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Sierra Metals Inc
Symbol SMT
Shares Issued 162,810,553
Close 2020-07-15 C$ 1.69
Recent Sedar Documents

Sierra Metals produces 9.7M lb Cu in Q2

2020-07-15 07:52 ET - News Release

Mr. Luis Marchese reports

SIERRA METALS REPORTS SOLID SECOND QUARTER 2020 PRODUCTION RESULTS INCLUDING STRONG PRODUCTION FROM BOLIVAR, DESPITE THE IMPACT OF THE COVID-19 PANDEMIC

Sierra Metals Inc. has provided second quarter 2020 production results featuring the strong operational performance at its Bolivar mine.

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 2020 production highlights

  • Copper production of 9.7 million pounds; in line with Q2 2019;
  • Silver production of 600,000 ounces; a 32-per-cent decrease from Q2 2019;
  • Gold production of 2,762 ounces; a 9-per-cent increase from Q2 2019;
  • Zinc production of 13.7 million pounds; a 17-per-cent decrease from Q2 2019;
  • Lead production of 6.4 million pounds; a 21-per-cent decrease from Q2 2019;
  • Copper equivalent production of 22.7 million pounds; a 10-per-cent decrease from Q2 2019;
  • Production at Yauricocha and Bolivar impacted in April and May due to the government-imposed shutdowns to contain the advancement of COVID-19;
  • Cusi remained under care and maintenance throughout the quarter.

Quarterly throughput from the Yauricocha and Bolivar mines was negatively impacted by the shutdowns announced by the Peruvian and the Mexican governments to contain the advancement of the COVID-19 pandemic. Both the mines, while maintaining essential activities, operated at reduced capacities for the April and May months. These restrictions were relaxed for mining companies in June (as announced in the company's press release dated June 5, 2020), and the company began to recall its furloughed employees and started ramping up the operations to full capacity. The Cusi mine remained under care and maintenance throughout the quarter, due to its proximity to urban communities.

Consolidated production of copper remained in line at 9.7 million pounds, silver decreased 32 per cent to 600,000 ounces, lead decreased 21 per cent to 6.4 million pounds, zinc declined 17 per cent to 13.7 million pounds and gold increased 9 per cent to 2,762 ounces compared with Q2 2019. Consolidated silver production dropped since there was no production at Cusi during the quarter, while gold production increased largely due to higher gold grades from the Bolivar mine.

The Yauricocha mine experienced a 20-per-cent reduction in throughput during Q2 2020 compared with Q2 2019, due to the aforementioned government-imposed state of emergency. The reduction in throughput was partially offset by higher head grades and higher silver and gold recoveries at Yauricocha, which resulted in a 15-per-cent decrease in copper equivalent pounds produced during Q2 2020 compared with Q2 2019.

At Bolivar, higher grades and recoveries were partially offset by the 5-per-cent decrease in throughput, resulting in a 24-per-cent increase in copper equivalent pounds produced during Q2 2020 compared with Q2 2019. A mere 5-per-cent decrease in throughput, despite the COVID-19-related shutdown, resulted from the increased plant capacity attributable to the expansion completed at the end of 2019.

Luis Marchese, president and chief executive officer of Sierra Metals, commented: "The company had solid production results in the second quarter despite the negative implications of the shutdowns that occurred due to the COVID-19 pandemic. At Yauricocha and Bolivar, the company was able to maintain essential activities while fully complying with the government protocols during the state of emergency. I want to thank our workers at the mines for their dedication and efforts during these difficult times, which led the company to have remarkably high productivity levels. While Cusi remained in care and maintenance due to its proximity to urban centres, we are working through a process that will allow us to safely return workers to the mine and ramp up production. Through the period of downtime, we reviewed our processes at each mine site, targeting improving efficiencies and identifying optimized exploration sequencing to add to our reserves and resources. As we ramp up towards full capacity, we continue to adhere to strict health protocols protecting our operations, our employees and the communities in which we operate."

