Sierra Metals announces 2013 third quarter financial results
VANCOUVER, Nov. 12, 2013 /PRNewswire/ - Sierra Metals Inc. (TSX:SMT) (BVL:SMT) ("Sierra Metals" or the "Company") is pleased to report the filing of its unaudited Financial Statements and Management Discussion and Analysis ("MD&A") for the third quarter of 2013. All amounts are presented in Canadian dollars unless otherwise stated. For the full Financial Statements or MD&A please visit the Company's website www.sierrametals.com or SEDAR at www.sedar.com.
Daniel Tellechea, President and CEO of Sierra Metals, commented: "Sierra's results for the third quarter of 2013 were mainly driven by decreased revenues due to both lower commodity prices and lower metal production relative to the same period in 2012. We expect our results to improve in the fourth quarter as we consolidate the production ramp up at Bolivar, implement measures to control grade dilution and reduce the frequency of mudrushes at Yauricocha, and benefit from the measures undertaken to reduce operating costs."
The following table sets out the selected financial results for the three and nine month periods ended September 30, 2013 and 2012, respectively:
|3 Months Ended||9 Months Ended|
|(In thousands of dollars, unless stated)||Sep 30, 2013||Sep 30, 2012||Sep 30, 2013||Sep 30, 2012|
|Cash Flow from continuing operations||6,621||11,896||14,650||37,295|
|Adjusted net income att. to shareholders||7,823||11,594||28,920||41,838|
|Non-cash depletion charge||14,595||21,726||49,185||59,836|
|Gross profit (loss)||(4,430)||3,544||(7,833)||14,333|
|Income Tax Recovery (Expense)||2,484||(6,437)||6,145||(7,440)|
|Net loss attributable to shareholders||(6,772)||(10,132)||(20,265)||(17,998)|
|Basic and diluted loss per share ($)|
|From continuing operations||(0.04)||(0.06)||(0.13)||(0.12)|
|From discontinued operations||-||(0.01)||-||(0.01)|
|Cash Cost per oz of Ag (Yauricocha)||US$||(11.25)||(17.64)||(13.37)||(21.44)|
|Cash Cost per lb of Cu (Bolivar)||US$||1.81||2.11||1.68||1.50|
|Cash Cost per oz of Ag (Cusi)||US$||14.96||N/A||16.21||N/A|
|(In thousands of dollars)||Sep 30, 2013||Dec 31, 2012|
|Cash and cash equivalents||$||33,688||$||79,835|
Adjusted net income attributable to shareholders (excluding the non-cash
depletion charge described above) of $7.8 million or $0.05 per share
for the three months ended September 30, 2013 compared to $11.6 million
or $0.07 per share for the same period in 2012. Adjusted net income
attributable to shareholders of $28.9 million or $0.18 per share for
the nine months ended September 30, 2013 compared to $41.8 million or
$0.28 per share for the same period in 2012.
Net loss attributable to shareholders of $6.8 million or $0.04 per share
for the three months ended September 30, 2013 compared to a loss of
$10.1 million ($0.07 per share) for the same period in 2012. Net loss
attributable to shareholders of $20.3 million or $0.13 per share for
the nine months ended September 30, 2013 compared to a loss of $18.0
million ($0.13 per share) for the same period in 2012.
A large component of the net loss for every quarter is the non-cash
depletion charge in Peru, which for the three months ended September
30, 2013 was $14.6 million (2012 - $21.7 million) and for the nine
months ended September 30, 2013 was $49.2 million (2012 - $59.8
million). The units of production depletion charge is based on the
aggregate fair value of the Yauricocha mineral property at the date of
acquisition of Sociedad Minera Corona S.A. ("Corona") of $363.9 million
amortized over the total proven and probable reserves of the mine. In
the event that additional reserves are identified this depletion charge
will be prospectively reduced in future periods.
Adjusted EBITDA of $11.2 million for the three months ended September
30, 2013 compared to $25.6 million for the same period in 2012.
