UPDATE PROVIDED FOR OPTIMIZED CAPEX PROFILE AT
YAURICOCHA VERSUS RECENTLY PUBLISHED NI 43-101 TECHNICAL
REPORT
TORONTO, Jan. 18, 2018 /PRNewswire/ - Sierra Metals
Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) ("Sierra
Metals" or "the Company") is pleased to report fourth quarter 2017
and full year 2017 production results, as well as 2018 production,
cost, and capex guidance.
Results are from Sierra Metals' three underground mines in
Latin America: The Yauricocha
polymetallic mine in Peru, and the
Bolivar copper and Cusi silver mines in Mexico.
2017 Consolidated Production Highlights
- Silver equivalent production of 14.9 million ounces; a 26%
increase from 2016
- Copper equivalent production of 90.4 million pounds; a 1%
decrease from 2016
- Zinc equivalent production of 193.2 million pounds; a 9%
decrease from 2016
- Total of 2.0 million tonnes processed; a 2% decrease from
2016
- Completion of key aspects of operational improvements and
turnaround plan in Mexico
Fourth Quarter 2017 Production Highlights
- Silver equivalent production of 4.1 million ounces; a 15%
increase from Q4 2016
- Copper equivalent production of 21.9 million pounds; a 12%
decrease from Q4 2016
- Zinc equivalent production of 47.3 million pounds; an 8%
decrease from Q4 2016
- Total of 498,199 tonnes processed; a 4% decrease from Q4
2016
- Tonnage at Bolivar and Cusi increased during Q4 2017 as key
components of the operational improvement and turnaround plan were
completed
During 2017, silver equivalent production increased by 26%,
copper equivalent production decreased 1%, and zinc equivalent
production decreased by 9% compared to 2016. During Q4 2017, silver
equivalent production increased by 15%, copper equivalent
production decreased 12%, and zinc equivalent production decreased
by 8% compared to Q4 2016. The decrease in metal production was due
to lower production in Mexico,
partially offset by record throughput, which led to an increase in
production, in Peru. The temporary decrease in metal
production in Q4 2017 compared to Q4 2016 was primarily due to
lower throughput, head grades, and recoveries at the Bolivar Mine,
and decreases in throughput and recoveries at the Cusi Mine.
Similar to the successful program at Yauricocha in Peru, which began in 2015, the Company has
engaged in an operation turnaround program in Mexico to modernize operations, improve
production, and lower costs. The Company has already realized
a 2% increase in throughput at Bolivar and a 23% increase at Cusi
in Q4 2017 compared to Q3 2017, and further throughput increases
are expected to continue during the first half of 2018. Equivalent
metal production variances are partially the result of differences
in realized metal prices used in the equivalent metal calculations
for both periods.
Igor Gonzales, President and CEO
of Sierra Metals, commented: "The Company ended 2017 with sound
production due to a very strong performance at Yauricocha, where we
continue to reap the benefits of a successful operational
improvements program resulting in higher tonnages, in addition to
higher-grade material discovered through our successful brownfield
exploration programs.
Mexican operations have seen a quarter over quarter
improvement compared to Q3 2017. At Bolivar, there have been
increases in tonnages as a result of new equipment purchases, which
have allowed more minable stopes to be incorporated into the mine
plan. At Cusi, the Company has changed its focus from mining the
existing narrow vein structures to the recently discovered
Santa Rosa de Lima zone, which has
significantly larger widths and higher grades. Cusi reported a
significant improvement in metal recoveries, and the 2018 guidance
is based on projections which reflect the potential for record
silver production and lower costs, as a result of the restructuring
program performed during the second half of 2017, which focused on
the mining of the Santa Rosa de
Lima structure. Both mines have also benefitted from
successful improvement efforts in metallurgical recoveries, which
have increased during Q4 2017 compared to previous
quarters."
