SSR Mining Reports Second Quarter 2018 Results
News Release 18-13
August 9, 2018
SSR MINING REPORTS SECOND QUARTER 2018 RESULTS
VANCOUVER, B.C. - SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) (“SSR Mining”) reports consolidated financial results for the second quarter ended June 30, 2018.
Paul Benson, President and CEO said, "We increased consolidated production in the second quarter to over 85,000 gold equivalent ounces at lower cash costs, putting us on track to achieve full year guidance. This achievement is also reflected in our improved financial performance, where we increased earnings and operating cash flow, and added cash to the balance sheet for the eleventh consecutive quarter. With these results and the Chinchillas project moving closer to completion, we maintain positive momentum towards our 2018 goals and near-term growth outlook."
Second Quarter 2018 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
- Improved financial performance: Cash generated from operating activities of $17.1 million and adjusted attributable net income of $12.1 million or $0.10 per share.
- Increased production at lower costs: Consolidated quarterly production increased to 85,082 gold equivalent ounces while achieving lower cash costs of $758 per payable ounce of gold sold.
- Strong performance at the Marigold mine: Produced 49,436 ounces of gold at cash costs of $700 per payable ounce of gold sold, and stacked a record 7.9 million tonnes of ore.
- Delivered updated Marigold life of mine plan: Released updated plan outlining a 10-year reserve life, 30% growth in production through 2021, and robust economics.
- Performance in line with guidance at the Seabee Gold Operation: Produced 23,582 ounces of gold at cash costs of $616 per payable ounce of gold sold, a solid result considering lower quarterly mill throughput.
- Exceeded first half guidance at Puna Operations: Produced 1.0 million ounces of silver at cash costs of $14.73 per payable ounce of silver sold, exceeding first half production guidance.
- Chinchillas project remains on track: Subsequent to quarter-end, trucked first ore to the Pirquitas site in July 2018. The project remains on schedule for sustained ore delivery in the fourth quarter of the year and on budget, with material advancements in construction and development activities made during the quarter.
- Increased cash position: Quarter-end cash increased to $493.6 million, up $20.7 million.
Marigold mine, U.S.
| Operating data | June 30 | March 31 December 31 September 30 | June 30 | ||
|---|---|---|---|---|---|
| 2018 | 2018 | 2017 | 2017 | 2017 | |
| Total material mined (kt) | 15,958 | 16,150 | 13,979 | 20,311 | 17,985 |
| Waste removed (kt) | 8,083 | 9,052 | 8,136 | 13,149 | 11,075 |
7,875
| Total ore stacked (kt) | 7,099 | 5,843 | 7,162 | 6,910 | |
| Strip ratio | 1.0 | 1.3 | 1.4 | 1.8 | 1.6 |
| Mining costs ($/t mined) | 1.92 | 1.80 | 1.98 | 1.52 | 1.67 |
| Gold stacked grade (g/t) | 0.42 | 0.37 | 0.37 | 0.31 | 0.31 |
| Processing costs ($/t processed) | 0.86 | 0.93 | 1.08 | 0.89 | 0.82 |
74.4
| Gold recovery (%) | 73.6 | 74.0 | 72.0 | 73.0 | |
| General and admin costs ($/t processed) | 0.41 | 0.42 | 0.51 | 0.40 | 0.42 |
| Gold produced (oz) | 49,436 | 42,960 | 52,768 | 38,699 | 55,558 |
| Gold sold (oz) | 46,644 | 42,078 | 51,420 | 38,818 | 57,426 |
| Realized gold price ($/oz)(1) | 1,304 | 1,331 | 1,269 | 1,270 | 1,265 |
| Cash costs ($/oz)(1) | 700 | 720 | 699 | 684 | 632 |
AISC ($/oz) (1) 954 1,001 979 833
Financial data ($000s)
Revenue 60,752 55,880 65,217 49,395 72,451
14,670
| Income from mine operations | 12,312 | 12,777 | 11,189 | 21,373 | |
| Capital expenditures(2) | 14,481 | 4,665 | 8,194 | 3,855 | 5,272 |
| Capitalized stripping | 850 | 2,902 | 5,712 | 6,056 | 4,350 |
| Exploration expenditures(3) | 3,243 | 1,914 | 1,208 | 1,130 | 1,538 |
(1) We report the non-GAAP financial measures of realized gold price, cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our Consolidated Statements of Income (Loss), please refer to “Non-GAAP Financial Measures” in Section 9 of our Management's Discussion and Analysis for the three and six months ended June 30, 2018 (“MD&A”) .
