Sierra Metals Reports Another Quarter of Increased Operating and Financial Performance

(All $ figures reported in USD)

• Revenue from metals payable of $62.7 million in Q2 2023, a 25% increase from Q2 2022.
• Adjusted EBITDA(1) of $13.5 million in Q2 2023, significantly higher than the Adjusted EBITDA(1) of $1.4 million in Q2 2022.
• Operating cash flows before movements in working capital(1) of $11.6 million in Q2 2023, compared to $(1.6) million Q2 2022.
• Net income attributable to shareholders in Q2 2023 was $1.6 million versus a loss of $15.3 million in Q2 2022.
• Copper equivalent production of 21.7 million pounds in Q2 2023; a 22% increase from Q2 2022.
• Consolidated cash costs per copper equivalent payable pound(1) in Q2 2023 of $2.11 and consolidated All-In Sustaining Costs per equivalent payable pound (“AISC”)(1) of $3.64 were 15% and 8% lower, respectively, than the same quarter of 2022.

(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.

Management will host a conference call and webcast to discuss Q2 2023 Results today, August 14, 2023, at 11:00 AM (EDT). Click here to register.

Sierra Metals Inc. (TSX: SMT | OTC: SMTSF) ("Sierra Metals" or "the Company") today reported financial results for the three-month (“Q2”) and six-month (“H1”) period ended June 30, 2023, showing total revenues of $62.7 million and adjusted EBITDA(1) of $13.5 million on throughput of 702,052 tonnes and metal production of 21.7 million copper equivalent pounds in Q2 2023.

Ernesto Balarezo Valdez, CEO of Sierra Metals, commented, “The second quarter of 2023 delivered strong operating and financial performance. Our Bolivar mine had record copper equivalent production for the quarter and far exceeded our expectations on costs. Our other core operation, the Yauricocha mine, continued its positive trend of quarter-over-quarter production increases. Both operations still have room for improvements, especially at Yauricocha where we are on track to obtain, by year-end, all required permits needed to operate below the 1120 level, which will allow us to mine in a larger ore body. As a result of our strong first half of 2023, we are well on our way to meeting our 2023 production guidance. Overall, we are very encouraged with the momentum we are building across our business.”

(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.

Q2 2023 Consolidated Financial Summary

The information provided below are excerpts from the Company’s Q2 2023 financial statements and Management’s Discussion and Analysis, which are available on the Company's website (www.SierraMetals.com) and on SEDAR (www.sedar.com) under the Company’s profile.

(In thousands of dollars, except per share and cash cost amounts, consolidated figures unless noted otherwise)

 

 

 

Var%

Var%

Six months ended June 30,

Q2 2023

Q1 2023

Q2 2022

vs Q2 2022

vs Q1 2023

 

2023

 

 

2022

 

Operating

 

Ore Processed / Tonnes Milled

 

702,052

 

 

577,284

 

 

640,181

 

10%

22%

 

1,279,336

 

 

1,230,911

Silver Ounces Produced (000's)

 

740

 

 

622

 

 

608

 

22%

19%

 

1,362

 

 

1,342

 

Copper Pounds Produced (000's)

 

10,459

 

 

8,285

 

 

8,334

 

25%

26%

 

18,744

 

 

14,658

 

Lead Pounds Produced (000's)

 

4,256

 

 

3,060

 

 

3,333

 

28%

39%

 

7,316

 

 

7,549

 

Zinc Pounds Produced (000's)

 

12,228

 

 

10,579

 

 

10,426

 

17%

16%

 

22,807

 

 

20,918

 

Gold Ounces Produced

 

4,442

 

 

3,910

 

 

2,622

 

69%

14%

 

8,352

 

 

4,545

Copper Equivalent Pounds Produced (000's)1

 

21,705

 

 

18,009

 

 

17,794

 

22%

21%

 

39,729

 

 

33,670

 

 

 

 

 

 

 


Cash Cost per Tonne Processed

 $

60.78

 

 $

61.60

 

 $

65.21

 

-7%

-1%

 $

61.15

 

 $

63.34

 

Cash Cost per CuEqLb2

 $

2.11

 

 $

2.12

 

 $

2.47

 

-15%

-1%

 $

2.11

 

 $

2.92

 

AISC per CuEqLb2

 $

3.64

 

 $

3.28

 

 $

3.94

 

-8%

11%

 $

3.48

 

 $

4.71

 

