- Increased production of higher value ore, improved
recoveries and improved metal pricing has positively impacted
financial results
- Q3 production second highest in the Yauricocha mine 69 year
history
TORONTO, Nov. 1, 2017 /PRNewswire/ - Sierra Metals
Inc. (TSX:SMT, BVL:SMT) ("Sierra Metals" or the "Company")
announces the filing of Sociedad Minera Corona S.A.'s ("Corona")
unaudited Financial Statements and Management Discussion and
Analysis ("MD&A") for the third quarter of 2017 ("Q3
2017").
The Company holds an 81.8% interest in Corona. All amounts are
presented in US dollars, unless otherwise stated, and have not been
adjusted for the 18.2% non-controlling interest.
Corona's Highlights for the Three Months Ended September 30, 2017
- Revenues of US$39.6 million vs
US$29.5 million in Q3 2016
- Adjusted EBITDA of US$ 18.8
million vs US$13.9 million in
Q3 2016
- Total tonnes processed of 268,178 vs 237,429 in Q3 2016
- Net production revenue per tonne of ore milled increased by 23%
to US$147.65
- Cash cost per silver equivalent payable ounce higher by 36% to
US$9.24
- All in sustaining cost ("AISC") per silver equivalent payable
ounce higher by 19% to US$14.60
- Silver equivalent production of 2.1 million ounces vs 2.1
million ounces in Q3 2016
- Copper equivalent production of 18.2 million pounds vs 17.7
million pounds in Q3 2016
- $24.5 million of cash and cash
equivalents as at September 30,
2017
- $31.0 million of working capital
as at September 30, 2017
Sierra Metals continues to see a positive impact from the
operational improvements program at Yauricocha and has successfully
focused on increasing the production of higher value ore, improving
recoveries, while benefiting from an improved metals price
environment resulting in significant increases to revenue and
adjusted EBITDA. The Company's continued emphasis at Yauricocha
will be to focus on the production of higher value ore, cost
reductions where possible, and optimization to improve the
Company's production, operating margins and cash flow
generation.
"I am very pleased with the continued operational and
exploration successes at the Yauricocha Mine" stated Igor Gonzales, President, and CEO of Sierra
Metals. "With our quarterly increase in revenues, adjusted
EBITDA and cashflow over Q3-2016, we continue to reap the benefits
of the operational improvements program at Yauricocha. The 19%
increase in the AISC per silver equivalent ounce relative to
Q3-2016 is a result of Capex and Opex, including drilling, plant
and equipment and infrastructure improvements. These are
investments in the Mine and should continue to provide a promising
future for Yauricocha. While the AISC per silver equivalent ounce
has increased, the benefit of this spending can be seen with a 134%
increase to our mineral reserve estimates, a doubling of mine life
at current throughput levels at Yauricocha in addition to an
increase of net production revenue per tonne of ore milled by 23%
to US$147.65."
He continued "With an ongoing focus on processing higher
value ore, the company has seen a 3% increase in silver equivalent
production compared to Q3 2016 which in turn, positively impacted
operating margins and cash flow at the Mine. Corona
continues to have a solid balance sheet and strong liquidity.
Management remains optimistic about continued operational
efficiencies and future operational and resource growth at
Yauricocha."
