Sierra Metals Inc. (TSX:SMT) (BVL:SMT) (NYSE
American:SMTS):
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the full release here:
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Image 1: Concentrate Truck being loaded
at Yauricocha (Photo: Business Wire)
Conference Call March 19, 2021 at 10:30 AM
(EDT)
(All $ figures reported in USD)
- Revenue from metals payable of $246.9 million in 2020
increased by 8% from $229.0 million in 2019;
- Adjusted EBITDA of $97.0 million in 2020 increased 49% from
$65.3 million in 2019 due to higher consolidated revenues and lower
operating costs at Yauricocha and Bolivar;
- Operating cash flows before movements in working capital of
$99.0 million in 2020 increased 49% from $66.4 million in
2019;
- 2020 consolidated copper production of 44.3 million pounds
an 11% increase, consolidated silver production of 3.5 million
ounces a 3% increase, consolidated zinc production of 81.9 million
pounds a 1% increase, consolidated lead production of 33.0 million
pounds a 7% decrease, and consolidated gold production of 13,771
ounces an 18% increase respectively compared to 2019;
- Consolidated All-In sustaining costs ("AISC") (1) per copper
equivalent pound (2) sold of $2.12 in 2020, or 8% lower than AISC
in 2019, driven by lower cash costs and the increase in copper
equivalent pounds sold in 2020 compared to 2019;
- $71.5 million of cash and cash equivalents as at December
31, 2020;
- Net Income attributable to shareholders of $0.14 per
share;
- Net Debt of $27.9 million as at December 31, 2020
- A shareholder conference call to be held Friday, March 19,
2021, at 10:30 AM (EDT)
(1) This is a non-IFRS performance measure, see Non-IFRS
Performance Measures section of the MD&A. (2) Silver equivalent
ounces and copper and zinc equivalent pounds for Q4 2020 were
calculated using the following realized prices: $24.30/oz Ag,
$3.32/lb Cu, $1.22/lb Zn, $0.89/lb Pb, $1,859/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for Q4 2019
were calculated using the following realized prices: $17.42/oz Ag,
$2.69/lb Cu, $1.07/lb Zn, $0.92/lb Pb, $1,506/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for full
year 2020 were calculated using the following realized prices:
$20.59/oz Ag, $2.80/lb Cu, $1.03/lb Zn, $0.83/lb Pb, $1,771/oz Au.
Silver equivalent ounces and copper and zinc equivalent pounds for
full year 2019 were calculated using the following realized prices:
$16.29/oz Ag, $2.73/lb Cu, $/1.14lb Zn, $0.91/lb Pb, $1,404/oz
Au.
Sierra Metals Inc. (TSX:SMT) (BVL:SMT) (NYSE
American:SMTS) ("Sierra Metals" or the "Company") today reported
revenue of $246.9 million and an adjusted EBITDA of $97.0 million
on the throughput of 2.8 million tonnes and metal production of
118.2 million copper equivalent pounds (or 16.1 million silver
equivalent ounces or 321.6 million zinc equivalent pounds), for the
year ended December 31, 2020.
The Company achieved annual throughput that was 6% higher than
the 2019 annual throughput despite the various COVID-19 related
operational challenges, including government-mandated shutdowns in
the second quarter of the year. Annual 2020 consolidated silver,
copper, zinc, and gold production increased 3%, 11%, 1%, and 18%,
respectively, while lead production decreased by 7% compared to
2019.
Despite the continued COVID-19 related operational challenges in
Q4 2020, consolidated quarterly ore throughput of 778,236 tonnes
increased by 6% over Q4 2019, as higher throughput from the Mexican
operations was partially offset by a 3% decline in throughput from
the Yauricocha mine.
Copper equivalent production at Yauricocha declined 20% during
Q4 2020 due to a 3% decrease in quarterly throughput combined with
lower head grades and recoveries. At Bolivar, 10% higher ore
throughput and higher recoveries were partially offset by lower
head grades resulting in Q4 2020 copper equivalent pounds
production that was in line with Q4 2019. Q4 2020 silver equivalent
production at the Cusi mine was 83% higher than Q4 2019 due to 35%
higher throughput realized, in addition to higher silver and gold
head grades as well as 65% higher gold recoveries as compared to Q4
2019.
Luis Marchese, CEO of Sierra Metals, stated: "Sierra Metals had
a solid performance in 2020 with a marked increase in adjusted
EBITDA as well as solid production despite the exceptionally
challenging year we had while dealing with the COVID-19 pandemic.
Overall, the Company did a great job of managing and improving
operations while controlling and maintaining costs. I want to thank
all of our employees for their significant efforts in helping the
Company achieve these remarkable results."