(2) Includes expansion capital expenditures of $5.9 million for the three months ended June 30, 2018 ($nil for the previous four quarters).
(3) Includes capitalized and expensed exploration expenditures.
In the second quarter of 2018, the Marigold mine produced 49,436 ounces of gold, a 15% increase over the first quarter.
During the quarter, 16.0 million tonnes of material were mined, similar to the first quarter primarily due to longer haul distances associated with the increase in ore tonnes. We expect total material mined to increase during the second half of 2018 due to shorter haul distances and as the four additional haul trucks enter service. These factors, along with completion of the new leach pad, are expected to increase gold production through the second half of the year.
Approximately 7.9 million tonnes of ore were delivered to the heap leach pads, a quarterly record. Gold grade increased to 0.42 g/t. This compares to 7.1 million tonnes of ore delivered to the heap
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leach pads at a gold grade of 0.37 g/t in the first quarter of 2018. The strip ratio was 1.0:1 for the quarter, 23% lower than the prior quarter.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include all costs of inventory, refining costs and royalties, of $700 per payable ounce of gold sold in the second quarter of 2018 were 3% lower than the previous quarter. This was primarily due to stacking 26% more recoverable ounces in the second quarter compared to the first quarter, which lowered the cost per ounce of inventory. The increase in recoverable ounces stacked was a result of the increased ore tonnage and grade in the second quarter compared to the first quarter. Total mining costs of $1.92 per tonne in the second quarter of 2018 were 7% higher than in the previous quarter primarily due to a 25% increase in total fuel costs through a combination of higher diesel price and increased consumption due to longer haul distances. Processing and general administrative unit costs were 8% and 2% lower, respectively, in the second quarter than in the first quarter due to higher tonnes processed while total costs remained stable.
AISC per payable ounce of gold sold increased in the second quarter of 2018 to $981 from $954 in the first quarter due to higher sustaining capital expenditures as construction of the new leach pad resumed, and due to higher planned exploration expenditures.
Mine sales
A total of 46,644 ounces of gold were sold at an average realized price of $1,304 per ounce during the second quarter of 2018, an increase of 11% from the 42,078 ounces of gold sold at an average realized price of $1,331 per ounce during the first quarter of 2018. Finished goods inventory increased as sales were below production.
Exploration
The main focus of our 2018 exploration program is to conduct infill drilling of the Red Dot resource area and to explore higher grade structural zones within phases of the Mackay pit. During the second quarter, we completed a total of 75 reverse circulation drillholes for 27,886 meters at Red Dot and within the Mackay pit.
Drilling of two east-west test sections were completed during the quarter within the Red Dot area. Drill results met expectations confirming the geologic interpretation and are expected to increase Mineral Resources at year-end 2018. In June, we decided to continue the program and complete infill drilling of the Red Dot area. Our objective is to convert Inferred Mineral Resources to Indicated Mineral Resources, and to upgrade existing Indicated Resources with the ultimate goal of declaring a Mineral Reserve at Red Dot by mid-2019.
In June, we completed the acquisition of a parcel of land, and the associated mineral and surface rights, that is proximal to the south-western margin of the Mackay pit. We anticipate that operating synergies and exploration benefits will be realized from the incorporation of these lands into the Marigold land package.
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During the third quarter of 2018, we will continue drilling for higher grade structures in the Mackay Phase 5 area while advancing the Red Dot exploration program.
