Mr. Igor Gonzales reports
SIERRA METALS REPORTS SECOND QUARTER 2018 PRODUCTION RESULTS INCLUDING RECORD CONSOLIDATED QUARTERLY ORE THROUGHPUT
Sierra Metals Inc. has released second quarter 2018 production results featuring the highest level of consolidated quarterly ore throughput to date.
Results are from Sierra Metals' three underground mines in Latin America: the Yauricocha polymetallic mine in Peru, the Bolivar copper mine in Mexico and the Cusi silver mine in Mexico.
Second quarter 2018 production highlights:
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Silver production of 700,000 ounces, a 12-per-cent increase from the second quarter of 2017;
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Copper production of 8.6 million pounds, a 62-per-cent increase from the second quarter of 2017;
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Zinc production of 20.3 million pounds, a 10-per-cent increase from the second quarter of 2017;
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Gold production of 1,814 ounces, a 38-per-cent increase from the second quarter of 2017;
- Total of 602,087 tonnes processed, a 32-per-cent increase from the second quarter of 2017;
- Record quarterly ore throughput at both the Yauricocha mine and Bolivar mine.
The company achieved record quarterly ore throughput from both the Yauricocha and Bolivar mines, continuing the successful production increases realized during the last five quarters. Consolidated production of copper increased 62 per cent to 8.6 million pounds, silver increased 12 per cent to 700,000 ounces, lead decreased 16 per cent to 7.1 million pounds, zinc increased 11 per cent to 20.3 million pounds and gold increased 38 per cent to 1,814 ounces compared with the second quarter of 2017.
The Yauricocha mine achieved record quarterly ore throughput during the second quarter of 2018. Metal production in the second quarter increased due to higher ore throughput, higher copper and gold head grades, and higher copper, lead and gold recoveries. Record ore throughput at Bolivar, along with higher copper and silver head grades, and copper and gold recoveries, resulted in an increase in equivalent metal production compared with the second quarter of 2017. At Cusi, the increase in ore throughput and higher silver recoveries resulted in higher silver equivalent production. The company expects to continue to realize the benefits of the efforts at Cusi focusing on production from the Santa Rosa de Lima zone during the rest of 2018.
Igor Gonzales, president and chief executive officer of Sierra Metals, commented: "I am very pleased with our second quarter 2018 production results which include record consolidated ore throughput and notable increases to the consolidated payable production of silver, copper, zinc and gold. The company continued its strong performance and built upon the first quarter's solid production results. Our strong performance this quarter is attributed to sequential, record production at both the Yauricocha and Bolivar mines where we continue to obtain the benefits of successful operational improvement programs. Furthermore, a strong increase in tonnage at Cusi was noted in the second quarter, and the company is reaping the rewards of a successful turnaround program and the refocusing of the mine's production to the Santa Rosa de Lima zone, which boasts higher grades and increased widths.
"During the second quarter, the company released encouraging preliminary economic assessments studies (PEA) for all three mines demonstrating positive economics and supporting future operational production increases. The full reports for the PEAs
will be filed on SEDAR and EDGAR within 45 days of the news releases. Development at all three mines will continue with an objective of progressing the resource increases at the Cusi mine, as well as the reserve and resource increases at the Yauricocha and Bolivar mines into the mine plans. Additionally, continued exploration programs at all three mines are expected to further increase reserves and resources at all mines which benefit future growth plans.
"Yauricocha continues to perform with record tonnage ore throughput in the second quarter. Final infrastructure for the Yauricocha tunnel should be completed early in the third quarter of 2018 allowing for more capacity to handle larger volumes of waste and ore. The Yauricocha shaft is also being sunk to the 1270 level this year providing access to further reserves and resources at the mine. The mine will see consistent levels of ore throughput in 2018 due to a refurbishment of the lower part of the Mascota shaft starting in the third quarter of 2018 which could potentially cause a slowdown in production rates during that time period. However, this has already been factored into our 2018 production guidance.
"At Bolivar, the company also had record tonnage ore throughput in the second quarter and also continues to improve and perform well. Production should increase incrementally in the second half of the year and is expected to reach approximately 3,500 tonnes per day by the end of the year. Installation of an additional mill in the second half of this year will help grind size optionality and improve recoveries at the plant.
