Author: Business Wire

Activist Adam Arviv Announces Intent to Nominate New Slate of Directors to the Board of WonderFi

  • Major shareholders representing ~22% of WonderFi stock are demanding urgent change as share price plummets during the strongest bull run in history for crypto currencies like Bitcoin
  • KAOS Capital CEO Adam Arviv leading the charge to replace the entrenched and disorganized Board that missed opportunities to capitalize on the Company’s position as the only fully regulated crypto exchange in Canada

TORONTO–(BUSINESS WIRE)–KAOS Capital Ltd. (“KAOS”), a significant shareholder in WonderFi Technologies Inc. (TSX: WNDR) (OTCQB: WONDF) (“WonderFi” or the “Company”), today announced its intent to nominate five highly experienced individuals to the WonderFi Board of Directors (the “Board”) ahead of the annual general meeting scheduled to be held on May 21, 2024.


KAOS’s call for change in the Board reflects its dissatisfaction with WonderFi’s lifeless stock performance and its failure to capitalize on its position as the only fully regulated crypto exchange in Canada. The current Board has overseen extremely poor performance as compared to other public securities in the global crypto space during the strongest bull run in history for crypto currencies like Bitcoin.

The current Board has repeatedly refused to engage on plans to restore investor confidence, leading KAOS to this decision to nominate a more effective and engaged slate of directors. KAOS’ call for change has significant support from shareholders, and cumulatively represents approximately 22% of the issued and outstanding shares, including Mogo Inc. (TSX:MOGO) (NASDAQ:MOGO) (“Mogo”), the Company’s largest shareholder, which holds approximately 13% ownership interest, and with whom KAOS has entered into a voting agreement.

KAOS is confident that new leadership will enable WonderFi to realize its significant upside potential and gain traction within the re-accelerating crypto marketplace. KAOS has recognized that the current weak leadership is not capable of capitalizing on opportunities in the marketplace and is holding the Company back, resulting in the stock trading significantly below its comparable peers and Company’s intrinsic value.

As the cryptocurrency market rebounds, WonderFi is uniquely positioned to leverage its position as the only fully regulated crypto exchange in Canada,” said Adam Arviv, CEO of KAOS. “Strong leadership is imperative to capitalizing on this opportunity and the current Board has not shown itself to be capable or engaged enough to lead the way. Rather than engaging constructively and identifying a path forward, the current Board has taken the approach of stonewalling its shareholders. A proxy contest was not our first choice, but unfortunately is now required if shareholder value is to be protected and enhanced.”



This need for new leadership has already been identified by a large proportion of shareholders and every day more shareholders are joining our call for change,” added Arviv. “I encourage the Board not to waste more Company resources and to participate in an orderly transition, given that change is inevitable.”

MISSED OPPORTUNITIES: FAILURE TO CAPITALIZE ON STRENGTHS

As the only Canadian crypto exchange listed on the Toronto Stock Exchange, WonderFi has been unable to seize the opportunities presented by the cryptocurrency rebound. Comparison of WonderFi’s performance with Coinbase and other industry peers highlights significant divergences and underscores ample room for improvement.

This failure is compounded by a lack of product strategy and fragmented brand positioning, eroding investor confidence and perpetuating value destruction. KAOS believes that a valuable asset with significant upside potential is being led astray by a weak Board and Management, squandering opportunities and driving the stock price far below its true intrinsic value.

SIGNIFICANT UNDERPERFORMANCE

Despite the thriving crypto market seeing double and triple-digit growth, the Company’s share price has witnessed significant value destruction this year.

As of market close on March 26, 2024, WonderFi’s stock price performance indicates fundamental underperformance, resulting in shareholder value destruction when compared to similar issuers/assets. A comparison of WonderFi’s share price against Coinbase Global Inc. (NASDAQ: COIN), DeFi Technologies (NEO: DEFI), Galaxy Digital Holdings (TSX: GLXY), MicroStrategy Inc. (NASDAQ: MSTR), and Bitcoin (BTC), across three distinct periods highlights this trend: from the announcement of the WonderFi and Coinsquare deal, the close of the deal, and year-to-date.

During these periods, WonderFi’s stock price performance was as follows: 33% return during the announcement period, 43% return at the close of the deal, and a decline of -10% year-to-date. However, when compared to the average return of the other five selected comparables, WonderFi’s performance exhibited a notable downward variance. The average returns of the comparables were significantly higher in the same periods, demonstrating average returns of 298%, 255%, and 67%, respectively.1

The Company’s missteps lie not only in its financial performance but also in its investor relations strategy, which has favoured issuing superficial press releases over substantive engagement with shareholders. This flawed approach has done little to increase investor confidence, instead raising valid concerns regarding the transparency and credibility of the company’s communication practices.

SUPPORT FROM WONDERFI’S LARGEST SHAREHOLDER

To ensure that WonderFi is on the track to maximizing shareholder value, KAOS and Mogo have entered into a voting agreement where Mogo will support the five nominees put forth by KAOS. This agreement is significant given that Mogo is the Company’s largest shareholder representing approximately 13% ownership interest and brings intimate knowledge of the business and industry in which the Company operates.

Mogo was also the largest shareholder of Coinsquare, which was acquired by WonderFi last year. This alignment creates opportunities for decisive action in guiding WonderFi towards positive outcomes for the Company and all its stakeholders.

POOR CAPITAL ALLOCATION TRACK RECORD

  • In assessing the Company’s capital allocation practices, several areas of concern have surfaced. This includes a lack of strategic coherence in mergers and acquisitions, coupled with inadequate follow-through on integrating acquired assets effectively.
  • The haphazard integration of five acquisitions made over the last two years and the presence of multiple brands and platforms has contributed to market confusion. The Company’s recent announcement on March 19, 2024, regarding the acquisition of FX Institutions Pty. Ltd. in Australia is another example of a misguided go-forward strategy that has confused investors. This acquisition appears to be following the same pattern of previous ill-advised acquisitions under the current Board.
  • Significant impairments from past acquisitions have raised questions about the Board’s oversight. The earlier acquisition of three entities totaling $158 million by December 2022 resulted in impairment charges of $121 million, representing 77% of the acquisition value.
  • In 2023, two additional acquisitions valued at $74 million led to a 70% dilution of shareholder value, with a looming threat of further impairments. This pattern has contributed to an accumulated deficit of approximately $200 million as of September 2023.

TUMULTUOUS TURNOVER IN LEADERSHIP

  • Over the past two years, the Company has experienced a tumultuous turnover in leadership, with changes including the departure of the CEO, two CFOs, the CSO, and multiple directors. This whirlwind of personnel shifts at the executive level has raised concerns regarding the Company’s strategic trajectory and governance practices.
  • As recently as last month, there were discussions around another major change in management with the board and third parties.

LOSS OF TRUST IN LEADERSHIP

  • WonderFi’s shareholders have lost trust in the Board’s ability to protect investors’ interests and lead the Company into the future.
  • KAOS cautions the Board not to take any defensive or further entrenchment actions or attempt to delay the previously scheduled WonderFi shareholder meeting. Any sale, transaction or other fundamental change being contemplated should be halted until shareholders have the opportunity to vote for a refreshed board.
  • Considering the views of a significant percentage of the Company’s shareholders, the urgency of the situation and the likely disruption, distraction, and costs of a proxy contest, the shareholders request that the current Board carefully consider and do what is right for WonderFi and its shareholders.
  • All shareholders are advised the current Board may try to shift focus with an aggressive smear campaign to distract shareholders from the core issue of ongoing value destruction and poor governance. The only thing consistent about this Board’s actions is dysfunction.

KAOS welcomes the opportunity to engage with fellow shareholders who believe that the Company needs better governance and a swift recovery in share price.

Interested parties can contact Kingsdale Advisors to share their concerns about the current leadership of WonderFi by calling 1-855-682-2031 (toll free in North America) or 1-437-561-5036 (text or call enabled outside North America) or emailing contactus@kingsdaleadvisors.com.

About KAOS

KAOS, a Miami-based hedge fund management firm with offices in Nassau, Bahamas, and Toronto, Canada, was founded in 2019 by its CEO, Adam Arviv.

The firm specializes in opportunistic investing in equities venture capital strategies and activist investing, principally in Canada. As an activist, KAOS has won board seats, challenged transactions, strengthened corporate governance, and ensured company leadership remains accountable to maximize shareholder value.

Advisors

Kingsdale Advisors is serving as KAOS’ strategic shareholder and communications advisor; Bennett Jones LLP is serving as legal advisor; and Canaccord Genuity Corp. is serving as the financial advisor.

Stikeman Elliott LLP is acting as legal advisor to Mogo.

Additional Information

The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate and securities laws. While KAOS intends to take additional steps in the future, which may include submitting director nominees pursuant to the advance notice requirements of the Company’s articles, soliciting proxies of shareholders, filing a dissident information circular and/or other actions or steps, shareholders are not being asked to execute or not execute a proxy with respect to any matter at this time (including any potential nominees of KAOS).

1 Financial figures are based on local currency; Bitcoin priced in USD.

Contacts

Kingsdale Advisors:

Aquin George

Director, Special Situations

Phone: 647-265-4528

Email: ageorge@kingsdaleadvisors.com

Dynacor Group Reports a Record Annual Production of 130,001 AuEq Ounces Generating a Record Net Income of US$15.1 Million (US$0.39 or C$0.53 Per Share), and Its 13th Consecutive Annual Profit in 2023

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MONTREAL — Dynacor Group Inc. (TSX: DNG) (Dynacor or the Corporation) released its audited annual consolidated financial statements and the management’s discussion and analysis (MD&A) for the year ended December 31, 2023.

These documents have been filed electronically with SEDAR+ at www.sedarplus.com and will be available on the Corporation’s website www.dynacor.com.

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(All figures in this press release are in Ms of US$ unless stated otherwise. All amounts per share are in US$. All variance % are calculated from rounded figures. Some additions might be incorrect due to rounding).

2023 OVERVIEW AND HIGHLIGHTS

OVERVIEW

Dynacor completed 2023 with both production and financial historical high performances generating its thirteenth (13th) consecutive year of profit. The Corporation achieved a production record of 130,001 AuEq ounces powering total sales to $250.2 million (CA$337.6 million), an increase of +26.7% compared to 2022 and a net income of $15.1 million (US$0.39 or CA$0.53 per share), an increase of +25.8% compared to 2022.

2023 was the first full year of operation at a processing capacity of 500 tonnes per day. Thanks to its high level of ore inventory at the opening of the year and the high volume of ore supplied and purchased, the mill has been able to operate at full capacity throughout the year averaging a new daily record processing rate of 468 tpd.

HIGHLIGHTS

Operational

  • Historical high ore volume supplied. Total ore volume supplied reached an all time high of 182,500 tonnes in 2023 (147,500 tonnes in 2022). Year-end ore inventory was over 21,000 tonnes representing more than 40 days of production throughput;
  • Highest yearly volume processed. In 2023, the Veta Dorada plant processed a historical high volume of 170,668 tonnes of ore (468 tpd average) compared to 150,819 tonnes in 2022 (413) a +13.2% increase;
  • Record high yearly gold production. In 2023, the gold equivalent production amounted to 130,001 AuEq ounces compared to 110,359 AuEq ounces in 2022 a +17.8% increase.

Financial

  • Increasing trend in gold prices, favorable FX effect and high operational performance impacted the 2023 financial performance. The gold price has increased from 1,840 $/oz in January 2023 to 2,060 $/oz in December as well with the higher tonnage processed positively impacted the production figures.
  • Solid cash position. Despite the significant increase in the level of ore inventory, cash on hand remained solid at $22.5 million at year-end 2023 compared to $25.6 million at year end 2022;
  • Historical high sales. Sales amounted to $250.2 million in 2023 compared to $197.5 million in 2022, a +26.7% increase;
  • Increased in gross operating margin in $. Gross operating margin amounted to $30.2 million (12.1% of sales) in 2023, compared to $24.4 million (12.4% of sales) in 2022;
  • Increased operating income. Operating income of $22.1 million in 2023 compared to $18.1 million in 2022, a +22.1% increase;
  • Cash gross operating margin of $257 per AuEq ounce sold(1) compared to $249 in 2022;
  • Increased EBITDA. EBITDA (2) of $25.5 million, compared to $21.2 million in 2022, a +20.3% increase;
  • Increased cash-flows. Cash flows from operating activities before change in working capital items of $18.6 million ($0.49 per share) (3) compared to $14.9 million ($0.38 per share) in 2022.
  • Historical high net income. Dynacor recorded an historical high net income of $15.1 million in 2023 (US$0.39 or CA$0.53 per share) compared to $12.0 million (US$0.31 or CA$0.40 per share) in 2022.

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Return to Shareholders

  • Share buy-back. 1,127,397 common shares repurchased for $2.9 million (CA$3.9 million) in 2023, compared to 819,416 common shares for $1.9 million (CA$2.4 million) in 2022;
  • Increased dividends. Continuation of monthly dividend payments which had been increased by +20% at the beginning of 2023 to CA$0.12 per share per year for a total of $3.4 million. This was recently followed by a new increase to CA$0.14 per year from January 2024

(1) Cash gross operating margin per AuEq ounce is in US$ and is calculated by subtracting the average cash cost of sale per equivalent ounces of Au from the average selling price per equivalent ounces of Au and is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another company.

(2) EBITDA: “Earnings before interest, taxes and depreciation” is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. The Corporation uses this non-IFRS measure as an indicator of the cash generated by the operations and allows investor to compare the profitability of the Corporation with others by canceling effects of different assets basis, effects due to different tax structures as well as the effects of different capital structures.

(3) Cash-flow per share is a non-IFRS financial performance measure with no standard definition under IFRS Accounting Standards. It is therefore possible that this measure could not be comparable with a similar measure of another corporation. The Corporation uses this non-IFRS measure which can also be helpful to investors as it provides a result which can be compared with the Corporation market share price.

RESULTS FROM OPERATIONS

Consolidated Statement of net income and comprehensive income

For the years ended

December 31,

(in $’000)

2023

2022

Sales

250,189

197,545

Cost of sales

(219,989)

(173,120)

Gross operating margin

30,200

24,425

General and administrative expenses

(7,096)

(5,970)

Other projects expenses

(1,005)

(318)

Operating income

22,099

18,137

Financial income net of expenses

750

85

Foreign exchange gain (loss)

98

(105)

Income before income taxes

22,947

18,117

Current income tax expense

(8,311)

(6,548)

Deferred income tax recovery

432

445

Net income and comprehensive income

15,068

12,014

Earnings per share

Basic

$0.39

$0.31

Diluted

$0.39

$0.30

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Total sales amounted to $250.2 million compared to $197.5 million in 2022. The $52.7 million increase is explained by quantities sold and higher average selling prices contributing to respectively a +$35.1 million and a +$17.6 million increase.

