Sierra Metals Reports Q2 2022 Consolidated Financial Results and Provides Revised Production, EBITDA, Cost & Capital Expenditure Guidance For 2022
Sierra Metals (SMTS) reported Q2 2022 revenue of $49.9 million, down 13% from Q1 and 37% from Q2 2021, alongside a significant adjusted EBITDA drop of 91% to $1.4 million. The company faced challenges with lower throughput and increased operating costs, leading to an adjusted net loss of $11.6 million, or $(0.07) per share. Production targets for the second half of 2022 have been revised downward, particularly at the Bolivar mine, while guidance for Yauricocha was adjusted upward. The dividend for 2022 has been suspended due to poor financial expectations.
- Increased copper equivalent production at Yauricocha by 12% over Q1 2022.
- Successfully completed 28,000 meters of exploration drilling across all mines.
- 13% revenue decline from Q1 2022; 37% decline from Q2 2021.
- 91% drop in adjusted EBITDA compared to Q1 2022.
- Adjusted net loss of $11.6 million for Q2 2022.
- Suspension of 2022 dividend due to lower EBITDA and cash flow expectations.
Conference Call
(All $ figures reported in USD)
- Revised production, EBITDA and Cost guidance due to lower than expected performance at Bolivar and Cusi, offset by higher throughput and grades at Yauricocha. Capital expenditure guidance lowered due to delays in Bolivar expansion.
- Bolivar turnaround program is making progress, but taking longer than expected due to operating restrictions and limited ventilation related to delays on a new raise bore in Bolivar NW. H1 target throughput below initial guidance.
-
Revenue from metals payable of
$49.9 million 13% decrease from$57.2 million 37% decrease from Q2 2021. -
Adjusted EBITDA of
$1.4 million $11.0 million -
Adjusted net loss attributable to shareholders(1) of
$11.6 million $(0.07) $5.9 million $0.04 $13.1 million $0.08 -
$16.4 million $64.4 million June 30, 2022 . - Suspension of 2022 dividend due to lower EBITDA and cashflow expectations
A shareholder conference call will be held
Image 1: Raptor Drill at Bolivar (Photo: Business Wire)
“On a consolidated basis, Sierra has achieved copper equivalent production within our guidance for H1. But in light of the delay in achieving our targeted ramp up in production at Bolivar, we have revised our guidance for H2 to reflect higher copper equivalent production at Yauricocha and lower copper equivalent production at Bolivar. EBITDA and cost guidance has also been revised accordingly. As a result of higher expected copper equivalent production at Yauricocha, cash cost expectations have been lowered with all-in sustaining costs increasing to reflect higher sustaining capital. At Bolivar and Cusi, cost guidance has also been adjusted on the higher end due to lower production expectations as well as higher operating costs. Consequently, EBITDA guidance has been increased at Yauricocha and lowered for both Bolivar and Cusi.”
“Earlier this year we also announced an intense drilling program. During the quarter, just over 28,000 meters in exploration and infill drilling were completed at all three mines, with the aim of replacing and increasing mineral resources, finding additional high value targets and to support development of new mining zones. Particular emphasis is given to Bolivar, as the turnaround process moves on. The drilling program at Bolivar remains a priority, as it is vital to reduce resource uncertainty.”
He concluded, “We are committed to ensuring the success of the Company’s turnaround program with the goal of delivering value going forward. As outlined in four areas of strategic focus, these include; strengthening our current portfolio, continued exploration and project development and a strong focus on our environmental, social and governance commitments.”
