TORONTO, Aug. 13, 2013 /CNW/ - Sierra Metals Inc.
(TSX: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 second 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: "Sierra
Metals' production for the first half of 2013 was in line with our
expectations. However, the overall financial results for the second
quarter of 2013 reflect the significant decrease in commodity
prices. Accordingly, we are in the process of implementing cost
reduction measures and increasing our productivity levels during
the second half of 2013. Sierra Metals has a strong balance sheet,
continues to generate solid operating cash flows and will continue
with the development of key projects that will improve the
Company's production profile in the medium term".
The following table sets out the selected first
quarter financial results:
|
Three months ended |
Six months ended |
|
June 30 |
June 30 |
(In thousands of dollars, unless
stated) |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
Revenue |
|
$ |
37,108 |
$ |
43,955 |
$ |
79,003 |
$ |
90,243 |
Adjusted EBITDA1 |
|
|
13,264 |
|
20,955 |
|
31,774 |
|
45,495 |
Cash Flow from continuing
operations |
|
|
5,670 |
|
18,182 |
|
8,029 |
|
25,399 |
Adjusted net income
attributable to shareholders2 |
|
|
7,948 |
|
15,651 |
|
21,096 |
|
30,244 |
Non-cash depletion charge on Corona
acquisition |
|
|
18,086 |
|
19,625 |
|
34,589 |
|
38,110 |
Net loss attributable to
shareholders |
|
|
(10,138) |
|
(3,974) |
|
(13,493) |
|
(7,866) |
Basic and diluted earnings (loss) per
share ($) |
|
|
|
|
|
|
|
|
|
|
From continuing operations |
|
|
(0.06) |
|
(0.03) |
|
(0.09) |
|
(0.06) |
|
Cash Cost per oz of Ag (Yauricocha) |
US$ |
|
(13.78) |
|
(22.06) |
|
(18.14) |
|
(27.63) |
|
Cash Cost per lb of Cu (Bolivar) |
US$ |
|
1.73 |
|
0.95 |
|
1.57 |
|
1.22 |
|
Cash Cost per oz of Ag (Cusi) |
US$ |
|
16.27 |
|
N/A |
|
16.19 |
|
N/A |
|
|
|
|
|
|
|
|
|
|
(In thousands of dollars) |
|
June 30, 2013 |
Dec 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
42,097 |
$ |
79,835 |
|
|
|
|
Assets |
|
|
471,909 |
|
505,064 |
|
|
|
|
Liabilities |
|
|
201,696 |
|
221,574 |
|
|
|
|
Equity |
|
|
270,213 |
|
283,490 |
|
|
|
|
1 Adjusted EBITDA is defined by management as EBITDA
adjusted for non-cash and non-recurring items including share-based
compensation, foreign exchange gain (loss), gain (loss) from
discontinued operations and unrealized gain (loss) on financial
instruments held at fair value through profit and loss.
2 Adjusted 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
- Adjusted net income attributable to shareholders (excluding the
non-cash depletion charge described above) of $7.9 million or $0.05 per share for the three months ended
June 30, 2013 compared to
$15.7 million or $0.11 per share for the same period in 2012.
Adjusted net income attributable to shareholders of $21.1 million or $0.13 per share for the six months ended
June 30, 2013 compared to
$30.2 million or $0.21 per share for the same period in 2012.
- Net loss attributable to shareholders of $10.1 million or $0.06 per share for the three months ended
June 30, 2013 compared to a loss of
$4.0 million ($0.03 per share) for the same period in 2012. Net
loss attributable to shareholders of $13.5
million or $0.09 per share for
the six months ended June 30, 2013
compared to a loss of $7.9 million
($0.06 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 June 30,
2013 was $18.1 million (2012-
$19.6 million) and the six months
ended June 30, 2012 was $34.6 million (2012- $38.1
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 reduced in future periods.
- Adjusted EBITDA of $13.3 million
for the three months ended June 30,
2013 compared to $21.0 million
for the same period in 2012. Adjusted EBITDA of $31.8 million for the six months ended
June 30, 2013 compared to
$45.5 million for the same period in
2012.
- Cash flow generated from continuing operations of $5.7 million for the three months ended
June 30, 2013 compared to
$18.2 million for the same period in
2012. Cash flow generated from continuing operations of
$8.0 million for the six months ended
June 30, 2013 compared to
$25.4 million for the same period in
2012.
- Cash and cash equivalents of $42.1
million as at June 30, 2013
compared to $79.8 million at the end
of 2012. Cash and cash equivalents have decreased by $37.7 million during the first half of 2013
mainly due to the capital expenditures incurred in Mexico and Peru for $22.8
million. These expenditures are in line with the Company's
growth and development initiatives financed by the $45.0 million private placement completed in
2012.