The 2023 gross operating margin amounted to $30.2 million (12.1% of sales) compared to $24.4 million (12.4% of sales) in 2022. The 2023 gross operating margin in dollar was positively impacted by higher sales and by the overall positive trend in gold market prices compared to 2022.

General and administrative expenses amounted to $7.1 million in 2023 compared $6.0 million in 2022. The increase is mainly explained by increases in salaries and share-based expenses.

Other projects represent the expenses incurred by the Corporation to duplicate its unique business model in the same or other jurisdictions.

A $7.9 million income tax expense was also recorded in 2023. This expense includes $0.5 million of withholding tax paid on dividends received from the subsidiary and a -$0.5 million (non-cash) deferred income tax recovery. The deferred tax expense or recovery is mainly explained by the variance throughout the period of the Peruvian Sol against the US$ which affect long term assets local tax basis. Future fluctuations will affect positively or negatively the deferred tax at the end of each period.

Reconciliation of non-IFRS measures

(in $’000)

For the years ended

December 31,

2023

2022

Reconciliation of net income and comprehensive income to EBITDA

Net income and comprehensive income

15,068

12,014

Income taxes expense (current and deferred)

7,879

6,103

Financial income net of expenses

(757)

(85)

Depreciation

3,349

3,205

EBITDA

25,539

21,237

CONSOLIDATED CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES AND WORKING CAPITAL AND LIQUIDITY

Operating activities

For the year ended December 31, 2023, the cash flow from operations, before changes in working capital items, amounted to $18.6 million compared to $14.9 million for the year ended December 31, 2022. Net cash from operating activities amounted to $9.6 million compared to $6.2 million for the year ended December 31, 2022. Changes in working capital items amounted to (-$9.0 million) compared to (-$8.7 million) for the year ended December 31, 2022.

Investing activities

In 2023, Dynacor invested $6.5 million in capital expenditure including $3.0 million for the purchase of an office in Lima. Other investments comprised of additions to the plant and purchases of rolling stocks. All investments have been financed with internally generated cash-flows.

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Financing activities

In 2023, monthly dividends of CA$0.01 representing an annual total of CA$0.12 per share were disbursed for a total consideration of $3.4 million (CA$4.6 million). In 2022, monthly dividends of CA$0.0083 representing a total of CA$0.10 per share were disbursed for a total consideration of $3.0 million (CA$3.9 million).

In 2023, 1,127,397 common shares were repurchased under the Corporation normal course issuer bid share buyback program for a total cash consideration of $2.9 million (CA$ 3.9 million) (819,416 shares for a total cash consideration of $1.9 million (CA$ 2.4 million) in 2022).

Subsequent to December 31, 2023, the Corporation has repurchased 926,800 common shares for a total cash consideration of $2,751,499 (CA$ 3,705,613), an average repurchase cost of $2.97 (CA$4.00) per share.

Working capital and liquidity

As at December 31, 2023, the Corporation’s working capital amounted to $50.8 million, including $22.5 million in cash ($43.7 million, including $25.6 million in cash at December 31, 2022).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at December 31, 2023, total assets amounted to $111.8 million ($96.9 million as at December 31, 2022). Major variances since last year-end come from the significant increase in inventories and the variance in the trade and other payables.

(in $’000)

As at

December 31,

As at

December 31,

2023

2022

Cash

22,481

25,595

Accounts receivable

13,328

12,298

Inventories

31,925

16,447

Prepaid

277

223

Current tax assets

371

Property, plant and equipment

24,590

21,392

Right-of-use assets

613

701

Exploration and evaluation assets

18,566

18,543

Other non-current assets

1,332

Total assets

111,780

96,902

Trade and other payables

15,357

11,168

Asset retirement obligations

3,724

3,642

Current tax liabilities

1,799

Deferred tax liabilities

677

1,110

Lease liabilities

636

701

Shareholders’ equity

89,587

80,281

Total liabilities and equity

111,780

96,902

OUTLOOK 2024

Ore processing

For 2024, the Corporation forecasted sales (1) ranging between $265-285 million representing a growth of 6-14% over 2023 sales. Net income is forecasted ranging between $12-15 million ($0.33-0.41 per share) (CA$0.45-0.56 per share) and include expenses of $2.7 million to advance other projects in other jurisdictions.

Dynacor Group plans to invest up to US$13 million in capital expenditures in 2024. This investment will be used at our Veta Dorada plant for new equipment to improve efficiency, increase tailing pond capacity, vehicles to support the security of our purchasers working in remote areas and will include, upon favourable conditions, up to $4 million to pursue the due diligence process and development of new projects in other jurisdictions.

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(1) Using a market gold price ranging between $2,000 and $2,050 per ounce

ABOUT DYNACOR

Dynacor is a dividend-paying industrial gold ore processor headquartered in Montreal, Canada. The corporation is engaged in gold production through the processing of ore purchased from the ASM (artisanal and small-scale mining) industry. At present, Dynacor operates in Peru, where its management and processing teams have decades of experience working with ASM miners. It also owns a gold exploration property (Tumipampa) in the Apurimac department.

The corporation intends to expand its processing operations in other jurisdictions as well.

Dynacor produces environmental and socially responsible gold through its PX IMPACT® gold program. A growing number of supportive firms from the fine luxury jewelry, watchmakers and investment sectors pay a small premium to our customer and strategic partner for this PX IMPACT® gold. The premium provides direct investment to develop health and education projects for our artisanal and small-scale miner’s communities.

Dynacor is listed on the Toronto Stock Exchange (DNG).

FORWARD-LOOKING INFORMATION

Certain statements in the preceding may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of Dynacor, or industry results, to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statements. These statements reflect management’s current expectations regarding future events and operating performance as of the date of this news release.

Shares Outstanding: 36,523,356

Website: http://www.dynacor.com
Twitter: http://twitter.com/DynacorGold

View source version on businesswire.com: https://www.businesswire.com/news/home/20240327580901/en/

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Contacts

For more information, please contact:

Director, Shareholder Relations
Dale Nejmeldeen
Dynacor Group Inc.
T: 514-393-9000 #230
E: investors@dynacor.com

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This Week in Flyers

Largo Reports Fourth Quarter and Full Year 2023 Financial Results; Continued Focus on Operational Improvements and Cost Reduction to Offset Depressed Vanadium Prices

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All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated.

Q4, Full Year 2023 and Other Highlights

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  • Revenues of $44.2 million in Q4 2023, 7% below Q4 2022; Revenues per pound sold1 of $7.69 in Q4 2023 vs. $7.77 in Q4 2022
  • Operating costs of $43.2 million in Q4 2023 vs. $44.5 million in Q4 2022; Cash operating costs excluding royalties per pound1 V2O5 equivalent sold of $5.44 in Q4 2023 vs. $5.15 in Q4 2022
  • Net loss of $13.3 million in Q4 2023, which included $6.6 million in non-recurring items vs. net loss of $15.6 million in Q4 2022, which included $6.3 million in non-recurring items; Basic loss per share of $0.21 in Q4 2023 vs. basic loss per share of $0.24 in Q4 2022
  • Adjusted EBITDA2 of $1.4 million in Q4 2023 increased by 138% from that seen in Q4 2022
  • Revenues of $198.7 million in 2023, 13% below 2022; Revenues per pound sold1 of $8.66 in 2023 vs. $9.38 in 2022
  • Operating costs of $174.8 million in 2023 vs. $169.7 million in 2022, and cash operating costs excluding royalties per pound1 V2O5 equivalent sold of $5.30 in 2023 vs. $4.57 in 2022; Within revised annual cash operating costs excluding royalties1 per pound guidance for 2023
  • Net loss of $32.4 million in 2023, which included $10.3 million in non-recurring items vs. net loss of $2.2 million in 2022, which included $13.8 million in non-recurring items; Basic loss per share of $0.51 in 2023 vs. basic loss per share of $0.03 in 2022
  • Adjusted EBITDA2 of $12.1 million in 2023 vs. $41.6 million in 2022
  • Cash balance of $42.7 million, net working capital3 surplus of $94.7 million and debt of $75.0 million exiting 2023
  • V2O5 production of 2,768 tonnes in Q4 2023, a 38% increase over the 2,004 tonnes produced in Q4 2022; Annual V2O5 production of 9,681 tonnes in 2023 vs. 10,436 tonnes in 2022 and within the Company’s revised 2023 production guidance range of 9,000 – 11,000 tonnes
  • Quarterly sales of 2,605 tonnes of V2O5 equivalent (inclusive of 139 tonnes of purchased material) in Q4 2023 vs. 2,774 tonnes in Q4 2022; Annual V2O5 equivalent sales of 10,396 (inclusive of 929 tonnes of purchased material) tonnes in 2023 vs. 11,091 tonnes in 2022 and within the Company’s revised 2023 sales guidance of 8,700 – 10,700 tonnes
  • In Q4 2023, Largo Clean Energy’s (“LCE”) 6 megawatt-hour vanadium flow battery deployment for Enel Green Power España (“EGPE”) was validated to operate on test conditions according to EGPE specifications and LCE test procedures
  • On March 18, 2024, the Company announced the signing of a non-binding letter of intent with Stryten Energy LLC (“Stryten”) to establish a 50:50 joint venture that would combine the Company’s wholly owned subsidiary, LCE with Stryten’s vanadium redox flow battery (“VRFB”) business
  • The Company produced 8,970 tonnes of ilmenite concentrate in Q4 2023; In January and February 2024, the Company produced 5,100 tonnes and 2,000 tonnes of ilmenite concentrate, respectively
  • Q4 and FY 2023 results conference call: Friday, March 22 at 1:00 p.m. ET

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Vanadium Market Update4

  • The average benchmark price per pound of V2O5 in Europe was $6.46 in Q4 2023, a 22% decrease from the average of $8.25 seen in Q4 2022; The average benchmark price per pound of V2O5 in Europe was $6.53 as at December 31, 2023, a 31% decrease from the average of $9.44 seen as at December 31, 2022
  • Vanadium spot demand was soft in Q4 2023, primarily due to adverse conditions in the Chinese and European steel industries, however, strong demand from the aerospace sector continued
  • The average benchmark price per pound of V2O5 in Europe as of March 15, 2024 was $6.05

TORONTO — Largo Inc. (“Largo” or the “Company“) (TSX: LGO) (NASDAQ: LGO) today released financial and operating results for the three and twelve months ended December 31, 2023. The Company reported annual vanadium pentoxide (“V2O5”) equivalent sales of 10,396 tonnes at a cash operating cost excluding royalties per pound1 sold of $5.30.

Daniel Tellechea, Interim CEO and Director of Largo, stated: “The Company’s financial results continued to be adversely affected by lower vanadium prices as highlighted by a sharp decline in the European V2O5 price of 22% in Q4 2023 compared to Q4 2022. We remain committed to achieving greater levels of operational efficiency at the Maracás Menchen Mine in order to meet production and sales targets improve cash flow going forward.”

He continued: “A number of notable achievements were made by the Company during 2023, including the successful construction and commissioning of a new ilmenite concentration plant. We continue with the ramp-up of production at this facility, further diversifying our revenue stream from our existing vanadium operations. Largo’s exploration efforts surrounding the Maracás Menchen Mine have become an increasingly important part of our story over the last few quarters, and we continue to advance our efforts in this area. Following our recent announcement on our review and evaluation of strategic alternatives to unlock and fully maximize the value of LCE, we look forward to continuing discussions with Stryten over the coming weeks.”

He concluded: “While vanadium appears to have very promising long-term fundamentals, the Company remains solely focused on reducing costs and meeting its production and sales targets to withstand the current period of low vanadium prices.”

Financial and Operating Results – Highlights

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(thousands of U.S. dollars, except as otherwise stated)

Three months ended

Year ended

Dec. 31, 2023

Dec. 31, 2022

Dec. 31, 2023

Dec. 31, 2022

Revenues

44,170

47,501

198,684

229,251

Operating costs

(43,218)

(44,455)

(174,758)

(169,719)

Net income (loss)

(13,301)

(15,636)

(32,358)

(2,226)

Basic earnings (loss) per share

(0.21)

(0.24)

(0.51)

(0.03)

Adjusted EBITDA2

1,385

(3,680)

12,127

41,583

Cash (used) provided before working capital items

(2,364)

(14,055)

5,267

21,424

Cash operating costs excl. royalties5 ($/lb)

5.44

5.15

5.30

4.57

Cash

42,714

54,471

42,714

54,471

Debt

75,000

40,000

75,000

40,000

Total mined – dry basis (tonnes)

3,490,711

2,737,149

14,864,394

10,517,210

Total ore mined (tonnes)

473,958

326,552

1,752,982

1,359,927

Effective grade6 of ore milled (%)

1.03

1.06

1.04

1.26

V2O5 equivalent produced (tonnes)

2,768

2,004

9,681

10,436

Q4 & Full Year 2023 Notes and Other Highlights

  • The Company recorded a net loss of $32.4 million in 2023 compared with a net loss of $2.2 million in 2022, largely driven by a 13% decrease in revenues and an increase in certain expenses, most notably a 3% increase in operating costs, a 506% increase in finance costs, a 195% increase in exploration and evaluation costs and a write down of vanadium assets of $4.9 million.
  • In 2023, the Company saw increased direct mine and production costs, primarily due to an increase in total ore mined in 2023, the cost impacts of low ore availability experienced earlier in the year and plant shutdowns for corrective maintenance during 2023. The Company’s direct mine and production costs decreased in Q4 2023 as compared with Q4 2022, reflecting the impact of the cost saving and operational improvement initiatives implemented at the mine, as well as the softening of prices for critical consumables.
  • The Company continues to actively work towards achieve higher levels of operational efficiency to better manage its costs as it navigates lower grades of ore mined as compared with prior years. In Q4 2023, V2O5 equivalent production was 28% higher than the 2,163 tonnes produced in Q3 2023 and 38% higher than the 2,004 tonnes produced in Q4 2022. The global recovery7 achieved in Q4 2023 was 79.4%, an increase of 6.3% from the 74.7% achieved in Q4 2022 and 3.3% higher than the 76.9% achieved in Q3 2023. The total ore mined in Q4 2023 was 473,958 tonnes, an increase of 45% in comparison with Q4 2022. 1,752,982 tonnes of ore were mined in 2023, an increase of 29% as compared with 2022. Actions were taken to increase crushing availability and normal production levels were recovered in Q4 2023. Total ore crushed in Q4 2023 was 8% higher than in Q3 2023 and 35% higher than in Q4 2022. For 2023, total ore crushed was 9% higher than in 2022.
  • For 2023, total professional, consulting and management fees decreased by 9% from 2022 and other general and administrative expenses decreased by 18% from 2022, both as a result of reduced activity and headcount at LCE as a result of the initiation of the strategic review. Additionally, technology start-up costs decreased by 52% in 2023 compared with 2022 primarily due to a write down of battery components inventory in Q4 2022 of $6.4 million and a decrease in activities at LCE in Q4 2023 as the installation of its battery project nears conclusion.
  • In 2021, the Company signed a 10-year exclusive off-take agreement with Gladieux Metals Recycling (“GMR”) for the purchase of all standard and high purity grade vanadium products GMR produces. The Company is committed to the purchase of a minimum of 360 tonnes of V2O5 in 2024 and its onward distribution to customers.
  • Subsequent to Q4 2023, production in January 2024 was 582 tonnes of V2O5 equivalent with 276 tonnes of V2O5 equivalent produced in February 2024. Lower production achieve in the first two months of Q1 2024 is attributable to the Company’s previously announced kiln refractory maintenance. Subsequent to Q4 2023, sales in January 2024 were 1,072 tonnes of V2O5 equivalent, with 1,065 sold in February 2024.

