SSR Mining Reports Third Quarter 2019 Results
News Release 19-23
November 5, 2019
SSR MINING REPORTS THIRD QUARTER 2019 RESULTS
VANCOUVER, B.C. - SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) (“SSR Mining”) reports consolidated financial results for the third quarter ended September 30, 2019.
Paul Benson, President and CEO said, "We delivered another strong quarter, with increased production at lower cash costs, which positions us well to meet or exceed guidance for the eighth consecutive year. Our strong operating performance resulted in improved margins, earnings, operating cash flow and free cash flow. Notably, we have an incredibly strong financial position with over half a billion dollars in cash and marketable securities.”
Third Quarter 2019 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
- Strong financial performance: Reported positive income from mine operations at all operations totaling $51.9 million, net income of $18.1 million and adjusted attributable net income of $28.4 million, or $0.23 per share. (1)
- On track for higher annual gold equivalent production: Achieved quarterly consolidated production of 104,775 gold equivalent ounces at cash costs of $759 per payable ounce of gold sold. (1)
- Record production and cash costs at the Seabee Gold Operation: Produced a record 32,345 ounces of gold at record low cash costs of $373 per payable ounce of gold sold under SSR Mining management. (1) Achieved higher gold recovery of 98.8% and gold grade of 12.4 g/t, quarterly records for the operation under our ownership.
- Strong operating performance at the Marigold mine: Produced 52,968 ounces of gold at lower cash costs of $822 per payable ounce of gold sold. Stacked 6.4 million tonnes of ore at a higher quarterly gold grade of 0.51 g/t. (1) Total material mined was over 19 million tonnes, continuing to demonstrate strong and efficient operating practices.
- Improved production at Puna Operations: Increased silver mill feed grade and recovery led to 1.7 million ounces of silver production at cash costs of $14.22 per payable ounce of silver sold. (1) Ore mined was significantly higher than ore milled, increasing the stockpile in advance of the rainy season.
- Exploration success at Marigold's Red Dot deposit: We expect to extend the current Marigold life of mine plan into the early 2030s with Red Dot phases 1, 2 and 3.
- Maintained strong balance sheet and liquidity: Increased cash balance to $474 million and total liquidity of approximately $526 million including our marketable securities.
- Consolidated 100% ownership in Puna Operations: Completed acquisition of the remaining 25% interest in Puna Operations leading to an immediate increase in silver production profile and improved operational flexibility.
- Exercised equity participation right in SilverCrest Metals financing: Maintaining our 9.8% interest and exposure to the high grade Las Chispas project.
- Marigold mine EIS permit received: Subsequent to September 30, 2019, Marigold received a positive Record of Decision on its Environmental Impact Statement ("EIS"). The receipt of the EIS permits the expansion of mining, including Red Dot and its associated facilities.
(1) We report the non-GAAP financial measures of adjusted net income and cash costs per payable ounce of gold and silver sold to manage and evaluate operating performance at the Marigold mine, the Seabee Gold Operation and Puna Operations. Please see “Cautionary Note Regarding Non-GAAP Measures”.
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Marigold mine, U.S.
