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 first quarter of 2019
(“Q1 2019”).
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 March 31, 2019
- Revenues of US$35.3 million vs. US$46.6
million in Q1 2018
- Adjusted EBITDA of US$13.7 million vs.
US$24.2 million in Q1 2018
- Total tonnes processed of 233,814 vs.
271,389 in Q1 2018
- Net production revenue per tonne of ore
milled decreased by 12% to US$147.75
- Cash cost per zinc equivalent payable
pound lower by 5% to US$0.54
- All in sustaining cost (“AISC”) per
zinc equivalent payable pound higher by 4% to US$0.85
- Zinc equivalent production of 35.9
million pounds vs. 34.8 million pounds in Q1 2018
- $13.3 million of cash and cash
equivalents as at March 31, 2019
- $46.8 million of working capital as at
March 31, 2019
Despite the loss of 12 days of production at the Yauricocha Mine
during March due to the illegal strike action which has
subsequently been resolved, the mine continued its strong
operational performance during Q1 2019, realizing an increase in
zinc equivalent metal production compared to Q1 2018. The revenues
and Adjusted EBITDA generated during Q1 2019 allowed the Company to
fund its capital expenditure programs and repay all of the existing
debt obligations, despite a challenging metal price environment.
Cash costs remained consistent quarter over quarter, while there
was a slight increase in AISC during Q1 2019 due to the increase in
treatment and refining charges related to the zinc concentrate
produced.
Igor Gonzales, President and CEO of Sierra Metals commented,
“The strike resulted in lower tonnage processed for the first
quarter. However, we have prepared a forecast for the remainder of
the year to try to recover as much tonnage as possible and stay
within guidance at Yauricocha. Despite the lower tonnage in the
first quarter, I would like to note that Yauricocha still realized
higher zinc equivalent production from higher head grades except
for gold and higher recoveries. The Company still saw relatively
strong revenue and adjusted EBITDA for the quarter albeit lower
than the same quarter in 2017. We continue to reap the benefit of
improvements to the Mine such as the shaft rehabilitation and the
new Yauricocha tunnel and expect these improvements to continue to
benefit us through the remainder of the year.
Moving on from the strike, 2019 still represents a critical year
for projects, improvements, and exploration at Yauricocha. Having
received our Environmental Impact Assessment Permit for the Mine to
complete the next level of the tailings deposition facility, we
have begun planning and are awaiting approval for our construction
permit. We are also continuing to sink the Yauricocha shaft towards
the 1270 level which provides access to further reserves and
resources at the Mine with loading pockets to be added on the 1210
level. Work will also commence on the ramp connecting the 920 level
with the 720 level of the Yauricocha Mine providing for an
additional 10,000 tonnes per month of increased capacity to move
ore and waste from the Mine. Furthermore, we continue to work
towards the completion of a Life of Mine Plan and updated NI 43-101
Technical Report for Reserves and Resources at Yauricocha expected
by mid year 2019. We have the right team in place to manage these
projects and the permitting and planning needed to see projects and
exploration programs move ahead as planned at the mine.”
He concluded, “Despite the strike set back, Corona continues to
have a solid balance sheet and strong liquidity. Management remains
optimistic that continued operational efficiencies and future
operational and resource growth are possible at Yauricocha.”
The following table displays selected unaudited financial
information for the three months ended March 31, 2019:
(In thousands of US dollars, except
cash cost and revenue
Three Months Ended per tonne
metrics)
March 31, 2019 March 31,
2018 Var % Revenue
$
35,338 46,563 -24% Adjusted EBITDA (1)
13,732 24,225
-43% Cash Flow from operations
13,172 24,081 -45% Gross
profit
14,487 25,220 -43% Income Tax Expense
(3,020)
(7,414) -59% Net Income
7,991 15,101
-47% Net production revenue per tonne of ore milled
(2)
147.75 168.74 -12% Cash cost per tonne of ore milled (2)
73.63 63.04 17% Cash cost per zinc equivalent payable pound
(2)
0.54 0.57 -5% All-In Sustaining Cost per zinc equivalent
payable pound (2)
$ 0.85 0.82 4%
(In thousands of US
dollars, unless otherwise stated)
March 31, 2019
December 31, 2018 Cash and cash equivalents
$ 13,257 17,898 Assets
161,090 169,034
Liabilities
33,270 49,205 Equity
127,820 119,829
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 Months Ended March 31, 2019
- Revenues of $35.3 million for Q1 2019
compared to $46.6 million in Q1 2018. The decrease in revenues for
Q1 2019 compared to Q1 2018 was due to a 14% decrease in tonnes
processed due to the illegal strike action initiated by members of
the Union of the Mine and Metallurgical Workers of Minera Corona on
March 19, 2019. This illegal strike was resolved on April 12, 2019,
however, resulted in a total of 12 days of lost production during
March 2019. Lower revenues were also affected by the decreases in
the prices of silver (7%), copper (9%), zinc (21%), lead (18%), and
gold (2%). This was partially offset by higher head grades and
recoveries for all metals, except gold head grades.
