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Sierra Metals Inc
Symbol SMT
Shares Issued 162,810,637
Close 2019-10-11 C$ 1.38
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Sierra Metals produces 4.91 moz AgEq in Q3

2019-10-15 06:59 ET - News Release

Mr. Igor Gonzales reports

SIERRA METALS REPORTS THIRD QUARTER 2019 PRODUCTION RESULTS INCLUDING RECORD QUARTERLY CONSOLIDATED EQUIVALENT METAL PRODUCTION

Sierra Metals Inc. has released its third quarter 2019 production results featuring the highest level of quarterly consolidated equivalent metal production.

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.

Third quarter 2019 production highlights:

  • Silver production of 1.0 million ounces, a 34-per-cent increase from the third quarter of 2018;
  • Copper production of 11.1 million pounds, a 34-per-cent increase from Q3 2018;
  • Zinc production of 22.5 million pounds, an 8-per-cent increase from Q3 2018;
  • Lead production of 10.5 million pounds, a 65-per-cent increase from Q3 2018;
  • Gold production of 3,490 ounces, an 83-per-cent increase from Q3 2018;
  • Copper equivalent production of 32.3 million pounds, a 37-per-cent increase from Q3 2018;
  • Record quarterly ore throughput and metal production at the Yauricocha mine in Peru and the Bolivar mine in Mexico.

The company achieved record quarterly consolidated equivalent metal production and ore throughput, as well as record quarterly ore throughput and equivalent metal production from the Yauricocha and Bolivar mines. The company has continued to build on its successful plant expansions, and mine production increases in Mexico over the last three quarters. This has resulted in record quarterly metal production as the company is approaching its 2019 target of 4,250 tonnes per day (tpd) at Bolivar and 1,200 tpd at Cusi. Consolidated production of silver increased 34 per cent to 1.0 million ounces, copper increased by 34 per cent to 11.1 million pounds, lead increased 65 per cent to 10.5 million pounds, zinc increased 8 per cent to 22.5 million pounds, and gold increased 83 per cent to 3,490 ounces compared with Q3 2018.

Igor Gonzales, president and chief executive officer of Sierra Metals, commented: "The company continues to strengthen its performance in 2019 achieving record quarterly consolidated equivalent metal production in the third quarter. This includes continued successful recovery and making up for lost production at Yauricocha from the illegal strike, as well as record quarterly ore throughput and metal production at both the Yauricocha and Bolivar mines. At the Cusi mine, which accounts for approximately only 5 per cent of company revenue, we unfortunately encountered and dealt with subsidence issues, which delayed development and access to higher-grade ore, but we now have new contractors on site, which will allow us to see higher-grade material reach the mill in November. Additionally, completion of a new crushing circuit will allow for improved tonnage throughput and recoveries at the mill. Aside from the temporary setback at Cusi, we continued to successfully ramp up our mine and mill expansion plans while reaping the benefits of operational improvement programs. Going forward we expect to deliver on our annual guidance at Yauricocha at the same time continuing to ramp up and further improve ore throughput and tonnage at our Mexican operations."

                         CONSOLIDATED PRODUCTION RESULTS

Consolidated production                   Three months ended       Nine months ended     
                                         Q3 2019     Q3 2018     Q3 2019     Q3 2018

Tonnes processed (mt)                    709,461     566,194   1,940,353   1,725,991
Daily throughput                           8,108       6,471       7,392       6,575
Silver ounces (000s)                         976         728       2,504       2,015
Copper pounds (000s)                      11,127       8,326      28,582      25,037
Lead pounds (000s)                        10,508       6,358      25,528      19,766
Zinc pounds (000s)                        22,480      20,772      55,494      59,286
Gold ounces                                3,490       1,906       8,016       5,606
Silver equivalent ounces (000s) (1)        4,917       4,447      13,645      13,540
Copper equivalent pounds (000s) (1)       32,326      23,628      79,099      71,717
Zinc equivalent pounds (000s) (1)         80,390      57,883     186,599     159,165

