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SSR Mining takes operational control of Hod Maden

The Hod Maden gold/copper development project in Türkiye.

The Hod Maden gold/copper development project in Türkiye.

9th May 2023

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Dever-based SSR Mining has announced a $270-million transaction to acquire from Lidya Mines up to 40% of the Hod Maden gold/copper development project, in Türkiye.

Currently, Lidya Mines and Horizon Copper hold 70% and 30% ownership interest, respectively, in the project.

SSR will make a $120-million upfront cash payment for a 10% interest, handing it immediate operational control of Hod Maden, which the company believes is one of the highest-margin, lowest capital intensity projects in the sector.

“We have been closely monitoring Hod Maden for well over seven years as it has progressed through critical development and permitting milestones, largely de-risking the project as it approaches a construction decision in 2024,” said SSR president and CEO Rod Antal.

He said that following discussions with joint venture partners, SSR believed that there were several positive operational value levers, as well as exploration potential beyond the existing 13-year life-of-mine plan that was presented in the 2021 feasibility study.

“We will spend the next 12 months updating the existing technical report for these value-enhancing opportunities, as well as to account for changes in market conditions.”

According to the 2021 study, Hod Maden will deliver an average of 195 000 oz of gold equivalent production a year at first quartile co-product all-in sustaining cost of $588/oz, generating $164-million of annual free cash flow and a 36% after-tax internal rate of return at base case commodity prices of $1 599/oz gold and $3.19/lb copper.

SSR would work towards a full construction decision in 2024 with a goal of delivering first production in 2027.

“The same principles and discipline that enabled our team to deliver the Çöpler sulphide plant project in Türkiye on time and under budget will be applied to Hod Maden to help us maximize the value of the project. The project’s robust economics have the ability to support a project-level finance facility, and we will build upon the project finance work completed by the joint venture to date as a potential funding opportunity while limiting SSR Mining’s cash outlay. Overall, this prudently structured transaction presents an opportunity to further our commitment to low capital intensity growth, strong free cash flow generation and continued robust capital returns,” said Antal.

Following completion of the earn-in structured cash milestone payments, SSR would own 40% of the project, Lidya will retain a 30% ownership interest and Horizon will own the remaining 30%.

As an upside sharing mechanism with Lidya, if an additional 500 000 oz of gold-equivalent mineral reserves, beyond those currently identified in the 2021 feasibility study, were delineated, SSR would make an $84-million payment to Lidya.

SSR and Lidya have enjoyed a successful partnership at the Çöpler mine for more than 15 years.

Horizon acquired its 30% ownership from Sandstorm Gold in August last year in exchange for a gold stream on production from a portion of Horizon’s 30% interest and certain other non-cash consideration. SSR’s attributable production and free cash flow are not encumbered by the gold streaming agreement between Horizon and Sandstorm.

"This is an important milestone and step forward in the development of the Hod Maden project. Over the last year, since Horizon's acquisition of a 30% interest in the project, Lidya, our Turkish partner and majority owner of the project, has been progressing various early works construction items at Hod Maden and working to secure project financing. SSR Mining will continue to advance the work that has been started while bringing a highly skilled project development team with extensive experience in developing gold mines in Türkiye," commented Horizon president and CEO Erfan Kazemi.

 

Edited by Creamer Media Reporter

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