CONFERENCE CALL MAY 7, 2021 AT 10:30 AM
(EDT)
(All $ figures reported in USD)
- Revenue from metals payable of $69.6 million in Q1 2021, a
25% increase from $55.6 million in Q1 2020
- Operating cash flows before movements in working capital of
$25.6 million in Q1 2021, a 63% increase from $15.7 million in Q1
2020
- Adjusted EBITDA of $25.3 million in Q1 2021, a 57% increase
from $16.1 million in Q1 2021
- Q1 2021 consolidated production includes 7.9 million pounds
of copper, a 33% decrease; 1.0 million ounces of silver, a 1%
increase; 24.1 million pounds of zinc, an 11% increase; 9.0 million
pounds of lead, a 1% decrease; and 2,636 ounces of gold, a 28%
decrease respectively, compared to Q1 2020 due to reduced mining of
higher grade areas primarily due to restrictions resulting from
COVID-19
- Cash costs and AISC per copper equivalent payable pound
compared to Q1 2020 increased at Yauricocha 26% and 18%
respectively; at Bolivar cash costs and AISC per copper equivalent
payable pound increased by 37% and 57%, respectively; and at Cusi
cash costs per silver equivalent payable pound decreased by 17%
while the AISC was flat
- Record quarterly throughput of 3,728 tonnes per day ("tpd")
at the Yauricocha Mine in Peru
- $74.3 million of cash and cash equivalents as at March 31,
2021
- A shareholder conference call to be held Friday, May 7,
2021, at 10:30 AM (EDT)
Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN:
SMTS) ("Sierra Metals" or "the Company") today reported revenue of
$69.6 million and an adjusted EBITDA of $25.6 million on the
throughput of 774,421 tonnes and metal production of 25.5 million
copper equivalent pounds or 3.7 million silver equivalent ounces,
or 79.8 million zinc equivalent pounds for the three-month period
ended March 31, 2021.
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the full release here:
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Image 1: Piedras Verdes Mill at Bolivar
(Photo: Business Wire)
Despite the decline in quantities of payable metals due to
ongoing COVID-19 related operational challenges and external
factors, the Company generated higher revenues, adjusted EBITDA and
operating cash flows during Q1 2021.
The Yauricocha Mine achieved 14% higher throughput in Q1 2021
compared to Q1 2020, despite the various operational challenges
posed by the COVID-19 pandemic. Zinc equivalent production dropped
9% as compared to Q1 2020. In terms of copper equivalent pound, the
decline was 21% due to a higher increase in copper prices than the
zinc prices compared to Q1 2020. Metal production declined (except
zinc and silver) as ore grades fell due to a decline of tonnage
contributions from the high-grade cuerpos chicos zones. The
copper-rich Esperanza zone also had some operational issues that
have since been resolved. Cash costs per copper equivalent payable
pound increased 26%, whereas cash costs per zinc equivalent payable
pound increased by 9% as compared to Q1 2020. AISC per copper
equivalent payable pound increased by 14%, as the increase in cash
cost was partially offset by lower treatment and refining charges
and lower sustaining capital. AISC per zinc equivalent payable
pound increased by 4% as compared to Q1 2020.
The Bolivar Mine processed 371,608 tonnes in Q1 2021,
representing a mere 2% decrease from tonnes processed in Q1 2020,
despite the ongoing challenges due to COVID-19 and bad weather at
the beginning of the quarter. The decrease in throughput combined
with lower grades resulted in a 20% decrease in copper equivalent
pounds produced during Q1 2021 as compared to Q1 2020. Cash costs
and AISC per copper equivalent payable pound increased by 37% and
57%, respectively, as compared to Q1 2020.
The Cusi Mine achieved 2% lower throughput at 30% higher silver
grades during Q1 2021, resulting in 17% higher silver equivalent
production as compared to Q1 2020. Cash costs per silver equivalent
ounce decreased by 17%, but AISC per silver equivalent payable
ounce was in line with Q1 2020, as higher sustaining capital offset
the impact of the increase in silver equivalent payable ounces in
Q1 2021.
Consolidated production of silver increased 1% to 1.0 million
ounces, copper decreased 33% to 7.9 million pounds, lead decreased
1% to 9.0 million pounds, zinc increased 11% to 24.1 million
pounds, and gold decreased 28% to 2,636 ounces compared to Q1
2020.