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2019 were 
calculated using the following realized prices: $17.28/ounce silver, $2.63/pound 
copper, 94 cents/pound lead, $1.06/pound zinc, $1,481/ounce gold. Silver equivalent 
ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the 
following realized prices: $14.85/ounce Ag, $2.79/pound Cu, 94 cents/pound Pb, 
$1.14/pound zinc, $1,206/ounce Au. Silver equivalent ounces and copper and zinc 
equivalent pounds for the first nine months of 2019 were calculated using the 
following realized prices: $15.91/ounce Ag, $2.74/pound Cu, 91 cents/pound Pb, 
$1.16/pound Zn, $1,370/ounce Au. Silver equivalent ounces and copper and zinc 
equivalent pounds for the first nine months of 2018 were calculated using the 
following realized prices: $15.99/ounce Ag, $3.02/pound Cu, $1.06/pound Pb, 
$1.36/pound Zn, $1,279/ounce Au.

Yauricocha mine, Peru

The Yauricocha mine processed a quarterly record of 307,239 tonnes during Q3 2019, representing an 8-per-cent increase compared with Q3 2018. Daily ore throughput averaged 3,511 tpd during the quarter, as efforts continue to ensure that the 24 days of production lost during the illegal strike action at Yauricocha during April and May, will not affect the annual production guidance for the mine.

The 8-per-cent increase in throughput realized at the mine during Q3 2019, as well as significantly higher head grades for all metals, except gold, and higher recoveries for all metals, except zinc, resulted in a 33-per-cent increase in zinc equivalent metal production compared with Q3 2018. The higher silver and lead head grades and silver and lead production realized during Q3 2019 was the result of increased production from the cuerpos chicos that contained higher silver and lead head grades during the quarter. Higher copper 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.

A summary of production from the Yauricocha mine for Q3 2019 is provided in the associated table.


Yauricocha production            Three months ended           Nine months ended   
                              Q3 2019       Q3 2018       Q3 2019       Q3 2018

Tonnes processed (mt)         307,239       283,446       795,218       838,285
Daily throughput                3,511         3,239         3,029         3,193
Silver grade (g/t)              66.36         58.68         64.49         59.12
Copper grade                    1.12%         0.98%         1.06%         0.94%
Lead grade                      1.69%         1.16%         1.58%         1.23%
Zinc grade                      3.79%         3.65%         3.59%         3.59%
Gold grade (g/t)                 0.59          0.59          0.58          0.58
Silver recovery                81.21%        75.47%        79.00%        72.92%
Copper recovery                79.36%        72.55%        77.68%        69.38%
Lead recovery                  90.51%        84.03%        89.71%        83.48%
Zinc recovery                  87.48%        90.95%        88.25%        89.25%
Gold recovery                  22.13%        17.08%        19.13%        16.44%
Silver ounces (000s)              532           404         1,303         1,162
Copper pounds (000s)            6,012         4,428        14,411        12,039
Lead pounds (000s)             10,340         6,114        24,857        18,993
Zinc pounds (000s)             22,480        20,772        55,494        59,215
Gold ounces                     1,282           911         2,844         2,553
Zinc equivalent
pounds (000s) (1)              57,166        42,854       130,122       116,749

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2019 
were calculated using the following realized prices: $17.28/ounce silver, 
$2.63/pound copper, 94 cents/pound lead, $1.06/pound zinc, $1,481/ounce gold. 
Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2018 
were calculated using the following realized prices: $14.85/ounce Ag, 
$2.79/pound Cu, 94 cents/pound Pb, $1.14/pound zinc, $1,206/ounce Au. Silver 
equivalent ounces and copper and zinc equivalent pounds for the first nine 
months of 2019 were calculated using the following realized prices: 
$15.91/ounce Ag, $2.74/pound Cu, 91 cents/pound Pb, $1.16/pound Zn, 
$1,370/ounce Au. Silver equivalent ounces and copper and zinc equivalent pounds 
for the first nine months of 2018 were calculated using the following realized 
prices: $15.99/ounce Ag, $3.02/pound Cu, $1.06/pound Pb, $1.36/pound Zn, 
$1,279/ounce Au. 
                                                                       

