On Tuesday, SSR Mining (TSX:SSRM) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
SSR Mining announced a definitive agreement to sell its interest in the Cherpla mine for $1.5 billion, expecting closure by Q3 2026, which will strategically reposition the company as a focused Americas-based gold and silver producer.
The company generated over $210 million in free cash flow in Q1 2026, ending the quarter with $630 million in cash and zero debt, after completing share repurchases worth $300 million.
Future outlook includes an updated life of mine plan for Marigold, ongoing brownfield growth opportunities, and a strategic review of Hotmadden, with proceeds from the Cherpla sale anticipated to further strengthen their balance sheet.
Full Transcript
OPERATOR
Hello everyone and welcome to SSR Mining's first quarter 2026 conference call. This call is being recorded at this time for opening remarks and introductions. I would like to turn the call over to Alex Huncheck from SSR Mining. Please go ahead.
Alex Huncheck
Thank you Operator and hello everyone. Thank you for joining today's conference call to Discuss SSR Mining's first quarter 2026 financial results. Our consolidated financial statements have been presented in accordance with US GAAP. These financial statements have been filed on EDGAR and SEDAR and they are also available on our website. There is an online webcast accompanying this call and you will find the information to access the webcast in this afternoon's news release and on our corporate website. Please note that all figures discussed during the call are in US Dollars unless otherwise indicated. Today's discussion will include forward looking statements, so please read the disclosures in the relevant documents. Additionally, we refer to non-GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measures. Rod Antell, Executive Chairman, will be joined by Michael Sparks, Chief Financial Officer and Bill McNevin, EVP Operations and Sustainability, on today's call. I will now turn the line over to Rod.
Rod Antell
Great. Thank you Alex and good afternoon to you all. It's been a strong and productive start to the year and I'm proud of the outstanding work delivered across the company in the recent months. Most notably in March, we announced in advance a definitive agreement to sell our interest in the Çöpler mine for $1.5 billion in cash. This transaction is progressing well and we expect it to close before the end of the third quarter of 2026. The divestment of Çöpler provides a strategic repositioning for SSR Mining as a focused Americas based gold and silver producer with a clear emphasis on free cash flow generation. Our portfolio is now anchored by the Marigold and Cripple Creek & Victor operations, two high quality long life assets that together form the third largest gold production platform in the United States. Both operations offer meaningful Runway to future growth and mine life extensions. Operationally, it was a solid quarter with our results tracking well against our internal plans and full year guidance. Financially, the business generated an impressive free cash flow of more than $210 million in the first quarter of the year. As a result, and following the settlement of our convertible notes at the end of March, we finished the quarter with more than $630 million in cash and zero debt. Our substantial cash position provides us with a robust balance sheet and flexibility to continue to invest in the organic growth opportunities across the portfolio and consideration for further capital returns to shareholders in the future. On that note, we completed the $300 million in share repurchases, acquiring more than 9 million shares subsequent to the quarter in April just passed. Since 2021, we have repurchased over 29 million shares at an average price of $21 per share, underscoring our disciplined capital allocation strategy and delivering meaningful per share value accretion to our shareholders. I'm sure you will agree and after a busy and successful first quarter, we have created a very strong position for SSR. Moving forward, we expect our low risk Americas focused platform and track record of disciplined capital allocation will position SSR mining as an attractive vehicle for investors seeking exposure both to gold and silver in the Americas. Before I move on to the next slide, I want to highlight some of the catalysts ahead for our business. First, we expect to provide an updated life-of-mine plan for Marigold in the coming 12 months, incorporating growth opportunities like Buffalo Valley as we push to optimise and extend mine life in Marigold. Next, we are continuing to advance various brownfield growth opportunities across the business, including both Puna and Seabee, and Bill's going to speak more on these in the coming slides. Further, we anticipate providing an update on our strategic review of Hotmadden in the coming months. And lastly, as noted, we expect the Çöpler transaction to close before the end of the third quarter, which will add a further $1.5 billion in cash to our balance sheet. These catalysts in and of themselves present an opportunity to create additional value for our shareholders and will be further bolstered by the ongoing free cash flow from our Americas operations. Let's move on to slide four and talk more about our track record of value creation. The figures on this slide illustrate a powerful picture of discipline and value creation. Over the past few years, we have clearly demonstrated a track record of value creation in per share metrics, capital returns and M&A. I've spoken to our commitment to capital returns and particularly share buybacks, but separately we also have a clear track record of value accretive M&A. This was most recently illustrated by the remarkable returns being generated from the acquisition of Cripple Creek & Victor in 2025. This is further supported across the portfolio where we have consistently demonstrated our ability to add value through mine life extensions and optimizations. These successes, combined with a supportive gold price environment have driven a more than 300% increase in our consolidated consensus net asset value per share. Since 2024 and a better than 400% increase in consensus cash flow per share over the same period. A fantastic outcome that differentiates SSR amongst its peers. So I'm going to turn over to Michael on slide 5 to discuss the quarterly results.
