- Financial results positively impacted by record throughput,
increased production of higher value ore, and consistent metal
pricing
TORONTO, July 30, 2018 /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 the Management Discussion and
Analysis ("MD&A") for the second quarter of 2018 ("Q2
2018").
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 June 30, 2018
- Revenues increased 18% to US$44.8
million vs. US$37.9 million in
Q2 2017
- Adjusted EBITDA increased 24% to US$23.5
million vs. US$18.9 million in
Q2 2017
- Total tonnes processed increased 19% to 283,450 vs. 237,912 in
Q2 2017
- Net production revenue per tonne of ore milled increased by 4%
to US$158.40
- All in sustaining cost ("AISC") per zinc equivalent payable
pound lower by 5% to US$0.72
- Zinc equivalent production of 39.8 million pounds vs. 36.6
million pounds in Q2 2017
- $20.3 million of cash and cash
equivalents as at June 30, 2018
- $38.7 million of working capital
as at June 30, 2018
"Corona's 2018 second quarter results demonstrate the
Company's continued commitment to successfully growing mineral
resources, as well as production, at Yauricocha," stated
Igor Gonzales, President and CEO of
Sierra Metals. "In Q2 2018 the Mine reported an 18% increase in
revenue, and a 25% increase in adjusted EBITDA over the same period
in 2017. With record quarterly throughput, a 4% increase to
production revenue per tonne milled, and a 5% decrease to the AISC
per zinc equivalent payable pound, Yauricocha's operational and
financial performance continues to improve as well made capital
investments come to fruition at the Mine."
He continued, "With a positive Preliminary Economic
Assessment study completed and future production expansion plans
under way, management is confident that the outlook for continued
success at the Yauricocha Mine remains positive. The Company
continues to have a solid balance sheet, and strong liquidity, to
meet its operational and growth expenditure requirements. We look
forward to the developments taking place over the third quarter,
including the completion of the Yauricocha tunnel infrastructure,
as well as the continued sinking of the Yauricocha shaft to provide
access to a significant amount of reserves and resources that were
recently delineated. These projects will enable our team to operate
more efficiently and effectively, ultimately providing an even
stronger balance sheet for Sierra Metals."
The following table displays the production results for the
three and six months ("H1 2018") ended June
30, 2018:
(In thousands of
US dollars, except cash cost and revenue
per tonne
metrics)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
2018
|
|
June 30,
2017
|
|
Var
%
|
June 30,
2018
|
|
June 30,
2017
|
|
Var
%
|
Revenue
|
$
|
44,790
|
37,859
|
18%
|
91,353
|
76,360
|
20%
|
Adjusted EBITDA
(1)
|
|
23,514
|
18,875
|
25%
|
47,739
|
39,421
|
21%
|
Cash Flow from
operations
|
|
23,495
|
18,986
|
24%
|
47,576
|
39,403
|
21%
|
Gross
profit
|
|
24,961
|
17,502
|
43%
|
50,181
|
37,418
|
34%
|
Income Tax
Expense
|
|
(8,343)
|
(5,184)
|
61%
|
(15,757)
|
(9,742)
|
62%
|
Net Income
|
|
13,319
|
9,761
|
36%
|
28,420
|
21,643
|
31%
|
|
|
|
|
|
|
|
|
Net production
revenue per tonne of ore milled (2)
|
|
158.40
|
152.66
|
4%
|
163.46
|
155.37
|
5%
|
Cash cost per tonne
of ore milled (2)
|
|
60.51
|
64.63
|
-6%
|
61.75
|
61.13
|
1%
|
|
|
|
|
|
|
|
|
Cash cost per zinc
equivalent payable pound (2)
|
|
0.50
|
0.48
|
4%
|
0.54
|
0.45
|
20%
|
All-In Sustaining
Cost per zinc equivalent payable
pound
(2)
|
$
|
0.72
|
0.76
|
-5%
|
0.77
|
0.69
|
13%
|
|
|
|
|
|
|
|
|
(In thousands of
US dollars, unless otherwise stated)
|
|
June 30,
2018
|
|
December 31,
2017
|
|
Cash and cash
equivalents
|
$
|
20,337
|
19,908
|
Assets
|
|
160,923
|
140,414
|
Liabilities
|
|
51,805
|
50,844
|
Equity
|
|
109,118
|
89,570
|
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 zinc 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 zinc 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 Six Months
Ended June 30, 2018
- Revenues of $44.8 million for Q2
2018 compared to $37.9 million in Q2
2017 and revenues of $91.4 million in
H1 2018 compared to $76.4 million in
H1 2017. The increase in revenues during H1 2018 was due to a 13%
increase in tonnes processed, higher head grades for copper and
gold, and higher recoveries for copper. Increases in the prices of
copper (20%), zinc (10%), lead (19%), and gold (5%) also
contributed to the revenue improvement.
- Cash cost per zinc equivalent pound sold at the Yauricocha Mine
of $0.50 for Q2 2018 compared to
$0.48 for Q2 2017 and $0.54 for H1 2018 compared to $0.45 for H1 2017. All-in sustaining cost
("AISC") per zinc equivalent pound sold of $0.72 for Q2 2018 compared to $0.76 for Q2 2017 and $0.77 for H1 2018 compared to $0.69 for H1 2017. The decrease in the AISC per
zinc equivalent payable pound for Q2 2018 compared to Q2 2017 was a
result of lower sustaining capital expenditures, while zinc
equivalent payable pounds and cash costs remained consistent. The
increase in AISC during H1 2018 compared to H1 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.
