{"id":21628,"date":"2020-05-17T10:03:21","date_gmt":"2020-05-17T14:03:21","guid":{"rendered":"https:\/\/capital10x.com\/old\/?p=21628"},"modified":"2020-05-17T13:59:36","modified_gmt":"2020-05-17T17:59:36","slug":"sierra-metals-smt-q1-2020-results","status":"publish","type":"post","link":"https:\/\/capital10x.com\/old\/sierra-metals-smt-q1-2020-results\/","title":{"rendered":"Sierra Metals Reports Solid Q1 Results and Navigates Operations Through COVID-19"},"content":{"rendered":"<p>Sierra Metals (TSX: SMT, NYSE: SMTS) released solid Q1 2020 results and provided the market an update on its operations and outlook as a result of the COVID-19 virus.<\/p>\n<p>Financial results for the quarter were ahead of consensus expectations, with copper equivalent production up 43% to 31.2 Mlb, revenue up +13% at $55.6 million, and EBITDA up 33% at $16.1 million.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-21650\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-earnings-charts.png\" alt=\"\" width=\"800\" height=\"295\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-earnings-charts.png 800w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-earnings-charts-300x111.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-earnings-charts-768x283.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-earnings-charts-696x257.png 696w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/p>\n<p>Management stated on the conference call the company&#8217;s 2020 objectives:<\/p>\n<ol>\n<li>Keeping employees safe through the COVID-19 pandemic.<\/li>\n<li>Maintaining a strong balance sheet.<\/li>\n<li>Pursuing growth and cash flow.<\/li>\n<li>Seek exploration and development to extend mine life.<\/li>\n<\/ol>\n<p>The global slowdown has had an adverse impact on base metal demand and prices. As a result G7 central banks and governments have ushered unprecedented levels of fiscal and monetary stimulus to drive economic growth.<\/p>\n<p>A recovery from the pandemic is expected to generate more demand and better prices for base metals. We believe mining companies with copper exposure present a strong value opportunity for investors.<\/p>\n<p>Copper consumption remains invariably linked to global economic growth, particularly as we move to a world where transport is driven by electrification.<\/p>\n<h4>Global Copper Consumption: 1900-2019<\/h4>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-21640\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-scaled.jpg\" alt=\"\" width=\"2560\" height=\"1978\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-scaled.jpg 1400w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-300x232.jpg 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-1024x791.jpg 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-768x593.jpg 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-1536x1187.jpg 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-2048x1583.jpg 2048w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-696x538.jpg 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/copper-consumption-1392x1076.jpg 1392w\" sizes=\"auto, (max-width: 2560px) 100vw, 2560px\" \/>Base metal mining stocks have sold off meaningfully year-to-date as a result of COVID-19. However Sierra has sold off more than its peers, we believe the company&#8217;s attractive copper, silver and gold exposure will attract interest from investors looking for value opportunities in the market.<\/p>\n<figure id=\"attachment_21651\" aria-describedby=\"caption-attachment-21651\" style=\"width: 2000px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-21651\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart.png\" alt=\"\" width=\"2000\" height=\"1167\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart.png 1755w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart-300x175.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart-1024x598.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart-768x448.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart-1536x896.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart-696x406.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/SMT.TO_CMMC.TO_TKO.TO_CS.TO_chart-1392x812.png 1392w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\" \/><figcaption id=\"caption-attachment-21651\" class=\"wp-caption-text\">Source: YCharts<\/figcaption><\/figure>\n<h2>Operational Results<\/h2>\n<p>Sierra Metals recorded consolidated mill throughput for the quarter at 740,698 tonnes, an increase of 30% year-on-year.\u00a0 Consolidated copper equivalent pounds of production came in at 31.2 million lbs, an increase of 43% year-on-year.<\/p>\n<figure id=\"attachment_21631\" aria-describedby=\"caption-attachment-21631\" style=\"width: 654px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-21631\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-throughput-increase-q1-300x107.png\" alt=\"\" width=\"654\" height=\"234\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-throughput-increase-q1-300x107.