Sierra Metals (SMTS) Reports Q3 Revenues Beat

Sierra Metals (NYSE: SMTS) reported Q3 revenue for the quarter came in at $73.2 million versus the consensus estimate of $38.23 million.

• Revenue from metals payable of $73.2 million in Q3 2020 increased 13% from $64.6 million in Q3 2019 due to higher throughput and metal production from all three mines
• Adjusted EBITDA of $37.2 million in Q3 2020 increased 73% from $21.6 million in Q3 2019, primarily due to increased revenues realized and a decrease in operating costs at all three mines
• Operating cash flows before movements in working capital of $37.9 million in Q3 2020 increased from $21.8 million in Q3 2019
• Q3 2020 consolidated copper production of 12.2 million pounds, consolidated silver production of 1.0 million ounces, consolidated gold production of 3,989 ounces, consolidated zinc production of 24.9 million pounds, and consolidated lead production of 9.9 million pounds; a 9% increase, 5% increase, 14% increase, 11% increase, and a 6% decrease respectively, compared to Q3 2019. Management expects to meet the revised annual production guidance issued on August 13, 2020, precluding any further COVID-19 interruptions to operations
• Q3 2020 revenues as a percentage of metals sold represent 37% from copper, 25% from silver, 20% from zinc, 9% from lead and 8% from gold
• Record quarterly ore throughput and copper and gold production at the Bolivar Mine in Mexico; Record quarterly silver production at the Cusi Mine in Mexico, despite being in care and maintenance for part of the quarter
• $63.8 million of cash and cash equivalents as at September 30, 2020
• $62.9 million of working capital as at September 30, 2020
• Revised 2020 Financial Guidance Issued

Luis Marchese, CEO of Sierra Metals, commented, “I am very pleased with the solid financial and production results achieved in the third quarter. We have continued to improve production rates at Bolivar and Cusi and continued to recover annual production tonnage lost at Yauricocha due to the COVID-19 pandemic. The robust production in the third quarter, along with improved operational efficiencies and improved metal prices, has resulted in record adjusted EBITDA for the Company. We also reported strong cash flow and net income. The Company continues to realize the benefits of our optimized operations and expansions ramp up, which provides for stronger financial and operational performances, which we expect to continue through the upcoming year. These improvements have enhanced the competitive position of both the Bolivar and Yauricocha mines within the cost curve for the global copper mining industry, with both mines now positioned in the lowest half of the cash cost curve.”

He continued, “The COVID-19 situation in Peru and Mexico remains very serious and is an important factor in our daily operations. Protecting our employees, the communities in which we operate, and our operations are extremely important to us; as such, we continue adhering to strict health protocols. Testing and quarantining have helped identify and keep active cases from occurring in the mines, but as a result, we are operating with a lower than optimal headcount. We appreciate all our employee’s hard work in helping the mines to run safely, efficiently, and in helping us achieve the strong third quarter results.”

He concluded, “We have reinitiated exploration and infrastructure projects at all mines that had been paused during the COVID-19 shutdowns. These programs and improvements are expected to help improve mine operations, production efficiencies as well as enable us to continue discovering and developing new and existing mineral resource opportunities. Barring any further COVID-19 work interruptions, the fourth quarter should help us to realize a strong finish for the year.”

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

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