TSX: SMT
BVL: SMT
NYSE AMERICAN: SMTS
TORONTO, Feb. 15, 2019 /CNW/ - Sierra Metals Inc.
(TSX:SMT, BVL:SMT) ("Sierra Metals" or the "Company") announces the
filing of Sociedad Minera Corona S.A.'s ("Corona") audited
Financial Statements and the Management Discussion and Analysis
("MD&A") for the fourth quarter of 2018 ("Q4 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 December 31, 2018
- Revenues of US$39.2 million vs.
US$38.2 million in Q4 2017
- Adjusted EBITDA of US$17.4
million vs. US$17.5 million in
Q4 2017
- Total tonnes processed of 268,363 vs. 254,933 in Q4 2017
- Net production revenue per tonne of ore milled increased by 2%
to US$144.11
- Cash cost per zinc equivalent payable pound lower by 7% to
US$0.52
- All in sustaining cost ("AISC") per zinc equivalent payable
pound lower by 19% to US$0.73
- Zinc equivalent production of 40.6 million pounds vs. 35.8
million pounds in Q4 2017
- $17.9 million of cash and cash
equivalents as at December 31,
2018
- $41.1 million of working capital
as at December 31, 2018
The Yauricocha Mine continued its strong operational and
financial performance during Q4 2018, realizing increases in metal
production and revenues compared to Q4 2017, despite a challenging
metal price environment. Cash cost and AISC per zinc equivalent
payable pound were both lower in Q4 2018 compared to Q4 2017 due to
the higher metal production, and despite a $2.0 million increase in labor costs, due to the
Company's union agreement and a salary adjustment to bring the 2018
salaries in line with the current market rates. The payment was
made during November and December
2018 but retroactive to the entire year's salaries. Going
forward these costs will be amortized over the entire year for
2019. The union was formed in July
2017 and has grown to 406 workers at the end of 2018,
equivalent to approximately 60% of the Company's workforce,
representing the majority of the mine employees
Igor Gonzales, President and
CEO of Sierra Metals commented, "I am pleased with Yauricocha's
performance in the fourth quarter which saw increased revenue and
consistent adjusted EBITDA compared to the same quarter in 2017 and
both stronger revenue and adjusted EBITDA on a year over year
basis. We also continue to reap the benefits of
investments made at the Mine through increased net production
revenue per tonne of ore milled as well as through lower cash costs
and all-in sustaing costs.
The Company continues to make progress on projects at the
Mine and during the fourth quarter we completed the refurbishment
of the lower part of the Mascota Shaft as well as the
infrastructure and tie-ins for the Yauricocha tunnel, allowing for
faster turn-around in the cycle time of the trolley locomotives,
and providing for increased capacity and handling of larger volumes
of ore and waste.
Looking ahead 2019 represents a critical year at Yauricocha
for projects, improvements and exploration. While we have
recently received our Environmental Impact Assesement Permit for
the Mine for the completion of the next level of the tailings
deposition facility, we must now apply for our contruction permit
and begin planning on additional waste rock facilities to support
future growth. Additionally the Yauricocha shaft will
continue to be sunk to the 1270 level this year to provide access
to further reserves and resources at the Mine and loading pockets
will be added on the 1210 level. Work will also commence on a ramp
connecting the 920 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. We have the
right team in place to manage these projects to completion as well
as manage the permitting and planning needed to see projects and
exploration programs move ahead as planned and on schedule at the
mine.
He concluded, Corona continues to have a solid balance sheet
and strong liquidity. Management remains optimistic that continued
operational efficiencies and future operational and resource growth
are possible at Yauricocha."
