Sierra Metals (SMTS) Reports Q1 Revenues Above Estimates

Sierra Metals (NYSE: SMTS) reported Q1 revenue for the quarter came in at $49.2 million versus the consensus estimate of $38.23 million.

• Adjusted EBITDA of $12.0 million in Q1 2019 decreased from $27.4 million in Q1 2018
• Operating cash flows before movements in working capital of $11.8 million in Q1 2019 decreased from $27.4 million in Q1 2018
• Revenue from metals payable of $49.2 million in Q1 2019 decreased from $61.7 million in Q1 2018 due to lower throughput and lower realized metal prices
• Q1 2019 consolidated copper production of 7.7 million pounds, consolidated silver production of 0.7 million ounces, consolidated zinc production of 16.4 million pounds, consolidated lead production of 7.0 million pounds, and consolidated gold production of 1,986 ounces; a 4% decrease, 16% increase, 10% decrease, a 10% increase, and a 2% increase respectively, compared to Q1 2018, management expects that annual production guidance will still be met(1)
• Record quarterly throughput at the Cusi Mine in Mexico
• $23.9 million of cash and cash equivalents as at March 31, 2019
• Net Debt of $45.0 million as at March 31, 2019
• The Company through its Normal Course Issuer Bid has to date repurchased and cancelled a total of 907,266 shares at an average VWAP of C$2.04
• Shareholder conference call to be held Tuesday, May 14, 2019, at 10:30 AM (EST)

Igor Gonzales, President, and CEO of Sierra Metals stated: “The first quarter has presented us with several challenges including an illegal strike at Yauricocha, as well as slower than expected ramp up of throughput at Bolivar and Cusi with lower head grades and recoveries. I want to assure shareholders that management remains focused on the expansions in Mexico and improving tonnage, head grades, and recovery rates which in turn will help to lower costs. Also, as noted above, it still bears mentioning that in Q1 2019 Yauricocha saw an increase in zinc equivalent metal production, Cusi had record throughput and Bolivar had a 1% increase in throughput over Q1 2018. Subsequent to Q1 2019, throughput rates continue to improve. At Yauricocha the strike has been settled and the mine is working to full capacity. In Mexico, production increases are expected to become more apparent in late Q2 2019 when we should reach higher throughput rates at both Bolivar and Cusi. Production is also expected to be higher in the latter half of 2019 when the mines are running at the higher throughput rates. Cash flow continues to be strong and with continued efforts, we expect to see further improvements in cash flow and good returns on the capital being invested. Management expects that the Company will still be within the annual production guidance provided.

We continue to modernize and improve all our Mines, implementing best operational practices. These improvements are expected to allow for the Company to increase metal production over the course of the coming year. Our Company-wide ongoing brownfield exploration programs should also lead to further significant growth in reserves and resources, which will add to the value of our assets during the year ahead.”

He continued, “Sierra Metals’ balance sheet remains strong with the liquidity needed to meet our operational and growth expenditure requirements. The Company is on-track for further growth in 2019 based upon positive PEA studies which demonstrates robust growth opportunities for the Company at all Mines. We continue working on Life of Mine plans which are expected to be completed in mid-2019. Furthermore, NI 43-101 Technical Reports are expected to be completed for the Yauricocha Mine by the end of Q2 2019 and for Bolivar and Cusi Mines by the end of Q4 2019. We are very optimistic that these updated reports will provide for additional reserves and resources at all Mines.”

For earnings history and earnings-related data on Sierra Metals (SMTS) click here.

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