Polymetallic miner Sierra Metals [stock_market_widget type="inline" template="generic" color="default" assets="SMT.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="SMTS" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has climbed over 20% as of this writing since releasing initial results from two separate 43-101s. While the updates were focused more on improved definition and quality of the reserves and resources, investors are clearly happy with the results.
We previously highlighted the updates as potential catalysts and will be releasing a full report once the 43-101s are made available on SEDAR (within 45 days of the press release). Below follows a high-level summary of each update.
Flagship Yaurichocha Holds Steady
Sierra’s flagship Yaurichocha mine in Peru has been the economic powerhouse of the company. While their other assets will grow in importance, this mine has provided stability.
Overall mineral reserves are now 8.4 million tonnes, 46.5 g/t silver, 1.1% copper, 0.8% lead, 3.1% zinc, and 0.5 g/t gold. This represents a 5.4% overall tonnage decrease, however, proven reserves increased 45% while probable reserves decreased 18%.
Overall measured and indicated resources are 12.7 million tonnes, with an average of 51.5 g/t silver, 1.3% copper, 0.9% lead, 3.0% zinc, and 0.6 g/t gold. This represents a 4% tonnage decrease, with an 18% increase in measured reserves and an 11% decrease in indicated reserves.
While tonnage decreased overall, there is a clear improvement in the quality of the reserve and resource classification. Given the depletion since the last update in 2017, as well the use of a lower, more accurate density factor, a small decrease is expected.
Sierra Metals will continue brownfield and greenfield exploration programs at the Yaurichocha mine with the goal of increasing reserves and resources through discoveries and expansions.
Bolivar Resources Updated with Reserves On Deck
Sierra Metals’ Bolivar asset, a copper mine in Mexico, will eventually take over as the main revenue generator for the company. While the full resource and reserve update will be released before the end of Q1 2020, the company has provided an update on resources.
Overall total indicated resources for the mine are 11.6 million tonnes, with an average of 0.95% copper, 18.1 g/t silver, and 0.24 g/t gold or 1.17% CuEq. This represents a 12% overall tonnage decrease, including depletions. Grades were also updated with reductions of 9% for copper, 20% for silver, and 17% for gold.
Total inferred resources are 16.7 million tonnes, with an average of 0.93% copper, 16.8 g/t silver, and 0.30 g/t gold or 1.16% CuEq. This represents a tonnage increase of 108%, while grades were reduced by 3% for copper, 25% for silver, and 29% for gold.
The upcoming reserve and resource update will include additional drill results and is expected to upgrade a portion of their newly increased inferred resources into the indicated category.
Once again, investors are seeing improved quality and classification. While they will have to wait to see the reserve update, initial results are positive.
Investors can expect the full updates within Q1 of 2020.
Sierra Metals is a market awareness client of Capital 10X.
