CONFERENCE CALL MAY 11,
2018 AT 10:30 AM (EDT)
(All $ figures reported in USD)
- Adjusted EBITDA of $27.4
million in Q1 2018 increased 8% from $25.4 million in Q1 2017
- Operating cash flows before movements in working capital of
$27.3 million in Q1 2018 increased
15% from $23.7 million in Q1
2017
- Revenue from metals payable of $61.7
million in Q1 2018 increased by 13% from $54.5 million in Q1 2017
- Q1 2018 consolidated copper production of 8.1 million
pounds, consolidated silver production of 0.6 million ounces, and
consolidated zinc production of 18.2 million pounds; an 11%
increase, 15% decrease, and flat production respectively, from Q1
2017, and within production guidance(1)
- Record quarterly throughput at Yauricocha and Bolivar
Mines
- Completion of some of the key aspects of the operational
improvements and turnaround plan in Mexico
- $25.5 million of cash and cash
equivalents as at March 31,
2018
- Net Debt of $41.3 million as
at March 31, 2018
- Shareholder conference call to be held Friday May 11, 2018 at 10:30 AM (EDT)
(1) Silver equivalent ounces and copper and zinc
equivalent pounds for Q1 2018 were calculated using the following
realized prices: $16.75/oz Ag,
$3.14/lb Cu, $1.15/lb Pb, $1.56/lb Zn, $1,334/oz Au. Silver equivalent ounces and copper
and zinc equivalent pounds for Q1 2017 were calculated using the
following realized prices: $17.71/oz
Ag, $2.64/lb Cu, $1.04/lb Pb, $1.27/lb Zn, $1,231/oz Au.
TORONTO, May 9, 2018 /CNW/ - Sierra Metals
Inc. (TSX:SMT)(BVL:SMT)(NYSE American:SMTS) ("Sierra Metals" or
the "Company") today reported revenue of $61.7 million and adjusted EBITDA of $27.4 million on throughput of 557,710 tonnes and
metal production of 4.4 million silver equivalent ounces, 23.4
million copper equivalent pounds, and 47.2 million zinc equivalent
pounds for the three month period ended March 31, 2018.
The Company achieved record quarterly throughput from both the
Yauricocha and Bolivar Mines, continuing the successful production
increases realized during 2017. Consolidated production of copper
increased 11%, silver decreased 15%, lead decreased 31%, zinc was
flat, and gold increased 10% compared to Q1 2017.
The Company continues to see positive gains and momentum from
the progress of the operational turnaround program implemented in
Mexico during the second half of
2017, to modernize operations, improve production, and lower costs.
The Company has already realized a 14% increase in throughput at
Bolivar and a 66% increase at Cusi in Q1 2018 compared to Q4 2017,
and further throughput increases are expected to continue during
the rest of the year. Copper equivalent production at Bolivar
increased 16%, and silver equivalent production at Cusi increased
12% in Q1 2018 compared to Q4 2017.
Igor Gonzales, President and CEO
of Sierra Metals stated: "Q1 2018 represents an inflection point
for the Company as we begin to realize returns on our capital
investments and operational improvement efforts with improving
operating performance in addition to the production of higher value
ore, strengthening our asset base, and continuing to increase the
mineral reserves and resources at each of our mines.
Yauricocha continues to perform with record throughput in the
first quarter as the Company continues to reap the benefits of a
successful operational improvements program. Additionally, improved
realized metal prices contributed to higher revenue and improved
net production revenue per tonne demonstrating the successful
capital investments made. At Bolivar, the effects of the
Mexico turn-around program are
very noticeable, and we are hitting our production targets and
realized record throughput. We also had lower all-in
sustaining costs which were below guidance. At Cusi, we continue to
ramp up tonnage and realize quarter over quarter improvements. We
are continuing to campaign development ore from the Santa Rosa de Lima zone with increasing
throughput rates, while selectively mining structures in the older
part of the mine. The Company expects to reach the existing
mill's capacity of 650 tonnes per day in Q2-2018. The addition of
another ball mill in the second half of 2018 will see the capacity
increase to approximately 1,200 tonnes per day in early
2019."