The following table displays selected audited financial
information for the three months and year ended December 31, 2018:
|
|
|
(In thousands of
US dollars, except cash cost and revenue
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
per tonne
metrics)
|
|
|
December 31,
2018
|
December 31,
2017
|
Var
%
|
December 31,
2018
|
December 31,
2017
|
Var
%
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
39,183
|
38,227
|
3%
|
168,657
|
154,153
|
9%
|
|
Adjusted EBITDA
(1)
|
|
|
17,385
|
17,534
|
-1%
|
82,771
|
75,779
|
9%
|
|
Cash Flow from
operations
|
|
|
17,711
|
18,022
|
-2%
|
83,178
|
76,269
|
9%
|
|
Gross
profit
|
|
|
17,895
|
18,357
|
-3%
|
86,605
|
73,828
|
17%
|
|
Income Tax
Expense
|
|
|
(5,435)
|
(5,717)
|
-5%
|
(27,138)
|
(20,682)
|
31%
|
|
Net Income
|
|
|
7,848
|
10,624
|
-26%
|
46,131
|
41,621
|
11%
|
|
|
|
|
|
|
|
|
|
|
Net production
revenue per tonne of ore milled (2)
|
|
|
144.11
|
141.10
|
2%
|
152.02
|
149.63
|
2%
|
|
Cash cost per tonne
of ore milled (2)
|
|
|
69.37
|
64.90
|
7%
|
63.23
|
62.42
|
1%
|
|
|
|
|
|
|
|
|
|
|
Cash cost per zinc
equivalent payable pound (2)
|
|
|
0.52
|
0.57
|
-9%
|
0.52
|
0.50
|
4%
|
|
All-In Sustaining
Cost per zinc equivalent payable pound (2)
|
|
$
|
0.73
|
0.90
|
-19%
|
0.73
|
0.78
|
-5%
|
|
|
|
|
|
|
|
|
|
|
(In thousands of
US dollars, unless otherwise stated)
|
|
|
December 31,
2018
|
December 31,
2017
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
17,898
|
19,908
|
|
|
|
|
|
Assets
|
|
|
169,034
|
140,414
|
|
|
|
|
|
Liabilities
|
|
|
49,205
|
50,844
|
|
|
|
|
|
Equity
|
|
|
119,829
|
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 Months and Year
Ended December 31, 2018
- Revenues of $39.2 million for Q4
2018 compared to $38.2 million in Q4
2017 and revenues of $168.7 million
for the year ended December 31, 2018,
compared to $154.2 million for the
same period in 2017. The increase in revenues for Q4 2018 compared
to Q4 2017 was due to a 5% increase in tonnes processed, higher
head grades for all metals, except zinc, and higher recoveries for
lead and gold. Increased revenues were realized due to the higher
metal production, despite decreases in the prices of silver (13%),
copper (12%), zinc (20%), lead (20%), and gold (3%). The 9%
increase in revenues for the year ended December 31, 2018, compared to the same period in
2017 was due to an 8% increase in tonnes processed, higher head
grades and recoveries for copper and gold, and a 5% increase in the
price of copper.
- Cash cost per zinc equivalent pound sold at the Yauricocha Mine
of $0.52 for Q4 2018 compared to
$0.57 for Q4 2017 and $0.52 for the year ended December 31, 2018, compared to $0.50 for the same period in 2017. All-in
sustaining cost ("AISC") per zinc equivalent pound sold of
$0.73 for Q4 2018 compared to
$0.90 for Q4 2017 and $0.73 for the year ended December 31, 2018, compared to $0.78 for the same period in 2017. The decrease
in the AISC per zinc equivalent payable pound for Q4 2018 and the
year ended December 31, 2018,
compared to the same periods in 2017 were a result of higher zinc
equivalent payable pounds due to higher throughput, and higher
copper and gold head grades and recoveries. These cost decreases
were realized in spite of the $2.0
million payment made to the Company's union of mining
employees made during Q4 2018, which was discussed previously.
- Adjusted EBITDA of $17.4 million
for Q4 2018 compared to $17.5 million
for Q4 2017 and $82.8 million for the
year ended December 31, 2018,
compared to $75.8 million for the
same period in 2017. The consistent adjusted EBITDA for Q4 2018 and
the increased adjusted EBITDA for year ended December 31, 2018, compared to the same periods
in 2017, was due to the increase in revenues discussed
previously.
- Operating cash flows before movements in working capital of
$17.7 million for Q4 2018, compared
to US$18.0 million for Q4 2017, and
$83.2 million for the year ended
December 31, 2018, compared to
$76.3 million for the same period in
2017. The consistent operating cash flows before movements in
working capital for Q4 2018 and the increased operating cash flows
before movements in working capital year ended December 31, 2018, compared to the same periods
in 2017 was primarily due to the increase in revenues, discussed
previously.
- Cash and cash equivalents of $17.9
million as at December 31,
2018, compared to $19.9
million as at December 31,
2017. Cash and cash equivalents decreased by $2.0 million which was driven by operating cash
flows of $53.2 million, short-term
loans received of $10.0 million,
offset by capital expenditures of $25.2
million, debt and interest payments of $11.6 million, intercompany loans of $12.5 million, and dividends paid of $15.9 million.
