TORONTO, July 19, 2016 /PRNewswire/ – Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") reports second quarter production results featuring record mine ore throughput for the Company as well as at its Bolivar and Cusi Mines in Mexico and continued improvement at the Yauricocha Mine, with an increase in both ore throughput and metal production in Q2 2016 versus the two previous quarters.
The Company continued to make strong progress on development at its Esperanza discovery at Yauricocha during the quarter and anticipates production to commence early in Q3 as previously announced.
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.
Second Quarter Highlights
- Total tonnes processed of 503,988; a 4% increase over Q2 2015's record production
- Silver equivalent production of 3.0 million ounces; a 9% decrease from Q2 2015 record production
- Copper equivalent production of 19.7 million pounds; a 9% decrease from Q2 2015 record production
- Increase of 15% in silver equivalent production for the Company during Q2 2016 vs Q1 2016
- Increase of 24% in silver equivalent production at Yauricocha during Q2 2016 vs Q1 2016
- Record throughput at both the Bolivar and Cusi Mines during Q2 2016
During Q2 2016, consolidated metal production declined compared to Q2 2015's record production due to reduced plant throughput, lower head grades and lower recoveries at the Yauricocha Mine in Peru, as well as lower head grades and recoveries at the Bolivar Mine in Mexico. This was partially offset by an increase in throughput at the Bolivar Mine and an increase in throughput, head grades and recoveries of most metals at the Cusi Mine.
The Company has seen a significant improvement in operations at Yauricocha as we near completion of the restructuring process taking place at the mine. Silver equivalent production increased by 24% in Q2 versus Q1 2016 as the Company focused on the production of higher grade material at a reduced rate to maintain costs while maximizing profitability.
"Management is very pleased to see significant benefits from the operational improvements at the Yauricocha Mine continuing to have a strong impact on operational results. We anticipate improved consolidated results quarter over quarter in the current year." commented Mark Brennan, President and CEO ofSierra Metals. "In Mexico we are seeing strong prospects for increased throughput and grade at Bolivar in the second half of 2016 in addition to further reduced development costs and the benefit of higher grades at Cusi"
He continued, "The combined effect of optimizing our mining practices to reduce costs, implement best practices and modernize the Mines coupled with a very successful brownfield exploration and development program at our Yauricocha Mine and both Mines in Mexico, are anticipated to provide a significant improvement in the intrinsic value to our shareholders in the near term."
Consolidated Production Results
Consolidated Production | 3 Months Ended | 6 Months Ended | 2016 Guidance | ||||||||
Q2 2016 | Q1 2016 | % Var. | Q2 2015 | % Var. | H1 2016 | H1 2015 | % Var. | Low | High | ||
Tonnes processed (mt) | 503,988 | 476,220 | 6% | 483,374 | 4% | 980,207 | 955,781 | 3% | |||
Daily throughput | 5,760 | 5,443 | 6% | 5,524 | 4% | 5,601 | 5,462 | 3% | |||
Silver ounces (000's) | 780 | 588 | 33% | 911 | -14% | 1,368 | 1,811 | -24% | 2,600 | 3,200 | |
Copper pounds (000's) | 5,245 | 5,836 | -10% | 6,508 | -19% | 11,081 | 12,992 | -15% | 24,400 | 30,100 | |
Lead pounds (000's) | 10,655 | 8,255 | 29% | 11,116 | -4% | 18,911 | 23,232 | -19% | 26,700 | 32,900 | |
Zinc pounds (000's) | 14,218 | 10,919 | 30% | 13,019 | 9% | 25,137 | 23,480 | 7% | 43,200 | 53,400 | |
Gold ounces | 2,197 | 2,236 | -2% | 2,177 | 1% | 4,432 | 4,838 | -8% | 9,100 | 11,200 | |
Silver equivalent ounces (000's)(1) | 2,965 | 2,582 | 15% | 3,247 | -9% | 5,547 | 6,437 | -14% | 10,400 | 12,800 | |
Copper equivalent pounds (000's)(1) | 19,714 | 17,164 | 15% | 21,589 | -9% | 36,878 | 42,797 | -14% | 69,100 | 85,300 | |
(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. | |||||||||||
Yauricocha Mine, Peru
The Yauricocha Mine processed a total of 215,510 tonnes in Q2 2016 representing a 4% decrease compared to the historic record level of Q2 2015. Lower metal production was driven by lower plant throughput and lower silver, copper, lead and gold head grades from the polymetallic and lead-oxide concentrates. Lower recoveries of all metals, except gold, were a consequence of lower head grades in the ore sources available to be mined in Q2 2016 versus Q2 2015.
The Company saw positive improvements from the restructuring at Yauricocha in Q2 2016 with a 24% increase in silver equivalent production over Q1 2016. The Company also saw an increase in the production of all metals except copper with increases in production of silver 63%, zinc 33%, lead 38% and gold 16% with a reduction of 49% in copper production. Management believes metal production and associated economics will continue to improve as we near the completion of the restructuring program later this year.
