SSRM

Do the reported cost structures suggest potential for further cost reduction initiatives or operational optimization in the coming quarters?

Created August 06, 2025 at 07:35 PM

Yes – the cost structure that SSR Mining disclosed for Q2 2025 points to clear opportunities for further cost‑reduction and operational‑optimization work in the next quarters.

Below is a step‑by‑step look at what the numbers reveal and why they matter for future performance.

1. What the headline numbers tell us

Metric (per payable ounce)	Value
Cost of sales (pure production cost)	$1,396
All‑in Sustaining Costs (AISC)	$2,068
AISC ex‑Çöpler (excluding Çöpler’s costs)	$1,858

AISC – Cost of sales = $2,068 – $1,396 = $672

This $672 per ounce represents the “sustaining” component (e.g., mine‑site overhead, G&A, reclamation, depreciation, and other non‑production expenses).
Çöpler’s impact on AISC:

$2,068 – $1,858 = $210 per ounce. Çöpler alone adds roughly $210 / oz to the all‑in cost base.

2. Why these figures suggest room for improvement

Observation	Implication
AISC is $2,068/oz – still above the $1,400‑$1,500 range that many mid‑tier gold producers target for a “low‑cost” profile.	The company is paying a premium for each ounce, which squeezes margins, especially if gold prices dip or plateau.
Ex‑Çöpler AISC is $1,858/oz – a ~15 % reduction versus the full‑company AISC.	Çöpler is a clear cost outlier. If the company can bring Çöpler’s cost structure closer to the “ex‑Çöpler” level, the overall AISC would fall dramatically.
Sustaining costs ($672/oz) are larger than the production cost of sales ($1,396/oz).	Non‑production expenses (administration, depreciation, reclamation, etc.) are a major cost driver. These are typically the easiest to trim through efficiency programs, renegotiated service contracts, or technology upgrades.
Production volume is 120,191 oz (≈ 0.12 M oz) in Q2, 223,987 oz YTD.	With a relatively modest output, fixed‑cost per ounce is still high. Scaling production or improving mine‑site productivity can spread those fixed costs over more ounces, lowering AISC.

3. Specific levers the company can pull

Cost‑reduction / optimization area	What it could achieve
Çöpler cost rationalisation	• Review of mining methods, ore‑grade handling, and processing bottlenecks. • Potentially defer or re‑allocate capital‑intensive projects that are inflating operating spend. • Target: cut the $210/oz premium by 30‑50 % → AISC falls to ≈ $1,970‑$1,980/oz.
Sustaining cost discipline	• Trim SG&A through shared‑services, digital reporting, and lean‑process initiatives. • Re‑evaluate reclamation and environmental spend to ensure it is aligned with actual risk and regulatory requirements. • Aim for a 10‑15 % reduction in the $672/oz sustaining component → AISC drops another $70‑$100/oz.
Production efficiency	• Boost ore‑grade recovery, reduce mining waste, and improve mill throughput. • Deploy automation or predictive‑maintenance tools to cut energy and consumable usage. • Even a 2‑3 % uplift in net‑recovery translates to ~30‑40 oz saved per 120k oz produced, shaving $40‑$50/oz off cost of sales.
Capital‑expenditure (CAPEX) optimization	• Prioritise projects with the highest cash‑flow conversion (e.g., low‑cost expansion vs. high‑capex, low‑return ventures). • De‑risk future cost escalations by locking in long‑term service contracts at favorable rates.
Currency & hedging management	• Since many operating costs (fuel, reagents, equipment) are denominated in foreign currencies, tighter hedging can protect against cost spikes that would otherwise inflate AISC.

4. How this could look in the next quarters

Scenario	Expected AISC (per ounce)	Rationale
Baseline (no new actions)	$2,068	Current trajectory.
Modest optimization (≈ 5 % total cost cut)	$1,960‑1,970	Achieved by trimming Çöpler costs by $100/oz and reducing sustaining costs by $70/oz.
Aggressive program (≈ 10‑12 % total cost cut)	$1,830‑1,850	Combines deeper Çöpler cost reductions, 15 % sustaining‑cost cut, and modest production‑efficiency gains.
Best‑case (industry‑leading low‑cost)	$1,750‑1,800	Would require a sustained focus on technology, possible mine‑life extensions, and disciplined CAPEX, but is within reach if the company executes a comprehensive cost‑reduction plan.

5. Bottom line

The cost structure disclosed for Q2 2025 already shows a “low‑cost” production component (Cost of sales ≈ $1,400/oz) but a relatively high sustaining cost component that pushes AISC above $2,000/oz.
Çöpler is a clear outlier, adding roughly $210/oz to AISC. Reducing or offsetting those costs would have an immediate, material impact on the company’s overall cost base.
Sustaining costs, which sit at $672/oz, are another sizable lever. Even a modest 10 % reduction would shave $70‑$80 per ounce off AISC.
Given the modest production scale, any efficiency gains translate directly into lower per‑ounce fixed costs.

Therefore, the reported cost structures do indeed suggest that SSR Mining has tangible, actionable opportunities for further cost‑reduction initiatives and operational optimization in the coming quarters. By targeting Çöpler’s cost profile, tightening sustaining‑cost discipline, and squeezing out incremental production efficiencies, the company can bring its AISC down toward the $1,800‑$1,850/oz range—well within the “low‑cost” tier that many gold miners aim for. This would improve margin resilience, free up cash for growth projects, and position the firm to better weather any near‑term gold‑price volatility.