"At Cusi, tonnage continued to improve in the second quarter, and the mine realized a 73-per-cent increase in ore throughput when compared to the first quarter of 2018. The company continues to increase mill feed from the Santa Rosa de Lima zone, while mining selected structures in the older part of the mine. Production has been increasing in the second quarter, and the company reached the existing mill's capacity of 650 tonnes per day at the end of second quarter. The addition of another ball mill will see the capacity increase to approximately 1,200 tonnes per day in early 2019. Additionally, the company has recently defined a significant high-grade silver zone, which remains open to depth within the Santa Rosa de Lima structure which will help contribute increased, higher-grade mill feed going forward."
Mr. Gonzales concluded: "Management is very optimistic for the second half of 2018 and beyond as the groundwork has been set for continued improvements, through the modernizing and implementation of best operational practices. We continue to realize positive returns on our capital investments, and the recent PEA results demonstrate a path for continued growth at all our mines. Ongoing aggressive brownfield exploration programs at all mines are expected to provide further growth in reserves and resources adding to the value of our assets during the year ahead."
CONSOLIDATED PRODUCTION RESULTS
Consolidated production Three months ended Six months ended 2018 guidance
Q2 2018 Q2 2017 Q2 2018 Q2 2017 Low High
Tonnes processed (mt) 602,087 454,805 1,159,797 984,500
Daily throughput 6,881 5,198 6,627 5,626
Silver ounces (000) 692 616 1,287 1,314 2,474 2,886
Copper pounds (000) 8,621 5,315 16,710 12,605 32,700 38,100
Lead pounds (000) 7,096 8,467 13,408 17,610 19,100 22,300
Zinc pounds (000) 20,300 18,530 38,514 36,666 62,900 73,400
Gold ounces 1,814 1,312 3,765 3,089 6,700 7,800
Silver equivalent ounces (000) (1) 4,663 3,287 9,071 7,034 13,900 16,210
Copper equivalent pounds (000) (1) 24,452 21,937 47,937 47,071 89,184 104,005
Zinc equivalent pounds (000) (1) 55,279 47,165 102,190 99,479 183,830 214,468
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the second quarter of 2018
were calculated using the following realized prices: $16.36/ounce silver, $3.12/pound copper,
$1.09/pound lead, $1.38/pound zinc, $1,296/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the second quarter of 2017 were calculated using the following realized
prices: $17.22/ounce Ag, $2.58/pound Cu, 99 cents/pound Pb, $1.20/pound Zn, $1,265/ounce Au.
Silver equivalent ounces and copper and zinc equivalent pounds for the first half of 2018 were
calculated using the following realized prices: $16.56/ounce Ag, $3.13/pound Cu, $1.12/pound Pb,
$1.47/pound Zn, $1,315/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds
for the first half of 2017 were calculated using the following realized prices: $17.47/ounce Ag,
$2.61/pound Cu, $/1.02/pound Pb, $1.24/pound Zn, $1,248/ounce Au.
Yauricocha mine, Peru
The Yauricocha mine processed a quarterly record of 283,450 tonnes during the second quarter of 2018, representing a 19-per-cent increase from the second quarter of 2017. Zinc equivalent metal production in the second quarter of 2018 increased by 9 per cent due to higher ore throughput, higher copper and gold head grades, and higher copper, lead and gold recoveries. Copper production was 77 per cent higher, zinc production was 11 per cent higher, and gold production was 43 per cent higher than the second quarter of 2017, while silver production was 12 per cent lower, and lead production was 15 per cent lower than the second quarter of 2017.
The company continues to see positive improvements from the restructuring at Yauricocha with increased ore throughput, and higher zinc and copper production due to the inclusion of more Cuerpos Chicos, which has higher zinc head grades, and Esperanza ore which is a copper-rich ore zone.
The company remains focused on capitalizing on the successful drilling campaigns executed during 2017 which resulted in significant increases to the reserves and resources at Yauricocha. Continued production growth is expected to be realized from the strategic allocation of operating cash flows toward growth efficient capital, in order to provide the infrastructure, and scoping studies necessary to monetize the reserve and resource increases as quickly as possible.