He continued, "Looking ahead, we expect this year to be an
exciting one for the Company. We continue advancing important
projects, completing operational improvements, and advancing
exploration at all three mines. We hope to receive the final permit
required to increase throughput by 20% to the 3,600 tonne per day
level at Yauricocha in the second quarter of the year. Furthermore,
we recently completed and published Preliminary Economic
Assessments with favorable economics for expansions at all three
mines, examining an increase in throughput starting in 2024. We
continue to work toward the completion of Preliminary Feasibility
Studies for all mines. COVID-19 is still challenging us, and case
counts remain high in Mexico and Peru. However, policies and
practices are in place to manage these issues while prioritizing
the health of our employees and surrounding communities."
He concluded, "The Company continues to have a strong balance
sheet, and liquidity with metal prices expected to remain strong
this year. These strengths should benefit the Company as we
continue with our growth and improvement plans. Management also
remains optimistic that we can find further operational
efficiencies with the larger scale of the Company operations."
The following table displays selected financial and operational
information for the three months and year ended December 31,
2020:
Q4 and 12M 2020 Financial
Highlights
Three Months Ended Twelve Months Ended
(In thousands of dollars, except per share and cash cost amounts,
consolidated figures unless noted otherwise)
December 31,
2020 December 31, 2019 December 31, 2020
December 31, 2019 Operating Ore Processed / Tonnes
Milled
778,236
731,500
2,828,877
2,671,853
Silver Ounces Produced (000's)
922
871
3,465
3,375
Copper Pounds Produced (000's)
10,626
11,308
44,262
39,890
Lead Pounds Produced (000's)
7,630
9,924
32,972
35,454
Zinc Pounds Produced (000's)
21,612
25,590
81,868
81,083
Gold Ounces Produced
3,363
3,615
13,771
11,632
Copper Equivalent Pounds Produced (000's)1
29,267
32,510
118,214
111,678
Zinc Equivalent Pounds Produced (000's)1
79,521
81,919
321,638
267,658
Silver Equivalent Ounces Produced (000's)1
3,996
5,016
16,097
18,721
Cash Cost per Tonne Processed
$
44.42
$
53.91
$
40.81
$
50.37
Cost of sales per AgEqOz2
$
9.76
$
9.61
$
8.67
$
8.53
Cash Cost per AgEqOz2
$
9.56
$
9.94
$
8.29
$
8.33
AISC per AgEqOz2
$
18.72
$
16.18
$
15.59
$
13.82
Cost of sales per CuEqLb2
$
1.33
$
1.48
$
1.18
$
1.42
Cash Cost per CuEqLb2
$
1.31
$
1.54
$
1.13
$
1.39
AISC per CuEqLb2
$
2.56
$
2.50
$
2.12
$
2.30
Cost of sales per ZnEqLb2
$
0.49
$
0.59
$
0.43
$
0.59
Cash Cost per ZnEqLb2
$
0.48
$
0.61
$
0.41
$
0.58
AISC per ZnEqLb2
$
0.94
$
0.99
$
0.78
$
0.95
Cash Cost per ZnEqLb (Yauricocha)2
$
0.42
$
0.46
$
0.37
$
0.46
AISC per ZnEqLb (Yauricocha)2
$
0.91
$
0.83
$
0.78
$
0.79
Cash Cost per CuEqLb (Yauricocha)2
$
1.16
$
1.17
$
1.01
$
1.12
AISC per CuEqLb (Yauricocha)2
$
2.47
$
2.11
$
2.11
$
1.91
Cash Cost per CuEqLb (Bolivar)2
$
1.35
$
2.06
$
1.13
$
1.73
AISC per CuEqLb (Bolivar)2
$
2.34
$
2.92
$
1.88
$
2.86
Cash Cost per AgEqOz (Cusi)2
$
15.70
$
42.12
$
16.62
$
21.38
AISC per AgEqOz (Cusi)2
$
28.18
$
56.64
$
25.26
$
30.89
Financial Revenues
$
76,218
$
64,634
$
246,888
$
229,038
Adjusted EBITDA2
$
31,127
$
19,104
$
96,982
$
65,257
Operating cash flows before movements in working capital
$
32,259
$
19,951
$
99,005
$
66,359
Adjusted net income attributable to shareholders2
$
8,638
$
7,228
$
29,569
$
13,874
Net income (loss) attributable to shareholders
$
7,603
$
4,534
$
23,419
$
4,431
Cash and cash equivalents
$
71,473
$
42,980
$
71,473
$
42,980
Working capital
$
70,885
$
49,922
$
70,885
$
49,922
(1) Silver equivalent ounces and copper and zinc equivalent pounds
for Q4 2020 were calculated using the following realized prices:
$24.30/oz Ag, $3.32/lb Cu, $1.22/lb Zn, $0.89/lb Pb, $1,859/oz Au.
