Mr. Igor Gonzales reports
SIERRA METALS REPORTS STRONG 2018 PRODUCTION RESULTS AND ANNOUNCES 2019 PRODUCTION GUIDANCE
Sierra Metals Inc. has released its fourth quarter 2018 and full-year 2018 production results, as well as 2019 production guidance. Two thousand nineteen cost and capital expenditure guidance will be provided in February as the planning and costing of various capital projects, which have been recently added or modified, are currently being completed.
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.
2018 consolidated production highlights:
-
Silver production of 2.7 million ounces, a 17-per-cent increase from 2017;
- Copper production of 34.0 million pounds, a 27-per-cent increase from 2017;
- Zinc production of 76.8 million pounds, a 1-per-cent increase from 2017;
- Lead production of 27.7 million pounds, a 7-per-cent decrease from 2017;
- Gold production of 7,743 ounces, a 25-per-cent increase from 2017;
- Total of 2.3 million tonnes processed, a 16-per-cent increase from 2017.
Fourth quarter 2018 production highlights:
-
Silver production of 700,000 ounces, a 41-per-cent increase from the fourth quarter of 2017;
- Copper production of 8.9 million pounds, a 20-per-cent increase from the fourth quarter of 2017;
-
Zinc production of 17.5 million pounds, a 10-per-cent decrease from the fourth quarter of 2017;
- Lead production of 7.9 million pounds, a 39-per-cent increase from the fourth quarter of 2017;
- Gold production of 2,137 ounces, a 34-per-cent increase from the fourth quarter of 2017.
The company achieved record consolidated quarterly ore throughput during the fourth quarter of 2018, as well as record quarterly ore throughput from the Bolivar and Cusi mines. These results continued the company's successful production increases realized during the first three quarters of 2018, which resulted in strong annual consolidated production figures.
Metal production at Yauricocha increased 14 per cent in the fourth quarter of 2018 compared with the fourth quarter of 2017 due to 5 per cent higher ore throughput, higher head grades of all metals, except zinc, and higher lead and gold recoveries. At Bolivar, 20 per cent higher ore throughput, and higher silver and gold head grades resulted in a 16-per-cent increase in copper equivalent pounds produced in the fourth quarter of 2018 compared with the fourth quarter of 2017. The Cusi mine realized a 258-per-cent increase in throughput which resulted in a 70-per-cent increase in silver equivalent ounces produced during the fourth quarter of 2018 compared with the fourth quarter of 2017.
During 2018, the annual consolidated production of silver, copper, zinc and gold increased 17 per cent, 27 per cent, 1 per cent and 25 per cent, respectively, while annual consolidated lead production decreased 7 per cent compared with 2017.
Igor Gonzales, president and chief executive officer of Sierra Metals, commented: "I am very pleased with the company's strong fourth quarter production results, which contributed to a solid year of production in 2018. The company continues to reap the benefits of the successful operational improvement programs at all mines.
"The company has completed expansion work at the Bolivar mine and is ramping up to 3,600 tonnes per day while also implementing a throughput expansion at Cusi to 1,200 tonnes per day. The company has also completed all of the necessary work and has submitted all of the required documentation to the authorities in Peru for its Yauricocha mine and expects to receive its environmental impact assessment permit shortly. Furthermore, the company has almost completed updated life-of-mine plans, and is working to complete prefeasibility and feasibility studies, based on the encouraging PEA's results released for all three mines, demonstrating positive economics, and supporting the potential for future important production expansions.
"At Yauricocha, during the fourth quarter of 2018, we have completed the refurbishment of the lower part of the Mascota shaft as well as the infrastructure and tie-ins for the Yauricocha tunnel, allowing for faster turnaround in the cycle time of the trolley locomotives, and providing for increased capacity and handling of larger volumes of ore and waste. Tonnage through the tunnel can be ramped up further as larger locomotives and ore cars are added in the future.
"In the first quarter of 2019 the Yauricocha shaft continues to be sunk to the 1270 level to provide access to further reserves and resources at the mine and loading pockets will be added later this year on the 1210 level. Also, work will commence on a ramp connecting the 920 level with the 720 level at Yauricocha providing for an additional 10,000 tonnes per month of increased capacity to move ore and waste from the mine."
He concluded: "Two thousand nineteen will be an important year for the company as we ramp up production in Mexico while continuing to modernize and improve all mines, implementing best operational practices. These changes should allow the company to increase metal production to new highs. Our company-wide ongoing brownfield exploration programs should also lead to further significant growth in reserves and resources, which will add to the value of our assets during the year ahead."
