Conference Call May 12, 2022 At 11:00 AM
(EDT)
______________________________________________________________________
(All $ figures reported in USD)
- Revenue from metals payable of $57.2 million in Q1 2022, an 18%
decrease from $69.6 million in Q1 2021 and an 8% decrease from Q4,
2021.
- Adjusted EBITDA of $16.0 million in Q1 2022, a 43% decrease
from $27.9 million in Q1 2021 and a 15% decrease from Q4,
2021.
- Operating cash flows before movements in working capital of
$10.7 million in Q1 2022, a 58% decrease from $25.3 million in Q1
2021 and a 31% decrease of from Q4, 2021.
- Copper equivalent production of 15.9 million pounds; a 38%
decrease from Q1 2021 and an 11% decrease from Q4, 2021.
- Cash costs and AISC per copper equivalent payable pound
compared to Q1 2021 increased at Yauricocha 48% and 41%
respectively; at Bolivar cash costs and AISC per copper equivalent
payable pound increased by 187% and 152%, respectively, driven by
higher costs and lower copper equivalent pounds payable; and at
Cusi cash costs per silver equivalent payable ounce decreased by
28% and 34%, respectively.
- Net income attributable to shareholders for Q1 2022 was $0.4
million (Q1 2021: $3.1 million) or $0.00 per share (basic and
diluted) (Q1 2021: $0.02);
- Adjusted net income attributable to shareholders (1) of $5.9,
or $0.04 per share, for Q1 2022 as compared to the adjusted net
income of $4.7 million, or $0.03 per share for Q1 2021;
- After reaching the Bolivar Northwest orebody at the end of Q1
2022, a continued focus on meeting maximum permitted throughput at
Yauricocha and an increase in throughput with higher grades at
Cusi, production is on track to reach the Company’s H1 guidance of
34.0 to 39.5 million copper equivalent pounds.
- $19.5 million of cash and cash equivalents as at March 31, 2022
.
- $61.6 million in net debt as at March 31, 2022.
A shareholder conference call to be held Thursday, May 12,
2022, at 11:00 AM (EDT). Click here to register.
Luis Marchese, CEO of Sierra Metals, commented, "Following a
difficult start to the year, the Company continues on its path
towards operational recovery. During the first quarter, lower
throughput and grades resulted in a decrease in the production of
all metals along with significant increases to cash costs and
all-in sustaining costs at both Yauricocha and Bolivar.
He continued, “Our turnaround program continues at Bolivar. With
close to 20,000 meters in exploration drilling completed, we have
now accessed the Bolivar NorthWest zone, which is expected to
provide ore for the next several quarters. As previously stated,
production at the Mine is expected to improve for the balance of
the year as we ramp up production to full capacity. Additionally,
with the discovery of the new Fortuna zone at Yauricocha, we expect
to see an improvement in throughput and grades during the second
half of the year. Continued drilling will help us better understand
the patterns within the high grade orebody and provide potential to
find additional high value targets. Meanwhile, we are pleased with
Cusi’s performance during the first quarter. As a result of
increased throughput and higher grades, the Mine is on track to
meet production guidance for the year and continue its positive
contribution to the Company’s EBITDA. Mine development at Cusi will
continue with the goal of targeting a throughput increase to 1,200
tonnes per day.”
He concluded, "The outlook for a full recovery at our largest
mines is encouraging. With the first quarter behind us, we continue
to proceed in a disciplined manner. Our goal is to ensure that our
current guidance is met and that we are making the right decisions
now for future performance at our mines, so that we can deliver
improved value for our shareholders going forward."
Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN:
SMTS) ("Sierra Metals" or "the Company") today reported revenue of
$57.2 million and an adjusted EBITDA of $16.0 million on the
throughput of 590,730 tonnes and metal production of 15.9 million
copper equivalent pounds for the three-month period ended March 31,
2022.
