TORONTO, Jan. 18, 2017 /PRNewswire/ – Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") is pleased to report fourth quarter 2016 and full year 2016 production results as well as 2017 production and cost guidance. Production results featured the second highest level of annual and quarterly metal production in the Company's history. The Company was also pleased to report record annual consolidated throughput for 2016. The fourth quarter also featured the second highest level of quarterly throughput at its Yauricocha and Bolivar Mines and the second highest quarter of metal production in the history of the Yauricocha Mine.
Results are from Sierra Metals' three underground mines in Latin America: The Yauricocha polymetallic Mine in Peru and the Bolivar Copper mine and Cusi silver Mine in Mexico.
2016 Consolidated Production Highlights
- Silver equivalent production of 11.4 million ounces; a 4% increase from 2015; second highest in Company history
- Copper equivalent production of 79.5 million pounds; a 4% increase from 2015; second highest in Company history
- Total of 2 million tonnes processed; a 9% increase from 2015 production; and the highest throughput in Company history
- Completion of restructuring and implementation of operational improvements program at Yauricocha
- 2016 Guidance Achieved
Fourth Quarter 2016 Production Highlights
- Silver equivalent production of 3.2 million ounces; a 31% increase from Q4 2015
- Copper equivalent production of 21.2 million pounds; a 31% increase from Q4 2015
- Total of 517,705 tonnes processed; a 13% increase from Q4 2015 production
- Second highest quarterly throughput at both the Yauricocha and Bolivar Mines
- Commissioning of the new Mascota hoist at Yauricocha
In 2016 consolidated metal production increased by 4% compared to 2015 and represented the second highest level of annual metal production in the Company's history. During Q4 2016, consolidated metal production increased 31% compared to Q4 2015, and resulted in the achievement of the second highest level of quarterly metals production in the Company's history. The increase in metal production compared to Q4 2015 was due to higher throughput, head grades and recoveries at the Yauricocha Mine in Peru. This was partially offset by a decrease in head grades and recoveries at the Bolivar Mine, and the decrease in throughput, head grades and recoveries at the Cusi Mine.
Mark Brennan, President and CEO of Sierra Metals commented: "The Company ended 2016 with solid production performance despite a planned shutdown in November for the installation of a higher capacity hoist at the Yauricocha Mine which will significantly increase capacity moving forward. In addition, Sierra also continues to see substantial impact from the operational improvement programs implemented at the Yauricocha Mine which continued to contribute strongly to operational results this quarter."
He continued "At the Bolivar Mine in Mexico, the Company saw a significant increase in throughput but was hindered by lower grades which led to a minor reduction in copper equivalent production when compared to Q4 2015. The Company will focus on continuing to increase production volume while improving the value per tonne of ore mined at Bolivar in 2017. At Cusi, poor weather and significant rainfall caused flooding in ramps which led to stope unavailability resulting in lower production, however we will continue to seek improvement at Cusi with better grade control and selective mining practices."
He concluded, "The groundwork has been set for a seminal year at Sierra in 2017. The lengthy process of modernizing and implementing best operational practices has opened the door to the possibility that we will surpass the highest levels of EBITDA previously attained by the Company. Our ongoing brownfield exploration programs at all of our mines should lead to a significant improvement to our net asset value in the year ahead as well."
