Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) (“Sierra Metals” or the “Company”) today announces that, as a result of the Company entering into a new phase as a generator of free cash flow, it is now in a position to start returning capital to its shareholders. In this regard, the Company’s board of directors (the “Board”) has approved a plan to return up to US$30 million to shareholders in the coming year.
In furtherance of this plan, Sierra Metals intends to launch a substantial issuer bid (the “Offer”) pursuant to which the Company will offer to repurchase for cancellation up to US$15 million of its common shares (the “Common Shares”) from shareholders for cash. The Offer will proceed by way of a modified Dutch auction.1 The Company intends to fund the Offer with available cash on hand and expects to announce the terms of the Offer in the second quarter of 2020.
The Board is continuing its ongoing review of and consideration with respect to the method by which the remaining US$15 million will be distributed to its shareholders including potential further substantial issuers bids. Going forward, the Company expects to be in a position to return a significant portion of its excess free cash flow to shareholders annually.
Igor Gonzales, President and CEO of Sierra Metals commented, “Management believes that Sierra’s underlying value along with its growth prospects are not reflected in the recent trading price of its Common Shares. As such, the Company will use a reasonable portion of its cash resources toward the purchase of its Common Shares under the Offer. Deploying a portion of the Company’s excess cash in this manner reflects management’s commitment to improving Sierra’s stock performance while allowing for the financial resources required to continue with our operations and growth strategy. The Offer should provide an important exit trading window to institutional shareholders who may have been concerned about the share trading liquidity of the Company.”
The foregoing is provided for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Common Shares. The solicitation and the offer to buy Common Shares will be made only pursuant to a separate offer to purchase and issuer bid circular and related documents. At the time the offer is commenced, Sierra Metals will file the offer to purchase, an issuer bid circular and related documents with Canadian securities regulatory authorities and with the United States Securities and Exchange Commission (the “SEC”). Shareholders should carefully read the offer to purchase and the issuer bid circular, the letter of transmittal and other related documents when they are available because they will contain important information, including the various terms and conditions of the Offer. The issuer bid circular, the related letter of transmittal and certain other related documents will be delivered without charge to all holders of Common Shares. The offer to purchase and issuer bid circular, the letter of transmittal and other related documents filed by Sierra Metals with the SEC will be available without charge at the SEC’s website at www.sec.gov. Offer documents required to be filed in Canada will also be available without charge at www.sedar.com. Shareholders are urged to read these materials carefully prior to making any decision with respect to the offer.
About Sierra Metals
Sierra Metals is a Canadian based growing polymetallic mining company with production from its Yauricocha Mine in Peru, and its 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 discoveries and still has additional brownfield exploration opportunities at all three Mines in Peru and Mexico that are within or 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 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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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: (i) the Company’s intention to return up to $30 million to its shareholders in the coming year; (ii) the Company’s intention to undertake the Offer and the terms thereof (including the maximum dollar value of Common Shares that Sierra Metals may purchase under the Offer and the timing for launch thereof); and (iii) the Company’s strategy with respect to returning excess cash to shareholders beyond 2020, as well as other statements that are not historical facts. 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 Offer not occurring as expected or in the time frame expected, any failure of any condition to the Offer, any inability to obtain any required regulatory approvals or exemptive relief in the United States or Canada, the extent to which shareholders elect to tender their Common Shares under the Offer, the Company having sufficient financial resources to launch the Offer, the results of the review and consideration by the board of directors of the Company, the risks described under the heading “Risk Factors” in the Company’s Annual Information Form dated March 28, 2019 in respect of the fiscal year ended December 31, 2018 and other risks identified in the Company’s filings with Canadian securities regulators and the SEC, 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.
1 A modified Dutch auction allows shareholders who choose to participate in the Offer to individually select the price, within a specified range as determined by the Company, at which to sell their Common Shares. Shareholders who wish to accept the Offer may do so proportionately by “Proportionate Tender” (such number of Common Shares that will result in maintaining their proportionate equity ownership in the Company following completion of the Offer at the purchase price determined pursuant to the Offer) or non-proportionately by “Auction Tender” (a specified number of Shares at a specified price) or “Purchase Price Tender” (a specified number of Shares at the purchase price determined pursuant to the Offer).
