TORONTO, May 29, 2013 /CNW/ – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra Metals” or the “Company” previously Dia Bras Exploration) is pleased to report the filing of its unaudited Financial Statements and Management Discussion and Analysis (“MD&A”) for the first quarter of 2013. All amounts are presented in Canadian dollars unless otherwise stated. For the full Financial Statements or MD&A please visit the Company’s website www.sierrametals.com or SEDAR at www.sedar.com.

Daniel Tellechea, President and CEO of Sierra Metals, commented: “We are pleased with Sierra Metals’ results for the first quarter of 2013. The Company announced commercial production at its Cusi Mine in Mexico during the period and continues to increase its production profile in 2013. Additionally, we are very excited to announce the conditional approval to be listed on the TSX from the TSX Venture. This marks a substantial milestone for the Company as we continue to strive towards our objective of becoming one of Latin America’s premier, low-cost precious and base metals producers”.

The following table sets out the selected first quarter financial results

			Three months ended
(In thousands of dollars, unless stated)			March 31, 2013	March 31, 2012
Revenue			$ 41,895	$ 46,288
EBITDA			18,510	24,540
Cash Flow from continuing operations			2,359	7,217
Adjusted net income attribuitable to shareholders1			13,148	14,593
Non-cash charge on Corona acquisition			16,503	18,485
Net loss attributable to shareholders			(3,355)	(3,892)
Basic and diluted earnings (loss) per share ($)
	From continuing operations		(0.02)	(0.02)
	Cash Cost per oz of Ag (Yauricocha)	US$	(21.50)	(31.99)
	Cash Cost per lb of Cu (Bolivar)	US$	1.62	1.73
	Cash Cost per oz of Ag (Cusi)	US$	15.52	N/A
(In thousands of dollars)			March 31, 2013	March 31, 2012
Cash and cash equivalents			$ 67,589	$ 79,835
Assets			493,261	505,064
Liabilities			216,623	221,574
Equity			276,638	283,490
1 Adjustable net income attributable to shareholders is defined by management as net income attributable to   shareholders shown in the financials statements plus non-cash depletion charges due to the acquisition of Corona.

 

Financial Events

• Net loss attributable to shareholders of $3.4 million or $0.02 per share for the three months ended March 31, 2013 compared to a loss of $3.9 million ($0.02 per share) for the same period in 2012

• A large component of the net loss for every quarter is the non-cash depletion charge in Peru, which for the three months ended March 31, 2013 was $16.5 million (2012- $18.5 million). The units of production depletion charge is based on aggregate fair value of the Yauricocha mineral property at the date of acquisition of Corona of $363.9 million amortized over the total proven and probable reserves of the mine.  In the event that additional reserves and resources are identified, this depletion charge will be prospectively adjusted in future periods.

• Notwithstanding lower metal prices in the quarter, the Company generated adjusted net income attributable to shareholders (excluding the non-cash depletion charge described above) of $13.1 million or $0.09 per share for the three months ended March 31, 2013 compared to $14.6 million or $0.10 per share for the same period in 2012.

• EBITDA of $18.5 million for the three months ended March 31, 2013 compared to $24.5 million for the same period in 2012.

• Cash flow generated from continuing operations of $2.4 million for the three months ended March 31, 2013 compared to $7.2 million for the same period in 2012.

• Cash and cash equivalents of $67.6 million as at March 31, 2013 compared to $79.8 million at the end of 2012.

• Revenues of $41.9 million for the three months ended March 31, 2013 compared to $46.3 million for the same period in 2012.

• Silver cash cost¹ after by-product credits of US$(21.50) per ounce (“oz”) in Yauricocha, silver cash cost after by-product credits of US$15.52 per oz in Cusi and copper cash cost after by-product credits of US$1.62 per pound (“lb”) at Bolivar for the three months ended March 31, 2013 compared to silver cash cost of US$(31.99)/oz and US$1.73 /lb for the same period of 2012 in Yauricocha and Bolivar, respectively.

Operational Events

• Total tonnes processed of 317,637 in the first quarter of 2013 compared to 286,022 tonnes in the same period of 2012. This represents an 11% increase year-over-year.

• Total silver production of 610,407 oz in the first quarter of 2013 compared to 584,284 oz for the same period of 2012. This represents a 4% increase year-over-year.

• Total copper production of 4.1 million lb in the first quarter of 2013 compared to 3.9 million lb for the same period of 2012. A 5% increase year-over-year.

• Total lead production of 8.6 million lb in the first quarter of 2013 compared to 7.9 million lb for the same period of 2012. An 8% increase year-over-year.

• Total zinc production of 13.3 million lb in the first quarter of 2013 compared to 13.6 million lb for the same period of 2012. A 2% decrease year-over-year.

• Total gold production from the Yauricocha Mine was 1,598 oz in the first quarter 2013 compared to 3,025 oz for the same period of 2012. A 47% decrease year-over-year.

• Cusi mine achieved commercial production on January 1, 2013 and during the first quarter of 2013 processed a total of 28,315 tonnes of ore at the Malpaso Mill representing a 133% increase year-over-year. This marks a substantial milestone as it is Sierra’s third mine in commercial production.

The following table sets out consolidated production results for the quarter ended March 31, 2013 and 2012. Please note that the production figures presented below include 100% of Yauricocha’s figures for that period. No adjustments have been made for the portion applicable to the non-controlling interest.