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Seabee Gold Operation, Canada
Operating data June 30 March 31 December 31 September 30 June 30 2018 2018 2017 2017 2017
84,010
Total ore milled (t) 93,269 89,237 84,315 84,469 Ore milled per day (t/day) 1,036 970 916 928
7.95
Gold mill feed grade (g/t) 8.95 8.89 7.03 7.97 Mining costs ($/t mined) 59 66 74 60 Processing costs ($/t processed) 21 24 22 20
97.3
Gold recovery (%) 97.4 97.4 97.2 97.3 General and admin costs ($/t
| processed) | 62 | 53 | 61 | 53 | 50 |
| Gold produced (oz) | 23,582 | 23,717 | 24,227 | 18,058 | 20,690 |
| Gold sold (oz)(1) | 20,512 | 20,012 | 23,969 | 21,798 | 17,909 |
| Realized gold price ($/oz)(2) | 1,306 | 1,340 | 1,276 | 1,269 | 1,257 |
| Cash costs ($/oz)(2) | 616 | 481 | 605 | 634 | 592 |
| AISC ($/oz)(2) | 854 | 896 | 776 | 775 | 831 |
Financial data ($000s)
| Revenue | 26,706 | 26,789 | 30,571 | 27,652 | 22,502 |
| Income from mine operations | 5,703 | 6,672 | 2,923 | 3,643 | 4,083 |
| Capital expenditures | 1,035 | 4,426 | 920 | 799 | 711 |
| Capitalized development | 2,069 | 2,283 | 2,301 | 1,314 | 2,165 |
| Exploration expenditures(3) | 2,745 | 2,032 | 1,187 | 1,253 | 1,566 |
(1) Beginning with the first quarter of 2018, the holder of the 3% net smelter returns royalty elected to receive its royalty in-kind and we will no longer report these ounces within gold sold.
(2) We report the non-GAAP financial measures of realized gold prices, cash costs and AISC per payable ounce of gold sold to manage and evaluate operating performance at the Seabee Gold Operation. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our Consolidated Statements of Income (Loss), please refer to “Non-GAAP Financial Measures” in Section 9 of our MD&A.
(3) Includes capitalized and expensed exploration expenditures.
Seabee Gold Operation produced 23,582 ounces of gold in the second quarter, in line with production in the previous quarter.
The mill achieved an average throughput of 923 tonnes per day, an 11% decrease from the first quarter. Production during the second quarter was impacted by planned maintenance, the transition of mining activities to the high-grade Santoy mine, and a forest fire. Mill throughput is expected to increase through the second half of the year relative to the second quarter. Gold recovery for the quarter remained consistent at 97.3%.
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Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs per payable ounce of gold sold, which include all costs of inventory and refining costs, were $616 in the second quarter of 2018, higher than the $481 in the first quarter of 2018. Higher cash costs per payable ounce sold were primarily the result of lower tonnes milled at lower grades while incurring similar total operating costs compared to the prior quarter. Costs per tonne mined were $60 in the second quarter of 2018, in line with the previous quarter. Processing and general and administrative unit costs increased by 29% and 17%, respectively, in the second quarter of 2018 compared to the first quarter of 2018, due to lower tonnes milled impacted by planned maintenance and the forest fire.
AISC per payable ounce of gold sold were $854 in the second quarter of 2018, lower than the $896 in the first quarter of 2018. This decrease was due to the seasonal nature of our sustaining capital expenditures as equipment and materials are purchased primarily in the first quarter of each year for delivery on the ice road.
Mine sales
A total of 20,512 ounces were sold at an average realized price of $1,306 per ounce during the second quarter of 2018, comparable to the 20,012 ounces of gold sold in the first quarter of 2018, at an average realized price of $1,340 per ounce of gold. Finished goods inventory increased as sales were below production.
