Good afternoon, everyone, and welcome to SSR Mining's Third Quarter 2020 Conference Call. This call is being recorded. At this time, I would like to turn the call over for opening remarks and introductions. I'd like to turn the call over to Michael McDonald, Investor Relations for SSR Mining. Please go ahead.
Thank you, operator. Good afternoon, ladies and gentlemen. Welcome to SSR Mining's Third Quarter 2020 Conference Call, during which we'll provide an update on our business and a review of our financial performance. Our financial statements and management's discussion and analysis have been filed on SEDAR, EDGAR, the ASX, and are also available on our website. To accompany our call, there is an online webcast, you will find the information to access the webcast in our news release relating to this call. Please note that all figures discussed during the call are in U.S. dollars, unless otherwise indicated. All references to cash costs and all-in sustaining costs are per payable ounce of metal sold. We will be making forward-looking statements today, please read the disclosures in the relevant documents.
Joining us on the call this morning are Rodney Antal, President and Chief Executive Officer, Gregory Martin, our CFO, and Stewart Beckman, COO. Now, I would like to turn the call over to Rodney for opening remarks.
Thanks, Michael, and good afternoon, all. I'm very pleased to welcome you to our first quarterly call following the completion of the merger with Alacer. Today, we'll be discussing our third quarter 2020 operating and financial results. It's so good to finally be talking about the new SSR, and I'm privileged to be leading the company into its next chapter and having the opportunity to work with an exceptional team. Building from our larger and fundamentally strong business, we have an exciting opportunity to firmly establish SSR as the premier mid-tier gold producer for the long term. Our journey is just beginning, and I fully expect that our portfolio will deliver a number of attractive growth options in the future. The third quarter was an eventful one for SSR.
From navigating the global impact of COVID-19 pandemic, closing the zero premium merger with Alacer Gold, and ramping up both Seabee and Puna back to full capacity post the COVID shutdowns. Post-merger, we have a very strong and diversified asset base across four operating jurisdictions. In 2020, we will produce between 680,000 and 760,000 ounces of gold equivalent after allowing for the impacts of COVID. We have over 8.5 million ounces of gold equivalent reserves, which puts our weighted average mine life in excess of 10 years, with Turkey providing longevity of around 20 years. We are in a peer-leading position due to our asset quality and low capital intensity growth going forward. We have a clear focus on free cash flow that will influence every major decision we make.
Not only is free cash flow generation going to be strong, but our starting point on the balance sheet is excellent, with over $770 million of consolidated cash. Our exploration portfolio is extensive. We have a number of organic growth options in the portfolio, with over 20 near mine and standalone exploration opportunities currently active. Over the next few months, we have a number of value-enhancing catalysts planned. The first will be the upcoming Çöpler Technical Report, which will provide a refreshed view of the sulfide operations and demonstrate a longevity to our oxide gold productions at Çöpler. In addition, we plan on providing a number of portfolio-wide exploration updates on our greenfield and brownfield initiatives before year-end. The last point to make is our integration efforts are on track and largely completed. We were fortunate that there was a close cultural alignment that has helped streamline the combination.
Our team has done a tremendous job in a challenging time to bring the business together, and I want to recognize them for their efforts that have gone above and beyond our normal high expectations. As 2020 draws to a close, we are firmly focused on delivering safe production and driving to a strong finish for the year. Turning to the next slide. ESG has always been ingrained in the culture of both SSR and Alacer. Going forward, we can leverage the in-house strength of the combined team to continue to do the right things and be recognized as a true partner to our employees in the communities where we operate. We have several different programs across all our operating sites. There are too many programs to call out today, though I would like to highlight two.
The first is the continued investing in our local communities through established social development funds where we are building capability and establishing sustainable businesses that are not dependent on the mines. Second, it's investing in schools and academic scholarships with a particular focus on encouraging local and female representation. From an environmental perspective, we hold ourselves in high regard and to a high standard. We have many examples of best practice, like being the first mine in the world to be certified under the International Cyanide Management Code. We are proud of our achievements and will continue to be a leader in our approach to ESG. Moving on to the next slide. With respect to COVID-19, we are focused on the protection of our employees and the local communities in which we operate.