Silver equivalent ounces and copper and zinc equivalent pounds for
Q4 2019 were calculated using the following realized prices:
$17.42/oz Ag, $2.69/lb Cu, $1.07/lb Zn, $0.92/lb Pb, $1,506/oz Au.
Silver equivalent ounces and copper and zinc equivalent pounds for
full year 2020 were calculated using the following realized prices:
$20.59/oz Ag, $2.80/lb Cu, $1.03/lb Zn, $0.83/lb Pb, $1,771/oz Au.
Silver equivalent ounces and copper and zinc equivalent pounds for
full year 2019 were calculated using the following realized prices:
$16.29/oz Ag, $2.73/lb Cu, $/1.14lb Zn, $0.91/lb Pb, $1,404/oz Au.
(2) This is a non-IFRS performance measure, see Non-IFRS
Performance Measures section of the MD&A.
Revenue from metals payable of $246.9 million in 2020 increased
by 8% from $229.0 million in 2019. Higher revenue was primarily a
result of higher copper sales from the Bolivar mine attributable to
increased throughput and higher average realized prices for copper,
gold and silver compared to 2019.
Yauricocha's cash cost per copper equivalent payable pound was
$1.01 (2019 - $1.12), and AISC per copper equivalent payable pound
of $2.11 (2019 - $1.91). Lower cash costs resulted from a decrease
in cost per tonne attributable to lower labour and contractor costs
due to operational challenges related to COVID-19. Cash costs for
the year were 10% lower despite the $4.8 million of charges related
to the COVID-19, such as the cost of cleaning supplies, medical
tests and costs related to quarantine employees and contractors.
The increase in the AISC per copper equivalent payable pound for
2020 compared to 2019 was a result of lower copper equivalent
pounds sold and higher treatment and refining costs. Other
sustaining costs were in-line with these costs incurred in
2019.
Bolivar's cash cost per copper equivalent payable pound was
$1.13 (2019 - $1.73), and AISC per copper equivalent payable pound
was $1.88 (2019 - $2.86). Lower unit costs at Bolivar were a result
of the 48% increase in copper equivalent pounds sold during 2020 as
compared to 2019.
Cusi's cash cost per silver equivalent payable ounce was $16.62
(2019 - $21.38), and AISC per silver equivalent payable ounce was
$25.26 (2019 - $30.89). Costs were lower during the year due to
lower contractor costs related to underground development. Silver
equivalent ounces sold during 2020 were 5% higher than 2019,
despite the production lost due to the care and maintenance period,
as silver and gold grades increased in Q4 2020.
Adjusted EBITDA(1) of $97.0 million for 2020 is a 49% increase
from the adjusted EBITDA of $65.3 million for 2019. This increase
was a combined result of the higher consolidated revenue and lower
operating costs per tonne at Yauricocha and Bolivar.
Cash flow generated from operations before movements in working
capital of $99.0 million for 2020 increased compared to $66.4
million in 2019. The increase in operating cash flow is mainly the
result of higher revenues generated and lower operating costs, as
mentioned earlier.
Net Income attributable to shareholders for 2020 was $23.4
million (2019: $4.4 million) or $0.14 per share (basic and diluted)
(2019: $0.03).
Cash and cash equivalents of $71.5 million and working capital
of $70.9 million as at December 31, 2020, compared to $43.0 million
and $49.9 million, respectively, at the end of 2019. Cash and cash
equivalents increased during 2020 due to $67.0 million of operating
cash flows after taxes and changes in working capital, offset by
cash used in investing activities in Mexico and Peru of $34.2
million and interest payment of $4.1 million on the senior secured
credit facility.
(1) This is a non-IFRS performance measure, see Non-IFRS
Performance Measures section of the MD&A.
Project Development
In October 2020, the Company reported positive results of a
Preliminary Economic Assessment ("PEA") for doubling its output at
the Bolivar Mine to 10,000 tonnes per day ("tpd"). The PEA results
indicated an incremental benefit of after-tax NPV (@8%) of $57.4
million and an IRR of 27.9%. A National Instrument 43-101 ("NI
43-101") technical report was filed on SEDAR and with the U.S.