A summary of production from the Yauricocha Mine for Q2 2016 has been provided below:
Yauricocha Production | 3 Months Ended | 6 Months Ended | |||||||
Q2 2016 | Q1 2016 | % Var. | Q2 2015 | % Var. | H1 2016 | H1 2015 | % Var. | ||
Tonnes processed (mt) | 215,510 | 207,580 | 4% | 224,988 | -4% | 423,090 | 444,957 | -5% | |
Daily throughput | 2,463 | 2,372 | 4% | 2,571 | -4% | 2,418 | 2,543 | -5% | |
Silver grade (g/t) | 107.34 | 74.21 | 45% | 109.77 | -2% | 91.09 | 112.48 | -19% | |
Copper grade | 0.39% | 0.75% | -48% | 0.71% | -45% | 0.57% | 0.61% | -7% | |
Lead grade | 2.93% | 2.29% | 28% | 2.79% | 5% | 2.62% | 3.01% | -13% | |
Zinc grade | 3.30% | 2.68% | 23% | 2.92% | 13% | 2.99% | 2.67% | 12% | |
Gold Grade (g/t) | 0.64 | 0.63 | 2% | 0.65 | -1% | 0.64 | 0.72 | -12% | |
Silver recovery | 62.26% | 57.19% | 9% | 72.61% | -14% | 60.23% | 70.01% | -14% | |
Copper recovery | 51.98% | 54.23% | -4% | 58.15% | -11% | 53.44% | 62.54% | -15% | |
Lead recovery | 68.49% | 66.17% | 4% | 77.58% | -12% | 67.50% | 76.20% | -11% | |
Zinc recovery | 87.53% | 83.98% | 4% | 90.01% | -3% | 85.97% | 89.62% | -4% | |
Gold Recovery | 27.79% | 25.33% | 10% | 26.24% | 6% | 26.60% | 27.41% | -3% | |
Silver ounces (000's) | 463 | 283 | 63% | 577 | -20% | 746 | 1,127 | -34% | |
Copper pounds (000's) | 959 | 1,863 | -49% | 2,037 | -53% | 2,822 | 3,749 | -25% | |
Lead pounds (000's) | 9,550 | 6,944 | 38% | 10,751 | -11% | 16,494 | 22,489 | -27% | |
Zinc pounds (000's) | 13,708 | 10,281 | 33% | 13,019 | 5% | 23,989 | 23,480 | 2% | |
Gold ounces | 1,236 | 1,062 | 16% | 1,232 | 0% | 2,299 | 2,819 | -18% | |
Silver equivalent ounces (000's)(1) | 1,852 | 1,496 | 24% | 2,152 | -14% | 3,348 | 4,176 | -20% | |
Copper equivalent pounds (000's)(1) | 12,314 | 9,948 | 24% | 14,308 | -14% | 22,261 | 27,764 | -20% | |
(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. | |||||||||
Esperanza Discovery
During the first quarter Sierra announced the discovery of a new high grade sulfide zone, referred to as the "Esperanza" zone, located 100 meters along strike from current mining activities. The discovery has returned the thickest sulfide intercepts in the 60 year mining history at Yauricocha and comes as part of ongoing drill testing of priority targets at the Yauricocha Mine (please see news release dated January 28, 2016).
Since discovery of the zone in 2015, 54 holes (9,856 meters) have been completed. A total of 39 holes (6,674 meters) have been completed to date in 2016 (please see press release dated May 24, 2016), including 35 delineation holes (5,528 meters) and 4 additional exploration holes (1,146 meters). The current strike length of the zone is approximately 250 meters and the vertical extent of the zone is approximately 250 meters. The mineralized zone remains open at depth to the north and south and additional exploration drilling in these areas is currently underway having established drilling stations at the 1070 level versus the previous drilling at the 870 level.
The Company is currently in the final stages of completing an NI 43-101 Technical Report to confirm reserves and resources for Yauricocha that will include the new Esperanza discovery. Publication of the report is imminent.
Bolivar Mine, Mexico
Bolivar had another quarter of record plant throughput in Q2 2016 of 236,252 tonnes which was a 13% increase compared to Q2 2015. Despite the record throughput, lower head grades for all metals and lower recoveries for all metals, except gold, were encountered which resulted in a 5% decrease in copper equivalent production in Q2 2016 compared to Q2 2015.
Copper production of 4.3 million pounds decreased 4%, silver production of 106,487 ounces decreased 6% and gold production of 743 ounces decreased 8% in Q2 2016 compared to Q2 2015. The decrease in metal production was driven by the lower head grades and recoveries of all metals, except gold.
The Company expects to see improved production as a result of higher throughput, better head grades and higher recoveries throughout the year by concentrating on known mineralized areas such as El Gallo.