CONSOLIDATED PRODUCTION RESULTS
Consolidated production Three months ended 12 months ended 2018 guidance
Q4 2018 Q4 2017 Q4 2018 Q4 2017 Low High
Tonnes processed (mt) 599,297 498,199 2,325,288 1,998,738
Daily throughput 6,849 5,694 6,644 5,711
Silver ounces (000) 701 496 2,716 2,317 2,474 2,886
Copper pounds (000) 8,932 7,471 33,968 26,775 32,700 38,100
Lead pounds (000) 7,948 5,736 27,714 29,704 19,100 22,300
Zinc pounds (000) 17,545 19,545 76,831 76,088 62,900 73,400
Gold ounces 2,137 1,591 7,743 6,197 6,700 7,800
Silver equivalent ounces (000) (1) 4,445 4,078 17,988 14,865 13,900 16,210
Copper equivalent pounds (000) (1) 23,447 21,856 95,184 90,354 89,184 104,005
Zinc equivalent pounds (000) (1) 56,287 47,287 215,053 193,152 183,830 214,468
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the fourth quarter of 2018
were calculated using the following realized prices: $14.63/ounce silver, $2.77/pound copper,
89 cents/pound lead, $1.16/pound zinc, $1,238/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the fourth quarter of 2017 were calculated using the following realized
prices: $16.77/ounce Ag, $3.13/pound Cu, $1.11/pound Pb, $1.45/pound Zn, $1,282/ounce Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 2018 were calculated using the
following realized prices: $15.65/ounce Ag, $2.96/pound Cu, $1.02/pound Pb, $1.31/pound Zn,
$1,269/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds for 2017 were
calculated using the following realized prices: $17.14/ounce Ag, $2.82/pound Cu, $1.06/pound
Pb, $1.32/pound Zn, $1,265/ounce Au.
Yauricocha mine, Peru
The Yauricocha mine processed a total of 1,106,649 tonnes during 2018, representing an 8-per-cent increase from 2017, and 268,363 tonnes in the fourth quarter of 2018, representing a 5-per-cent increase compared with the fourth quarter of 2017. Zinc equivalent metal production in the fourth quarter of 2018 increased by 14 per cent due to higher ore throughput, higher head grades for all metals, except zinc, and higher lead and copper recoveries. The higher lead head grades and lead production realized during the fourth quarter of 2018 was the result of increased production from the Cuerpos Chicos that contained higher lead grades during the quarter. Higher copper head grades and lower zinc head grades resulted from the inclusion of certain copper-enriched zones at Esperanza, polymetallic ore from the Central mine zone and a small inclusion of polymetallic ore from the Cuerpos Chicos.
Year-over-year zinc equivalent production was 7 per cent higher in 2018 compared with the prior year. Copper production was 43 per cent higher, zinc production 2 per cent higher and gold production was 18 per cent higher. This was partially offset by a 5-per-cent decrease in silver production, and a 5-per-cent decrease in lead production from 2017.
A summary of production from the Yauricocha mine for the fourth quarter of 2018 has been provided.
YAURICOCHA PRODUCTION
Three months ended 12 months ended
Q4 2018 Q4 2017 Q4 2018 Q4 2017
Tonnes processed (mt) 268,363 254,933 1,106,649 1,023,491
Daily throughput 3,067 2,914 3,162 2,924
Silver grade (g/t) 64.06 53.57 60.32 67.13
Copper grade 1.06% 0.80% 0.97% 0.79%
Lead grade 1.51% 1.19% 1.30% 1.48%
Zinc grade 3.41% 3.91% 3.55% 3.74%
Gold grade (g/t) 0.57 0.55 0.58 0.54
Silver recovery 72.66% 75.13% 72.85% 74.82%
Copper recovery 74.89% 78.86% 70.84% 65.45%
Lead recovery 84.42% 81.32% 83.75% 83.64%
Zinc recovery 87.07% 88.25% 88.74% 89.14%
Gold recovery 17.20% 16.02% 16.63% 16.30%
Silver ounces (000) 402 330 1,563 1,653
Copper pounds (000) 4,702 3,567 16,741 11,719
Lead pounds (000) 7,528 5,431 26,520 27,934
Zinc pounds (000) 17,545 19,393 76,761 75,151
Gold ounces 850 723 3,403 2,894
Zinc equivalent pounds (000) (1) 40,640 35,758 157,151 146,816
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the fourth quarter of 2018
were calculated using the following realized prices: $14.63/ounce silver, $2.77/pound copper,
89 cents/pound lead, $1.16/pound zinc, $1,238/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the fourth quarter of 2017 were calculated using the following realized
prices: $16.77/ounce Ag, $3.13/pound Cu, $1.11/pound Pb, $1.45/pound Zn, $1,282/ounce Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 2018 were calculated using the
following realized prices: $15.65/ounce Ag, $2.96/pound Cu, $1.02/pound Pb, $1.31/pound Zn,
$1,269/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds for 2017 were
calculated using the following realized prices: $17.14/ounce Ag, $2.82/pound Cu, $1.06/pound
Pb, $1.32/pound Zn, $1,265/ounce Au.