| September 30 | June 30 | March 31 | December 31 September 30 | ||
|---|---|---|---|---|---|
| Operating data | 2019 | 2019 | 2019 | 2018 | 2018 |
| Total material mined (kt) | 19,033 | 19,254 | 17,295 | 17,039 | 21,284 |
| Waste removed (kt) | 12,676 | 12,185 | 11,767 | 11,361 | 14,411 |
| Total ore stacked (kt) | 6,357 | 7,070 | 5,528 | 5,679 | 6,873 |
| Gold stacked grade (g/t) | 0.51 | 0.38 | 0.34 | 0.34 | 0.32 |
| Gold recovery (%) | 77.0 | 75.0 | 73.0 | 72.9 | 72.3 |
| Strip ratio | 2.0 | 1.7 | 2.1 | 2.0 | 2.1 |
| Mining cost ($/t mined) | 1.73 | 1.65 | 1.73 | 1.86 | 1.51 |
| Processing cost ($/t processed) | 1.17 | 1.01 | 1.20 | 1.27 | 1.12 |
General and administrative costs
| ($/t processed) | 0.54 | 0.47 | 0.54 | 0.51 | 0.50 |
| Gold produced (oz) | 52,968 | 54,922 | 53,151 | 54,306 | 58,459 |
| Gold sold (oz) | 50,650 | 59,702 | 55,517 | 50,550 | 59,612 |
| Realized gold price ($/oz)(1) | 1,481 | 1,309 | 1,303 | 1,227 | 1,207 |
| Cash costs ($/oz)(1) | 822 | 835 | 812 | 760 | 711 |
| AISC ($/oz)(1) | 1,104 | 986 | 930 | 963 | 927 |
Financial data ($000s)
| Revenue | 74,820 | 78,039 | 72,263 | 61,861 | 71,848 |
| Income from mine operations | 22,064 | 13,939 | 12,981 | 9,977 | 13,254 |
| Capital expenditures(2) | 10,496 | 6,924 | 3,167 | 8,328 | 25,461 |
| Capitalized stripping | 2,031 | 871 | 2,293 | 1,208 | 2,529 |
| Exploration expenditures(3) | 1,990 | 2,452 | 3,653 | 2,096 | 2,956 |
(1) We report the non-GAAP financial measures of realized gold price, cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Includes expansionary capital expenditure of $16 million in the third quarter of 2018. Excludes capitalized exploration expenditures.
(3) Includes capitalized and expensed exploration expenditures.
Mine production
In the third quarter of 2019, the Marigold mine produced 52,968 ounces of gold, a 4% decrease from the second quarter of 2019, as ores were stacked higher up on the leach pad to allow for the appropriate leach cycle on ores previously stacked at lower elevations. Gold sales for the third quarter totaled 50,650 ounces, 15% lower than the previous quarter, due to lower gold production and a significant inventory drawdown in the second quarter of 2019.
During the third quarter of 2019, 19.0 million tonnes of material were mined, in line with the second quarter of 2019. Approximately 6.4 million tonnes of ore were delivered to the heap leach pads at a grade of 0.51 g/t gold in the quarter. This compares to 7.1 million tonnes of ore delivered to the heap leach pads at a gold grade of 0.38 g/t in the second quarter of 2019. The gold grade to the
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leach pads was 34% higher compared to the prior quarter, consistent with plan, as we mined higher grade ore in the current phase of the Mackay pit.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs of $822 per payable ounce of gold sold in the third quarter of 2019 were 2% lower than the previous quarter. This was primarily due to more ounces stacked in the quarter due to higher grade combined with an increase in deferred stripping in the third quarter compared to the second quarter, offset partially by lower gold ounces sold. Total mining costs of $1.73 per tonne in the third quarter of 2019 were 5% higher than in the previous quarter primarily due to higher tire and fuel operating costs in the haul fleet. Processing and general and administrative unit costs were 16% and 15% higher, respectively, in the third quarter of 2019 than in the second quarter, due to fewer tonnes stacked while total spend remained stable.
AISC per payable ounce of gold sold increased in the third quarter of 2019 to $1,104 from $986 in the second quarter, due to higher planned sustaining capital expenditures on processing facility upgrades, leach pad expansion, deferred stripping and capitalized maintenance components.
Mine sales
Average realized gold price is a non-GAAP financial measure. Please see “Cautionary Note Regarding Non-GAAP Measures”.
A total of 50,650 ounces of gold were sold at an average realized gold price of $1,481 per ounce during the third quarter of 2019, a decrease of 15% from the 59,702 ounces of gold sold at an average realized gold price of $1,309 per ounce during the second quarter of 2019. The decrease in ounces sold was primarily due to a build-up of inventory available for sale compared to the prior quarter.
Permitting
On October 30, 2019, Marigold received a positive Record of Decision (“ROD”) from the Bureau of Land Management regarding the new Marigold environmental impact statement. The receipt of the ROD permits mining of the Mackay open pit mineral resource complex including Red Dot and associated features such as leach pads and dumps. Further permitting will be required to mine Mineral Reserves and Resources at Valmy, Trenton Canyon and Buffalo Valley.
Exploration
The main focus of our 2019 exploration program at Marigold has been to increase Red Dot Mineral Reserves. In addition, we have continued exploration drilling for additional Mineral Resources north and south of Red Dot, in the Mackay pit and at Valmy, Crossfire and East Basalt areas. During the third quarter of 2019, we completed a total of 51 reverse circulation drillholes for 17,000 meters on these targets.