Michael Sparks (Chief Financial Officer)
Thank you Rod and good afternoon everyone. In the first quarter we produced 110,000 gold equivalent ounces at all in sustaining costs of $2,433 per ounce, well aligned with our expectations. As highlighted in our guidance release, we continue to expect 55% to 60% of full year production in the second half with higher sustaining capital spend in the second and third quarters. Bill will speak in more depth about each operation in the coming slides, but I wanted to call out two notable milestones from the Q1 results. First, Puna delivered more than $120 million in site-level free cash flow in the quarter, an excellent result that reinforces Puna's position and as one of the highest margin primary silver mines globally. We are excited about the opportunities for meaningful mine life extensions in Argentina and are advancing these programs through 2026. Second, following another strong quarter from CC&V, the operation has now generated approximately $325 million in mine site free cash flow since its acquisition in 2025. This is a phenomenal result given the $275 million acquisition cost and the long mine life ahead for the operation. So overall a strong and solid start to the year operationally and we look forward to building on this momentum through the rest of the year. Now let's move to slide 6 for a brief review of our financial results. Our solid operational results Translated into strong first quarter financials, including nearly $600 million in revenue from 113,000 ounces of gold equivalent sales. With the sale of our ownership in Sherpler announced in March, the asset is now classified as a discontinued operation in our financial reporting. The results from discontinued operations largely reflect a one time non cash adjustment to fair book value on the announcement of the sale at Sherpler. Looking at the rest of the business, net income from continuing operations in the first quarter of 2026 was $1.16 per diluted share while adjusted net income per diluted share was $1.15. Free cash flow from continuing operation in the quarter was $211 million. This strong free cash flow increased our cash position to $634 million at the end of Q1 inclusive of the $87.5 million contingent payment made to Newmont during the quarter as part of the CC&V transaction. Also during the quarter we fully redeemed our outstanding convertible notes, leaving the balance sheet debt free at the end of March and with total liquidity of $1.1 billion. As Rod mentioned, subsequent to quarter end we completed $300 million of share repurchases under our buyback program, reflecting our continued commitment to shareholder returns. Looking ahead, we expect our ongoing free cash flow combined with proceeds from the sale of Çöpler before the end of the third quarter of 2026 will further strengthen the balance sheet and enhance our ability to continue to allocate capital with discipline while prioritizing high return growth opportunities and long term value creation. Before turning the call over to Bill, I'll briefly touch on global cost pressures with a focus on fuel. At Marigold and CCNV, nearly 70% of our diesel exposure is currently mitigated through zero cost collars executed in late 2025 which extends through the end of 2026. At Seabee, diesel is secured through annual winter road deliveries and at Puna, we are not currently seeing meaningful impact given domestic supply conditions. As a guide to the remainder of 2026, for every $10 per barrel increase in oil prices it translates to approximately $7 to $10 per ounce increase in our consolidated All-In Sustaining Cost (AISC). We will continue to monitor fuel markets closely as we continue to maintain a disciplined focus on cost control and operation efficiency across the portfolio. Now over to bill on slide 7.
