- Sustained throughput and production of all metals except
lead, complimented by lower costs helped to mitigate impact of
lower realized metal prices in Q3 2018
TORONTO, Oct. 30, 2018 /PRNewswire/ - 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 2018
("Q3 2018").
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, 2018
- Revenues decreased by 4% to US$38.1
million vs. US$39.6 million in
Q3 2017
- Adjusted EBITDA decreased by 6% to US$17.6 million vs. US$18.8 million in Q3 2017
- Total tonnes processed increased by 6% to 283,446 vs. 268,178
in Q3 2017
- Net production revenue per tonne of ore milled decreased by 10%
to US$132.45
- All in sustaining cost ("AISC") per zinc equivalent payable
pound lower by 20% to US$0.66
- Zinc equivalent production of 42.9 million pounds vs. 36.9
million pounds in Q3 2017
- $27.8 million of cash and cash
equivalents as at September 30,
2018
- $41.7 million of working capital
as at September 30, 2018
Igor Gonzales, President and CEO
of Sierra Metals commented: "Corona's 2018 third quarter results
continue to deliver performance from the Mine through stable metal
production and tonnage throughput when compared to Q3 2017.
However, softer realized metal prices have resulted in a small
decrease in revenue and adjusted EBITDA over the same period in
2017, partially offset by lower cash and all-in sustaining costs
per zinc equivalent payable pound. The Company is still
reporting a 12% increase in revenue and adjusted EBITDA when
comparing nine months of 2018, to the same period in 2017. Overall,
I am happy with the efforts made at Yauricocha to maximize the
operational and financial performances which continue to benefit
from well-made capital investments at the Mine."
He continued, "based on the positive Preliminary Economic
Assessment study completed we are now working towards the first
stage of expansion plans at Yauricocha which we expect to take
effect in 2019 once all permits are received. We have also
commenced pre-feasibility and feasibility studies on a potential
secondary stage expansion plan at the Mine. Management are
confident that the outlook for the Yauricocha Mine remains positive
for sustained success. The Company continues to have a solid
balance sheet, and strong liquidity, to meet its growth and
operational expenditure requirements. We look forward to the
developments taking place over the fourth quarter, including the
completion of the Yauricocha tunnel infrastructure, the
rehabilitation of the Mascota shaft, as well as the continued
sinking of the Yauricocha shaft providing access to a significant
amount of reserves and resources recently delineated. These
projects will enable our team to operate more efficiently and
effectively and ultimately will provide for a stronger balance
sheet for Sierra Metals. Furthermore, the Company continues
to have success in its drilling campaigns at the Mine as evidenced
in a recent press release dated October 1,
2018, demonstrating the existence of porphyry style
mineralization at Yauricocha and a great opportunity for further
expansion potential at the Mine. Yauricocha remains a solid
contributor with growth potential and additional brownfield
exploration opportunities."
The following table displays selected unaudited financial
information for the three and nine months ("9M 2018") ended September
30, 2018:
Press Release
Selected Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands of
US dollars, except cash cost and revenue
per tonne
metrics)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30,
2018
|
September 30,
2017
|
Var
%
|
September 30,
2018
|
September 30,
2017
|
Var
%
|
Revenue
|
$
|
38,121
|
39,566
|
-4%
|
129,474
|
115,926
|
12%
|
Adjusted EBITDA
(1)
|
|
17,647
|
18,824
|
-6%
|
65,386
|
58,245
|
12%
|
Cash Flow from
operations
|
|
17,891
|
18,844
|
-5%
|
65,467
|
58,247
|
12%
|
Gross
profit
|
|
18,529
|
18,053
|
3%
|
68,710
|
55,471
|
24%
|
Income Tax
Expense
|
|
(5,946)
|
(5,223)
|
14%
|
(21,703)
|
(14,965)
|
45%
|
Net Income
|
|
9,863
|
9,354
|
5%
|
38,283
|
30,997
|
24%
|
|
|
|
|
|
|
|
|
Net production
revenue per tonne of ore milled (2)
|
|
132.45
|
147.65
|
-10%
|
154.55
|
152.63
|
1%
|
Cash cost per tonne
of ore milled (2)
|
|
60.34
|
62.32
|
-3%
|
61.27
|
61.55
|
0%
|
Cash cost per zinc
equivalent payable pound (2)
|
|
0.48
|
0.53
|
-9%
|
0.51
|
0.48
|
6%
|
All-In Sustaining
Cost per zinc equivalent payable pound (2)
|
$
|
0.66
|
0.83
|
-20%
|
0.73
|
0.74
|
0%
|
|
|
|
|
|
|
|
|
(In thousands of
US dollars, unless otherwise stated)
|
|
September 30,
2018
|
December 31,
2017
|
|
|
|
|
Cash and cash
equivalents
|
$
|
27,767
|
19,908
|
|
|
|
|
Assets
|
|
164,487
|
140,414
|
|
|
|
|
Liabilities
|
|
49,506
|
50,844
|
|
|
|
|
Equity
|
|
114,981
|
89,570
|
|
|
|
|
1
Adjusted EBITDA includes adjustments for depletion and
depreciation, interest expense and other financing costs, interest
income, share-based compensation, Foreign Exchange (gain) loss and
income taxes; see non-IFRS Performance Measures section of the
Company's MD&A.
