Take Some Profit With SSR Mining

The stock has catalysts, but is expensive

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SSR Mining Inc. (SSRM, Financial) is expensive.

The stock soared 7.09% to close at $10.4 on Friday. The robust upside followed the release of third-quarter earnings of 9 cents per share, which beat consensus by 7 cents, on $115.03 million in revenue, topping expectations by $1.33 million.

Over the 52 weeks through Nov. 9, the share price has risen 20% to a market capitalization of approximately $1.2 billion and is now trading above the 200-, 100- and 50-day simple moving average lines. The share price at close on Friday is only 10% below the 52-week high of $11.44 and over 36% above the 52-week low of $7.64. The midpoint of the range is $9.54.

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The price-book ratio of 1.3 is still well below the industry median of 1.74.

Friday’s closing price is actually suggesting taking some profit off the table and reintegrating the position once the share price has been pushed below $8.5 per share. Then, increasing SSR Mining will make more sense than today. Gold and silver prices have been falling since mid-2018, so once the effects of the earnings report begin to wear off, SSR Mining will also start to decline.

After all, it would be a shame not to benefit from SSR Mining’s catalysts for a wider appreciation than what analysts and the market are projecting as of Nov. 12. The target price to hit within the next 52 weeks is $11.75 per share.Â

These catalysts are represented by operations in North America and Argentina that are expected to perform strongly over the coming quarters. SSR Mining has equipped its Nevadan operations at the Marigold mine with excellent machinery and made haulage of material more efficient.

Operations at Seabee Gold mine in Canada are just as critical. After a strong year-to-date period, shareholders of SSR Mining can be optimistic about the preservation of robust mining and gold recovery rates.

The company aims to produce 285,000 to 300,000 ounces of gold and 3 million to 3.5 million ounces of silver for the full year.

SSR's third producing asset is the Puna Operations in Argentina, which is also expected to perform well.Ă‚

The production of saleable concentrates will start at the Chinchillas mine in Argentina before Dec. 31. The mine will be the company's fourth producing asset and operating cash flow generator. As a result of declining costs, the company has already more than doubled the second quarter of 2018 and surpassed the prior-year quarter with a cash flow of $35.4 million. The increase in operating cash flow has brought the company's total liquidity to $550 million, including the availability of a line of credit.

Disclosure: I have no positions in any securities mentioned in this article.

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