Sierra Metals Inc. Reports Fourth Quarter and Year-End 2014 Financial Results

VANCOUVER, March 26, 2015 /CNW/ - Sierra Metals Inc. (TSX:SMT) (BVL:SMT) ("Sierra Metals" or the "Company") today reported its financial and operating results for the fourth quarter ("Q4") and year ended December 31, 2014. This press release should be read in conjunction with the Company's audited Financial Statements and Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2014, as available on the Company's website at www.sierrametals.com and on SEDAR at www.sedar.com. All monetary figures are presented in US dollars unless otherwise stated.

Audra Walsh, President and CEO of Sierra Metals, commented: "2014 was an exceptional year for the Company, as reflected in this year's financial and operational results. Revenues and operating cash flows in 2014 increased by 20% and 124%, respectively, despite a 19% and 7% decline in annual realized silver and copper prices, respectively. The increase in revenues in 2014 was driven mainly by higher throughput at our three operating mines and higher lead grades and higher lead and silver recoveries at the Yauricocha Mine, which resulted in higher volumes of concentrates sold." Ms. Walsh continued: "The Company expects to continue expanding and upgrading the mineral reserves and resources at all three mines through mine development and exploration, and continue to deliver solid production and financial results during 2015 and beyond."

2014 Operating and Financial Highlights














Three Months Ended 

Year Ended 

(In thousands of dollars, except per share and cash cost amounts)

31-Dec-14

31-Dec-13

31-Dec-14

31-Dec-13

Operating











Ore Processed / Tonnes Milled



428,859


390,781


1,706,715


1,321,781


Silver Ounces Produced



875,400


653,705


3,148,145


2,560,467


Copper pounds produced (000's)



5,908


4,819


22,643


15,905


Lead pounds produced (000's)



12,096


11,278


48,834


37,957


Zinc pounds produced (000's)



13,399


13,382


54,256


51,747


Gold ounces produced



2,329


1,665


9,457


6,736


Silver Equivalent Ounces Produced (000's)1



3,058


2,596


11,788


9,439


Cash Cost per Tonne Processed


$

40.48

$

43.46

$

40.55

$

49.21


Cash Cost (recovery) per silver payable ounce (Yauricocha)2


$

(19.98)

$

(8.53)

$

(21.25)

$

(12.04)


Cash Cost per copper payable pound (Bolivar)2


$

1.85

$

1.69

$

1.65

$

1.70


Cash Cost per silver payable ounce (Cusi)2


$

12.07

$

14.25

$

8.92

$

15.70











Financial











Revenues


$

40,857

$

36,417

$

172,614

$

143,538


Adjusted EBITDA2


$

13,404

$

12,941

$

72,597

$

54,502


Operating Cash Flows


$

12,142

$

12,418

$

60,067

$

26,749


Adjusted Net Income Attributable to Shareholders2


$

5,583

$

1,195

$

30,496

$

16,277


Net income (loss) attributable to shareholders


$

3,366

$

(14,330)

$

9,300

$

(33,973)


Cash and Cash Equivalents


$

41,273

$

44,930

$

41,273

$

44,930


Working Capital


$

23,186

$

40,997

$

23,186

$

40,997











Shareholders











Earnings (loss) per Share ("EPS") - Basic


$

0.03

$

(0.09)

$

0.06

$

(0.22)


Adjusted EPS2


$

0.04

$

0.01

$

0.19

$

0.10


Weighted Average Shares Outstanding for the Periods



159,764


157,949


159,302


157,836

(1)Silver equivalent ounces were calculated using the following metal prices: $20/oz Ag, $3.00/lb Cu, $0.85/lb Pb, $0.95/lb Zn, $1,250/oz Au.

(2)This is a non-IFRS performance measure, see Non-IFRS Performance Measures section of the MD&A.