- Revenues of $37.1 million for the
three months ended June 30, 2013
compared to $44.0 million for the
same period in 2012. Revenues of $79.0
million for the six months ended June
30, 2013 compared to $90.2
million for the same period in 2012.
- Negative silver cash cost1 of US$13.78 per ounce ("oz") at Yauricocha, silver
cash cost of US$16.27 per oz at Cusi
and copper cash cost of US$1.73 per
pound ("lb") at Bolivar for the three months ended June 30, 2013 compared to negative silver cash
cost of US$22.06 per oz at Yauricocha
and US$0.95 per lb at Bolivar for the
same period of 2012. Negative silver cash cost of US$18.14 per oz at Yauricocha, silver cash cost
of US$16.19 per oz at Cusi and copper
cash cost of US$1.57 per lb at
Bolivar for the six months ended June 30,
2013 compared to negative silver cash cost of US$27.63 per oz at Yauricocha and US$1.22 per lb at Bolivar for the same period of
2012. Cash costs at Cusi for 2012 are not available because this
property was not in commercial production at that time.
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.
Operational Events
- Total tonnes processed of 323,751 in the second quarter of 2013
compared to 325,913 tonnes in the same period of 2012. A 1%
decrease year-over-year. Total tonnes processed of 641,387 in the
first half of 2013 compared to 619,488 tonnes in the same period of
2012. A 4% increase year-over-year.
- Total silver production of 669,620 oz in the second quarter of
2013 compared to 670,706 oz for the same period of 2012. A very
similar amount year-over-year. Total silver production of 1,280,028
oz in the first half of 2013 compared to 1,254,990 oz for the same
period of 2012. A 2% increase year-over-year.
- Total copper production of 3.8 million lb in the second quarter
of 2013 compared to 4.1 million lb for the same period of 2012. A
9% decrease year-over-year. Total copper production of 7.8 million
lb in the first half of 2013 compared to 8.0 million lb for the
same period of 2012. A 2% decrease year-over-year.
- Total lead production of 9.6 million lb in the second quarter
of 2013 compared to 9.1 million lb for the same period of 2012. A
5% increase year-over-year. Total lead production of 18.1 million
lb in the first half of 2013 compared to 17.0 million lb for the
same period of 2012. A 6% increase year-over-year.
- Total zinc production of 12.8 million lb in the second quarter
of 2013 compared to 15.3 million lb for the same period of 2012. A
16% decrease year-over-year. Total zinc production of 26.1 million
lb in the second quarter of 2013 compared to 28.9 million lb for
the same period of 2012. A 10% decrease year-over-year.
- Total gold production from the Yauricocha Mine was 1,800 oz in
the second quarter of 2013 compared to 2,876 oz for the same period
of 2012. A 37% decrease year-over-year. Total gold production from
the Yauricocha Mine was 3,398 oz in the first half of 2013 compared
to 5,901 oz for the same period of 2012. A 42% decrease
year-over-year.
The following table sets out consolidated
production results for the three and six months ended June 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.
Consolidated Production |
3 Months Ended |
6 Months Ended |
June 30,
2013 |
June 30,
2012 |
%
Var. |
June 30,
2013 |
June 30,
2012 |
%
Var. |
Silver production (oz) |
669,620 |
670,706 |
0% |
1,280,028 |
1,254,990 |
2% |
Copper production (000 lb) |
3,755 |
4,122 |
-9% |
7,816 |
8,000 |
-2% |
Lead production (000 lb) |
9,559 |
9,084 |
5% |
18,087 |
17,014 |
6% |
Zinc production (000 lb) |
12,776 |
15,282 |
-16% |
26,080 |
28,905 |
-10% |
Gold Production (oz) |
1,800 |
2,876 |
-37% |
3,398 |
5,901 |
-42% |
Exploration Events
- On April 17, 2013, the Company
announced the completion of a pre-feasibility study (the "PFS") on
its Bolivar mine in the Piedras
Verdes mining district of Chihuahua State, Mexico. According to this PFS completed by
Gustavson Associates, LLC, proven and probable ("Proven and
Probable") ore reserves now total 7,456,806 tonnes at 1.044% copper
equivalent ("CuEq") averaging 19.5 grams per tonne ("g/t") Ag,
0.759% Cu and 0.329% Zn. Gold contents average 0.226 g/t but
were not included in the CuEq calculation; however, they were
included within the project's economics. Out of the 15.4
million tonnes of measured and indicated ("Measured and Indicated"
or "M&I") resources (grading 19.45 g/t Ag, 0.79% Cu, 1.06% Zn
and 0.24 g/t Au) defined in the October 15,
2012 NI 43-101 technical report, 6.1 million tonnes of the
highest grades deposits (i.e. Alta
Ley and portions of Gallo Superior deposits) were not
included in the PFS as more data are required for mine planning
purposes. Additional drilling is underway to complete mine
planning in order to convert these Measured and Indicated resources
to Proven and Probable reserves. At a production rate of 2,000
tonnes per day ("tpd"), these reserves provide a 10-year mine life
with an additional year of processing from the stockpile for a
total of 11 years.