                               CONSOLIDATED PRODUCTION RESULTS

                                               Three months ended            Six months ended
                                            Q2 2020       Q2 2019       Q2 2020       Q2 2019

Tonnes processed                            511,485       662,490     1,252,183     1,230,891
Daily throughput                              5,846         7,571         7,155         7,034
Silver production (000s oz)                     572           836         1,520         1,528
Copper production (000s lb)                   9,709         9,723        21,483        17,455
Lead production (000s lb)                     6,406         8,066        15,485        15,020
Zinc production (000s lb)                    13,741        16,593        35,387        33,014
Gold production (oz)                          2,762         2,540         6,419         4,526
Silver equivalent ounces (000s) (1)           3,297         4,667         8,028         8,652
Copper equivalent pounds (000s) (1)          22,743        25,230        54,016        47,004
Zinc equivalent pounds (000s) (1)            61,353        57,622       146,032       108,277

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q2 2020 were calculated 
    using the following realized prices: $16.59/oz Ag, $2.40/lb Cu, 89 cents/lb Zn, 76 cents/lb 
    Pb and $1,722/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q1 
    2019 were calculated using the following realized prices: $14.88/oz Ag, $2.75/lb Cu, 
    $1.20/lb Zn, 85 cents/lb Pb and $1,323/oz Au. Silver equivalent ounces and copper and zinc 
    equivalent pounds for the first six months of 2020 were calculated using the following 
    realized prices: $16.58/oz Ag, $2.46/lb Cu, 91 cents/lb Zn, 78 cents/lb Pb and $1,654/oz Au. 
    Silver equivalent ounces and copper and zinc equivalent pounds for the first six months of 
    2019 were calculated using the following realized prices: $15.23/oz Ag, $2.80/lb Cu, $1.22/lb 
    Zn, 90 cents/lb Pb and $1,314/oz Au.
 

Yauricocha mine, Peru

The Yauricocha mine processed 202,534 tonnes during Q2 2020, which is a 20-per-cent decrease from Q2 2019. The decline resulted from the government-imposed state of emergency, which remained in force until June 4, 2020, when the Peruvian government announced the resumption of mining activities as part of phase two of its economic recovery plan. Gradually ramping up its operation, the mine achieved an average throughput of approximately 2,600 tonnes per day in June. The average production for Q2 2020 was 2,315 tpd. The Yauricocha mine has the operational flexibility to recover part of the lost production.

Higher head grades and higher silver and gold recoveries partially offset the impact of lower throughput resulting in a 15-per-cent decrease in copper equivalent metal production compared with Q2 2019. Copper and lead recoveries were slightly below the Q2 2019 recoveries, while zinc recoveries were in line with Q2 2019. Head grades for all metals were higher due to the mining in the cuerpos chicos. Copper grades were particularly higher as a greater proportion of copper sulphides were processed versus polymetallic ore as compared with Q2 2019. Installation of the SK-240 cells and grade analyzers helped achieve higher silver and gold recoveries.

A summary of production from the Yauricocha mine for Q2 2020 is in the "Yauricocha production" table.

                                  YAURICOCHA PRODUCTION

                                             Three months ended          Six months ended
                                           Q2 2020      Q2 2019      Q2 2020      Q2 2019

Tonnes processed                           202,534      254,165      487,759      487,980
Daily throughput                             2,315        2,905        2,787        2,788
Silver grade (g/t)                           66.37        63.13        66.07        63.31
Copper grade                                  1.21%        1.04%        1.17%        1.02%
Lead grade                                    1.63%        1.57%        1.59%        1.51%
Zinc grade                                    3.48%        3.36%        3.74%        3.46%
Gold grade (g/t)                              0.62         0.60         0.66         0.58
Silver recovery                              82.82%       77.82%       82.82%       77.54%
Copper recovery                              77.19%       78.04%       77.19%       76.52%
Lead recovery                                88.08%       89.96%       88.08%       89.15%
Zinc recovery                                88.32%       88.08%       88.32%       88.78%
Gold recovery                                21.18%       16.47%       21.18%       17.21%
Silver production (000s oz)                    358          401          853          770
Copper production (000s lb)                  4,164        4,536        9,548        8,399
Lead production (000s lb)                    6,406        7,911       15,014       14,516
Zinc production (000s lb)                   13,741       16,593       35,387       33,014
Gold production (oz)                           850          809        2,104        1,562
Copper equivalent pounds (000s) (1)         14,354       16,811       34,549       32,283

