U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 40-F
Check One
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Registration Statement Pursuant to Section 12 of the Securities Exchange
Act of 1934
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Annual
Report Pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2018
Commission File Number: 001-38141
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Sierra Metals Inc.
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(Exact name of Registrant as specified in its charter)
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N/A
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(Translation of Registrant’s name into English (if applicable))
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Canada
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(Province or other jurisdiction of incorporation or organization)
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1021
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(Primary Standard Industrial Classification Code Number (if applicable))
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N/A
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(I.R.S. Employer Identification Number (if applicable))
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161
Bay Street, Suite 4260, Toronto, Ontario M5J 2S1 Canada, (416) 366-7777
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(Address and telephone number of Registrant’s
principal executive offices)
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Cogency Global Inc.
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10 East 40th Street, 10th Floor, New York, NY 10016, (800) 221-0102
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(Name, address (including zip code) and
telephone number (including area code of agent
for service in the United States)
Securities registered or to be registered
pursuant to Section 12(b) of the Act.
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Common Shares
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NYSE American
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Title of each class
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Name of each exchange on which registered
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Securities registered or to be registered
pursuant to Section 12(g) of the Act.
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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
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None
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(Title of Class)
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For annual reports, indicate by check mark the information filed
with this Form:
x
Annual information form
x
Audited annual financial statements
Indicate the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of the close of the period covered by the annual report:
Common Shares: 163,427,335
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 of 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days.
Yes
x
No
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Indicate by
check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Yes
x
No
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Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging
growth company
x
If an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, indicate by checkmark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
¨
Not applicable
DISCLOSURE CONTROLS AND PROCEDURES
Sierra Metals Inc. (the “Company”) has designed
disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made known to the Chief Executive Officer and Chief Financial Officer
by others within the Company, including its consolidated subsidiaries, on a regular basis, including during the period in which
the Company’s Annual Report on Form 40-F relating to financial results for the fiscal year ended December 31, 2018 is being
prepared. The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and
procedures as of the end of the period covered by this report. Based on the evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded, as of that evaluation date, that the Company’s disclosure controls and procedures were effective
to ensure that the material information relating to the Company (including its consolidated subsidiaries) required to be included
in the Company’s periodic filings under the Exchange Act, was (i) recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission (the “SEC” or the “Commission”) rules and
forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL
CONTROLS
For management’s report on internal control over financial
reporting, see “Disclosure Controls and Internal Controls over Financial Reporting ("ICFR") in our MD&A attached
as Exhibit 99.2 to this Form 40-F and incorporated by reference herein.
AUDITOR ATTESTATION
This Annual Report does not include an attestation report of
the Company's registered public accounting firm due to a transition period established by rules of the SEC for companies that are
newly public in the U.S.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
During the fiscal year ended December 31, 2018, there were no
significant changes in the Company’s internal controls over financial reporting, or in other factors that could significantly
affect such internal controls, that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Company’s board of directors (the “Board”)
has a standing audit committee (the “Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Exchange
Act. The Audit Committee consists of the following three Board members: Douglas Cater, Philip Renaud and Jose Vizquerra Benavides.
AUDIT COMMITTEE FINANCIAL EXPERT
The Board has determined that all three members serving on its
Audit Committee are considered “audit committee financial experts”. Each of Douglas Cater, Philip Renaud and Jose Vizquerra
Benavides has been determined to be such an audit committee financial expert, within the meaning of Item 407 of Regulation S-K.
Each of Mr. Cater, Mr. Renaud and Mr. Vizquerra Benavides is independent, as that term is defined by the New York Stock Exchange’s
listing standards applicable to the Company. The Securities and Exchange Commission has indicated that the designation of each
of Mr. Cater, Mr. Renaud and Mr. Vizquerra Benavides as an audit committee financial expert does not make Mr. Cater, Mr. Renaud
and Mr. Vizquerra Benavides an “expert” for any purpose, impose any duties, obligations or liability on Mr. Cater,
Mr. Renaud and Mr. Vizquerra Benavides that are greater than those imposed on Board members who do not carry this designation,
or affect the duties, obligations or liabilities of any other Board member.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers LLP acted as our independent registered
public accounting firm for the fiscal years ended December 31, 2018 and 2017. For a description of the total amount PricewaterhouseCoopers
LLP billed to us for services performed in the last two fiscal years by category of service (audit fees, audit-related fees, tax
fees and all other fees), see the information under the caption "Audit Committee Information - External Auditor Fees"
in our Annual Information Form (“AIF”), which is attached as Exhibit 99.1 to this Form 40-F and incorporated by reference
herein.
The Audit Committee has adopted specific policies and procedures
for the engagement of non-audit services, including the requirement that all non-audit services to be performed by the external
auditor must be pre-approved and monitored by the Audit Committee. Subject to National Instrument 52-110
Audit Committees
of
the Canadian Securities Administrators, the engagement of non-audit services is considered by our Board, and where applicable the
Audit Committee, on a case-by-case basis.