The following table displays selected financial and operational information for the three months and six months ended
| Six Months Ended |
||||||||||||||||
| (In thousands of dollars, except per share and cash cost amounts, consolidated figures unless noted otherwise) | Q2 2022 | Q1 2022 | Var% | Q2 2021 | Var% |
|
2022 |
|
|
2021 |
||||||
| Operating | ||||||||||||||||
| Ore Processed / Tonnes Milled |
|
640,181 |
|
|
590,730 |
8 |
% |
|
787,534 |
-19 |
% |
|
1,230,911 |
|
|
1,561,955 |
| Silver Ounces Produced (000's) |
|
608 |
|
|
734 |
-17 |
% |
|
954 |
-36 |
% |
|
1,342 |
|
|
1,915 |
| Copper Pounds Produced (000's) |
|
8,334 |
|
|
6,324 |
32 |
% |
|
9,535 |
-13 |
% |
|
14,658 |
|
|
17,430 |
| Lead Pounds Produced (000's) |
|
3,333 |
|
|
4,216 |
-21 |
% |
|
7,960 |
-58 |
% |
|
7,549 |
|
|
16,964 |
| Zinc Pounds Produced (000's) |
|
10,426 |
|
|
10,492 |
-1 |
% |
|
21,133 |
-51 |
% |
|
20,918 |
|
|
45,256 |
| Gold Ounces Produced |
|
2,622 |
|
|
1,923 |
36 |
% |
|
2,812 |
-7 |
% |
|
4,545 |
|
|
5,448 |
| Copper Equivalent Pounds Produced (000's)1 |
|
17,794 |
|
|
15,896 |
12 |
% |
|
24,786 |
-28 |
% |
|
33,670 |
|
|
50,157 |
| Cash Cost per Tonne Processed | $ |
65.21 |
|
$ |
61.32 |
6 |
% |
$ |
46.54 |
40 |
% |
$ |
63.34 |
|
$ |
47.04 |
| Cash Cost per CuEqLb2 | $ |
2.47 |
|
$ |
2.73 |
-10 |
% |
$ |
1.62 |
53 |
% |
$ |
2.92 |
|
$ |
1.75 |
| AISC per CuEqLb2 | $ |
3.94 |
|
$ |
4.48 |
-12 |
% |
$ |
2.88 |
37 |
% |
$ |
4.71 |
|
$ |
3.24 |
| Cash Cost per CuEqLb (Yauricocha)2 | $ |
2.06 |
|
$ |
2.19 |
-6 |
% |
$ |
1.41 |
46 |
% |
$ |
2.12 |
|
$ |
1.45 |
| AISC per CuEqLb (Yauricocha)2 | $ |
3.39 |
|
$ |
3.73 |
-9 |
% |
$ |
2.57 |
32 |
% |
$ |
3.53 |
|
$ |
2.62 |
| Cash Cost per CuEqLb (Bolivar)2, 3 | $ |
3.39 |
|
$ |
4.55 |
-26 |
% |
$ |
1.76 |
92 |
% |
$ |
3.87 |
|
$ |
1.67 |
| AISC per CuEqLb (Bolivar)2, 3 | $ |
5.49 |
|
$ |
7.33 |
-25 |
% |
$ |
3.85 |
43 |
% |
$ |
6.26 |
|
$ |
3.39 |
| Cash Cost per AgEqOz (Cusi)2 | $ |
24.84 |
|
$ |
13.48 |
84 |
% |
$ |
21.67 |
15 |
% |
$ |
17.83 |
|
$ |
20.15 |
| AISC per AgEqOz (Cusi)2 | $ |
33.83 |
|
$ |
19.94 |
70 |
% |
$ |
35.73 |
-5 |
% |
$ |
25.25 |
|
$ |
32.92 |
| Financial | ||||||||||||||||
| Revenues | $ |
49,941 |
|
$ |
57,241 |
-13 |
% |
$ |
79,449 |
-37 |
% |
$ |
107,182 |
|
$ |
149,073 |
| Adjusted EBITDA2 | $ |
1,413 |
|
$ |
15,988 |
-91 |
% |
$ |
40,499 |
-97 |
% |
$ |
17,401 |
|
$ |
68,445 |
| Operating cash flows before movements in working capital | $ |
(1,630 |
) |
$ |
10,702 |
-115 |
% |
$ |
35,411 |
-105 |
% |
$ |
9,071 |
|
$ |
60,681 |
| Adjusted net income (loss) attributable to shareholders2 | $ |
(11,631 |
) |
$ |
5,945 |
-296 |
% |
$ |
13,066 |
-189 |
% |
$ |
(5,686 |
) |
$ |
17,805 |
| Net income (loss) attributable to shareholders | $ |
(15,266 |
) |
$ |
369 |
-4237 |
% |
$ |
9,084 |
-268 |
% |
$ |
(14,897 |
) |
$ |
12,168 |
| Cash and cash equivalents | $ |
16,404 |
|
$ |
19,511 |
-16 |
% |
$ |
76,102 |
-78 |
% |
$ |
16,404 |
|
$ |
76,102 |
| Working capital | $ |
(6,426 |
) |
$ |
12,433 |
-152 |
% |
$ |
62,291 |
-110 |
% |
$ |
(6,426 |
) |
$ |
62,291 |
(1) |
Copper equivalent pounds and silver equivalent ounces were calculated using the following realized prices: |