Exploration
For 2018, the Seabee Gold Operation plans 45,000 meters of underground drilling and 20,000 meters of surface drilling with the objective to increase and convert Mineral Resources into Mineral Reserves near the Santoy mine. In the second quarter of 2018, close to the Santoy mine area, we completed 12,157 meters of underground drilling and 6,840 meters of surface drilling in 40 and 12 drillholes, respectively. Our underground drill program for the second quarter of 2018 focused on three targets, including Santoy Gap, Santoy 8A zone and Santoy Gap hanging wall.
Surface exploration drilling in the second quarter of 2018 outside the Santoy mine area, focused on three areas including CRJ, Santoy 3 and Fisher with 12,052 meters being completed in 23 drillholes. Current activities are focused on testing first pass targets on the Fisher property identified along the length of the Santoy shear zone extension. Holes completed during the quarter partially tested the Santoy shear zone extension and have intersected favourable lithologies, alteration and mineralization. Analytical results are pending and we continue to be encouraged by the potential of this early stage property.
Activities in the third quarter will focus on continuing the conversion drilling from underground on the Santoy Gap, Santoy Gap hanging wall and Santoy 8A targets, and completing our planned surface field and drill programs on Fisher.
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Puna Operations, Argentina (75% interest)
(amounts presented on 100% basis unless otherwise stated)
Three months ended Operating data
| June 30 | March 31 December 31 | September 30 | June 30 | ||
|---|---|---|---|---|---|
| 2018 | 2018 | 2017 | 2017 | 2017 | |
| Ore milled (kt) | 396 | 373 | 442 | 461 | 446 |
| Silver mill feed grade (g/t) | 110 | 115 | 125 | 153 | 185 |
| Zinc mill feed grade (%)(2) | 0.71 | — | — | — | — |
| Processing costs ($/t milled) | 17.26 | 15.34 | 13.53 | 11.92 | 12.94 |
| Silver recovery (%) | 68.1 | 67.7 | 66.0 | 67.8 | 73.5 |
| Zinc recovery (%)(2) | 31.5 | — | — | — | — |
| General and admin costs ($/t milled) | 7.07 | 6.33 | 5.74 | 4.81 | 5.00 |
| Silver produced ('000 oz) | 954 | 938 | 1,169 | 1,541 | 1,947 |
| Silver produced (attributable) ('000 oz)(1) | 716 | 704 | 877 | 1,156 | 1,777 |
| Zinc produced ('000 lb)(2) | 1,521 | — | — | — | — |
| Zinc produced (attributable) ('000 lb)(1,2) | 1,141 | — | — | — | — |
| Silver sold ('000 oz) | 1,142 | 1,064 | 820 | 2,076 | 1,655 |
| Silver sold (attributable) ('000 oz)(1) | 857 | 798 | 615 | 1,557 | 1,473 |
| Zinc sold ('000 lb)(2) | — | — | — | — | — |
| Zinc sold (attributable) ('000 lb)(1,2) | — | — | — | — | — |
| Realized silver price ($/oz)(3) | 16.49 | 16.79 | 16.96 | 16.77 | 17.31 |
| Cash costs ($/oz)(3,4) | 14.73 | 17.07 | 16.36 | 12.76 | 12.15 |
| AISC ($/oz)(3,4) | 17.66 | 18.37 | 18.30 | 13.56 | 12.78 |
Financial Data ($000s)
| Revenue | 16,570 | 15,233 | 12,093 | 28,958 | 22,029 |
| Income (loss) from mine operations | 830 | (1,753 ) | 5,490 | 7,690 | 4,006 |
| Capital expenditures(5) | 2,652 | 789 | 917 | 1,006 | 420 |
| Exploration expenditures(5) | 429 | 6 | — | — | — |
(1) Attributable production and sales for the second quarter of 2017 represent 100% for April and May and 75% for June 2017. Attributable production and sales for all subsequent quarters represent 75%.
(2) Data for zinc production and sales relate only to zinc in zinc concentrate.