The following table displays selected unaudited financial
information for the three and nine months ended September 30, 2017:
|
|
|
|
|
|
|
(In thousands of US
dollars, except cash cost and revenue
per tonne metrics)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30,
2017
|
September 30,
2016
|
Var
%
|
September 30,
2017
|
September 30,
2016
|
Var
%
|
Revenue
|
$
|
39,566
|
29,532
|
34%
|
115,926
|
65,441
|
77%
|
Adjusted EBITDA
(1)
|
|
18,824
|
13,904
|
35%
|
58,245
|
20,086
|
190%
|
Cash Flow from
operations
|
|
18,844
|
13,774
|
37%
|
58,247
|
20,110
|
190%
|
Gross
profit
|
|
18,053
|
14,335
|
26%
|
55,471
|
22,008
|
152%
|
Income Tax (Expense)
Recovery
|
|
(5,223)
|
(3,924)
|
33%
|
(14,965)
|
(4,248)
|
252%
|
Net Income
(loss)
|
|
9,354
|
7,337
|
27%
|
30,997
|
9,225
|
236%
|
|
|
|
|
|
|
|
|
Net production
revenue per tonne of ore milled (2)
|
|
147.65
|
119.70
|
23%
|
152.63
|
99.10
|
54%
|
Cash cost per tonne
of ore milled (2)
|
|
62.33
|
56.17
|
11%
|
61.55
|
55.65
|
11%
|
|
|
|
|
|
|
|
|
Cash cost per silver
equivalent payable ounce (2)
|
|
9.24
|
6.80
|
36%
|
8.36
|
8.23
|
1%
|
All-In Sustaining
Cost per silver equivalent payable ounce (2)
|
|
14.60
|
12.24
|
19%
|
12.88
|
13.80
|
-7%
|
Cash cost per copper
equivalent payable pound (2)
|
|
1.08
|
0.79
|
37%
|
0.98
|
0.96
|
2%
|
All-In Sustaining
Cost per copper equivalent payable pound (2)
|
$
|
1.71
|
1.43
|
20%
|
1.51
|
1.61
|
-5%
|
|
|
|
|
|
|
|
|
(In thousands of
US dollars, unless otherwise stated)
|
|
September 30,
2017
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
24,486
|
36,877
|
|
|
|
|
Assets
|
|
139,137
|
128,769
|
|
|
|
|
Liabilities
|
|
51,191
|
62,254
|
|
|
|
|
Equity
|
|
87,945
|
66,515
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Adjusted EBITDA includes adjustments for
depletion and depreciation, interest expense and other financing
costs, interest income, share-based compensation, Foreign Exchange
(gain) loss and income taxes; see non-IFRS Performance Measures
section of the Company's MD&A.
2
All-In Sustaining Cost per silver equivalent ounce sold and
copper equivalent pound sold are non-IFRS performance measures and
include cost of sales, treatment and refining charges, sustaining
capital expenditures, general and administrative expense, and
selling expense, and exclude workers' profit sharing, depreciation
and other non-cash provisions; Cash cost per silver equivalent
ounce sold and copper equivalent pound sold, net production revenue
per tonne of ore milled, and cash cost per tonne of ore milled are
non-IFRS performance measures; see non-IFRS Performance Measures
section of the Company's MD&A.
Corona's Financial Highlights for the Three and Nine Months
Ended September 30, 2017
- Revenues of $39.6 million for Q3
2017 compared to $29.5 million in Q3
2016 and revenues of $115.9 million
for the nine months ended September 30,
2017 compared to $65.4 million
for the same period in 2016. The increase in revenues was due to a
15% increase in tonnes processed, higher head grades for copper and
zinc, higher recoveries for all metals, except gold, and the
increase in the prices of copper (26%), lead (26%), and zinc
(42%).
- Cash cost per silver equivalent ounce sold at the Yauricocha
Mine of $9.24 for Q3 2017 compared to
$6.80 for Q3 2016 and $8.36 for the nine months ended September 30, 2017 compared to $8.23 for the same period in 2016. All-in
sustaining cost ("AISC") per silver equivalent ounce sold of
$14.60 for Q3 2017 compared to
$12.24 for Q3 2016 and $12.88 for the nine months ended September 30, 2017 compared to $13.80 for the same period in 2016. The decrease
in AISC during 9M 2017 was due to an increase in silver equivalent
payable ounces as a result of higher throughput and ore feed head
grades from the increase in available production from higher grade
zones in the mine. Also, lower treatment and refining costs
incurred during Q3 and 9M 2017 resulting from improved terms within
re-negotiated sales contracts with our off-takers.
- The 19% increase in the AISC per silver equivalent ounce
relative to Q3-2016 is a result of increased Capex, including a
substantial amount of infill drilling, infrastructure improvements
including ramp and shaft development, ventilation improvements,
equipment, as well as plant improvements that were completed.
The increase was also a result of Opex including infill drilling
and drift development that will be utilized within one year.
Pricing used to calculate the AISC on an equivalent silver basis
are the Company's 2017 budgeted metal prices including:
$19.50/oz. Ag, $2.28/lb. Cu, $0.85/lb. Pb, $1.05/lb. Zn, $1,369/oz. Au.
- Adjusted EBITDA of $18.8 million
for Q3 2017 compared to $13.9 million
for Q3 2016 and $58.2 million for the
nine months ended September 30, 2017
compared to $20.1 million for the
same period in 2016. The increase in adjusted EBITDA for Q3 and 9M
2017 was due to the increase in plant throughput, metal production
and revenues, discussed above.