Both Seabee and Puna were rightly shut down for a period, while Marigold and Çöpler have been successful in navigating through COVID, though we had to adjust our operating plans along the way as circumstances dictated. All our operations continue to work with national and local authorities in accordance with applicable regulations and remain vigilant with respect to on-site activities. We have implemented numerous mitigation measures such as testing, quarantining, ensuring physical distancing, and providing additional protective equipment. We are operating our corporate offices at a reduced capacity with all employees working remotely. Just moving on to slide number six. A few quarterly highlights before diving into the details. Operationally, we had a solid third quarter and are on track to meet our updated 2020 production and all-in sustaining guidance on the back of what is shaping up to be a strong fourth quarter.
Gold equivalent production from all operations for the first nine months is 492,000 oz, with 164,000 oz produced in the third quarter. Our quarter three all-in sustaining cost was $1,034 per ounce. Çöpler and Marigold continued to operate reliably, with Puna and Seabee now back to steady state. On the growth front, we are busy on a number of fronts, from continuing exploration drilling at a number of targets to finalizing the Çöpler District technical report. From a financial perspective, we enter the quarter in excellent position with consolidated net cash of $315 million and anticipate a strong fourth quarter with robust free cash flows to the end of the year. Moving on to slide seven. I'm delighted to announce a corporate dividend policy beginning in quarter one 2021. We have been very thoughtful in our approach to capital allocation.
Our capital allocation strategy going forward is to balance the continued investment in high growth while maintaining peer-leading financial strength and providing sustainable capital returns to our shareholders. While a recurring quarterly dividend is expected to be the primary method of capital return, we will periodically evaluate supplementing this dividend from excess trailing free cash flow. With that, I'll turn the call over to Gregory, who will discuss our financial performance in more detail.
Thanks, Rodney. Good afternoon to everyone. This is definitely an exciting time for SSR. I joined when we were a company with a single asset in Argentina, and to go forward positioned at the top end of the mid-tiers with four strong assets and one of the best balance sheets in the business is a great opportunity. Overall, I am quite pleased with our third quarter. Even though Seabee and Puna operations were interrupted for part of the quarter, they contributed well, with Marigold solid and Çöpler coming in strong over the quarter. As you will have noted from our statements, we only recognize the operating and financial results for Çöpler within our consolidated statements for the two-week period post the September 16th transaction close date. Within that context, revenues totaled $225 million, with income from mine operations totaling $83 million.
Attributable net earnings totaled $27 million, or $0.19 per share. Each of these financial metrics were increases relative to the comparative quarter. I'll talk about a number of factors related to the transaction that impacted our quarter shortly, but adjusted net income of $68 million or $0.49 per share is an impressive start for the merged company, with all four assets contributing to that result. Cash from operating activities was $44 million, with notable items being catch-up cash tax payments as COVID-19-related tax deferrals expired, working capital build-up as Puna resumed concentrate sales, and the settlement of payables and accruals acquired through the Alacer transaction. Like many of our peers, one of the principal impacts of COVID-19 has been the necessity to defer capital projects to reduce risk of contractors interacting with our operating staff.
While that situation has somewhat normalized, it will push some capital spend into 2021. Publishing these first quarterly statements of the new SSR really highlights one of the features of the merger. A n exceptionally strong liquidity position to drive our strategy. Consolidated cash totals $773 million, with net working capital over $1 billion. We have a strong net cash position and well-structured low-cost debt. The balance sheet is in great shape and will get better. Let me briefly discuss the financial statement impacts of the merger. The most apparent is the transaction and integration costs we incurred in the third quarter of $15.7 million. This accounts for the majority of costs we expect to incur, with the exception of certain limited integration costs that will carry forward through the next couple of quarters. The merger is accounted for as an acquisition of Alacer by SSR.
We recognize the assets and liabilities of Alacer at fair value on the date of acquisition. This has the result of increasing the book value of mineral properties and current assets to fair value, as described in Note four to our financial statements. Future cash flows are not impacted by the resetting to fair value, but future earnings are. The assets impacted were inventories, finished goods, leach pad inventories, and sulfide ore stockpiles. As these assets are processed, the associated production costs will increase, reflecting this recognition at fair value. This was evident in the third quarter as we sold the gold inventory acquired and produced from the heap leach. You will note a $19 million increase to production costs, principally due to these impacts.
Finished goods is a one-time impact. Heap leach will carry forward for a number of future quarters. The ore stockpiles, which equate to over two years of plant throughput, will impact certain periods over the mine life as they are processed. Finally, the mineral reserves see a significant fair value bump, in this case, just under $1 million. As we mine and process these ounces, we will incur additional depletion expense of approximately $180 per ounce. As mentioned earlier, all non-cash impacts, important to understand in estimating future income. Next, it gives me a lot of satisfaction that we can announce the first dividend for the merged SSR commencing in the first quarter of 2021. It is strong evidence of the strength and maturity of our business. The base quarterly dividend will be $0.05 per share, representing an annual yield of approximately 1%.