VP, Investor Relations
Sierra Metals Inc.
+1 (416) 366-7777
Sierra Metals Inc.
+1 (416) 366-7777
President & CEO
Sierra Metals Inc.
+1 (416) 366-7777
UPDATED MINERAL RESOURCE AND RESERVE ESTIMATE TO BE ISSUED IN Q1 2020 WHICH WILL INCLUDE ADDITIONAL DRILLING AND INFORMATION FROM A LITHO-STRUCTUAL MODEL
Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) (“Sierra Metals” or “the Company”) has updated its Mineral Resource at the Company’s Bolivar Mine, located in Chihuahua State, Mexico.
The updated Mineral Resource Estimate disclosed herein is the result of drilling programs completed between November 2017 and September 2019, as well as production data up to September 2019; this Mineral Resource update includes 13,698 metres of infill drilling and 41,553 metres of exploration drilling. Subsequent to the cut-off date of September 30, 2019 the updated Resource statement does not include approximately 1,377 metres infill drilling and 4,149 metres exploration drilling some of which is in the process of being drilled with an aim to further expand the resources and reserves at the Bolivar mine. These additional infill and exploration drill meters completed after the September 30, 2019 cut-off date will be included in the next Mineral Resource and Reserve update.
Work has already commenced on the next updated Mineral Resource and Reserve Update for the Bolivar Mine which is expected to be released before the end of Q1 2020. The update will not only include additional drilling completed during Q4 2019 but will also take advantage of new information which will be provided from an additional litho-structural model.
Press Release Highlights:
- Total Indicated Mineral Resources for Bolivar are 11.63 million tonnes averaging 0.95% copper, 18.1 g/t silver and 0.24 g/t gold or 1.17% CuEq which represents a 12% overall tonnage decrease from the previous Indicated Resource Estimate, but which includes depletions since the previous Resource Update. Metal grades were also reduced by 9% for copper, 20% for silver and 17% for gold.
- Total Inferred Mineral Resources for Bolivar are 16.69 million tonnes averaging 0.93% copper, 16.8 g/t silver and 0.30 g/t gold or 1.16% CuEq which represents a 108% overall tonnage increase from the previous Inferred Resource Estimate. Metal grades were reduced by 3% for copper, 25% for silver and 29% for gold.
- The updated Mineral Resource Estimate varies from the 2017 Technical Report due to a variety of factors, including: a reduction in the Net Smelter Return (NSR) cut off grades resulting in lower value material, increased commodity prices* and depletion by production since the Report was completed.
- The updated Mineral Resource Estimate has incorporated new exploration drilling, sampling, and face mapping information into the geologic interpretation and grade estimations providing more refined resource models.
* Metal price assumptions considered for the calculation of unit values are: Silver (US$/oz 17.82), Copper (US$/lb 3.08), Gold (US$/oz 1,354.00)
Igor Gonzales, President and CEO of Sierra Metals Inc. commented: “We are satisfied with the updated Mineral Resource report for the Bolivar mine and the quality of the defined areas within the report like the recent Yauricocha Mineral Resource update, we have incorporated improved methodologies to provide us with a higher quality and better refined Mineral Resource. Since the latter part of 2017, the Company has been executing on a 55,251 meter drilling campaign, with a significant portion of the program already completed. Drilling has occurred at Bolivar West, Bolivar Northwest and El Gallo Inferior zones. Currently, these high-value targets continue to be defined and subsequent exploration programs planned with a goal of increasing tonnage and grades at Bolivar.”
He continued “The planned Mineral Resource and Reserve Update, which is currently underway, will include additional drilling and take advantage of new information that we hope will provide for a positive outcome with respect to tonnage and grades included in the report, as the litho-geologic model is expected to upgrade a portion of our now significantly increased inferred resources into the indicated category.”
An updated Preliminary Economic Assessment (PEA) is expected to be released in Q3 2020 for the Bolivar Mine. The PEA will study and present an opportunity for increased tonnage throughput at the Bolivar Mine in excess of the 5,000 tonne per day level, which is expected to be reached by the end of 2020.
