Sierra Metals Reports Second Quarter 2016 Production Results

Company records highest throughput in its history

TORONTO, July 19, 2016 /CNW/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") reports second quarter production results featuring record mine ore throughput for the Company as well as at its Bolivar and Cusi Mines in Mexico and continued improvement at the Yauricocha Mine, with an increase in both ore throughput and metal production in Q2 2016 versus the two previous quarters.

The Company continued to make strong progress on development at its Esperanza discovery at Yauricocha during the quarter and anticipates production to commence early in Q3 as previously announced.

Results are from Sierra Metals' three underground mines in Latin America: The Yauricocha polymetallic Mine in Peru and the Bolivar copper and Cusi silver Mines in Mexico.

Second Quarter Highlights

  • Total tonnes processed of 503,988; a 4% increase over Q2 2015's record production
  • Silver equivalent production of 3.0 million ounces; a 9% decrease from Q2 2015 record production
  • Copper equivalent production of 19.7 million pounds; a 9% decrease from Q2 2015 record production
  • Increase of 15% in silver equivalent production for the Company during Q2 2016 vs Q1 2016
  • Increase of 24% in silver equivalent production at Yauricocha during Q2 2016 vs Q1 2016
  • Record throughput at both the Bolivar and Cusi Mines during Q2 2016

During Q2 2016, consolidated metal production declined compared to Q2 2015's record production due to reduced plant throughput, lower head grades and lower recoveries at the Yauricocha Mine in Peru, as well as lower head grades and recoveries at the Bolivar Mine in Mexico. This was partially offset by an increase in throughput at the Bolivar Mine and an increase in throughput, head grades and recoveries of most metals at the Cusi Mine.

The Company has seen a significant improvement in operations at Yauricocha as we near completion of the restructuring process taking place at the mine. Silver equivalent production increased by 24% in Q2 versus Q1 2016 as the Company focused on the production of higher grade material at a reduced rate to maintain costs while maximizing profitability.

"Management is very pleased to see significant benefits from the operational improvements at the Yauricocha Mine continuing to have a strong impact on operational results.  We anticipate improved consolidated results quarter over quarter in the current year." commented Mark Brennan, President and CEO of Sierra Metals. "In Mexico we are seeing strong prospects for increased throughput and grade at Bolivar in the second half of 2016 in addition to further reduced development costs and the benefit of higher grades at Cusi"

He continued, "The combined effect of optimizing our mining practices to reduce costs, implement best practices and modernize the Mines coupled with a very successful brownfield exploration and development program at our Yauricocha Mine and both Mines in Mexico, are anticipated to provide a significant improvement in the intrinsic value to our shareholders in the near term."

Consolidated Production Results





Consolidated Production 

3 Months Ended

6 Months Ended

2016 Guidance


Q2 2016

Q1 2016

% Var.

Q2 2015

% Var.

H1 2016

H1 2015

% Var.

Low

High












Tonnes processed (mt)

503,988

476,220

6%

483,374

4%

980,207

955,781

3%




Daily throughput

5,760

5,443

6%

5,524

4%

5,601

5,462

3%

























Silver ounces (000's)

780

588

33%

911

-14%

1,368

1,811

-24%

2,600

3,200

Copper pounds (000's)

5,245

5,836

-10%

6,508

-19%

11,081

12,992

-15%

24,400

30,100

Lead pounds (000's)

10,655

8,255

29%

11,116

-4%

18,911

23,232

-19%

26,700

32,900

Zinc pounds (000's)

14,218

10,919

30%

13,019

9%

25,137

23,480

7%

43,200

53,400

Gold ounces

2,197

2,236

-2%

2,177

1%

4,432

4,838

-8%

9,100

11,200

Silver equivalent ounces (000's)(1)

2,965

2,582

15%

3,247

-9%

5,547

6,437

-14%

10,400

12,800

Copper equivalent pounds (000's)(1)

19,714

17,164

15%

21,589

-9%

36,878

42,797

-14%

69,100

85,300












(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Yauricocha Mine, Peru

The Yauricocha Mine processed a total of 215,510 tonnes in Q2 2016 representing a 4% decrease compared to the historic record level of Q2 2015. Lower metal production was driven by lower plant throughput and lower silver, copper, lead and gold head grades from the polymetallic and lead-oxide concentrates. Lower recoveries of all metals, except gold, were a consequence of lower head grades in the ore sources available to be mined in Q2 2016 versus Q2 2015.

