SS1 sun silver limited

I decided to repeat my analysis of Rochester in case some...

  1. 6,809 Posts.
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    I decided to repeat my analysis of Rochester in case some posters did not see it as SS1 refer to it in presentation as did @slipperymack .

    I had a look at Rochester and as a result have much greater doubts about SS1's Maverik project. Rochester has not been profitable for the last 11 years (excluding the $500m Cap ex to expand the plant from 16mT pa to 32 Mtpa) and in 6 years has been free cash flow NEGATIVE and in 5 years low positive degree of free cash flow.


    Looking at the quarterlies reveals the actual free cash flow and profitability since 2014. Rochester has been operating for years (well over 10 years). All figures below are in US$. (see images below) and has been spending lots of money doubling the mill throughput from 16mTpa to 32Mtpa in the last few years. The current mill size is almost the level of Cadia and they are very expensive.

    Cashflow was NEGATIVE in 2024 (to date including 4th quarter), 2023, 2021, 2020, 2019, and 2017. Even if you exclude the high cap ex in 2020, 2021, 2022 and 2023 of $724m the cashflow was negative in each year and the profit would have been even more negative after deducting non-cash items and general expenses. The 2024 figures are even negative excluding cap ex in a period of record gold and silver prices. It did have positive cashflow in 2018 and 2016, 2015 and 2014 of $23.1m, $12m, $6.8m, $1.8m - hardly stellar figures which are at a level that would most probably not be profitable after deducting non-cash items and general expenses.

    They seem to have spend between $500m and $600m cap ex just to expand the plant (I have tried to exclude ongoing cap ex for production). Based on Rochester, for a green fields project that SS1 has the Cap ex to produce 100k Oz AuEq pa is probably going to be around $US1b (there has been significant inflation) and for 20Ok Oz AuEq probably closer to $US1.5b - that is between $A1.5b and $2.25b. ALK Boda SS for a 20mtpa mill assumed a Cap Ex of $A1.8b but a 32mTpa mill would cost more - ie over $2b. Massive cap ex - not sure if my cap ex estimates are too low.

    Production AuEq K Oz from 2023 to 2014 as follows, 79, 70, 64, 79, 46, 106, 113, 107 and 94. Not big production with an average of less than 100k Oz pa and in first 3 quarters of 2024 about 55k Oz (ie 73k Oz AuEq annualised) - definitely not a big producer and actually a small producer. Yes they will probably do better financially once the 32mtpa mill reaches capacity but form SS1 to get to that level the cap-ex is going to be a killer. SS1 could even look to a bigger plant than 32mtpa but the cap-ex is going to be even higher.

    It seems based on the above analysis silver and gold prices are going to have to be substantially higher for a sustained period for SS1 to have a viable project. Then there is the question about recoveries which based on historic work do not look very good.

    The cap ex is going to be a real killer for the SS1 project.


    In my view there are much better silver projects around than SS1. If its so good why is the MC so low?




 
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