Consolidated Production Results
Consolidated Production | 3 Months Ended | 12 Months Ended | |||||
Dec 31, 2016 | Dec 31, 2015 | % Var. | Dec 31, 2016 | Dec 31, 2015 | % Var. | ||
Tonnes processed (mt) | 517,705 | 456,842 | 13% | 2,034,465 | 1,864,706 | 9% | |
Daily throughput | 5,917 | 5,221 | 13% | 5,813 | 5,328 | 9% | |
Silver ounces (000's) | 789 | 603 | 31% | 2,979 | 3,105 | -4% | |
Copper pounds (000's) | 6,153 | 5,493 | 12% | 23,390 | 23,197 | 1% | |
Lead pounds (000's) | 9,990 | 7,920 | 26% | 40,551 | 42,177 | -4% | |
Zinc pounds (000's) | 17,039 | 9,265 | 84% | 56,610 | 42,077 | 35% | |
Gold ounces | 1,867 | 2,201 | -15% | 8,604 | 9,066 | -5% | |
Silver equivalent ounces (000's)(1) | 3,194 | 2,444 | 31% | 11,952 | 11,439 | 4% | |
Copper equivalent pounds (000's)(1) | 21,233 | 16,250 | 31% | 79,463 | 76,051 | 4% | |
(1) 2017 Guidance silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz Au. | |||||||
(1) 2016 Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au. |
Yauricocha Mine, Peru
The Yauricocha mine processed a total of 897,169 tonnes in 2016 representing an 8% increase from 2015. The Mine also processed a total of 236,650 tonnes in Q4 2016 representing a 22% increase compared to Q4 2015. Higher metal production was driven by increased throughput, higher silver, copper and zinc head grades; higher recoveries of all metals, except gold, which were a consequence of higher head grades in the ore sources available to be mined in Q4 2016 versus Q4 2015 as the Esperanza Zone and the cuerpos chicos zones continued to contribute to the metal production.
For 2016 year over year silver production was 4% lower, lead production was 4% lower and gold production was 5% lower. This was offset by a 1% increase in copper production and a 35% increase in zinc production from 2015. The Company continues to see positive improvements from the restructuring at Yauricocha and the continuation of the Esperanza zone into the production schedule in Q4 2016 as evidenced by a 65% increase in silver equivalent production over Q4 2015. During Q4 2016 the Company also saw an increase in the production of all metals, except gold, with increases in production of silver 92%, copper 64%, zinc 81%, and lead 36%, during Q4 2016 compared to Q4 2015.
A summary of production from the Yauricocha Mine for Q4 2016 has been provided below:
Yauricocha Production | 3 Months Ended | 12 Months Ended | |||||
Dec 31, 2016 | Dec 31, 2015 | % Var. | Dec 31, 2016 | Dec 31, 2015 | % Var. | ||
Tonnes processed (mt) | 236,650 | 193,710 | 22% | 897,169 | 832,225 | 8% | |
Daily throughput | 2,705 | 2,214 | 22% | 2,563 | 2,378 | 8% | |
Silver grade (g/t) | 100.37 | 86.13 | 17% | 97.69 | 102.62 | -5% | |
Copper grade | 0.51% | 0.38% | 35% | 0.54% | 0.49% | 9% | |
Lead grade | 2.18% | 2.46% | -11% | 2.52% | 2.93% | -14% | |
Zinc grade | 3.63% | 2.48% | 46% | 3.18% | 2.57% | 24% | |
Gold Grade (g/t) | 0.59 | 0.63 | -6% | 0.64 | 0.70 | -8% | |
Silver recovery | 72.05% | 53.53% | 35% | 65.34% | 65.23% | 0% | |
Copper recovery | 64.75% | 64.94% | 0% | 59.26% | 61.68% | -4% | |
Lead recovery | 81.72% | 64.98% | 26% | 73.07% | 73.28% | 0% | |
Zinc recovery | 88.49% | 87.45% | 1% | 87.18% | 89.38% | -2% | |
Gold Recovery | 20.06% | 26.38% | -24% | 25.19% | 26.74% | -6% | |
Silver ounces (000's) | 550 | 287 | 92% | 1,841 | 1,791 | 3% | |
Copper pounds (000's) | 1,720 | 1,047 | 64% | 6,281 | 5,567 | 13% | |
Lead pounds (000's) | 9,295 | 6,814 | 36% | 36,440 | 39,430 | -8% | |
Zinc pounds (000's) | 16,776 | 9,265 | 81% | 54,805 | 42,077 | 30% | |
Gold ounces | 908 | 1,041 | -13% | 4,664 | 5,018 | -7% | |
Silver equivalent ounces (000's)(1) | 2,170 | 1,319 | 65% | 7,656 | 7,037 | 9% | |
Copper equivalent pounds (000's)(1) | 14,425 | 8,768 | 65% | 50,903 | 46,788 | 9% | |
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au. |
Bolivar Mine, Mexico
The Bolivar Mine processed 950,398 tonnes in 2016 representing another record for annual throughput at the Mine and represented a 14% increase over 2015. Bolivar had a strong quarter of throughput in Q4 2016 with 245,000 tonnes processed which was a 16% increase compared to Q4 2015. The higher throughput and higher recoveries helped offset the lower head grades encountered and resulted in just a 1% decrease in copper equivalent production in Q4 2016 compared to Q4 2015.
