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Last updated on April 19, 2014 at 21:20 EDT

Sierra Metals announces 2013 first quarter financial results and receipt of conditional approval to be listed on the TSX main board

May 29, 2013

TORONTO, May 29, 2013 /PRNewswire/ – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra Metals” or the “Company” previously Dia
Bras Exploration) is pleased to report the filing of its unaudited
Financial Statements and Management Discussion and Analysis (“MD&A”)
for the first 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: “We are pleased with Sierra Metals’ results for the first quarter of
2013. The Company announced commercial production at its Cusi Mine in
Mexico during the period and continues to increase its production
profile in 2013. Additionally, we are very excited to announce the
conditional approval to be listed on the TSX from the TSX Venture. This
marks a substantial milestone for the Company as we continue to strive
towards our objective of becoming one of Latin America’s premier,
low-cost precious and base metals producers”.

The following table sets out the selected first quarter financial
results


                                                     Three months ended

    (In thousands of dollars, unless         March 31, 2013 March 31, 2012
    stated)

    Revenue                                        $ 41,895       $ 46,288

    EBITDA                                           18,510         24,540

    Cash Flow from continuing                         2,359          7,217
    operations

    Adjusted net income attribuitable to             13,148         14,593
    shareholders1

    Non-cash charge on Corona                        16,503         18,485
    acquisition

    Net loss attributable to                        (3,355)        (3,892)
    shareholders

    Basic and diluted earnings (loss)
    per share ($)

      From continuing operations                     (0.02)         (0.02)

      Cash Cost per oz of Ag            US$         (21.50)        (31.99)
      (Yauricocha)

      Cash Cost per lb of Cu (Bolivar)  US$            1.62           1.73

      Cash Cost per oz of Ag (Cusi)     US$           15.52           N/A 

    (In thousands of dollars)                March 31, 2013 March 31, 2012

    Cash and cash equivalents                      $ 67,589       $ 79,835

    Assets                                          493,261        505,064

    Liabilities                                     216,623        221,574

    Equity                                          276,638        283,490

    1 Adjustable net income attributable to shareholders is defined by
    management as net income attributable to
      shareholders shown in the financials statements plus non-cash
    depletion charges due to the acquisition of Corona. 

 

Financial Events

        --  Net loss attributable to shareholders of $3.4 million or $0.02
            per share for the three months ended March 31, 2013 compared to
            a loss of $3.9 million ($0.02 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 March 31, 2013 was $16.5 million (2012- $18.5 million).
            The units of production depletion charge is based on aggregate
            fair value of the Yauricocha mineral property at the date of
            acquisition of Corona of $363.9 million amortized over the
            total proven and probable reserves of the mine.  In the event
            that additional reserves and resources are identified, this
            depletion charge will be prospectively adjusted in future
            periods.
        --  Notwithstanding lower metal prices in the quarter, the Company
            generated adjusted net income attributable to shareholders
            (excluding the non-cash depletion charge described above) of
            $13.1 million or $0.09 per share for the three months ended
            March 31, 2013 compared to $14.6 million or $0.10 per share for
            the same period in 2012.
        --  EBITDA of $18.5 million for the three months ended March 31,
            2013 compared to $24.5 million for the same period in 2012.
        --  Cash flow generated from continuing operations of $2.4 million
            for the three months ended March 31, 2013 compared to $7.2
            million for the same period in 2012.
        --  Cash and cash equivalents of $67.6 million as at March 31, 2013
            compared to $79.8 million at the end of 2012.
        --  Revenues of $41.9 million for the three months ended March 31,
            2013 compared to $46.3 million for the same period in 2012.
        --  Silver cash cost1 after by-product credits of US$(21.50) per
            ounce ("oz") in Yauricocha, silver cash cost after by-product
            credits of US$15.52 per oz in Cusi and copper cash cost after
            by-product credits of US$1.62 per pound ("lb") at Bolivar for
            the three months ended March 31, 2013 compared to silver cash
            cost of US$(31.99)/oz and US$1.73 /lb for the same period of
            2012 in Yauricocha and Bolivar, respectively.

Operational Events

        --  Total tonnes processed of 317,637 in the first quarter of 2013
            compared to 286,022 tonnes in the same period of 2012. This
            represents an 11% increase year-over-year.
        --  Total silver production of 610,407 oz in the first quarter of
            2013 compared to 584,284 oz for the same period of 2012. This
            represents a 4% increase year-over-year.
        --  Total copper production of 4.1 million lb in the first quarter
            of 2013 compared to 3.9 million lb for the same period of 2012.
            A 5% increase year-over-year.
        --  Total lead production of 8.6 million lb in the first quarter of
            2013 compared to 7.9 million lb for the same period of 2012. An
            8% increase year-over-year.
        --  Total zinc production of 13.3 million lb in the first quarter
            of 2013 compared to 13.6 million lb for the same period of
            2012. A 2% decrease year-over-year.
        --  Total gold production from the Yauricocha Mine was 1,598 oz in
            the first quarter 2013 compared to 3,025 oz for the same period
            of 2012. A 47% decrease year-over-year.
        --  Cusi mine achieved commercial production on January 1, 2013 and
            during the first quarter of 2013 processed a total of 28,315
            tonnes of ore at the Malpaso Mill representing a 133% increase
            year-over-year. This marks a substantial milestone as it is
            Sierra's third mine in commercial production.

