Sierra Metals announces first quarter 2013 financial results of its subsidiary Sociedad Minera Corona in Peru

TORONTO, April 30, 2013 /CNW/ - Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) ("Sierra") ("the Company") announces the filing of Sociedad Minera Corona S.A.'s ("Corona") unaudited Financial Statements and Management Discussion and Analysis ("MD&A") for the first quarter of 2013. The Company holds an interest of 81.8% in Corona. All amounts are presented in thousands of US dollars unless otherwise stated and have not been adjusted for the 18.2% non-controlling interest.

Daniel Tellechea, President and CEO of Sierra Metals, commented "The results of our subsidiary in Peru reflect cost pressures mainly driven by more aggressive mine development at the Yauricocha mine during the first quarter of 2013 and the appreciation of the Peruvian Sol relative to the US Dollar. The former will enable the mine to reduce its operating costs during the next 12 months. The acquisition of Yauricocha has continued to add substantial value to the Company in 2013, as the mine through its local corporate entity (Sociedad Minera Corona) paid a US$ 40 million dividend in first quarter of 2013. The Yauricocha property shows strong upside potential and the Company has started the development of a new shaft in the Central Mine Area. This project, combined with an aggressive exploration program to increase reserves and resources, will improve the production profile in Peru in the medium term".

The following table sets out select unaudited financial information for the first quarter of 2013 and 2012:

		Three months ended
(In thousands of US dollars, unless stated)		Mar 31, 2013	Mar 31, 2012
Revenue		33,285	40,054
EBITDA		17,225	21,624
Cash Flow from continuing operations		701	6,127
Income Taxes 1		(4,315)	(5,622)
Non-recurring gain on asset sale 1		-	9,954
Net Income		9,164	24,642
Cash Cost per oz of Ag (Yauricocha)	US$	(21.50)	(31.99)
Exchange Rate (PEN / US$) 2		2.574	2.683
(In thousands of US dollars)		Mar 31, 2013	Dec 31, 2012
Cash and cash equivalents		29,581	72,071
Assets		103,017	141,826
Liabilities		43,808	52,231
Net Debt 3		(18,581)	(61,071)
Equity		59,209	89,595
1 Includes a US$ 3.9 million reclassification from income taxes to gain on asset sale.
2 Peruvian Soles (PEN) per US Dollar (US$).
3 Consolidated debt minus cash and cash equivalents.

Corona's Financial Highlights

• Net income of US$ 9.1 million or US$0.255 per share for the first quarter of 2013 compared to US$ 24.6 million or US$ 0.685 per share for the same period in 2012. Note that the first quarter of 2012 results include a US$ 10.0 million non-recurring gain associated with the sale of the Huanchor hydroelectric asset.
• EBITDA of US$ 17.2 million for the first quarter of 2013 compared to US$ 21.6 million for the same period in 2012. The main drivers for the decline in EBITDA include: a decrease in revenue per tonne due to lower prices of copper, silver and gold, higher cash costs resulting from increases from higher costs of labor, consumables and third party services, especially in exploration activities, and the appreciation of the Peruvian sol relative to the US Dollar.
• Operating cash flows of US$ 0.7 million for the first quarter of 2013 compared to US$ 6.1 million for the same period in 2012. Lower EBITDA levels mainly drive the decrease in operating cash flow in the first quarter of 2013 compared to the same period in 2012. It is important to highlight that Corona's operating cash flows during the first quarter are usually lower than in the rest of the year. The main reason is working capital. During the first quarter of 2013 the Company paid US$ 7.8 million in profit sharing and US$ 2.0 million in tax adjustments. These two payments were provisioned as expenses during the 2012 fiscal year but were paid in the first quarter of 2013. Accordingly, the Company will provision these expenses during 2013 but will not make these payments again until the first quarter of 2014.
• Income taxes of US$ 4.3 million for the first quarter of 2013 compared to US$ 5.6 million in the same period of 2012. Income taxes in the first quarter of 2012 were $1.7 million and include a $3.9 million one-time deferred tax adjustment related to the sale of Huanchor hydroelectric asset. We have reclassified this one-time $3.9 million adjustment from income taxes to gain on asset sale on the table above.
• Revenues of US$ 33.3 million in the first quarter of 2013 compared to US$ 40.1 million for the same period in 2012. The main drivers include lower copper and silver prices, change in the production mix of the Company, and lower metal content in concentrates due to lower head grades.
• Cash and cash equivalents of US$ 29.6 million as of March 31, 2013 compared to US$ 72.1 million as of March 31, of 2012. The US$ 40.0 dividend paid during the first quarter of 2013 mainly drives the decrease in cash and cash equivalents.
• A negative silver ("Ag") cash cost of US$ 21.50 per ounce ("oz") at Yauricocha in the first quarter of 2013 compared to a negative cash cost of US$ 31.99 in the same period of 2012.

Corona's Operational Highlights

• Silver ("Ag") production of 474,601 oz in the first quarter of 2013 compared to 492,432 oz for the same period in 2012.
• Copper ("Cu") production of 2.2 million pounds ("lb") in the first quarter of 2013 compared to 2.6 million lb for the same period in 2012.
• Lead ("Pb") production of 8.4 million lb in the first quarter of 2013 compared to 7.8 million lb for the same period in 2012.
• Zinc ("Zn") production of 13.0 million lb in the first quarter of 2013 compared to 10.5 million lb for the same period in 2012.
• Gold ("Au") production from the Yauricocha Mine was 1,598 oz in the first quarter of 2013 and 3,025 oz for the same period in 2012.

The following table sets out production results for the first quarter ended March 31, 2013 and 2012:

	Three months ended
		Mar 31, 2013		Mar 31, 2012		% Var.
Silver (oz)		476,601		492,432		-3%
Copper (000 lb)		2,175		2,634		-17%
Lead (000 lb)		8,379		7,846		7%
Zinc (000 lb)		13,045		10,485		24%
Gold (000 lb)		1,598		3,025		-47%

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 Head of 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, its Bolivar mine and Cusi mine 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 TSXV 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 TSXV 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. 

 

SOURCE Sierra Metals Inc.

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