Securities and Exchange Commission on November 5, 2020;
In November 2020, the Company announced an update on the Cusi
Mineral Resource Estimate, which included an 18% increase in the
Measured and Indicated Resources and a 200% increase in the
Inferred Resources. This update was followed up by a NI 43-101
technical report on December 22, 2020;
In December 2020, the Company filed a NI 43-101 PEA technical
report for the Yauricocha Mine with favourable economics including
an incremental after-tax NPV (@8%) of $28.4 million and an IRR of
35.7% to increase the production to 5,500 tpd from 3,780 tpd. The
technical report also contained an increase in the Mineral Resource
estimate for the Yauricocha Mine. The update included a 26%
increase in the Measured and Indicated Mineral Resources and a 79%
increase in the Inferred Resource estimate; and;
In December 2020, the Company reported the results of a PEA for
doubling its output at the Cusi Mine to 2,400 tpd, which indicated
an after-tax incremental NPV (@8%) of $28.1 million and IRR of
46.8%. A 43-101 technical report for this PEA was filed on January
6, 2021.
Exploration Highlights
Peru:
- Exploration activities at the Yauricocha mine were suspended
between March 16, 2020, to October 31, 2020, due to restrictions
related to COVID-19; and
- Of the planned 25,000 meters of drilling planned for the year,
only 10,120 meters could be completed, which included 5,088 meters
of underground drilling and 5,032 meters of brownfield surface
exploration.
Mexico:
Bolivar
- The Infill Drilling program was carried in the El Gallo and
Bolivar West. 6,971 meters of drilling was completed, including
6,413 meters at Bolivar West and 558 meters at El Gallo; and
- Brownfield exploration drilling program was completed for
19,372 meters, which included mainly 11,184 meters at Bolivar West
and 7,222 meters at La Montura (El Salto) zone, with the remaining
meters drilled in the copper porphyry.
Cusi
- The Infill Drilling program was carried in the NorthEast
System, with the objective to define the continuity and the grades
of this system. 9,752 meters of drilling was completed, including
1,884 meters of definition drilling into this system; and
- Brownfield exploration drilling program started at Promontorio
vein, and La Gloria Vein and 3,975 meters of drilling were
completed during the year.
Annual SEC Filing completed by Sierra
Metals
Sierra Metals has completed its annual SEC filing. Copies of
these documents can be found at www.sierrametals.com on the
Investors Page under Financial Information. Shareholders may
request a hard copy of the complete audited financial statements
free of charge upon request.
Conference Call Webcast
Sierra Metals' senior management will host a conference call on
Friday, March 19, 2021, at 10:30 AM (EDT) to discuss the Company's
financial and operating results for the three months and year ended
December 31, 2020.
Via Webcast:
A live audio webcast of the meeting will be available on the
Company's website:
https://event.on24.com/wcc/r/2947459/6CFF80ECA94506BA22260486A6292C76
The webcast, along with presentation slides, will be archived
for 180 days on www.sierrametals.com.
Via phone:
To register for this conference call, please use the link
provided below. A confirmation will be sent through email,
including dial-in details and unique conference call codes for
entry after registering.
Registration is open throughout the live call; however, to
ensure you are connected for the entire call, we suggest
registering a day in advance or at minimum 10 minutes before the
start of the call.
Conference Call Registration
Link
http://www.directeventreg.com/registration/event/4514269
Quality Control
Américo Zuzunaga, FAusIMM CP (Mining Engineer) and Vice
President of Corporate Planning, is a Qualified Person under
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
Augusto Chung, FAusIMM CP (Metallurgist) and Vice President of
Metallurgy and Projects, is a Qualified Person under National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
About Sierra Metals
Sierra Metals Inc. is a diversified Canadian mining company
focused on the production and development of precious and base
metals from its polymetallic Yauricocha Mine in Peru and 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 (collectively, "forward-looking information").
Forward-looking information includes, but is not limited to,
statements with respect to the date of the 2020 Shareholders'
Meeting and the anticipated filing of the Compensation Disclosure.
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, the risks described under the heading "Risk
Factors" in the Company's annual information form dated March 30,
2020 for its fiscal year ended December 31, 2019 and other risks
identified in the Company's filings with Canadian securities
regulators and the United States Securities and Exchange
Commission, which filings are available at www.sedar.com and
www.sec.gov, respectively.
The risk factors referred to above are not an exhaustive list of
the factors that may affect any of the Company's forward-looking
information. Forward-looking information includes statements about
the future and is 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 such 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210318005988/en/
Mike McAllister Vice President, Investor Relations Sierra
Metals Inc. Tel: +1 (416) 366-7777 Email: info@sierrametals.com
Luis Marchese CEO Sierra Metals Inc. Tel: +1 (416)
366-7777
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