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The information provided within this release should be read in conjunction with Largo’s annual consolidated financial statements for the years ended December 31, 2023 and 2022 and its management’s discussion and analysis for the year ended December 31, 2023 which are available on our website at www.largoinc.com or on the Company’s respective profiles at www.sedarplus.com and www.sec.gov.

About Largo

Largo is a globally recognized vanadium company known for its high-quality VPURE™ and VPURE+™ products, sourced from its Maracás Menchen Mine in Brazil. The Company is currently focused on the ramp-up its ilmenite concentrate plant and is undertaking a strategic evaluation of its U.S.-based clean energy business, including its advanced VCHARGE vanadium battery technology to maximize the value of the organization. Largo’s strategic business plan centers on maintaining its position as a leading vanadium supplier with a growth strategy to support a low-carbon future.

Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.

Cautionary Statement Regarding Forward-looking Information:

This press release contains “forward-looking information” and “forward-looking statements” (collectively, “forward looking statements”) within the meaning of applicable Canadian and United States securities legislation. Forward‐looking statements in this press release include, but are not limited to: the achievement of operational stability; Largo’s ability to improve cash flow in the future; expected sales; diversifying the Company’s product offering; optimizing operations, continued advancements at the Maracás Menchen Mine; the conclusion of the installation of Largo’s battery project; and future commitments to purchase V2O5..

The following are some of the assumptions upon which forward-looking statements are based: that general business and economic conditions will not change in a material adverse manner; demand for, and stable or improving price of V2O5 and other vanadium commodities; receipt of regulatory and governmental approvals, permits and renewals in a timely manner; that the Company will not experience any material accident, labour dispute or failure of plant or equipment or other material disruption in the Company’s operations at the Maracás Menchen Mine or relating to LCE; the availability of financing for operations and development; the ability to mitigate the impact of continuing heavy rainfall; the Company’s ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; that the estimates of the resources and reserves at the Maracás Menchen Mine are within reasonable bounds of accuracy (including with respect to size, grade and recovery and the operational and price assumptions on which such estimates are based); the Company’s “two-pillar” business strategy will be successful; the Company’s sales and trading arrangements will not be affected by the evolving sanctions against Russia; and the Company’s ability to attract and retain skilled personnel and directors; the ability of management to execute strategic goals.

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Forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. All information contained in this news release, other than statements of current and historical fact, is forward looking information. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Largo or LCE to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks described in the annual information form of Largo and in its public documents filed on www.sedarplus.com and available on www.sec.gov from time to time. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Readers should also review the risks and uncertainties sections of Largo’s most recent annual and interim MD&A, which also apply. Largo’s most recent annual and interim MD&A are available on Largo’s SEDAR+ profile at www.sedarplus.com.

Trademarks are owned by Largo Inc.

Non-GAAP8 Measures

The Company uses certain non-GAAP measures in this press release, which are described in the following section. Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under IFRS, the Company’s GAAP, and might not be comparable to similar financial measures disclosed by other issuers. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Management believes that non-GAAP financial measures, when supplementing measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company.

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Revenues Per Pound Sold

This press release refers to revenues per pound sold, a non-GAAP performance measure that is used to provide investors with information about a key measure used by management to monitor the performance of the Company.

This measure, along with cash operating costs and total cash costs, is considered to be one of the key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine and sales activities. This revenues per pound sold measure does not have any standardized meaning prescribed by IFRS and differs from measures determined in accordance with IFRS. This measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

The following table provides a reconciliation of this measure per pound sold to revenues as per the Q4 2023 and annual unaudited condensed interim consolidated financial statements.

Three months ended

Year ended

December 31,

2023

December 31,

2022

December 31,

2023

December 31,

2022

Revenues – V2O5 produced1

$

25,182

$

24,908

$

115,534

$

123,529

V2O5 sold – produced (000s lb)

3,215

3,483

13,113

14,307

V2O5 revenues per pound of V2O5 sold – produced ($/lb)

$

7.83

$

7.15

$

8.81

$

8.63

Revenues – V2O5 purchased1

$

1,497

$

$

9,028

$

3,184

V2O5 sold – purchased (000s lb)

265

1,279

265

V2O5 revenues per pound of V2O5 sold – purchased ($/lb)

$

5.65

$

$

7.06

$

12.02

Revenues – V2O51

$

26,679

$

24,908

$

124,562

$

126,713

V2O5 sold (000s lb)

3,480

3,483

14,392

14,571

V2O5 revenues per pound of V2O5 sold ($/lb)

$

7.67

$

7.15

$

8.65

$

8.70

Revenues – V2O3 produced1

$

6,213

$

4,736

$

13,788

$

8,534

V2O3 sold – produced (000s lb)

596

426

1,215

734

V2O3 revenues per pound of V2O3 sold – produced ($/lb)

$

10.42

$

11.12

$

11.35

$

11.63

Revenues – V2O3 purchased1

$

$

480

$

1,155

$

962

V2O3 sold – purchased (000s lb)

42

88

85

V2O3 revenues per pound of V2O3 sold – purchased ($/lb)

$

$

11.43

$

13.13

$

11.32

Revenues – V2O31

$

6,213

$

5,216

$

14,943

$

9,496

V2O3 sold (000s lb)

596

468

1,303

819

V2O3 revenues per pound of V2O3 sold ($/lb)

$

10.42

$

11.15

$

11.47

$

11.59

Revenues – FeV produced1

$

11,278

$

15,664

$

57,686

$

71,025

FeV sold – produced (000s kg)

479

559

2,070

2,135

FeV revenues per kg of FeV sold – produced ($/kg)

$

23.54

$

28.02

$

27.87

$

33.27

Revenues – FeV purchased1

$

$

1,713

$

1,386

$

22,017

FeV sold – purchased (000s kg)

64

50

603

FeV revenues per kg of FeV sold – purchased ($/kg)

$

$

26.77

$

27.72

$

36.51

Revenues – FeV1

$

11,278

$

17,377

$

59,072

$

93,042

FeV sold (000s kg)

479

623

2,120

2,738

FeV revenues per kg of FeV sold ($/kg)

$

23.54

$

27.89

$

27.86

$

33.98

Revenues1

$

44,170

$

47,501

$

198,577

$

229,251

V2O5 equivalent sold (000s lb)

5,743

6,116

22,920

24,451

Revenues per pound sold ($/lb)

$

7.69

$

7.77

$

8.66

$

9.38

  1. As per note 4 of the Company’s 2023 annual consolidated financial statements.
    Three months ended calculated as the amount per note 22 less the corresponding amount disclosed for the nine-month period in note 18 of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.

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Cash Operating Costs Excluding Royalties Per Pound

The Company’s press release refers to cash operating costs excluding royalties per pound, which are non-GAAP ratios based on cash operating costs and cash operating costs excluding royalties, which are non-GAAP financial measures, in order to provide investors with information about a key measure used by management to monitor performance. This information is used to assess how well the Maracás Menchen Mine is performing compared to plan and prior periods, and also to assess its overall effectiveness and efficiency.

Cash operating costs includes mine site operating costs such as mining costs, plant and maintenance costs, sustainability costs, mine and plant administration costs, royalties and sales, general and administrative costs (all for the Mine properties segment), but excludes depreciation and amortization, share-based payments, foreign exchange gains or losses, commissions, reclamation, capital expenditures and exploration and evaluation costs. Operating costs not attributable to the Mine properties segment are also excluded, including conversion costs, product acquisition costs, distribution costs and inventory write-downs.

Cash operating costs excluding royalties is calculated as cash operating costs less royalties. Cash operating costs per pound and cash operating costs excluding royalties per pound are obtained by dividing cash operating costs and cash operating costs excluding royalties, respectively, by the pounds of vanadium equivalent sold that were produced by the Maracás Menchen Mine. Cash operating costs, cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound, along with revenues, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

The following table provides a reconciliation of cash operating costs and cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound for the Maracás Menchen Mine to operating costs as per the 2023 annual consolidated financial statements.

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Three months ended

Year ended

December 31,

2023

December 31,

2022

December 31,

2023

December 31,

2022

Operating costsi

$

43,218

$

44,455

$

174,758

$

169,719

Professional, consulting and management feesii

887

1,185

3,102

4,969

Other general and administrative expensesiii

718

530

1,750

1,390

Add: insurance proceedsi

683

683

Less: iron ore costsi

(84

)

(22

)

(722

)

(659

)

Less: conversion costsi

(1,768

)

(2,231

)

(7,319

)

(8,070

)

Less: product acquisition costsi

(1,974

)

(3,775

)

(15,354

)

(24,426

)

Less: distribution costsi

(2,366

)

(2,282

)

(8,540

)

(9,169

)

Less: inventory write-downiv

(192

)

(332

)

(1,853

)

(1,987

)

Less: depreciation and amortization expensei

(6,592

)

(5,959

)

(26,048

)

(20,882

)

Cash operating costs

31,847

32,252

119,774

111,568

Less: royalties1

(2,243

)

(2,106

)

(9,162

)

(10,371

)

Cash operating costs excluding royalties

29,604

30,146

110,612

101,197

Produced V2O5 sold (000s lb)

5,437

5,855

20,871

22,121

Cash operating costs per pound ($/lb)

$

5.86

$

5.51

$

5.74

$

5.04

Cash operating costs excluding royalties per pound ($/lb)

$

5.44

$

5.15

$

5.30

$

4.57

  1. As per note 23 of the Company’s annual 2023 consolidated financial statements.
    Three months ended calculated as the amount per note 23 less the corresponding amount disclosed for the nine-month period in note 19 of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.
  2. Year ended as per the Mine properties segment in note 18 of the Company’s annual 2023 consolidated financial statements.
    Three months ended calculated as the amount for the Company’s Mine properties segment in note 18 less the corresponding amount disclosed for the Mine properties segment for the nine-month period in note 15 of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 statements.
  3. Year ended as per the Mine properties segment in note 18 of the Company’s annual 2023 consolidated financial statements. less the increase in legal provisions of $692 as noted in the “other general and administrative expenses” section on page 7 of the Company’s Q4 2023 MD&A.
    Three months ended calculated as the amount for the Company’s Mine properties segment in note 18 of the Company’s annual 2023 consolidated financial statements. less the increase in legal provisions of $(85), less the corresponding amount disclosed for the Mine properties segment for the nine-month period in note 15 of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.
  4. Year ended as per note 5 of the Company’s annual 2023 consolidated financial statements for finished products – vanadium less $2,013 for produced products, plus the write-down amounts for finished products – ilmenite and warehouse materials.
    Three months ended calculated as the amount per above less the corresponding amount (less $835 for produced products) disclosed for the nine-month period in note 5 of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.

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EBITDA and Adjusted EBITDA

The Company’s press release refers to earnings before interest, tax, depreciation and amortization, or “EBITDA”, and adjusted EBITDA, which are non-GAAP financial measures, in order to provide investors with information about key measures used by management to monitor performance. EBITDA is used as an indicator of the Company’s ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures.

Adjusted EBITDA removes the effect of inventory write-downs, impairment charges (including write-downs of vanadium assets), insurance proceeds received, movements in legal provisions, non-recurring employee settlements and other expense adjustments that are considered to be non-recurring for the Company. The Company believes that by excluding these amounts, which are not indicative of the performance of the core business and do not necessarily reflect the underlying operating results for the periods presented, it will assist analysts, investors and other stakeholders of the Company in better understanding the Company’s ability to generate liquidity from its core business activities.

EBITDA and adjusted EBITDA are intended to provide additional information to analysts, investors and other stakeholders of the Company and do not have any standardized definition under IFRS. These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures exclude the impact of depreciation, costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operating activities as determined under IFRS. Other companies may calculate EBITDA and adjusted EBITDA differently.

The following table provides a reconciliation of EBITDA and adjusted EBITDA to net income (loss) as per the 2023 annual consolidated financial statements.

Three months ended

Year ended

December 31,

2023

December 31,

2022

December 31,

2023

December 31,

2022

Net loss

$

(13,301

)

$

(15,636

)

$

(32,358

)

$

(2,226

)

Finance costs

4,096

801

9,630

1,588

Interest income

(280

)

(311

)

(2,018

)

(1,109

)

Income tax expense

40

(1,336

)

88

7,688

Deferred income tax recovery

(3,119

)

(252

)

(2,786

)

(1,423

)

Depreciationi

7,393

6,725

29,250

23,278

EBITDA

$

(5,171

)

$

(10,009

)

$

1,806

$

27,796

Inventory write-downii

2,407

6,797

4,068

8,739

Write-down of vanadium assets

3,535

4,862

Insurance proceedsiii

(683

)

(683

)

Movement in legal provisionsiii

(85

)

215

692

5,107

Employee settlementsiii

699

699

624

Adjusted EBITDA

$

1,385

$

(3,680

)

$

12,127

$

41,583

  1. Year ended as per the consolidated statements of cash flows in the Company’s annual 2023 consolidated financial statements.
  2. Three months ended calculated as the amount per the consolidated statements of cash flows less the corresponding amount disclosed for the nine-month period in the consolidated statements of cash flows of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.
  3. Year ended as per note 5 in the Company’s annual 2023 consolidated financial statements.
  4. Three months ended calculated as the amount per note 5 less the corresponding amount disclosed for the nine-month period in note 5 of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.
  5. As per the “non-recurring items” section on page 7 of the Company’s 2023 management’s discussion and analysis.