While this recurring quarterly dividend is expected to be the primary method of capital return, we will periodically evaluate supplementing this dividend from 12-month trailing excess free cash flow in the form of incremental dividends and share buyback programs. I have confidence the outlook for metal prices and our business will provide significant opportunity for capital returns as we continue to deliver shareholder value from the portfolio. Finally, I look forward to a great fourth quarter. We will have the contribution of Çöpler for the full quarter and expect all four assets to close the year strongly in an environment of robust metal prices. With those comments, I'll turn the call over to Stewart, who will discuss our operational performance and organic growth in more detail.
Thanks, Gregory. As always, I'll start with a comment on health, safety, environment, community relations. A considerable amount of energy has been expended through and before the integration process to ensure that we managed HSE and the risk in the business. Experience has shown us that in periods of change, we have distraction and risk. COVID has added an overlay of protocols and anguish to everything in 2020. We have a well-resourced and experienced HSE and operations teams in SSR who have managed to achieve impressive results over the years. Our operations managers have done an impressive job of maintaining our HSE standards while managing the business, and in some cases, restarting them in the COVID world. Our safety metrics were disappointingly slightly down through the middle of the year, but are now improving.
Protecting and caring for our people, the environment, and the communities underpins our business performance, and will continue to be a key focus area of all of our teams. Each of the sites has a slightly different approach to dealing with COVID management, tailored to the situation and the specifics of the site. I'm confident that all the sites have taken a very strong and proactive stance against COVID and are increasing protocols ahead of rising statistics. Now a brief comment on each of the mine sites. Please move to slide 10. Çöpler has not had a direct interruption through the COVID pandemic. There have been some indirect impacts, including some impact on production and the pushing back of some work and costs into next year.
Through the first nine months of the year, both oxide and sulfide plants produced a total of 224,000 oz of gold for approximately $214 million in pre-tax free cash flow. There have been some reductions in workforce as a result of quarantining, which have affected operations. As a result, there were some changes made to the mine plan to compensate. Çöpler remains on track to achieve full-year guidance. The sulfide plant continues to operate at above design rates, compensating for slightly lower than planned grade and recovery.
The change to the mine plan ensured that the manganese pit cutback was completed on time, and we're now starting to mine the higher grade ore in this pit. Autoclave One was inspected during a brief plant shutdown in July and found to be in excellent condition. The Autoclave One shutdown, previously planned for the second half, has now been pushed back to 2021.
There are no autoclave shutdowns planned for the rest of the year. Exploration in the region and within the Çöpler Mine area continues with encouraging results, which we plan to share soon. Along with the other targets that we've previously discussed, our VP exploration hypothesized the presence of a porphyry intrusion relatively close to the ultimate bottom of the Çöpler Mine pit. Midyear, we started testing this target, which we've creatively named C2, and have intersected mineralization consistent with a porphyry intrusion. We will share the data when the analysis in the QA/QC is complete. Engineering and early works for the supplemental flotation plant advanced during the quarter. The flotation plant will increase the sulfide plant throughput and lower unit costs. The impact of the flotation plant is being incorporated into the upcoming Çöpler District technical report.
The updated technical report will also contain a PEA outlining the preliminary development plan for Ardich. As a reminder, Ardich is still being explored and the resource will expand. The Ardich PEA represents only drilling from up to 2019. We restarted drilling in March, April of this year after a bit of a COVID delay. Subsequent 2020 drilling confirms extension to the mineralization. We will shortly provide an update of the exploration at Ardich, including both infill and step-out drilling. The technical report will be released before the end of the year after finalization of engineering and business assessment, and of course, approvals. Please move to slide 11, and we'll talk about Marigold. Marigold continued to operate through COVID, a great credit to the mine management. Again, there have been indirect impacts that affect both 2020 and 2021.
Total material moved was another quarter above 20 million tons, despite some teething issues with our new hydraulic shovel. We believe these issues are now mostly behind us. Shorter hauls into next year will facilitate higher tonnage rates for the mine. As expected, the head grade increased in the third quarter versus previous quarters. Overall, we stacked just over 73,000 oz recoverable in Q3 and expect to finish the year within guidance. All-in sustaining costs at $1,243 took a hit from the increase in royalties as a result of the gold price as it did at all of the sites. High gold prices are a nice problem to have. Exploration drilling continued across the property with some interesting results. With land acquisition over the last few years, we are assessing the plethora of opportunities across our very large package in the region.