He concluded, "The groundwork has been set for an important
year at Sierra in 2018. The modernizing and implementation of best
operational practices should allow the Company to increase metal
production and EBITDA to new highs. Our ongoing aggressive
brownfield exploration programs at all mines should also lead to
further significant growth in reserves and resources, and add to
the value of our assets during the year ahead."
Consolidated Production Results
|
|
|
Consolidated
Production
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Q4
2017
|
Q4
2016
|
%
Var.
|
|
|
|
|
|
|
|
Tonnes processed
(mt)
|
498,199
|
517,705
|
-4%
|
1,998,738
|
2,034,465
|
-2%
|
|
Daily
throughput
|
5,694
|
5,917
|
-4%
|
5,711
|
5,813
|
-2%
|
|
|
|
|
|
|
|
Silver ounces
(000's)
|
496
|
789
|
-37%
|
2,317
|
2,979
|
-22%
|
Copper pounds
(000's)
|
7,471
|
6,153
|
21%
|
26,775
|
23,390
|
14%
|
Lead pounds
(000's)
|
5,736
|
9,990
|
-43%
|
29,704
|
40,551
|
-27%
|
Zinc pounds
(000's)
|
19,545
|
17,039
|
15%
|
76,088
|
56,610
|
34%
|
Gold
ounces
|
1,591
|
1,867
|
-15%
|
6,197
|
8,604
|
-28%
|
|
|
|
|
|
|
|
Silver equivalent
ounces (000's)(1)
|
4,078
|
3,533
|
15%
|
14,865
|
11,798
|
26%
|
Copper equivalent
pounds (000's)(1)
|
21,856
|
24,969
|
-12%
|
90,354
|
91,398
|
-1%
|
Zinc equivalent
pounds (000's)(1)
|
47,287
|
51,229
|
-8%
|
193,152
|
211,583
|
-9%
|
|
|
|
|
|
|
|
(1) Silver equivalent
ounces and copper and zinc equivalent pounds for Q4 2017 were
calculated using the following realized prices: $16.77/oz Ag,
$3.13/lb Cu, $1.11/lb Pb, $1.45/lb Zn, $1,282/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for Q4 2016
were calculated using the following realized prices: $16.82/oz Ag,
$2.38/lb Cu, $0.95/lb Pb, $1.16/lb Zn, $1,210/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 12M
2017 were calculated using the following realized prices: $17.14/oz
Ag, $2.82/lb Cu, $1.06/lb Pb, $1.32/lb Zn, $1,265/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 12M
2016 were calculated using the following realized prices: $17.08/oz
Ag, $2.21/lb Cu, $/0.85lb Pb, $0.95/lb Zn, $1,254/oz
Au.
|
Yauricocha Mine, Peru
The Yauricocha Mine processed a total of 1,023,491 tonnes during
2017, representing a 14% increase from 2016. The mine
processed a total of 254,933 tonnes in Q4 2017, representing an 8%
increase compared to Q4 2016. Higher metal production was driven by
increased throughput, higher copper and zinc head grades, and
higher recoveries of all metals, except gold, which were a
consequence of higher head grades in the ore sources available to
be mined, as the Esperanza Zone and Cuerpos Chicos continued to
contribute to the metal production.
Year over year zinc equivalent production was 4% higher in 2017
compared to the prior year. Copper Production was 87% higher and
zinc production 37% higher. This was offset by a 10% decrease in
silver production, a 23% decrease in lead production and a 38%
decrease in gold production from 2016. The Company continued to see
positive improvements from the restructuring at Yauricocha with
increased throughput; however, slightly lower grades were noted
with increased contribution from the Esperanza zone into the production schedule in
Q4 2017, as evidenced a 3% decrease in zinc equivalent production
over Q4 2016. During Q4 2017, the Company saw a significant 107%
increase in the production of copper and a 16% increase in the
production of zinc, offset by decreases in production of silver
(40%), lead (42%) and gold (20%) compared to Q4 2016.
