Silver Standard Resources Inc. SSRI posted fourth-quarter and full-year 2015 operational results alongside providing its production and cost guidance for 2016. The company reported record annual production for both its Pirquitas and Marigold mines.  

The Marigold mine produced 207,006 ounces of gold in 2015 – a record for the mine since it started operations in 1988. Gold production from this mine also surpassed the top end of the company’s increased annual production outlook range. Further, annual gold sales were a record 206,338 ounces at the Marigold mine.

The Marigold mine produced 61,461 ounces of gold in the fourth quarter of 2015, up 49% sequentially owing to higher grade ore tons sourced from the deeper benches of the Mackay pit during the third and fourth quarters. In the fourth quarter, the company sold a total of 62,827 ounces of gold produced at the mine. This figure is 59% higher than that recorded in the previous quarter.

In 2015, total material mined and ore stacked on leach pads were a record 74.6 million tons and 20.5 million tons, respectively. Also in 2015, the productivity rate of the rope shovel increased 12% year over year, contributing to an improvement in overall mine production. Higher ore tons and gold ounces were mined in 2015 owing to higher mining rates.

The Pirquitas mine produced a record 10.3 million ounces of silver in 2015, up 18.4% from 8.7 million ounces produced in 2014. The figure was close to the higher end of the company’s increased annual production guidance range. Additionally, in 2015, silver mined grade and silver mill feed grade increased 15% and 13% year over year, respectively. The mine sold a total of 10.3 million ounces of silver in 2015. It also witnessed higher sustained silver recovery of 82.6%, compared with 77.3% in 2014 owing to higher quality sulphide ore and process control improvements.

In the fourth quarter of 2015, the Pirquitas mine produced 2.6 million ounces of silver, which was flat sequentially. The mine sold a total of 1.9 million ounces of silver in the fourth quarter, down 31% sequentially and lower than the quarterly production as well, as 2 shipments left the port in early Jan 2016.

The Pirquitas mine produced roughly 9.5 million pounds of zinc in zinc concentrate in 2015. During the fourth quarter, the mine produced 865,000 pounds of zinc in zinc concentrate.

Silver Standard anticipates strong production at the Marigold mine to continue in 2016, with quarterly and annual variations driven by Mackay pit phase sequencing. Capital expenditures include around $6 million for additional leaching capacity, $16 million for maintenance and capitalized spares for mining equipment, and $3 million for permitting. The company expects 2016 to be a year of higher capitalized stripping as the next phase of the Mackay pit operations begin.

Silver Standard expects annual silver production at the Pirquitas mine to decrease in 2016 from 2015 levels, as the Phase 2 pit is slated for completion in the fourth quarter and mining activities at the San Miguel open pit are due for termination. Moreover, the company intends to extend the mine life for Pirquitas as depicted by 2016 planned expenditures at Chinchillas and on-going evaluation of underground mining options at the Pirquitas mine.

Silver Standard also projects exploration and development expenditures for 2016 to be around $15 million. The company estimates planned expenditures associated with the Pirquitas mine to include $7.5 million for the Chinchillas project on pre-development activities. Moreover, expenditures at the Marigold mine are expected to be around $4 million. Nearly $1.5 million is estimated for greenfields U.S. exploration activities. The rest of the expenses are attributable to property holdings.

Shares of the company fell 2.4% to close at $4.40 on Jan 15.

Silver Standard currently carries a Zacks Rank #4 (Sell).

Better-ranked companies in the basic materials sector include Fortuna Silver Mines Inc. FSM, Golden Star Resources, Ltd. GSS and Agnico Eagle Mines Limited AEM, all carrying a Zacks Rank #2 (Buy).

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