He concluded, "Sierra Metals continues to have a very solid
balance sheet, and strong liquidity, to meet its operational and
growth expenditure requirements. Management continues to be
very optimistic for the remainder of the year as the groundwork for
continued improvements, through the modernizing and implementation
of best operational practices has been set. Our ongoing, aggressive
and lower-risk brownfield exploration programs at all three mines
should also lead to further significant growth in mineral reserves
and resources and add to the value of our assets during the year
ahead."
The following table displays selected financial and operational
information for the three months ended March
31, 2018:
|
Three Months
Ended
|
(In thousands of
dollars, except per share and cash cost amounts,
consolidated
figures unless
noted otherwise)
|
March 31,
2018
|
March 31,
2017
|
Operating
|
|
|
|
|
|
Ore Processed /
Tonnes Milled
|
|
557,710
|
|
529,695
|
|
Silver Ounces
Produced (000's)
|
|
594
|
|
698
|
|
Copper Pounds
Produced (000's)
|
|
8,090
|
|
7,290
|
|
Lead Pounds Produced
(000's)
|
|
6,312
|
|
9,143
|
|
Zinc Pounds Produced
(000's)
|
|
18,214
|
|
18,137
|
|
Gold Ounces
Produced
|
|
1,952
|
|
1,777
|
|
Copper Equivalent
Pounds Produced (000's)1
|
|
23,445
|
|
25,126
|
|
Zinc Equivalent
Pounds Produced (000's)1
|
|
47,209
|
|
52,231
|
|
Silver Equivalent
Ounces Produced (000's)1
|
|
4,394
|
|
3,746
|
|
|
|
|
|
|
Cash Cost per Tonne
Processed
|
$
|
46.66
|
$
|
39.84
|
|
Cost of sales per
AgEqOz
|
$
|
7.15
|
$
|
7.09
|
|
Cash Cost per
AgEqOz2
|
$
|
6.77
|
$
|
6.69
|
|
AISC per
AgEqOz2
|
$
|
9.85
|
$
|
10.44
|
|
Cost of sales per
CuEqLb2
|
$
|
1.34
|
$
|
1.06
|
|
Cash Cost per
CuEqLb2
|
$
|
1.27
|
$
|
1.00
|
|
AISC per
CuEqLb2
|
$
|
1.85
|
$
|
1.56
|
|
Cost of sales per
ZnEqLb2
|
$
|
0.67
|
$
|
0.51
|
|
Cash Cost per
ZnEqLb2
|
$
|
0.63
|
$
|
0.48
|
|
AISC per
ZnEqLb2
|
$
|
0.92
|
$
|
0.75
|
|
|
|
|
|
|
Cash Cost per ZnEqLb
(Yauricocha)2
|
$
|
0.57
|
$
|
0.42
|
|
AISC per ZnEqLb
(Yauricocha)2
|
$
|
0.82
|
$
|
0.61
|
|
Cash Cost per CuEqLb
(Bolivar)2
|
$
|
1.29
|
$
|
1.20
|
|
AISC per CuEqLb
(Bolivar)2
|
$
|
1.94
|
$
|
1.98
|
|
Cash Cost per AgEqOz
(Cusi)2
|
$
|
18.34
|
$
|
9.78
|
|
AISC per AgEqOz
(Cusi)2
|
$
|
28.33
|
$
|
20.55
|
Financial
|
|
|
|
|
|
Revenues
|
$
|
61,675
|
$
|
54,518
|
|
Adjusted
EBITDA2
|
$
|
27,403
|
$
|
25,361
|
|
Operating cash flows
before movements in working capital
|
$
|
27,348
|
$
|
23,707
|
|
Adjusted net income
attributable to shareholders2
|
$
|
11,187
|
$
|
10,990
|
|
Net income
attributable to shareholders
|
$
|
8,703
|
$
|
2,558
|
|
Cash and cash
equivalents
|
$
|
25,514
|
$
|
37,959
|
|
Working
capital
|
$
|
(1,576)
|
$
|
12,442
|
|
|
|
|
|
|
(1) Silver
equivalent ounces, Copper equivalent pounds, and Zinc equivalent
pounds for Q1 2018 were calculated using the following realized
prices: $16.75/oz Ag, $3.14/lb Cu, $1.15/lb Pb, $1.56/lb Zn,
$1,334/oz Au. Silver equivalent ounces, Copper equivalent pounds,
and Zinc equivalent pounds for Q1 2017 were calculated using the
following realized prices: $17.71/oz Ag, $2.64/lb Cu, $1.04/lb Pb,
$1.27/lb Zn, $1,231/oz Au.