A summary of production from the Yauricocha Mine for Q4 2017 has
been provided below:
|
|
|
Yauricocha
Production
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Q4
2017
|
Q4
2016
|
%
Var.
|
|
|
|
|
|
|
|
Tonnes processed
(mt)
|
254,933
|
236,650
|
8%
|
1,023,491
|
897,169
|
14%
|
|
Daily
throughput
|
2,914
|
2,705
|
8%
|
2,924
|
2,563
|
14%
|
|
|
|
|
|
|
|
|
Silver grade
(g/t)
|
53.57
|
100.37
|
-47%
|
67.13
|
97.69
|
-31%
|
|
Copper
grade
|
0.80%
|
0.51%
|
58%
|
0.79%
|
0.54%
|
48%
|
|
Lead grade
|
1.19%
|
2.18%
|
-45%
|
1.48%
|
2.52%
|
-41%
|
|
Zinc grade
|
3.91%
|
3.63%
|
8%
|
3.74%
|
3.18%
|
18%
|
|
Gold Grade
(g/t)
|
0.55
|
0.59
|
-7%
|
0.54
|
0.64
|
-16%
|
|
|
|
|
|
|
|
|
Silver
recovery
|
75.13%
|
72.05%
|
4%
|
74.82%
|
65.34%
|
15%
|
|
Copper
recovery
|
78.86%
|
64.75%
|
22%
|
65.45%
|
59.26%
|
10%
|
|
Lead
recovery
|
81.32%
|
81.72%
|
0%
|
83.64%
|
73.07%
|
14%
|
|
Zinc
recovery
|
88.25%
|
88.49%
|
0%
|
89.14%
|
87.18%
|
2%
|
|
Gold
Recovery
|
16.02%
|
20.06%
|
-20%
|
16.30%
|
25.19%
|
-35%
|
|
|
|
|
|
|
|
Silver ounces
(000's)
|
330
|
550
|
-40%
|
1,653
|
1,841
|
-10%
|
Copper pounds
(000's)
|
3,567
|
1,720
|
107%
|
11,719
|
6,281
|
87%
|
Lead pounds
(000's)
|
5,431
|
9,295
|
-42%
|
27,934
|
36,440
|
-23%
|
Zinc pounds
(000's)
|
19,393
|
16,776
|
16%
|
75,151
|
54,805
|
37%
|
Gold
ounces
|
723
|
908
|
-20%
|
2,894
|
4,664
|
-38%
|
|
|
|
|
|
|
|
Zinc equivalent
pounds (000's)(1)
|
35,758
|
36,841
|
-3%
|
146,816
|
140,928
|
4%
|
|
|
|
|
|
|
|
(1) Zinc equivalent
pounds for Q4 2017 were calculated using the following realized
prices: $16.77/oz Ag, $3.13/lb Cu, $1.11/lb Pb, $1.45/lb Zn,
$1,282/oz Au. Zinc equivalent pounds for Q4 2016 were calculated
using the following realized prices: $16.82/oz Ag, $2.38/lb Cu,
$0.95/lb Pb, $1.16/lb Zn, $1,210/oz Au. Zinc equivalent pounds for
12M 2017 were calculated using the following realized prices:
$17.14/oz Ag, $2.82/lb Cu, $1.06/lb Pb, $1.32/lb Zn, $1,265/oz Au.
Zinc equivalent pounds for 12M 2016 were calculated using the
following realized prices: $17.08/oz Ag, $2.21/lb Cu, $/0.85lb Pb,
$0.95/lb Zn, $1,254/oz Au.
|
Bolivar Mine, Mexico
The Bolivar Mine processed 887,237 tonnes in 2017, representing
a 7% decrease over 2016. Q4 2017 throughput was 226,986 tonnes,
which was 7% lower when compared to Q4 2016. The lower throughput
and recoveries, along with lower head grades encountered, resulted
in a 16% decrease in copper equivalent production in Q4 2017
compared to Q4 2016. The decrease in throughput was due to the lack
of availability of equipment required to mine current production
stopes and minable ore zones, as well as a lack of development
within the mine. The focus remains on increasing tonnage at Bolivar
through the commissioning of the newly acquired equipment, all of
which has arrived was commissioned during Q4 2017. We continue to
define higher grade ore sources through further development, which
are expected to come into the mine plan in the future.