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______________________________________________
1 Revenues per pound sold and cash operating costs are non-GAAP financial measures, and cash operating costs per pound and cash operating costs excluding royalties per pound are non-GAAP ratios with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-GAAP Measures” section of this press release.
2 Adjusted EBITDA is a non-GAAP financial measure with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-GAAP Measures” section of this press release.
3 Defined as current assets less current liabilities per the consolidated statements of financial position.
4 Fastmarkets MetalBulletin
5 The cash operating costs excluding royalties and revenues per pound per pound sold are reported on a non-GAAP basis. Refer to the “Non-GAAP Measures” section of this press release. Revenues per pound sold are calculated based on the quantity of V2O5 sold during the stated period.
6 Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate
7 Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
8 GAAP – Generally Accepted Accounting Principles

Appendix:

Consolidated Statements of Financial Position
Expressed in thousands / 000’s of U.S. dollars

As at

December 31,

2023

December 31,

2022

Assets

Cash

$

42,714

$

54,471

Restricted cash

712

470

Amounts receivable

25,598

20,975

Inventory

61,565

64,221

Prepaid expenses

6,534

14,007

Total Current Assets

137,123

154,144

Other intangible assets

6,153

7,263

Mine properties, plant and equipment

212,176

175,237

Vanadium assets

18,674

14,510

Deferred income tax asset

7,495

4,596

Total Non-current Assets

244,498

201,606

Total Assets

$

381,621

$

355,750

Liabilities

Current portion of lease liability

$

600

$

581

Accounts payable and accrued liabilities

31,439

26,634

Deferred revenue

3,553

1,698

Debt

4,000

Current portion of provisions

6,863

6,060

Total Current Liabilities

42,455

38,973

Lease liability

925

1,473

Non-current accounts payable and accrued liabilities

724

326

Long term debt

75,000

36,000

Provisions

6,718

4,424

Total Non-current Liabilities

83,367

42,223

Total Liabilities

125,822

81,196

Equity

Issued capital

412,295

411,646

Equity reserves

12,200

14,138

Accumulated other comprehensive loss

(98,200

)

(112,165

)

Deficit

(77,643

)

(48,227

)

Equity attributable to owners of the Company

248,652

265,392

Non-controlling Interest

7,147

9,162

Total Equity

255,799

274,554

Total Liabilities and Equity

$

381,621

$

355,750

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Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Expressed in thousands / 000’s of U.S. dollars and shares (except per share information)

Years ended

December 31,

2023

2022

Revenues

$

198,684

$

229,251

Expenses

Operating costs

(174,758

)

(169,719

)

Professional, consulting and management fees

(23,068

)

(25,277

)

Foreign exchange (loss) gain

(183

)

1,584

Other general and administrative expenses

(11,792

)

(14,319

)

Share-based payments

362

(2,372

)

Finance costs

(9,630

)

(1,588

)

Interest income

2,018

1,109

Technology start-up costs

(6,122

)

(12,695

)

Write-down of vanadium assets

(4,862

)

Exploration and evaluation costs

(5,705

)

(1,935

)

(233,740

)

(225,212

)

Net income (loss) before tax

$

(35,056

)

$

4,039

Income tax expense

(88

)

(7,688

)

Deferred income tax recovery

2,786

1,423

Net loss

$

(32,358

)

$

(2,226

)

Other comprehensive income

Items that subsequently will be reclassified to operations:

Unrealized gain on foreign currency translation

13,965

6,607

Comprehensive income (loss)

$

(18,393

)

$

4,381

Net loss attributable to:

Owners of the Company

$

(30,343

)

$

(1,451

)

Non-controlling interests

$

(2,015

)

$

(775

)

$

(32,358

)

$

(2,226

)

Comprehensive income (loss) attributable to:

Owners of the Company

$

(16,378

)

$

5,156

Non-controlling interests

$

(2,015

)

$

(775

)

$

(18,393

)

$

4,381

Basic loss per Common Share

$

(0.51

)

$

(0.03

)

Diluted loss per Common Share

$

(0.51

)

$

(0.03

)

Weighted Average Number of Shares Outstanding (in 000’s)

– Basic

64,038

64,446

– Diluted

64,038

64,446

Consolidated Statements of Cash Flows
Expressed in thousands / 000’s of U.S. dollars

Years ended

December 31,

2023

2022

Operating Activities

Net loss for the year

$

(32,358

)

$

(2,226

)

Depreciation

29,250

23,278

Share-based payments

(362

)

2,372

Unrealized foreign exchange (gain)

(509

)

(4,580

)

Non-cash listing expense

571

Loss on sale of vanadium assets

156

Finance costs

9,630

1,588

Interest income

(2,018

)

(1,109

)

Write down of vanadium assets

4,862

Income tax expense

88

7,688

Deferred income tax recovery

(2,786

)

(1,423

)

Income tax paid

(686

)

(4,735

)

Cash Provided Before Working Capital Items

5,267

21,424

Change in amounts receivable

(3,861

)

3,573

Change in inventory

5,361

(15,710

)

Change in prepaid expenses

7,961

(7,232

)

Changes in accounts payable and provisions

4,614

5,176

Change in deferred revenue

1,855

(3,771

)

Net Cash Provided by Operating Activities

21,197

3,460

Financing Activities

Receipt of debt

70,000

55,000

Repayment of debt

(35,000

)

(30,000

)

Interest paid

(7,065

)

(616

)

Interest received

2,014

1,109

Lease payments

(580

)

(569

)

Change in restricted cash

(242

)

(22

)

Sale of non-controlling interest

7,344

Share repurchase

(6,088

)

Issuance of common shares

277

Net Cash Provided by Financing Activities

29,127

26,435

Investing Activities

Intangible assets

(157

)

(3,444

)

Mine properties, plant and equipment

(53,546

)

(42,193

)

Purchase of vanadium assets

(10,115

)

(14,510

)

Sale of vanadium assets

933

Net Cash Used in Investing Activities

(62,885

)

(60,147

)

Effect of foreign exchange on cash

804

933

Net Change in Cash

(11,757

)

(29,319

)

Cash position – beginning of the year

54,471

83,790

Cash Position – end of the year

$

42,714

$

54,471

View source version on businesswire.com: https://www.businesswire.com/news/home/20240321493592/en/

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Contacts

For further information, please contact:

Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com

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Largo Announces a Proposed Joint Venture with Stryten Energy to Bring Innovation and Scale to North American Vanadium Flow Battery Market

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New Relationship Would Establish Integrated Supply Chain for Vanadium and Vanadium Electrolyte Manufacturing; Support Growing Demand For Long-duration Energy Storage Solutions

TORONTO — Largo Inc. (TSX: LGO) (NASDAQ: LGO) is pleased to announce the signing of a non-binding letter of intent with Stryten Energy LLC (“Stryten”) to establish a 50:50 joint venture that would combine the Company’s wholly owned subsidiary, Largo Clean Energy Corp. (“LCE”) with Stryten’s vanadium redox flow battery (“VRFB”) business (the “Proposed Transaction”). This announcement comes in concert with Enel Green Power España and LCE’s go-live of a 5.5-megawatt hour VRFB in Spain, the deployment of one of the largest utility scale vanadium system in Europe.

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The combination of the parties’ decades of VRFB technology expertise, access to raw vanadium supplies from friendly sources, and high-volume electrolyte production capabilities is expected to transform the long-duration energy storage (“LDES”) sector in North America.

The estimated market in North America for VRFB LDES solutions is hundreds of Gigawatts in size, requiring the creation of a vertically integrated vanadium supply chain to reliably meet this demand. It is expected that this joint venture would provide access to U.S.-produced vanadium electrolyte needed for VRFB manufacturers to accelerate the commercial deployment of vanadium battery solutions.

“The agreement is a direct result of our review and evaluation of strategic alternatives to unlock and fully maximize the value of LCE,” said Daniel Tellechea, Director and Interim Chief Executive Officer of Largo. “The distinctive value proposition LCE presents for vanadium batteries and the long-duration energy storage sector, including its patented vanadium flow battery stack technology, electrolyte purification technology and access to vanadium through Largo Physical Vanadium Corp. (TSX.V:VAND, OTCQX:VANAF), were key determining factors in advancing our discussions with Stryten. Additionally, Stryten’s ability to produce electrolyte in large volumes will help reduce the overall cost for VRFB solutions, a critical factor in catalyzing the commercial adoption of the technology and meeting the DOE LCOS targets.”

The Proposed Transaction remains subject to, among other conditions, negotiation of definitive agreements, completion of due diligence by both parties and receipt of any required Board and regulatory approvals. There can be no assurance that the Proposed Transaction will be completed, nor can there be any assurance, if the Proposed Transaction is completed, that the potential benefits of the Proposed Transaction will be realized.

About Stryten Energy

Stryten Energy helps solve the world’s most pressing energy challenges with a broad range of energy storage solutions across the Essential Power, Motive Power, Transportation, Military and Government sectors. Headquartered in Alpharetta, Georgia, Stryten Energy partners with some of the world’s most recognized companies to meet the growing demand for reliable and sustainable energy storage capacity. Stryten Energy powers everything from submarines to subcompacts, microgrids, warehouses, distribution centers, cars, trains and trucks. Its stored energy technologies include advanced lead, lithium and vanadium redox flow batteries, intelligent chargers and energy performance management software that keep people on the move and supply chains running. An industry leader backed by more than a century of expertise, Stryten has The Energy to Challenge the status quo and deliver top-performing energy solutions for today and tomorrow. Learn more at www.stryten.com.

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About Largo Physical Vanadium Corp.

LPV aims to provide a secure, convenient and exchange-traded investment alternative for investors interested in having direct exposure to physical vanadium, a metal essential to achieving a greener world in key industries such as steel, aerospace and energy storage. Vanadium is non-degrading and fully recyclable when used as electrolyte in vanadium redox flow batteries (VRFBs) and offers carbon reducing attributes when used in steel alloying applications. LPV offers pure-play exposure to vanadium through its holdings of physical vanadium. LPV’s strategy is not only to achieve appreciation through the acquisition of vanadium, but to own and actively supply vanadium to end users of VRFBs to advance to integration of renewable energy in long duration storage. This strategy is integral to LPV’s business plan, as it necessarily defrays the costs to LPV associated with storage of vanadium, and demonstrates the benefits and utility of vanadium, therefore supporting vanadium’s value. For more information, please visit www.lpvanadium.com.

About Largo

Largo is a globally recognized vanadium company known for its high-quality VPURE™ and VPURE+™ products, sourced from its Maracás Menchen Mine in Brazil. The Company is currently focused on ramping up production of its ilmenite concentrate plant and is undertaking a strategic evaluation of its U.S.-based clean energy business, including its advanced VCHARGE vanadium battery technology to maximize the value of the organization. Largo’s strategic business plan centers on maintaining its position as a leading vanadium supplier with a growth strategy to support a low-carbon future.

Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.

Cautionary Statement Regarding Forward-looking Information:

This press release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation. Forward‐looking information in this press release includes, but is not limited to, statements with respect to the Proposed Transaction, the entering into of a definitive agreements, the conditions to Closing, including receipt of all necessary regulatory approvals.

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The following are some of the assumptions upon which forward-looking information is based: receipt of regulatory and governmental approvals and permits in connection with the Proposed Transaction in a timely manner; that the Parties will be able to work collaboratively as parties to a joint venture; that due diligence in connection with the Proposed Transaction will be completed and the results thereof being acceptable to the parties; and the ability of management of the joint venture to execute strategic goals.

Forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. All information contained in this news release, other than statements of current and historical fact, is forward looking information. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Largo to be materially different from those expressed or implied by such forward-looking statements, including but not limited: to those risks described in the annual information form of Largo and in its public documents filed on www.sedarplus.ca and available on www.sec.gov from time to time; the risk that the Proposed Transaction may not be completed in a timely manner or at all; the failure to satisfy the conditions to the consummation of the Proposed Transaction, including receiving the necessary regulatory approvals; failure to realize the anticipated benefits of the Proposed Transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the letter of intent prior to a definitive agreement being reached; the inability to implement business plans, forecasts, and other expectations after the completion of the Proposed Transaction; and any inability to raise additional funds to meet capital requirements and pursue the growth strategy of the joint venture when and in the amounts needed. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Readers should also review the risks and uncertainties sections of Largo’s annual and interim MD&A which also apply.

Trademarks are owned by Largo Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318566497/en/

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Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com

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Largo to Release its Fourth Quarter and Annual 2023 Financial Results on March 21, 2024



TORONTO–(BUSINESS WIRE)–$LGO #cleanenergy–Largo Inc. (“Largo” or the “Company”) (TSX: LGO) (NASDAQ: LGO) will release its fourth quarter and annual 2023 financial results on Thursday, March 21, 2024 after the close of market trading. Additionally, the Company will host a conference call to discuss its fourth quarter, annual 2023 results and other updates on Friday, March 22 at 1:00 p.m. ET.


To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/48drhVN to receive an instant automated call back.

You may also dial direct to be entered to the call by an operator using the dial-in details provided below.

Conference Call Details

Date:



Friday, March 22, 2023

Time:

1:00 p.m. ET

Dial-in Number:

Local: +1 (416) 764-8650

North American Toll Free: +1 (888) 664-6383

Conference ID:

00825768

RapidConnect Link

https://emportal.ink/48drhVN

Replay Number:

Local / International: + 1 (416) 764-8677

North American Toll Free: +1 (888) 390-0541

Replay Passcode: 825768#

Website:

To view press releases or any additional financial information, please visit the Investor Resources section of the Company’s website at: https://www.largoinc.com/investors/Overview

About Largo

Largo is a globally recognized vanadium company known for its high-quality VPURETM and VPURE+TM products, sourced from its Maracás Menchen Mine in Brazil. The Company is currently focused on ramping up production of its ilmenite concentrate plant and is undertaking a strategic evaluation of its U.S.-based clean energy business, including its advanced VCHARGE vanadium battery technology to maximize the value of the organization. Largo’s strategic business plan centers on maintaining its position as a leading vanadium supplier with a growth strategy to support a low-carbon future.

Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information on the Company, please visit www.largoinc.com.