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-throughput-increase-q1-768x275.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-throughput-increase-q1-696x249.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-throughput-increase-q1.png 883w\" sizes=\"auto, (max-width: 654px) 100vw, 654px\" \/><figcaption id=\"caption-attachment-21631\" class=\"wp-caption-text\">Source: Sierra Metals<\/figcaption><\/figure>\n<p>Copper continues to increase as a percentage of overall revenues, currently at 40%. The favorable pricing pricing environment for gold has resulted in the metal now accounting for 9% of overall revenues.<\/p>\n<figure id=\"attachment_21644\" aria-describedby=\"caption-attachment-21644\" style=\"width: 500px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-21644\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-revenue-mix-300x153.png\" alt=\"\" width=\"500\" height=\"254\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-revenue-mix-300x153.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-revenue-mix-768x391.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-revenue-mix-696x354.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/05\/sierra-visual-revenue-mix.png 843w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><figcaption id=\"caption-attachment-21644\" class=\"wp-caption-text\">Source: Sierra Metals<\/figcaption><\/figure>\n<h3>Yauricocha<\/h3>\n<p>The Yauricocha Mine in Peru achieved 22% higher throughput on the quarter, resulting in a 30% increase in copper equivalent pounds produced to 20.1 Mlbs.<\/p>\n<p>The mine is trending towards copper as the main product as a percentage of revenue. On a copper equivalent basis, cash costs were down 20% y\/y at $1.17\/lb and AISC (all-in-sustaining-cost) was up 15% to $2.24\/lb.<\/p>\n<p>The Peruvian government declared a COVID-19 state of emergency on March 17th, 2020, the measures have been extended to May 24th, as a result the company is maintaining only essential crew at the site.\u00a0 Open pit mining is currently permitted in Peru and the industry is waiting for a date to restart underground mining.<\/p>\n<p>Sierra has the flexibility to run the mill at higher levels to make up for lost tonnage from the COVID-19 shutdown.\u00a0 Additionally, the company is optimistic they will receive government permits to increase production by 20% to 3,600 tpd and is currently completing studies to increase it further to 5,500 tpd over the next few years.<\/p>\n<h3>Bolivar<\/h3>\n<p>The Bolivar Mine in Mexico achieved record throughput for the quarter, 43% higher from the previous year at 4,315 tpd. This resulted in an 80% increase in copper equivalent pounds produced to 9.1 Mlbs.<\/p>\n<p>On a copper equivalent basis cash costs were 44% lower to $1.15\/lb and AISC was 48% lower to $1.85\/lb.<\/p>\n<p>The Mexican government announced a suspension of all non-essential activities in Mexico on March 31st, 2020 for 30 days. The government has declared mining an essential operation and the company is is expecting to open operations from May 17th.<\/p>\n<p>The company is focused on ramping up production to the 5,000 tonne per day level, which is a 38% increase over 2019.\u00a0 The recent reserve and resource update has outlined expansion potential exists beyond the 5,000 tpd level.<\/p>\n<h3>Cusi<\/h3>\n<p>The Cusi Mine in Mexico achieved 9% higher throughput on the quarter, resulting in 53% increase in copper equivalent pounds produced to 1.9 Mlbs.<\/p>\n<p>On a silver equivalent basis cash costs were 37% higher to $22.62\/oz and AISC was flat at $30.00\/oz. Cusi has faced higher operating costs due to development and subsidence activity experienced in 2019.<\/p>\n<p>Cusi is currently on care and maintenance, and as a result of the COVID-19 shutdown the NI 43-101 has been delayed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sierra Metals (TSX: SMT, NYSE: SMTS) released solid Q1 2020 results and provided the market an update on it&#8217;s operations and outlook as a result of the COVID-19 virus.<\/p>\n","protected":false},"author":7,"featured_media":17303,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[76,1609,188,859,146,846,848,847,1267],"class_list":{"0":"post-21628","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-metals","8":"tag-copper","9":"tag-covid-19","10":"tag-earnings","11":"tag-metals","12":"tag-mining","13":"tag-sierra-metals","14":"tag-silver","15":"tag-smt","16":"tag-smts"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Sierra Metals Reports Solid Q1 Results and Navigates Operations Through COVID-19 | Capital 10X<\/title>\n<meta name=\"description\" content=\"Sierra Metals (TSX: SMT, NYSE: SMTS) released solid Q1 2020 results and provided the market an update on it&#039;s 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