Silver Standard Reports Fourth Quarter and Year-End 2016 Results
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February 23, 2017 News Release 17-04
SILVER STANDARD REPORTS FOURTH QUARTER AND YEAR-END 2016
RESULTS
VANCOUVER, B.C. - Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) (“Silver
Standard”) reports consolidated financial results for the fourth quarter and year ended December
31, 2016.
Paul Benson, President and CEO said, “We had a strong fourth quarter capping a year of records
for Silver Standard, which included production of over 390,000 gold equivalent ounces at an AISC
of less than $925 per ounce. Our focus on Operatio nal Excellence has led not only to production
and cost improvements at each site, it has allowed us to meet or exceed our annual guidance for
the fifth straight year.”
“Importantly, we entered 2017 in a very strong position with over $32 5 million in cash and an
additional $150 million in marketable securities, which predominantly reflects our near 10% stake
in Pretium Resources. Last year, we continued to invest in our business, particularly with respect
to exploration, and the success in growing reserves at both Marigold and Seabee is driving our
increased brownfields exploration in 2017.”
Fourth Quarter and Year-End 2016 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
▪ Strong financial performance: Generated cash from operations of $170.7 million in 2016 and
increased our cash position by $115.3 million to $327.1 million. Generated net earnings of
$65.0 million or $0.63 per share and adjusted net earnings of $100.3 million or $0.97 per share.
Quarterly cash from operations of $74.1 million, net earnings of $12.1 million or $0.10 per
share and adjusted net earnings of $30.8 million or $0.26 per share.
▪ Delivered on scale and margin: Record production of 393,325 gold equivalent ounces at cash
costs of $653 and AISC of $923 per payable gold equivalent ounce sold for the full year 2016.
Fourth quarter production was 110,130 gold equivalent ounces at cash costs of $625 and AISC
of $845 per payable gold equivalent ounce sold.
▪ Completed the acquisition of Claude Resources: Purchase of Claude Resources Inc.
completed on May 31, 2016, through a share exchange transaction, adding the Seabee Gold
Operation, a high quality, free cash generating gold operation in Canada.
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▪ Increased Mineral Reserves at Marigold and Seabee: Successful exploration activities in
2016 increased gold Mineral Reserves at our Ma rigold mine by 31% to 2.84 million ounces
and at the Seabee Gold Operation by 50% to 0.36 million ounces.
▪ Enhanced our financial flexibility: Working capital totaled $559.9 million at year-end, an
increase of $219.1 million from the end of 2015. Contributing to working capital are
marketable securities valued at $148.9 million at December 31, 2016.
▪ Sustained efficiencies at Marigold: Production in the fourth qu arter was strongest for the
year at 59,945 ounces of gold, taking full ye ar production to 205,116 ounces. Reported 2016
cash costs of $647 per payable ounce of gold sold. Fourth quarter cash costs were $585 per
payable ounce of gold sold.
▪ Continued operational improvements at Seabee: Ore milling rates averaged 919 tonnes per
day during the fourth quarter of 2016 contributing to annual record gold production of 77,640
ounces and low fourth quarter cash costs and AISC of $595 and $833 per payable gold ounce
sold, respectively.
▪ Record operating performance at Pirquitas: Achieved record annual silver production of 10.4
million ounces at cash costs of $9.00 and AISC of $10.21 per payable silver ounce sold due in
part to record average annual ore milling ra tes of 4,846 tonnes per day in 2016, a 14%
improvement compared to 2015.
▪ Favorable resolution with Canada Revenue Agency: Settled in our favor the Notice of
Reassessment with the CRA, which resulted in the repayment of our deposit of $18.2 million
plus accrued interest.
▪ Created value from our portfolio: Completed the sale of the Parral properties in Mexico and
the Diablillos project in Argentina for combined consideration of approximately $8 million in
retained equity and undiscounted future cash payments of $15 million. Subsequent to year-
end, we entered into an option agreement fo r the Candelaria project in the U.S. and
announced the sale of the Berenguela project in Peru for approximately $1 million in equity
and undiscounted future cash payments of $12 million and a 9.9% retained interest.
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Marigold Mine, U.S.