Bolivar mine, Mexico
The Bolivar mine processed 1,031,750 tonnes in 2018, representing a 16-per-cent increase over 2017. Fourth quarter 2018 record throughput was 272,645 tonnes, which was 20 per cent higher when compared with the fourth quarter of 2017. The higher throughput and higher gold and silver head grades resulted in a 16-per-cent increase in copper equivalent production in the fourth quarter of 2018 compared with the fourth quarter of 2017. The increase in throughput was due to the work performed to increase the profile of the ramps and main access drives to five metres wide by five metres high within the mine to provide access to larger conventional road dump trucks as well as articulating six-wheel trucks to move higher volumes of ore out of the mine. The development work performed during the year resulted in increased access to more minable stopes which also contributed to the higher throughput. The company is pleased with the progress made on the expansion plans at the Bolivar mine. With the early completion of construction at the Piedras Verdes mill, the company expects to deliver on the goal of a 20-per-cent increase in production from 3,000 tpd to 3,600 tpd in the first quarter of 2019.
Copper equivalent production at the Bolivar mine increased 16 per cent in 2018 compared with 2017, with copper production 14 per cent higher, silver production 38 per cent higher and gold production 38 per cent higher. In the fourth quarter of 2018, copper production increased by 8 per cent to 4.23 million pounds, silver production increased 53 per cent to 128,000 ounces and gold production increased 47 per cent to 1,163 ounces compared with the fourth quarter of 2017. The 16-per-cent increase in copper equivalent production was driven by higher throughput, and higher silver and gold head grades.
A summary of production for the Bolivar mine for the fourth quarter of 2018 has been provided in the associated table.
BOLIVAR PRODUCTION
Three months ended 12 months ended
Q4 2018 Q4 2017 Q4 2018 Q4 2017
Tonnes processed (mt) 272,645 226,986 1,031,750 887,237
Daily throughput 3,116 2,594 2,948 2,535
Copper grade 0.89% 0.94% 0.95% 0.96%
Silver grade (g/t) 19.00 14.67 17.69 14.93
Gold grade (g/t) 0.21 0.16 0.17 0.17
Copper recovery 79.27% 83.03% 79.95% 79.82%
Silver recovery 77.14% 78.35% 77.08% 76.88%
Gold recovery 64.29% 68.42% 68.55% 59.50%
Copper pounds (000) 4,230 3,904 17,227 15,056
Silver ounces (000) 128 84 452 327
Gold ounces 1,163 791 3,968 2,880
Copper equivalent pounds (000) (1) 5,426 4,677 21,323 18,338
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the fourth quarter of 2018
were calculated using the following realized prices: $14.63/ounce silver, $2.77/pound copper,
89 cents/pound lead, $1.16/pound zinc, $1,238/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the fourth quarter of 2017 were calculated using the following realized
prices: $16.77/ounce Ag, $3.13/pound Cu, $1.11/pound Pb, $1.45/pound Zn, $1,282/ounce Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 2018 were calculated using the
following realized prices: $15.65/ounce Ag, $2.96/pound Cu, $1.02/pound Pb, $1.31/pound Zn,
$1,269/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds for 2017 were
calculated using the following realized prices: $17.14/ounce Ag, $2.82/pound Cu, $1.06/pound
Pb, $1.32/pound Zn, $1,265/ounce Au.
Cusi mine, Mexico
Annual production at the Cusi mine was 186,889 tonnes in 2018, which was 112 per cent higher than 2017. Total ore processed increased 258 per cent to 58,289 tonnes during the fourth quarter of 2018 compared with the fourth quarter of 2017. The higher throughput was partially offset by lower head grades and recoveries for all metals, but still resulted in a 70-per-cent increase in silver equivalent production in the fourth quarter of 2018 compared with the fourth quarter of 2017.