This Mineral Resources Estimate incorporates new exploration and infill drilling, reduced operational costs, higher commodity price assumptions, sampling, face mapping information into the geologic interpretations, and grade estimations which have resulted in a further refinement of the ore body. It is Management’s view that the resulting Mineral Resource Estimate reflects the ongoing efforts by the Company to achieve good value from the Bolivar asset, given the current operating and metal price environment.
Mineral Resource Estimate
Mineral Resource Estimations have been conducted by Cliff Revering, P.Eng of SRK Consulting (Canada.) Inc., a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects, using Maptek Vulcan™ and Leapfrog Geo™ software.
SRK has worked with Sierra Metals/Dia Bras personnel to develop the mineralization models, estimations, and reporting criteria for mineral resources at Bolivar. Mineralization models were developed by Sierra Metals and were modified and reviewed by SRK. In all, there are nineteen individual mineralized bodies identified through drilling and mine development. These were used as hard boundaries for the purposes of the estimation. The block models were created by SRK and have been estimated using a combination of inverse distance and ordinary kriging methods. The mineral resources have been estimated in conformity with generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines.
SRK is of the opinion that the mineral resource estimations are suitable for public reporting and are a fair representation of the mill feed tonnes, grade, and metal for the Bolivar deposit.
The September 30, 2019, consolidated mineral resource statement for the Bolivar Mine area is presented in Table 1. These resources have been stated in unmined areas of the deposits.
(All $ figures reported in USD)
Revenue from metals payable of $64.6 million in Q3 2019 increased 22% from $53.0 million in Q3 2018 due to higher throughput and metal production from all three mines;
Adjusted EBITDA of $21.6 million in Q3 2019 increased 18% from $18.2 million in Q3 2018, primarily due to increased revenues realized from all three mines;
Operating cash flows before movements in working capital of $21.8 million in Q3 2019 increased from $18.1 million in Q3 2018
Q3 2019 consolidated copper production of 11.1 million pounds, consolidated silver production of 1.0 million ounces, consolidated zinc production of 22.5 million pounds, consolidated lead production of 10.5 million pounds, and consolidated gold production of 3,490 ounces; a 34% increase, 34% increase, 8% increase, 65% increase, and an 83% increase respectively, compared to Q3 2018, and management expects that annual production guidance will still be met(1)
Q3 2019 revenues as a percentage of metals sold represent 35% from copper, 27% from silver, 23% from zinc, 14% from lead and 1% from gold
Record consolidated quarterly equivalent metal production and throughput, and record quarterly equivalent metal production and throughput at the Yauricocha and Bolivar Mines
$40.4 million of cash and cash equivalents as at September 30, 2019
$50.9 million of working capital as at September 30, 2019
Net Debt of $58.8 million as at September 30, 2019
A shareholder conference call to be held Thursday, November 14, 2019, at 10:30 AM (EST)
(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2019 were calculated using the following realized prices: $17.28/oz Ag, $2.63/lb Cu, $0.94/lb Pb, $1.06/lb Zn, $1,481/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the following realized prices: $14.85/oz Ag, $2.79/lb Cu, $0.94/lb Pb, $1.14/lb Zn, $1,206/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2019 were calculated using the following realized prices: $15.91/oz Ag, $2.74/lb Cu, $0.91/lb Pb, $1.16/lb Zn, $1,370/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2018 were calculated using the following realized prices: $15.99/oz Ag, $3.02/lb Cu, $/1.06lb Pb, $1.36/lb Zn, $1,279/oz Au.
Sierra Metals Inc. (TSX:SMT)(BVL:SMT)(NYSE American:SMTS) (“Sierra Metals” or the “Company”) today reported revenue of $64.6 million and adjusted EBITDA of $21.6 million on throughput of 709,461 tonnes and metal production of 4.9 million silver equivalent ounces, or 32.3 million copper equivalent pounds, or 80.4 million zinc equivalent pounds for the three month period ended September 30, 2019.
The Company achieved record quarterly consolidated equivalent metal production and ore throughput, as well as record quarterly ore throughput and equivalent metal production from the Yauricocha and Bolivar Mines. The Company has continued to build on its successful plant expansions, and mine production increases in Mexico over the last three quarters. This has resulted in record quarterly metal production, as the Company is approaching its 2019 target of 4,250 tonnes per day (TPD) at Bolivar, and 1,200 TPD at Cusi.