Bill McNevin (EVP Operations and Sustainability)
Thanks Michael. I'll first start with EHS&S. Getting our people home safe and healthy each and every day is foundational for our business. This is highlighted in one of SSR Mining's three core values being Safety First Always. This year as part of our ongoing improvement focus, we're commencing implementation of iCARE. We care across SSR. This is a safety leadership and culture program prioritising people and how we each own and take responsibility for ourselves, our workplace and our teams. I'm very encouraged by the energy and input coming through from this early work and look forward to this making a difference on both people, safety and overall business performance. Now on to slide 8 to start with Marigold. Marigold had a solid start to the year with production results well aligned with expectations. We continue to expect full year production at marigold will be55.6% weighted second half of the year driven largely by higher grade stacked mid year ASIC at Marigold are expected to peak in the second quarter of 2026 driven by timing of spend on fleet replacements and upgrades. ULI ASIC remains on track against original guidance range though we are seeing cost pressures stemming largely from higher royalty costs driven by gold prices. Nearly three quarters of our diesel fuel usage at Marigold and CCNB is hedged for this year which has helped to insulate us against the current elevated fuel prices globally. Our focus remains on equipment productivities, maintenance quality and efficiency with consumables to manage current and potential future inflationary pressures. Work continues on growth initiatives across Marigold, particularly at Buffalo Valley as we work to include the project into an updated life of mine plan at Marigold within the next 12 months. We've also had some great results from near mine drilling across the property including some high grade intercepts to DG80 target to the southwest of the current Mackie Pit. Our teams are also continuing to evaluate longer term open pit expansions at New Millennium. These initiatives combined with additional near mine drilling campaigns and project evaluation work point to significant potential for mine life extensions at Marigold in the future. We're excited by what's ahead and look forward to providing more details in the new technical report. Now on to slide 9 for an update on CCMB. CCNB had another great quarter with better than expected recoveries driving strong production and delivering more than 120 million in mind. Site Free Cash Flow since acquisition at the end of last February, CCMB has now generated 325 million in free cash flow, an excellent result that now exceeds the total transaction consideration in just 12 months. CINV remains well on track against its full year production cost guidance targets with highest sustaining capital expected in the second and third quarters. We are continuing to evaluate opportunities to improve the longer term production and cost profile of CCNV through trade off studies and potential for future mineral reserve conversion. CCNV has an exciting future ahead and we look forward to continuing to deliver value at that operation going forward. On to Slide 10 to discuss operations at Seabee. First quarter at Seabee saw our continued focus on underground development as we aim to deliver stronger grades and production in the second half of the year. Production was also impacted by extreme cold in the quarter which caused some temporary downtime in the processing plant. ASIC reflected costs incurred with the winter road season and overall Seabee remains on track for its full year guidance ranges. Exploration and resource development activities at both Santoy and Paulki continued in the quarter with both programs targeting potential mineral reserve growth. At Santoy, near mine drilling is focused on higher grades at depth while our teams continue to evaluate Porky as a potential new mining front to support future mine life extension. Now on to puna on slide 11. Puna continued its recent run of excellent operating results with a strong first quarter Average daily processing plant throughput set another record the fifth consecutive quarter Puna has delivered improvements in process plant efficiency as planned. Mining was focused on waste stripping in the quarter and Puna remains well on track for full year production and cost guidance. Average realized silver prices in the first quarter of 2026 exceeded $90 per ounce, enabling Puna to deliver more than $120 million in mine site free cash flow in Q1. Puna has been an excellent contributor for the business over the last few years and continues to clearly demonstrate its exceptional margins and free cash flow in the current silver price environment. We're advancing a number of opportunities to extend the current life at Puna, including additional laybacks at the existing Chinchillas pit, evaluation of the Molina target adjacent to Chinchillas for open potential in the medium term and continued advancement of the Cortaderos underground project with multiple avenues for growth at Puna. We're very excited for the future this operation and see potential to meaningfully extend the mine worth life well below our initial current reserve base. On to growth on slide 12. I've touched on the majority of these projects and targets work through each asset, but it's still worth highlighting the wealth of potentially meaningful growth opportunities that currently exist across our portfolio. These projects that we have identified through successful exploration and development work completed at each asset in recent years. In my view, there is no better way to serve value for our shareholders than through the advancement of organic growth opportunities. It's also important to note these projects are compelling at current mineral reserve prices of $1,700 per ounce of gold and $20.50 per ounce silver. We do certainly see future upside at each of these assets when spot prices are considered, but we will be diligent in ensuring we advance the highest returning growth opportunities. I'm excited about the growth potential of this portfolio and look forward to executing on these opportunities to deliver value for our shareholders and I'll turn back to Rod for closing remarks.