Very prospective areas on the edge of both mining areas and close to old tenement boundaries are some of the areas of focus. Obviously, we avoided showing our excitement for these while we negotiated to purchase the abutting areas. We will provide some update on the Marigold tenement exploration in our group exploration updates later this year. Please move to slide 12. Seabee is a great high-grade mine with lots of potential. From a health and safety perspective, we've been doing a lot of work to comply with the new diesel particulate matter requirements stipulated by the province of Saskatchewan. This involves a lot of improvements to existing equipment, as well as we recently started commissioning of a new ventilation raise and fans, which has made a very big improvement as designed. As you know, we shut Seabee down as a precaution for COVID.
This action also pushed some working capital into 2021. Seabee ramped back up in August, and in September, we had a record milling month of an average of 1,271 tons a day. This included our best ever one-day throughput of 1,522 tons a day. For perspective, the year that prior to SSR Mining purchasing Seabee, the mill averaged 760 ton a day throughput. In the PEA that was released subsequently in 2017, mill throughput was estimated to average 1,050 for the whole life of mine. The current throughput rates demonstrate upside to the production profile. The mine is currently bottleneck at Seabee. There are also real continuous improvement opportunities in the mine at Seabee, and this will be an area of considerable ongoing focus. We recently approved the replacement of an older jumbo, along with an additional jumbo for the mining fleet.
These purchases will come across the ice road in early 2021. During the shutdown for COVID, there was a lot of maintenance of both processing facility and the mobile mining equipment, which will support productivity going forward. Seabee has great exploration potential, both immediately on strike in the current mining areas and in the very large tenement package, along with the contiguous Fisher tenements. You may have seen that we recently satisfied the earning requirements at Fisher and are now 60% owners, with an option to increase to 80% in the future. We are looking to increase exploration around the mine this year. When we do the corporate exploration update later this year, we will update you on some of the interesting exploration results from Seabee and Fisher and from our productive summer program at Amisk, which is about 50 km to the south of Seabee.
Now, please move to slide 13. Puna ramped back after a hiatus for COVID. Infection rates in Argentina, including Puna, reached well into the 20% range. Though we've seen generally pretty low severity and few hospitalizations. Our team have done a fantastic job of isolating the mine. There is, of course, a cost of very tight COVID controls. The mine and the plant have ramped back up really well, and the plant is running regularly at above design throughput and recoveries. The tailing pumping system that caused us some consternation last year now appears to be fully resolved and in control. On the back of higher silver prices and low costs, Puna is forecasting to produce good cash flow going forward. An all-in sustaining cost of $11.26 for the quarter, despite the shutdowns and COVID, demonstrates the potential of Puna.
I'm very excited to see what the team can deliver there. Now move to slide 14. I've covered off most of this already. In summary, our focus is on, first, operational discipline and continuous improvement to deliver us from our tremendous operating assets. Secondly, leverage off our fertile organic growth portfolio with our immediate focus on converting some of the near mine low-cost prospects into production. You will get a look at the first of these or the next of these when we reveal Ardich PEA in the Çöpler technical report in the next few weeks. With that, I'd like to close and hand back to Rod.
Well, thanks, Stuart and Greg. Despite the challenges thrown at us by COVID, we've done an amazing job managing our operations, completing the merger, and integrating both companies into the new SSR. The announcement of a dividend highlights the financial strength of the business and a responsible approach to capital allocation. Finally, we are lining up a number of catalysts that will show the value and exciting growth potential from within our portfolio. With that, I'll pass the line to the operator and take any questions you may have. Hello, operator.
Thank you. We will now begin the question and answer session. This is a question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. To join the question queue, please press star then one now. Ou r first question comes from Ovais Habib of Scotiabank. Please go ahead.
Hi, Gordon team, congrats on a good quarter. Thanks for taking my questions. Just a couple of quick questions from me. Just starting off with the Çöpler. Great to hear how well the autoclaves are performing. You mentioned the autoclave number one shutdown is now expected in 2021. Is this shutdown expected in the first half or second half of 2021?
We're scheduling it in the first quarter at this point.
The first quarter. In terms of the shutdown that you saw in the autoclave number two, in terms of how well the ramp-up has gone, is there any kind of optimizations or anything that you guys need to do within those autoclaves that you're seeing? Is this just a routine shutdown that you're expecting in the first half of the first quarter?