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During 2019, our Red Dot exploration program focused on geotechnical drilling and engineering with the goal of declaring additional Mineral Reserves at Red Dot. In the third quarter of 2019, we completed preliminary pit designs and related economic evaluations at Red Dot. These evaluations were completed with strict economic return and investment thresholds and were based on current assumptions, which include a gold price of $1,250 per ounce. Based on the results of these evaluations, Red Dot is anticipated to extend the Marigold mine life into the early 2030s, without requiring expansion of the haul fleet or the associated expansion capital.
Also, at Marigold, infill drill results for the Mackay pit and the North and South Red Dot areas are expected to add to Mineral Reserves and Mineral Resources at year-end 2019. Additional information regarding our Marigold exploration program was published in our news release dated July 30, 2019 (which, for greater certainty, is not incorporated by reference herein).
Exploration and permitting activities are scheduled through the fourth quarter of 2019 at the Mackay pit, North and South Red Dot, Valmy, East Basalt, and the newly acquired Trenton Canyon areas, aimed at extending known gold mineralization and discovery. During the third quarter of 2019, we began the first phase of our exploration program at the Trenton Canyon property, which is located immediately south of and adjacent to Marigold.
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Seabee Gold Operation, Canada
| September 30 | June 30 | March 31 December 31 September 30 | |||
|---|---|---|---|---|---|
| Operating data | 2019 | 2019 | 2019 | 2018 | 2018 |
| Total ore milled (t) | 77,465 | 88,424 | 90,756 | 86,447 | 88,273 |
| Ore milled per day (t/day) | 842 | 971 | 1,008 | 940 | 959 |
| Gold mill feed grade (g/t) | 12.39 | 9.83 | 8.59 | 10.20 | 9.52 |
| Gold recovery (%) | 98.8 | 98.4 | 97.2 | 97.6 | 97.1 |
| Mining costs ($/t mined) | 61 | 53 | 52 | 57 | 48 |
| Processing costs ($/t processed) | 28 | 35 | 28 | 26 | 26 |
General and administrative costs
| ($/t processed) | 59 | 50 | 53 | 63 | 47 |
| Gold produced (oz) | 32,345 | 26,539 | 31,183 | 20,473 | 27,831 |
| Gold sold (oz) | 28,278 | 24,276 | 27,999 | 21,711 | 29,175 |
| Realized gold price ($/oz)(1) | 1,480 | 1,329 | 1,302 | 1,236 | 1,210 |
| Cash costs ($/oz)(1) | 373 | 526 | 467 | 502 | 447 |
| AISC ($/oz)(1) | 715 | 828 | 947 | 728 | 591 |
Financial data ($000s)
| Revenue | 41,331 | 32,237 | 36,431 | 26,890 | 35,270 |
| Income from mine operations | 22,134 | 11,762 | 13,672 | 7,347 | 11,061 |
| Capital expenditures | 5,406 | 3,358 | 8,772 | 625 | 968 |
| Capitalized development | 3,352 | 3,345 | 3,379 | 2,910 | 1,812 |
| Exploration expenditures(2) | 2,131 | 2,257 | 3,172 | 1,661 | 2,860 |
(1) We report the non-GAAP financial measures of realized gold price, cash costs and AISC per payable ounce of gold sold to manage and evaluate operating performance at the Seabee Gold Operation. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Includes capitalized and expensed exploration expenditures.
Mine production
The Seabee Gold Operation produced 32,345 ounces of gold in the third quarter of 2019, a 22% increase from the second quarter, mainly due to higher mill feed head grade and the sale of 1,244 ounces as a result of sludge, fines and cathodes recovered during the third quarter of 2019. Gold sales totaled 28,278 ounces for the third quarter of 2019, an increase of 17% from the second quarter.
The mill achieved an average throughput of 842 tonnes per day over the third quarter, a 13% decline compared to the previous quarter largely due to a power outage caused by electrical transformer damage resulting from lightning strikes. Gold mill feed grade was 12.39 g/t, 25% higher compared to the second quarter due to the mining of higher grade stopes. Gold recovery for the third quarter was 98.8%, in-line with the second quarter.