Rod Antell
Great. Thanks everyone. With such an important and transformational quarter behind us, our focus is now building on this momentum during the remainder of the year. We are in excellent position and have a number of meaningful catalysts ahead of us. As I mentioned in the introduction to this call, with the low risk Americas based business, continued delivery of strong operating results, organic growth initiatives and the potential for further capital returns, we are well positioned to benefit from the ongoing RE rate of SSR mining. With that, I'm going to turn the call over to the operator for any questions. Thank you,
OPERATOR
thank you Mr. Antell. We'll now begin the question and answer session. To join the question queue, you May press star then 1. On your telephone keypad, you'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from George Eady with ubs. Please go ahead.
George Eady (Equity Analyst at UBS)
Yeah, good evening, team, and thanks for the call and nice update today on the Hod Maden Strategic Review. Can you just remind me what are the goals and what does it look like? I guess my question is, if a sale is concluded as the outcome, do we have to wait another two or so quarters for that process to run and then another couple of quarters to close? And I guess, could we be 12 months away from that deal closing if a sale is the decided outcome?
Rod Antell
Yeah. Hi, George. Look, we haven't really given much guidance on the process that we're going through other than to obviously announce it. With the sale of Çöpler back in March, I think the objective of the review was to consider all of the options from actually building the project all the way through to sale, and then within sale or other strategic options to remove ourselves from Hod Maden. And what does that mean? Because there are sort of multiple ways that that can be achieved. So other than we're still in the process of doing that and going through those different trade offs, there's really not much else to. To update you on. And I think some of the details that you're looking for here will come once we set a clearer picture for the direction.
George Eady (Equity Analyst at UBS)
Okay. Okay. Yep, that's cool. Thank you. And then just two sort of payment questions. Can you remind me what the Carlton Tunnel payment is at CC&V? And then secondly, just with the buyback, 300 million bought back 9.2 million shares. That says 32.6 US, the share average. But the shares were only really in that range for sort of five days at the start of April. Is that right? Or am I missing anything there or you just bought sort of at that little peak in early April?
Michael Sparks (Chief Financial Officer)
Yeah. George, this is Michael. I'll take the second one first and then circle back to the Carlton Tunnel. So with the share buyback program that we announced towards in the middle of the quarter, we did put an normal course issuer bid (NCIB) in place which allows us to give directions to the banks to exercise that outside of us having material information, that process did move very quickly and it ranged anywhere from $21 up to $32. But with the volatility of the price during that, it did Come in around that $32 a share average as you go through and then circling back to Carlton tunnel. So the 87.5 million that we paid for Newmont during the quarter was for the Carleton Tunnel. And that leaves the one more payment, 87 and a half additional payment, which would come in connection with Amendment 14 and the updated closure plans at that site as we look at that deal structure.
George Eady (Equity Analyst at UBS)
Okay, yeah. Awesome. And so if Amendment 14 closes, say 12 months, whenever it is, that payment is straight after you get that approval, is that right?
Michael Sparks (Chief Financial Officer)
Yes. Right. So amendment 14 remains on track. Anywhere from 12 to 18 months is kind of what we're penciling in. And then that payment will be due once that work is completed and that permit is issued.
Rod Antell
I'll just chime in here a little bit, George. It's all going to plan. So. And we're leading that work now. Bill and the team have taken that over and the work that we've done to one to establish our presence within the community in Colorado and also locally down at Cripple Creek has gone really well. So that's all tracking the plan.
George Eady (Equity Analyst at UBS)
Okay, cool. Cheers guys.
Rod Antell
Great. Thanks mate.