Metals production at the Bolivar Mine decreased in 2016 with copper production 3% lower, silver production 10% lower and gold production 7% lower when compared to 2015. In Q4 2016 Copper production was flat at 4.4 million pounds, silver production of 98,000 ounces decreased 4%, and gold production of 801 ounces decreased 4% compared to Q4 2015. The 1% decrease in metal production was driven by the lower head grades for all metals and lower copper recoveries, despite the 16% increase in throughput.
The Company's focus at Bolivar in 2017 will be on improving production volume with higher throughput, and higher recoveries by concentrating on the development and extraction of known mineralized areas within the Bolivar concessions.
A summary of production for the Bolivar Mine for Q4 2016 has been provided below:
Bolivar Production | 3 Months Ended | 12 Months Ended | |||||
Dec 31, 2016 | Dec 31, 2015 | % Var. | Dec 31, 2016 | Dec 31, 2015 | % Var. | ||
Tonnes processed (mt) | 245,000 | 211,311 | 16% | 950,398 | 830,447 | 14% | |
Daily throughput | 2,800 | 2,415 | 16% | 2,715 | 2,373 | 14% | |
Copper grade | 0.99% | 1.13% | -13% | 1.00% | 1.15% | -13% | |
Silver grade (g/t) | 15.53 | 19.37 | -20% | 16.72 | 20.57 | -19% | |
Gold grade (g/t) | 0.18 | 0.31 | -40% | 0.19 | 0.30 | -35% | |
Copper recovery | 83.03% | 84.29% | -1% | 81.73% | 84.02% | -3% | |
Silver recovery | 80.42% | 78.18% | 3% | 77.84% | 80.18% | -3% | |
Gold recovery | 55.62% | 40.04% | 39% | 50.55% | 40.49% | 25% | |
Copper pounds (000's) | 4,433 | 4,447 | 0% | 17,109 | 17,629 | -3% | |
Silver ounces (000's) | 98 | 103 | -4% | 398 | 440 | -10% | |
Gold ounces | 801 | 833 | -4% | 2,986 | 3,216 | -7% | |
Silver equivalent ounces (000's)(1) | 825 | 834 | -1% | 3,193 | 3,331 | -4% | |
Copper equivalent pounds (000's)(1) | 5,483 | 5,542 | -1% | 21,230 | 22,147 | -4% | |
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au. |
Cusi Mine, Mexico
Annual production at the Cusi mine was 186,898 tonnes which was 7% lower than 2015. Total ore processed of 36,055 tonnes during Q4 2016 decreased 30% compared to Q4 2015. Lower head grades and recoveries for all metals, combined with the lower throughput, resulted in a 32% decrease in metal production during Q4 2016 compared to Q4 2015.
Silver production of 740,000 ounces in 2016 decreased 15%, however gold production at 954 ounces increased 15% and lead production at 4.1 million pounds increased 50% over 2015. The Cusi Mine also began the production of Zinc in 2016 with annual production of 1.8 million pounds for the year. In the Q4-2016 silver production of 140,000 ounces decreased 34%, gold production of 158 ounces decreased 52%, while lead production of 0.7 million pounds decreased 37% compared to Q4 2015. The Mine also produced 263,000 pounds of zinc which was the fourth quarter of zinc production at Cusi. The lower throughput was the result of exceptionally poor weather encountered at Cusi during the last six months which caused flooding in various ramps within the mine which required additional pumping to be performed to de-water the ramps and resulted in the Company not having access to as many production stopes during the quarter.