|
2
All-In Sustaining Cost per zinc equivalent pound sold are
non-IFRS performance measures and include cost of sales, treatment
and refining charges, sustaining capital expenditures, general and
administrative expense, and selling expense, and exclude workers'
profit sharing, depreciation, and other non-cash provisions; Cash
cost zinc equivalent pound sold, net production revenue per tonne
of ore milled, and cash cost per tonne of ore milled are non-IFRS
performance measures; see non-IFRS Performance Measures section of
the Company's MD&A.
|
Corona's Financial Highlights for the Three and Nine Months
Ended September 30, 2018
- Revenues of $38.1 million for Q3
2018 compared to $39.6 million in Q3
2017 and revenues of $129.5 million
in 9M 2018 compared to $116.0 million in 9M 2017. The increase in revenues during
9M 2018 was due to an 11% increase in
tonnes processed, higher head grades for copper and gold, and
higher recoveries for copper. Increases in the prices of copper
(12%), zinc (6%), lead (3%), and gold (2%) also contributed to the
revenue improvement. The decrease in revenues during Q3 2018
compared to Q3 2017 was due to lower metal prices realized for all
metals.
- Cash cost per zinc equivalent pound sold at the Yauricocha Mine
of $0.48 for Q3 2018 compared to
$0.53 for Q3 2017 and $0.51 for 9M 2018
compared to $0.48 for 9M 2017. All-in sustaining cost ("AISC") per zinc
equivalent pound sold of $0.66 for Q3
2018 compared to $0.83 for Q3 2017
and $0.73 for 9M 2018 compared to $0.74 for 9M 2017.
The decrease in the AISC per zinc equivalent payable pound for Q3
2018 compared to Q3 2017 was a result of lower sustaining capital
expenditures, higher zinc equivalent payable pounds sold, while
cash costs remained consistent. The AISC during 9M 2018 compared to 9M 2017 were consistent as higher cash costs
during 9M 2018 were offset by lower
sustaining capital expenditures, and higher zinc equivalent payable
pounds sold.
- Adjusted EBITDA of $17.7 million
for Q3 2018 compared to $18.8 million
for Q3 2017 and $65.4 million for
9M 2018 compared to $58.2 million for 9M 2017. The increase in adjusted EBITDA for
9M 2018 was primarily due to the
increase in throughput, metal production, and metal prices
discussed previously.
- Operating cash flows before movements in working capital of
$17.9 million for Q3 2018, compared
to US$18.8 million for Q3 2017 and
$65.5 million for 9M 2018 compared to $58.2
million for 9M 2017. The
increase in operating cash flows before movements in working
capital for 9M 2018 was primarily due
to the increase in revenues, discussed previously.
- Cash and cash equivalents of $27.8
million as at September 30,
2018, compared to $19.9
million as at December 31,
2017. Cash and cash equivalents increased by $7.9 million which was driven by operating cash
flows of $44.5 million, and
$5.0 million being drawn from a
short-term revolving line of credit for working capital purposes,
partially offset by capital expenditures of $18.4 million, debt and interest payments of
$5.0 million, intercompany loans of
$5.3 million, and dividends paid of
$12.9 million.