SUMMARY OF PRODUCTION FROM THE YAURICOCHA MINE FOR THE SECOND QUARTER OF 2018
Yauricocha production Three months ended Six months ended
Q2 2018 Q2 2017 Q2 2018 Q2 2017
Tonnes processed (mt) 283,450 237,912 554,839 489,092
Daily throughput 3,239 2,719 3,171 2,795
Silver grade (g/t) 59.19 76.08 59.35 78.80
Copper grade 0.95% 0.69% 0.92% 0.75%
Lead grade 1.28% 1.81% 1.27% 1.79%
Zinc grade 3.66% 3.88% 3.56% 3.74%
Gold grade (g/t) 0.54 0.49 0.57 0.52
Silver recovery 72.71% 76.97% 72.71% 76.43%
Copper recovery 65.37% 60.65% 65.37% 61.39%
Lead recovery 84.82% 84.32% 84.82% 85.15%
Zinc recovery 88.73% 89.84% 88.73% 89.48%
Gold recovery 16.48% 15.21% 16.48% 16.33%
Silver ounces (000) 392 448 758 947
Copper pounds (000) 3,884 2,192 7,611 4,975
Lead pounds (000) 6,809 8,010 12,878 16,392
Zinc pounds (000) 20,300 18,268 38,443 36,041
Gold ounces 807 566 1,642 1,344
Zinc equivalent pounds (000) (1) 39,841 36,612 74,468 74,777
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the second quarter of 2018
were calculated using the following realized prices: $16.36/ounce silver, $3.12/pound copper,
$1.09/pound lead, $1.38/pound zinc, $1,296/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the second quarter of 2017 were calculated using the following realized
prices: $17.22/ounce Ag, $2.58/pound Cu, 99 cents/pound Pb, $1.20/pound Zn, $1,265/ounce Au.
Silver equivalent ounces and copper and zinc equivalent pounds for the first half of 2018 were
calculated using the following realized prices: $16.56/ounce Ag, $3.13/pound Cu, $1.12/pound Pb,
$1.47/pound Zn, $1,315/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds
for the first half of 2017 were calculated using the following realized prices: $17.47/ounce Ag,
$2.61/pound Cu, $/1.02/pound Pb, $1.24/pound Zn, $1,248/ounce Au.
Bolivar mine, Mexico
The Bolivar mine processed a record 272,040 tonnes in the second quarter of 2018, representing a 41-per-cent increase over the second quarter of 2017. The higher ore throughput, copper and silver head grades, and copper and gold recoveries resulted in a 45-per-cent increase in copper equivalent production in the second quarter of 2018 compared with the second quarter of 2017. In the second quarter of 2018, copper production increased by 52 per cent to 4,737,000 pounds, silver production increased 50 per cent to 110,000 ounces, and gold production increased 47 per cent to 911 ounces compared with the second quarter of 2017. The company has been successful at increasing tonnage at Bolivar through the commissioning of new equipment, increased development to access more minable stopes, and plant improvements that have increased recoveries.
The company continues to define higher-grade ore sources at Bolivar West and Bolivar Northwest which are expected to come into the mine plan by the second half of 2019. However, as a short-term planning strategy, the Bolivar mine continues to focus on developing and mining the El Gallo Inferior zone to centralize operations, optimize equipment usage and to improve productivity. The company remains confident that ore throughput can be increased to 3,500 tonnes per day during the third quarter or fourth quarter of 2018.
SUMMARY OF PRODUCTION FOR THE BOLIVAR MINE FOR THE SECOND QUARTER OF 2018
Bolivar production Three months ended Six months ended
Q2 2018 Q2 2017 Q2 2018 Q2 2017
Tonnes processed (mt) 272,040 192,937 531,415 436,911
Daily throughput 3,109 2,205 3,037 2,497
Copper grade 0.97% 0.97% 0.96% 1.00%
Silver grade (g/t) 16.61 15.65 17.21 15.42
Gold grade (g/t) 0.15 0.17 0.16 0.19
Copper recovery 81.33% 76.04% 81.01% 79.17%
Silver recovery 75.53% 75.22% 78.25% 77.28%
Gold recovery 71.81% 58.32% 71.34% 54.81%
Copper pounds (000) 4,737 3,123 9,099 7,630
Silver ounces (000) 110 73 230 167
Gold ounces 911 620 1,959 1,460
Copper equivalent pounds (000) (1) 5,691 3,914 11,138 9,449
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the second quarter of 2018
were calculated using the following realized prices: $16.36/ounce silver, $3.12/pound copper,
$1.09/pound lead, $1.38/pound zinc, $1,296/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the second quarter of 2017 were calculated using the following realized
prices: $17.22/ounce Ag, $2.58/pound Cu, 99 cents/pound Pb, $1.20/pound Zn, $1,265/ounce Au.