OPERATOR
The next question is from Lawson Winter with Bank of America Merrill Lynch. Please go ahead.
Lawson Winter (Equity Analyst at BOA Merrill Lynch)
Thank you operator and good evening Rod and team. Thank you for today's update. Could I ask about the buyback and just, you know, thinking about your situation today. The balance sheet is very strong. The outlook for free cash flow generation is quite robust. I mean you mentioned an intention to look at the buyback again and now the buyback authorization is totally exhausted. I mean why not go to the board prior along with the results and ask for the renewal then? And when's your thinking on timing around a renewal?
Rod Antell
Yeah, I think it's important to sort of take a step back, to take a step forward. Obviously the. And Michael can talk more around the work that's going on, but the share buyback that we just executed for us was particularly on the announcement of the Chirplus sale made a lot of sense to do and it was executed very quickly given the parameters that we had put in place to the prior questions. But the step back that I'm talking about now is now to post the. Remember where we suspended our capital allocation strategy with the Çöpler incident a few years ago when we said once we have clarity on the outcome of post that that we would then go back and have a look at our capital allocations and reimplementing and reinstituting it. And that's what we're doing at the moment, the work around more holistically, how do we manage our capital allocation and then looking at the requirements obviously for the business in the future with all the various growth opportunities we have in front of us, the balance sheet and other things before we go and make our mind up on the actual mechanisms we use for returns to shareholders. So that works underway with Michael and the team.
Lawson Winter (Equity Analyst at BOA Merrill Lynch)
Well, that's interesting. So part of it is just a discussion between whether it's going to be increased dividend or increased buyback rather than just whether you're going to do it.
Rod Antell
I wouldn't say increase because we haven't got a dividend in place at the moment because we suspended it. And that's the point. So it is a question of whether we reinstitute our yield that we had in place before became a sort of a vogue more recently in the market. We actually had that way back in 2021 as well as supplementing that through the share buyback program. So that was really how we had managed it before with the three pillars, balance sheet strength, growth and returns. But it's really just pulling all that work together with the emerging growth opportunities we have as well to ensure that we're making sound decisions.
Lawson Winter (Equity Analyst at BOA Merrill Lynch)
And fully acknowledging those growth opportunities. I think it'd be interesting to hear your views on M and A, particularly in light of your strong free cash flow and balance sheet position. I mean, that must compete with options within the portfolio, I assume. But what is SSR's appetite right now for growth through MA?
Rod Antell
Yeah, look, I think that's why in the intro slides, if you go back to the start of the call, Lawson, the reason we go to the pains of sort of setting out our track record around M and A is to. Is to actually highlight we've been really good stewards of capital for a long time and all of the deals that we have brought to market and we look at a lot of stuff and we've never made a secret of the fact that we're active, always looking at different trade offs and different opportunities around the market. When we do bring deals to the table and to our shareholders, there is usually a multiple of upside. And that's what we've been able to achieve. And the results speak for themselves, I think. So that is part of who we are. I think we're particularly good at it. We have a number of filters that we look at for MA through any cycle. It doesn't matter what cycle we're in, but it has to align to our business strategy. It has to compete for capital and it has to be make sense for us in terms of what we want to build. But we've actually got a particular focus now, obviously, with the reset of the business on the Americas. So that is a bit of a nuance to what we had before. But beyond that, you know, we are staying active in that space.
Lawson Winter (Equity Analyst at BOA Merrill Lynch)
That is clear. Thank you very much.
OPERATOR
The next question is from Josh Wolfson with rbc. Please go ahead.
Josh Wolfson (Equity Analyst at RBC)
Yeah, thank you very much. Following up Lawson's question, just on the buyback and capital allocation, I mean, I can appreciate the company's desire to be measured here, but pro forma net cash, over 200 million generated in free cash flow this quarter. Why not continue a little bit of the buyback in the interim before closing of Tripler? Or is there another way that we should be thinking about this in terms of maybe capital needs being higher for some of the development projects? Thank you.