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the full release here:
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Image 1: Raptor Drill at Bolivar (Photo:
Business Wire)
Q1 2022 Consolidated Operating
Highlights
The Yauricocha Mine achieved a throughput of 315,250 tonnes or
3% lower in Q1 2022 compared to Q1 2021. This 3% decrease was due
to delays in shotcrete work resulting from lower equipment
availability and shortage of manpower. Labor shortages were also
experienced in development and mining areas due to the continued
impact of COVID-19. The delays in preparation of the polymetallic
mining zones forced the mine to focus on copper sulfides during the
quarter, which resulted in higher copper head grades, but
negatively impacted grades for all other metals, except gold. Q1
2022 copper and gold production was 60% and 19% higher, while
silver, lead and zinc production was 43%, 56% and 57% lower
respectively as compared to Q1 2021. Lower throughput combined with
the impact of lower grades, except for copper and gold, resulted in
a 32% decrease in copper equivalent pounds produced in Q1 2022
compared to Q1 2021. Cash costs per copper equivalent payable pound
increased 48% and AISC per copper equivalent payable pound
increased by 41% as compared to Q1 2021.
The Bolivar Mine processed 187,556 tonnes in Q1 2022,
representing a 50% decrease from tonnes processed in Q1 2021. Ore
tonnage and grades at Bolivar in Q1 2022 were negatively impacted
due to the presence of intrusive rock in the Mina de Fierro zone
and lower than expected grades from the Bolivar West ore body.
Grades for copper, silver and gold were 25%, 44% and 16% lower
respectively, as compared to Q1 2021. The decrease in throughput
and grades resulted in a 64% decrease in copper equivalent pounds
produced during Q1 2022 as compared to Q1 2021. Production is
expected to improve for the balance of the year, in particular,
during the second half of 2022, due to the full turn-around effort
currently underway. Mining started in the Bolivar Northwest zone,
which is expected to support the bulk of production for the coming
quarters. Cash costs and AISC per copper equivalent payable pound
increased by 187% and 152%, respectively, as compared to Q1
2021.
The Cusi Mine achieved a 15% increase in throughput at 11%
higher silver grades during Q1 2022, resulting in 37% higher silver
equivalent production as compared to Q1 2021 as higher head grades
resulted from positive reconciliations to the resources in the
mined zones. Cusi production is on track to meet production
guidance for the year. Cash costs and AISC per silver equivalent
ounce decreased by 28% and 34%, respectively, as compared to Q1
2021.
Consolidated production of silver decreased 24% to 0.7 million
ounces, copper decreased 20% to 6.3 million pounds, lead decreased
53% to 4.2 million pounds, zinc decreased 57% to 10.5 million
pounds, and gold decreased 27% to 1,923 ounces compared to Q1
2021.
Q1 2022 Consolidated Financial
Highlights
Revenue from metals payable of $57.2 million in Q1 2022
decreased by 18% from $69.6 million in Q1 2021. The decrease in
revenues was largely the result of lower throughput at the Bolivar
mine and lower grades from the Bolivar and Yauricocha mine. Higher
average realized prices for all metals, except silver, could not
compensate for the lower metals production.
Yauricocha’s cash cost per copper equivalent payable pound was
$2.19 (Q1 2021 - $1.48), and AISC per zinc equivalent payable pound
of $3.73 (Q1 2021 - $2.65). Higher unit costs resulted from a 37%
decrease in copper equivalent payable pounds.
Bolivar’s cash cost per copper equivalent payable pound was
$4.55 (Q1 2021 - $1.58), and AISC per copper equivalent payable
pound was $7.33 (Q1 2021 - $2.91) for Q1 2022. Unit costs at
Bolivar increased as the 50% decrease in tonnage processed resulted
in higher operating costs per tonne. Further, lower grades resulted
in a 56% decrease in the copper equivalent payable pounds as
compared to Q1 2021.
Cusi’s cash cost per silver equivalent payable ounce was $13.48
(Q1 2021 - $18.72), and AISC per silver equivalent payable ounce
was $19.94 (Q1 2021 - $30.28) for Q1 2022 as compared to Q1 2021.
Unit costs for Q1 2022 declined at Cusi due to the 49% increase in
the silver equivalent payable ounces sold as compared to Q1
2021.
Adjusted EBITDA(1) of $16.0 million for Q1 2022 decreased
compared to $27.9 million in Q1 2021. The decrease in adjusted
EBITDA in Q1 2022 resulted from lower revenues and lower gross
margins as compared to Q1 2021.
Net income attributable to shareholders for Q1 2022 was $ 0.4
million (Q1 2021: $3.1 million) or $0.00 per share (basic and
diluted) (Q1 2021: $0.02).
Adjusted net income attributable to shareholders (1) of $5.9
million, or $0.04 per share, for Q1 2022 as compared to the
adjusted net income of $4.7 million, or $0.03 per share for Q1
2021.