- Net income of $7.8 million, or
$0.22 per share for Q4 2018 compared
to net income of $10.6 million, or
$0.30 per share for Q4 2017. Net
income of $46.1 million, or
$1.28 per share, for the year ended
December 31, 2018, compared to
$41.6 million, or $1.16 per share, for the same period in
2017.
Corona's Operational Highlights for the Three Months and Year
Ended December 31, 2018:
The following table displays the production results for the
three months and year ended December 31,
2018:
|
|
Yauricocha
Production
|
3 Months
Ended
|
12 Months
Ended
|
|
Q4
2018
|
Q4
2017
|
%
Var.
|
Q4
2018
|
Q4
2017
|
%
Var.
|
|
|
|
|
|
|
|
|
Tonnes processed
(mt)
|
268,363
|
254,933
|
5%
|
1,106,649
|
1,023,491
|
8%
|
|
Daily
throughput
|
3,067
|
2,914
|
5%
|
3,162
|
2,924
|
8%
|
|
|
|
|
|
|
|
|
Silver grade
(g/t)
|
64.06
|
53.57
|
20%
|
60.32
|
67.13
|
-10%
|
|
Copper
grade
|
1.06%
|
0.80%
|
33%
|
0.97%
|
0.79%
|
22%
|
|
Lead
grade
|
1.51%
|
1.19%
|
27%
|
1.30%
|
1.48%
|
-12%
|
|
Zinc
grade
|
3.41%
|
3.91%
|
-13%
|
3.55%
|
3.74%
|
-5%
|
|
Gold Grade
(g/t)
|
0.57
|
0.55
|
3%
|
0.58
|
0.54
|
7%
|
|
|
|
|
|
|
|
|
Silver
recovery
|
72.66%
|
75.13%
|
-3%
|
72.85%
|
74.82%
|
-3%
|
|
Copper
recovery
|
74.89%
|
78.86%
|
-5%
|
70.84%
|
65.45%
|
8%
|
|
Lead
recovery
|
84.42%
|
81.32%
|
4%
|
83.75%
|
83.64%
|
0%
|
|
Zinc
recovery
|
87.07%
|
88.25%
|
-1%
|
88.74%
|
89.14%
|
0%
|
|
Gold
Recovery
|
17.20%
|
16.02%
|
7%
|
16.63%
|
16.30%
|
2%
|
|
|
|
|
|
|
|
|
Silver ounces
(000's)
|
402
|
330
|
22%
|
1,563
|
1,653
|
-5%
|
|
Copper pounds
(000's)
|
4,702
|
3,567
|
32%
|
16,741
|
11,719
|
43%
|
|
Lead pounds
(000's)
|
7,528
|
5,431
|
39%
|
26,520
|
27,934
|
-5%
|
|
Zinc pounds
(000's)
|
17,545
|
19,393
|
-10%
|
76,761
|
75,151
|
2%
|
|
Gold
ounces
|
850
|
723
|
18%
|
3,403
|
2,894
|
18%
|
|
|
|
|
|
|
|
|
Zinc equivalent
pounds (000's)(1)
|
40,640
|
35,758
|
14%
|
157,151
|
146,816
|
7%
|
|
|
|
|
|
|
|
|
(1) Silver equivalent
ounces and copper and zinc equivalent pounds for Q4 2018 were
calculated using the following realized prices: $14.63/oz Ag,
$2.77/lb Cu, $0.89/lb Pb, $1.16/lb Zn, $1,238/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for Q4 2017
were calculated using the following realized prices: $16.77/oz Ag,
$3.13/lb Cu, $1.11/lb Pb, $1.45/lb Zn, $1,282/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 12M
2018 were calculated using the following realized prices: $15.65/oz
Ag, $2.96/lb Cu, $1.02/lb Pb, $1.31/lb Zn, $1,269/oz Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 12M
2017 were calculated using the following realized prices: $17.14/oz
Ag, $2.82/lb Cu, $/1.06lb Pb, $1.32/lb Zn, $1,265/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 Vice President Special Projects and Metallurgy
and a 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.
View original
content:http://www.prnewswire.com/news-releases/sierra-metals-reports-strong-q4-2018-financial-results-at-its-sociedad-minera-corona-subsidiary-in-peru-300796466.html
SOURCE Sierra Metals Inc.