Contacts

For further information, please contact:

Investor Relations
Alex Guthrie

Senior Manager, External Relations

+1.416.861.9778

aguthrie@largoinc.com

SSR Mining Reports Fourth Quarter and Full-Year 2023 Results

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DENVER — SSR Mining Inc. (Nasdaq/TSX: SSRM, ASX: SSR) (“SSR Mining” or the “Company”) reports consolidated financial results for the fourth quarter and full-year ended December 31, 2023. Subsequent to year-end 2023, on February 13, 2024, operations at Çöpler were suspended as a result of a significant slip on the heap leach pad (the “Çöpler Incident”). Nine individuals remain unaccounted for as a result. The Company is not, at this time, able to estimate or predict when it will resume operations at Çöpler. The Company is assessing the potential impacts on the business, cash flows, results of operations and financial condition.

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Rod Antal, Executive Chairman of SSR Mining, said, “Right now, our attention is focused at Çöpler. The events of February 13, 2024 were tragic and overshadow today’s results. We are heartbroken and sympathize with what we know is an extraordinarily stressful time for the families, friends and colleagues of the nine missing personnel.

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We would like to recognize the overwhelming support by a number of government agencies who are providing significant resources at Çöpler. Our teams are supporting the various government agencies to ensure that areas impacted are safe to continue the recovery and containment work. Finally, initial discussions and technical support is progressing to agree on the ultimate permanent storage location for the heap leach material that has been displaced from the heap leach pad.

Due to the evolving situation at our Çöpler mine, we are retracting our previously issued 2024 and long-term guidance forecasts for Çöpler and Türkiye. We are also suspending our quarterly dividend payments and the automatic share purchase plan (“ASPP”). While we continue to assess the impact of the Çöpler Incident, with a year-end 2023 cash balance of nearly $500 million and our operations at Marigold, Seabee and Puna continuing to generate cash flow, we do not, at this time, anticipate any near-term liquidity concerns. This is a challenging time, and we continue to offer our support to all individuals impacted by the events of February 13, 2024.”

Detailed disclosure related to the Çöpler Incident is included in the Company’s 10-K filed today. SSR Mining has also created a page on its website where it will be providing further updates on the situation at Çöpler.

The Company reports non-GAAP financial measures including adjusted attributable net income, adjusted attributable net income per share, cash generated by operating activities before working capital adjustments, free cash flow, free cash flow before changes in working capital, net cash (debt), cash costs and AISC per ounce sold (a common measure in the mining industry), to manage and evaluate its operating performance at its mines. See “Cautionary Note Regarding Non-GAAP Financial Measures” for an explanation of these financial measures and a reconciliation of these financial measures to the most comparable GAAP financial measures.

Fourth Quarter and Full-Year 2023 Results & Subsequent Events: (1)
(All figures are in U.S. dollars unless otherwise noted; 2023 results do not reflect any impact of the Çöpler Incident)

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  • Çöpler Incident: On February 13, 2024, the Company suspended operations at Çöpler as a result of a significant slip on the heap leach pad. At this time, nine personnel remain unaccounted for. The Turkish government is conducting environmental monitoring of surface water, groundwater, soil and air quality in the region with respect to potential contamination. Public comments from the Turkish government indicate that to date, the testing results have been negative with respect to potential contamination in the locations being monitored. Containment and remediation efforts are ongoing, which are being directed by the Turkish government and supported by the Company, with an initial focus on removing heap leach material from the Sabırlı Valley and relocating it to a permanent storage location. The Company is in the process of evaluating the estimated remediation costs and anticipates recording a remediation liability during the first quarter of 2024. We also anticipate recording an impairment of inventory and specific assets directly impacted by the Çöpler Incident and will evaluate the Çöpler long-lived asset group for additional impairment during the first quarter of 2024. As of December 31, 2023, the Çöpler leach pad inventory of $73.3 million represents 19% and 10% of Çöpler’s total inventory and of the Company’s total inventory, respectively. As of December 31, 2023, the Çöpler mineral, properties, plant and equipment (“MPP&E”) related to the leach pad of $33.1 million represents 1.0% and 0.8% of Çöpler’s total MPP&E and of the Company’s total MPP&E, respectively.
  • Board of Directors: In light of the Çöpler Incident, Michael Anglin, currently our Lead Independent Director, who had previously advised the Company of his decision to retire and not stand for re-election to the Board, is expected to postpone his retirement and stand for re-election at the Company’s 2024 Annual Meeting of Shareholders. Mr. Anglin has served on the Board since 2008 and brings more than 30 years of industry experience to his role. Mr. Anglin’s continued presence during this period will provide important experience and leadership on the Board.
  • Operating results: Fourth quarter 2023 production was 211,226 gold equivalent ounces at cost of sales of $1,064 per gold equivalent ounce and AISC of $1,326 per gold equivalent ounce. For the twelve months ending December 31, 2023, SSR Mining reported production of 706,894 gold equivalent ounces at cost of sales of $1,141 per gold equivalent ounce and AISC of $1,461 per gold equivalent ounce. Production was previously reported in mid-January 2024 and was in line with 2023 guidance.
  • Financial results: Attributable net loss in the fourth quarter of 2023 was $217.8 million, or $1.07 per diluted share, largely attributed to a non-cash impairment at Çöpler as a result of the Company removing C2 Mineral Resources from its consolidated Mineral Reserves and Mineral Resources (“MRMR”) statement. Adjusted attributable net income in the fourth quarter was $127.1 million, or $0.59 per diluted share. In the fourth quarter of 2023 operating cash flow was $203.2 million, or $218.4 million before working capital adjustments, and free cash flow was $144.4 million, or $159.6 million before changes in working capital. For the twelve months ending December 31, 2023, attributable net loss was $98.0 million, or $0.48 per diluted share and adjusted attributable net income was $276.5 million, or $1.29 per diluted share. For the twelve months ending December 31, 2023, operating cash flow was $421.7 million, or $555.9 million before working capital adjustments, and free cash flow was $198.3 million, or $332.5 million before changes in working capital.
  • Capital returns program: For the twelve months ending December 31, 2023, SSR Mining returned $114.0 million to shareholders, a capital returns yield of approximately 5.0%. Capital returns were composed of $57.7 million in quarterly cash dividend payments and $56.3 million in share repurchases. As a result of the Çöpler Incident, the Company suspended its dividend and share repurchases.
  • Year-end cash and liquidity position: As of December 31, 2023, SSR Mining had a cash and cash equivalent balance of $492.4 million and a non-GAAP net cash position of $261.6 million.
  • Technical Report Summaries published for all producing assets: On February 13, 2024, the Company released Technical Report Summaries (“TRS”) for Marigold, Puna, and Seabee. The TRS are in compliance with Subpart 1300 of Regulation SK. These reports include refreshed operating and economic assumptions for each asset. The Company also released a TRS for Çöpler, which had an effective date of October 31, 2023 and as such does not reflect the impact of the Çöpler incident. The operating and economic assumptions in the TRS are being evaluated.
  • Çöpler 2023 operating results: Gold production was 57,126 ounces in the fourth quarter of 2023 at cost of sales of $1,160 per payable ounce and AISC of $1,535 per payable ounce. During the fourth quarter of 2023, Çöpler recovered approximately 10,000 ounces of gold from Çakmaktepe, which delivered first production in late September 2023. For the twelve months ending December 31, 2023, gold production for Çöpler was 220,999 ounces at full-year cost of sales of $1,191 per payable ounce and AISC of $1,433 per payable ounce. As a result of the Çöpler Incident, all operations at the mine are suspended.
  • Marigold 2023 operating results: Gold production was 82,794 ounces in the fourth quarter of 2023 at cost of sales of $1,095 per payable ounce and AISC of $1,170 per payable ounce. For the twelve months ending December 31, 2023, gold production for Marigold was 278,488 ounces, a record for the operation over its more than 30-year operating history. For the full-year, the Company reported cost of sales of $1,047 per payable ounce and AISC of $1,349 per payable ounce.
  • Seabee 2023 operating results: Gold production was 38,757 ounces in the fourth quarter of 2023, reflecting processed grades of over 10.1 g/t in the quarter, at cost of sales of $666 per payable ounce and AISC of $916 per payable ounce. Underground mining and plant throughput averaged approximately 1,300 tonnes per day during the fourth quarter of 2023, highlighting the ongoing success of continuous improvement initiatives at the mine. For the twelve months ending December 31, 2023, gold production for Seabee was 90,777 ounces at cost of sales of $991 per payable ounce and AISC of $1,427 per payable ounce.
  • Puna 2023 operating results: Silver production was 2.8 million ounces in the fourth quarter of 2023 at cost of sales of $14.07 per payable ounce and AISC of $15.51 per payable ounce. For the twelve months ending December 31, 2023, Puna’s silver production was 9.7 million ounces, exceeding the full-year guidance range, at cost of sales of $16.49 per payable ounce and AISC of $15.37 per payable ounce, below the full-year guidance range.
  • Automatic Share Purchase Plan Termination: The Company announces that, in connection with its normal course issuer bid (the “NCIB”), it has terminated its previously announced automatic share purchase plan (the “ASPP”) with a designated broker, pursuant to which the designated broker could acquire common shares of the Company based on pre-established purchasing parameters, without further instructions by the Company, in compliance with the rules of the Toronto Stock Exchange. The termination is effective March 1, 2024. The Company confirms that at the time of sending the notice of termination of the ASPP, it did not possess knowledge of any material fact or material change about the Company or any of its securities that has not been generally disclosed.

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(1)

The Company reports non-GAAP financial measures including adjusted attributable net income, adjusted attributable net income per share, cash generated by operating activities before working capital adjustments, free cash flow, free cash flow before changes in working capital, net cash (debt), cash costs and AISC per ounce sold (a common measure in the mining industry), to manage and evaluate its operating performance at its mines. See “Cautionary Note Regarding Non-GAAP Financial Measures” for an explanation of these financial measures and a reconciliation of these financial measures to the most comparable GAAP financial measures.

Select Updated 2024 Guidance Outlook

As a result of the Çöpler Incident, the Company is retracting all previously issued operating and cost guidance for Çöpler and its operations and projects in Türkiye. SSR Mining will revisit the forward-looking guidance at an appropriate future date.

Table 1: Full-Year 2024 Outlook (Excluding Çöpler and Hod Maden)

Operating Guidance (2)

Marigold

Seabee

Puna

Corporate

Gold Production

koz

155 – 175

75 – 85

Silver Production

Moz

8.75 – 9.50

Gold Equivalent Production

koz AuEq

155 – 175

75 – 85

110 – 120

Cost of Sales per Ounce (3)

$/oz

1,300 – 1,340

990 – 1,030

16.50 – 18.00

Cash Cost per Ounce (4)

$/oz

1,300 – 1,340

990 – 1,030

11.50 – 13.00

Sustaining Capital Expenditures (5)

$M

37

40

17

Reclamation Cost Accretion & Amortization

$M

3

3

13

General & Administrative

$M

60 – 65

All-In Sustaining Cost per Ounce (4)

$/oz

1,535 – 1,575

1,495 – 1,535

14.75 – 16.25

Growth Capital

$M

1

2

Growth Exploration and Resource Development Expense (6)

$M

9

15

10

4

Total Growth Expenditures

$M

11

17

10

4

(2)

Figures may not add due to rounding.

(3)

Excludes depreciation, depletion, and amortization.

(4)

SSR Mining reports the non-GAAP financial measures of cash costs and AISC per payable ounce of gold and silver sold to manage and evaluate operating performance at Çöpler, Marigold, Seabee and Puna. See “Cautionary Note Regarding Non-GAAP Measures” at the end of this press release for an explanation of these financial measures and a reconciliation of these financial measures to cost of sales, previously referred to as production costs, which is the most comparable GAAP financial measures. AISC includes reclamation cost accretion and amortization and certain lease payments.

(5)

Includes sustaining exploration and evaluation expenditures. Includes approximately $1 million of expensed sustaining exploration at Marigold and $24 million in underground mine development at Seabee.

(6)

All growth exploration and resource development spend is expensed. Growth exploration includes project studies and evaluation.

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Financial and Operating Highlights

A summary of the Company’s consolidated financial and operating results for the three and twelve months ended December 31, 2023 and December 31, 2022 are presented below:

Three Months Ended

Twelve Months Ended

(in thousands of US dollars, except per share data)

December 31,

December 31,

2023

2022

2023

2022

Financial Results

Revenue

$

425,897

$

306,377

$

1,426,927

$

1,148,033

Operating income (loss)

$

(297,623)

$

39,367

$

(130,244)

$

190,268

Net income (loss)

$

(264,360)

$

95,177

$

(120,225)

$

210,428

Net income (loss) attributable to equity holders of SSR Mining

$

(217,845)

$

93,884

$

(98,007)

$

194,140

Basic net income (loss) per share attributable to equity holders of SSR Mining

$

(1.07)

$

0.45

$

(0.48)

$

0.92

Diluted net income (loss) per share attributable to equity holders of SSR Mining

$

(1.07)

$

0.43

$

(0.48)

$

0.89

Adjusted attributable net income (7)

$

127,077

$

25,580

$

276,494

$

144,814

Adjusted basic attributable net income per share (7)

$

0.62

$

0.12

$

1.35

$

0.69

Adjusted diluted attributable net income per share (7)

$

0.59

$

0.12

$

1.29

$

0.67

Cash generated by operating activities before changes in working capital (7)

$

218,388

$

95,463

$

555,872

$

308,166

Cash generated by operating activities

$

203,159

$

118,097

$

421,725

$

160,896

Cash generated by (used in) investing activities

$

(59,050)

$

(166,299)

$

(339,261)

$

(236,282)

Cash generated by (used in) financing activities

$

(24,450)

$

(33,148)

$

(182,256)

$

(271,782)

Operating Results

Gold produced (oz)

178,677

153,187

590,264

522,159

Gold sold (oz)

172,917

146,385

585,171

521,928

Silver produced (‘000 oz)

2,759

2,389

9,688

8,397

Silver sold (‘000 oz)

2,830

2,098

9,920

7,864

Lead produced (‘000 lb) (8)

13,814

13,422

45,772

41,004

Lead sold (‘000 lb) (8)

13,758

10,138

48,640

38,393

Zinc produced (‘000 lb) (8)

1,322

3,643

7,127

8,583

Zinc sold (‘000 lb) (8)

1,992

1,452

8,166

6,998

Gold equivalent produced (oz) (9)

211,226

182,655

706,894

623,819

Gold equivalent sold (oz) (9)

206,310

172,308

704,594

617,135

Average realized gold price ($/oz sold)

$

1,976

$

1,749

$

1,950

$

1,812

Average realized silver price ($/oz sold)

$

23.23

$

18.58

$

22.82

$

19.47

Cost of sales per gold equivalent ounce sold (9, 10)

$

1,064

$

1,064

$

1,141

$

985

Cash cost per gold equivalent ounce sold (9, 10)

$

1,008

$

1,019

$

1,083

$

928

AISC per gold equivalent ounce sold (9, 10)

$

1,326

$

1,358

$

1,461

$

1,339

Financial Position

December 31, 2023

December 31, 2022

Cash and cash equivalents

$

492,393

$

655,453

Current assets

$

1,196,476

$

1,376,435

Total assets

$

5,385,773

$

5,254,657

Current liabilities

$

170,573

$

279,252

Total liabilities

$

1,081,570

$

1,128,458

Working capital (11)

$

1,025,903

$

1,097,183

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(7)

The Company reports non-GAAP financial measures including adjusted attributable net income, adjusted attributable net income per share, cash generated by operating activities before changes in working capital, cash costs and AISC per ounce sold to manage and evaluate its operating performance at its mines. See “Non-GAAP Financial Measures” at the end of this press release for an explanation of these financial measures and a reconciliation of these financial measures to net income, cost of sales, and cash generated by operating activities, which are the most comparable GAAP financial measures.