A summary of production for the Cusi Mine for Q4 2016 has been provided below:
Cusi Production | 3 Months Ended | 12 Months Ended | |||||
Dec 31, 2016 | Dec 31, 2015 | % Var. | Dec 31, 2016 | Dec 31, 2015 | % Var. | ||
Tonnes processed (mt) | 36,055 | 51,821 | -30% | 186,898 | 202,033 | -7% | |
Daily throughput | 412 | 592 | -30% | 534 | 577 | -7% | |
Silver grade (g/t) | 172.70 | 175.20 | -1% | 171.78 | 175.88 | -2% | |
Gold grade (g/t) | 0.23 | 0.29 | -19% | 0.26 | 0.22 | 15% | |
Lead grade | 1.13% | 1.19% | -5% | 1.21% | 0.78% | 56% | |
Zinc grade | 1.04% | 0.00% | N.A. | 1.16% | 0.00% | N.A. | |
Silver recovery (flotation) | 70.04% | 73.00% | -4% | 71.66% | 76.46% | -6% | |
Gold recovery (lixiviation) | 58.16% | 67.91% | -14% | 61.82% | 57.22% | 8% | |
Lead recovery | 77.43% | 81.10% | -5% | 82.24% | 79.08% | 4% | |
Zinc recovery | 31.86% | 0.00% | N.A. | 37.72% | 0.00% | N.A. | |
Silver ounces (000's) | 140 | 213 | -34% | 740 | 873 | -15% | |
Gold ounces | 158 | 327 | -52% | 954 | 831 | 15% | |
Lead pounds (000's) | 695 | 1,106 | -37% | 4,110 | 2,747 | 50% | |
Zinc pounds (000's) | 263 | 0 | N.A. | 1,804 | 0 | N.A. | |
Silver equivalent ounces (000's)(1) | 199 | 292 | -32% | 1,103 | 1,070 | 3% | |
Copper equivalent pounds (000's)(1) | 1,324 | 1,940 | -32% | 7,330 | 7,116 | 3% | |
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au. |
2017 Production and Cost Guidance
The Company anticipates 2017 silver equivalent production will range between 11.5 to 13.5 million ounces. Copper equivalent production will range between 98.6 to 115.1 million pounds. The forecasted range includes increased production and higher recoveries at Yauricocha and Bolivar and increased throughput at Cusi.
"Sierra Metals has a significant amount of untapped potential for continued growth in volume, mill throughput and delivering increased ore value to the mills which will increase cash flow and at current metal prices, should lead the Company to surpass previous EBITDA records in 2017." stated Mark Brennan, President and CEO of Sierra Metals. The Company also expects to see continued growth in mineral resources and metals production and is continuing with a disciplined and well organized plan to unlock value and growth at all three Mines in 2017. Continued investment in our properties through brownfield exploration and key capital expenditures to improve infrastructure and equipment will lay the ground work for continued increases in cashflow, metals production, grade and resources for Sierra Metals in 2017 and beyond."
A table summarizing 2017 production guidance has been provided below:
2017 Guidance | 2016 Actual | |||
Low | High | |||
Silver ounces (000's) | 2,987 | 3,485 | 2,979 | |
Copper pounds (000's) | 31,050 | 36,200 | 23,390 | |
Lead pounds (000's) | 31,100 | 36,300 | 40,551 | |
Zinc pounds (000's) | 61,800 | 72,100 | 56,610 | |
Gold ounces | 7,800 | 9,100 | 8,604 | |
Silver equivalent ounces (000's) (1) | 11,534 | 13,454 | 11,952 | |
Copper equivalent pounds (000's) (1) | 98,642 | 115,066 | 79,463 | |
(1) 2017 Silver equivalent ounces & copper equivalnet pounds were calculated using the following metal prices: $19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz Au |
A mine by mine breakdown of 2017 production guidance, cash costs as well as all in sustaining costs ("ASIC") are included in the table below. Cash costs and AISC guidance is shown per payable silver equivalent ounce and copper equivalent pound.