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q2 2020 were calculated 
    using the following realized prices: $16.59/oz Ag, $2.40/lb Cu, 89 cents/lb Zn, 76 cents/lb 
    Pb and $1,722/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q1 
    2019 were calculated using the following realized prices: $14.88/oz Ag, $2.75/lb Cu, 
    $1.20/lb Zn, 85 cents/lb Pb and $1,323/oz Au. Silver equivalent ounces and copper and zinc 
    equivalent pounds for the first six months of 2020 were calculated using the following 
    realized prices: $16.58/oz Ag, $2.46/lb Cu, 91 cents/lb Zn, 78 cents/lb Pb and $1,654/oz Au. 
    Silver equivalent ounces and copper and zinc equivalent pounds for the first six months of 
    2019 were calculated using the following realized prices: $15.23/oz Ag, $2.80/lb Cu, $1.22/lb 
    Zn, 90 cents/lb Pb and $1,314/oz Au.

Bolivar mine, Mexico

The Bolivar mine processed 308,951 tonnes in Q2 2020, which is a mere 5-per-cent decrease from the Q2 2019 throughput, despite the impact of COVID-19. The average daily throughput realized during the quarter was 3,531 tpd. Head grades for copper, silver and gold were 8 per cent, 44 per cent and 28 per cent higher, respectively, as compared with Q2 2019. Higher head grades and higher copper and silver recoveries, partially offset by lower throughput, resulted in a 24-per-cent increase in copper equivalent pounds produced during Q2 2020 compared with Q2 2019. In Q2 2020, copper production increased by 7 per cent to 5,544,000 pounds, silver production increased 41 per cent to 214,000 ounces, and gold production increased 21 per cent to 1,912 ounces compared with Q2 2019.

Development and infrastructure improvements, which were on hold during Q2 2020, are planned to resume in the second half of the year in the effort to push throughput at Bolivar to 5,000 tpd by the end of 2020. Copper grades are expected to increase during the second half of the year, as mining is planned in the Mina de Fierro and Bolivar West zones.

A summary of production for the Bolivar mine for Q2 2020 is provided in the "Bolivar production" table.


                                       BOLIVAR PRODUCTION

                                                Three months ended              Six months ended
                                            Q2 2020        Q2 2019        Q2 2020        Q2 2019

Tonnes processed (t)                        308,951        326,208        686,513        589,445
Daily throughput                              3,531          3,728          3,923          3,368
Copper grade                                  0.93%          0.86%          0.91%          0.84%
Silver grade (g/t)                            26.00          18.09          23.30          18.71
Gold grade (g/t)                               0.30           0.24           0.29           0.22
Copper recovery                              87.09%         83.51%         86.45%         82.96%
Silver recovery                              82.80%         80.03%         82.41%         79.62%
Gold recovery                                63.79%         64.14%         63.84%         65.61%
Copper production (000s lb)                   5,544          5,187         11,935          9,056
Silver production (000s oz)                     214            152            424            282
Gold production (oz)                          1,912          1,586          4,103          2,685
Copper equivalent pounds (000s) (1)           8,389          6,770         17,541         11,848

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q2 2020 were calculated 
    using the following realized prices: $16.59/oz Ag, $2.40/lb Cu, 89 cents/lb Zn, 76 cents/lb 
    Pb and $1,722/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q1 
    2019 were calculated using the following realized prices: $14.88/oz Ag, $2.75/lb Cu, 
    $1.20/lb Zn, 85 cents/lb Pb and $1,323/oz Au. Silver equivalent ounces and copper and zinc 
    equivalent pounds for the first six months of 2020 were calculated using the following 
    realized prices: $16.58/oz Ag, $2.46/lb Cu, 91 cents/lb Zn, 78 cents/lb Pb and $1,654/oz Au. 
    Silver equivalent ounces and copper and zinc equivalent pounds for the first six months of 
    2019 were calculated using the following realized prices: $15.23/oz Ag, $2.80/lb Cu, $1.22/lb 
    Zn, 90 cents/lb Pb and $1,314/oz Au.


