Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) has announced strong first quarter 2020 production results featuring an increase in production for all metals, despite the impact of COVID-19 during the second half of March 2020.
Results are from Sierra Metals’ three underground mines in Latin America: The Yauricocha polymetallic mine in Peru, and the Bolivar copper and Cusi silver mines in Mexico.
The Yauricocha Mine achieved 22% higher throughput as compared to Q1 2019, despite being affected by the state of emergency declared by the Peruvian government on March 17, 2020. Higher throughput combined with higher grades for all metals resulted in a 52% increase in zinc equivalent pounds produced during Q1 2020 compared to Q1 2019.
The state of emergency has been extended to April 26, as a result of which the dompany continues to only maintain an essential services crew at the mine site. The company continues to be prepared to recommence and ramp up production very quickly. It has the operating flexibility to run the ore processing mill above the 3,150 tpd capacity, which should help Yauricocha recover lost ore tonnages from the work stoppage.
At Bolivar, a 43% increase in throughput, higher grades for all metals and higher recoveries except gold resulted in an 80% increase in copper equivalent pounds produced during Q1 2020 as compared to Q1 2019.
At Cusi, a 9% increase in throughput combined with higher grades and recoveries resulted in a 28% increase in silver equivalent ounces as compared to Q1 2019. The mining operations in Mexico were not impacted by the COVID-19 pandemic during the first quarter of 2020.
On March 31, 2020, the Mexican government announced a 30-day suspension of all non-essential activities, following which the Company is maintaining only an essential services crew at the Bolivar Mine site until April 30, 2020. The Cusi Mine has been placed into care and maintenance during this period. The company said it anticipates resuming normal production levels at the Mines after this period.
President and CEO, Igor Gonzales, said that due to the continued impact of the COVID-19 related work stoppages at all its mines, the company has suspended its 2020 production and cost guidance, until a complete review of operations is completed.
He said the company continues to evaluate the mines and expects to provide a more comprehensive update as part of the Q1 2020 reporting process.
“I am very pleased with the strong Q1 2020 production results as shown through an increase in all metals produced versus Q1 2019,” Mr Gonzales said.
“This increase takes into account a slowdown in production during the last two weeks in March due to the COVID-19 pandemic. Since the beginning of 2019 we have realized quarter over quarter increases in metals produced as we completed expansions and ramped up production in Mexico.
“We also ran the Yauricocha Mine at higher throughput levels to catch up from a strike in 2019 and in Q1 2020 to build up processed tonnage as a buffer against any potential interruptions. Additionally, we continue to reap the benefits of prudent investments and operational improvement programs at all Mines.
“While we will be affected by the COVID-19 pandemic in Q2 2020 we maintain reduced essential services crews at the Yauricocha and Bolivar mines. We expect to be able to ramp up quickly to pre-pandemic levels once the state of emergency is withdrawn in Peru and Mexico.
“At Bolivar we expect to continue the ramp-up in throughput to the 5,000 tpd. Furthermore, with the recently released Bolivar NI 43-101 Technical Report the large increase in Mineral Resources has shown that we believe there is further expansion potential which will be studied through an updated Preliminary Economic Assessment.
“The Cusi Mine, due to its proximity to an urban area has been placed into care and maintenance during this period and will continue to be assessed as the situation improves. Finally, permitting was placed on hold by the Peruvian government during the state of emergency but we are optimistic that we will receive the required permits to increase production at Yauricocha to the 3,600 tpd level this year.
“I would like to reassure the shareholders that during this COVID-19 pandemic we first and foremost are taking care of our workforce.
“We have a strong balance sheet and we have reduced and deferred capital expenditures to ensure we emerge as strong a company as before the pandemic. Once the situation returns to a more normal one and metal prices improve, we are still poised for strong future growth and cashflow and will continue to make prudent, strategic investments in the company which will benefit all shareholders.”