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Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs per payable ounce of gold sold were $373 in the third quarter of 2019, lower than the $526 in the second quarter of 2019. Lower cash costs per payable ounce sold were primarily the result of producing and selling more ounces due to higher grades. Total mining costs were $61 per tonne in the third quarter of 2019, higher than the previous quarter, resulting from reduced tonnage from the mine partially due to a power outage caused by lightning strikes discussed above. Processing unit costs decreased by 20% in the third quarter of 2019 compared to the second quarter of 2019, but consistent with the first quarter of 2019. The reclassification of certain costs incurred in the first half of the year to capital costs in the third quarter of 2019 impacted processing costs. General and administrative costs per tonne increased by 18% in the third quarter of 2019 compared to the second quarter of 2019, mainly due to an increase in insurance premiums.
AISC per payable ounce of gold sold were $715 in the third quarter of 2019, 14% lower than the $828 in the second quarter of 2019. This decrease was primarily due to lower cash costs and an increase in payable ounces sold for the quarter, offset by higher capital expenditures due mainly to the Tailings Management Facility expansion.
Mine sales
Average realized gold price is a non-GAAP financial measure. Please see “Cautionary Note Regarding Non-GAAP Measures”.
A total of 28,278 ounces of gold were sold at an average realized gold price of $1,480 per ounce during the third quarter of 2019, compared to 24,276 ounces of gold sold in the second quarter of 2019, at an average realized gold price of $1,329 per ounce of gold. Gold sales by volume for the third quarter were 16% higher than the second quarter primarily due to higher production as a result of higher gold grades.
Exploration
In 2019, the Seabee Gold Operation planned 45,000 meters of underground drilling and 15,000 meters of surface drilling with the objective to increase and convert Mineral Resources into Mineral Reserves near the Santoy mine. During the third quarter of 2019, close to the Santoy mine area, we completed 13,732 meters of underground drilling in 46 reported drillholes. Our underground drill activities focused mainly on Santoy Gap hanging wall ("Gap HW") with a smaller number of holes completed on the Santoy Gap and Santoy 8A zones. Additional information regarding our Seabee exploration program was published in our news release dated July 30, 2019 (which, for greater certainty, is not incorporated by reference herein). We anticipate that Gap HW will make a positive contribution to Mineral Resources when estimated and reported at year-end 2019.
Greenfields exploration at the Seabee Gold Operation and Fisher property intersected new mineralized zones at the Batman Lake and Mac targets, respectively, where we are targeting new gold discoveries.
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In addition, exploration field activities outside the immediate Santoy mine area began in June and continued through the third quarter of 2019. These are now complete for the season and were focused on Mineral Resource discovery at the Seabee Gold Operation and the Fisher project. This work comprised field programs of soil geochemistry, prospecting, trenching, and geologic mapping conducted from fly-in camps located along the Santoy shear zone. Prospecting work located numerous zones of anomalous gold mineralization in bedrock north and south of the Mac area along with a well-developed soil anomaly located 800 meters north of the Santoy mine workings that are expected to be targets for the 2020 drill campaign.