The Company earned revenues of $64.6 million, Adjusted EBITDA of $21.6 million, and operating cash flows before movements in working capital of $21.8 million. Higher revenues are primarily attributable to the 8% increase in throughput, higher head grades and recoveries of all metals, except zinc recoveries, at Yauricocha; a 46% increase in throughput, and higher silver and gold head grades, and higher copper and silver recoveries at Bolivar; and the 28% increase in throughput, higher gold head grades and silver and gold recoveries, higher silver prices, and the sale of concentrate inventory built-up during H1 2019 at Cusi. Quarterly revenues at Yauricocha increased by 16%, and Bolivar increased by 23% compared to Q3 2018, despite decreases in the prices of copper (6%) and zinc (7%), and higher treatment and refining charges incurred on the zinc and copper concentrates sold.
Despite the decrease in copper prices over the last nine months, the Bolivar Mine was able to generate $0.9 million of Adjusted EBITDA during Q3 2019, helped by record quarterly throughput. The Company hopes to increase throughput at Bolivar to 4,250 TPD during Q4 2019, and then to 5,000 TPD during Q4 2020, while modestly improving copper grades to approximately 0.95% due to an expected blend of 40% of ore sourced from Bolivar West, and 60% from El Gallo Inferior.
At Cusi, an increased silver price and the sale of approximately 1,000 tonnes of stockpiled concentrate resulted in Adjusted EBITDA of $1.5 million in Q3 2019. Ore throughput reached approximately 805 TPD during Q3 2019, and the Company continues to work towards reaching the 1,200 TPD mark during Q4 2019. The 28% increase in throughput realized during Q3 2019 resulted in a 15% increase in silver equivalent ounces produced, despite lower head grades for all metals, except gold, as we continue to develop deeper into the Santa Rosa de Lima zone which has higher silver head grades.
Currently, the Company remains focused on increasing the efficiency of mining the mineralized silver structures using selective mining techniques with the objective to reduce dilution. A significant infill drilling program is expected to be initiated on the Santa Rosa de Lima orebody during Q4 2019, targeting improved resource classification, while also improving mine planning and selective mining methods to reduce the dilution of high-grade minable stopes. Additionally, development work is being accelerated to provide access to more minable stopes, which should help with grade control and dilution control. The orebodies within the Santa Rosa de Lima zone have strong rock structures that should allow for sub-level stoping and sub-level caving mining methods to be implemented. The Company believes that this strategy can be successful, given the higher-grade ore available on the 1704 and 1720 levels of the Santa Rosa de Lima zone, and the substantial investment that has been made to ramp to and develop these areas for mining.
Igor Gonzales, President, and CEO of Sierra Metals stated: “I am proud of the Company’s achievements in the third quarter. We were able to generate one of the Company’s highest quarters of operating cash flows of $21.8 million, with free cash flow of $1.9 million despite lower metal prices as a result of record quarterly consolidated equivalent metal production and throughput. Additionally, we have consistently used operating cash flows for significant growth capital investments at all three mines, which have proven to be value-creating for the Company, given the cost-efficient growth realized. The capital was allocated to significant plant expansions, successful brownfield exploration programs, and rigorous infill drilling campaigns to maximize production and resource definition. Furthermore, we are continuing with our efforts to modernize and improve all our mines while implementing best operational practices.”
He continued, “Management continually monitor and modify projects and capital allocation and have decided at the end of Q3 2019, to further reduce our capital expenditures from $70 million to $55 million for 2019. The Company’s decision to defer $11 million of growth capital expenditures in Peru was due to project delays caused by the strike at Yauricocha, equipment procurement and contractor hiring difficulties, as well as poor ground conditions at the areas proposed for the new ventilation raise bores. Additionally, $4 million of growth capital at Bolivar was deferred due to the postponed equipment purchases, plant improvement costs and development costs previously planned to push throughput to 5,000 tonne per day level. Despite the Capex deferral for 2019, the Company remains committed to its growth plans and the prudent use of capital to achieve its objectives at Yauricocha, regardless of whether these expenditures are made during 2019, or postponed until 2020 or 2021. I am also happy to state that the Company is nearing completion of the Yauricocha and Bolivar NI 43-101 Reserve and Resource Updates, which are expected to be released during December 2019.”
