Sierra Metals Reports Consolidated Financial Results for the Second Quarter of 2019 Conference Call August 15, 2019 at 10 30 AM (EDT)
Sierra Metals Inc. (TSX:SMT)(BVL:SMT)(NYSE American:SMTS) (“Sierra Metals” or the “Company”) today reported revenue of $50.7 million and adjusted EBITDA of $12.6 million on throughput of 662,490 tonnes and metal production of 4.7 million silver equivalent ounces, or 25.2 million copper equivalent pounds, or 57.6 million zinc equivalent pounds for the three month period ended June 30, 2019.
Revenues and Adjusted EBITDA generated during Q2 2019 allowed the Company to fund its capital expenditure programs despite a challenging metal price environment and a loss of production from the illegal strike action at the Yauricocha Mine. Yauricocha’s Cash costs were lower quarter over quarter, while there was a slight increase in the AISC during Q2 2019 compared to Q2 2018 due to the increase in treatment and refining charges related to the zinc concentrate produced, as well as higher general and administrative costs due to higher labour costs. The mine sustained its exceptional performance into July, and the remainder of the year continues to look very promising, despite the significant decline in base metal prices. As previously announced on our July 30, 2019 press release, the management team has revised the release date for the Yauricocha NI 43-101 Reserve and Resource Update to Q4 2019 in order to allow the Company to include the results from additional drilling currently taking place at key, high priority targets at the Yauricocha property.
The Bolivar Mine generated $2.6 million in EBITDA during the quarter, helped by record quarterly throughput despite lower copper prices. Average daily throughput realized during the quarter was approximately 3,700 tpd, and the Company expects to reach 4,000 tpd during Q3 2019, increasing to 4,250 tpd during Q4 2019. Copper head grades are expected to improve during the second half of the year as more ore is sourced from the Bolivar West zone.
At Cusi, the Company realized record quarterly tonnage in the second quarter, resulting in a 41% increase in metal production, even with lower head grades and recoveries for all metals. Daily throughput at Cusi during Q2 2019 was 938 tpd but is expected to reach 1,200 tpd by the end of Q4 2019. The proposed increase to 1,200 tpd has been slower than expected due to poor contractor performance, equipment availability issues, delays in development and stope preparation, and issues with subsidence. To address these issues, the Company is changing to mining contractors who can provide their own equipment, and whose focus will be to significantly increase development to a level of 90 meters per month. Additionally, in order to provide ore with silver head grades of 175 g/t, mine production will focus on the 1704 and 1720 levels of the Santa Rosa de Lima zone. Work will also continue enlarging the ramp size to 4x4 meters, allowing for larger trucks to haul more ore from the mine to the plant.