- Net income of $9.9 million, or
$0.27 per share for Q3 2018 compared
to net income of $9.4 million, or
$0.26 per share for Q3 2017. Net
income of $38.3 million, or
$1.06 per share for 9M 2018 compared to net income of $31.0 million, or $0.86 per share for 9M 2017.
Corona's Operational Highlights for the Three and Nine Months
Ended September 30, 2018:
The following table displays the production results for the
three and nine months ended September 30,
2018:
Yauricocha
Production
|
3 Months
Ended
|
9 Months
Ended
|
|
Q3
2018
|
Q3
2017
|
%
Var.
|
Q3
2018
|
Q3
2017
|
%
Var.
|
Tonnes processed
(mt)
|
283,446
|
268,178
|
6%
|
838,285
|
757,270
|
11%
|
Daily
throughput
|
3,239
|
3,065
|
6%
|
3,193
|
2,890
|
11%
|
|
|
|
|
|
|
|
Silver grade
(g/t)
|
58.68
|
58.94
|
0%
|
59.12
|
71.76
|
-18%
|
Copper
grade
|
0.98%
|
0.79%
|
24%
|
0.94%
|
0.76%
|
23%
|
Lead
grade
|
1.16%
|
1.26%
|
-8%
|
1.23%
|
1.60%
|
-23%
|
Zinc
grade
|
3.65%
|
3.73%
|
-2%
|
3.59%
|
3.73%
|
-4%
|
Gold Grade
(g/t)
|
0.59
|
0.56
|
5%
|
0.58
|
0.53
|
8%
|
|
|
|
|
|
|
|
Silver
recovery
|
75.47%
|
73.99%
|
2%
|
72.92%
|
75.72%
|
-4%
|
Copper
recovery
|
72.55%
|
68.07%
|
7%
|
69.38%
|
63.84%
|
9%
|
Lead
recovery
|
84.03%
|
81.82%
|
3%
|
83.48%
|
84.22%
|
-1%
|
Zinc
recovery
|
90.95%
|
89.40%
|
2%
|
89.25%
|
89.45%
|
0%
|
Gold
Recovery
|
17.08%
|
17.27%
|
-1%
|
16.44%
|
16.68%
|
-1%
|
|
|
|
|
|
|
|
Silver ounces
(000's)
|
404
|
376
|
7%
|
1,162
|
1,323
|
-12%
|
Copper pounds
(000's)
|
4,428
|
3,178
|
39%
|
12,039
|
8,152
|
48%
|
Lead pounds
(000's)
|
6,114
|
6,112
|
0%
|
18,993
|
22,503
|
-16%
|
Zinc pounds
(000's)
|
20,772
|
19,717
|
5%
|
59,215
|
55,758
|
6%
|
Gold
ounces
|
911
|
827
|
10%
|
2,553
|
2,171
|
18%
|
|
|
|
|
|
|
|
Zinc equivalent
pounds (000's)(1)
|
42,854
|
36,856
|
16%
|
116,749
|
111,224
|
5%
|
|
|
|
|
|
|
|
(1) 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 Q3 2017
were calculated using the following realized prices: $16.86/oz Ag,
$2.93/lb Cu, $1.08/lb Pb, $1.36/lb Zn, $1,280/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, $1.06/lb Pb, $1.36/lb Zn, $1,279/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 9M 2017
were calculated using the following realized prices: $17.31/oz Ag,
$2.70/lb Cu, $/1.03lb Pb, $1.28/lb Zn, $1,253/oz
Au.
|
Qualified Persons
All technical production data contained in this news release has
been reviewed and approved by Gordon
Babcock, P.Eng., Chief Operating Officer and a Qualified
Person under National Instrument 43-101 – Standards of Disclosure
for Mineral Projects.
Americo Zuzunaga, MAusIMM CP
(Mining Engineer) and Vice President of Corporate Planning is a
Qualified Person and chartered professional qualifying as a
Competent Person under the Joint Ore Reserves Committee (JORC)
Australasian Code for Reporting of Exploration Results, Mineral
Resources, and Ore Reserves.
Augusto Chung, FAusIMM CP
(Metallurgist) and Consultant to Sierra Metals is a Qualified
Person and chartered professional qualifying as a competent person
on metallurgical processes.