Luis Marchese, CEO of Sierra Metals, commented, "The safety of
our workforce and the communities in which we operate is paramount.
The COVID-19 pandemic has enacted various direct and indirect
challenges which have affected our ability to operate as
effectively as expected. Additionally, an extended power outage at
Cusi affected our operations during the quarter. Despite these
challenges, we still had solid revenue and adjusted EBITDA tempered
by higher costs due to lower metal production and a decline in ore
grades. We continue to work through the challenges and issues, and
we expect to see improvement as we progress throughout the
year."
He continued, "Looking ahead, the year continues to be busy with
many exciting developments such as the anticipated receipt of the
Informe Tecnico Minero ("ITM") permit at Yauricocha, which will
allow us to increase throughput by 20%. We also continue advancing
the completion of Preliminary Feasibility Studies for all mines,
examining increases in throughput starting in 2024. We also expect
to begin construction of an iron ore processing plant at Bolivar,
expected to produce 500,000 tonnes per year of 62% iron ore fines.
This is expected to enhance Bolivar's profitability while also
lowering our transportation and tailing development costs.
Furthermore, we continue with our brownfield and greenfield
exploration programs. We have had recent success in the area
between the Esperanza and Cachi Cachi zones with the discovery of
high-grade copper silver and zinc oxide material as reported in a
press release dated April 13, 2020."
He concluded, "The Company continues to have a strong balance
sheet to support the Company's capital expenditures and growth
initiatives. While we are facing challenges from COVID-19
currently, the mid-term plans remain in place."
The following table displays selected financial and operational
information for the three months ended March 31, 2021:
Three Months Ended (In thousands of dollars, except per
share and cash cost amounts, consolidated figures unless noted
otherwise)
March 31, 2021
March 31, 2020
Operating Ore Processed / Tonnes Milled
774,421
740,698
Silver Ounces Produced (000's)
961
948
Copper Pounds Produced (000's)
7,895
11,775
Lead Pounds Produced (000's)
9,004
9,079
Zinc Pounds Produced (000's)
24,123
21,646
Gold Ounces Produced
2,636
3,657
Copper Equivalent Pounds Produced (000's)1
25,496
31,170
Zinc Equivalent Pounds Produced (000's)1
79,778
84,466
Silver Equivalent Ounces Produced (000's)1
3,741
4,751
Cash Cost per Tonne Processed
$
47.54
$
46.73
Cost of sales per AgEqOz
$
11.48
$
8.96
Cash Cost per AgEqOz2
$
11.02
$
8.43
AISC per AgEqOz2
$
19.62
$
14.71
Cost of sales per CuEqLb2
$
1.69
$
1.37
Cash Cost per CuEqLb2
$
1.62
$
1.29
AISC per CuEqLb2
$
2.88
$
2.25
Cost of sales per ZnEqLb2
$
0.54
$
0.50
Cash Cost per ZnEqLb2
$
0.52
$
0.47
AISC per ZnEqLb2
$
0.92
$
0.83
Cash Cost per ZnEqLb (Yauricocha)2
$
0.47
$
0.43
AISC per ZnEqLb (Yauricocha)2
$
0.85
$
0.82
Cash Cost per CuEqLb (Yauricocha)2
$
1.48
$
1.17
AISC per CuEqLb (Yauricocha)2
$
2.65
$
2.24
Cash Cost per CuEqLb (Bolivar)2
$
1.58
$
1.15
AISC per CuEqLb (Bolivar)2
$
2.91
$
1.85
Cash Cost per AgEqOz (Cusi)2
$
18.72
$
22.62
AISC per AgEqOz (Cusi)2
$
30.28
$
30.00
Financial Revenues
$
69,624
$
55,558
Adjusted EBITDA2
$
25,269
$
16,074
Operating cash flows before movements in working capital
$
25,626
$
15,710
Adjusted net income (loss) attributable to shareholders2
$
4,383
$
1,210
Net income (loss) attributable to shareholders
$
3,084
$
(1,869
)
Cash and cash equivalents
$
74,329
$
36,915
Working capital
$
64,704
$
49,193
(1) Silver equivalent ounces and copper and zinc equivalent
pounds for Q1 2021 were calculated using the following realized
prices: $26.44/oz Ag, $3.88/lb Cu, $1.24/lb Zn, $0.92/lb Pb,
$1,778/oz Au. Silver equivalent ounces and copper and zinc
equivalent pounds for Q1 2020 were calculated using the following
realized prices: $16.57/oz Ag, $2.53/lb Cu, $0.93/lb Zn, $0.80/lb
Pb, $1,585/oz Au. (2) This is a non-IFRS performance measure, see
Non-IFRS Performance Measures section of the MD&A.