The Company saw positive improvements from the restructuring at Yauricocha in Q2 2016 with a 24% increase in silver equivalent production over Q1 2016. The Company also saw an increase in the production of all metals except copper with increases in production of silver 63%, zinc 33%, lead 38% and gold 16% with a reduction of 49% in copper production. Management believes metal production and associated economics will continue to improve as we near the completion of the restructuring program later this year.

A summary of production from the Yauricocha Mine for Q2 2016 has been provided below:




Yauricocha Production

3 Months Ended

6 Months Ended


Q2 2016

Q1 2016

% Var.

Q2 2015

% Var.

H1 2016

H1 2015

% Var.










Tonnes processed (mt)

215,510

207,580

4%

224,988

-4%

423,090

444,957

-5%


Daily throughput

2,463

2,372

4%

2,571

-4%

2,418

2,543

-5%




















Silver grade (g/t)

107.34

74.21

45%

109.77

-2%

91.09

112.48

-19%


Copper grade

0.39%

0.75%

-48%

0.71%

-45%

0.57%

0.61%

-7%


Lead grade

2.93%

2.29%

28%

2.79%

5%

2.62%

3.01%

-13%


Zinc grade

3.30%

2.68%

23%

2.92%

13%

2.99%

2.67%

12%


Gold Grade (g/t)

0.64

0.63

2%

0.65

-1%

0.64

0.72

-12%











Silver recovery

62.26%

57.19%

9%

72.61%

-14%

60.23%

70.01%

-14%


Copper recovery

51.98%

54.23%

-4%

58.15%

-11%

53.44%

62.54%

-15%


Lead recovery

68.49%

66.17%

4%

77.58%

-12%

67.50%

76.20%

-11%


Zinc recovery

87.53%

83.98%

4%

90.01%

-3%

85.97%

89.62%

-4%


Gold Recovery

27.79%

25.33%

10%

26.24%

6%

26.60%

27.41%

-3%



















Silver ounces (000's)

463

283

63%

577

-20%

746

1,127

-34%

Copper pounds (000's)

959

1,863

-49%

2,037

-53%

2,822

3,749

-25%

Lead pounds (000's)

9,550

6,944

38%

10,751

-11%

16,494

22,489

-27%

Zinc pounds (000's)

13,708

10,281

33%

13,019

5%

23,989

23,480

2%

Gold ounces

1,236

1,062

16%

1,232

0%

2,299

2,819

-18%

Silver equivalent ounces (000's)(1)

1,852

1,496

24%

2,152

-14%

3,348

4,176

-20%

Copper equivalent pounds (000's)(1)

12,314

9,948

24%

14,308

-14%

22,261

27,764

-20%










(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Esperanza Discovery

During the first quarter Sierra announced the discovery of a new high grade sulfide zone, referred to as the "Esperanza" zone, located 100 meters along strike from current mining activities. The discovery has returned the thickest sulfide intercepts in the 60 year mining history at Yauricocha and comes as part of ongoing drill testing of priority targets at the Yauricocha Mine (please see news release dated January 28, 2016).

Since discovery of the zone in 2015, 54 holes (9,856 meters) have been completed. A total of 39 holes (6,674 meters) have been completed to date in 2016 (please see press release dated May 24, 2016), including 35 delineation holes (5,528 meters) and 4 additional exploration holes (1,146 meters). The current strike length of the zone is approximately 250 meters and the vertical extent of the zone is approximately 250 meters.  The mineralized zone remains open at depth to the north and south and additional exploration drilling in these areas is currently underway having established drilling stations at the 1070 level versus the previous drilling at the 870 level.

The Company is currently in the final stages of completing an NI 43-101 Technical Report to confirm reserves and resources for Yauricocha that will include the new Esperanza discovery. Publication of the report is imminent.

Bolivar Mine, Mexico

Bolivar had another quarter of record plant throughput in Q2 2016 of 236,252 tonnes which was a 13% increase compared to Q2 2015. Despite the record throughput, lower head grades for all metals and lower recoveries for all metals, except gold, were encountered which resulted in a 5% decrease in copper equivalent production in Q2 2016 compared to Q2 2015.

Copper production of 4.3 million pounds decreased 4%, silver production of 106,487 ounces decreased 6% and gold production of 743 ounces decreased 8% in Q2 2016 compared to Q2 2015. The decrease in metal production was driven by the lower head grades and recoveries of all metals, except gold.

The Company expects to see improved production as a result of higher throughput, better head grades and higher recoveries throughout the year by concentrating on known mineralized areas such as El Gallo.

A summary of production for the Bolivar Mine for Q2 2016 has been provided below:




Bolivar Production

3 Months Ended

6 Months Ended


Q2 2016

Q1 2016

% Var.