No, it's just a routine shutdown. The main driver for this one will be the replacement of the agitator blades, because they're a wear item, and eventually they wear. They've lasted much longer than we had expected to, but we're expecting to have to replace them late the first quarter.
Just then moving on to exploration drilling at Ardich. You mentioned that recent drilling had started around the April timeframe. Has that been mostly step-out and infill? Can you give us an indication as to any sort of preliminary results that have come according to expectations?
Yeah. The infill drilling's confirmed what we expected to see. We've been stepping out around the existing resource. When we issue the update in the next few weeks, we're planning on breaking it out so you can see what's infill and what's step out.
Just confirming, none of this will be included in the study?
No. Well, the technical report, as you know, we have to pick a point in time. We closed, we prepared the technical report, and this is subsequent. It's all upside to what you'll see in the technical report.
Okay. Then just moving on to Seabee, and then I'll jump back into the queue. In terms of Seabee, throughput was definitely, you're hitting record throughput levels. Is that expected to be sustained at current levels going into Q4 in 2021? Also, can you give us any indication of what the stockpile grade for the 17,000 tons is?
The challenge for Seabee in the longer term is the mine rather than the plant. We are putting some extra equipment in there. My comment regarding the jumbos, so new jumbos. There are some requests for some other equipment, and we're working on improvement plans to get the mine rate up in order to be able to feed the plant at a higher rate. I'm not promising anything beyond the numbers that you previously would've seen. It'll take a while for us to get some traction. There's definitely good upside at Seabee.
That's all. Just any indication as to what you can give us information on the 17,000 tons of stockpile grade?
It's a very small stockpile. It's pretty much just a run, so it's around about the average grade that's feeding the plant.
Got it. I'll leave it there, guys, and jump back into you. Todd, thanks.
Great. Thanks, Ovais.
Our next question comes from Cosmos Chiu of CIBC. Please go ahead.
Hi. Thanks, Rodney, Stewart, and Gregory. Very good financials today, and certainly good to see that you've put in a dividend here. I guess the market likes it as well. Maybe first off on Çöpler, as you talked about, the cutback here, Manganese Pit is still on time, and looks like it's going to start contributing some higher grade material. Can you remind me, is it both the oxides and sulfides that will benefit from it? What's the magnitude in terms of the grade improvement versus the main pit here?
Yeah. There is a small contribution of oxide. The contact is sub-vertical in Manganese Pit, so when we get to the bottom of the pit, we still do get small amounts of oxide. With regards to the grade, I don't think we've disclosed sort of what the incremental increase will be. You remember that Çöpler mining rate has always been higher than the processing rate- as it was in the original technical report. we do feed the higher grade as it comes to the plant.
We are, as I've discussed on previous calls, always having to juggle grade and chemistry. It's one of the advantages that we'll have when we get the flotation plant in. That we'll have a bit of a disconnect between the chemistry, because we'll have a bit more control over sulfide grades and being able to manage down carbonate reporting to the autoclave.
Mm-hmm. For sure. Understood. again, on Çöpler here, as you mentioned, the MD&A, the TSF construction, you had to slow it down a little bit. However, you're still advancing ahead of operational requirements. With that said, in an ideal world, would you want to catch up on that construction later on, maybe sometime in 2021? is that why you've talked about some of the CapEx catch-up in 2021?
With the tailings dam at Çöpler, another way to think of it is the waste dump for the mine. We take the competent, suitable, mostly limestone material from the mine- use it for the placement with compaction into the wall. As a result, the rise at the TSF is driven mostly by the mining rate rather than the plant requirements. We were a long way ahead of where we needed to be.
When we didn't have enough drivers, what we did was found an area to stockpile the ore, sorry, the tailings dam wall material, partway to the tailings dam so that we could free the fleet back up to go into the mine and work. Now, there is a small cost associated with that, because we have to pick it back up and then take it the rest of the way. There is a cost to pick it up at some point in the future to move it out to the tailings dam. We're a long way ahead of where we need to be in the tailings dam, and we will remain there.
For sure. Again, maybe moving ahead out to Marigold here. As you talked about, you've been transitioning from the lower levels of Mackay 5 to now the upper levels of Mackay 4. I think phase VIII is also coming in. You talked about the grade being lower year-over-year due to the fact that you're transitioning into the upper levels of Mackay 4. Again, I haven't been to Marigold for a while now. Can you remind me in terms of, I don't remember a lot of grade variability between the different phases. When are you getting in and out of it? Could you give us some color in terms of the grade profile, maybe intermediate term and also potentially longer term as well?
I can give you part of that, and we'll have to take the rest on notice.