Adjusted EBITDA of $43.0 million for the nine months ended September
30, 2013 compared to $71.1 million for the same period in 2012. This
decrease was mainly a result of lower commodity prices and lower metal
production due to lower head grades driven by higher dilution levels at
Cash flow generated from continuing operations of $6.6 million for the
three months ended September 30, 2013 compared to $11.9 million for the
same period in 2012. Cash flow generated from continuing operations of
$14.7 million for the nine months ended September 30, 2013 compared to
$37.3 million for the same period in 2012. This decrease was mainly
driven by lower adjusted EBITDA.
Cash and cash equivalents of $33.7 million as at September 30, 2013
compared to $79.8 million at the end of 2012. Cash and cash equivalents
have decreased by $46.1 million during 2013 mainly due to capital
expenditures of $34.0 million incurred in Mexico and Peru. These
expenditures are in line with the Company's growth and development
initiatives financed by the $45.0 million private placement completed
Revenues of $30.6 million for the three months ended September 30, 2013
compared to $46.1 million for the same period in 2012. Revenues of
$109.6 million for the nine months ended September 30, 2013 compared to
$136.4 million for the same period in 2012.
- Negative silver cash cost of US$11.25 per ounce ("oz") at Yauricocha, silver cash cost of US$14.96 per oz at Cusi and copper cash cost of US$1.81 per pound ("lb") at Bolivar for the three months ended September 30, 2013 compared to negative silver cash cost of US$17.64 per oz at Yauricocha and US$2.11 per lb at Bolivar for the same period in 2012. Negative silver cash cost of US$13.37 per oz at Yauricocha, silver cash cost of US$16.21 per oz at Cusi and copper cash cost of US$1.68 per lb at Bolivar for the nine months ended September 30, 2013 compared to negative silver cash cost of US$21.44 per oz at Yauricocha and US$1.50 per lb at Bolivar for the same period in 2012. Cash costs at Cusi for 2012 are not available because this property was not in commercial production at that time.
Total silver production of 626,735 oz in the third quarter of 2013
compared to 681,846 oz for the same period in 2012. An 8% decrease
year-over-year. Total silver production of 1,906,763 oz in the first
nine months of 2013 compared to 1,936,836 oz for the same period in
2012. In line with the previous period.
Total copper production of 3.3 million lb in the third quarter of 2013
compared to 3.5 million lb for the same period in 2012. A 7% decrease
year-over-year. Total copper production of 11.1 million lb in the first
nine months of 2013 compared to 11.5 million lb for the same period in
2012. A 4% decrease year-over-year.
Total lead production of 8.6 million lb in the third quarter of 2013
compared to 10.0 million lb for the same period in 2012. A 14% decrease
year-over-year. Total lead production of 26.7 million lb in the first
nine months of 2013 compared to 27.0 million lb for the same period in
2012. In line with the previous period.
Total zinc production of 12.3 million lb in the third quarter of 2013
compared to 15.4 million lb for the same period in 2012. A 20% decrease
year-over-year. Total zinc production of 38.4 million lb in the first
nine months of 2013 compared to 44.3 million lb for the same period in
2012. A 13% decrease year-over-year.
Total gold production of 1,673 oz in the third quarter of 2013 compared
to 2,409 oz for the same period in 2012. A 31% decrease year-over-year.
Total gold production of 5,071 oz in the first nine months of 2013
compared to 8,310 oz for the same period of 2012. A 39% decrease
On September 30, 2013 the Company announced that mill capacity at its
Bolivar mine has been doubled to 2,000 tonnes-per-day ("tpd") from
1,000 tpd. The Company installed a leased, 1,250 kva generator to
increase mill throughput to bypass delays in the installation of the
power substation that will provide power via the Company's
newly-constructed 10 km power line. The mill is now working on a
combination of generator power and line power. Once the work on the
power substation is completed, which is expected to be by year-end, the
mill will operate off the national grid power system. Since September
20, 2013, the Piedras Verdes mill has increased daily throughput as the
new circuit is being tuned and adjusted. Bolivar achieved an average
throughput of 1,915 tpd in October 2013.