- Additionally, on April 24, 2013,
the Company issued a revised press release regarding the Bolivar
PFS, which announced that economic results show capital costs of
US$43.0 million, with an initial
capital cost of approximately US$7.0
million and sustaining capital over the life of mine ("Life
of Mine" or "LOM") of approximately US$36.0
million. The project has an estimated pre-tax net
present-value ("NPV") of US$135.6
million and a post-tax, base case NPV of US$91.7 million, at an 8% discount rate.
- On May 14, 2013 the Company
announced that drilling encountered wide zones of mineralization in
both the Upper and Lower Skarn horizons located 600 meters
northwest of the major ore-hosting zones of the Bolivar
(Alta Ley) Mine. In addition,
step-out drilling from the El
Gallo deposit has extended that mineralized zone 600 m to
the northeast with high grades of zinc in the Upper Skarn horizon.
Drill hole DB13B433 cut 7.05 meters core length averaging 1.552 g/t
Au, 53 g/t Ag, 0.55% Cu and 1.15% Zn, including 5.5 metyers
averaging 1.914 g/t Au, 64 g/t Ag, 0.66% Cu and 1.38% Zn. At the
Step Out area, 600 meter north east of El
Gallo, drill hole DB12B416 cut 10.8 m core length averaging
0.89% Cu and greater than 9.66% Zn, including 3.2 meters averaging
2.91% Cu and greater than 30% Zn.
- On May 28, 2013 Sierra Metals
announced that it is on track to triple production at its Cusi
property during 2013 and achieve 500 tpd during the fourth quarter
of 2013. Development at Santa Eduwiges, La India and Minerva mines
returned substantial results including 5,836 g/t Ag and 4.1 g/t Au
over 0.9 meters, 1,496 g/t Ag and 5.4 g/t Au over 0.4 meters and
1,237 g/t Ag and 22.5 g/t Au over 0.3 meters, respectively.
Additionally, the San Juan mine
has been developed and production is scheduled to commence during
the fourth quarter of 2013 at 80-100 tpd.
Corporate Events
- On May 1, 2013, the Company
announced the completion of its first quarterly cash dividend
payment of $2.5 million, or
$.016 per Common Share to
shareholders.
- On May 10, 2013, the Company
announced that, in connection with its normal course issuer bid
("NCIB") announced on March 26, 2013,
it entered into an automatic share repurchase plan agreement (the
"Plan") with Haywood Securities. The Plan permits Haywood to
repurchase shares under the NCIB at any time, including during
internal blackout periods and/or when the Company is in possession
of undisclosed material information, without the control or
influence of the Company, subject to a maximum of 500,000 shares,
certain price limitations and other parameters prescribed by the
Plan. During the six months ended June 30,
2013, the Company repurchased and cancelled 371,700
shares.
- On June 17, 2013 the Company
announced that it retained First Canadian Capital Corp. ("First
Canadian") as a consultant to provide consulting and investor
relations services. Under the terms of the consulting agreement
with First Canadian (the "Agreement"), Sierra Metals will pay First
Canadian $7,000 per month for a
twelve month initial term (with a right of termination by either
party after six months) and grant 200,000 stock options at an
exercise price of $2.50 per share,
with vesting in accordance with the Agreement, the TSX policies and
the Company's stock option plan. The stock options will expire and
terminate upon the earlier of: (i) 15 months from the date of the
execution of the Agreement; and (ii) 30 days after First Canadian
ceases to provide any and all services set forth in the
Agreement.
- Additionally, on June 17, 2013
the Company announced the results of the annual and special meeting
of Sierra Metals' shareholders held on May
29, 2013 in Lima, Peru. All
of the resolutions tabled were overwhelmingly approved by
shareholders, including the re-election of J. Alberto Arias, Douglas F. Cater, Steven
G. Dean, John S. Donnelly,
Guillermo Kaelin, Philip Renaud and Daniel
Tellechea as directors.
- On June 21, 2013 the Company
announced its second quarterly cash dividend of approximately
$2.5 million, or $0.016 per Common Share of the Company, payable
on or about July 31, 2013 to the
holders of the issued and outstanding Common Shares as of the close
of business on June 28, 2013.
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 the Toronto
Stock Exchange under the symbol "SMT".
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.
SOURCE Sierra Metals Inc.