Overcomes COVID Related Issues To Report US$69.6 Million In Revenue
Sierra Metals Inc. (TSX: SMT) has reported revenue of US$69.6 million and an adjusted EBITDA of US$25.6 million for Quarter 1, 2021.
The revenue was earned on a throughput of 774,421 tonnes and metal production of 25.5 million copper equivalent pounds or 3.7 million silver equivalent ounces, or 79.8 million zinc equivalent pounds for the three-month period ended March 31, 2021.
CEO, Luis Marchese, said that despite the decline in quantities of payable metals due to ongoing COVID-19 related operational challenges and external factors, the company generated higher revenues, adjusted EBITDA and operating cash flows during Q1 2021.
The Yauricocha Mine achieved 14% higher throughput in Q1 2021 compared to Q1 2020, despite the various operational challenges posed by the COVID-19 pandemic. Zinc equivalent production dropped 9% as compared to Q1 2020. In terms of copper equivalent pound, the decline was 21% due to a higher increase in copper prices than the zinc prices compared to Q1 2020. Metal production declined (except zinc and silver) as ore grades fell due to a decline of tonnage contributions from the high-grade cuerpos chicos zones.
The copper-rich Esperanza zone also had some operational issues that have since been resolved. Cash costs per copper equivalent payable pound increased 26%, whereas cash costs per zinc equivalent payable pound increased by 9% as compared to Q1 2020. AISC per copper equivalent payable pound increased by 14%, as the increase in cash cost was partially offset by lower treatment and refining charges and lower sustaining capital. AISC per zinc equivalent payable pound increased by 4% as compared to Q1 2020.
The Bolivar Mine processed 371,608 tonnes in Q1 2021, representing a mere 2% decrease from tonnes processed in Q1 2020, despite the ongoing challenges due to COVID-19 and bad weather at the beginning of the quarter. The decrease in throughput combined with lower grades resulted in a 20% decrease in copper equivalent pounds produced during Q1 2021 as compared to Q1 2020. Cash costs and AISC per copper equivalent payable pound increased by 37% and 57%, respectively, as compared to Q1 2020.
The Cusi Mine achieved 2% lower throughput at 30% higher silver grades during Q1 2021, resulting in 17% higher silver equivalent production as compared to Q1 2020. Cash costs per silver equivalent ounce decreased by 17%, but AISC per silver equivalent payable ounce was in line with Q1 2020, as higher sustaining capital offset the impact of the increase in silver equivalent payable ounces in Q1 2021.
Consolidated production of silver increased 1% to 1.0 million ounces, copper decreased 33% to 7.9 million pounds, lead decreased 1% to 9.0 million pounds, zinc increased 11% to 24.1 million pounds, and gold decreased 28% to 2,636 ounces compared to Q1 2020.
“The safety of our workforce and the communities in which we operate is paramount. The COVID-19 pandemic has enacted various direct and indirect challenges which have affected our ability to operate as effectively as expected,” Mr Marchese said.
“Additionally, an extended power outage at Cusi affected our operations during the quarter. Despite these challenges, we still had solid revenue and adjusted EBITDA tempered by higher costs due to lower metal production and a decline in ore grades. We continue to work through the challenges and issues, and we expect to see improvement as we progress throughout the year.
“Looking ahead, the year continues to be busy with many exciting developments such as the anticipated receipt of the Informe Tecnico Minero (ITM) permit at Yauricocha, which will allow us to increase throughput by 20%. We also continue advancing the completion of Preliminary Feasibility Studies for all mines, examining increases in throughput starting in 2024.
“We also expect to begin construction of an iron ore processing plant at Bolivar, expected to produce 500,000 tonnes per year of 62% iron ore fines. This is expected to enhance Bolivar’s profitability while also lowering our transportation and tailing development costs. Furthermore, we continue with our brownfield and greenfield exploration programmes.
“We have had recent success in the area between the Esperanza and Cachi Cachi zones with the discovery of high-grade copper silver and zinc oxide material in April 2020.
“The company continues to have a strong balance sheet to support the company’s capital expenditures and growth initiatives. While we are facing challenges from COVID-19 currently, the mid-term plans remain in place.”