Bolivar mine, Mexico

The Bolivar mine processed a quarterly record of 331,818 tonnes in Q3 2019, representing a 46-per-cent increase over Q3 2018. The average daily ore throughput realized during the quarter was approximately 3,800 tpd, and the company expects to reach 4,250 tpd during Q4 2019. The 46-per-cent increase in throughput, and higher silver and gold head grades, and higher copper and silver recoveries resulted in a 55-per-cent increase in copper equivalent pounds produced during Q3 2019 compared with Q3 2018. This increase was achieved despite a 13-per-cent decrease in copper head grades and 9-per-cent decrease in gold recoveries. However, the company expects copper head grades to increase during Q4 2019, as more ore is sourced from Bolivar West. In Q3 2019, copper production increased by 31 per cent to 5,115,000 pounds, silver production increased 84 per cent to 173,000 ounces, and gold production increased 127 per cent to 2,073 ounces compared with Q3 2018.

Development and infrastructure improvements continue in the effort to push ore throughput at Bolivar to 4,250 tpd during Q4 2019. Target mining areas will be the Gallo Inferior, Mina de Fierro, Chimneys, Breccias and Gallo Superior orebodies. Infill drilling will continue on the Bolivar West and Gallo Inferior areas, while mine development will focus on the Gallo Inferior and Breccia zones. This work will allow the company to increase the number of minable stopes available in order to increase ore throughput at the plant.

A summary of production for the Bolivar mine for Q3 2019 is provided in the associated table.


Bolivar production                          Three months ended         Nine months ended   
                                          Q3 2019      Q3 2018      Q3 2019      Q3 2018

Tonnes processed (mt)                     331,818      227,690      921,263      759,106
Daily throughput                            3,792        2,602        3,510        2,892
Copper grade                                0.86%        0.99%        0.85%        0.97%
Silver grade (g/t)                          20.53        17.25        19.36        17.23
Gold grade (g/t)                             0.31         0.17         0.25         0.16
Copper recovery                            81.28%       78.30%       82.35%       80.17%
Silver recovery                            78.99%       74.27%       79.38%       77.06%
Gold recovery                              62.35%       68.59%       64.15%       70.49%
Copper pounds (000s)                        5,115        3,898       14,171       12,998
Silver ounces (000s)                          173           94          455          324
Gold ounces                                 2,073          911        4,758        2,805
Copper equivalent pounds (000s) (1)         7,420        4,790       19,184       15,902

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2019 were 
calculated using the following realized prices: $17.28/ounce silver, $2.63/pound 
copper, 94 cents/pound lead, $1.06/pound zinc, $1,481/ounce gold. Silver equivalent 
ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the 
following realized prices: $14.85/ounce Ag, $2.79/pound Cu, 94 cents/pound Pb, 
$1.14/pound zinc, $1,206/ounce Au. Silver equivalent ounces and copper and zinc 
equivalent pounds for the first nine months of 2019 were calculated using the 
following realized prices: $15.91/ounce Ag, $2.74/pound Cu, 91 cents/pound Pb, 
$1.16/pound Zn, $1,370/ounce Au. Silver equivalent ounces and copper and zinc 
equivalent pounds for the first nine months of 2018 were calculated using the 
following realized prices: $15.99/ounce Ag, $3.02/pound Cu, $1.06/pound Pb, 
$1.36/pound Zn, $1,279/ounce Au.

Cusi mine, Mexico

At Cusi, ore throughput reached approximately 805 tpd during Q3 2019, and the company continues to work toward reaching the 1,200 tpd mark during Q4 2019. The 28-per-cent increase in throughput realized during Q3 2019 resulted in a 15-per-cent increase in silver equivalent ounces produced, despite lower head grades for all metals, except gold, as the company continues to develop deeper into the Santa Rosa de Lima zone which has higher silver head grades.