Metal production at the Bolivar Mine decreased in 2017 compared
to 2016 with copper production 12% lower, silver production 18%
lower and gold production 4% lower. In Q4 2017, copper
production decreased by 12% to 3,904,000 pounds, silver production
decreased 15% to 84,000 ounces, and gold production decreased 1% to
791 ounces compared to Q4 2016. The 16% decrease in metal
production was driven by lower throughput, lower head grades and
lower recoveries for all metals, with the exception of gold
recoveries.
A summary of production for the Bolivar Mine for Q4 2017 has
been provided below:
|
|
|
Bolivar
Production
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Q4
2017
|
Q4
2016
|
%
Var.
|
|
|
|
|
|
|
|
Tonnes processed
(mt)
|
226,986
|
245,000
|
-7%
|
887,237
|
950,398
|
-7%
|
|
Daily
throughput
|
2,594
|
2,800
|
-7%
|
2,535
|
2,715
|
-7%
|
|
|
|
|
|
|
|
|
Copper
grade
|
0.94%
|
0.99%
|
-5%
|
0.96%
|
1.00%
|
-3%
|
|
Silver grade
(g/t)
|
14.67
|
15.53
|
-6%
|
14.93
|
16.72
|
-11%
|
|
Gold grade
(g/t)
|
0.16
|
0.18
|
-13%
|
0.17
|
0.19
|
-12%
|
|
|
|
|
|
|
|
|
Copper
recovery
|
83.03%
|
83.03%
|
0%
|
79.82%
|
81.73%
|
-2%
|
|
Silver
recovery
|
78.35%
|
80.42%
|
-3%
|
76.88%
|
77.84%
|
-1%
|
|
Gold
recovery
|
68.42%
|
55.62%
|
23%
|
59.50%
|
50.55%
|
18%
|
|
|
|
|
|
|
|
Copper pounds
(000's)
|
3,904
|
4,433
|
-12%
|
15,056
|
17,109
|
-12%
|
Silver ounces
(000's)
|
84
|
98
|
-15%
|
327
|
398
|
-18%
|
Gold
ounces
|
791
|
801
|
-1%
|
2,880
|
2,986
|
-4%
|
|
|
|
|
|
|
|
Copper equivalent
pounds (000's)(1)
|
4,677
|
5,536
|
-16%
|
18,338
|
21,889
|
-16%
|
|
|
|
|
|
|
|
(1) Copper equivalent
pounds for Q4 2017 were calculated using the following realized
prices: $16.77/oz Ag, $3.13/lb Cu, $1.11/lb Pb, $1.45/lb Zn,
$1,282/oz Au. Copper equivalent pounds for Q4 2016 were calculated
using the following realized prices: $16.82/oz Ag, $2.38/lb Cu,
$0.95/lb Pb, $1.16/lb Zn, $1,210/oz Au. Copper equivalent pounds
for 12M 2017 were calculated using the following realized prices:
$17.14/oz Ag, $2.82/lb Cu, $1.06/lb Pb, $1.32/lb Zn, $1,265/oz Au.
Copper equivalent pounds for 12M 2016 were calculated using the
following realized prices: $17.08/oz Ag, $2.21/lb Cu, $/0.85lb Pb,
$0.95/lb Zn, $1,254/oz Au.
|
Cusi Mine, Mexico
Annual production at the Cusi Mine was 88,011 tonnes in 2017,
which was 53% lower than 2016. Total ore processed decreased 55% to
16,280 tonnes during Q4 2017 compared to Q4 2016. The lower
throughput was partially offset by increased head grades for gold
and silver and increased recoveries of all metals except gold, and
resulted in a 42% decrease in silver equivalent production in Q4
2017 compared to Q4 2016. Recovery improvements at Cusi also
helped, with metallurgical recoveries increasing in Q4 2017
compared to previous quarters.