A summary of production for the Bolivar Mine for Q2 2016 has been provided below:
Bolivar Production | 3 Months Ended | 6 Months Ended | |||||||
Q2 2016 | Q1 2016 | % Var. | Q2 2015 | % Var. | H1 2016 | H1 2015 | % Var. | ||
Tonnes processed (mt) | 236,252 | 218,886 | 8% | 209,459 | 13% | 455,138 | 412,818 | 10% | |
Daily throughput | 2,700 | 2,502 | 8% | 2,394 | 13% | 2,601 | 2,359 | 10% | |
Copper grade | 1.00% | 1.06% | -6% | 1.14% | -12% | 1.03% | 1.19% | -13% | |
Silver grade (g/t) | 18.51 | 18.37 | 1% | 20.40 | -9% | 18.44 | 22.84 | -19% | |
Gold grade (g/t) | 0.20 | 0.27 | -23% | 0.31 | -33% | 0.23 | 0.31 | -24% | |
Copper recovery | 82.54% | 77.69% | 6% | 85.06% | -3% | 80.13% | 85.53% | -6% | |
Silver recovery | 75.76% | 75.40% | 0% | 82.62% | -8% | 75.59% | 83.18% | -9% | |
Gold recovery | 48.07% | 45.99% | 5% | 39.11% | 23% | 46.93% | 42.45% | 11% | |
Copper pounds (000's) | 4,286 | 3,973 | 8% | 4,471 | -4% | 8,260 | 9,242 | -11% | |
Silver ounces (000's) | 106 | 97 | 9% | 114 | -6% | 204 | 252 | -19% | |
Gold ounces | 743 | 859 | -14% | 804 | -8% | 1,603 | 1,723 | -7% | |
Silver equivalent ounces (000's)(1) | 806 | 759 | 6% | 846 | -5% | 1,565 | 1,770 | -12% | |
Copper equivalent pounds (000's)(1) | 5,362 | 5,046 | 6% | 5,623 | -5% | 10,408 | 11,770 | -12% | |
(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
Total ore processed of 52,226 tonnes during Q2 2016 increased 7% compared to Q2 2015. Higher head grades for all metals and higher recoveries for all metals, except silver, as well as the start of zinc concentrate production from the plant, during Q1 2016, contributed to the 23% increase in silver equivalent production.
Silver production of 210,706 ounces decreased 5%, gold production of 217 ounces increased 54%, while lead production of 1.1 million pounds increased 203% compared to Q2 2015. The Mine also produced 0.5 million pounds of zinc which was the second quarter of zinc production at Cusi.
A summary of production for the Cusi Mine for Q2 2016 has been provided below:
Cusi Production | 3 Months Ended | 6 Months Ended | |||||||
Q2 2016 | Q1 2016 | % Var. | Q2 2015 | % Var. | H1 2016 | H1 2015 | % Var. | ||
Tonnes processed (mt) | 52,226 | 49,753 | 5% | 48,928 | 7% | 101,979 | 98,006 | 4% | |
Daily throughput | 597 | 569 | 5% | 559 | 7% | 583 | 560 | 4% | |
Silver grade (g/t) | 181.50 | 174.38 | 4% | 179.58 | 1% | 178.02 | 176.52 | 1% | |
Gold grade (g/t) | 0.23 | 0.29 | -23% | 0.18 | 23% | 0.26 | 0.19 | 36% | |
Lead grade | 1.19% | 1.41% | -16% | 0.46% | 160% | 1.29% | 0.46% | 183% | |
Zinc grade | 1.15% | 1.38% | -17% | 0.00% | N.A. | 1.26% | 0.00% | N.A. | |
Silver recovery | 69.14% | 74.16% | -7% | 78.22% | -12% | 71.54% | 77.68% | -8% | |
Gold recovery | 57.12% | 66.84% | -15% | 48.92% | 17% | 62.49% | 49.41% | 26% | |
Lead recovery | 80.97% | 84.92% | -5% | 74.32% | 9% | 83.07% | 75.12% | 11% | |
Zinc recovery | 38.53% | 42.02% | -8% | 0.00% | N.A. | 40.39% | 0.00% | N.A. | |
Silver ounces (000's) | 211 | 207 | 2% | 221 | -5% | 418 | 432 | -3% | |
Gold ounces | 217 | 314 | -31% | 142 | 54% | 531 | 297 | 79% | |
Lead pounds (000's) | 1,105 | 1,312 | -16% | 365 | 203% | 2,417 | 742 | 226% | |
Zinc pounds (000's) | 510 | 638 | -20% | 0 | N.A. | 1,147 | 0 | N.A. | |
Silver equivalent ounces (000's)(1) | 307 | 326 | -6% | 249 | 23% | 633 | 491 | 29% | |
Copper equivalent pounds (000's)(1) | 2,038 | 2,170 | -6% | 1,658 | 23% | 4,209 | 3,262 | 29% | |
(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. | |||||||||
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 a Canadian mining company focused on production of precious and base metals from its Yauricocha Mine in Peru, and its Bolivar Mineand Cusi Mine in Mexico. In addition, Sierra Metals is exploring several precious and base metals 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 inNorthern Peru. Projects in Mexico include Bacerac (silver) in the state of Sonora and La Verde (gold) at the Batopilas Property in the state of Chihuahua.
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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