SS1 (ASX) Best next development?

Originally posted by calmbeforestorm: ↑

Thanks for the reference to Rochester - I had a look at it and as a result have much greater doubts about SS1. You state Rochester is profitable, Maybe you have a different definition of profit than I do.

Go and look at the quarterlies which 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 doubled 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 200Ok Oz AuEq probably closer to $US1.5b - that is between $A1.5b and $2.25b. Massive cap ex.

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).

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.

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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Thanks calmbeforestorm,

I appreciate your reply. Indeed it seems they have had problems with the Rochester mine in the past, but according to the last quarterly, they do seem positive about it's future:

"Rochester continues to gather steam during the second half and remains on-track to deliver a step-change in production and
cash flow during the remainder of the year and be well-positioned to deliver a record breaking 2025."

My main point in comparing Rochester and Maverick Springs is not so much the geology, but the formation of the mineralised zones. Rochester has most of its mineralisation in hanging wall faults and cross faults, whereas Maverick Springs is mostly in a long, wide, thick and seemingly consistent tabular formation. Possibly, also, many near surface reaching fault veins or splays, which may be identified with cross-drilling techniques as the deposit is drilled out. If you believe the market cap is low at the moment, it is most likely because the deposit is only in the measured category. It will also be larger with a higher head grade, with higher metals prices??

I think the value of the minerals at Maverick will continue to rise, particularly silver to over $40 an ounce next year and beyond. Based on continued tariffs on Chinese solar, a presidential claim to reduce US energy costs, and increased local US manufacturing efforts, they have a good chance at the silver paste tax credit.

Capex...yes...that is the $64 question. I can't find anywhere a scenario they have planned for this. Is a merger likely, i.e. Couer if Rochester does liven up next year and silver prices climb. They can't dilute to get the full capex.
Is it possible to part pit the deposit and generate early cashflow to complete full pit and pit production (then use capital to proceed to underground stages??).

I think the market cap is probably reasonable at the moment until resource confidence is drilled out. Some idea of capex plans would be great. But I don't think $20 billion of silver and gold and antimony will be left in the ground as these minerals become scarce.

Cheers
Slipperymack