(3) We report the non-GAAP financial measures of cash costs per payable ounce of silver sold, realized silver prices and AISC per payable ounce of silver sold to manage and evaluate operating performance at Puna Operations. For a better understanding and a reconciliation of these measures to cost of sales, as shown in our Consolidated Statements of Income (Loss), please refer to “Non-GAAP Financial Measures” in Section 9 of our MD&A.
(4) Cash costs and AISC per payable ounce of silver sold include stockpile inventory costs previously incurred of $nil for the three months ended June 30, 2018 (March 31, 2018 - $5.75, December 31, 2017 - $5.30, September 30, 2017 - $5.20, June 30, 2017 - $3.30).
(5) Does not include exploration or development of the Chinchillas project.
Mine production
During the second quarter of 2018, the operation produced 1.0 million ounces of silver, for a total of 1.9 million ounces produced in the first half of 2018, exceeding our silver production guidance of 1.6 million ounces. Our attributable share of silver production in the second quarter was approximately 716,000 ounces.
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Ore was sourced exclusively from residual surface stockpiles and milled at an average rate of 4,353 tonnes per day in the second quarter, 5% above the previous quarter. Ore milled in the second quarter contained an average silver grade of 110 g/t, 4% lower than the 115 g/t reported in the first quarter, consistent with processing of increasingly lower grade stockpiles. The average recovery of silver in the silver concentrate in the second quarter was 63.4%, 6% lower than the previous quarter consistent with increasing metallurgical complexity of the residual stockpiled material.
We commenced production of zinc concentrate from stockpiled ore near the end of the second quarter, and produced approximately 1.5 million pounds of zinc. Approximately 70,000 ounces of silver were recovered in zinc concentrate over the quarter, for a total silver recovery of 68.1%.
Mine operating costs
Cash costs and AISC per payable ounce of silver sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include cost of inventory, treatment and refining costs and provincial royalties were $14.73 per payable ounce of silver sold in the second quarter of 2018, a decline from the $17.07 per payable ounce of silver sold in the first quarter of 2018 principally due to processing stockpiles with no inventory value. This benefit was partly offset by an increase in processing and general and administrative unit costs by 13% and 12%, respectively, when compared to the previous quarter.
AISC per payable ounce of silver sold in the second quarter of 2018 were $17.66, 4% lower than $18.37 in the first quarter of 2018.
Mine sales
Silver sales totaled 1.1 million ounces and attributable sales were 0.9 million ounces in the second quarter of 2018, each a 7% increase from the first quarter of 2018. No zinc sales occurred during the quarter.
Exploration
During the first quarter of 2018, we commenced a 2,400 meter surface drill program at Pirquitas targeting mineralization that would augment the Cortaderas underground Mineral Resources. During the second quarter of 2018, twelve drillholes were completed for 1,587 meters. All drillholes intersected high-grade silver-zinc mineralization from the Potosi structure having the form of two narrow, but vertically and laterally continuous veins. Results will be evaluated when finalized.
Chinchillas project, Argentina
The second quarter saw increased activities in both pre-stripping and construction with the completion of recruitment of new mine personnel and mobilization of contractors at both Pirquitas and Chinchillas.
Material movement related to Chinchillas pre-stripping ramped up over the quarter with the hiring of the new mine operations team. The workforce was employed exclusively out of the local communities and a major mine fleet operations and maintenance training program was initiated late
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in the first quarter. Total material moved in the pre-strip project to date was 1.83 million tonnes from the Chinchillas pit including 0.1 million tonnes of ore. The mine completed construction of a waste dump and the main pit temporary access ramp. Negotiations were also completed towards the end of the quarter for an ore transport contract with initial ore haulage from Chinchillas to Pirquitas commencing in July 2018. Through the third quarter, continued ramp up in mining rates and ore haulage rates are expected to provide a stockpile of Chinchillas ore at the Pirquitas mill to allow processing to commence in the second half of 2018.