Mine | Silver Eq Oz (M) | Copper Eq Lbs (M) | Cash Costs per | AISC ($)* per CuEqLb Sold |
Yauricocha (Ag Eq Oz) | 7.1 – 8.3 | 60.8 – 70.9 | $9.58/oz | $12.29/oz |
Bolivar (Cu Eq Oz) | 3.2 – 3.7 | 27.4 – 31.9 | $1.08/lb | $1.74/lb |
Cusi (Ag Eq Oz) | 1.2 – 1.4 | 10.5 – 12.3 | $10.90/oz | $19.66/oz |
*AISC includes Treatment and Refining Charges, Selling Costs, G&A Costs and Sustaining Capex | ||||
(1) 2017 Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $19.5/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz Au | ||||
2017 Capital Expenditures
In 2017 the Company plans to invest a total of $49.0 million on capital expenditures including $25.3 million for sustaining requirements, $23.7 million for expansion, growth projects and exploration expenses. This total represents a significant increase from 2016, however it will allow Sierra Metals to significantly grow mineral resources and increase production at all three projects which will provide increased cash flow and lower cash costs. This program will be funded by operating cashflow.
The 2017 budget includes a total of $8.6 million to be spent on property plant and equipment, $7.1 million towards underground development, $4.3 million in exploration and $29 million towards corporate projects including shaft deepening at the Yauricocha Mine and new tailings deposition facilities at the Bolivar & Cusi Mines. Management will continue to review metal prices and retains the option to adjust the 2017 budget should metal prices experience any dramatic changes in 2017.
A breakdown by Mine of the tonnage and grade, throughput and planned capital investments is shown below:
The Yauricocha Mine in Peru plans to process up to 1.0 million tonnes (2,850 tpd) in 2017. Sustaining Capex will be approximately $9.8 million and growth Capex will be approximately $6.9 million.
2017 major capital investments include:
- $5.5 million for deepening of the Yauricocha Shaft
- $1.4 million for the completion of the Yauricocha Tunnel
- $5.0 million for brownfield exploration and existing definition drilling and development
The Bolivar Mine in Mexico plans to process up to 1.1 million tonnes with initial production at 3,000 tpd with an objective to reach 3,500 tpd by year end in 2017. Sustaining Capex will be approximately $15.8 million and growth Capex will be approximately $3.5 million.
2017 major capital investments include:
- $6.1 million for tailings deposition facility expansion, move to dry stack application
- $4.9 million for equipment overhaul and replacement
- $4.1 million for brownfield exploration and existing definition drilling and development
The Cusi Mine in Mexico plans to process up to 221,000 tonnes (600 tpd) in 2017. Sustaining Capex will be approximately $8.4 million and growth Capex will be $0.3 million.
2017 major capital investments include:
- $2.6 million for tailings deposition facility
- $2.4 million for brownfield exploration and existing definition drilling and development
Quality Control
All technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
About Sierra Metals
Sierra Metals Inc. is Canadian based growing polymetallic mining company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico. The company recently completed a very successful operational improvements program at it Yauricocha mine and is now focused on completing a similar program at its Mexican operations to increase production volume, recoveries and modernize operations. Sierra continues to grow its mineral resources with several exciting brownfield opportunities such as the Esperanza Zone at the Yauricocha Mine which went from first discovery to mining in less than one year. The Company has several other brownfield exploration opportunities at all three Mines in Peru and Mexico within or very close to the existing mines which its actively exploring and hopes to daylight in the short-term. The company has large land packages at all three Mines with several regional highly prospective targets providing longer term exploration upside and mineral resource growth potential.
The Company's shares trade on the Lima Stock Exchange (Bolsa de Valores de Lima) and on the TSX under the symbol "SMT".
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. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events or results. These statements reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. 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 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.
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SOURCE Sierra Metals Inc.