About Sierra Metals
Sierra Metals Inc. is Canadian based growing polymetallic mining
company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico. The Company remains focused on
increasing production volume and growing mineral resources. Sierra
Metals has recently had several discoveries and still has
additional brownfield exploration opportunities at all three mines
in Peru and Mexico that are within close proximity to the
existing mines. Additionally, the Company has large land packages
at all three mines with several prospective regional targets
providing longer-term exploration upside and mineral resource
growth potential.
The Company's Common Shares trade on the Bolsa de Valores de Lima and the Toronto Stock Exchange
under the symbol "SMT" and the NYSE AMERICAN Exchange under the
symbol "SMTS."
Continue to Follow, Like and Watch our progress:
Web: www.sierrametals.com | Twitter: sierrametals
| Facebook: SierraMetalsInc | LinkedIn: Sierra Metals
Inc
Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of Canadian and
U.S. securities laws related to the Company (collectively,
"forward-looking information"). Forward-looking information
includes, but is not limited to, statements with respect to the
Company's operations, including anticipated developments in the
Company's operations in future periods, the Company's planned
exploration activities, the adequacy of the Company's financial
resources, and other events or conditions that may occur in the
future. Statements concerning mineral reserve and resource
estimates may also be considered to constitute forward-looking
statements to the extent that they involve estimates of the
mineralization that will be encountered if and when the properties
are developed or further developed. These statements relate to
analyses and other information that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
"expects", "anticipates", "plans", "projects", "estimates",
"assumes", "intends", "strategy", "goals", "objectives",
"potential" or variations thereof, or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved, or the negative of any of these terms
and similar expressions) are not statements of historical fact and
may be forward-looking information.
Forward-looking information is subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking information, including,
without limitation, risks inherent in the mining industry including
environmental hazards, industrial accidents, unusual or unexpected
geological formations, floods, labour disruptions, explosions,
cave-ins, weather conditions and criminal activity; commodity price
fluctuations; higher operating and/or capital costs; lack of
available infrastructure; the possibility that future exploration,
development or mining results will not be consistent with the
Company's expectations; risks associated with the estimation of
mineral resources and the geology, grade and continuity of mineral
deposits and the inability to replace reserves; fluctuations in the
price of commodities used in the Company's operations; risks
related to foreign operations; changes in laws or policies, foreign
taxation, delays or the inability to obtain necessary governmental
permits; risks relating to outstanding borrowings; issues regarding
title to the Company's properties; risks related to environmental
regulation; litigation risks; risks related to uninsured hazards;
the impact of competition; volatility in the price of the Company's
securities; global financial risks; inability to attract or retain
qualified employees; potential conflicts of interest; risks related
to a controlling group of shareholders; dependence on third
parties; differences in U.S. and Canadian reporting of mineral
reserves and resources; potential dilutive transactions; foreign
currency risks; risks related to business cycles; liquidity risks;
reliance on internal control systems; credit risks, including risks
related to the Company's compliance with covenants with respect to
its BCP Facility; uncertainty of production and cost estimates for
the Yauricocha Mine, the Bolivar Mine and the Cusi Mine; and other
risks identified in the Company's filings with Canadian securities
regulators and the U.S. Securities and Exchange Commission, which
filings are available at www.sedar.com and www.sec.gov,
respectively.
This list is not exhaustive of the factors that may affect any
of the Company's forward-looking information. Forward looking
information includes statements about the future and are inherently
uncertain, and the Company's actual achievements or other future
events or conditions may differ materially from those reflected in
the forward-looking information due to a variety of risks,
uncertainties and other factors. The Company's statements
containing forward-looking information are based on the beliefs,
expectations and opinions of management on the date the statements
are made, and the Company does not assume any obligation to update
forward-looking information if circumstances or management's
beliefs, expectations or opinions should change, other than as
required by applicable law. For the reasons set forth above, one
should not place undue reliance on forward-looking information.
Note Regarding Reserve and Resource Estimates
All reserve and resource estimates reported by the Company are
calculated in accordance with the Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects and the
Canadian Institute of Mining and Metallurgy Classification system.
These standards differ significantly from the requirements of the
SEC. The differences between these standards are discussed in our
SEC filings. Mineral resources which are not mineral reserves do
not have demonstrated economic viability.
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SOURCE Sierra Metals Inc.