Sure.
You're correct. We are transitioning out of Mackay 5 and Mackay 6 and coming back up into Mackay 4 and Mackay 8 now. We'll be back down in Mackay 5, I think about the second or third quarter. I'll have to confirm those numbers for you going forward.
I guess as you go deeper, as you transition deeper into the mine, you get higher grades sometimes. As you're at the upper levels, you get lower grade, and then you would come to that-
Yeah.
Kind of mix.
Yeah, we have been below the reserve grade, and we're moving back towards the reserve grade, as you would expect.
Okay. Maybe one last question here on Seabee Santoy. Stewart, as you mentioned, there's the ice road that's needed every year to replenish your inventories, your supplies. Any kind of concerns in terms of with COVID-19 impacts and whatnot? Can you remind us, I guess, number one, what is the timing of building the ice road? number two, do you foresee any kind of impact, given the current pandemic?
No, we don't expect to see any impact. We build the road ourselves with our own team, and the team is ready to go to do that work as they normally would. We start building it at the beginning of next year. We don't have to bring quite as much as we would normally bring across the ice road this year. Because we were shut down for a period, we've got those materials and inventory supplies on site already. It won't be as big a year as it usually is coming across the ice road. We don't see any impact from COVID in our ability to be able to do that.
Again, when are you going to start building it? When is it going to get cold enough?
I think they start in January.
Okay.
Certainly, they need to wait for it to start to freeze, and then they progressively take smaller trucks across to get it to harden. Moving the equipment across it hardens it. Usually by about February, they're getting ready to start to run it.
Mm-hmm. Maybe one last question, maybe for Rodney here. Again, taking a step back, looking at the big picture here. Clearly one key catalyst is the Çöpler technical report coming out, and it's great to see that exploration results are coming out as well. Again, when could we expect? Are you expecting to put out some kind of longer-term sort of guidance, maybe three-year guidance in terms of production and costs? On top of that, as you talked about, Rod, you're looking at optimizing the portfolio and when can we start expecting more details in terms of CapEx, in terms of what's in the core portfolio, what might not be? Certainly there's Pitarrilla that's in it. There was some chatter or some talk previously about new trucks at Marigold. Just wondering about timing and what kind of detail could we expect. Thanks, Rodney.
Yeah. That was a long question, Cosmos. I appreciate it. I think we'd sort of say, as a new team, that we're relieved to get the quarter three results and work behind us, because it's been important for us to sort of demonstrate the strength in the business and as we're now moving forward. I think in the meantime, we've been busily working on bringing the organizations together and also ensuring we stand things up. as part of that, developing the catalyst-rich announcements that will come out here as we close 2020 off. then, moving into 2021, starting to look more about in the exploration and growth area, and particularly, how it all sort of plays together. I think, first things first, we finish the year. We've got catalysts already lined up as we've outlined in the quarterly results.
Into next year, starting to line all those up together and seeing how they play out in terms of our growth profiles and portfolio management moving into 2021. We've got plenty on our plate. I'm pretty excited by the growth potential, and I think it sort of plays out when you look at our capital allocation strategy. Clearly we've got an eye into the business, to ensure that we're continuing to reinvest. We're continuing to ensure that we have the balance sheet to bring some of these opportunities forward and returning capital to our shareholders. I think we've covered a lot already as a new team. We've got a fairly aggressive plan moving into 2021 as well.
Thanks a lot, Rodney, and that's a great answer, and thanks again.
Our next question comes from Dalton Baretto of Canaccord. Please go ahead.
Thanks, operator. Good evening, everybody. Rodney, I'd like to start by wishing you and your team all the very best with the new company. That said, it is a very different company than Alacer. I'd really like to get a sense for how you're now viewing the world through the SSR lens. In particular, I'd love to get your thoughts on how you're thinking about growth versus shareholder returns, and then also risk from a jurisdictional, from a balance sheet perspective. Just finally, your thoughts on silver, given SSR's legacy operations as well as some of its projects.
Look, I think, Dalton, when Paul and I were talking about the merits of the merger and bringing both companies together, what we saw was a very close cultural alignment. The lens that we looked through, both businesses were eerily similar. I think that's held true to where we are today. From a lot of perspectives, it's business as usual and getting the team to get going and starting to think about what are we doing as a business? What do we need to deliver? What's important? Where do we prioritize our capital for growth? A lot of the elements and framework was already in place, and thoughts were in place.