He concluded, “Our balance sheet remains strong with the liquidity needed to meet our operational and growth expenditure requirements. These efforts are expected to allow the Company to continue to increase metal production over the coming year. Additionally, our Company-wide ongoing brownfield exploration programs should also lead to further discoveries and growth in reserves and resources, which will add to the value of our assets during the year ahead.”
The following table displays selected financial and operational information for the three and nine months ended September 30, 2019:
Vancouver, British Columbia--(Newsfile Corp. - November 6, 2019) - As a proud media sponsor, InvestmentPitch Media would like to invite investors to the latest TakeStock Alberta Investor Forum in Calgary on November 7th, 2019 at the Calgary Petroleum Club, 319 5th Avenue SW, from 8:30 am to 5:30 pm.
TakeStock investors series connects public and emerging private companies with key influencers and investors, providing a platform for networking, education and growth. The series of Investor Forums currently take place twice a year in Calgary, giving an excellent opportunity for a select group of companies to meet new investors and tell their story in greater detail. The full day event will include an exciting lineup of public and private companies.
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The public companies include the following:
Amerigo Resources (TSX: ARG) (www.amerigoresources.com) is an innovative copper producer with a project in Chile.
Appia Energy Corp. (CSE: API) (www.appiaenergy.ca) is a Canadian company in the uranium and rare earth element sectors.
Callinex Mines (TSXV: CNX) (www.callinex.ca) is advancing its portfolio of zinc rich deposits located in established Canadian mining jurisdictions.
Commander Resources (TSXV: CMD) (www.commanderresources.com) is a Canadian focused exploration company following the Prospect Generator business model that has leveraged its success in exploration through partnerships and sale of properties, while retaining equity and royalty interests.
Copper North Mining, (TSXV: COL) (www.coppernorthmining.com) is focused on the exploration and development of copper deposits in the Yukon and the North West Territories.
Eagle plains Resources (TSXV: EPL) (www.eagleplains.com) is a mineral exploration company operating in Western Canada exploring for gold, base-metals, uranium, rare earth elements and industrial minerals.
IceSoft Technologies (CSE: ISFT) (www.icesoft.org) is a leading global provider of advanced notification and RIA solutions for desktop and mobile enterprise.
Razor Energy (TSXV: RZE) (www.razor-energy.com) is a junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta.
Rockhaven Resources (TSXV: RK) (www.rockhavenresources.com) is a mineral exploration company focused on growth through the advancement of its Klaza project, located in the Dawson Range Gold Belt of southern Yukon.
Sierra Metals (TSX: SMT) (www.sierrametals.com) is a Canadian-based growing polymetallic mining company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico.
Tocvan Ventures (CSE: TOC) (www.tocvan.ca) is a natural resource company primarily focused on the exploration and development of its Rogers Creek property located in the Lower Lillooet River valley, approximately 90 km northeast of Vancouver.
Taiga Gold (CSE: TGC) (www.taigagold.com) is to focusing on the exploration and development of its gold projects located adjacent to the Seabee Gold Operation and along the Tabbernor Fault structure in eastern Saskatchewan.
For more information on these companies, or to register for this free event, please visit www.takestockalberta.com.
We hope you'll join us on November 7th, 2019 at the Calgary Petroleum Club.
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Shareholder Conference Call and Webcast to be held on Thursday November 14th, 2019 at 10:30 AM EST
Sierra Metals Inc. (TSX: SMT) (NYSE American: SMTS) (BVL: SMT) (“Sierra Metals” or the “Company”) will release its Q3 2019 financial results on Wednesday November 13, 2019 after Market close. Senior Management will also host a webcast and conference call on Thursday November 14, 2019 at 10:30am EST. Details of the Conference Call and Webcast are as follows:
A live audio webcast of the meeting will be available on the Company’s website:
The webcast along with presentation slides will be archived for 180 days on www.sierrametals.com.
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.
