going to continue. We've got the underground work started at Pitarrilla, so we'll go underground. We'll probably be doing certainly some scoping study ahead of moving into something like a full feasibility study, but it's the one project that we continue to advance along. But we'll be doing drilling there through next year, doing the underground development. We have to do underground drilling on it. And both from that date to be able to scope out where we want to move forward with that project.

When do you think is the earliest we'll see some kind of scoping study planned at Pitarrilla?

Well, it's probably going to be well into next year, would that not be true, Ken and George, I think that's probably where - yes, we've got to get the drilling done and then get underground on that?

I think realistically, it will be late next year, yes.

Yes.

Okay, all right thanks guys.

Thank you.

Thank you, and our next question will now come from Rodney Stevens of Salman Partners. Please go ahead.

Just a couple of comments. First of all, I guess, should we expect to see more significant increase in resources at Pitarrilla when you have better access underground?

The underground area, Rodney, is going to be, you know, focusing in on the areas where we've already reported measured and indicated. So, I wouldn't see substantial increases there. I mean, we can't comment. And one reason for going underground is to be able to do the detailed drilling. Much of that is in the indicated category.

So, today, we've always had pleasant surprises. That area is higher grade mineralization, but again, we'll be drilling it in more detail from that underground access area.

Okay, and can you just comment on the debt financing for Pirquitas?

Yes, we currently are in, I would say, advanced discussions with respect to a $75 million syndicated facility. And we'll be able to say a little bit more about that perhaps later in this quarter, but those discussions are proceeding. The only comment I guess I would make on that is one of the reasons for, again, us looking at debt financing is we didn't want to put any hedging as it relates to silver on the project and we continue to move in that direction.

Okay, so you don't think it will be a bottleneck for project development?

Not at our current planned expenditure level, no.

Okay, and then just finally, can you comment on the progress of the sale of non-core assets, or maybe in terms of timing actually?

Yes, well, you know, we have a couple of our projects which are already out under option, which if they come to a successful conclusion would put some capital back in our balance sheet. We are in discussions with other groups with respect to a couple of the other projects and so, they're advancing on a timetable which we've set up. I would expect to be able to comment more of those during the first quarter of next year.

Okay, great. Thanks very much.

Thank you, Rodney.

Thank you. (OPERATOR INSTRUCTIONS).

And at this time, Mr. Quartermain we have no other questions registered.

Great, well, thank you very much, ladies and gentlemen for attending the conference call this morning, and we look forward to updating you in 2008 on our progress. Have a great day. Bye now.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for participating and have yourself a great day.