The following table sets out consolidated production results for the
quarter ended March 31, 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.


                                                     3 Months Ended

    Consolidated Production       March 31, 2013   March 31, 2012   % Var.

    Silver (oz)                          610,407          584,284       4%

    Copper (000 lb)                        4,060            3,878       5%

    Lead (000 lb)                          8,528            7,930       8%

    Zinc (000 lb)                         13,304           13,622      -2%

    Gold (oz)                              1,598            3,025     -47%

 

Exploration Events

        --  During the first quarter of 2013 a total of 22,163 meters of
            drilling were completed on the following properties:
      o Yauricocha Mine, Peru: 8,175 meters of drilling completed at the
        Central Mine Area and regional targets.
      o Bolivar Mine, Mexico: 8,362 meters of drilling that focused on
        upgrading resources to reserves and expanding skarn mineralization
        at the Bolivar Mine.
      o Cusi Mine, Mexico: 5,625 meters of definition drilling was
        completed to delineate the extent of mineralization at the
        Promontorio, San Juan, Minerva and La India mines.
        --  On January 9, 2013 the Company announced that drilling at the
            Central Mine Area of the Yauricocha mine in Peru expanded
            mineralization at depth. Drill results show that mineralization
            of the Rosaura and Antacaca Sur ore bodies extend 150 meters to
            depth and the Antacaca and Catas ore bodies have increased
            mineralization at depth.  These bodies are open to depth.

Corporate Events

        --  On January 25, 2013, the State Court of Chihuahua, Mexico (the
            "State Court") overturned a previously announced resolution of
            the 8th Civil Court of the Judicial District of Morelos in
            Chihuahua (the "8th Civil Court"), which absolved the Company
            from the claims brought against it by Polo y Ron Minerals, S.A.
            de C.V. ("P&R"). The original claim brought by P&R only
            included the San Jose properties, which are not located in any
            areas where Dia Bras Mexicana, S.A. de C.V currently operates,
            or in areas included in any resource estimates of the Company.
            However, the State Court ordered the Company to: (i) transfer
            to P&R 17 mining concessions relating to its Bolivar project
            including the mining concessions where mine operations are
            located; and (ii) pay US$422,674 to P&R. In February 2013, the
            Federal Court in the State of Chihuahua ("Federal Court")
            granted the Company a temporary suspension of the adverse
            resolution issued by the State Court. A final verdict by the
            Federal Court is pending. The Company will continue to
            vigorously defend this claim by applying the proper legal
            resources necessary to defend its position.
        --  On February 12, 2013, the Company announced the adoption of a
            dividend policy whereby it will pay cash dividends on a
            quarterly basis of approximately $10 million per annum. The
            Company completed the first quarterly cash dividend payment of
            $2.5 million or $0.016 per common share ("Common Share") to
            shareholders on April 30, 2013. Sierra announced this dividend
            policy as a result of strong cash flows from its Yauricocha
            mine in Peru and operational improvements at the Bolivar and
            Cusi mines in Mexico.
        --  On March 11, 2013, the Company announced that J. Alberto Arias
            was appointed Chairman of the board of directors ("Board of
            Directors"), succeeding Mr. Steven Dean. Mr. Dean will continue
            to serve as a director of Sierra Metals while contributing as a
            member of several committees including the newly created
            Corporate Strategy Committee. Additionally, Mr. John S.
            Donnelly was appointed lead director for the Company.
        --  On March 11, 2013, the Company also submitted an application to
            list its common shares on the Toronto Stock Exchange (the
            "TSX"), Canada's premier stock exchange. If the application is
            accepted by the TSX, the Company's common shares will graduate
            to the TSX and such common shares will cease to be listed for
            trading on the TSX Venture Exchange ("TSX-V").
        --  On March 26, 2013, the Company announced that the Board of
            Directors has approved a share repurchase program pursuant to a
            normal course issuer bid ("NCIB") in the open market through
            the facilities of the TSX-V to be completed over the next
            twelve months. Haywood Securities will conduct the NCIB on
            behalf of the Company. Pursuant to the NCIB, the Company can
            repurchase up to of 7,886,873 of its common shares, which is
            the maximum number of shares permitted to be purchased under
            the TSX rules, and represents 5% of the 157,737,476 issued and
            outstanding shares of the Company as of March 26, 2013.
        --  On May 29, 2013 the Company announced that it received
            conditional approval to be listed on the Toronto Stock Exchange
            (the "TSX"), Canada's premier stock exchange. Once final
            approval has been received by the TSX, the Company's common
            shares will be listed in the TSX and such common shares will
            cease to be listed for trading on the TSX-V. The Company
            submitted the original application to be listed in the TSX on
            March 11, 2013.

Quality Assurance

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 Senior Vice President, 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, and its Bolivar and Cusi
mines 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 TSX-V
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 TSX-V 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.

Forward-Looking Statements

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.

(1) Cash costs are calculated to include cost of sales, treatment and
refining charges, and selling expenses less depreciation, workers
profit sharing and other non-cash provisions included in cost of sales.

SOURCE Sierra Metals Inc.


Source: PR Newswire