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Puna Operations, Argentina
(Amounts presented on 100% basis unless otherwise stated)
Three months ended
| September 30 | June 30 | March 31 | December 31 September 30 | ||
|---|---|---|---|---|---|
| Operating data(1) | 2019 | 2019 | 2019 | 2018 | 2018 |
| Total material mined (kt) | 3,116 | 3,304 | 2,618 | 897 | — |
| Waste removed (kt) | 2,531 | 3,114 | 2,469 | 696 | — |
| Strip ratio | 4.3 | 16.3 | 16.5 | 3.5 | — |
| Ore milled (kt) | 336 | 313 | 345 | 342 | 308 |
| Silver mill feed grade (g/t) | 165 | 160 | 235 | 133 | 96 |
| Lead mill feed grade (%) | 0.81 | 0.71 | 1.07 | 0.92 | — |
| Zinc mill feed grade (%) | 0.60 | 0.46 | 0.46 | 1.14 | 1.25 |
| Silver recovery (%) | 93.5 | 92.4 | 91.7 | 81.5 | 69.90 |
Lead recovery (%)
| 88.1 | 79.4 | 83.6 | 83.1 | — | |
| Zinc recovery (%) | 49.3 | 48.1 | 47.3 | 49.5 | 38.1 |
| Mining costs ($/t mined) | 2.76 | 2.33 | 2.74 | 2.61 | — |
| Processing costs ($/t milled) | 36.34 | 32.57 | 29.62 | 22.18 | 20.87 |
General and administrative costs
| ($/t milled) | 9.24 | 8.27 | 8.02 | 8.16 | 7.98 |
| Silver produced ('000 oz) | 1,664 | 1,486 | 2,392 | 1,189 | 666 |
| Silver sold ('000 oz) | 1,505 | 2,679 | 927 | 932 | 623 |
| Lead produced ('000 lb)(2) | 5,304 | 3,879 | 6,789 | 2,735 | 372 |
| Lead sold ('000 lb)(2) | 4,119 | 7,652 | 2,977 | 1,059 | — |
| Zinc produced ('000 lb)(3) | 2,206 | 1,539 | 1,640 | 4,014 | 3,241 |
| Zinc sold ('000 lb)(3) | 2,030 | 5,757 | 3,218 | 1,983 | 382 |
| Realized silver price ($/oz)(4) | 17.31 | 14.92 | 15.35 | 14.42 | 15.45 |
| Realized lead price ($/lb)(4) | 0.94 | 0.85 | 0.95 | 0.89 | — |
| Realized zinc price ($/lb)(4) | 1.03 | 1.28 | 1.27 | 1.22 | 1.17 |
| Cash costs ($/oz)(4) | 14.22 | 9.80 | 9.94 | 15.02 | 17.41 |
| AISC ($/oz)(4) | 18.66 | 14.28 | 19.76 | 20.45 | 22.39 |
Financial Data ($000s)
Revenue 31,697 44,873 17,556 14,961 7,915 Income (loss) from mine
| operations | 7,708 | 4,126 | 3,584 | (788) | (2,440 ) | |
| Capital expenditures(5) | 3,453 | 3,119 | 1,543 | 3,849 | 2,390 | |
| Capitalized stripping | 1,604 | 7,302 | 6,191 | — | — | |
| Exploration expenditures(5) | 229 | 65 | 1 | 21 | 6 |
(1) Data for the fourth quarter of 2018 is for the period subsequent to December 1, 2018, the date upon which commercial production was declared at the Chinchillas mine.
(2) Data for lead production and sales relate only to lead in lead concentrate.
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(3) Data for zinc production and sales relate only to zinc in zinc concentrate.
(4) We report the non-GAAP financial measures of realized silver, lead and zinc prices, cash costs and AISC per payable ounce of silver sold to manage and evaluate operating performance at Puna Operations. See “Cautionary Note Regarding Non-GAAP Measures”.
(5) Does not include exploration or development of the Chinchillas project.
Mine production
Puna Operations produced 1.7 million ounces of silver for the third quarter of 2019, 12% higher than the second quarter of 2019, mainly due to higher mill throughput and silver mill feed grade. Silver sales totaled 1.5 million for the third quarter of 2019.
During the third quarter of 2019, ore was milled at an average throughput of 3,648 tonnes per day, a 6% increase compared to the previous quarter, mainly due to improved performance of the tailings pumping system. During the month of September 2019, following a mill maintenance shutdown, ore was milled at an average throughput of 4,539 tonnes per day. Processed ore in the third quarter of 2019 contained an average silver grade of 165 g/t, a 3% increase compared to the second quarter, consistent with the mine plan and average silver reserve grade. The average silver recovery in the third quarter was 94%, in line with the previous quarter. The strip ratio during the third quarter was 4.3:1, significantly lower than 16.3:1, consistent with the mine plan.
Mine operating costs
Cash costs and AISC per payable ounce of silver sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs were $14.22 per payable ounce of silver sold in the third quarter of 2019, an increase from the $9.80 per payable ounce of silver sold in the second quarter of 2019, mainly due to lower by-product revenues in the current period and higher operating costs. In addition, fewer costs were deferred to stripping due to the significant decline in strip ratio.