Silver equivalent ounces and copper and zinc equivalent pounds for the first half of 2018 were
calculated using the following realized prices: $16.56/ounce Ag, $3.13/pound Cu, $1.12/pound Pb,
$1.47/pound Zn, $1,315/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds
for the first half of 2017 were calculated using the following realized prices: $17.47/ounce Ag,
$2.61/pound Cu, $/1.02/pound Pb, $1.24/pound Zn, $1,248/ounce Au.
Cusi mine, Mexico
Total ore processed increased by 95 per cent in the second quarter to 46,597 tonnes when compared with the second quarter of 2017 and increased 73 per cent when compared with the first quarter of 2018. Silver equivalent production increased 46 per cent compared with the second quarter of 2017.
Silver production of 190,000 ounces increased 100 per cent in the second quarter of 2017, as the metallurgical work performed during 2017 increased silver recoveries by 25 per cent, and ore throughput was 100 per cent higher than the second quarter of 2017 as the company has successfully transitioned to mining the recently developed Santa Rosa de Lima zone. This zone was being developed for the majority of 2017 as ramps were being prepared to access the minable stopes within the deposit.
The company is currently mining selected higher-grade structures at the old mine, the San Antonio vein, as well as the Santa Rosa de Lima structure containing improved head grades to the mill at Cusi. The company has successfully increased tonnage from the Santa Rosa de Lima zone to approximately 50 per cent of the current mill feed, as well as other zones in the areas previously developed with a different mandate to produce from disseminated mineralized zones until the mill is operating at its capacity of 650 tonnes per day. Additionally, structural development at the Santa Rosa de Lima zone will be completed using long-hole mining versus the existing cut-and-fill methodology which should result in lower costs going forward.
SUMMARY OF PRODUCTION FOR THE CUSI MINE FOR THE SECOND QUARTER OF 2018
Cusi production Three months ended Six months ended
Q2 2018 Q2 2017 Q2 2018 Q2 2017
Tonnes processed (mt) 46,597 23,956 73,543 58,497
Daily throughput 533 274 420 334
Silver grade (g/t) 155.60 188.95 151.16 163.66
Gold grade (g/t) 0.16 0.27 0.17 0.26
Lead grade 0.36% 1.11% 0.41% 1.19%
Zinc grade 0.33% 1.08% 0.40% 1.19%
Silver recovery 81.66% 65.42% 83.41% 64.76%
Gold recovery 39.80% 60.72% 41.91% 59.10%
Lead recovery 77.22% 78.02% 80.27% 79.38%
Zinc recovery 0.00% 45.80% 10.99% 40.86%
Silver ounces (000) 190 95 298 199
Gold ounces 96 126 165 285
Lead pounds (000) 287 457 530 1,218
Zinc pounds (000) 0 262 71 625
Silver equivalent ounces (000) (1) 217 149 353 335
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the second quarter of 2018
were calculated using the following realized prices: $16.36/ounce silver, $3.12/pound copper,
$1.09/pound lead, $1.38/pound zinc, $1,296/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the second quarter of 2017 were calculated using the following realized
prices: $17.22/ounce Ag, $2.58/pound Cu, 99 cents/pound Pb, $1.20/pound Zn, $1,265/ounce Au.
Silver equivalent ounces and copper and zinc equivalent pounds for the first half of 2018 were
calculated using the following realized prices: $16.56/ounce Ag, $3.13/pound Cu, $1.12/pound Pb,
$1.47/pound Zn, $1,315/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds
for the first half of 2017 were calculated using the following realized prices: $17.47/ounce Ag,
$2.61/pound Cu, $/1.02/pound Pb, $1.24/pound Zn, $1,248/ounce Au.
Quality control
All technical data contained in this news release have been reviewed and approved by Gordon Babcock, PEng, chief operating officer and a qualified person under National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.
Americo Zuzunaga, MAusIMM, CP (mining engineer) and vice-president of corporate planning, is a qualified person and chartered professional qualifying as a competent person under the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.
Augusto Chung, FAusIMM, CP (metallurgist) and consultant to Sierra Metals, is a qualified person and chartered professional qualifying as a competent person on metallurgical processes.
About Sierra Metals Inc.
Sierra Metals is a Canada-based growing polymetallic mining company with production from its Yauricocha mine in Peru, and its Bolivar and Cusi mines in Mexico. The company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new discoveries and still has additional brownfield exploration opportunities at all three mines in Peru and Mexico that are within or close proximity to the existing mines. Additionally, the company has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.
We seek Safe Harbor.
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