Rod Antell
Hi, Josh. Look, I think it's pretty simple. I think the first things first is we want to close the deal and get the cash into the bank. So that's really important through any transaction. And as we said, that'll take place and achieve that within the third quarter. And I think that's really the most important catalyst. It doesn't mean we can't do share buybacks or do more share buybacks, but I think as we noodle through the various options and have the discussions with the board, the work that Michael and the team are doing really, really does need to be as holistic as possible and predictable as possible. And that's really the work that we're doing. So it's not because we have an aversion to doing any more share buybacks. I think it's really around just let's get the deal closed, let's get the cash in the bank, and then the rest will come.
Josh Wolfson (Equity Analyst at RBC)
Thank you. And then on Hodmadden, you had signaled minimal costs. You did spend $31 million in the first quarter. How should we think about what minimal costs are going forward?
Michael Sparks (Chief Financial Officer)
Yeah, Josh. So a lot of the work, as you remember under Hodmadden right now is around early site works. So a lot of that was advanced during that first part of the Q1, and that's where you're seeing that majority of that 31 million coming in. We anticipate that as we go through the strategic review in the coming months, that that'll be much lower. It won't be zero, but it will be towards the lower end of that range.
Josh Wolfson (Equity Analyst at RBC)
Thank you. And then there was some commentary earlier on the call about fuel price sensitivity, I think of seven to ten dollars. Just clarifying, what does that number incorporate? Does it reflect the hedging program as well that's in place? And then does that include secondary impacts and other items that may not be
Michael Sparks (Chief Financial Officer)
just direct fuel usage? Yeah, you bet. So the hedge program goes through the end of this year. So that $10, the $10 increase in the $10 AISC is really tied to this year with the hedge programs in place. Just to give you a guide that without the hedge programs, if we don't have anything in place going into 27, that goes up to about double that, which is $20. So we only have about 10% of our fuel costs that are our operating costs. Only about 10% of that is fuel. And as Bill mentioned, we really are focused on operational efficiency and controlling those costs. And it's a bit early to look at what the knock on effects would be. We are monitoring it, but we're not seeing anything that's tangible at this point. But it is something that we are continuing to monitor and we'll continue to update on in this quarter as we progress in the year.
Josh Wolfson (Equity Analyst at RBC)
Great, thank you very much.
OPERATOR
The next question is from Obeys Habib with Scotiabank. Please go ahead.
Obeys Habib (Equity Analyst at Scotiabank)
Hi Rod and SSR team. Congrats on a Q1 beat and great to see CCNV outperforming. I mean the amount of free cash flow this operation is generating is really impressive. Just a couple of questions from me. You know, again sticking with sccnv. Just a follow up question from George regarding the Carton Tunnel payment. Is there a read through or a positive read through on the fact that you made this payment? On the fact that you know you are looking for this amendment 14 permit and is that kind of read through that this coming imminently?
Rod Antell
No, I think they're mutually exclusive. Think of it the other way. The Amendment 14 was as you recall when we put out the technical report for Cripple Creek as the first update from SSR. It was constrained around the already in process amendment 14. So it was, it's an expansion permit that Newmont had already begun when we acquired the asset. The Carlton Tunnel discussions and considerations was another unique piece of work that was going on with the regulators around the long term management of the water discharge. So it's entirely separate from the Amendment 14.
Obeys Habib (Equity Analyst at Scotiabank)
Got it. Thanks for the color on that. And just moving on to the new mine plan expected at Marigold. That's I believe, including Buffalo Valley. Are you expecting any sort of significant improvement in the Production profile or you're looking at more like an increase in mine life. Any color on that?
Rod Antell
Look, I think the first things first it was to include some of the growth options that we have to understand the requirements for those growth options. And what I mean by that, you know, the permitting requirements where we might need more infrastructure, where we might need to develop a new area, where we might need to do more technical work to ensure that we're in good shape for that growth profile. So some of those growth options will more feature, you know, sort of later in the life of Marigold. Not so much initially because of those reasons, you know, permitting or whatever it happens to be. Some of it was to do the trade offs that we can look at for various parts of the property, you know, the southern part of the property around New Millennium Buffalo Valley and some of the extensions that we've got down there to see whether we could share an infrastructure down there rather than having long haulage. So there's those optimisation opportunities as we're going through the mine plans as well. And then in the initial years the key focus is to show and demonstrate that we actually have production profile that now accounts for the blending requirements that we talked about last year that I think folks were getting a little bit concerned about. So the importance of having to have different faces open. So we're allowing for the blending requirement of those final rules up on the heap leach pad. So the next five years, as we sort of said at the end of last year will probably stay about the same overall. But it's really then the growth options beyond it to bring in ounces where we can along the way and extend obviously the life of mine at Marigold with a substantial amount of resources that we have.