- Operating cash flows before movements in working capital of
$18.8 million for Q3 2017 compared to
US$13.8 million for Q3 2016 and
$58.2 million for the nine months
ended September 30, 2017 compared to
$20.1 million for the same period in
2016. The increase in operating cash flows before movements in
working capital for Q3 and 9M 2017 compared to the same period in
2016 was primarily due to the increase in revenues, discussed
previously.
- Cash and cash equivalents of $24.5
million as at September 30,
2017 compared to $36.9 million
as at December 31, 2016. Cash and
cash equivalents decreased by $12.4
million which was driven by operating cash flows of
$42.8 million, offset by capital
expenditures of $13.5 million, debt
and interest payments of $20.1
million, intercompany loans of $12.0
million, and dividends paid of $9.6
million.
- Net income of $9.4 million, or
$0.26 per share for Q3 2017 compared
to net income of $7.3 million, or
$0.20 per share for Q3 2016. Net
income of $31.0 million, or
$0.86 per share, for the nine months
ended September 30, 2017 compared to
$9.2 million, or $0.26 per share, for the same period in
2016.
Corona's Operational Highlights for the Three and Nine Months
Ended September 30, 2017:
The following table displays the production results for the
three and nine months ended September 30,
2017:
|
|
|
Yauricocha
Production
|
3 Months
Ended
|
9 Months
Ended
|
|
Q3
2017
|
Q3
2016
|
%
Var.
|
Q3
2017
|
Q3
2016
|
%
Var.
|
Tonnes processed
(mt)
|
268,178
|
237,429
|
13%
|
757,270
|
660,519
|
15%
|
|
Daily
throughput
|
3,065
|
2,713
|
13%
|
2,890
|
2,516
|
15%
|
|
Silver grade
(g/t)
|
58.94
|
106.80
|
-45%
|
71.76
|
96.73
|
-26%
|
|
Copper
grade
|
0.79%
|
0.51%
|
55%
|
0.76%
|
0.55%
|
40%
|
|
Lead grade
|
1.26%
|
2.69%
|
-53%
|
1.60%
|
2.64%
|
-39%
|
|
Zinc grade
|
3.73%
|
3.06%
|
22%
|
3.73%
|
3.02%
|
24%
|
|
Gold Grade
(g/t)
|
0.56
|
0.70
|
-21%
|
0.53
|
0.66
|
-19%
|
|
|
|
|
|
|
|
|
Silver
recovery
|
73.99%
|
66.81%
|
11%
|
75.72%
|
62.84%
|
20%
|
|
Copper
recovery
|
68.07%
|
65.33%
|
4%
|
63.84%
|
57.43%
|
11%
|
|
Lead
recovery
|
81.82%
|
75.75%
|
8%
|
84.22%
|
70.51%
|
19%
|
|
Zinc
recovery
|
89.40%
|
87.73%
|
2%
|
89.45%
|
86.61%
|
3%
|
|
Gold
Recovery
|
17.27%
|
27.25%
|
-37%
|
16.68%
|
26.85%
|
-38%
|
Silver ounces
(000's)
|
376
|
545
|
-31%
|
1,323
|
1,291
|
2%
|
Copper pounds
(000's)
|
3,178
|
1,740
|
83%
|
8,152
|
4,561
|
79%
|
Lead pounds
(000's)
|
6,112
|
10,652
|
-43%
|
22,503
|
27,145
|
-17%
|
Zinc pounds
(000's)
|
19,717
|
14,040
|
40%
|
55,758
|
38,030
|
47%
|
Gold
ounces
|
827
|
1,458
|
-43%
|
2,171
|
3,756
|
-42%
|
Silver equivalent
ounces (000's)(1)
|
2,134
|
2,071
|
3%
|
6,412
|
5,319
|
21%
|
Copper equivalent
pounds (000's)(1)
|
18,248
|
17,710
|
3%
|
54,838
|
45,491
|
21%
|
(1) Silver equivalent
ounces & copper equivalent pounds were calculated using the
following metal prices:
$19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz
Au.
|
Qualified Persons
All production technical data contained in this news release has
been reviewed and approved by Gordon
Babcock, P.Eng., Chief Operating Officer and a Qualified
Person under National Instrument 43-101 – Standards of Disclosure
for Mineral Projects.
Americo Zuzunaga, MAusIMM CP
(Mining Engineer) and Vice President of Corporate Planning is a
Qualified Person and chartered professional qualifying as a
Competent Person under the Joint Ore Reserves Committee (JORC)
Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves.