CODE OF ETHICS
The Board has adopted a Code of Business Conduct & Ethics
(the "Code"), covering all employees, officers, directors, agents and contractors of our company, to assist in maintaining
the highest standards of ethical conduct in corporate affairs. In addition, the Board must comply with conflict of interest provisions
in Canadian corporate law, including relevant securities regulatory instruments, in order to ensure that directors exercise independent
judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.
A copy of the Code is available on the Company’s website at:
https://s2.q4cdn.com/485819848/files/doc_downloads/corporate_gov/Code-of-Business-Conduct-and-Ethics-current.pdf
.
All amendments and any waivers of the Code that apply to the
officers covered by it will be posted on our website, furnished to the SEC as required, and provided to any shareholder who requests
them. During the fiscal year ended December 31, 2018, we did not grant any waiver, including an implicit waiver, from a provision
of the Code to any executive officer or director. With the exceptions of the Code, no information contained on the Company’s
website shall be incorporated by reference in this Form 40-F.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements as defined
in General Instruction B(11) to Form 40-F as of December 31, 2018.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
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Within 1 year
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1-2 years
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2-5 years
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After 5 years
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Total
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As at December 31,
2018
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$
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$
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$
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$
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$
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$
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Accounts payable and accrued liabilities
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36,092
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-
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-
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-
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36,092
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36,092
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Loans payable
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27,520
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6,000
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22,733
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-
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56,253
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56,253
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Interest on loans payable
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198
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127
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250
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-
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575
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575
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Other liabilities
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8,908
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1,081
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-
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-
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9,989
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9,989
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Total Commitments
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72,718
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7,208
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22,983
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-
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102,909
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102,909
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CLASSIFICATION OF MINERAL RESERVES AND
RESOURCES
In our AIF, the definitions of proven and probable mineral reserves,
and measured, indicated and inferred mineral resources are those used by the Canadian provincial securities regulatory authorities
and conform to the definitions utilized by the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM"), as
the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council, as amended.
CAUTIONARY NOTE TO UNITED STATES READERS
CONCERNING MINERAL RESERVES AND RESOURCE
ESTIMATES
Our AIF for the year ended December 31, 2018 attached to the
Form 40-F as Exhibit 99.1 and incorporated by reference herein has been prepared in accordance with the requirements of the securities
laws in effect in Canada, which differ from the requirements of U.S. securities laws. The terms “mineral reserve”,
“proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance
with the Canadian Securities Administrators’ National Instrument 43-101 – Standards of Disclosure for Mineral Projects
(“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum as the CIM Definition Standards on Mineral
Resources and Mineral Reserves adopted by the CIM Council, as amended. These definitions differ from the definitions in SEC Industry
Guide 7 under the Securities Act. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility
study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate
reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured
mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and
required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources”
have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC
Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in our AIF may contain descriptions
of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting
and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
MINE SAFETY DISCLOSURE
Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other
mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified
health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under
the regulation of the Federal Mine Safety and Health Review Administration under the Federal Mine Safety and Health Act of 1977.
During the fiscal year ended December 31, 2018, neither we nor any of our subsidiaries operated a coal or other mine in the United
States, and we were not subject to any citations, orders or other legal actions under the Federal Mine Safety and Health Act of
1977.
DISCLOSURE PURSUANT TO SECTION 13(r)
OF THE EXCHANGE ACT
Pursuant to section 13(r) of the Exchange Act, the Company is
required to disclose whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings related
to both the Islamic Republic of Iran (“Iran”) and certain persons listed on the Specially Designated National and Blocked
Persons list maintained by the U.S. Department of Treasury Office of Foreign Assets Control, during the year ended December 31,
2018. Disclosure of these certain activities, transactions or dealings is generally required even if conducted in compliance with
applicable law and regulations. The Company is not aware that it or any of its affiliates have knowingly engaged in any transaction
or dealing reportable under section 13(r) of the Exchange Act during the year ended December 31, 2018.
ADDITIONAL INFORMATION
Additional information relating to our company, including
our AIF, Audited Financial Statements and Management’s Discussion and Analysis (“MD&A”), can be found
on SEDAR at www.sedar.com, on the SEC website at www.sec.gov, or on our website at
www.sierramatals.com
.
Shareholders may also contact the Vice President, Corporate Development of the Company by phone at (866) 493-9646 or by
email at
info@sierrametals.com
to request copies of these documents and this annual report on Form
40-F.
UNDERTAKING AND CONSENT TO SERVICE OF
PROCESS
The Company undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission
staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation
to file an annual report on Form 40-F arises; or transactions in said securities.
The Company has previously filed a Form F-X in connection with
each class of securities to which the obligation to file this Form 40-F arises. Any change to the name and address of the agent
for service of process shall be communicated promptly to the Commission by amendment to Form F-X.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant
certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Form 40-F to be signed on its
behalf by the undersigned, thereto duly authorized.
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SIERRA METALS INC.
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By:
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/s/ Igor Gonzales
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Igor Gonzales
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President and Chief Executive Officer
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Dated: March 28, 2019
EXHIBITS
The following documents are filed as exhibits to this Form 40-F:
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema
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101.CAL
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XBRL Taxonomy Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Document
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101.LAB
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XBRL Taxonomy Extension Labels Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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