Obeys Habib (Equity Analyst at Scotiabank)
Thanks for the color on that Rod. And that's it for me. Most of my other questions were already answered.
Rod Antell
Thanks Gustav, thanks ever.
OPERATOR
The next question is from Cosmos Chu with cibc. Please go ahead.
Cosmos Chu (Equity Analyst at CIBC)
Hey, thanks Rod and Team A. It's finally my turn. My question is on the contingent payment. Sorry for going back to the Carlton Tunnel. $87.5 million. If I, you know, go back to your original agreement, it was due when there is regulatory relief relating to flow related permitting requirements achieving highest feasibility, allocation or alternative to water flow. So I guess you've achieved that point. But after saying all that, could you maybe explain to me what that means and, and you know, where, where we are today in terms of that water flow?
Rod Antell
I was surprised because you weren't caller number one but I kind of. Look on the tunnel discharge. Look, this is, remember, this is a Newmont remains a Newmont lead piece of work. So I'll say that they did achieve some of the permitting requirements from the regulators in Colorado that necessitated us having a requirement to pay them that milestone of the 87.5 million. So in layman terms, they, they achieve what they set out to achieve. But there will also always there is ongoing dialogue for on Newmont's behalf with the regulators to consider again the overall requirements for what is going to be ultimately the plan for the Carlton tunnel discharge, so whether it needs intervention through some sort of water treatment facility in the long term, et cetera, et cetera. And remember, the way that we carved that out through the deal was that was always going to be on Newmont's account. So it's important that they take the lead on that and they continue with that dialogue. And obviously we're a stakeholder, but not a stakeholder who is leading the discussions on this.
Cosmos Chu (Equity Analyst at CIBC)
Got it. Maybe a question on Chirpolar. You know, as you had mentioned in your guidance, there was about 80 to $100 million in care maintenance costs budgeted for the full year. If I were to take the difference of your free cash flow in Q1,210 and $175 million difference is about 35.6 million. Is that the part that's kind of related to care and maintenance for the quarter, which seems a bit high because it guided to about 20 to 25 million dollars? You know, I guess what I'm trying to get to is is that the number related to care maintenance and what should we expect in Q2 and when would it stop? Would it stop? Is it only going to stop when you, I guess, close the deal?
Mark
Okay, I'm going to pass it on to Mark. Yeah, Cosmo, how you doing? Just a couple points on that. In the Q1. You'll remember there are a number of taxes and license renewals. So our Q1 costs, care maintenance and otherwise are always a little bit higher in Q1. So that original guidance that we had of 20 to 25 would be what I would use for Q2. And the answer to your second part is we will maintain that care maintenance and ongoing support through the closing with the transaction. So as you're doing your modeling, you can use that 20 to 25 rough estimate and then that would continue on until we announce the close of the deal.
Cosmos Chu (Equity Analyst at CIBC)
And I guess my last question is, you know, what else needs to be completed for, you know, closing of the deal? You know, as you mentioned, Due diligence period was, has now been completed. And so what else needs to happen in terms of closing of the deal?
Rod Antell
The work going on the ground there has actually been excellent with the discussions around the transition requirements, you know, et cetera, et cetera, with Genghis Holdings. So all of the cooperation you would expect through a transaction like this has been very good. So we're very pleased with that. The only thing that is required, I think we actually sent it out with the announcement is of regulatory approvals. And so we'll wait on those that we will, that Genghis actually require, when we require through the Ministry of Mining and Energy in particular. And then once they're achieved, we can close the deal. So we expect that, you know, by the end of quarter three.