Operational Highlights

  • The Company's metal production exceeded the high end of the 2014 production guidance for silver, lead, zinc and gold while copper production was within the guidance range;
  • For 2014, the Company achieved the highest recorded annual throughput of 1,706,715 tonnes, which resulted in increased contained metal production for all metals;
  • Annual silver production of 3,148,145 ounces (''oz'') in 2014 increased by 29% compared to 2,560,467 oz in 2013. The increase in silver production was due to higher plant throughput at all three mines and higher recoveries at Yauricocha and Cusi;
  • Annual copper production of 22.6 million pounds (''lb'') in 2014 increased by 42% compared to 15.9 million lb in 2013. The increase in copper production was due to the ramp up from 1,000 tonnes per day ("tpd") to 2,000 tpd at Bolivar during Q4 2013, which resulted in higher throughput during 2014;
  • Annual lead production of 48.8 million lb in 2014 increased by 29% compared to 38.0 million lb in 2013. Higher lead head grades at Yauricocha contributed to the increase in lead production in 2014;
  • Annual zinc production of 54.3 million lb in 2014 increased by 5% compared to 51.7 million lb in 2013. The increase in zinc production was due to the increase in throughput at Yauricocha as the zinc head grades and recoveries in 2014 were consistent with those achieved in 2013; and
  • Annual gold production of 9,457 oz in 2014 increased by 40% compared to 6,736 oz in 2013. The increase in gold production during 2014 was due to higher head grades and recoveries realized at the Bolivar and Cusi mines.

Financial Highlights

  • Revenue from metals payable of $172.6 million in 2014, increased by 20% from $143.5 million in 2013. The increase in revenues was due to higher head grades and recoveries for silver, lead and copper at Yauricocha and higher plant throughput at the Yauricocha, Bolivar and Cusi Mines;
  • Cash costs (recovery) per silver payable ounce was $(21.25) (2013: $(12.04)) at Yauricocha, cash cost per copper payable pound was $1.65 (2013: $1.70) at Bolivar and cash cost per silver payable ounce was $8.92 (2013: $15.70) at Cusi for the year ended December 31, 2014. The decrease at Yauricocha was due to higher plant throughput, an increase in by-product credits and continued success with the cost reduction measures implemented in Q3 2013. Bolivar's cash costs remained consistent with 2013 as the increase in the copper payable pounds offset the decrease in by-product credits due to the decline in silver prices. The decrease in cash costs at Cusi was due to higher silver payable ounces and by-product credits due to higher plant throughput;
  • Net income attributable to shareholders of $9.3 million or $0.06 per share for the year ended December 31, 2014 compared to a net loss of $(34.0) million ($(0.22) per share) in 2013. The increase in net income attributable to shareholders is due to the increase in revenues and decrease in costs described above, as well as the decrease in the non-cash depletion charge on the Yauricocha mineral property arising from the original acquisition of Sociedad Minera Corona S.A. ("Corona");
  • Adjusted EBITDA of $72.6 million for the year ended December 31, 2014 increased 33% compared to $54.5 million in 2013. The increase in adjusted EBITDA in 2014 is due to the increase in revenues and decrease in costs described above;
  • Adjusted net income attributable to shareholders of $30.5 million or $0.21 per share for the year ended December 31, 2014 increased 87% compared to $16.3 million or $0.10 per share for 2013;
  • A large component of the net income (loss) for every period is the non-cash depletion charge in Peru, which was $33.9 million (2013: $57.3 million) for the year ended December 31, 2014. The non-cash depletion charge is based on the aggregate fair value of the Yauricocha mineral property at the date of acquisition of Corona of $371.0 million amortized over the total proven and probable reserves and measured and indicated resources of the mine. The Company has been successful in reducing the depletion expense year over year as a result of the 54% increase in the mineral reserves at Yauricocha based on the NI 43-101 reports dated October 2012 and November 2013;
  • Cash flow generated from operations of $60.1 million for the year ended December 31, 2014 compared to $26.7 million in 2013. The increase in cash flow is mainly the result of higher revenues generated and higher gross margins achieved; and
  • Cash and cash equivalents of $41.3 million as at December 31, 2014 compared to $44.9 million at the end of 2013. Cash and cash equivalents have decreased by $3.6 million during 2014 due to the capital expenditures incurred in Mexico and Peru of $(40.0) million, repayment of loans and credit facilities of $(14.8) million, and dividends paid to shareholders of $(1.5) million and non-controlling interests of $(7.1) million, offset by $60.1 million of operating cash flow.