- Cash cost per zinc equivalent pound
sold at the Yauricocha Mine of $0.54 for Q1 2019 compared to $0.57
for Q1 2018 and All-in sustaining cost (“AISC”) per zinc equivalent
pound sold of $0.85 for Q1 2019 compared to $0.82 for Q1 2018. The
increase in the AISC per zinc equivalent payable pound for Q1 2019
compared to Q1 2018 was due to the increase in treatment and
refining charges for the zinc concentrate produced, but was
partially offset by the increase in zinc equivalent payable pounds
as the Company realized higher head grades and recoveries for all
metals, except gold head grades.
- Adjusted EBITDA of $13.7 million for Q1
2019 compared to $24.2 million for Q1 2018. The decrease in
Adjusted EBITDA was due to lower metal production which resulted in
lower revenues, as a result of the illegal strike action initiated
at the Yauricocha Mine.
- Operating cash flows before movements
in working capital of $13.2 million for Q1 2019, compared to
US$24.1 million for Q1 2018. The decrease in operating cash flows
before movements in working capital for Q1 2019 was primarily due
to the decrease in revenues, discussed previously.
- Cash and cash equivalents of $13.3
million as at March 31, 2019, compared to $17.9 million as at
December 31, 2018. Cash and cash equivalents decreased by $4.6
million which was driven by operating cash flows of $2.6 million,
offset by capital expenditures of $4.5 million, debt and interest
payments of $5.0 million, and net repayment of intercompany loans
of $2.7 million.
- Net income of $8.0 million, or $0.22
per share for Q1 2019 compared to net income of $15.1 million, or
$0.42 per share for Q1 2018.
Corona’s Operational Highlights for the
Three Months Ended March 31, 2019:
The following table displays the production results for the
three months ended March 31, 2019:
Yauricocha Production
3 Months Ended
Q1 2019 Q1 2018 %
Var. Tonnes processed (mt) 233,814
271,389 -14% Daily throughput 2,672 3,102 -14%
Silver
grade (g/t) 63.51 59.52 7% Copper grade 1.00% 0.89% 13% Lead grade
1.45% 1.24% 17% Zinc grade 3.56% 3.45% 3% Gold Grade (g/t) 0.55
0.61 -9% Silver recovery 77.23% 70.50% 10% Copper recovery
74.80% 70.22% 7% Lead recovery 88.19% 81.51% 8% Zinc recovery
89.51% 87.94% 2% Gold Recovery 18.09% 15.77% 15%
Silver ounces
(000's) 369 366 1% Copper pounds
(000's) 3,863 3,727 4% Lead pounds
(000's) 6,605 6,069 9% Zinc pounds
(000's) 16,421 18,144 -9% Gold
ounces 753 835 -10%
Zinc equivalent pounds
(000's)(1)
35,911 34,767 3%
(1) Silver equivalent ounces and copper
and zinc equivalent pounds for Q1 2019 were calculated using the
following realized prices: $15.57/oz Ag, $2.85/lb Cu, $0.94/lb Pb,
$1.23/lb Zn, $1,305/oz Au. 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.
Qualified Persons
All technical production 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 Vice President
Special Projects and Metallurgy and a 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.”
For further information regarding Sierra Metals, please visit
www.sierrametals.com.
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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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005299/en/
Mike McAllisterVP, Investor RelationsSierra Metals Inc.+1
(416) 366-7777info@sierrametals.com
Ed GuimaraesCFOSierra Metals Inc.+1 (416) 366-7777
Igor GonzalesPresident & CEOSierra Metals Inc.+1
(416) 366-7777
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