(8)

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.

(9)

Gold equivalent ounces are calculated multiplying the silver ounces by the ratio of the silver price to the gold price, using the average London Bullion Market Association (“LBMA”) prices for the period. The Company does not include by-products in the gold equivalent ounce calculations

(10)

Excludes depreciation, depletion, and amortization

(11)

Working capital is defined as current assets less current liabilities.

Çöpler, Türkiye

(amounts presented on 100% basis)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Operating Data

2023

2022

2023

2022

Gold produced (oz)

57,126

65,603

220,999

191,366

Gold sold (oz)

59,694

59,949

225,599

192,811

Ore mined (kt)

1,223

1,407

4,501

3,161

Waste removed (kt)

7,533

5,596

25,197

17,311

Total material mined (kt)

8,756

7,003

29,698

20,472

Strip ratio

6.2

4.0

5.6

5.5

Ore stacked (kt)

182

249

813

459

Gold grade stacked (g/t)

1.24

1.22

1.36

1.06

Ore milled (kt)

710

748

2,733

2,068

Gold mill feed grade (g/t)

2.55

2.75

2.56

2.86

Gold recovery (%)

88.2

86.8

87.5

87.0

Average realized gold price ($/oz sold)

$

1,989

$

1,743

$

1,945

$

1,826

Cost of sales ($/oz gold sold)

$

1,160

$

1,065

$

1,191

$

985

Cash costs ($/oz gold sold) (12)

$

1,146

$

1,053

$

1,175

$

969

AISC ($/oz gold sold) (12)

$

1,535

$

1,269

$

1,433

$

1,328

(12)

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. See “Non-GAAP Financial Measures” for an explanation of these financial measures and a reconciliation to cost of sales, which are the comparable GAAP financial measure. For the three and twelve months ended December 31, 2023 and December 31, 2022, cash costs and AISC per ounce of gold sold exclude the impact of any fair value adjustment on acquired inventories.

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For the three months ended December 31, 2023 and 2022, Çöpler produced 57,126 and 65,603 ounces of gold, respectively. For the twelve months ended December 31, 2023 and 2022, Çöpler produced 220,999 and 191,366 ounces of gold, respectively. In the fourth quarter of 2023, Çöpler recovered approximately 10,000 ounces of gold from Çakmaktepe, which delivered first production late in the third quarter of 2023 in line with guidance. The Çöpler sulfide plant operated at an average throughput rate of nearly 7,500 tonnes per day in 2023 and more than 7,700 tonnes per day in the fourth quarter of 2023. Fourth quarter 2023 cost of sales of $1,160 per payable ounce and AISC of $1,535 per payable ounce resulted in full-year cost of sales of $1,191 per payable ounce and AISC of $1,433 per payable ounce.

As a result of the removal of copper-gold mineralization associated with the C2 Project at Çöpler from the Company’s Mineral Resources as of December 31, 2023, SSR Mining performed its long-lived asset and impairment evaluation. Based on the evaluation, the Company recorded a non-cash write down of $349 million at Çöpler in the Company’s financial statements for the year ended December 31, 2023. This reduced the fixed asset and mineral property value for Çöpler from approximately $2.80 billion to $2.45 billion as of 2023 year-end.

The Company is unable to reasonably estimate the impact of the Çöpler Incident on the financial position, results of operations and cash flows of Çöpler and the Company as a whole at this time.

Marigold, USA

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Operating Data

2023

2022

2023

2022

Gold produced (oz)

82,794

62,875

278,488

194,668

Gold sold (oz)

81,173

62,936

275,962

195,617

Ore mined (kt)

3,705

4,861

21,846

18,061

Waste removed (kt)

25,793

15,880

74,800

72,166

Total material mined (kt)

29,499

20,741

96,646

90,227

Strip ratio

7.0

3.3

3.4

4.0

Ore stacked (kt)

3,705

4,861

21,846

18,061

Gold grade stacked (g/t)

0.43

0.60

0.45

0.56

Average realized gold price ($/oz sold)

$

1,971

$

1,719

$

1,950

$

1,783

Cost of sales ($/oz gold sold)

$

1,095

$

1,004

$

1,047

$

1,053

Cash costs ($/oz gold sold) (13)

$

1,097

$

1,010

$

1,049

$

1,056

AISC ($/oz gold sold) (13)

$

1,170

$

1,160

$

1,349

$

1,378

(13)

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. See “Non-GAAP Financial Measures” for an explanation of these financial measures and a reconciliation to cost of sales, which are the comparable GAAP financial measure.

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For the three months ended December 31, 2023 and 2022, Marigold produced 82,794 and 62,875 ounces of gold, respectively. For the twelve months ended December 31, 2023 and 2022, Marigold produced 278,488 and 194,668 ounces of gold, respectively, a record for the operation over its more than 30-year operating history and in line with full-year guidance. Fourth quarter 2023 cost of sales of $1,095 per payable ounce and AISC of $1,170 per payable ounce were in line with expectations resulting in full year 2023, cost of sales of $1,047 per payable ounce and AISC of $1,349 per payable ounce.

Seabee, Canada

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Operating Data

2023

2022

2023

2022

Gold produced (oz)

38,757

24,709

90,777

136,125

Gold sold (oz)

32,050

23,500

83,610

133,500

Ore mined (kt)

117

118

443

425

Waste removed (kt)

83

90

307

291

Total material mined (kt)

199

208

750

716

Ore milled (kt)

122

119

445

414

Gold mill feed grade (g/t)

10.14

6.69

6.62

10.36

Gold recovery (%)

97.0

97.2

96.7

98.0

Average realized gold price ($/oz sold)

$

1,988

$

1,725

$

1,965

$

1,833

Cost of sales ($/oz gold sold)

$

666

$

909

$

991

$

559

Cash costs ($/oz gold sold) (14)

$

666

$

911

$

992

$

561

AISC ($/oz gold sold) (14)

$

916

$

1,234

$

1,427

$

823

(14)

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. See “Non-GAAP Financial Measures” for an explanation of these financial measures and a reconciliation to cost of sales, which are the comparable GAAP financial measure.

For the three months ended December 31, 2023 and 2022, Seabee produced 38,757 and 24,709 ounces of gold, respectively, reflecting strong grades of over 10.1 g/t in the fourth quarter of 2023. For the twelve months ended December 31, 2023 and 2022, Seabee produced 90,777 and 136,125 ounces of gold, respectively. Underground mining and plant throughput averaged approximately 1,300 tonnes per day during the fourth quarter of 2023. Fourth quarter 2023 cost of sales of $666 per payable ounce and AISC of $916 per payable ounce resulted in full-year 2023, cost of sales of $991 per payable ounce and AISC of $1,427 per payable ounce.

As a result of the updates to Mineral Reserves and Mineral Resources as of year-end 2023, the Company evaluated goodwill and long-lived assets for impairment. Based on that analysis, the Company recorded a write-down of $50 million in goodwill at Seabee in the Company’s financial statements for the year ended December 31, 2023.

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Puna, Argentina

Three Months Ended

Twelve Months Ended

December 31,

December 31,

Operating Data

2023

2022

2023

2022

Silver produced (‘000 oz)

2,759

2,389

9,688

8,397

Silver sold (‘000 oz)

2,830

2,098

9,920

7,864

Lead produced (‘000 lb)

13,814

13,422

45,772

41,004

Lead sold (‘000 lb)

13,758

10,138

48,640

38,393

Zinc produced (‘000 lb)

1,322

3,643

7,127

8,583

Zinc sold (‘000 lb)

1,992

1,452

8,166

6,998

Gold equivalent sold (‘000 oz) (15)

33,393

25,923

119,423

95,207

Ore mined (kt)

545

455

1,926

1,851

Waste removed (kt)

1,377

2,017

6,240

8,634

Total material mined (kt)

1,921

2,472

8,166

10,485

Strip ratio

2.5

4.4

3.2

4.4

Ore milled (kt)

450

415

1,728

1,638

Silver mill feed grade (g/t)

196.7

186.5

181.1

166.7

Lead mill feed grade (%)

1.46

1.59

1.27

1.23

Zinc mill feed grade (%)

0.26

0.69

0.34

0.49

Silver mill recovery (%)

96.9

95.8

96.3

95.7

Lead mill recovery (%)

95.7

92.0

94.3

92.3

Zinc mill recovery (%)

51.6

57.9

54.6

48.7

Average realized silver price ($/oz sold)

$

23.23

$

18.58

$

22.82

$

19.47

Cost of sales ($/oz sold)

$

14.07

$

16.53

$

16.49

$

17.48

Cash costs ($/oz silver sold) (16)

$

10.32

$

13.01

$

12.64

$

13.23

AISC ($/oz silver sold) (16)

$

15.51

$

15.97

$

15.37

$

15.50

(15)

Gold equivalent ounces are calculated multiplying the silver ounces by the ratio of the silver price to the gold price, using the average LBMA prices for the period. The Company does not include by-products in the gold equivalent ounce calculations.

(16)

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. See “Non-GAAP Financial Measures” for an explanation of these financial measures and a reconciliation to cost of sales, which are the comparable GAAP financial measure.

For the three months ended December 31, 2023 and 2022, Puna produced 2.8 million and 2.4 million ounces of silver, respectively. For the twelve months ended December 31, 2023 and 2022, Puna produced 9.7 million ounces of silver and 8.4 million ounces of silver. Full-year 2023 production was a record for the operations more than 15 year operating life and exceeded the mine’s original full-year production guidance range. Fourth quarter 2023 cost of sales of $14.07 per payable ounce and AISC of $15.51 per payable ounce resulted in full-year 2023 cost of sales of $16.49 per payable ounce and AISC of $15.37 per payable ounce.

Mineral Reserves and Mineral Resources (“MRMR”) for Year-End 2023

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For a detailed summary by asset, please refer to Item 2. Properties in the Company’s Annual Report, and for a discussion of year-over-year changes to the MRMR figures below, please see the Company’s press release on February 13, 2024 titled, “SSR Mining Issues Multi-Year Guidance and Technical Reports for all Operating Assets”. Please note that the information in the Company’s press release dated February 13, 2024 and the Technical Report Summary for Çöpler filed at the same time did not reflect the impact of the Çöpler Incident. The operating and economic assumptions, along with the mineral reserve, mineral resources, cost estimates and other findings contained in press release and the Technical Report Summary may no longer be accurate and, when more information is available regarding the operations at Çöpler, the TRS may need to be amended.

As per Subpart 1300 of Regulation S-K, the Company’s year-end 2023 MRMR are presented on an attributable basis.

Conference Call Information

This news release should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) and available on the SEC website at www.sec.gov or www.ssrmining.com.

  • Conference call and webcast: Tuesday, February 27, 2024, at 5:00 pm EST.
  • The conference call will be archived and available on our website. Audio replay will be available for two weeks by calling:

Toll-free in U.S. and Canada:

+1 (855) 669-9658, replay code 0631

All other callers:

+1 (412) 317-0088, replay code 0631

SSR Mining has created a page on its website where it will be providing updates on the situation at Çöpler. Accordingly, interested parties, investors and others should monitor this section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts for more information on the situation at Çöpler.

About SSR Mining

SSR Mining is listed under the ticker symbol SSRM on the Nasdaq and the TSX, and SSR on the ASX.

Cautionary Note Regarding Forward-Looking Information and Statements:

Except for statements of historical fact relating to us, certain statements contained in this news release constitute forward-looking information, future oriented financial information, or financial outlooks (collectively “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information may be contained in this document and our other public filings. Forward-looking information relates to statements concerning our outlook and anticipated events or results and, in some cases, can be identified by terminology such as “may”, “will”, “could”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “projects”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts.

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Forward-looking information and statements in this news release include any statements concerning, among other things: the incident at Çöpler, including, among other things, the impact on the Company, the response from the Türkiye government, the length of time operations will remain suspended and the financial and legal impact on the Company, forecasts and outlook; preliminary cost reporting in this document; timing, production, operating, cost, and capital expenditure guidance; our operational and development targets and catalysts and the impact of any suspensions on operations; the generation of free cash flow and payment of dividends; matters relating to proposed exploration; communications with local stakeholders; maintaining community and government relations; negotiations of joint ventures; negotiation and completion of transactions; commodity prices; Mineral Resources, Mineral Reserves, conversion of Mineral Resources, realization of Mineral Reserves, and the existence or realization of Mineral Resource estimates; the development approach; the timing and amount of future production; the timing of studies, announcements, and analysis; the timing of construction and development of proposed mines and process facilities; capital and operating expenditures; economic conditions; availability of sufficient financing; exploration plans; receipt of regulatory approvals; timing and impact surrounding suspension or interruption of operations as a result of regulatory requirements or actions by governmental authority; renewal of NCIB program; and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, environmental, regulatory, and political matters that may influence or be influenced by future events or conditions.

