Sierra Metals: Solid Q2 2021 Production Results Despite COVID-19 Headwinds

On July 20th Sierra Metals (NYSE:SMTS, TSX:SMT) announced solid second quarter 2021 production results and record throughput at its Yauricocha Mine in Peru.

Sierra Metals delivered +9% year over year growth in copper equivalent production for the quarter despite the headwinds of COVID-19.

Luis Marchese, CEO of Sierra Metals stated the following about the company’s outlook for the remainder of 2021:

“Looking ahead to the second half of 2021, we anticipate seeing an improvement in production results over the first half of the year as we continue to manage the implications of COVID-19 using best practices”

The company will be reviewing production guidance as a part of their Q2-2021 consolidated financial results.  Key catalysts going into the 2nd half of 2021:

  • Implementation on a 500,000 tonne per year magentite concentrate plant at Bolivar which will be operational next year.
  • In June Sierra Metals received the final permit required for the construction and operation of the expansion of throughput at Yauricocha to 3,600 tonnes per day.
  • Completion of Preliminary Feasibility Studies for all three mines to support planned expansions at all mines starting in 2024.

The global copper and base metals markets continue to remain constrained on the supply side.  The prospect of surging demand comes after years of exploration and development cutbacks when prices were low and as the supply side grapples with rising social and environmental expectations and falling ore quality.

Operational Highlights

Yauricocha Mine (Peru)

The Yauricocha Mine processed a record 328 thousand tonnes during Q2 2021, a strong increase of 62% from Q2 2020.

The higher throughput was partially oset by lower head grades for all metals, resulting in a 7% higher copper equivalent production as compared to Q2 2020.

Bolivar Mine (Mexico)

The Bolivar Mine processed 385 thousand tonnes during Q2 2021, a strong increase of 25% from 2019. Copper equivalent production decreased 8% for the quarter because of lower silver (-6%) and gold (-15%) production, offset by 5% higher copper production.

Cusi (Mexico)

The Cusi Mine processed 73 thousand tonnes during Q2 2021, there was no production last year (Q2 2020) as the mine remained in care and maintenance due to the government mandated shutdown due to COVID-19.

For Q2 2021, Silver head grade for Q2 2021 was 138.94 g/t resulting in silver production of 269,000 ounces.

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Sierra Metals is a market awareness client of Capital 10X.

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