Metal production decreased in 2017 compared to 2016 for all
metals including silver (54%), gold (56%), lead (57%) and zinc
(48%). Silver production decreased 41% to 82,000 ounces, gold
production decreased 51% to 77 ounces, lead production decreased
56% to 305,000 pounds and zinc production decreased 42% to 152,000
pounds during Q4 2017 compared to Q4 2016.
The lower throughput was the result of the Company refocusing
its efforts away from the existing structures to the recently
discovered Santa Rosa de Lima
structure, which is wider and has higher silver grades compared to
the narrow veins currently being mined. The Company remains
focused on the development of the Santa
Rosa de Lima zone, developing drifts to mine this area and
with production ramping up from this area, which is expected to
continually increase into Q2 2018 when full mill feed capacity will
come from this new zone.
A summary of production for the Cusi Mine for Q4 2017 has been
provided below:
|
|
|
Cusi
Production
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Q4
2017
|
Q4
2016
|
%
Var.
|
|
|
|
|
|
|
|
Tonnes processed
(mt)
|
16,280
|
36,055
|
-55%
|
88,011
|
186,898
|
-53%
|
|
Daily
throughput
|
186
|
412
|
-55%
|
251
|
534
|
-53%
|
|
|
|
|
|
|
|
|
Silver grade
(g/t)
|
178.60
|
172.70
|
3%
|
164.93
|
171.78
|
-4%
|
|
Gold grade
(g/t)
|
0.25
|
0.23
|
8%
|
0.26
|
0.26
|
0%
|
|
Lead grade
|
0.97%
|
1.13%
|
-14%
|
1.12%
|
1.21%
|
-7%
|
|
Zinc grade
|
1.00%
|
1.04%
|
-4%
|
1.13%
|
1.16%
|
-2%
|
|
|
|
|
|
|
|
|
Silver
recovery
|
88.15%
|
70.04%
|
26%
|
72.17%
|
71.66%
|
1%
|
|
Gold
recovery
|
58.09%
|
58.16%
|
0%
|
58.40%
|
61.82%
|
-6%
|
|
Lead
recovery
|
87.65%
|
77.43%
|
13%
|
81.26%
|
82.24%
|
-1%
|
|
Zinc
recovery
|
42.50%
|
31.86%
|
33%
|
42.56%
|
37.72%
|
13%
|
|
|
|
|
|
|
|
Silver ounces
(000's)
|
82
|
140
|
-41%
|
337
|
740
|
-54%
|
Gold
ounces
|
77
|
158
|
-51%
|
423
|
954
|
-56%
|
Lead pounds
(000's)
|
305
|
695
|
-56%
|
1,769
|
4,110
|
-57%
|
Zinc pounds
(000's)
|
152
|
263
|
-42%
|
937
|
1,804
|
-48%
|
|
|
|
|
|
|
|
Silver equivalent
ounces (000's)(1)
|
122
|
209
|
-42%
|
549
|
1,114
|
-51%
|
|
|
|
|
|
|
|
(1) Silver equivalent
ounces for Q4 2017 were calculated using the following realized
prices: $16.77/oz Ag, $3.13/lb Cu, $1.11/lb Pb, $1.45/lb Zn,
$1,282/oz Au. Silver equivalent ounces for Q4 2016 were calculated
using the following realized prices: $16.82/oz Ag, $2.38/lb Cu,
$0.95/lb Pb, $1.16/lb Zn, $1,210/oz Au. Silver equivalent ounces
for 12M 2017 were calculated using the following realized prices:
$17.14/oz Ag, $2.82/lb Cu, $1.06/lb Pb, $1.32/lb Zn, $1,265/oz Au.
