What happened
Shares of Colorado-based gold mining company SSR Mining (SSRM 2.00%) were devastated in early trading Monday, falling more than 21% at one point on news reports that its Copler mine in Turkey might be forced to temporarily shut down.
As of 12:25 p.m. ET, SSR stock had recovered from the majority of that decline, but was still trading down by 7.4%.
NASDAQ: SSRM
Key Data Points
So what
Responding to the news Monday morning, SSR put out a press release explaining that it was aware of the reports and is "seeking a formal response from the Ministry of Environment regarding the reports."
Management noted that on June 21, the mine in Turkey's central Eastern Erzincan Province suffered "a minor leak estimated at eight kilograms of cyanide." That leak, it said, was "cleaned up immediately without any environmental impact or discharge from site." The company also said it had "immediately notified the relevant authorities of the event." Presumably, this was what precipitated reports that the mine would be shut down, but these reports have not been confirmed.
SSR's website notes that it owns an 80% interest in the Copler mine, which boasts 4.3 million ounces of proven and probable gold reserves. (Therefore, about 3.4 million of these ounces belong to SSR.) According to data from S&P Global Market Intelligence, that works out to about 37.5% of SSR's total proved and probable reserves of gold -- so you can see why investors were spooked by the shutdown threat.
Now what
Were last week's spill likely to result in the total closure of SSR's mining operations in Turkey, or the loss of the company's ownership interest in the Copler mine, the initial 21% sell-off in SSR's stock would have made a fair amount of sense. One could even argue that under those circumstances, the stock should have fallen further.
At present, however, the company's description of the incident suggests that neither of those things will happen. Indeed, with not even a temporary closure of the mine confirmed, it appears that Monday morning's sell-off was an overreaction -- and may have handed long-term investors an opportunity to scoop up shares at a discount.