Such forward-looking information and statements are based on a number of material factors and assumptions, including, but not limited in any manner to, those disclosed in any other of our filings on EDGAR and SEDAR, and include:the wide ranging, potentially material and presently uncertain impacts of the incident at Çöpler, the inherent speculative nature of exploration results; the ability to explore; communications with local stakeholders; maintaining community and governmental relations; status of negotiations of joint ventures; weather conditions at our operations; commodity prices; the ultimate determination of and realization of Mineral Reserves; existence or realization of Mineral Resources; the development approach; availability and receipt of required approvals, titles, licenses and permits; sufficient working capital to develop and operate the mines and implement development plans; access to adequate services and supplies; foreign currency exchange rates; interest rates; access to capital markets and associated cost of funds; availability of a qualified work force; ability to negotiate, finalize, and execute relevant agreements; lack of social opposition to our mines or facilities; lack of legal challenges with respect to our properties; the timing and amount of future production; the ability to meet production, cost, and capital expenditure targets; timing and ability to produce studies and analyses; capital and operating expenditures; economic conditions; availability of sufficient financing; the ultimate ability to mine, process, and sell mineral products on economically favorable terms; and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, geopolitical, regulatory and political factors that may influence future events or conditions. While we consider these factors and assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.

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The Company has included important information related to the incident at Çöpler in its Annual Report on Form 10-K, which has been filed with the SEC, including a discussion of risks and uncertainties resulting from the incident at Çöpler. You are strongly encouraged to review the Company’s Annual Report on Form 10-K in its entirety.

The above list is not exhaustive of the factors that may affect any of the Company’s forward-looking information. You should not place undue reliance on forward-looking information and statements. Forward-looking information and statements are only predictions based on our current expectations and our projections about future events. Actual results may vary from such forward-looking information for a variety of reasons including, but not limited to, risks and uncertainties disclosed in our filings on our website at www.ssrmining.com, on SEDAR at www.sedarplus.ca, on EDGAR at www.sec.gov and on the ASX at www.asx.com.au and other unforeseen events or circumstances. Other than as required by law, we do not intend, and undertake no obligation to update any forward-looking information to reflect, among other things, new information or future events. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Qualified Persons

The scientific and technical information concerning our mineral projects in this news release have been reviewed and verified by a “qualified person” under subpart 1 of Regulation S-K 1300 (“S-K 1300”). For a description of the key assumptions, parameters and methods used to estimate mineral reserves and mineral resources included in this news release, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the Technical Report Summaries for each of the Company’s material properties, which are available under the Company’s corporate profile on EDGAR at www.sec.gov.

Cautionary Note to U.S. Investors

This news release includes terms that comply with reporting standards in Canada under National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), including the terms “Mineral Reserves” and “Mineral Resources”. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The standards of NI 43-101 differ significantly from the requirements of the SEC. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made in accordance with U.S. standards.

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Cautionary Note Regarding Non-GAAP Financial Measures

We have included certain non-GAAP financial measures to assist in understanding the Company’s financial results. The non-GAAP financial measures are employed by us to measure our operating and economic performance and to assist in decision-making, as well as to provide key performance information to senior management. We believe that, in addition to conventional measures prepared in accordance with GAAP, certain investors and other stakeholders will find this information useful to evaluate our operating and financial performance; however, these non-GAAP performance measures do not have any standardized meaning. These performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Our definitions of our non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. These non-GAAP measures should be read in conjunction with our consolidated financial statements.

Cash costs, AISC per ounce sold, adjusted attributable net income (loss), free cash flow, and net cash are Non-GAAP Measures with no standardized definition under U.S GAAP.

Non-GAAP Measure – Net Cash
Net cash and net debt are used by management and investors to measure the Company’s underlying operating performance. The Company believes that net cash is a useful measure for shareholders as it helps evaluate the strength of liquidity and available cash.

The following table provides a reconciliation of cash and cash equivalents to net cash:

As of

(in thousands)

December 31, 2023

December 31, 2022

Cash and cash equivalents

$

492,393

$

655,453

Restricted cash

$

101

$

33,653

Total Cash

$

492,494

$

689,106

Short and Long Term Portion of Term Loan

$

$

70,000

Face Value of 2019 Convertible Note

$

230,000

$

230,000

Other Debt

$

920

$

1,797

Total Debt

$

230,920

$

301,797

Net Cash (Debt)

$

261,574

$

387,309

In addition to net cash and net debt, the Company also uses Total liquidity to measure its financial position. Total liquidity is calculated as Cash and cash equivalents plus Restricted cash and borrowing capacity under current revolving credit facilities, including accordion features. As of December 31, 2023, no borrowings were outstanding on the Company’s $400 million credit facility with a $100 million accordion feature.

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The following table provides a reconciliation of Cash and cash equivalents to Total liquidity:

As of

(in thousands)

December 31, 2023

December 31, 2022

Cash and cash equivalents

$

492,393

$

655,453

Restricted cash

$

101

$

33,653

Total cash

$

492,494

$

689,106

Borrowing capacity on credit facility

$

400,000

$

200,000

Borrowing capacity on accordion feature of credit facility

$

100,000

$

100,000

Total liquidity

$

992,494

$

989,106

Non-GAAP Measure – Cash Costs and AISC
The Company uses cash costs per ounce of precious metals sold to monitor its operating performance internally. The most directly comparable measure prepared in accordance with GAAP is Cost of sales. The Company believes this measure provides investors and analysts with useful information about its underlying cash costs of operations and the impact of by-product credits on its cost structure. The Company also believes it is a relevant metric used to understand its operating profitability and ability to generate cash flow. When deriving the Cost of sales associated with an ounce of precious metal, the Company includes by-product credits. Thereby allowing management and other stakeholders to assess the net costs of gold and silver production. In calculating cash costs per ounce, the Company also excludes the impact of specific items that are significant, but not reflective of its underlying operations.

AISC includes total cost of sales incurred at the Company’s mining operations, which forms the basis of cash costs. Additionally, the Company includes sustaining capital expenditures, sustaining mine-site exploration and evaluation costs, reclamation cost accretion and amortization, and general and administrative expenses. This measure seeks to reflect the ongoing cost of gold and silver production from current operations; therefore, expansionary capital and non-sustaining expenditures are excluded. Certain other cash expenditures, including tax payments and financing costs are also excluded.

The Company believes that AISC represents the total costs of producing gold and silver from current operations and provides the Company and other stakeholders with additional information about its operating performance and ability to generate cash flows. It allows the Company to assess its ability to support capital expenditures and to sustain future production from the generation of operating cash flows.

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When deriving the number of ounces of precious metal sold, the Company considers the physical ounces available for sale after the treatment and refining process, commonly referred to as payable metal, as this is what is sold to third parties.

The following tables provide a reconciliation of Cost of sales to cash costs and AISC:

Three Months Ended December 31, 2023

(in thousands, unless otherwise noted)

Çöpler

Marigold

Seabee

Puna

Corporate

Total

Cost of sales (GAAP) (17)

$ 69,259

$ 88,920

$ 21,338

$ 39,822

$ —

$ 219,340

By-product credits

$ (849)

$ (55)

$ (13)

$ (15,310)

$ —

$ (16,227)

Treatment and refining charges

$ —

$ 157

$ 28

$ 4,685

$ —

$ 4,869

Cash costs (non-GAAP)

$ 68,410

$ 89,023

$ 21,353

$ 29,197

$ —

$ 207,982

Sustaining capital expenditures

$ 21,398

$ 4,453

$ 6,774

$ 3,293

$ —

$ 35,918

Sustaining exploration and evaluation expense

$ —

$ 872

$ —

$ —

$ —

$ 872

Reclamation cost accretion and amortization (18)

$ 427

$ 609

$ 1,239

$ 11,302

$ —

$ 13,578

General and administrative expense and stock-based compensation expense

$ 1,384

$ —

$ —

$ 114

$ 13,582

$ 15,080

Total AISC (non-GAAP)

$ 91,619

$ 94,957

$ 29,365

$ 43,906

$ 13,582

$ 273,429

Gold sold (oz)

59,694

81,173

32,050

172,917

Silver sold (oz)

2,830,057

2,830,057

Gold equivalent sold (oz) (19, 20)

59,694

81,173

32,050

33,277

206,194

Cost of sales per gold ounces sold

$ 1,160

$ 1,095

$ 666

N/A

N/A

N/A

Cost of sales per silver ounces sold

N/A

N/A

N/A

$ 14.07

N/A

N/A

Cost of sales per gold equivalent ounce sold

$ 1,160

$ 1,095

$ 666

$ 1,197

N/A

$ 1,064

Cash cost per gold ounce sold

$ 1,146

$ 1,097

$ 666

N/A

N/A

N/A

Cash cost per silver ounce sold

N/A

N/A

N/A

$ 10.32

N/A

N/A

Cash cost per gold equivalent ounce sold

$ 1,146

$ 1,097

$ 666

$ 877

N/A

$ 1,008

AISC per gold ounce sold

$ 1,535

$ 1,170

$ 916

N/A

N/A

N/A

AISC per silver ounce sold

N/A

N/A

N/A

$ 15.51

N/A

N/A

AISC per gold equivalent ounce sold

$ 1,535

$ 1,170

$ 916

$ 1,319

N/A

$ 1,326

Three Months Ended December 31, 2022

(in thousands, unless otherwise noted)

Çöpler

Marigold

Seabee

Puna

Corporate

Total

Cost of sales (GAAP) (17)

$ 63,839

$ 63,173

$ 21,360

$ 34,669

$ —

$ 183,041

By-product credits

$ (726)

$ (30)

$ (14)

$ (11,107)

$ —

$ (11,877)

Treatment and refining charges

$ —

$ 393

$ 53

$ 3,723

$ —

$ 4,169

Cash costs (non-GAAP)

$ 63,113

$ 63,536

$ 21,399

$ 27,286

$ —

$ 175,334

Sustaining capital expenditures

$ 11,175

$ 8,083

$ 6,664

$ 2,361

$ —

$ 27,519

Sustaining exploration and evaluation expense

$ —

$ 800

$ —

$ 3,388

$ —

$ 4,951

Reclamation cost accretion and amortization

$ 643

$ 585

$ 930

$ 432

$ —

$ 2,590

General and administrative expense and stock-based compensation expense

$ 1,125

$ —

$ —

$ 33

$ 22,081

$ 23,239

Total AISC (non-GAAP)

$ 76,055

$ 73,004

$ 28,993

$ 33,499

$ 22,081

$ 233,632

Gold sold (oz)

59,949

62,936

23,500

146,385

Silver sold (oz)

2,097,482

2,097,482

Gold equivalent sold (oz) (19, 20)

59,949

62,936

23,500

25,657

172,042

Cost of sales per gold ounces sold

$ 1,065

$ 1,004

$ 909

N/A

N/A

N/A

Cost of sales per silver ounces sold

N/A

N/A

N/A

$ 16.53

N/A

N/A

Cost of sales per gold equivalent ounce sold

$ 1,065

$ 1,004

$ 909

$ 1,351

N/A

$ 1,064

Cash cost per gold ounce sold

$ 1,053

$ 1,010

$ 911

N/A

N/A

N/A

Cash cost per silver ounce sold

N/A

N/A

N/A

$ 13.01

N/A

N/A

Cash cost per gold equivalent ounce sold

$ 1,053

$ 1,010

$ 911

$ 1,063

N/A

$ 1,019

AISC per gold ounce sold

$ 1,269

$ 1,160

$ 1,234

N/A

N/A

N/A

AISC per silver ounce sold

N/A

N/A

N/A

$ 15.97

N/A

N/A

AISC per gold equivalent ounce sold

$ 1,269

$ 1,160

$ 1,234

$ 1,306

N/A

$ 1,358

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(17)

Excludes depreciation, depletion, and amortization.

(18)

During the fourth quarter of 2023, the Company identified an adjustment of $10.5 million related to 2023 asset retirement cost depreciation, which was erroneously excluded from Puna’s AISC calculation. The Company recognized the total adjustment in the fourth quarter of 2023 and the impact to prior periods was not material. The adjustment only impacts the AISC calculation and does not impact Exploration, evaluation and reclamation costs or Net income (loss) attributable to SSR Mining shareholders in the Company’s Consolidated Statements of Operations.

(19)

Gold equivalent ounces are calculated using the silver ounces produced or sold multiplied by the ratio of the silver price to the gold price, using the average LBMA prices for the period. The Company does not include copper, lead, or zinc as they are considered by-products.

(20)

Gold equivalent ounces sold may not re-calculate based on amounts presented in this table due to rounding

Year Ended December 31, 2023

(in thousands, unless otherwise noted)

Çöpler

Marigold

Seabee

Puna

Corporate

Total

Cost of sales (GAAP) (21)

$ 268,628

$ 289,063

$ 82,898

$ 163,558

$ —

$ 804,147

By-product credits

$ (3,523)

$ (154)

$ (54)

$ (56,773)

$ —

$ (60,504)

Treatment and refining charges

$ —

$ 666

$ 101

$ 18,649

$ —

$ 19,416

Cash costs (non-GAAP)

$ 265,105

$ 289,575

$ 82,945

$ 125,434

$ —

$ 763,059

Sustaining capital expenditures

$ 50,982

$ 79,151

$ 32,994

$ 13,193

$ —

$ 176,320

Sustaining exploration and evaluation expense

$ —

$ 983

$ —

$ —

$ —

$ 983

Reclamation cost accretion and amortization (22)

$ 1,709

$ 2,628

$ 3,347

$ 13,598

$ —

$ 21,282

General and administrative expense and stock-based compensation expense

$ 5,479

$ —

$ —

$ 246

$ 61,721

$ 67,446

Total AISC (non-GAAP)

$ 323,275

$ 372,337

$ 119,286

$ 152,471

$ 61,721

$ 1,029,090

Gold sold (oz)

225,599

275,962

83,610

585,171

Silver sold (oz)

9,920,262

9,920,262

Gold equivalent sold (oz) (23, 24)

225,599

275,962

83,610

119,423

704,594

Cost of sales per gold ounces sold

$ 1,191

$ 1,047

$ 991

N/A

N/A

N/A

Cost of sales per silver ounces sold

N/A

N/A

N/A

$ 16.49

N/A

N/A

Cost of sales per gold equivalent ounce sold

$ 1,191

$ 1,047

$ 991

$ 1,370

N/A

$ 1,141

Cash cost per gold ounce sold

$ 1,175

$ 1,049

$ 992

N/A

N/A

N/A

Cash cost per silver ounce sold

N/A

N/A

N/A

$ 12.64

N/A

N/A

Cash cost per gold equivalent ounce sold

$ 1,175

$ 1,049

$ 992

$ 1,050

N/A

$ 1,083

AISC per gold ounce sold

$ 1,433

$ 1,349

$ 1,427

N/A

N/A

N/A

AISC per silver ounce sold

N/A

N/A

N/A

$ 15.37

N/A

N/A

AISC per gold equivalent ounce sold

$ 1,433

$ 1,349

$ 1,427

$ 1,277

N/A

$ 1,461

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Year Ended December 31, 2022