Construction advanced with the receipt of all major equipment and materials for the in-pit tailings pumping system. Concrete foundations for the pumps were completed and the remaining work to be completed is the dump/emergency discharge pond. Both carbon steel and HDPE pipe welding were substantially completed with pumps rough set, pre-fabricated electrical rooms were set on foundations and cable pulling commenced. The overhead power line to the Pirquitas pit for water reclaim also advanced during the quarter with the power poles installed; line installation is expected to be completed in the third quarter 2018.
The fine ore stockpile dome installation achieved 95% completion of the geodesic structure and the entire cover is expected to be completed, including cladding, by the end of the third quarter 2018.
Infrastructure works at the Chinchillas site saw significant progress on the road between Chinchillas and Pirquitas with the completion of one of three community village by-passes along with road upgrades and water crossings. Power line upgrades between Chinchillas and Pirquitas also advanced with installation of the new main power transformer at Pirquitas and completion of overhead line installation. Connection to the Pirquitas substation and installation of new transformers at Chinchillas is expected to be completed in the third quarter 2018.
The main foundations for the Chinchillas truck shop were completed and all structural steel delivered to site. Gate houses and the medical clinic were also delivered and put into operation. Temporary power and water services are expected to be completed, along with the dining room and change house, by the end of the third quarter.
The project remains on budget and on schedule to support sustained delivery of ore to the Pirquitas mill in the fourth quarter of the year.
Other Projects
The SIB exploration project is located near the high-grade, past-producing Eskay Creek mine in northwest British Columbia. During the fourth quarter of 2017, we announced plans to continue with the exploration program committing to a $3.2 million drill program and geophysics activities in 2018. We hold a three-year option to acquire up to a 60% undivided interest in the project and have met the first year spending requirement of $2.9 million. During the second quarter, we completed an electromagnetic survey that identified a new conductive anomaly in an area permissive for potential massive sulphide mineralization. This anomaly will receive ground follow-up and drilling in the third quarter as we commence our 2018 drill campaign.
During the quarter, we made the decision to terminate our purchase option agreement at the Perdito project in California due to overly restrictive conditions attached to our drill permit granted by the Bureau of Land Management.
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Outlook
This section of the news release provides management's production, cost, capital, exploration and development expenditure estimates for 2018. Please see "Cautionary Note Regarding Forward- Looking Statements."
Due to positive operating performance through the first half of 2018 and a continued positive operating outlook for the second half of 2018, we are improving certain cost guidance metrics.
At the Marigold mine, annual cash cost guidance improves to between $725 and $750 per payable ounce of gold sold, a $25 per ounce reduction to the top end of guidance due to higher grades mined more than offsetting higher energy costs. Gold production at Marigold is expected to be between 40,000 and 50,000 ounces in the third quarter, with fourth quarter production of approximately 60,000 ounces as the new leach pad is put into service.
Seabee Gold Operation annual cash cost guidance also improves to between $560 and $585 per payable ounce of gold sold, a $25 per ounce reduction to the top end of guidance largely due to strong first quarter operating performance and favourable exchange rate impact.
Remaining operating guidance is unchanged.
For the full year 2018, we now expect:
Seabee Gold Puna Operations
| Operating Guidance | Marigold mine | Operation | (75% interest)(4) | |
|---|---|---|---|---|
| Gold Production | oz 190,000 - 210,000 | 85,000 - 92,000 | — | |
| Silver Production | Moz | — | — | 3.0 - 4.4 |
| Silver Production (attributable) | Moz | — | — | 2.3 - 3.3 |
| Lead Production | Mlb | — | — | 7.0 - 12.5 |
| Lead Production (attributable) | Mlb | — | — | 5.3 - 9.4 |
| Zinc Production | Mlb | — | — | 5.5 - 7.5 |
| Zinc Production (attributable) | Mlb | — | — | 4.1 - 5.6 |
| Cash Cost per Payable Ounce Sold(1)$/oz | 725 - 750 | 560 - 585 | 12.50 - 15.00 | |
| Sustaining Capital Expenditures(2) | $M | 35 | 10 | 10 |
Capitalized Stripping / Capitalized $M 15 9 10 Development Exploration Expenditures (3) $M 9 9 1
(1) We report the non-GAAP financial measure of cash costs per payable ounce of gold and silver sold to manage and evaluate operating performance at the Marigold mine, the Seabee Gold Operation and Puna Operations. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Sustaining capital expenditures for the Marigold mine exclude $22 million for four additional haul trucks as announced in our news release dated February 22, 2018, and for Puna Operations exclude initial capital expenditures related to the development of the Chinchillas project.