That's why I think in a lot of regards, we've hit the ground running, and that's what you're seeing obviously play out here with the quarter three results and a number of the other catalysts coming up further in this quarter and moving into next year. We're in really good shape, and that shouldn't be a surprise to anyone because we did talk about it. In terms of prioritizing some of that growth opportunities, I've said a few times that what we see in front of us right now is low capital intensity across the portfolio because a lot of them are brownfields opportunities that are near mine.
Of course, we have a number of exciting greenfield opportunities within the portfolio, quite an extensive allotment there that we're progressing through and looking how that might play out into our capital needs moving forward as we continue to evolve the SSR story beyond this year and probably beyond next year as well. I think that plays out in our capital allocation strategy that I just mentioned. Clearly, there's an element that we want to retain money to grow and invest because that's the best bang for the buck for our shareholders and that high yield and growth, and we'll see how that plays out. We've got it all before us. We've got a great platform to start with. We're off to a good start, and look forward to presenting more of these as we move into next year. Your last question on silver.
Clearly with Puna specifically, people have asked about the future of Puna. Puna is a great contributor to the group level in its cash generation. It shouldn't be lost on folks that for us, while it still does that and still generates on a per ounce basis, great free cash flow. It's welcome within the portfolio against the other three operations. That's our going-in proposition, and that hasn't changed at all. We'll obviously continue to assess Puna in the longer term to see whether there are other opportunities around it as well that it may actually evolve here into something different. That'll be part of our thought process as moving into 2021 as we continue to look at all the organic growth we have.
Our next question comes from Daniel Morgan of UBS. Please go ahead.
Hi, Rodney and team. First question just on Çöpler. Are you back on reasonable manning levels? Can you just discuss the COVID-19 impacts at Çöpler and maybe just touch on the other assets, where you're at on that issue as well? Thank you.
Yeah. Çöpler's back up to full manning. Çöpler's actually got rapid testing up and running at site now. They're still isolating people for a week when they come in. They're doing both antigen testing and testing for the virus itself, which they can turn around in about one hour. We've got better control, and things do seem to be improving. In Puna, they had very high rates, as I said in my talk. They were up getting 25% positivity rates with people. It has, just in the last week or two, really markedly dropped down. I guess that means everybody's had it and they're immune. Things seem to be getting a bit easier there. At Marigold, they've got quite a lot of controls in place to control people coming to site and ensuring it. As you may know, Nevada is seeing an increase in rates.
The protocols that we've got in place are well established now, and it's not impacting us from a production perspective. Lastly, at Seabee. Seabee, we have had some issues with manning, particularly where we have quite a lot of Indigenous folks coming in from sort of remote areas. From Saskatoon as well, where there are instances of family members or friends being positive, we have to delay them coming back to site. We are seeing some impact, but it's not as much as it was previously.
Okay. Thank you very much. The grades being stacked at Marigold has seen a big uplift. Can you just talk about what you expect for the next couple of quarters? I imagine that'll go up towards half a gram or more over Q4 and into Q1. Is that about right?
We start to head back up towards the reserve average. I'm not sure they're going to get to 0.5 in those periods. I think it's a little bit below that, but heading back towards the reserve numbers.
Okay. Maybe just the dividend, just keen to explore capital return framework that you've outlined a little bit more. Great to see a dividend earlier than I had thought. The $0.05 per share, which is the base, is that just every quarter you're going to pay that? Just wondering how the supplementary works is that every quarter you'll look at the free cash flow for the quarter behind you and go, "Okay, we're looking good," and pay out a supplementary, or is it something that you might do on more a half-year or annual basis, look at the supplementary?
Thanks, Dan. It's Greg. I'll just take that question. As you say, we're certainly pleased to have the initial dividend announced, and we'll start paying the regular quarterly dividend at $0.05 per share, starting in Q1 of 2021. We will look at capital returns as one of the uses of our capital compared to, as Rodney and Stewart talked about, lots of opportunity we see in the portfolio. We will look at those supplemental dividends on a trailing 12 months attributable basis. As we start to bed down the combined business and get those results put together, the board will periodically review that.
I think give us a little bit of time here to get things settled down, and then the board will start to look at those supplemental returns, and we'll be comparing incremental dividends against share buybacks just depending on market conditions and against other needs within the portfolio.
On that, and a follow question just on the mechanics. What do you need to do mechanically to get a buyback in place? Forgive me, I'm not as familiar with perhaps Canadian law or jurisdictions regarding this. Do you need AGM approval? Is it board resolution? How would you do that? Also a follow question on that is, how do you make the assessment of a buyback versus a dividend?