Project Development

  • Underground drilling has led to expansion and upgrading of mineralization at Yauricocha's Central Mine and Cachi Cachi areas. Five mineralized chimneys were discovered within 400 meters of the Central Mine head frames. Discovery of these chimneys has led to a new structural interpretation that indicates a similar area of mineralization may occur west of the Central Mine area. Reconnaissance drilling is planned for 2015;
  • Drilling and exploration during 2014 have demonstrated that the limits of ore-grade mineralization have not been reached at the Yauricocha Mine and further expansion of the mine's resources and reserves is expected;
  • Underground development at the Cusi Mine has exposed several hundred meters of mineralized shoots in Cusi's Promontorio and Santa Eduwiges mines which has increased the Company's confidence that further development into areas identified by drilling may encounter mineralized shoots that are higher-grade and more extensive than indicated by the historic drilling pattern; and
  • Development of both the Promontorio and Santa Eduwiges mines, on the Company's Cusi property, has progressed significantly during 2014 so that substantially more development ore is being processed at the Company's Malpaso plant. Production during Q4 2014 has averaged about 500 tpd and the target throughput of approximately 600 tpd is expected to be achieved in Q1 2015.

Exploration Highlights

  • Development proceeded along the Monaco shoot of the Milagro vein at the Cusi property. The Monaco shoot contains high grades of gold and silver, and has been developed along a 170 m strike length. The shoot is open to depth and a ramp is being driven to reach deeper levels of the shoot;
  • Development in the Gallo Superior Magnetita ore body of the Bolivar mine was started and mining began during Q2 2014. An aggressive exploration program was initiated on the Bolivar property, outside the main mine area. The focus of the program will be to test several targets that have been identified by the Company's geologists over several years, which are: La Lilly (copper-zinc), Veta Piedras Verde (silver-gold), La Sidra (silver-gold), Nathalie Fault and Bolívar NW; and
  • Drilling at depth at the Central Mine Area of the Yauricocha property demonstrated that the Catas orebody extends at least an additional 130 meters down dip.  Drilling of three additional holes in the Central Mine Area demonstrated that the Antacaca orebody extends at least an additional 250 meters to depth.

Weblinks

The Company's audited Financial Statements and MD&A for the year ended December 31, 2014, as available on the Company's website at http://sierrametals.com/investors/reports/

Fourth Quarter 2014 Results Conference Call Webcast

Sierra Metals' senior management will host a conference call on Friday, March 27, 2015 at 10:30 AM (E.S.T.) to discuss the Company's financial and operating results.

Via Webcast:

A live audio webcast of the meeting will be available on the Company's website: http://event.on24.com/r.htm?e=971356&s=1&k=48A8BD32556DAA58378A5B806EB46B2D

The webcast along with presentation slides will be archived for 180 days on www.sierrametals.com

Via phone:

For those who prefer to listen by phone, please use the dial-in instructions below. We recommend you call in approximately five minutes prior to the scheduled start time of the call.

Participant Number (Toll Free Peru):                                           

0800-53-840

Participant Number (Toll Free North America):                             

1-(888)-231-8191

Participant Number (International):                                              

(647) 427-7450

Conference ID:                                                                         

10404484

 

Reply Archive:

A replay of the conference call will be available until 23:59 PM (E.S.T.) on Friday, April 3, 2015 and can be accessed by using the following dial-in numbers:

Encore Toll Free Dial in Number:                                    

1-855-859-2056

Encore Local Dial in Number:                                                     

(416) 849-0833

Encore ID:                                                                                

10404484

 

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on the production of precious and base metals from its Yauricocha Mine in Peru, and 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 and La Verde (gold) at the Batopilas Property in the state of Chihuahua.

The Company's shares trade on the Lima Stock Exchange (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. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events or results. These statements reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. 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.

For further information: regarding Sierra Metals, please visit www.sierrametals.com or contact: Audra Walsh, President & CEO, Sierra Metals Inc., 1 (866) 493-9646; Victoria Vargas, Vice President, Investor Relations, Sierra Metals Inc., 1 (866) 493-9646, Email:info@sierrametals.com

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