Cash flow generated from operations before movements in working
capital of $10.7 million for Q1 2022 decreased compared to $25.3
million in Q1 2021. The decrease in operating cash flow is mainly
the result of lower consolidated revenues generated and lower gross
margins realized.
Cash and cash equivalents of $19.5 million and working capital
of $12.4 million as at March 31, 2022 compared to $34.9 million and
$17.3 million, respectively, at the end of 2021. Cash and cash
equivalents decreased during Q1 2022 due to $3.9 million used in
operating cash activities, $10.7 million of cash used in investing
activities and $0.9 million used in financing activities.
The Company has access to an available credit line with a
Peruvian Bank in the amount of US$14 million as well as other short
term lines and prepayment facilities with its commercial
offtakers.
(1) This is a non-IFRS performance measure. See the Non-IFRS
Performance Measures section of the MD&A.
The following table displays selected financial and operational
information for the three months ended March 31, 2022:
Three Months Ended (In thousands of dollars, except per
share and cash cost amounts, consolidated figures unless noted
otherwise)
March 31, 2022 March 31, 2021
Operating Ore Processed / Tonnes Milled
590,730
774,421
Silver Ounces Produced (000's)
734
961
Copper Pounds Produced (000's)
6,324
7,895
Lead Pounds Produced (000's)
4,216
9,004
Zinc Pounds Produced (000's)
10,492
24,123
Gold Ounces Produced
1,923
2,636
Copper Equivalent Pounds Produced (000's)1
15,896
25,496
Cash Cost per Tonne Processed
$
61.32
$
47.54
Cash Cost per CuEqLb2
$
2.73
$
1.62
AISC per CuEqLb2
$
4.48
$
2.88
Cash Cost per CuEqLb (Yauricocha)2
$
2.19
$
1.48
AISC per CuEqLb (Yauricocha)2
$
3.73
$
2.65
Cash Cost per CuEqLb (Bolivar)2
$
4.55
$
1.58
AISC per CuEqLb (Bolivar)2
$
7.33
$
2.91
Cash Cost per AgEqOz (Cusi)2
$
13.48
$
18.72
AISC per AgEqOz (Cusi)2
$
19.94
$
30.28
Financial Revenues
$
57,241
$
69,624
Adjusted EBITDA2
$
15,988
$
27,946
Operating cash flows before movements in working capital
$
10,702
$
25,270
Adjusted net income (loss) attributable to shareholders2
$
5,945
$
4,739
Net income (loss) attributable to shareholders
$
369
$
3,084
Cash and cash equivalents
$
19,511
$
74,329
Working capital
$
12,433
$
64,704
(1) Silver equivalent ounces and copper equivalent pounds for Q1
2022 were calculated using the following realized prices: $23.95/oz
Ag, $4.53/lb Cu, $1.69/lb Zn, $1.06/lb Pb, $1,875/oz Au. Silver
equivalent ounces and copper 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. (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, 2022, vs March 31,
2021:
Realized Metal Prices % (In US dollars) Q1
2022 Q1 2021 Variance Silver (oz)
$
23.95
$
26.44
-9
%
Copper (lb)
$
4.53
$
3.88
17
%
Lead (lb)
$
1.06
$
0.92
15
%
Zinc (lb)
$
1.69
$
1.24
36
%
Gold (oz)
$
1,875
$
1,778
5
%
Outlook 2022
Yauricocha:
- Lost production during Q1/2022 is expected to be recovered in
the coming quarters by making use of spare capacity at the plant,
with increased throughput. Our drilling campaign remains focused on
the upper areas of the mine to identify new mineable areas within
the permitted levels.
- Expect to access the newly discovered high grade Fortuna
orebody as early as Q3, 2022.
- Yauricocha Mine remains on track to achieve copper equivalent
production guidance of 45 to 49 million copper equivalent
pounds.
Bolivar:
- Expect improved production for the balance of 2022, in
particular, during the second half of the year, due to the full
turn-around effort currently underway. Mining started in the
Bolivar NW zone, which is expected to support the bulk of the
production for the coming quarters.
- Infill drilling and development will continue.
- Bolivar Mine is expected to meet copper equivalent production
guidance of 23.8 to 29.9 million copper equivalent pounds.
Cusi:
- Focus on development to target throughput of 1,200 TPD.
- Cusi Mine is on track to meet production guidance of 1.75
million to 1.85 million silver equivalent ounces.