Cusi mine, Mexico

The Cusi mine remained in care and maintenance throughout the second quarter of 2020, due to the government-mandated shutdown to contain the advancement of COVID-19. As a result, there was no production from Cusi during the quarter. As announced in the press release dated June 18, 2020, this care and maintenance period has allowed the management team to complete an optimized view of the entire mine operation. Changes in the interpretation of the geological system have been made based on updated information from a stockwork tonnage system to a vein model system, which is expected to help better control and improve head grades and dilution and make better use of Cusi's silver mineral resources.

Mine development is currently continuing at Cusi in a zone that will bypass the previously announced area of subsidence and provide access to higher grade economic ore to provide feed for the mill. Production is expected to recommence after the mine development work is completed and once a process can be implemented at the mine to mitigate risk to employees at the site through a testing and quarantine methodology similar to the company's other operations.

The company plans to drill an additional 1,000 metres to better understand the mineralization of the new high-grade silver zone in an area called northeast-southwest system of epithermal veins, as mentioned in the press release dated June 18, 2020.

The management team will continue to ramp throughput up to the targeted 1,200 tpd by the end of the year and will commence studies in the second half of the year for the potential expansion of Cusi.

A summary of production for the Cusi mine for Q2 2020 is provided in the "Cusi production" table.

                                  CUSI PRODUCTION

                                               Three months ended            Six months ended
                                            Q2 2020       Q2 2019       Q2 2020       Q2 2019

Tonnes processed (t)                              0        82,117        77,911       153,466
Daily throughput                                  0           938           890           877
Silver grade (g/t)                             0.00        145.44        120.88        126.77
Gold grade (g/t)                               0.00          0.15          0.18          0.15
Lead grade                                    0.00%         0.11%         0.33%         0.20%
Zinc grade                                                  0.09%                       0.19%
Silver recovery (flotation)                   0.00%        73.74%        80.21%        75.98%
Gold recovery (lixiviation)                   0.00%        37.37%        46.53%        37.45%
Lead recovery                                 0.00%        74.96%        84.17%        75.14%
Silver production (000s oz)                       0           283           243           475
Gold production (oz)                              0           146           212           279
Lead production (000s lb)                         0           154           471           504
Silver equivalent ounces (000s) (1)               0           305           286           529

(1) Silver equivalent ounces and copper and zinc equivalent pounds for Q2 2020 were calculated 
    using the following realized prices: $16.59/oz Ag, $2.40/lb Cu, 89 cents/lb Zn, 76 cents/lb 
    Pb and $1,722/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q1 
    2019 were calculated using the following realized prices: $14.88/oz Ag, $2.75/lb Cu, 
    $1.20/lb Zn, 85 cents/lb Pb and $1,323/oz Au. Silver equivalent ounces and copper and zinc 
    equivalent pounds for the first six months of 2020 were calculated using the following 
    realized prices: $16.58/oz Ag, $2.46/lb Cu, 91 cents/lb Zn, 78 cents/lb Pb and $1,654/oz Au. 
    Silver equivalent ounces and copper and zinc equivalent pounds for the first six months of 
    2019 were calculated using the following realized prices: $15.23/oz Ag, $2.80/lb Cu, $1.22/lb 
    Zn, 90 cents/lb Pb and $1,314/oz 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, 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 diversified Canadian mining company focused on the production and development of precious and base metals from its polymetallic Yauricocha mine in Peru, and 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. Additionally, the company also 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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