Augusto Chung, FAusIMM CP
(Metallurgist) and Consultant to Sierra Metals is a Qualified
Person and chartered professional qualifying as a competent person
on metallurgical processes.
About Sierra Metals
Sierra Metals Inc. is Canadian based growing polymetallic mining
company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico. The Company is focused on increasing
production volume and growing mineral resources. Sierra Metals has
recently had several new discoveries and still has additional
brownfield exploration opportunities at all three mines in
Peru and Mexico that are within or close proximity to
the existing mines. Additionally, the Company has large land
packages at all three mines with several prospective regional
targets providing longer term exploration upside and mineral
resource growth potential.
The Company's Common Shares trade on the Bolsa de Valores de Lima and on the Toronto Stock
Exchange under the symbol "SMT" and on the NYSE MKT Exchange under
the symbol "SMTS".
Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of Canadian and
U.S. securities laws related to the Company (collectively,
"forward-looking information"). Forward-looking information
includes, but is not limited to, statements with respect to the
Company's operations, including anticipated developments in the
Company's operations in future periods, the Company's planned
exploration activities, the adequacy of the Company's financial
resources, and other events or conditions that may occur in the
future. Statements concerning mineral reserve and resource
estimates may also be considered to constitute forward-looking
statements to the extent that they involve estimates of the
mineralization that will be encountered if and when the properties
are developed or further developed. These statements relate to
analyses and other information that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
"expects", "anticipates", "plans", "projects", "estimates",
"assumes", "intends", "strategy", "goals", "objectives",
"potential" or variations thereof, or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved, or the negative of any of these terms
and similar expressions) are not statements of historical fact and
may be forward-looking information.
Forward-looking information is subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking information, including,
without limitation, risks inherent in the mining industry including
environmental hazards, industrial accidents, unusual or unexpected
geological formations, floods, labour disruptions, explosions,
cave-ins, weather conditions and criminal activity; commodity price
fluctuations; higher operating and/or capital costs; lack of
available infrastructure; the possibility that future exploration,
development or mining results will not be consistent with the
Company's expectations; risks associated with the estimation of
mineral resources and the geology, grade and continuity of mineral
deposits and the inability to replace reserves; fluctuations in the
price of commodities used in the Company's operations; risks
related to foreign operations; changes in laws or policies, foreign
taxation, delays or the inability to obtain necessary governmental
permits; risks relating to outstanding borrowings; issues regarding
title to the Company's properties; risks related to environmental
regulation; litigation risks; risks related to uninsured hazards;
the impact of competition; volatility in the price of the Company's
securities; global financial risks; inability to attract or retain
qualified employees; potential conflicts of interest; risks related
to a controlling group of shareholders; dependence on third
parties; differences in U.S. and Canadian reporting of mineral
reserves and resources; potential dilutive transactions; foreign
currency risks; risks related to business cycles; liquidity risks;
reliance on internal control systems; credit risks, including risks
related to the Company's compliance with covenants with respect to
its BCP Facility; uncertainty of production and cost estimates for
the Yauricocha Mine, the Bolivar Mine and the Cusi Mine; and other
risks identified in the Company's filings with Canadian securities
regulators and the U.S. Securities and Exchange Commission, which
filings are available at www.sedar.com and www.sec.gov,
respectively.
This list is not exhaustive of the factors that may affect any
of the Company's forward-looking information. Forward looking
information includes statements about the future and are inherently
uncertain, and the Company's actual achievements or other future
events or conditions may differ materially from those reflected in
the forward-looking information due to a variety of risks,
uncertainties and other factors. The Company's statements
containing forward-looking information are based on the beliefs,
expectations and opinions of management on the date the statements
are made, and the Company does not assume any obligation to update
forward-looking information if circumstances or management's
beliefs, expectations or opinions should change, other than as
required by applicable law. For the reasons set forth above, one
should not place undue reliance on forward-looking information.
Note Regarding Reserve and Resource Estimates
All reserve and resource estimates reported by the Company are
calculated in accordance with the Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects and the
Canadian Institute of Mining and Metallurgy Classification system.
These standards differ significantly from the requirements of the
SEC. The differences between these standards are discussed in our
SEC filings. Mineral resources which are not mineral reserves do
not have demonstrated economic viability.
Continue to watch our progress at:
Web: www.sierrametals.com
Twitter: sierrametals
Facebook: SierraMetalsInc
LinkedIn: Sierra Metals Inc
SOURCE Sierra Metals Inc.