Three months ended Total
Operating data
December
31, 2016
September
30, 2016
June 30,
2016
March 31,
2016 2016 2015
Total material mined (kt) 19,559 19,558 18,685 17,291 75,093 74,592
Waste removed (kt) 13,123 14,741 12,005 11,611 51,480 54,054
Total ore stacked (kt) 6,436 4,817 6,680 5,680 23,613 20,538
Strip ratio 2.0 3.1 1.8 2.0 2.2 2.6
Mining cost ($/t mined) 1.52 1.48 1.55 1.45 1.50 1.56
Gold stacked grade (g/t) 0.48 0.42 0.44 0.47 0.45 0.45
Processing cost ($/t processed) 0.80 0.95 0.70 0.71 0.78 0.81
Gold recovery (%) 75.0 71.0 70.7 70.0 72.0 70.6
General and admin costs ($/t
processed) 0.46
0.56
0.38
0.47
0.46
0.51
Gold produced (oz) 59,945 47,456 47,195 50,520 205,116 207,006
Gold sold (oz) 61,308 47,278 47,124 48,605 204,315 206,338
Realized gold price ($/oz) (1) 1,247 1,330 1,259 1,189 1,255 1,151
Cash costs ($/oz) (1) 585 636 663 719 647 692
AISC ($/oz) (1) 835 1,139 1,067 841 960 895
Financial data ($000s)
Revenue 77,047 62,831 59,197 57,742 256,817 237,296
Income from mine operations 28,648 23,156 17,641 11,227 80,672 57,539
Capital investments 3,271 8,310 10,154 8,796 30,531 22,595
Capitalized deferred stripping 10,171 13,787 7,231 1,435 32,624 12,543
Exploration expenditures (2) 1,276 1,145 1,597 1,102 5,120 6,204
(1) We report the non-GAAP financial measure of cash costs per payable o unce of gold sold, realize d gold prices and all-in
sustaining costs ("AISC") 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 consolidat ed statements of comprehensive income,
please see “Non-GAAP and Additional GAAP Financial Measures” in section 13 of our management's discussion and
analysis of the financial position and results of operations for the year ended December 31, 2016 (“MD&A”).
(2) Includes capitalized and expensed exploration expenditures.
Mine production
In the fourth quarter of 2016, the Marigold mine produced 59,945 ounces of gold, 26% higher than
the previous quarter as expected, due to higher grade ore tonnes sourced from the deeper benches
of the current Mackay pit phase during the thir d and fourth quarters of 2016. Higher grade ore
was placed on the new leach pad, completed in the third quarter of 2016, which assisted in
accelerated gold recovery.
A total of 19.6 million tonnes of material were mi ned in the fourth quarter of 2016, in line with
material mined in the third quarter. Approximat ely 6.4 million tonnes of ore were delivered to
the heap leach pads at a gold grade of 0.48 g/t. This compares to 4.8 million tonnes of ore
delivered to the heap leach pads at a gold grad e of 0.42 g/t in the third quarter of 2016. Gold
grade mined in the fourth quarter was 14% higher than the third quarter. The strip ratio declined
to 2.0:1 in the quarter, a 36% reduction compared to the previous quarter.
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In 2016, the Marigold mine produced 205,116 ounces of gold, compared to 207,006 ounces of gold
produced in 2015, achieving the mid-point of our improved 2016 production guidance.
Total material mined and ore stacked on leach pads of 75.1 million tonnes and 23.6 million tonnes,
respectively, in 2016, were record amounts for the Marigold mine, due to the increased hauling
capacity added to the fleet earlier in the year. Th e grade of the ore delivered to the leach pads in
2016 was 0.45 g/t and the average strip ratio was 2.2:1.
Mine sales
A total of 61,308 ounces of gold were sold at an average price of $1, 247 per ounce during the
fourth quarter of 2016, an increase of 30% from the 47,278 ounces of gold sold at an average price
of $1,330 per ounce during the third quarter of 2016. The increase in sales was a function of
increased gold production. Gold sales totaled 204,315 ounces in 2016.