|
Q2 2022 - |
||
Q2 2021 - |
||
6M 2022 - |
||
6M 2021 - |
||
(2) |
This is a non-IFRS performance measure, see Non-IFRS Performance Measures section of the MD&A. |
|
(3) |
Cost of sales for Bolivar for the three-month and six-month ended |
|
were missed in the cash cost calculations in Q2 2021 and recorded as prior period adjustments in Q3 2021. |
The following table displays average realized metal prices information for the three- month period ended
| Realized Metal Prices | ||||||||||||
| (In US dollars) | Q2 2022 | Q1 2022 | Q2 2021 | H1 2022 | H1 2021 | |||||||
| Silver (oz) | $ |
22.65 |
$ |
23.95 |
$ |
26.80 |
$ |
23.30 |
$ |
26.62 |
||
| Copper (lb) | $ |
4.30 |
$ |
4.53 |
$ |
4.37 |
$ |
4.42 |
$ |
4.13 |
||
| Lead (lb) | $ |
1.00 |
$ |
1.06 |
$ |
0.97 |
$ |
1.03 |
$ |
0.94 |
||
| Zinc (lb) | $ |
1.79 |
$ |
1.69 |
$ |
1.34 |
$ |
1.74 |
$ |
1.29 |
||
| Gold (oz) | $ |
1,872 |
$ |
1,875 |
$ |
1,818 |
$ |
1,873 |
$ |
1,798 |
||
Q2 2022 Consolidated Operating Highlights
When compared to Q1 2022, consolidated production of silver decreased
When compared to Q2 2021, there was a
Negative variances in the lead and zinc grades and positive variance in the copper grade resulted from mining in the Esperanza ore body. Despite a
The Bolivar mine processed 256,372 tonnes during Q2 2022 or
When compared to Q2 2021, throughput at Bolivar was
At Cusi, throughput was 66,722 tonnes during Q2 2022 or
When comparing Q2 2022 to Q2 2021, the mine processed
Q2 2022 Consolidated Financial Highlights
Revenues Declined Due to Closing Metal Prices at the End of Q2 & Lower Production
Revenue from metals payable of
When compared to Q2 2021, lower revenue in Q2 2022 was the result of lower metal production during the quarter, attributable to the
Cost of Operations Increased Due to Lower Throughput, Increase in Contractor Costs and Global External Factors
Operating costs during the quarter increased mainly due to global external factors. Costs related to inputs such as fuel and plant consumables, reagents, explosives and drill bits increased due to global inflationary cost pressures. This also impacted costs related to the hiring of contractors during the quarter for increased mine preparation work and process improvements, particularly at Yauricocha and Bolivar. These higher costs were partially offset at Bolivar by the
Yauricocha’s cash cost per copper equivalent payable pound for Q2 2022 was
Bolivar’s cash cost per copper equivalent payable pound for Q2 2022 was
Cusi’s cash cost per silver equivalent payable ounce was
EBITDA, Net Income and Cash Flow Generation Impacted by Lower Revenues and Higher Operating Costs
Adjusted EBITDA(1) of
Net loss attributable to shareholders for Q2 2022 was
Adjusted net loss attributable to shareholders(1) of
Operating cash flow before movements in working capital of
Cash and cash equivalents of
|
Exploration Update
- Underground exploration drilling continued during Q2 2022 with the aim to replace and increase the depleted mineral resources. Approximately 6,258 meters of drilling was completed in the Amoeba, Adrico South, Fortuna and Fortuna North zones.