Silver equivalent ounces for 12M 2016 were calculated using the
following realized prices: $17.08/oz Ag, $2.21/lb Cu, $/0.85lb Pb,
$0.95/lb Zn, $1,254/oz Au.
|
2018 Production and Cost Guidance
The Company anticipates that 2018 silver equivalent production
will range between 13.9 and 16.2 million ounces, copper equivalent
production will range between 89.2 and 104.0 million pounds, and
zinc equivalent production will range between 183.8 and 214.5
million pounds. The forecasted range is a result of increased
throughput, production, and higher recoveries at Bolivar and
Cusi. Yauricocha will see consistently strong, albeit flat
levels of throughput in 2018 due to a rehabilitation of the lower
part of the Mascota shaft in Q2
2018, which will slightly lower throughput rates during that time
period.
A summary of realized metal pricing for Q4 2017 has been
provided below:
|
|
|
Realized
Prices
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Q4
2017
|
Q4
2016
|
%
Var.
|
Ag $/oz
|
16.77
|
16.82
|
0%
|
17.14
|
17.08
|
0%
|
Cu $/lb
|
3.13
|
2.38
|
31%
|
2.82
|
2.21
|
28%
|
Pb $/lb
|
1.11
|
0.95
|
17%
|
1.06
|
0.85
|
25%
|
Zn $/lb
|
1.45
|
1.16
|
25%
|
1.32
|
0.95
|
38%
|
Au $/oz
|
1,282
|
1,210
|
6%
|
1,265
|
1,254
|
1%
|
A table summarizing 2018 production guidance has been provided
below:
|
|
|
|
2018
Guidance
|
2017
|
|
Low
|
High
|
Actual
|
Silver ounces
(000's)
|
2,474
|
2,886
|
2,317
|
Copper pounds
(000's)
|
32,700
|
38,100
|
26,775
|
Lead pounds
(000's)
|
19,100
|
22,300
|
29,704
|
Zinc pounds
(000's)
|
62,900
|
73,400
|
76,088
|
Gold
ounces
|
6,700
|
7,800
|
6,197
|
Silver equivalent
ounces (000's)(1)
|
13,900
|
16,210
|
14,865
|
Copper equivalent
pounds (000's)(1)
|
89,184
|
104,005
|
90,354
|
Zinc equivalent
pounds (000's)(1)
|
183,830
|
214,468
|
193,152
|
(1) Silver equivalent
ounces, copper and zinc equivalent pounds for 2018 were calculated
using the following metal prices: $18.25/oz Ag, $3.00/lb Cu,
$1.38/lb Pb, $1.05/lb Zn, $1,291/oz Au. Silver equivalent ounces,
copper and zinc equivalent pounds for 12M 2017 were calculated
using the following realized prices: $17.14/oz Ag, $2.82/lb Cu,
$1.06/lb Pb, $1.32/lb Zn, $1,265/oz Au.
|
A mine by mine breakdown of 2018 production guidance, cash costs
and all-in sustaining costs ("AISC") are included in the table
below. Cash costs and AISC guidance is shown per payable zinc
equivalent pound at Yauricocha, copper equivalent pound at Bolivar,
and silver equivalent ounce at Cusi.
|
|
|
|
|
Mine
|
|
Equivalent
Production Range
|
Cash Costs per
ZnEqLb or
CuEqLb or
AgEqOz Sold
|
AISC ($)* per
ZnEqLb or
CuEqLb or
AgEqOz Sold
|
Yauricocha
|
Zinc Eq Lbs
(000's)
|
123,897 -
144,546
|
$0.62/lb
|
$0.78/lb
|
Bolivar
|
Copper Eq Lbs
(000's)
|
21,986 -
25,651
|
$1.60/lb
|
$1.96/lb
|
Cusi
|
Silver Eq Ozs
(000's)
|
1,205 -
1,406
|
$11.12/oz
|
$14.28/oz
|
*AISC includes
Treatment and Refining Charges, Selling Costs, G&A Costs and
Sustaining Capex
|
|
(1) 2018 Silver
equivalent ounces, copper and zinc equivalent pounds were
calculated using the following metal prices: $18.25/oz Ag, $3.00/lb
Cu, $1.05/lb Pb, $1.38/lb Zn, $1,291/oz Au
|
2018 Capital Expenditures
In 2018, the Company plans to invest a total of $49 million on capital expenditures, including
$13.1 million for sustaining capital
requirements and $35.7 million for
expansion, growth projects and exploration expenses. These
capital expenditures will allow Sierra Metals to continue to
significantly grow mineral resources and increase production, which
will provide increased cash flow and lower cash costs. This program
will be funded by operating cash flow.