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 $585 per payable
ounce of gold sold in the fourth quarter of 2016 were lower than cash costs of $636 per payable
ounce of gold sold in the third quarter of 2016 due to higher number of ounces stacked lowering
the unit costs of inventory. Cash costs decreased in 2016 to $647 per payable ounce of gold sold,
compared to $692 per payable ounce of gold sold in 2015, due to the high er number of ounces
stacked, improved mining costs and an increase in the proportion of operating costs capitalized
to stripping. Costs per tonne mined decreased in 2016 to $1.50 per tonne compared to $1.56 per
tonne in 2015 as a result of our increased capaci ty and improved efficiencies in our loading and
hauling practices as well as a lower diesel unit cost. Processing and general and administration
unit costs also declined by 4% and 10%, respectively, in 2016 compared to the comparative period,
principally due to higher ore tonnes stacked. Oper ational Excellence remains a core activity at
Marigold, particularly focused on maintenance processes and practices.
AISC decreased in the fourth quarter of 2016 to $835 per payable ounce of gold sold from $1,139
in the third quarter of 2016 due to lower capitali zed stripping and lower investments in capital.
AISC of $960 per payable ounce of gold sold in 2016 increased from $895 in 2015, primarily due
to higher capital investments, including the construction of a new leach pad, and higher
capitalized stripping.
Exploration
During the fourth quarter Marigold drilled 14 ,289 meters in 54 reverse circulation (“RC”)
drillholes using two RC drills. One core drillhole was completed as part of the deep sulphide
exploration program. In 2016, we drilled 55,147 mete rs in 231 RC drillholes, 955 meters in one
core drillhole and assayed 55,073 samples as a pa rt of our program to re-assay historic drill
samples (the “Assay Program”). Drill activities for 2016 focused on Mineral Resources to Mineral
Reserves conversion around the 8 South pit, Terry Zone North, HideOut, Mud and Valmy pits
and Mineral Resources discovery at the Crossfire, East Basalt and Battle Cry targets. The results
of this successful exploratio n program are discussed in the Mineral Reserves and Mineral
Resources section. Drilling in the fourth quarter of 2016 centered on Mineral Resources expansion.
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During 2016, we completed the Assay Program, which had the objective of identifying low grade
ore that was not included in the existing Mineral Reserves. The samples from the Assay Program
are from the planned life of mine production areas. The 2016 Assay Program added 130,000 gold
ounces to Indicated Mineral Resources, which are included in our 2016 Mineral Reserves and
Mineral Resources statement.
Mineral Resources expansion drilling has exceeded expectations in the East Basalt pit area, where
14 drillholes were completed during the fourth qu arter of 2016, with the majority intersecting
mineralization at or above Mineral Resources average grade. In addition, drilling adjacent to the
dormant Valmy pit continues to demonstrate the presence of higher gr ade structural trends
beyond the south east corner of the pit.
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Seabee Gold Operation, Canada
Operating data
Three months
ended December
31, 2016
Three months ended
September 30, 2016
Period from
Acquisition to
June 30, 2016 (1)
Period from
Acquisition to
December 31, 2016 (2)
Total ore milled (t) 84,526 82,756 18,856 186,138
Ore milled per day (t/day) 919 900 629 870
Gold mill feed grade (g/t) 7.40 7.40 7.79 7.44
Mining costs ($/t mined) 62 58 110 65
Processing costs ($/t 19 19 29 20
Gold recovery (%) 97.0 96.5 96.6 96.7
General and admin costs ($/t
processed) 44 37 61 43
Gold produced (oz) 19,711 20,142 6,721 46,574
Gold sold (oz) 17,229 21,911 11,306 50,446
Realized gold price ($/oz) (3) 1,230 1,334 1,278 1,271
Cash costs ($/oz) (3,5) 595 661 663 639
AISC ($/oz) (3,5) 833 840 776 823
Financial data ($000s)
Revenue 21,175 29,214 14,437 64,826
Income from mine operations 2,864 4,126 1,216 8,206
Capital investments 1,010 579 337 1,926
Capitalized development 2,432 2,104 803 5,339
Exploration expenditures (4) 829 1,206 117 2,152
(1) The data presented in this column is for the period from May 31, 2016, to June 30, 2016, the period for which we were entitled
to all economic benefits of the Seabee Gold Operation following our acquisition of Claude Resources Inc. ("Claude Resources").