The following table displays average realized metal prices
information for the three months ended March 31, 2021, vs March 31,
2020:
Average Realized Metal Prices % (In US
dollars) Q1 2021 Q1 2020 Increase
Silver ($/oz)
$
26.44
$
16.57
60
%
Copper ($/lb)
$
3.88
$
2.53
53
%
Lead ($/lb)
$
0.92
$
0.80
15
%
Zinc ($/lb)
$
1.24
$
0.93
33
%
Gold ($/oz)
$
1,778
$
1,585
12
%
Q1 2021 Financial
Highlights
Revenue from metals payable of $69.6 million in Q1 2021
increased by 25% from $55.6 million in Q1 2020. The increase in
revenues was largely driven by the increase in realized metal
prices, which more than compensated for the decrease in metal
payable, except zinc and lead.
Yauricocha's cost of sales per zinc equivalent payable pound was
$0.50 (Q1 2020 - $0.45), cash cost per zinc equivalent payable
pound was $0.47 (Q1 2020 - $0.43), and AISC per zinc equivalent
payable pound of $0.85 (Q1 2020 - $0.82). AISC per zinc equivalent
payable pound for Q1 2021 increased as compared to Q1 2020 due to
an 11% decline in zinc equivalent payable pounds during the
quarter.
Yauricocha's cost of sales per copper equivalent payable pound
was $1.56 (Q1 2020 - $1.22), cash cost per copper equivalent
payable pound was $1.48 (Q1 2020 - $1.17), and AISC per copper
equivalent payable pound of $2.65 (Q1 2020 - $2.24). AISC per
copper equivalent payable pound for Q1 2021 increased as compared
to Q1 2020 due to a 22% decline in copper equivalent payable pounds
during the quarter.
Bolivar's cost of sales per copper equivalent payable pound was
$1.64 (Q1 2020 - $1.19), cash cost per copper equivalent payable
pound was $1.58 (Q1 2020 - $1.15), and AISC per copper equivalent
payable pound was $2.91 (Q1 2020 - $1.85) for Q1 2021. Unit costs
at Bolivar increased due to the 24% decline in the copper
equivalent payable pound resulting from lower grades as compared to
Q1 2020.
Cusi's cost of sales per silver equivalent payable ounce was
$18.92 (Q1 2020 - $27.48), cash cost per silver equivalent payable
ounce was $18.72 (Q1 2020 - $22.62), and AISC per silver equivalent
payable ounce was $30.28 (Q1 2020 - $30.00) for Q1 2021 as compared
to Q1 2020. Cost of sales and cash costs per unit declined at Cusi
due to the 23% increase in the silver equivalent payable ounces
sold as compare to Q1 2020. AISC per silver equivalent payable
pound at Cusi was in line with Q1 2020 as a 188% increase in
sustaining capital, driven by higher development costs, offset the
impact of higher silver equivalent ounces sold.
Adjusted EBITDA(1) of $25.3 million for Q1 2021 increased
compared to $16.1 million in Q1 2020. The increase in adjusted
EBITDA in Q1 2021 resulted from higher revenues and higher gross
margins at all sites.
Net income attributable to shareholders for Q1 2021 was $3.1
million (Q1 2020: $(1.9) million) or $0.02 per share (basic and
diluted) (Q1 2020: $(0.01).
Adjusted net income attributable to shareholders (1) of $4.4, or
$0.03 per share, for Q1 2021 as compared to the adjusted net income
of $1.2 million, or $0.01 per share for Q1 2020.
Cash flow generated from operations before movements in working
capital of $25.6 million for Q1 2021 increased compared to $15.7
million in Q1 2020. The increase in operating cash flow is mainly
the result of higher consolidated revenues generated, and higher
gross margins realized.
Cash and cash equivalents of $74.3 million and working capital
of $64.7 million as at March 31, 2021, compared to $71.5 million
and $70.1 million, respectively, at the end of 2020. Cash and cash
equivalents increased during Q1 2021 due to $18.2 million of
operating cash flows after working capital adjustments and taxes
offset by $14.6 of cash used in investing activities and interest
payments of $0.8 million.