AISC per payable ounce of silver sold in the third quarter of 2019 was $18.66, 31% higher than $14.28 in the second quarter of 2019. The increase in AISC was primarily due to higher cash costs for the period, combined with fewer payable ounces of silver sold at similar sustaining capital costs compared to the prior period, more than offsetting the lower deferred stripping.
During the third quarter of 2018, the Federal Government of Argentina instituted export duties on several goods, including metal concentrate exports. Effective September 3, 2018, the export of silver, lead and zinc concentrates were levied with an export duty of three Argentine pesos per one U.S. dollar of export value. Such export duty is mandated to cease at the end of 2020 and is recoverable for projects such as ours which are protected by fiscal stability agreements. These duties are being included as a component of cash costs pending successful recovery of amounts paid.
Mine sales
Although production was higher in the quarter compared to the previous quarter, sales were significantly lower compared to the second quarter as concentrate inventory that was built up during the first quarter of 2019 was sold in the second quarter. We generally target concentrate sales to align with concentrate production but, due to timing of concentrate shipments, variations will occur. Silver sales totaled 1.5 million ounces in the third quarter of 2019, a 44% decrease from the second quarter of 2019. Lead sales totaled 4.1 million pounds in the third quarter of 2019, a 46% decrease
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from the second quarter of 2019. Zinc sales totaled 2.0 million pounds in the third quarter of 2019, a 65% decrease from the second quarter of 2019.
Exploration
During the quarter, we mobilized a diamond drill to the Pirquitas property to begin drilling a 3,000 meter exploration program on the Granada target. The Granada target is the projected intersection of the north-dipping past producing historic Potosi vein and the south-dipping Cortaderas Breccia vein which hosts much of the current underground Mineral Resources at Pirquitas.
Chinchillas project, Argentina
During the third quarter of 2019, the final hand over to plant operations of the new tailings system was completed. Engineering work was performed on the tailings system to improve pumping efficiency. Infrastructure work continued in the third quarter, including completion of the diesel fuel station and water management works planned in the Chinchillas project. The project is substantially complete with certain contract close-out and hold-back costs expected to continue into the fourth quarter.
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Outlook
This section of the news release provides management's production, cost, capital, exploration and development expenditure estimates for 2019. Please see "Cautionary Note Regarding Forward- Looking Statements."
Our production and cash costs guidance is unchanged from that reported on August 8, 2019. For the full year 2019, we expect:
Seabee Gold Puna
| Operating Guidance | Marigold mine | Operation | Operations | ||
|---|---|---|---|---|---|
| Gold Production | oz 205,000 - 220,000 | 100,000 - 110,000 | — | ||
| Silver Production | Moz | — | — | 6.5 - 7.5 | |
| Lead Production | Mlb | — | — | 20.0 - 22.0 | |
| Zinc Production | Mlb | — | — | 7.0 - 9.0 | |
| Cash Cost per Payable Ounce Sold(1) | $/oz | 780 - 800 | 475 - 505 | 9.75 - 11.25 | |
| Sustaining Capital Expenditures(2) | $M | 45 | 25 | 15 | |
| Capitalized Stripping / Capitalized Development | $M | 10 | 12 | 24 | |
| Exploration Expenditures(3) | $M | 9 | 6 | 1 |
(1) We report the non-GAAP financial measure of cash costs per payable ounce of gold and silver sold to manage and evaluate operating performance at the Marigold mine, the Seabee Gold Operation and Puna Operations. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Sustaining capital expenditures for Puna Operations exclude initial capital expenditures related to the development of the Chinchillas project. Excludes capitalized exploration expenditures.
(3) Includes capitalized and expensed exploration expenditures.
In 2019, we expect to produce, on a consolidated basis, 400,000 gold equivalent ounces at gold equivalent cash costs of between $710 and $760 per payable ounce sold.
At Marigold, sustaining capital expenditure guidance has been increased to $45 million reflecting the delivery of a replacement hydraulic loading unit in the fourth quarter. The loader was anticipated to be acquired in 2020, but due to favorable lead times the purchase has been advanced.
Gold equivalent figures for our 2019 operating guidance are based on a gold-to-silver ratio of 85:1. Cash costs and capital expenditures guidance is based on an oil price of $65 per barrel and exchange rate of 1.25 Canadian dollars to one U.S. dollar.
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