During Q3 2019, significant improvements were made to the crushing and grinding circuits at the plant, as well as increasing the number of hours per day that the plant can operate. However, development was delayed due heavy rains as well as a subsidence issue in the mine, which resulted in a 16-metre pillar required to be left for stability purposes. As a result of the delayed development, lower-grade zones that were accessible were mined resulting in lower silver grades in the quarter. Studies are currently under way addressing the best way to access the ore located within the pillar. Additionally, new mine contractors arrived on site at Cusi during October, 2019, and their focus will be to increase development rates to 90 metres per month and increase stope access. The company's focus remains on increasing head grades by mining higher-grade ore located on the 1704 and 1720 levels of the Santa Rosa de Lima zone, which is expected to occur in November this year. Throughput was lower during Q3 2019 compared with Q2 2019 as efforts continue to reduce dilution to ensure that economic ore is provided to the plant.

Silver production of 271,000 ounces increased 17 per cent, gold production of 135 ounces increased 62 per cent and lead production of 168,000 pounds decreased 31 per cent in Q3 2019 compared with Q3 2018.

A revised LOM plan is nearing completion at Cusi, and the company expects to have an updated NI 43-101 report completed during Q2 2020. 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, in order to continue to ramp up to the goal of 1,200 tpd during Q4 2019.

A summary of production for the Cusi mine for Q3 2019 is provided in the associated table.


Cusi production                             Three months ended         Nine months ended   
                                          Q3 2019      Q3 2018      Q3 2019      Q3 2018

Tonnes processed (mt)                      70,405       55,058      223,871      128,600
Daily throughput                              805          629          853          490
Silver grade (g/t)                         141.47       156.27       131.39       153.35
Gold grade (g/t)                             0.15         0.14         0.15         0.16
Lead grade                                  0.14%        0.26%        0.18%        0.34%
Zinc grade                                  0.16%        0.32%        0.18%        0.36%
Silver recovery                            84.65%       83.49%       78.91%       83.45%
Gold recovery                              39.57%       32.97%       38.12%       38.40%
Lead recovery                              78.30%       78.00%       75.90%       79.54%
Zinc recovery                               0.00%        0.00%        0.00%        6.89%
Silver ounces (000s)                          271          231          746          529
Gold ounces                                   135           84          414          248
Lead pounds (000s)                            168          243          671          773
Zinc pounds (000s)                              0            0            0           71
Silver equivalent ounces (000s) (1)           292          253          820          606

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2019 were 
calculated using the following realized prices: $17.28/ounce silver, $2.63/pound 
copper, 94 cents/pound lead, $1.06/pound zinc, $1,481/ounce gold. Silver equivalent 
ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the 
following realized prices: $14.85/ounce Ag, $2.79/pound Cu, 94 cents/pound Pb, 
$1.14/pound zinc, $1,206/ounce Au. Silver equivalent ounces and copper and zinc 
equivalent pounds for the first nine months of 2019 were calculated using the 
following realized prices: $15.91/ounce Ag, $2.74/pound Cu, 91 cents/pound Pb, 
$1.16/pound Zn, $1,370/ounce Au. Silver equivalent ounces and copper and zinc 
equivalent pounds for the first nine months of 2018 were calculated using the 
following realized prices: $15.99/ounce Ag, $3.02/pound Cu, $1.06/pound Pb, 
$1.36/pound Zn, $1,279/ounce Au.

Quality control

All technical data contained in this news release have been reviewed and approved by Americo Zuzunaga, FAusIMM, CP (mining engineer), vice-president of corporate planning, who 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), vice-president of metallurgy and projects for Sierra Metals, is a qualified person and chartered professional qualifying as a competent person on metallurgical processes.

About Sierra Metals Inc.

Sierra Metals is Canadian-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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