The 2018 budget includes several capital investments for
property, plant and equipment; underground development;
exploration; and corporate projects including tunnel completion,
shaft deepening and rehabilitation at the Yauricocha Mine, and
improvements to existing tailings deposition facilities at the
Bolivar and Cusi Mines.
Management will continue to review metal prices and retains the
option to adjust the 2018 budget should metal prices experience any
dramatic changes within the year.
A breakdown by mine of the throughput and planned capital
investments is shown below:
The Yauricocha Mine in Peru
plans to process up to 1.0 million tonnes (3,000 tpd) in 2018.
Sustaining capex will be approximately $8.4
million and growth capex will be approximately $19.3 million.
2018 major capital investments include:
- $6.0 million for deepening of
the Yauricocha Shaft
- $1.8 million for
rehabilitation of the lower portion of Mascota Shaft
- $2.7 million for the
completion of the Yauricocha Tunnel
- $3.2 million
ventilation
- $6.0 million for brownfield
exploration and existing definition drilling and
development
- $1.1 million for concentrator
plant
- $1.0 million for mine
camp
- $3.3 million for
equipment
The Bolivar Mine in Mexico
plans to process up to 1.2 million tonnes, with initial production
at 3,000 tpd with an objective to reach 3,500 tpd by year end in
2018. Sustaining capex will be approximately $2.8 million and growth capex will be
approximately $9.0 million.
2018 major capital investments include:
- $1.0 million for tailings
deposition facility expansion
- $5.1 million for brownfield
exploration and existing definition drilling and
development
- $3.0 million for concentrator
plant
- $2.7 million for
equipment
The Cusi Mine in Mexico plans
to process up to 201,540 tonnes, ramping up from 300 tpd with an
objective to reach 650 tpd in Q2 2018. Sustaining capex will
be approximately $1.9 million and
growth capex will be $7.4
million.
2018 major capital investments include:
- $1.5 million for tailings
deposition facility
- $4.3 million for brownfield
exploration and existing definition drilling and
development
- $1.4 million for
equipment
- $1.9 million for concentrator
plant
Update to the Yauricocha Capex included in the recently
published NI 43-101 Technical Report
The technical report filed on SEDAR on November 10, 2017 noted the inclusion in reserves
of 9M tonnes. As indicated in the
report, during the years 2018, 2019 and 2020, capital expenditures
would have amounted to approximately $70
million, and this estimate had the shaft sinking down to the
1400 level.
Management has revised some of the estimated capex, and the
related activity program for the expenditures was reduced to 2
years from the 3-year timeline set out in the November 2017 technical report.
The capital expenditures included in the technical report has
been reduced by $18M, to $52M (capex expected to be spent in 2018 is
$28M). This reduction resulted in the
elimination of 130 meters of shaft sinking, the elimination of the
proposed 1370 level station, and the elimination of the 1400 level
loading and spill pocket. This program does not compromise the
ability to access the 9M tonnes of
reserves delineated in the technical report. This revised capex
estimate reflects the necessary capital required to mine the
existing 9M tonnes of reserves
included in the technical report.
Quality Control
All 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 key discoveries and still has many more
exciting brownfield exploration opportunities at all three Mines in
Peru and Mexico that are within close proximity to the
existing mines. Additionally, the Company also 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 American Exchange
under the symbol "SMTS".
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Inc
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 were
calculated in accordance with the Canadian National Instrument
43-101 and the Canadian Institute of Mining and Metallurgy
Classification system. These standards differ significantly from
the requirements of the U.S. Securities and Exchange Commission
("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.
SOURCE Sierra Metals Inc.