Yeah, thanks. Within Canada, there is a normal course issuer bid structure that allows you some buyback opportunities tied to your liquidity, so a certain amount of volume. That is one structure. If we wanted to do a more significant piece, yes, there's more regulatory and other approvals required. In terms of the trade-off, it's really going to be driven by really where we see market valuation conditions overall. Again, if we see an opportunity where that makes more sense for our shareholders, again, this will all be focused from a shareholder lens in terms of how we make that decision. If we see that as being a preference use of capital, we'll move in that direction.
Okay. Thank you very much for your responses.
Thank you.
Once again, if you have a question, please press star then one. Our next question comes from Mike Parkin of National Bank. Please go ahead.
Thanks, guys, for taking my questions and congrats on the good quarter. Just to follow up there on the NCIB, assuming that's the vehicle you pursue, like a share buyback, would you be using a P&L valuation at something below spot, like something like a trailing 12-month average or something to kind of determine whether or not you're active with an NCIB versus a cash payment?
Yeah. Thanks, Mike. We'll look at a number of general market conditions in addition to any specific factors that are playing out. I don't want to get too specific on it because obviously we're in a cyclical business here. We can see a lot of volatility in market conditions over time. Again, we would be looking at it over long-term valuation parts. Certainly, it wouldn't be our intent to use that structure unless we really felt we were in a strong position to do so on a valuation perspective. I think as we said, we see the quarterly dividend as the primary recurring return of capital. We will look at these on a supplemental basis. I would again focus you in terms of what we've said there around the dividend being the primary capital return piece.
Okay. Yeah, that makes sense. Switching over to some of the stuff that's coming down the pipe in the next few weeks. With respect to Ardich, you mentioned how it'll be a PEA. What are the next steps after that? Are you going to go through a full feasibility study? Given track record and the experience, it's a regional kind of satellite for you. Are you more comfortable having an earlier stage economic analysis on it to move ahead with a construction decision?
Yeah, thanks for that. We've determined to make it a PEA because we're still exploring it, so it's still growing. We wanted to give an indication of what our expectation was for the development, and the development potential for it. It's quite separate from Çöpler in that it's removed, and we'll have to spend some capital on it. Then bring that across and process it at the Çöpler plant with an expansion of the heap leach at Çöpler. That's all incorporated into the PEA. If we'd gone down the pathway of doing a reserve, we could have either presented a smaller case that wasn't as indicative of what we expect it to be, and then had to have done a subsequent reserve. Our expectation is we'll issue this. As I said earlier, it's a point in time, and it represents a point in time, a development opportunity.
The resources is obviously already growing outside of that. Our plan will be, sometime in the next year or so, to issue an update. At that point, it will convert into a reserve, most probably a reserve in the greater Çöpler. We'll see. It will be a reserve in the next year or so.
Okay. spending should be pretty much not much other than exploration dollars for the next 12 months?
No. We don't have a lot to spend. Obviously, we've got the development costs of the metallurgical test work and those types. It's of the order of $10 million.
Okay. Just with Seabee, on an exploration standpoint, you do tend to do more of your expansionary step-out drilling in the wintertime. What is it that you're aiming to focus on? I remember Batman Lake looked pretty exciting last year with results coming out of there, plus some additional intercepts along the Santoy Shear. Is it follow-up work there? Is there additional targets that you're aiming to test?
There's quite a number of targets along that mineralized trend that goes down through Fisher and then branches up also to the north, northwest as well. We have a series of targets. In the exploration, you'll see that there's some drilling as well as field exploration in those areas, as well as in Amisk, field exploration in Amisk, a bit further away, and in and around Santoy itself. Of course, we've been working on the Gap Hangingwall over the period as well, getting ready to convert that into a reserve.
Okay.
We are looking this year to maybe invest a little bit more into exploration in around Seabee to give ourselves a bit of a longer time horizon for decision-making.
Okay. Can you just remind us on what you need to do to take that ownership up on Fisher from 60% to, I believe you said earlier, 80%?
Yeah. Thanks, Mike. It's Greg here. It's really just a one-time $3 million payment that's due to our partner to do that increase from 60%- 80%. We'll look at that here as we work through the next number of months.
Okay. Thanks, guys. All my other questions were answered. Thanks very much, and congrats again.
Thank you.
This concludes the question and answer session. I would like to turn the conference back over to Rodney Antal for any closing remarks.
Well, thank you, and thanks, operator. I want to appreciate everyone for participating today on our first call as a combined entity, and wish you all a good day. Thank you very much.
This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.