- Adjusted EBITDA of $23.5 million
for Q2 2018 compared to $18.9 million
for Q2 2017 and $47.7 million for H1
2018 compared to $39.4 million for H1
2017. The increase in adjusted EBITDA for Q2 and H1 2018 was
primarily due to the increase in throughput, metal production, and
metal prices discussed previously.
- Operating cash flows before movements in working capital of
$23.5 million for Q2 2018, compared
to US$19.0 million for Q2 2017 and
$47.6 million for H1 2018 compared to
$39.4 million for H1 2017. The
increase in operating cash flows before movements in working
capital for Q2 and H1 2018 was primarily due to the increase in
revenues, discussed previously.
- Cash and cash equivalents of $20.3
million as at June 30, 2018,
compared to $19.9 million as at
December 31, 2017. Cash and cash
equivalents increased by $0.4 million
which was driven by operating cash flows of $25.2 million, and $5.0
million being drawn from a short term revolving line of
credit for working capital purposes, partially offset by capital
expenditures of $13.0 million, debt
and interest payments of $3.2
million, intercompany loans of $4.8
million, and dividends paid of $8.8
million.
- Net income of $13.3 million, or
$0.37 per share for Q2 2018 compared
to net income of $9.8 million, or
$0.27 per share for Q2 2017. Net
income of $28.4 million, or
$0.79 per share for H1 2018 compared
to net income of $21.6 million, or
$0.60 per share for H1 2017.
Corona's Operational Highlights for the Three and Six Months
Ended June 30, 2018:
The following table displays the production results for the
three and six months ended June 30,
2018:
Yauricocha
Production
|
3 Months
Ended
|
6 Months
Ended
|
|
Q2
2018
|
Q2
2017
|
%
Var.
|
Q2
2018
|
Q2
2017
|
%
Var.
|
Tonnes processed
(mt)
|
283,450
|
237,912
|
19%
|
554,839
|
489,092
|
13%
|
|
Daily
throughput
|
3,239
|
2,719
|
19%
|
3,171
|
2,795
|
13%
|
|
Silver grade
(g/t)
|
59.19
|
76.08
|
-22%
|
59.35
|
78.80
|
-25%
|
|
Copper
grade
|
0.95%
|
0.69%
|
38%
|
0.92%
|
0.75%
|
22%
|
|
Lead
grade
|
1.28%
|
1.81%
|
-29%
|
1.27%
|
1.79%
|
-29%
|
|
Zinc
grade
|
3.66%
|
3.88%
|
-6%
|
3.56%
|
3.74%
|
-5%
|
|
Gold Grade
(g/t)
|
0.54
|
0.49
|
11%
|
0.57
|
0.52
|
9%
|
|
Silver
recovery
|
72.71%
|
76.97%
|
-6%
|
72.71%
|
76.43%
|
-5%
|
|
Copper
recovery
|
65.37%
|
60.65%
|
8%
|
65.37%
|
61.39%
|
6%
|
|
Lead
recovery
|
84.82%
|
84.32%
|
1%
|
84.82%
|
85.15%
|
0%
|
|
Zinc
recovery
|
88.73%
|
89.84%
|
-1%
|
88.73%
|
89.48%
|
-1%
|
|
Gold
Recovery
|
16.48%
|
15.21%
|
8%
|
16.48%
|
16.33%
|
1%
|
Silver ounces
(000's)
|
392
|
448
|
-12%
|
758
|
947
|
-20%
|
Copper pounds
(000's)
|
3,884
|
2,192
|
77%
|
7,611
|
4,975
|
53%
|
Lead pounds
(000's)
|
6,809
|
8,010
|
-15%
|
12,878
|
16,392
|
-21%
|
Zinc pounds
(000's)
|
20,300
|
18,268
|
11%
|
38,443
|
36,041
|
7%
|
Gold
ounces
|
807
|
566
|
43%
|
1,642
|
1,344
|
22%
|
Silver equivalent
ounces (000's)(1)
|
3,361
|
2,551
|
32%
|
6,610
|
5,288
|
25%
|
Copper equivalent
pounds (000's)(1)
|
17,624
|
17,029
|
3%
|
34,932
|
35,383
|
-1%
|
Zinc equivalent
pounds (000's)(1)
|
39,841
|
36,612
|
9%
|
74,468
|
74,777
|
0%
|
(1) Silver equivalent
ounces and copper and zinc equivalent pounds for Q2 2018 were
calculated using the following realized prices: $16.36/oz Ag,
$3.12/lb Cu, $1.09/lb Pb, $1.38/lb Zn, $1,296/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for Q2 2017
were calculated using the following realized prices: $17.22/oz Ag,
$2.58/lb Cu, $0.99/lb Pb, $1.20/lb Zn, $1,265/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 6M 2018
were calculated using the following realized prices: $16.56/oz Ag,
$3.13/lb Cu, $1.12/lb Pb, $1.47/lb Zn, $1,315/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 6M 2017
were calculated using the following realized prices: $17.47/oz Ag,
$2.61/lb Cu, $/1.02lb Pb, $1.24/lb Zn, $1,248/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 remains focused on
increasing production volume and growing mineral resources. Sierra
Metals has recently had several discoveries and still has
additional brownfield exploration opportunities at all three mines
in Peru and Mexico that are within 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 the Toronto Stock Exchange
under the symbol "SMT" and the NYSE AMERICAN Exchange under the
symbol "SMTS."
Continue to Follow, Like and Watch our progress:
Web: www.sierrametals.com | Twitter: sierrametals
| Facebook: SierraMetalsInc | LinkedIn: Sierra Metals
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 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.