Participant Number (Toll Free North America): (833) 245-9659
Participant Number (Toll Free Peru): 0800-71-476
Participant Number (International): +1 (647) 689-4231
Conference ID: 5678458
About Sierra Metals
Sierra Metals Inc. is a Canadian-based growing polymetallic mining company with production from its Yauricocha Mine in Peru, and its 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 discoveries and still has additional brownfield exploration opportunities at all three mines in Peru and Mexico that are within or 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 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 or contact:
Continue to Follow, Like and Watch our progress:
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 28, 2019 in respect of the year ended December 31, 2019 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.
Vice President, Investor Relations
Sierra Metals Inc.
Tel: +1 (416) 366-7777
President & CEO
Sierra Metals Inc.
Tel: +1 (416) 366-7777
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 third quarter of 2019 (“Q3 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 September 30, 2019
- Revenues of US$44.4 million vs. US$38.1 million in Q3 2018
- Adjusted EBITDA of US$20.5 million vs. US$17.6 million in Q3 2018
- Total tonnes processed of 307,239 vs. 283,446 in Q3 2018; a new record
- Net production revenue per tonne of ore milled increased by 10% to US$145.64
- Cash cost per zinc equivalent payable pound decreased by 21% to US$0.38
- All in sustaining cost (“AISC”) per zinc equivalent payable pound consistent at US$0.66
- Zinc equivalent production of 57.2 million pounds vs. 42.9 million pounds in Q3 2018
- $29.0 million of cash and cash equivalents as at September 30, 2019
- $56.8 million of working capital as at September 30, 2019
The Company achieved record quarterly equivalent metal production and ore throughput from the Yauricocha Mine during Q3 2019, which has helped to continue to make-up for the lost production realized during the illegal strike during March and April 2019. Revenues increased by 17%, and Adjusted EBITDA increased by 16% during Q3 2019 compared to Q3 2018, and the cash flows generated during Q3 2019 allowed the Company to fund its capital expenditure programs despite a challenging base metal price environment, and significant increases in zinc treatment and refining costs. Cash costs decreased by 21% quarter over quarter due to a 40% increase in zinc equivalent payable pounds, as a result of the 8% increase in throughput, and higher head grades and recoveries for all metals, except zinc. However, the increase in zinc payable pounds was offset by the increase in treatment and refining charges related to the zinc concentrate produced, as well as higher general and administrative costs incurred from higher labour costs, which resulted in the All-in sustaining cost per zinc equivalent payable pound remaining consistent, quarter over quarter. In addition to the record quarterly production realized during Q3 2019, the Company has also been able to build-up a stockpile of approximately 30,000 tonnes of polymetallic ore which is expected to be processed during Q4 2019.
Igor Gonzales, President and CEO of Sierra Metals commented, “I am very pleased with the Yauricocha Mine’s excellent quarterly financial results as highlighted with notable improvements to revenue and adjusted EBITDA, while seeing lower realized cash costs. These strong improvements were made possible by the excellent production results that were realized this quarter. Our efforts to recover as much lost tonnage as possible from the illegal strike earlier in this year have been successful and we remain committed to falling within the published guidance for Yauricocha. In addition, we continue to reap the benefit of improvements being made at the Mine and Plant and expect these improvements to continue to benefit the Company through the remainder of the year.”
He continued, “Looking ahead, the fourth quarter is an important time for projects, improvements, and exploration at Yauricocha. We are working to complete the Yauricocha NI 43-101 Reserve and Resource Update which is expected in December this year. We are continuing surface drilling at Don Leona and Kilkaska which are high value, exploration targets and will hopefully have newsflow with the results before year end. Additionally, work continues on the completion of the next level of the tailings deposition facility, needed for the expansion of Yauricocha to the 3,600 tonnes per day level. Furthermore, we continue to sink the Yauricocha shaft towards the 1270 level to provide the Company access to further reserves and resources in the Mine. Finally, work has commenced on the ramp connecting the 820 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.”
He concluded, “Yauricocha continues its strong operational and financial performance for the Company and Corona continues to have a solid balance sheet and strong liquidity. Management remains positive 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 and nine months (“9M 2019”) ended September 30, 2019:
Sierra Metals Inc. (TSX:SMT) (BVL:SMT) (NYSE AMERICAN:SMTS) (“Sierra Metals” or “the Company”) is pleased to report third quarter 2019 production results featuring the highest level of quarterly consolidated equivalent metal production.