What happened
Shares of SSR Mining (SSRM +8.22%) jumped over 13% today after the company announced production results from the third quarter of 2018. All three mines in the portfolio delivered strong production volumes. Considering that gold prices roared higher this week as economic anxiety pushed investors out of stocks, the company might be able to cash in.
Maintaining the production gains will be necessary for SSR Mining stock to break out of its narrow trading range, as shares have been stuck around $10 for most of the last two years. Can the business translate higher throughput at its mines to higher earnings and cash flow?
As of 3:20 p.m. EDT on Friday, the stock had settled to a 13.2% gain.
Image source: Getty Images.
So what
SSR Mining reported strong production volumes at each of its three mining complexes for the third quarter of 2018. Marigold in Nevada churned out 18% more gold compared with the second quarter of 2018. However, it needed to move 33% more raw material, as gold grades for the processed ore were 24% lower.
The company's Seabee mine in Canada also saw gold production jump 18% compared with the previous three-month period, but that was aided by 20% higher gold concentrations during the third quarter of 2018. The nearly 28,000 ounces of gold produced at the mine were a quarterly record.
Finally, the Puna operations managed to double overall zinc production and process higher volumes of ore from the all-important Chinchillas expansion project in South America. Chinchillas is key to SSR Mining's long-term growth strategy, and could more than double annual production at Puna to 6.9 million silver equivalent ounces in 2021.
Now what
SSR Mining appears to have all the pieces in place to execute on its growth strategy. Although gold concentrations have dropped at Marigold, higher gold grades at Seabee more than made up for the slip. Meanwhile, the Puna expansion remains on track; it'll just require investors to remain patient for several more years to enjoy all the benefits higher silver production will bring. The progress was enough to get investors excited today, but whether or not the enthusiasm holds remains to be seen.