Bolivar
-
At Bolivar during Q2 2022, 17,227 meters were drilled in the Bolivar West,
Bolivar North-West , La Montura, theCieneguita zones and El Gallo Superior encountering skarn intersections with mineralization. Additionally, infill drilling of 6,975 meters was completed in the Bolivar West, El Gallo Inferior andBolivar North-West zones;
Cusi
-
During Q2 2022, the Company completed 4,111 meters of infill drilling to support the development of the
Santa Rosa de Lima vein and NE Trend.
Covid-19 Update And Outlook
The COVID-19 pandemic has impacted the Company’s operations over the past two years. While there are still concerns regarding the newer variants of the virus, there is reduced pressure on the operations due to relaxed measures as the Company has achieved almost
Revised Guidance
The production and financial results of the Company in the first half of 2022 were impacted by slower than anticipated turnaround at Bolivar and the unexpected underground flooding event at Cusi. Further, the sharp decline in the metal prices in
While the delays in development and ventilation in Bolivar and the flooding event in Cusi are still considered temporary issues, management believes that this requires downward revision to the production estimates for these sites for the second half of the year. At Yauricocha though, tonnages and grades are expected to improve due to the mining in the Fortuna zones, resulting in positive adjustments to the production for H2 2022. Copper equivalent production is now expected to fall between 70.0 to 78.0 million pounds, as summarized in the table below:
Production
Revised 2022 guidance |
Original guidance | Actual production |
|||
| Low | High | Low | High | H1 2022 | |
| Silver (000 oz) | 2,400 |
2,800 |
3,203 |
3,361 |
1,342 |
| Copper (000 lbs) | 30,000 |
33,500 |
34,500 |
41,000 |
14,658 |
| Lead (000 lbs) | 18,000 |
20,000 |
16,500 |
17,500 |
7,549 |
| Zinc (000 lbs) | 53,000 |
55,000 |
49,000 |
54,500 |
20,918 |
| Gold (oz) | 7,800 |
9,500 |
15,500 |
17,500 |
4,545 |
| Copper equivalent |
70,000 |
78,000 |
79,500 |
89,700 |
33,670 |
| (1) 2022 metal equivalent guidance was calculated using the following prices: |
|||||
The Company has reviewed the impact of the revised production profiles and the inflationary conditions on its costs and EBITDA for the remainder of the year and has adjusted its guidance for 2022, as per the tables below:
|
Cash costs range |
AISC(2) range |
||
Mine |
per CuEqLb or AgEqOz |
per CuEqLb or AgEqOz |
||
Revised 2022 guidance |
||||
Yauricocha |
Copper Eq Lbs ('000) |
49,000 - 53,000 |
|
|
Bolivar |
Copper Eq Lbs ('000) |
14,000 - 16,000 |
|
|
Cusi |
Silver Eq Oz ('000) |
1,000 - 1,200 |
|
|
Original guidance |
||||
Yauricocha |
Copper Eq Lbs ('000) |
45,000 - 49,000 |
|
|
Bolivar |
Copper Eq Lbs ('000) |
23,800 - 29,900 |
|
|
Cusi |
Silver Eq Oz ('000) |
1,750 - 1,850 |
|
|
Actual production and costs H1 2022 |
||||
Yauricocha |
Copper Eq Lbs ('000) |
22,969 |
|
|
Bolivar |
Copper Eq Lbs ('000) |
6,788 |
|
|
Cusi |
Silver Eq Oz ('000) |
742 |
|
|
(1) 2022 metal equivalent guidance was calculated using the following prices: |
||||
(2) AISC includes treatment and refining charges, selling costs, G&A costs and sustaining capital expenditure |
||||
Actual EBITDA |
Revised 2022 Guidance | Original guidance | ||||||||
H1 2022 |
||||||||||
| Mine |
|
Low |
High |
Low |
High |
|||||
|
|
|
|
|||||||
| Yauricocha | 18,483 |
|
57,000 |
|
61,300 |
|
53,000 |
|
60,000 |
|
| Bolivar | 755 |
|
8,000 |
|
9,500 |
|
35,000 |
|
42,000 |
|
| Cusi | 887 |
|
2,000 |
|
2,200 |
|
7,000 |
|
8,000 |
|
| Corporate | (2,724 |