Silver equivalent production increased 48 per cent during 2018 compared with 2017, as silver production increased 108 per cent to 700,000 ounces, while gold production decreased 12 per cent to 372 ounces, lead production decreased 33 per cent to 1,194,000 pounds and zinc production decreased 92 per cent to 71,000 pounds. However, during the fourth quarter of 2018, silver, gold and lead production was 107 per cent, 62 per cent and 38 per cent higher than the fourth quarter of 2017, respectively.
The increase in throughput was partially the result of the company's successful development and mining of ore from the recently discovered high-grade silver stockwork zone located within the Santa Rosa de Lima (SRL) vein complex. This mineralized zone extends to over 100 metres in length, 40 metres in width and 70 metres in height. The company's development plan is now incorporating the wider dimensions of this zone.
A summary of production for the Cusi mine for the fourth quarter of 2018 has been provided.
CUSI PRODUCTION
Three months ended 12 months ended
Q4 2018 Q4 2017 Q4 2018 Q4 2017
Tonnes processed (mt) 58,289 16,280 186,889 88,011
Daily throughput 666 186 534 251
Silver grade (g/t) 111.10 178.60 140.17 164.93
Gold grade (g/t) 0.16 0.25 0.16 0.26
Lead grade 0.41% 0.97% 0.36% 1.12%
Zinc grade 0.49% 1.00% 0.40% 1.13%
Silver recovery 82.06% 88.15% 83.10% 72.17%
Gold recovery 40.72% 58.09% 39.14% 58.40%
Lead recovery 80.61% 87.65% 79.92% 81.26%
Zinc recovery 0.00% 42.50% 4.26% 42.56%
Silver ounces (000) 171 82 700 337
Gold ounces 124 77 372 423
Lead pounds (000) 421 305 1,194 1,769
Zinc pounds (000) 0 152 71 937
Silver equivalent ounces (000) (1) 207 122 813 550
(1) Silver equivalent ounces and copper and zinc equivalent pounds for the fourth quarter of 2018
were calculated using the following realized prices: $14.63/ounce silver, $2.77/pound copper,
89 cents/pound lead, $1.16/pound zinc, $1,238/ounce gold. Silver equivalent ounces and copper and
zinc equivalent pounds for the fourth quarter of 2017 were calculated using the following realized
prices: $16.77/ounce Ag, $3.13/pound Cu, $1.11/pound Pb, $1.45/pound Zn, $1,282/ounce Au. Silver
equivalent ounces and copper and zinc equivalent pounds for 2018 were calculated using the
following realized prices: $15.65/ounce Ag, $2.96/pound Cu, $1.02/pound Pb, $1.31/pound Zn,
$1,269/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds for 2017 were
calculated using the following realized prices: $17.14/ounce Ag, $2.82/pound Cu, $1.06/pound
Pb, $1.32/pound Zn, $1,265/ounce Au.
2019 production guidance
The company anticipates that 2019 silver equivalent production will range between 19.5 million and 21.8 million ounces, copper equivalent production will range between 107.0 million and 119.9 million pounds, and zinc equivalent production will range between 261.5 million and 292.9 million pounds. The increase in 2019 guidance for silver ounces and copper pounds compared with the actual 2018 production is due to the significant throughput and recovery increases planned at Bolivar and Cusi. At Yauricocha, higher copper production should be realized due to consistent copper head grades and improvement to recoveries expected from the various areas planned to be mined from the copper areas in the Esperanza zone during 2019.
A table summarizing 2019 production guidance has been provided.
2019 guidance 2018
Low High actual
Silver ounces (000) 3,730 4,176 2,716
Copper pounds (000) 45,000 50,400 33,968
Lead pounds (000) 25,500 28,600 27,714
Zinc pounds (000) 72,400 81,100 76,831
Gold ounces 8,100 9,000 7,743
Silver equivalent ounces (000) (1) 19,478 21,812 17,988
Copper equivalent pounds (000) (1) 107,035 119,858 95,184
Zinc equivalent pounds (000) (1) 261,545 292,880 215,053
(1) Two thousand nineteen silver equivalent ounces, copper and zinc equivalent pounds
were calculated using the following metal prices: $16.65/ounce Ag, $3.03/pound Cu,
$1.01/pound Pb, $1.24/pound Zn, $1,275/ounce Au.
Quality control
All technical production 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), vice-president of corporate planning, 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 vice-president, special projects and metallurgy, a chartered professional qualifying as a competent person on metallurgical processes.
About Sierra Metals Inc.
Sierra Metals is a Canada-based 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 key discoveries and still has many more exciting brownfield exploration opportunities at all three mines in Peru and Mexico that are within close proximity to the existing mines.
We seek Safe Harbor.
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