SSR Mining adds 40% stake in ‘world-class’ Hod Maden project in Turkey to portfolio

SSR Mining (TSX: SSRM; NASDAQ: SSRM ASX: SSR) Tuesday after adding another “world-class” project in Turkey to its development pipeline, and potentially, its fifth producing asset. 

On Monday, the Canadian miner said it will acquire up to a 40% interest along with operational control of the Hod Maden gold-copper development project from Lidya Mines, its joint venture partner at the Çöpler gold mine.

Hod Maden is 70%-owned by Lidya Mines, with the other 30% held by Horizon Copper (TSXV: HCU).

As consideration, SSR will make cash payments totalling US$270 million, of which US$120 million has been paid upfront for a 10% interest in the project as well as its sole operatorship. The remaining US$150 million will be structured milestone payments for an additional 30% interest, payable at the start of construction.

Commenting on the deal, SSR said Hod Maden represents one of the “highest margin and lowest capital intensity development projects” globally, and is expected to deliver an estimated after-tax internal rate of return (IRR) of more than 15% after acquisition costs.

According to a 2021 feasibility study published by Horizon Copper, Hod Maden features a 13-year mine life averaging (on a 100% basis) 195,000 oz. of gold-equivalent production annually. The study forecast the project’s all-in sustaining costs at US$588 per oz. (on a coproduct basis), generating US$164 million of annual free cash flow and a 36% after-tax IRR.

Based on these figures, the project is expected to hand SSR Mining production of 80,000 gold-equivalent oz. and annual free cash flow of US$66 million once in production, expected in 2027.

The 35-sq.-km Hod Maden property is located in northeastern Turkey, about 330 km from the company’s Çöpler mine and 260 km from the Copper Hill development prospect. As such, SSR Mining believes the deal allows for potential synergies.

“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,” Rod Antal, president and CEO of SSR Mining, commented in Monday’s news release.

Following review and after discussions with joint venture partners, the company believes there are several positive operational value levers as well as exploration potential beyond the existing life of mine plan that was presented in the 2021 feasibility study.

“We will now spend the next twelve months updating the existing technical report for these value enhancing opportunities, as well as to account for changes in market conditions,” Antal said, adding that the project development team will work to advance Hod Maden to a full construction decision in 2024 with a goal of delivering first production in 2027.

He noted the project would benefit from the same principles and discipline the team applied to build the Çöpler sulphide plant project on time and under budget.

Once the earn-in milestone payments are completed, SSR Mining will own 40% of the project, and Lidya Mines and Horizon will each own 30%.

Horizon acquired its 30% ownership interest from Sandstorm Gold in August 2022 in exchange for a gold stream on the project. SSR Mining said its attributable production and free cash flow are not encumbered by the gold streaming agreement between Horizon and Sandstorm.

As an upside sharing mechanism with Lidya Mines, if an additional 500,000 ounces of gold equivalent mineral reserves beyond those currently identified in feasibility study are delineated, SSR Mining said it will make an US$84 million payment to Lidya.

SSR saw a slight bump in its stock price, with shares up 0.3% by 1 p.m. EDT, for a market capitalization of $4.7 billion.