Exploration Update
Peru:
During the first quarter, 2,053 meters of surface exploration
was completed in the Yauricocha Medio (1,095 meters), Kilcasca (449
meters), Exito (373 meters) and Fortuna (136 meters) zones;
Underground exploration continued during Q1 2022 with the aim to
replace and increase mineral resources. Approximately 4,213 meters
of drilling was completed mainly in France Chert, Adrico Sur and
Amoeba zones;
Drilling during the first quarter allowed for the recent
discovery of the Fortuna zone, which belongs to system of
high-grade polymetallic bodies associated with structural traps. A
structural analysis of the area as well as further drilling is
required, to understand the patterns for the presence of this type
of orebody. A program of at least 1,500 meters of additional
drilling is proposed.
An analysis of the structural patterns within the Fortuna
orebody with a review of geophysical information to look for
correlations, can allow for important targets for future additional
drilling.
Mexico:
Bolivar
At Bolivar during Q1 2022, 19,739 meters were drilled from
surface including 780 meters drilled in the Bolivar West, 13,353
meters in the Bolivar North-West and 441 meters in the Gallo
Inferior encountering skarn intersections with mineralization in
all the zones. Additionally, infill drilling of 2,078 meters was
completed in the Bolivar West zone and 3,087 meters in the Gallo
Inferior (Mina de Fierro).
Additional exploration will focus on 2 areas:
Bolivar East, an area of high grade zinc, silver and gold. The
Company is currently carrying out geochemistry analysis as well as
a review of geophysics with the aim of initiating a drilling
campaign later this year; and
La Sidra, a high grade epithermal system of silver and gold.
Necessary drilling permits are already in place for this zone. The
zone lies within close proximity to current operations, potentially
allowing for improved mineral value to support the Bolivar
mine.
Cusi
During Q1 2022, the Company completed 7,092 meters of infill
drilling to support the development of the Santa Rosa de Lima vein
and NE Trend.
The exploration focus in the short term is to continue
investigating the NE SW system as it has significant potential,
both laterally and at depth.
Covid-19 Update
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. Lower volume of
sales is a result of 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.
During the quarter ended March 31, 2022, the Company has
continued its efforts to safeguard the health of its employees,
while continuing to operate safely. During this quarter, the
company still suffered some delays in mine development leading to
lower head grades, and forced deferral of some exploration and
capital projects.
Due to the current vaccination efforts at Yauricocha, 100% of
onsite personnel have been vaccinated with three doses,
significantly reducing any further risk of serious infection caused
by COVID. The Company is constantly updating its guidelines by
closely following the health updates issued by the Peruvian
government.
In Mexico, there has been significant progress with the
vaccination program. Currently, most personnel at Bolivar and Cusi
are vaccinated with at least two doses with plans to achieve full
vaccination with three doses by the end of Q3 2022.
Conference Call and
Webcast
Sierra Metals' senior management will host a conference call on
Thursday, May 12, 2022, at 11:00 AM (EDT) to discuss the Company's
financial and operating results for the three months ended March
31, 2022.
Via Webcast:
A live audio webcast of the meeting will be available on the
Company's website:
https://event.on24.com/wcc/r/3724262/ABA56A91A50DA5A991E18125DC207388
The webcast, along with presentation slides, will be archived
for 180 days on www.sierrametals.com.
Via phone:
For those who prefer to listen by phone, dial-in instructions
are below. To ensure your participation, please call approximately
five minutes prior to the scheduled start time of the call.
US/CAN dial-in number (Toll Free): 1 844 200 6205 US dial-in
number (Local): 1 646 904 5544 Canada dial-in number (Local): 1 226
828 7575 All other locations: +1 929 526 1599 Access code: 020167
Press *1 to ask a question, *2 to withdraw your question, or *0 for
operator assistance.
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.
About Sierra Metals
Sierra Metals Inc. is a diversified Canadian mining company with
Green Metal exposure including increasing copper production and
base metal production with precious metals byproduct credits,
focused on the production and development of its 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".
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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 2021 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 16,
2022 for its fiscal year ended December 31, 2021 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.
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For further information regarding Sierra Metals, please visit
www.sierrametals.com or contact:
Investor Relations Sierra Metals Inc. +1 (416) 366-7777
Email: info@sierrametals.com
Luis Marchese CEO Sierra Metals Inc. +1(416) 366-7777
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