Q2 2015

% Var.

H1 2016

H1 2015

% Var.










Tonnes processed (mt)

236,252

218,886

8%

209,459

13%

455,138

412,818

10%


Daily throughput

2,700

2,502

8%

2,394

13%

2,601

2,359

10%




















Copper grade

1.00%

1.06%

-6%

1.14%

-12%

1.03%

1.19%

-13%


Silver grade (g/t)

18.51

18.37

1%

20.40

-9%

18.44

22.84

-19%


Gold grade (g/t)

0.20

0.27

-23%

0.31

-33%

0.23

0.31

-24%











Copper recovery

82.54%

77.69%

6%

85.06%

-3%

80.13%

85.53%

-6%


Silver recovery

75.76%

75.40%

0%

82.62%

-8%

75.59%

83.18%

-9%


Gold recovery

48.07%

45.99%

5%

39.11%

23%

46.93%

42.45%

11%



















Copper pounds (000's)

4,286

3,973

8%

4,471

-4%

8,260

9,242

-11%

Silver ounces (000's)

106

97

9%

114

-6%

204

252

-19%

Gold ounces

743

859

-14%

804

-8%

1,603

1,723

-7%

Silver equivalent ounces (000's)(1)

806

759

6%

846

-5%

1,565

1,770

-12%

Copper equivalent pounds (000's)(1)

5,362

5,046

6%

5,623

-5%

10,408

11,770

-12%










(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Cusi Mine, Mexico

Total ore processed of 52,226 tonnes during Q2 2016 increased 7% compared to Q2 2015. Higher head grades for all metals and higher recoveries for all metals, except silver, as well as the start of zinc concentrate production from the plant, during Q1 2016, contributed to the 23% increase in silver equivalent production.

Silver production of 210,706 ounces decreased 5%, gold production of 217 ounces increased 54%, while lead production of 1.1 million pounds increased 203% compared to Q2 2015. The Mine also produced 0.5 million pounds of zinc which was the second quarter of zinc production at Cusi.

A summary of production for the Cusi Mine for Q2 2016 has been provided below:




Cusi Production

3 Months Ended

6 Months Ended


Q2 2016

Q1 2016

% Var.

Q2 2015

% Var.

H1 2016

H1 2015

% Var.










Tonnes processed (mt)

52,226

49,753

5%

48,928

7%

101,979

98,006

4%


Daily throughput

597

569

5%

559

7%

583

560

4%




















Silver grade (g/t)

181.50

174.38

4%

179.58

1%

178.02

176.52

1%


Gold grade (g/t)

0.23

0.29

-23%

0.18

23%

0.26

0.19

36%


Lead grade

1.19%

1.41%

-16%

0.46%

160%

1.29%

0.46%

183%


Zinc grade

1.15%

1.38%

-17%

0.00%

N.A.

1.26%

0.00%

N.A.











Silver recovery

69.14%

74.16%

-7%

78.22%

-12%

71.54%

77.68%

-8%


Gold recovery

57.12%

66.84%

-15%

48.92%

17%

62.49%

49.41%

26%


Lead recovery

80.97%

84.92%

-5%

74.32%

9%

83.07%

75.12%

11%


Zinc recovery

38.53%

42.02%

-8%

0.00%

N.A.

40.39%

0.00%

N.A.



















Silver ounces (000's)

211

207

2%

221

-5%

418

432

-3%

Gold ounces

217

314

-31%

142

54%

531

297

79%

Lead pounds (000's)

1,105

1,312

-16%

365

203%

2,417

742

226%

Zinc pounds (000's)

510

638

-20%

0

N.A.

1,147

0

N.A.

Silver equivalent ounces (000's)(1)

307

326

-6%

249

23%

633

491

29%

Copper equivalent pounds (000's)(1)

2,038

2,170

-6%

1,658

23%

4,209

3,262

29%










(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Quality Control

All technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on 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 metals 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 on the TSX 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 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.

Continue to watch our progress at:

Web: www.sierrametals.com
Twitter: sierrametals
Facebook: SierraMetalsInc
LinkedIn: Sierra Metals Inc

SOURCE Sierra Metals Inc.

For further information: regarding Sierra Metals, please visit www.sierrametals.com or contact: Mike McAllister, Vice President, Corporate Development, Sierra Metals Inc., Tel: +1 (416) 366-7777, TF: 1 (866) 493-9646, Email: info@sierrametals.com; Mark Brennan, President & CEO, Sierra Metals Inc., Tel: +1 (416) 366-7777, TF: 1 (866) 493-9646

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