- Lower production at Yauricocha during the third quarter of 2013 was mainly driven by higher dilution in head grades due to unusual levels of water at the mine that also produced a higher frequency of mudrushes. The Company has engaged SRK Consulting to assist Yauricocha with this matter and expects to report improvements during the fourth quarter of 2013.
The following table sets out consolidated production results for the three and nine months ended September 30, 2013 and 2012. Please note that the production figures presented below include 100% of Yauricocha's figures for that period. No adjustments have been made for the portion applicable to the non-controlling interest.
|Consolidated Production||3 Months Ended||9 Months Ended|
|Sep 30, 2013||Sep 30, 2012||% Var.||Sep 30, 2013||Sep 30, 2012||% Var.|
|Silver production (oz)||626,735||681,846||-8%||1,906,763||1,936,836||-2%|
|Copper production (000 lb)||3,270||3,517||-7%||11,086||11,517||-4%|
|Lead production (000 lb)||8,591||10,009||-14%||26,678||27,024||-1%|
|Zinc production (000 lb)||12,284||15,402||-20%||38,365||44,306||-13%|
|Gold Production (oz)||1,673||2,409||-31%||5,071||8,310||-39%|
On July 9, 2013 the Company announced that drilling has extended the
Veta del Contacto at its Cusi project, Chihuahua state, Mexico, to a
depth extent of over 700 m. Detailed geologic mapping has identified
two areas of wide silicification and veining at vein intersections,
which are high-priority drill targets. Drill hole DC12B575 cut 4.0 m
true width of Veta del Contacto averaging 709 g/t silver and 2.12%
lead. Drill hole DC12B578 cut 1.0 m true width of Veta del Contacto
averaging 459 g/t silver, 4.04 g/t gold and 1.81% lead. Geologic
mapping in the San Juan area reveals a broad zone of silicification and
veining at the intersection of the San Juan and Las Margaritas veins.
Another zone of silicification occurs at the intersection of the La
Gloria and Minerva veins. These results extend the silver
mineralization from surface down to 700 meters depth and the vein
remains open at depth. The geologists' structural interpretation of the
Veta Del Contacto vein indicates significant potential mining width.
On July 17, 2013, the Company announced a new silver resource estimate
on its Cusi Mine. These resources are in two areas of the Cusi Mine
currently in commercial production, Promontorio and Santa Eduwiges, as
well as in two prospective areas, La India and San Juan, where the
Company is doing underground development. This resource estimate was
prepared by Gustavson Associates, LLC of Lakewood, Colorado
("Gustavson"). The silver resource estimate was increased five-fold.
The new total estimated Indicated Mineral Resources for the Cusi Mine
with exploration drilling information as of December 31, 2012 are:
1,380,000 tonnes averaging 165 g/t silver, 0.30% lead and 0.29% zinc at
a cut-off grade of 90.0 g/t silver, which contain 7.3 million oz of
Total estimated Inferred Resources are: 1,651,000 tonnes averaging 273
g/t silver, 0.14% lead and 0.08% zinc at the same cut-off that contain
14.6 million oz of silver.
On August 14, 2013 the Company announced that drilling at its Yauricocha
Mine in Peru has discovered high-grade, silver-lead-zinc mineralization
in the Cachi Cachi Mine, located immediately north of the Central Mine
Area. The positive results of this drilling demonstrate that
additional potentially-economic polymetallic mineralization occurs
within the Yauricocha fault zone along strike from the main mine area.
Drill hole 12-13-04 cut 5.6 m true width averaging 199 g/t silver,
6.44% lead and 19.93% zinc in the Elissa body of the Cachi Cachi Mine.
Drill hole 12-13-08 cut 4.6 m true width averaging 226 g/t silver,
18.16% lead and 19.42% zinc in the Escondida body of the Cachi Cachi
Mine. Mineralization remains open to depth.