(1) This is a non-IFRS performance measure. See the Non-IFRS
Performance Measures section of the MD&A.
Exploration Update
Peru:
During the first quarter, surface exploration continued in the
Triada copper porphyry (446 meters) and Kilkasca zones (224
meters);
- Underground exploration continued during Q1 2021 with the aim
to replace and increase mineral resources that were depleted during
2020. Approximately 5,028 meters of drilling was completed in
Esperanza North, Central Mine, Cachi-cachi and the high-grade
cuerpos chicos.
Mexico:
Bolivar
- At Bolivar during Q1 2021, 11,185 meters were drilled from the
surface as well as diamond drilling within the mine. Surface
exploration drilling included 2,071 meters drilled in the Bolivar
West – Bolivar West extension and 3,697 meters in the "Gallo
Inferior" ("La Montura" Area) encountering skarn intersections with
mineralization. Additionally, infill drilling of 2,846 meters was
completed in the Bolivar West zone and 2,571 meters in the Gallo
Inferior (Fierro Mine).
Cusi
- During Q1 2021, the Company completed 2,775 meters of infill
drilling to support the development of the Santa Rosa de Lima vein
and NE Trend. In addition, 2,383 meters of surface drilling was
completed to support the "San Juan Vein" exploration and the "Gallo
vein."
Covid-19 Update and
Guidance
The COVID-19 pandemic has impacted the Company's operations, and
this is reflected in delays in mine development and preparation of
areas for mining and consequent lower head grades. A lower volume
of sales is a result of a decrease in concentrate production
attributable to lower grades. Costs are also negatively impacted
mainly due to indirect fixed costs which have to be incurred,
despite lower production. The Company continues to take proactive
and reactive mitigation measures to minimize any potential impacts
COVID-19 may have on its employees, communities, operations, supply
chain, and finances. These measures, including COVID testing and
quarantining employees and contractors. Further, some exploration
and capital expenditure projects have been deferred due to ongoing
and residual difficulties.
On January 27, 2021, the Peruvian Government, in response to the
"second wave" of COVID-19, declared a quarantine period in certain
cities for two weeks ending on February 14, 2021. This period was
extended on February 10, 2021, for an additional two weeks until
February 28, 2021. The second wave in Perú is still ongoing, with
the number of cases remaining at all-time highs.
In Mexico, the contagion was at its peak at the end of 2020.
Hospitalization rates were higher than 80% of the capacity in the
state of Chihuahua, where the Company operates. Although the number
of new cases declined until mid-March 2021, these cases have
gradually been increasing since then, possibly due to new strains
of the virus. The Mexican Government announced a precautionary
closure of non-essential businesses in the last weekend of April
2021, and greater restrictions have been imposed on businesses and
the mobility of people.
Currently, although the operations have not been directly
affected by these recent additional measures taken by the local
governments, they are affected by the overall pandemic operational
restrictions and inefficiencies. Management continues to assess the
situation but is maintaining its production guidance of between 155
million to 170 million Cu Eq pounds issued on January 18, 2021.
Conference Call and
Webcast
Sierra Metals' senior management will host a conference call on
Friday, May 7, 2021, at 10:30 AM (EDT) to discuss the Company's
financial and operating results for the three months ended March
31, 2021.
Via Webcast:
A live audio webcast of the meeting will be available on the
Company's website:
https://event.on24.com/wcc/r/3081089/8CC784C584EEDC0F4B1375A13E2CE27A
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. After registering, a confirmation will be sent
through email, including dial-in details and unique conference call
codes for entry. As well, reminders will be sent to registered
participants in advance of the call.
If you experience difficulty registering, please dial: (888)
869-1189 or (706) 643-5902 for extra assistance.
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 for Phone:
http://www.directeventreg.com/registration/event/4189713
Qualified Persons
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 Toronto Stock Exchange
and the Bolsa de Valores de Lima 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, the risks described under the heading "Risk
Factors" in our Annual Information Form dated March 30, 2021 in
respect of the year ended December 31, 2020 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.
The risk factors referred to above 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506006149/en/
Mike McAllister V.P., Investor Relations Sierra Metals
Inc. +1 (416) 366-7777 Email: info@sierrametals.com
Ed Guimaraes CFO Sierra Metals Inc. +1(416) 366-7777
Luis Marchese CEO Sierra Metals Inc. +1(416) 366-7777
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