(in thousands, unless otherwise noted)

Çöpler

Marigold

Seabee

Puna

Corporate

Total

Cost of sales (GAAP) (21)

$ 189,825

$ 206,014

$ 74,679

$ 137,424

$ —

$ 607,942

By-product credits

$ (2,928)

$ (125)

$ (111)

$ (48,124)

$ —

$ (51,288)

Treatment and refining charges

$ —

$ 693

$ 316

$ 14,753

$ —

$ 15,762

Cash costs (non-GAAP)

$ 186,897

$ 206,582

$ 74,884

$ 104,053

$ —

$ 572,416

Sustaining capital expenditures

$ 34,064

$ 53,514

$ 32,980

$ 10,446

$ —

$ 131,004

Sustaining exploration and evaluation expense

$ —

$ 7,377

$ —

$ 5,372

$ —

$ 12,749

Care and maintenance (25)

$ 31,067

$ —

$ —

$ —

$ —

$ 31,067

Reclamation cost accretion and amortization

$ 1,320

$ 2,181

$ 1,983

$ 1,726

$ —

$ 7,210

General and administrative expense and stock-based compensation expense

$ 2,794

$ 1

$ 11

$ 266

$ 68,588

$ 71,660

Total AISC (non-GAAP)

$ 256,142

$ 269,655

$ 109,858

$ 121,863

$ 68,588

$ 826,106

Gold sold (oz)

192,811

195,617

133,500

521,928

Silver sold (oz)

7,863,646

7,863,646

Gold equivalent sold (oz) (23, 24)

192,811

195,617

133,500

95,207

617,135

Cost of sales per gold ounces sold

$ 985

$ 1,053

$ 559

N/A

N/A

N/A

Cost of sales per silver ounces sold

N/A

N/A

N/A

$ 17.48

N/A

N/A

Cost of sales per gold equivalent ounce sold

$ 985

$ 1,053

$ 559

$ 1,443

N/A

$ 985

Cash cost per gold ounce sold

$ 969

$ 1,056

$ 561

N/A

N/A

N/A

Cash cost per silver ounce sold

N/A

N/A

N/A

$ 13.23

N/A

N/A

Cash cost per gold equivalent ounce sold

$ 969

$ 1,056

$ 561

$ 1,093

N/A

$ 928

AISC per gold ounce sold

$ 1,328

$ 1,378

$ 823

N/A

N/A

N/A

AISC per silver ounce sold

N/A

N/A

N/A

$ 15.50

N/A

N/A

AISC per gold equivalent ounce sold

$ 1,328

$ 1,378

$ 823

$ 1,280

N/A

$ 1,339

(21)

Excludes depreciation, depletion, and amortization

(22)

During the fourth quarter of 2023, the Company identified an adjustment of $10.5 million related to 2023 asset retirement cost depreciation, which was erroneously excluded from Puna’s AISC calculation. The Company recognized the total adjustment in the fourth quarter of 2023 and the impact to prior periods was not material. The adjustment only impacts the AISC calculation and does not impact Exploration, evaluation and reclamation costs or Net income (loss) attributable to SSR Mining shareholders in the Company’s Consolidated Statements of Operations.

(23)

Gold equivalent ounces are calculated multiplying the silver ounces by the ratio of the silver price to the gold price, using the average LBMA prices for the period. The Company does not include by-products in the gold equivalent ounce calculations.

(24)

Gold equivalent ounces sold may not re-calculate based on amounts presented in this table due to rounding.

(25)

Care and maintenance expense in the AISC calculation only includes direct costs, as depreciation is not included in the calculation of AISC.

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The following tables provide a reconciliation of cost of sales to cash costs and AISC used in the calculation of 2024 cost guidance:

(operating guidance) (26)

Marigold

Seabee

Puna

Corporate

Gold Production

koz

155 – 175

75 – 85

Silver Production

Moz

8.75 – 9.50

Gold Equivalent Production

koz

155 – 175

75 – 85

110 – 120

Gold Sold

koz

155 – 175

75 – 85

Silver Sold

Moz

8.75 – 9.50

Gold Equivalent Sold

koz

155 – 175

75 – 85

110 – 120

Cost of Sales (GAAP) (27)

$M

201 – 235

75 – 85

140 – 162

By-Product Credits + Treatment & Refining Costs

$M

(45)

Cash Cost (non-GAAP) (28)

$M

202 – 235

75 – 85

96 – 117

Sustaining Capital Expenditures (29)

$M

37

40

17

Reclamation Cost Accretion & Amortization

$M

3

3

13

General & Administrative

$M

60 – 65

All-In Sustaining Cost (non-GAAP) (28)

$M

241 – 274

118 – 128

125 – 147

60 – 65

Cost of Sales per Ounce (GAAP) (27)

$/oz

1,300 – 1,340

990 – 1,030

16.50 – 18.00

Cash Cost per Ounce (non-GAAP) (28)

$/oz

1,300 – 1,340

990 – 1,030

11.50 – 13.00

All-In Sustaining Cost per Ounce (non-GAAP) (28)

$/oz

1,535 – 1,575

1,495 – 1,535

14.75 – 16.25

Growth Capital Expenditures

$M

1

2

Growth Exploration and Resource Development Expenditures (30)

$M

9

15

10

4

Total Growth Capital

$M

10

17

10

4

(26)

Figures may not add due to rounding.

(27)

Excludes depreciation, depletion, and amortization.

(28)

SSR Mining reports the non-GAAP financial measures of cash costs and AISC per payable ounce of gold and silver sold to manage and evaluate operating performance at Çöpler, Marigold, Seabee and Puna. See “Cautionary Note Regarding Non-GAAP Measures” at the end of this press release for an explanation of these financial measures and a reconciliation of these financial measures to cost of sales, previously referred to as production costs, which is the most comparable GAAP financial measures. AISC includes reclamation cost accretion and amortization and certain lease payments.

(29)

Includes sustaining exploration and evaluation expenditures. Includes approximately $1 million in expensed sustaining exploration at Marigold and $24 million in underground mine development at Seabee.

(30)

All growth exploration and resource development spend is expensed. Growth exploration includes project studies and evaluation.

Non-GAAP Measure – Adjusted Attributable Net Income (loss)
Adjusted attributable net income (loss) and adjusted attributable net income (loss) per share are used by management to measure the Company’s underlying operating performance. We believe this measure is also useful for shareholders to assess the Company’s operating performance. The most directly comparable financial measures prepared in accordance with GAAP are Net income (loss) attributable to SSR Mining shareholders and Net income (loss) per share attributable to SSR Mining shareholders. Adjusted attributable net income (loss) is defined as net income (loss) adjusted to exclude the after-tax impact of specific items that are significant, but not reflective of the Company’s underlying operations, including impairment charges; inflationary impacts on tax balances; transaction, integration, and SEC conversion expenses; and other non-recurring items.

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The following table provides a reconciliation of Net income (loss) attributable to SSR Mining shareholders to adjusted net income (loss) attributable to SSR Mining shareholders:

Three Months Ended

Twelve Months Ended

(in thousands of US dollars, except per share data)

December 31,

December 31,

2023

2022

2023

2022

Net income (loss) attributable to equity holders of SSR Mining (GAAP)

$

(217,845)

$

93,884

$

(98,007)

$

194,140

Interest saving on convertible notes, net of tax

$

$

1,233

$

$

4,910

Net income (loss) used in the calculation of diluted net income per share

$

(217,845)

$

95,117

$

(98,007)

$

199,050

Weighted-average shares used in the calculation of net income (loss) and adjusted net income (loss) per share

Basic

203,566

206,612

204,714

209,883

Diluted

203,566

219,227

204,714

222,481

Net income (loss) per share attributable to common stockholders (GAAP)

Basic

$

(1.07)

$

0.45

$

(0.48)

$

0.92

Diluted

$

(1.07)

$

0.43

$

(0.48)

$

0.89

Adjustments:

Foreign exchange loss (gain) (31)

$

$

12,727

$

$

32,460

Gain on acquisition of Kartaltepe

$

$

(81,852)

$

$

(81,852)

Loss (gain) on sale of mineral properties, plant and equipment

$

(1,610)

$

288

$

$

1,501

Transaction and integration costs (32)

$

(406)

$

$

$

1,561

SEC conversion costs

$

$

$

$

1,255

Impairment charges (33)

$

338,097

$

$

340,734

$

Changes in fair value of marketable securities

$

(3,656)

$

(4,438)

$

(4,221)

$

(602)

Devaluation of ARS (34)

$

26,074

$

$

26,074

$

Income tax impact related to above adjustments

$

(9,041)

$

1,079

$

(9,826)

$

(966)

Foreign exchange (gain) loss and inflationary impacts on tax balances (31)

$

(4,536)

$

3,892

$

(16,907)

$

(14,128)

Impact of income tax rate change in Türkiye (35)

$

$

$

37,170

$

Other tax adjustments (36)

$

$

$

1,477

$

11,445

Adjusted net income (loss) attributable to equity holders of SSR Mining (Non-GAAP)

$

127,077

$

25,580

$

276,494

$

144,814

Adjusted net income (loss) per share attributable to SSR Mining shareholders (Non-GAAP)

Basic

$

0.62

$

0.12

$

1.35

$

0.69

Diluted (37)

$

0.59

$

0.12

$

1.29

$

0.67

(31)

Effective January 1, 2023, the Company no longer adjusts for the fluctuations of foreign exchange gains and losses.

(32)

Represents the transaction of integration costs of $0.4 million for the acquisition of Artmin during the year ended December 31, 2023 and $1.6 million for the sale of Pitarrilla during the year ended December 31, 2022.

(33)

Represents the impairment of $279.3 million related to Çöpler mineral properties and exploration and evaluation assets (amount is presented net of pre-tax attributable to non-controlling interest of $69.8 million), $49.8 million related to Seabee goodwill, $9.0 million write-off of capitalized cloud computing arrangement (amount is presented net of pre-tax attributable to non-controlling interest of $0.8 million), and $2.6 million related to supplies inventories during the year ended December 31, 2023. Represents impairment charges related to the Royalty Portfolio sale, based on the differences between the carrying amount of the assets within the Royalty Portfolio, and the estimated net transaction price for the year ended December 31, 2022. See Note 7 to the Consolidated Financial Statements for further details.

(34)

Represents the foreign exchange net loss due to the measures implemented by the Argentine government during the fourth quarter of 2023 which included foreign exchange losses due to the official ARS exchange rate change, foreign exchange gains related to the conversion of a portion of export proceeds at a market exchange rate, and the foreign exchange loss on the utilization of blue chip swaps to convert ARS to USD and manage currency risk. See Currency Risk in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the Company’s Annual Report for further details.

(35)

Represents the corporate income tax rate change from 20% to 25% during the year ended December 31, 2023.

(36)

Represents charges related to a one-time tax imposed by Türkiye to fund earthquake recovery efforts, offset by a release of an uncertain tax position during the year ended December 31, 2023. Represents charges related to a tax settlement and an uncertain tax position during the year ended December 31, 2022.

(37)

Adjusted net income (loss) per diluted share attributable to SSR Mining shareholders is calculated using diluted common shares, which are calculated in accordance with GAAP. For the year ended December 31, 2023, $4.9 million interest saving on 2019 Notes, net of tax, and potentially dilutive shares of approximately 12.9 million were excluded from the computation of diluted loss per common share attributable to SSR Mining shareholders in the Consolidated Statement of Operations as they were antidilutive. These interest savings and shares were included in the computation of adjusted net income (loss) per diluted share attributable to SSR Mining shareholders for the year ended December 31, 2023.

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Non-GAAP Measure – Free Cash Flow
The Company uses free cash flow, cash flow from operating activities before changes in working capital, and free cash flow before changes in working capital to supplement information in its condensed consolidated financial statements. The most directly comparable financial measures prepared in accordance with GAAP is cash provided by operating activities. The Company believes that in addition to conventional measures prepared in accordance with US GAAP, certain investors and analysts use this information to evaluate the ability of the Company to generate cash flow after capital investments and build the Company’s cash resources. The Company calculates free cash flow by deducting cash capital spending from cash generated by operating activities.

The following table provides a reconciliation of cash provided by operating activities to free cash flow:

Three Months Ended

Twelve Months Ended

(in thousands of US dollars, except per share data)

December 31,

December 31

2023

2022

2023

2022

Net cash provided by operating activities (GAAP)

$

203,159

$

118,097

$

421,725

$

160,896

Expenditures on mineral properties, plant, and equipment (38)

$

(58,789)

$

(46,198)

$

(223,422)

$

(137,515)

Free cash flow (non-GAAP)

$

144,370

$

71,899

$

198,303

$

23,381

(38)

Represents purchases of plant and equipment, excluding purchases of mineral properties.

We also present operating cash flow before working capital adjustments and free cash flow before working capital adjustments as non-GAAP cash flow measures to supplement our operating cash flow and free cash flow (non-GAAP) measures. We believe presenting both operating cash flow and free cash flow before working capital adjustments, which reflects an exclusion of net changes in operating assets and liabilities, will be useful for investors because it presents cash flow that is actually generated from the continuing business. The Company calculates cash flow from operating activities before changes in working capital by adjusting cash provided by operating activities by the net change in operating assets and liabilities. The Company also calculates free cash flow before changes in working capital by deducting cash capital spending from cash flow from operating activities before changes in working capital.

The following table provides a reconciliation of cash provided by operating activities to free cash flow before changes in working capital:

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Three Months Ended

Twelve Months Ended

(in thousands of US dollars, except per share data)

December 31,

December 31

2023

2022

2023

2022

Net cash provided by operating activities (GAAP)

$

203,159

$

118,097

$

421,725

$

160,896

Net change in operating assets and liabilities

$

15,229

$

(22,634)

$

134,147

$

147,270

Cash generated by (used in) operating activities before changes in working capital (non-GAAP)

$

218,388

$

95,463

$

555,872

$

308,166

Expenditures on mineral properties, plant, and equipment (39)

$

(58,789)

$

(46,198)

$

(223,422)

$

(137,515)

Free cash flow before changes in working capital (non-GAAP)

$

159,599

$

49,265

$

332,450

$

170,651

(39)

Represents purchases of plant and equipment, excluding purchases of mineral properties.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240227512657/en/

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Contacts

SSR Mining Inc.
E-Mail: invest@ssrmining.com
Phone: +1 (888) 338-0046

To receive SSR Mining’s news releases by e-mail, please register using the SSR Mining website at www.ssrmining.com.

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