- On August 29, 2013 the Company announced that drilling at its Yauricocha Mine in Peru has extended mineralization to depth at the previously identified exploration target below Central Mine Area at the Yauricocha Mine. These results demonstrate that the mineralization in the various ore bodies of the Central Mine Area continues below the 1270 Level and remains open to depth. These results support the previous statements that high-grade ore continues to depth in the Central Mine Area, drilling has significantly extended mineralization of the Rosaura ore body over a strike length of 150 m and more than 250 m to depth, which will add tonnage to the resources when an updated NI 43-101 estimate is completed later this year. Additional drilling will be done to extend other bodies below current workings with the intent of increasing known reserves and resources in the future.
On July 5, 2013 the Company announced that its common shares were
approved for listing on the TSX and commenced trading on the TSX at the
opening of the market on July 8, 2013 under the symbol "SMT".
On August 23, 2013 Sierra Metals announced that it signed an amended and
restated dealer agreement (the "Amended Agreement") with a designated
broker (the "Broker") in respect of its previously announced normal
course issuer bid ("NCIB"). The Company and the Broker entered into a
dealer agreement dated March 26, 2013, as amended on May 10, 2013,
whereby the Broker was engaged to operate an automatic share purchase
plan ("ASPP") under the NCIB. The primary amendment agreed between the
parties under the Amended Agreement was the conversion of the ASPP into
a discretionary share purchase plan ("DSPP"). Pursuant to the DSPP, the
Broker will only trade with the Company's express instructions.
On September 19, 2013 the Company announced the appointment of Mr. Igor
Gonzales to its Board of Directors. Mr. Gonzales is originally from
Peru and has more than 30 years of experience in the mining industry.
He is currently a member of the Board of Directors of HudBay Minerals
Inc. From 1998 to 2013, Mr. Gonzales was with Barrick Gold Corporation,
most recently as Executive Vice President and Chief Operating Officer.
Between 1980 and 1996, Mr. Gonzales served in various roles with
Southern Peru Copper Corporation. Mr. Gonzales has a Bachelor of
Science degree in Chemical Engineering from the University of San
Antonio Abad in Cusco, Peru, and was a Fulbright Scholar at the New
Mexico Institute of Mining and Technology, where he earned a Master of
Science degree in Extractive Metallurgy.
- On October 17, 2013 the Company amended its acquisition financing at Dia Bras Peru, its wholly owned subsidiary, and closed a new $60 million credit facility at Corona. The main changes on the acquisition financing include: extended tenor from 3 to 5 years, lower interest rates from Libor + 4.50% to Libor + 4.15%, less restrictions on capital expenditures, and more flexibility to transfer excess cash among the Company's subsidiaries. Consequently, with this debt refinancing, Sierra Metals has strengthened its liquidity, enhanced its financial flexibility and secured the capital required to execute its medium term plans.
The technical content of this news release has been approved by Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101.
About Sierra Metals
Sierra Metals Inc. is a Canadian mining company focused on precious and base metals from its Yauricocha Mine in Peru, its Bolivar Mine and Cusi Mine in Mexico. In addition, Sierra Metals is exploring several precious and base metal targets in Peru and Mexico. Projects in Peru include Adrico (gold), Victoria (copper-silver) and Ipillo (polymetallic) at the Yauricocha Property in the province of Yauyos and the San Miguelito gold properties in Northern Peru. Projects in Mexico include Bacerac (silver) in the state of Sonora, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.
The Company's shares trade on the Bolsa de Valores de Lima and the Toronto Stock Exchange under the symbol "SMT".
Except for statements of historical fact contained herein, the information in this press release may constitute "forward-looking information" within the meaning of Canadian securities law. Other than statements of historical fact, all statements are "forward-looking statements", which involve various known and unknown risk and uncertainties and other factors, including market conditions that may affect the Company's ability to execute its current business plan. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.
SOURCE Sierra Metals Inc.