			3 Months Ended
Consolidated Production			March 31, 2013	March 31, 2012	% Var.
Silver (oz)			610,407	584,284	4%
Copper (000 lb)			4,060	3,878	5%
Lead (000 lb)			8,528	7,930	8%
Zinc (000 lb)			13,304	13,622	-2%
Gold (oz)			1,598	3,025	-47%

 

Exploration Events

• During the first quarter of 2013 a total of 22,163 meters of drilling were completed on the following properties:
  
  
  
  • Yauricocha Mine, Peru: 8,175 meters of drilling completed at the Central Mine Area and regional targets.
    
  • Bolivar Mine, Mexico: 8,362 meters of drilling that focused on upgrading resources to reserves and expanding skarn mineralization at the Bolivar Mine.
    
  • Cusi Mine, Mexico: 5,625 meters of definition drilling was completed to delineate the extent of mineralization at the Promontorio, San Juan, Minerva and La India mines.
  
  
• On January 9, 2013 the Company announced that drilling at the Central Mine Area of the Yauricocha mine in Peru expanded mineralization at depth. Drill results show that mineralization of the Rosaura and Antacaca Sur ore bodies extend 150 meters to depth and the Antacaca and Catas ore bodies have increased mineralization at depth.  These bodies are open to depth.

Corporate Events

• On January 25, 2013, the State Court of Chihuahua, Mexico (the “State Court”) overturned a previously announced resolution of the 8th Civil Court of the Judicial District of Morelos in Chihuahua (the “8th Civil Court”), which absolved the Company from the claims brought against it by Polo y Ron Minerals, S.A. de C.V. (“P&R”). The original claim brought by P&R only included the San Jose properties, which are not located in any areas where Dia Bras Mexicana, S.A. de C.V currently operates, or in areas included in any resource estimates of the Company. However, the State Court ordered the Company to: (i) transfer to P&R 17 mining concessions relating to its Bolivar project including the mining concessions where mine operations are located; and (ii) pay US$422,674 to P&R. In February 2013, the Federal Court in the State of Chihuahua (“Federal Court”) granted the Company a temporary suspension of the adverse resolution issued by the State Court. A final verdict by the Federal Court is pending. The Company will continue to vigorously defend this claim by applying the proper legal resources necessary to defend its position.

• On February 12, 2013, the Company announced the adoption of a dividend policy whereby it will pay cash dividends on a quarterly basis of approximately $10 million per annum. The Company completed the first quarterly cash dividend payment of $2.5 million or $0.016 per common share (“Common Share”) to shareholders on April 30, 2013. Sierra announced this dividend policy as a result of strong cash flows from its Yauricocha mine in Peru and operational improvements at the Bolivar and Cusi mines in Mexico.

• On March 11, 2013, the Company announced that J. Alberto Arias was appointed Chairman of the board of directors (“Board of Directors”), succeeding Mr. Steven Dean. Mr. Dean will continue to serve as a director of Sierra Metals while contributing as a member of several committees including the newly created Corporate Strategy Committee. Additionally, Mr. John S. Donnelly was appointed lead director for the Company.

• On March 11, 2013, the Company also submitted an application to list its common shares on the Toronto Stock Exchange (the “TSX”), Canada’s premier stock exchange. If the application is accepted by the TSX, the Company’s common shares will graduate to the TSX and such common shares will cease to be listed for trading on the TSX Venture Exchange (“TSX-V”).

• On March 26, 2013, the Company announced that the Board of Directors has approved a share repurchase program pursuant to a normal course issuer bid (“NCIB”) in the open market through the facilities of the TSX-V to be completed over the next twelve months. Haywood Securities will conduct the NCIB on behalf of the Company. Pursuant to the NCIB, the Company can repurchase up to of 7,886,873 of its common shares, which is the maximum number of shares permitted to be purchased under the TSX rules, and represents 5% of the 157,737,476 issued and outstanding shares of the Company as of March 26, 2013.

• On May 29, 2013 the Company announced that it received conditional approval to be listed on the Toronto Stock Exchange (the “TSX”), Canada’s premier stock exchange. Once final approval has been received by the TSX, the Company’s common shares will be listed in the TSX and such common shares will cease to be listed for trading on the TSX-V. The Company submitted the original application to be listed in the TSX on March 11, 2013.

Quality Assurance

The technical content of this news release has been approved by Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101 and Senior Vice President, Exploration, for Sierra Metals Inc.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on precious and base metals from its Yauricocha mine in Peru, and its Bolivar and Cusi mines in Mexico. In addition, Sierra Metals is exploring several precious and base metal targets in Peru and Mexico. Projects in Peru include Adrico (gold), Victoria (copper-silver) and Ipillo (polymetallic) at the Yauricocha Property in the province of Yauyos and the San Miguelito gold properties in Northern Peru. Projects in Mexico include Bacerac (silver) in the state of Sonora, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.

The Company’s shares trade on the Bolsa de Valores de Lima and TSX-V under the symbol “SMT”.

This press release does not constitute an offer to sell or solicitation of an offer to buy the securities in the United States or any other jurisdiction. The Common Shares will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Except for statements of historical fact contained herein, the information in this press release may constitute “forward-looking information” within the meaning of Canadian securities law. Other than statements of historical fact, all statements are “forward-looking statements”, which involve various known and unknown risk and uncertainties and other factors, including market conditions that may affect the Company’s ability to execute its current business plan.  Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.

¹ Cash costs are calculated to include cost of sales, treatment and refining charges, and selling expenses less depreciation, workers profit sharing and other non-cash provisions included in cost of sales.

SOURCE: Sierra Metals Inc.

For further information:

on Sierra Metals, please visit www.sierrametals.com or contact:

Daniel Tellechea
President & CEO
Sierra Metals Inc.
1 (866) 493?]9646

Matt Morrish
Director, Investor Relations
Sierra Metals Inc.
1 (866) 493?]9646