Peruvian Subsidiary Corona Performed Strongly Despite COVID-19 Issues
Sierra Metals Inc. (TSX:SMT) has reported the filing of positive unaudited financial statements for the fourth quarter of 2020 of its Peruvian subsidiary Sociedad Minera Corona S.A.’s
The company holds an 81.8% interest in Corona.
Corona’s Highlights for the Three Months Ended December 31, 2020
- Revenues of US$45.2 million vs. US$42.2 million in Q42019
- Adjusted EBITDA of US$22.5 million vs. US$17.9 million in Q4 2019
- Total tonnes processed decreased by 3% to 311,946 vs. 321,701 in Q4 2019
- Net production revenue per tonne of ore milled increased by 8% to US$148.13
- Cash cost per copper equivalent payable pound decreased by 1% at US$1.16 in Q4 2020
- All-in sustaining cost (AISC) per copper equivalent payable increased 17% to US$2.47 in Q4 2020
- Copper equivalent production of 18.4 million pounds vs. 23.1 million pounds in Q4 2019
- US$65.0 million of cash and cash equivalents as at December 31, 2020
- US$92.0 million of working capital as at December 31,2020
Sierra Metals CEO, Luis Marchese, said annual throughput of 1,117,860 was in line with the 2019 annual production, despite the impact of COVID-19 related shutdowns faced in Q2 2020 and other COVID-19 related challenges throughout the year.
Throughput for Q4 2020 decreased by 3.0% as compared to Q4 2019, as a result of operational downtimes and minor production disruptions. Copper and zinc equivalent metal production in Q4 2020 decreased by 20% and 14%, respectively, due to lower throughput and lower head grades.
Mr Marchese said that additionally, lower workforce availability continued to impact mine development, leading to lower ore contribution from the high-grade cuerpos chicos zones. Year over year, copper equivalent production decreased 4% in 2020 compared to the prior year.
During 2020, zinc and gold’s annual production increased 1% and 3%, respectively, while copper and lead annual production decreased by 2% and 9%. Silver production for 2020 was in line with the 2019 annual silver production.
Q4 2020 revenues increased by 7% compared to Q4 2019 as a result of higher metal prices realized. Annual revenues were 6% lower due to the impact of a 66% increase in the treatment and refining costs. Adjusted EBITDA increased by 25% and 4% during Q4 2020 and the year respectively compared to the same periods of 2019, as operating costs excluding COVID-19 costs were lower than the prior year.
Cash and cash equivalents increased by $30 million during the year due to a combined result of a 27% increase in operating cash flows and a decrease of 26% in cash used in investing activities, as some capital expenditures were deferred considering the uncertainties related to the impacts of COVID-19. Cash costs per copper equivalent payable pound for 2020 decreased by 10% due to lower operating costs per tonne. AISC per copper equivalent payable pound for 2020 increased 10% primarily due to a 66% increase in treatment and refining costs partially offset by lower cash costs.
“I am pleased with Yauricocha’s performance in the fourth quarter of 2020, which saw increases in revenue and adjusted EBITDA compared to the same quarter in 2019,”Mr Marchese said.
“The company also realised increased EBITDA but lower revenue on a year over year basis primarily due to lower incomes resulting from significant increases to the treatment and refining charges. Overall, the company performed well and produced solid results, given the challenging year we had due to the effects of dealing with the COVID-19 pandemic. I want to thank all employees for their efforts to help the company achieve these results.
“Looking ahead, 2021 is an exciting time for the company as we continue advancing important projects, operational improvements, and exploration at Yauricocha. We also look forward to receiving the necessary permits at Yauricocha to increase throughput by 20% to the 3,600 tonne per day level.
“Furthermore, we recently completed and published a Preliminary Economic Assessment at Yauricocha with favourable economics to examine increasing throughput to 5,500 tonnes per day starting in 2024. We look forward to releasing a Preliminary Feasibility Study in the coming months to support that expansion further.
“Corona continues to have a solid balance sheet and strong liquidity. Management remains optimistic that continued operational efficiencies can be obtained at the Yauricocha Mine as well as capitalising on further operational and resource growth opportunities.”
