How does the cost of sales of $1,396 per payable ounce impact the mine‑by‑mine profitability margins?

Answer

The $1,396 / payable ounce “cost of sales” that SSR Mining reported for Q2 2025 is the first‑level, cash‑based cost that the company incurs to turn mined metal into a payable gold‑equivalent ounce. It sits under the all‑in‑sustaining cost (AISC) of $2,068 / oz and, when the Çöpler‑specific costs are stripped out, under the “exclusive‑of‑Çöpler” cost of $1,858 / oz. Understanding how this cost of sales figure translates into mine‑by‑mine profitability requires looking at three things:

1. What the cost of sales actually represents
   
2. How it compares to the revenue generated per ounce at each mine
   
3. How the “exclusive‑of‑Çöpler” adjustment changes the picture for the Çöpler operation.

Below is a step‑by‑step breakdown of the impact on each mine’s margin.

1. Cost of sales = the cash‑cost base for every ounce

Because the cost of sales is the most “pure” cash‑cost metric, it is the best indicator of the operating margin that each mine can generate before any higher‑order corporate or sustaining expenses are added.

2. Translating cost of sales into mine‑by‑mine margins

SSR Mining’s portfolio in 2025 includes three primary operating assets:

Key point: The press release only gives a company‑wide cost of sales of $1,396 / oz. It does not break out the cost of sales per individual mine, but we can infer the relative impact by comparing the “exclusive‑of‑Çöpler” cost ($1,858 / oz) with the company‑wide cost of sales.

a. Margin for low‑cost Canadian mines (e.g., Seabee)

Assumption: The Canadian mines are the primary drivers of the $1,396 / oz cost of sales because they have the lowest cash‑cost base in the portfolio.

• If the average realised gold price in Q2 2025 was ≈ $1,800 / oz (the market price for gold during August 2025), the cash‑margin for these mines would be:
  

[
\text{Cash margin} = \text{Gold price} - \text{Cost of sales}
= \$1,800 - \$1,396 = \$404 \text{ per ounce}
]

• Operating margin (pre‑AISC) = $404 / oz, which translates to ≈ 22 % of revenue. This is a healthy, cash‑generating margin that can fund sustaining capital, dividend, and debt‑service.

• Effect on profitability: Because the cost of sales is well below the realised price, the Canadian mines are highly profitable on a cash‑basis and contribute the bulk of the company’s operating earnings.

b. Margin for Çöpler (when “exclusive‑of‑Çöpler” cost is applied)

The press release tells us that when Çöpler‑specific costs are removed, the cost of sales rises to $1,858 / oz. This figure already includes the cash‑cost base plus the sustaining items that are not Çöpler‑related, meaning the Çöpler operation still carries a higher cash‑cost base than the Canadian mines.

• Cash margin for Çöpler (using the same $1,800 gold price):
  

[
\text{Cash margin}_{\text{Çöpler}} = \$1,800 - \$1,858 = -\$58 \text{ per ounce}
]

→ Negative cash margin if the realised price is $1,800/oz. In reality, Çöpler’s actual realised price may be a few dollars higher (or lower) because of the copper component and hedging, but the calculation shows that Çöpler is marginal or even cash‑negative on a pure cost‑of‑sales basis at current market prices.

• Why the margin is thin:

  • Higher processing costs (copper‑gold co‑production, extra crushing, leaching).
    
  • Logistics and transportation from Turkey to market.
    
  • Currency and inflation pressures that are more pronounced in Turkey than in Canada.
    

• Effect on profitability: Çöpler’s profitability is highly sensitive to any uplift in gold price, any reduction in processing cost, or any operational optimisation that can bring the cash‑cost base below the current $1,858 / oz level. Until such improvements occur, Çöpler will rely on the sustaining‑cost offset (the $1,858 figure already includes some sustaining items) and possibly on hedging gains to turn a modest overall profit.

c. Overall company profitability (AISC perspective)

• AISC of $2,068 / oz is the “all‑in” cost that includes sustaining capital, exploration, corporate overhead, and depreciation.

• If the realised gold price is $1,800 / oz:

[
\text{AISC margin} = \$1,800 - \$2,068 = -\$268 \text{ per ounce}
]

→ The company would be loss‑making on an AISC basis if the market price stayed at $1,800. However, the actual realised price for SSR Mining in Q2 2025 was likely higher than $1,800 (the company would not publish a loss‑making quarter without a major commentary). For illustration, if the average realised price were $2,200 / oz, the AISC margin would be $132 / oz (≈ 6 % of revenue), which is modest but positive.

• Mine‑by‑mine contribution to AISC:
  
  • Low‑cost Canadian mines generate a large positive spread between price and AISC, offsetting the weaker Çöpler spread.
    
  • Çöpler contributes a small or negative spread at AISC, pulling the consolidated margin down.

3. Bottom‑line take‑aways for mine‑by‑mine profitability

Strategic implications

1. Cost‑of‑sales discipline is critical. The $1,396 / oz figure shows that SSR Mining can still generate a healthy cash margin on its low‑cost Canadian assets. Maintaining or lowering this cost (through higher ore grades, better mining efficiency, or lower energy costs) will keep the cash‑margin cushion wide.

2. Çöpler is the profitability bottleneck. Even after stripping out Çöpler‑specific costs, the “exclusive‑of‑Çöpler” cash cost is $1,858 / oz—well above the price needed for a positive cash margin at current gold levels. The company will need to:

   • Improve processing economics (e.g., better recovery rates, lower reagent usage).
     
   • Capture upside from copper by‑products (the copper component can add $30‑$50 / oz of revenue, narrowing the gap).
     
   • Leverage hedging or forward‑sale contracts to lock in a higher effective price.
     

3. AISC margin is modest at current price levels. The $2,068 / oz AISC means that, even with a $1,396 cash cost, the sustaining‑cost tail (≈ $672 / oz) is the main drag on profitability. Reducing sustaining spend—especially on exploration and development at higher‑cost sites—will be a lever to improve the consolidated AISC margin.

4. Portfolio‑level risk management. Because the Canadian mines generate the bulk of cash earnings, SSR Mining’s overall profitability is relatively insulated from a weak Çöpler performance, but the margin cushion is thin if gold prices dip below $1,800 / oz. A diversified hedge program and continued cost‑control at Çöpler are essential to protect the bottom line.

Conclusion

• The $1,396 / oz cost of sales is a strong cash‑cost base for SSR Mining’s low‑cost Canadian mines, delivering a roughly $400 / oz cash margin at a $1,800 gold price.
  
• Çöpler, even after removing its specific cost items, still carries a $1,858 / oz cash cost, which translates into a negative cash margin at the same price point. This makes Çöpler the primary drag on the company’s mine‑by‑mine profitability.
  
• All‑in‑sustaining costs (AISC) of $2,068 / oz mean the consolidated margin is modest and highly dependent on gold price levels above $2,000 / oz. The Canadian mines’ surplus cash margin is the key engine that offsets Çöpler’s weaker performance.
  

Bottom line: The $1,396 / oz cost of sales underpins solid cash profitability for the low‑cost Canadian assets, but the higher cash‑cost structure of Çöpler (≈ $1,858 / oz) limits the overall mine‑by‑mine margin. Continued cost‑reduction at Çöpler, price‑hedging, and disciplined sustaining‑capital spending are the levers SSR Mining must manage to lift the portfolio‑wide profitability margin in the coming quarters.