|
(2)
This is a non-IFRS performance measure, see Non-IFRS Performance
Measures section of the MD&A.
|
Q1 2018 Financial Highlights
Revenue from metals payable of $61.7
million in Q1 2018 increased by 13% from $54.5 million in Q1 2017. Higher revenues are
primarily attributable to the 5% increase in throughput, the
increase in copper, and gold head grades, and higher recoveries for
copper at Yauricocha; and the increase in the prices of copper
(19%), lead (11%), zinc (23%), and gold (8%) in Q1 2018 compared to
Q1 2017; this was partially offset by a 22% decrease in throughput
and lower head grades and recoveries for all metals, except lead
recoveries, at Cusi; while the 6% increase in throughput, higher
silver head grades, silver and gold recoveries, and the higher
copper price resulted in Bolivar's revenues being consistent with
Q1 2017.
Yauricocha's cash cost per zinc equivalent payable pound was
$0.57 (Q1 2017 - $0.42), and AISC per zinc equivalent payable
pound of $0.82 (Q1 2017 -
$0.61). The increase in the AISC per
zinc equivalent payable pound for Q1 2018 compared to Q1 2017 were
a result of fewer zinc equivalent pounds sold, despite higher
throughput due to lower head grades; as well as slight increases to
administrative costs and operating costs which included infill
drilling and drift development costs that will be utilized within
one year, and thus are included in opex.
Bolivar's cash cost per copper equivalent payable pound was
$1.29 (Q1 2017 - $1.20), and AISC per copper equivalent payable
pound was $1.94 (Q1 2017 -
$1.98) for Q1 2018 compared to Q1
2017. The decrease in the AISC per copper equivalent payable pound
during Q1 2018 was due to a decrease in sustaining capital
expenditures, as there were additional mine development costs, and
various equipment purchases made by the Company during the Q1 2017
in an effort to improve equipment availability and increase
tonnage.
Cusi's cash cost per silver equivalent payable ounce was
$18.34 (Q1 2017 - $9.78), and AISC per silver equivalent payable
ounce was $28.33 (Q1 2017 -
$20.55) for Q1 2018 compared to Q1
2017. AISC per silver equivalent payable ounce increased due to the
decline in throughput which resulted in fewer silver equivalent
payable ounces as the Company continued its refocused efforts on
completing access, development and production from the Santa Rosa de Lima zone which contains wider
structures and higher silver grades.
Adjusted EBITDA(1) of $27.4
million for Q1 2018 increased 8% compared to $25.4 million in Q1 2017. The increase in
adjusted EBITDA in Q1 2018 was primarily due to the $8.1 million increase in revenues at Yauricocha,
discussed previously.
Cash flow generated from operations before movements in working
capital of $27.3 million for Q1 2018
increased 15% compared to $23.7
million in Q1 2017. The increase in operating cash flow is
mainly the result of higher revenues generated and higher gross
margins realized.
Cash and cash equivalents of $25.5
million and working capital of $(1.6)
million as at March 31, 2018
compared to $23.9 million and
$(6.8) million, respectively, at the
end of 2017. Cash and cash equivalents have increased by
$1.6 million during Q1 2018 due to
$11.5 million of operating cash
flows, and $5.0 million drawn down
from a short term revolving line of credit, being offset by capital
expenditures incurred in Mexico
and Peru of $(9.7) million, repayment of loans, credit
facilities and interest of $(4.2)
million, dividends paid to non-controlling interest
shareholders of $(1.1) million.
Included in the $11.5 million of
operating cash flows were negative changes in non-cash working
capital items of $3.5 million due to
the decrease in income tax payable as at March 31,
2018.
(1) This is a non-IFRS performance measure, see
Non-IFRS Performance Measures section of the
MD&A.
Project Development
The Company will provide an updated Mineral Reserve and Resource
Estimate for the Company's Bolivar Mine on May 22, 2018. The NI 43-101 Technical Report will
be filed on SEDAR within 45 days of the Mineral Reserve and
Resource Estimate press release and will be prepared by SRK
Consulting (U.S.) Inc.
