Sierra Metals announces first quarter 2013 financial results of its subsidiary Sociedad Minera Corona in Peru
TORONTO, April 30, 2013 /PRNewswire/ – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT)
(“Sierra”) (“the Company”) announces the filing of Sociedad Minera
Corona S.A.’s (“Corona”) unaudited Financial Statements and Management
Discussion and Analysis (“MD&A”) for the first quarter of 2013. The
Company holds an interest of 81.8% in Corona. All amounts are presented
in thousands of US dollars unless otherwise stated and have not been
adjusted for the 18.2% non-controlling interest.
Daniel Tellechea, President and CEO of Sierra Metals, commented “The results of our subsidiary in Peru reflect cost pressures mainly
driven by more aggressive mine development at the Yauricocha mine
during the first quarter of 2013 and the appreciation of the Peruvian
Sol relative to the US Dollar. The former will enable the mine to
reduce its operating costs during the next 12 months. The acquisition
of Yauricocha has continued to add substantial value to the Company in
2013, as the mine through its local corporate entity (Sociedad Minera
Corona) paid a US$ 40 million dividend in first quarter of 2013. The
Yauricocha property shows strong upside potential and the Company has
started the development of a new shaft in the Central Mine Area. This
project, combined with an aggressive exploration program to increase
reserves and resources, will improve the production profile in Peru in
the medium term”.
The following table sets out select unaudited financial information for
the first quarter of 2013 and 2012:
Three months ended (In thousands of US dollars, unless stated) Mar 31, 2013 Mar 31, 2012 Revenue 33,285 40,054 EBITDA 17,225 21,624 Cash Flow from continuing operations 701 6,127 Income Taxes 1 (4,315) (5,622) Non-recurring gain on asset sale 1 - 9,954 Net Income 9,164 24,642 Cash Cost per oz of Ag (Yauricocha) US$ (21.50) (31.99) Exchange Rate (PEN / US$) 2 2.574 2.683 (In thousands of US dollars) Mar 31, 2013 Dec 31, 2012 Cash and cash equivalents 29,581 72,071 Assets 103,017 141,826 Liabilities 43,808 52,231 Net Debt 3 (18,581) (61,071) Equity 59,209 89,595 1Includes a US$ 3.9 million reclassification from income taxes to gain on asset sale. 2Peruvian Soles (PEN) per US Dollar (US$). 3Consolidated debt minus cash and cash equivalents.
Corona’s Financial Highlights
-- Net income of US$ 9.1 million or US$0.255 per share for the first quarter of 2013 compared to US$ 24.6 million or US$ 0.685 per share for the same period in 2012. Note that the first quarter of 2012 results include a US$ 10.0 million non-recurring gain associated with the sale of the Huanchor hydroelectric asset. -- EBITDA of US$ 17.2 million for the first quarter of 2013 compared to US$ 21.6 million for the same period in 2012. The main drivers for the decline in EBITDA include: a decrease in revenue per tonne due to lower prices of copper, silver and gold, higher cash costs resulting from increases from higher costs of labor, consumables and third party services, especially in exploration activities, and the appreciation of the Peruvian sol relative to the US Dollar. -- Operating cash flows of US$ 0.7 million for the first quarter of 2013 compared to US$ 6.1 million for the same period in 2012. Lower EBITDA levels mainly drive the decrease in operating cash flow in the first quarter of 2013 compared to the same period in 2012. It is important to highlight that Corona's operating cash flows during the first quarter are usually lower than in the rest of the year. The main reason is working capital. During the first quarter of 2013 the Company paid US$ 7.8 million in profit sharing and US$ 2.0 million in tax adjustments. These two payments were provisioned as expenses during the 2012 fiscal year but were paid in the first quarter of 2013. Accordingly, the Company will provision these expenses during 2013 but will not make these payments again until the first quarter of 2014. -- Income taxes of US$ 4.3 million for the first quarter of 2013 compared to US$ 5.6 million in the same period of 2012. Income taxes in the first quarter of 2012 were $1.7 million and include a $3.9 million one-time deferred tax adjustment related to the sale of Huanchor hydroelectric asset. We have reclassified this one-time $3.9 million adjustment from income taxes to gain on asset sale on the table above. -- Revenues of US$ 33.3 million in the first quarter of 2013 compared to US$ 40.1 million for the same period in 2012. The main drivers include lower copper and silver prices, change in the production mix of the Company, and lower metal content in concentrates due to lower head grades. -- Cash and cash equivalents of US$ 29.6 million as of March 31, 2013 compared to US$ 72.1 million as of March 31, of 2012. The US$ 40.0 dividend paid during the first quarter of 2013 mainly drives the decrease in cash and cash equivalents. -- A negative silver ("Ag") cash cost of US$ 21.50 per ounce ("oz") at Yauricocha in the first quarter of 2013 compared to a negative cash cost of US$ 31.99 in the same period of 2012.
Corona’s Operational Highlights
-- Silver ("Ag") production of 474,601 oz in the first quarter of 2013 compared to 492,432 oz for the same period in 2012. -- Copper ("Cu") production of 2.2 million pounds ("lb") in the first quarter of 2013 compared to 2.6 million lb for the same period in 2012. -- Lead ("Pb") production of 8.4 million lb in the first quarter of 2013 compared to 7.8 million lb for the same period in 2012. -- Zinc ("Zn") production of 13.0 million lb in the first quarter of 2013 compared to 10.5 million lb for the same period in 2012. -- Gold ("Au") production from the Yauricocha Mine was 1,598 oz in the first quarter of 2013 and 3,025 oz for the same period in 2012.
The following table sets out production results for the first quarter
ended March 31, 2013 and 2012:
Three months ended Mar 31, 2013 Mar 31, 2012 % Var. Silver (oz) 476,601 492,432 -3% Copper (000 lb) 2,175 2,634 -17% Lead (000 lb) 8,379 7,846 7% Zinc (000 lb) 13,045 10,485 24% Gold (000 lb) 1,598 3,025 -47%
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
and Head of Exploration for Sierra Metals Inc.
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 TSXV
under the symbol “SMT”.
This press release does not constitute an offer to sell or solicitation
of an offer to buy the securities in the United States or any other
jurisdiction. The Common Shares will not be and have not been
registered under the United States Securities Act of 1933, as amended,
and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements.
Neither the TSXV nor its Regulation Services Provider (as that term is
defined in policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
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.