(3) Includes capitalized and expensed exploration expenditures.
(4) Shown on a 100% basis unless otherwise indicated.
On a consolidated basis, at the mid-point of guidance, we expect to produce approximately 340,000 gold equivalent ounces in 2018 at gold equivalent cash costs of between $715 and $760 per payable ounce sold. On an attributable basis, we expect to produce approximately 325,000 gold equivalent ounces in 2018 at gold equivalent cash costs of between $705 and $750 per payable ounce sold.
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Gold equivalent figures for our 2018 operating guidance are based on gold-to-silver ratio of 79:1. Cash costs and capital expenditures guidance is based on actual performance to June 30, 2018 and a second half 2018 oil price of $70 per barrel and exchange rate of 1.25 Canadian dollar to U.S. dollar.
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Consolidated Financial Summary
(presented in thousands of U.S. dollars, except for per share value)
Selected Financial Data (1)
Three months ended June 30, Six months ended June 30,
| 2018 | 2017 | 2018 | 2017 | |
| $ | $ | $ | $ | |
| Revenue | 104,028 | 116,982 | 201,930 | 234,887 |
| Income from mine operations | 21,203 | 29,462 | 38,434 | 69,551 |
| Gross margin (%) | 20 | 25 | 19 | 30 |
| Operating income | 8,883 | 46,193 | 16,614 | 71,002 |
| Net income | 2,607 | 37,747 | 285 | 52,795 |
| Basic attributable income per share | 0.04 | 0.31 | 0.03 | 0.44 |
| Adjusted attributable income before tax | 13,051 | 15,551 | 19,787 | 38,487 |
| Adjusted attributable net income | 12,080 | 13,017 | 17,742 | 32,826 |
| Adjusted basic attributable income per share | 0.10 | 0.11 | 0.15 | 0.27 |
| Cash generated by operating activities | 17,132 | 38,614 | 28,139 | 69,258 |
| Cash generated by (used in) investing activities | 1,731 | (26,311 ) | 3,118 | (44,431) |
| Cash generated by financing activities | 4,248 | 550 | 6,164 | 885 |
| Financial Position | June 30, 2018 | December 31, 2017 | ||
| Cash and cash equivalents | 493,642 | 459,864 | ||
| Marketable securities | 8,746 | 114,001 | ||
| Current assets | 759,586 | 799,597 | ||
| Current liabilities | 87,619 | 71,466 | ||
| Working capital | 671,967 | 728,131 | ||
| Total assets | 1,504,987 | 1,537,454 |
(1) We report non-GAAP measures, including gross margin, adjusted attributable income before tax, adjusted attributable net income, adjusted basic attributable income per share, and working capital to manage and evaluate our operating performance. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Quarterly financial summary
Revenue in the second quarter of 2018 decreased by 11% relative to the comparative quarter of 2017 due principally to the expected declines in sales at Puna Operations, as we processed lower grade stockpiles, and at the Marigold mine, due to variations in production and leach cycles.
Income from mine operations in the second quarter of 2018 generated a gross margin of 20%, lower than the 25% margin in the second quarter of 2017. Relative to the comparative prior year quarter, in the second quarter of 2018 cost of sales at Puna Operations were elevated as we processed lower grade stockpiles, and also higher cost of sales were experienced at the Marigold mine as we stacked lower grade ore in the previous quarters.
Net income for the quarter was impacted by the recognition of a one-time $5.8 million tax expense related to the re-organization of our business units in Argentina.
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