Mine development at Bolívar during Q1 2018 totaled 1,177 meters.
Most of these meters (650) were developed to prepare stopes for
mine production. The remainder of the meters (466) were related to
the deepening of ramps and developing service ramps to be used for
ventilation and pumping, and 61 meters of raises; and
During Q1 2018, at the Cusi property, mine development totaled
676 meters, and 1,448 meters of infill drilling was carried out
inside the Mine, and 7,398 meters drilled from surface.
Exploration Update
Yauricocha
During Q1 2018, the Company drilled 66 holes totaling 6,919
meters at Yauricocha. The drilling included the following:
Exploration Drilling:
- Contacto Sur Medio (Level 1070): 6 holes totaling 1,548 meters
have intercepted the mineralized structure as we explore the
continuity of this high-grade orebody at depth;
- Contacto Sur Medio Oeste (Level 1070 Central Mine Zone): 2
horizontal holes totaling 286 meters to explore possible mineralize
orebodies;
- Gallito (Level 1070 Central Mine Zone): 5 holes totaling 637
meters with the objective of exploring and verifying the continuity
of mineralization in the Gallito orebody; the holes from the 920
level to the 1070 level intercepted stretches of lead and zinc
sulphides;
- Esperanza - Cuye (Level 1070 Central Mine Zone): 1 hole
totaling 612 meters with the objective of exploring the area
between Cuye and Esperanza, an area which has the potential of more
mineral resources; drilling will continue in this area;
Definition Drilling:
- Antacaca (Level 920): 6 holes totaling 273 meters to define the
orebody between the 1020 and 1070 levels, floor 16;
- Antacaca (Level 920): 7 holes to define the continuity of
mineralization of the orebody; which were executed from floors 16
and 8 of the 970 level;
- Catas (Levels 1020 & 1070): 15 holes totaling 1,139 meters
to further define the orebody;
- Contacto Occidental (970 Level): 7 holes totaling 330 meters to
further define the orebody, which intercepted polymetallic mineral
and lead oxide mineral with silver;
- Esperanza Brecha (820 Level): 8
holes totaling 684 meters to further define the orebody;
- Mascota (1170 Level): 9 holes
totaling 1,410 meters in the polymetallic area of the orebody to
further define it; these holes intercepted stretches of economic
mineral;
- During Q1 2018, surface exploration was continued in the
southern end of the Central Mine Zone, mainly in the areas of the
Chonta Fault (Yauricocha II), where diamond drilling will be
carried out.
Bolivar
- At Bolívar during Q1 2018, 6,281 meters were drilled from
surface as well as diamond drilling within the mine. 1,601 meters
were drilled within the mine in the El
Gallo zone, 4,680 meters within Bolivar Northwest and
Bolivar West areas exploring the extension of the orebody to the
North and West, exploring the skarn orebody with semi-massive
magnetite, and disseminated nodules of chalcopyrite. This area will
continue to be explored during the rest of 2018.
Cusi:
- During Q1 2018, the Company drilled 1,448 meters inside the
mines to verify the continuity of the orebodies and support
development work on the various veins and 7,398 meters on
surface.
Conference Call Webcast
Sierra Metals' senior management will host a conference call on
Friday May 11, 2018 at 10:30 AM (EDT) to discuss the Company's financial
and operating results for the three months ended March 31, 2018.
Via Webcast:
A live audio webcast of the meeting will be available on the
Company's website:
https://event.on24.com/wcc/r/1627974/61D76E33DC48C22ECB595CC82024F168
The webcast along with presentation slides will be archived for
180 days on www.sierrametals.com.
Via phone:
For those who prefer to listen by phone, dial-in instructions
are below. To ensure your participation, please call approximately
five minutes prior to the scheduled start time of the call.
Participant Number (Toll Free Peru): 0800-71-470
Participant Number (Toll Free North America): (866)
393-4306
Participant Number (International): (734) 385-2616
Conference ID: 9969336
Quality Control
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 American Exchange
under the symbol "SMTS".
Continue to Follow, Like and Watch our progress:
Web: www.sierrametals.com | Twitter: sierrametals
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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 the 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 ("SEC"),
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.
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SOURCE Sierra Metals Inc.