) |
(6,000 |
) |
(6,000 |
) |
(5,000 |
) |
(5,000 |
) |
| Total | 17,401 |
|
61,000 |
|
67,000 |
|
90,000 |
|
105,000 |
|
| (1) Calculated using the following spot prices as on |
||||||||||
| (2) Using the consensus prices |
||||||||||
Capital Expenditure Guidance
Due to the lowered expectation for EBITDA for the full year, reduced throughput and related CAPEX, the Company is lowering its capital expenditure guidance from
| Amounts in $M | |||
| Revised 2022 Capital Expenditure guidance | Sustaining | Growth | Total |
| Yauricocha | 15 |
13 |
28 |
| Bolivar | 18 |
5 |
23 |
| Cusi | 6 |
1 |
7 |
| Greenfield Exploration | - |
1 |
1 |
| Total Capital Expenditure | 39 |
20 |
59 |
Management continues to monitor the turnaround plans for Bolivar and also any external factors such as the metal prices, and may adjust its capital expenditure plans as required.
Dividend
The Company expects to continue to deliver on its production goals at Yauricocha with a continued focus on the success of the turnaround program at Bolivar. However, due to the anticipated lower production and EBITDA, in addition to the current weakening of commodities, the Company feels it would be prudent to suspend the payment of a dividend in 2022.
Conference Call and Webcast
Via Webcast:
A live audio webcast of the meeting will be available on the Company's website:
https://event.on24.com/wcc/r/3828385/8F4898DF12D6F6F90626175BB7F7742D
The webcast, along with presentation slides, will be archived for 180 days on www.sierrametals.com.
Via phone:
For those who prefer to listen by phone, dial-in instructions are below. To ensure your participation, please call approximately five minutes prior to the scheduled start time of the call.
US/CAN dial-in number (Toll Free): 1 844 200 6205
All other locations (International): +1 929 526 1599
Access code: 989047
Qualified Persons
Américo Zuzunaga, FAusIMM (Mining Engineer)
About
The Company's Common Shares trade on the Bolsa de
For further information regarding
Continue to Follow, Like and Watch our progress:
Web: www.sierrametals.com | Twitter: sierrametals | Facebook: SierraMetalsInc | LinkedIn:
Forward-Looking Statements
This press release contains forward-looking information within the meaning of Canadian and
Forward-looking information is subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, the risks described under the heading "Risk Factors" in the Company's annual information form dated
The risk factors referred to above are not an exhaustive list of the factors that may affect any of the Company's forward-looking information. Forward-looking information includes statements about the future and is inherently uncertain, and the Company's actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. The Company's statements containing forward-looking information are based on the beliefs, expectations, and opinions of management on the date the statements are made, and the Company does not assume any obligation to update such forward-looking information if circumstances or management's beliefs, expectations or opinions should change, other than as required by applicable law. For the reasons set forth above, one should not place undue reliance on forward-looking information.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005621/en/
Investor Relations
+1 (416) 366-7777
Email: info@sierrametals.com
CEO
+1(416) 366-7777
Source:
FAQ
What were Sierra Metals' Q2 2022 revenue results?
What is the adjusted EBITDA for Sierra Metals in Q2 2022?
How did Sierra Metals' production guidance change for H2 2022?
Did Sierra Metals declare a dividend for 2022?