Cosmos Chu (Equity Analyst at CIBC)
Great. Thanks Rod, Michael and team, and congrats on a very good start to 2026.
Rod Antell
All right, good morning. Thank you.
OPERATOR
The next question is from Don DeMarco with National Bank Financial. Please go ahead.
Don DeMarco (Equity Analyst at National Bank Financial)
Oh, hi, good evening Rod and team. Thanks for taking my questions first on cb. So Rod, I heard that guidance is on track and so can you provide any incremental color on the cost on Q1 beyond what you already mentioned about the cold weather? And should we model, if we take it at face value, should we then model a step change, lower costs in Q2?
Rod Antell
So look, I think the feature for this, Don, let me take a step back and then I'll try to play it forward for you so you can try to model it out. At the end of last year, and we said early into this year and through pretty much the first half, the real focus there is on development at Seabee, which is ongoing and that will continue through this quarter as well. And we'll start to see incrementally better production profile coming out of Seabee. But it's really fourth quarter heavy in terms of the production coming out of that through the development work that we began in the second half of last year and will continue in the first half of this year. So that's how to think about it. It will progressively start to get better. But the real big quarter will be fourth quarter this year. And really the costs or the all in sustaining costs will average themselves out over the year as we get the ounces production back into that sort of guidance range. It's just because we're still incurring costs while we're doing the development. But obviously the ounce production is much lower in Q1, two moving up into Q3 and then obviously a great quarter four.
Don DeMarco (Equity Analyst at National Bank Financial)
Okay, so in other words, like Q1, two, you might be above the top end of the guidance range and then Q3,4, you could be below the lower end of the guidance range. Is that fair to say?
Michael Sparks (Chief Financial Officer)
Yeah, I think that's right, Don. And just remember, a good chunk of our costs for CB come across on that ice road. So Q1 is always going to be a little higher for us. But as we increase the production, as Rod said, throughout the year and as we get out of that Q1 early Q2, which is the ice road span, that will normalize.
Don DeMarco (Equity Analyst at National Bank Financial)
Okay, thanks. And then on Hod Madden, looking forward to your update in the strategic review, but can you remind us what your book value is for this asset?
Rod Antell
I actually don't have that on my head. I'll get that for you, Don. I don't have it right here with us. We'll get back to you dawn on that one.
Don DeMarco (Equity Analyst at National Bank Financial)
Okay, sure. And then finally on M and A, you know, you had mentioned the Americas and so on, but I'm just wondering, do you have a bias and preference in terms of stage or jurisdiction? I mean given your cash balance, would you then have a favor toward development projects? And with the Americas that you mentioned, does that imply north and South America? And you equally weighed all the jurisdictions build the countries within this jurisdictions?
Rod Antell
I think it's. We look at the full life cycle of assets, everything from greenfields type of opportunities which we do over time quietly acquire, particularly around our current assets. So we're fairly active in that space anyway all the way through to brownfields development and then producing assets. So we don't have a strong preference either way. I think the most important thing for us is a fit on strategy. Does it fit and align with our long term vision of building from the platforms we have and then obviously the value add that we can add to them and each one of those will be unique in their own circumstances for various reasons. So it really just depends, Dom. But remember, I think we've got a reputation of being good discoverers all the way through to mine builders and operators. So I think there really isn't anything that we wouldn't look at or wouldn't tackle. It's more around is it on strategy? Do I have a bias from north to South America? I certainly think right now our focus for sure to continue to build out the sort of, you know, the lower risk ounce base that we now enjoy with Marigold, Triple Creek and Seabee. That would be a preference. Not forgetting the fact that we have a platform in Argentina and more recently. Over the last few years, we've seen a much better environment down there for So that's another thing that we'll keep on looking at, given it's fairly underexplored because we've already got a presence there. So it's not like marching into a brand new jurisdiction. But, yeah, look, I think our focus at the moment is really North America and then trying to build around the platform we've got down in Argentina.
Don DeMarco (Equity Analyst at National Bank Financial)
Okay, great. Thanks again. That's all for me. And good luck with the quarter.
Rod Antell
Good on you. Thank you, Dawn.
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