Completion of New Credit Facility Expected
by End of Q1 2019
Sierra Metals Inc. (TSX:SMT) (BVL:SMT) (NYSE
AMERICAN:SMTS) (“Sierra Metals” or “the Company”) is reporting 2019
cost, and capex guidance which follows the 2019 production guidance
previously issued (see press release dated January 24, 2019). Also,
the company is close to finalizing a new credit facility which will
replace the existing debt structure while providing additional
liquidity.
2019 Cost Guidance
A mine by mine breakdown of 2019 production guidance, cash costs
and all-in sustaining costs (“AISC”) are included in the table
below. Cash costs and AISC guidance is shown per zinc equivalent
payable pound at Yauricocha, copper equivalent payable pound at
Bolivar, and silver equivalent payable ounce at Cusi.
Mine
EquivalentProduction
Range
Cash Costs perZnEqLb
orCuEqLb orAgEqOz Sold
AISC ($)* perZnEqLb
orCuEqLb orAgEqOz Sold
Yauricocha Zinc Eq Lbs (000's) 163,884
- 183,478 $0.58/lb $0.88/lb Bolivar
Copper Eq Lbs (000's) 29,877 - 33,449 $1.35/lb $2.08/lb Cusi
Silver Eq Ozs (000's) 1,862 - 2,085
$14.29/oz $20.70/oz *AISC includes Treatment
and Refining Charges, Selling Costs, G&A Costs and Sustaining
Capex (1) 2019 Silver equivalent ounces, copper and zinc equivalent
pounds were calculated using the following metal prices: $16.65/oz
Ag, $3.03/lb Cu, $1.01/lb Pb, $1.24/lb Zn, $1,275/oz Au
2019 Capital
Expenditures
In 2019, the Company plans to invest a total of up to $83
million on capital expenditures, including $39 million for
sustaining capital requirements and $44 million for expansion,
growth projects and exploration expenses. These capital
expenditures will allow Sierra Metals to continue to significantly
grow our mineral reserves and resources, complete the development
work required in operations in order to increase production in the
future, as well as complete plant expansion projects to process the
increased production. These significant capital expenditure
projects are expected to result in increased cash flows, and lower
cash costs. These capital expenditure programs will be funded
through the generation of operating cash flows, as well as
additional liquidity provided from the new credit facility in
process if needed.
Igor Gonzales, President and CEO of Sierra Metals commented,
“The 2019 budget includes important capital investments for
property, plant and equipment as well as underground development,
exploration, corporate projects including shaft deepening,
ventilation and camp improvements. Additionally, tailing dam
facility expansions at the Yauricocha Mine, and improvements and
expansion of existing tailings deposition facilities at the Bolivar
and Cusi Mines are included in this year’s budget. These prudent
capital investments provide for solid returns and will allow the
Company to proceed on a path of future production and exploration
growth while improving operational performance. Management
continues to review metal prices and retains the option to adjust
the 2019 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 1.1 million
tonnes (3,250 tpd) in 2019. Sustaining capex will be approximately
$18 million and growth capex will be approximately $23 million.
2019 major capital investments include:
Up to:
- $8 million for deepening of the
Yauricocha Shaft
- $6 million for regional and brownfield
exploration and lower level development
- $5 million for ventilation
- $4 million for the mine camp
- $4 million for equipment
- $2 million for tailing dam facility
expansion next lift
- $2 million for Mascota ramp from 920 to
720 level
- $7 million in development in Central
and Cachi Cachi mine zones
The Bolivar Mine in Mexico plans to process up to 1.4 million
tonnes, with an average production rate of 4,000 tpd in 2019.
Sustaining capex will be approximately $12.0 million and growth
capex will be approximately $10 million.
2019 major capital investments include:
Up to:
- $9 million for regional and brownfield
exploration and development of drifts and drill stations
- $5 million for equipment
- $4 million for concentrator plant
- $2 million for tailings deposition
facility expansion
The Cusi Mine in Mexico plans to process up to 515,500 tonnes,
ramping up from 650 tpd with an objective of reaching 1,200 tpd in
Q2 2019 and 2,400 tpd in Q4 2019. Sustaining capex will be
approximately $8 million and growth capex will be $12 million.
2019 major capital investments include:
Up to:
- $5 million for concentrator plant
- $5 million for exploration and
development of drifts and drill stations
- $4 million for equipment
- $4 million for tailings deposition
facility
Debt Refinancing
Sierra Metals is currently in the process of refinancing its
existing debt facilities. The main purpose on the new credit
facility is to repay the existing BCP credit facilities, which in
turn will provide the Company with financial flexibility for
further drawdowns if internally generated cash flows are not enough
to cover capital expenditures and working capital requirements in
2019 and beyond. The Company is very close to finalizing this new
credit facility of up to US$100 million with a preferred lender,
which is expected to close before the end of Q1 2019.
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”.
For further information regarding Sierra Metals, please visit
www.sierrametals.com.
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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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190225005294/en/
Mike McAllisterV.P., Corporate DevelopmentSierra Metals
Inc.+1 (416) 366-7777Email: info@sierrametals.com
Gordon Babcock, P. Eng.Chief Operating OfficerSierra
Metals Inc.+1 (416) 366-7777
Igor GonzalesPresident & CEOSierra Metals Inc.+1
(416) 366-7777
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