(2) The data presented in this column is for the period from May 31, 2016, to December 31, 2016, the period for which we were
entitled to all economic benefits of the Seabee Gold Operation following our acquisition of Claude Resources.
(3) 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 comprehensive income, please see “Non-GAAP and
Additional GAAP Financial Measures” in section 13 of our MD&A.
(4) Includes capitalized and expensed exploration expenses.
(5) The non-GAAP financial measure of cash costs per payable ounce of gold sold from the Seabee Gold Operation was adjusted
to eliminate the adjustment of inventory to fair value as at the date of our acquisition of Claude Resources.
Mine production
The Seabee Gold Operation consists of the Seabee and Santoy underground mines, both of which
feed a single processing facility. In the fourth quarter, the Seabee Gold Operation produced 19,711
ounces of gold, largely in line with the 20,142 ou nces of gold produced during the third quarter
of 2016. Production during the second half of the year of 39,853 ounces of gold exceeded our
second half 2016 production guidance range of 32,000 to 35,000 ounces of gold.
A record 84,526 tonnes of ore were milled at an average gold grade of 7.40 g/t and recovery of
97.0% during the fourth quarter. This compares to a total of 82,756 tonnes of ore milled at an
average gold grade of 7.40 g/t and recovery of 96.5% in the third quarter.
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During the fourth quarter, the mill was maintained at a higher throughput of 919 tonnes per day,
a record quarterly performance. The Santoy complex mined approximately 92% of total ore
milled, with the remainder mined from Seabee. Mining continued to transition to long hole stope
ore from Santoy and we are reviewing the mine plan to determine the feasibility of higher,
sustainable production rates.
During the period since acquisit ion, from May 31, 2016 to December 31, 2016, the Seabee Gold
Operation produced a total of 46,574 ounces of gold.
Mine sales
A total of 17,229 ounces of gold were sold at an aver age price of $1,230 per ounce during the
fourth quarter of 2016. This compares to 21,911 ounces of gold sold in the third quarter of 2016 at
an average realized price of $1,334 per ounce.
In the period from acquisition to December 31, 2016, we sold 50,446 ounces of gold at an average
price of $1,271 per payable gold ounce sold.
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”.
Cost of sales and income from mine operations includes the effects of non-cash amortization
charges related to purchase price accounting upon our acquisition of Claude Resources in 2016.
Cash costs per payable ounce of gold sold, which include all costs of inventory, refining costs and
royalties, were $595 in the fourth quarter of 2016, lower than the $661 in the third quarter of 2016
due to timing of inventory costing and higher capital development. Cash costs for the period from
acquisition to December 31, 2016, were $639 per payable ounce of gold sold.
AISC per payable ounce of gold sold were $833 in the fourth quarter of 2016, comparable to $840
in the third quarter of 2016, while capital spen ding remained modest, and higher exploration
spending consistent with our objective of adding Mineral Reserves and Mineral Resources at the
mine, offset the lower cash costs. AISC for the period from acquisition to December 31, 2016, were
$823 per payable ounce of gold sold.
Exploration
For 2016, the Seabee Gold Operation planned 65,000 meters of underground drilling and 18,000
meters of surface drilling with the objective to increase and convert Mineral Resources to Mineral
Reserves. During the fourth quarter of 2016, we completed 21,705 meters of underground
diamond drilling to upgrade Inferred Mineral Reso urces and explore further the extensions to
the Santoy 8A and Santoy Gap deposits. From surface, we completed 7,702 meters of drilling to
upgrade the up plunge extension of the Santoy Gap 9A, 9B and 9C Mineral Resources and to
complete deeper infill drilling on the Santoy 8A Inferred Mineral Resources. The results of this
successful exploration program ar e discussed in the Mineral Reserves and Mineral Resources
section.
On October 6, 2016, we announced an option agreement to acquire up to an 80% interest in the
adjacent Fisher property which lies south on st rike from the ore deposits at Santoy Gap and
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Santoy 8A. This agreement doubles our prospectiv e land position at the Seabee Gold Operation
and planning for our 2017 exploration work is underway with surface exploration drilling
expected in the second half of the year.