 

 

 

 

 

 


Cash Cost per CuEqLb (Yauricocha)2

 $

2.29

 

 $

2.05

 

 $

2.06

 

11%

12%

 $

2.16

 

 $

2.12

 

AISC per CuEqLb (Yauricocha)2

 $

3.97

 

 $

3.12

 

 $

3.39

 

17%

27%

 $

3.54

 

 $

3.53

 

Cash Cost per CuEqLb (Bolivar)2

 $

1.62

 

 $

1.85

 

 $

3.39

 

-52%

-12%

 $

1.71

 

 $

3.87

 

AISC per CuEqLb (Bolivar)2

 $

3.02

 

 $

3.10

 

 $

5.49

 

-45%

-2%

 $

3.06

 

 $

6.26

 

Cash Cost per AgEqOz (Cusi)2

 $

29.17

 

 $

23.02

 

 $

24.84

 

17%

27%

 $

25.91

 

 $

17.83

 

AISC per AgEqOz (Cusi)2

 $

38.83

 

 $

29.80

 

 $

33.83

 

15%

30%

 $

34.05

 

 $

25.25

 

Financial

 

 

 

 

 

Revenues

 $

62,665

 

 $

58,526

 

 $

49,941

 

25%

7%

 $

121,191

 

 $

107,182

 

Adjusted EBITDA2

 $

13,526

 

 $

15,205

 

 $

1,413

 

857%

-11%

 $

28,731

 

 $

17,401

 

Operating cash flows before movements in working capital

 $

11,588

 

 $

12,851

 

 $

(1,630

)

811%

-10%

 $

24,439

 

 $

9,071

 

Adjusted net income (loss) attributable to shareholders2

 $

4,308

 

 $

4,746

 

 $

(11,631

)

137%

-9%

 $

9,054

 

 $

(5,686

)

Net income (loss) attributable to shareholders

 $

1,638

 

 $

2,053

 

 $

(15,266

)

111%

-20%

 $

3,691

 

 $

(14,897

)

Cash and cash equivalents

 $

4,393

 

 $

3,864

 

 $

16,404

 

-73%

14%

 $

4,393

 

 $

16,404

 

Working capital 3

 $

(88,431

)

 $

(83,001

)

 $

(6,426

)

-1276%

7%

 $

(88,431

)

 $

(6,426

)

(1) Copper equivalent pounds were calculated using the following realized prices:

Q2 2023: $24.17/oz Ag, $3.99/lb Cu, $1.16/lb Zn, $0.96/lb Pb, $1,977/oz Au.

Q1 2023: $22.57/oz Ag, $4.06/lb Cu, $1.42/lb Zn, $0.97/lb Pb, $1,891/oz Au.

Q2 2022: $22.65/oz Ag, $4.30/lb Cu, $1.79/lb Zn, $1.00/lb Pb, $1,872/oz Au.

H1 2023: $23.37/oz Ag, $4.02/lb Cu, $1.29/lb Zn, $0.96/lb Pb, $1,934/oz Au.

H1 2022: $23.30/oz Ag, $4.42/lb Cu, $1.74/lb Zn, $1.03/lb Pb, $1,873/oz Au.

(2) This is a non-IFRS performance measure, see Non-IFRS Performance Measures section of this press release.

(3) Despite the successful refinancing of part of the corporate credit facility and improved operational performance, the Company continues to be in breach of some of its debt covenants, since these are calculated on a rolling four-quarter basis. Hence the working capital continues to be negative due to the result of the reclassification of the long-term portion of the corporate facility and term loan to current.

Revenue from metals payable was $62.7 million in Q2 2023, representing an increase of 25% over the revenue in Q2 2022 of $49.9 million and a 7% increase over the revenue in Q1 2023 of $58.5 million. The increase in revenue was largely driven by higher metal sales at the Bolivar mine, which recorded a 151% increase in copper equivalent sales compared to Q2 2022 and a 45% increase over Q1 2023.

The Yauricocha Mine had a cash cost per copper equivalent payable pound1 of $2.29 (Q2 2022 - $2.06), and an AISC per copper equivalent payable pound1 of $3.97 (Q2 2022 - $3.39) for Q2 2023. The increase in unit cash costs and AISC was mainly due to the 27% decrease in copper equivalent payable pounds as compared to Q2 2022.

(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.

Bolivar’s cash cost per copper equivalent payable pound1 was $1.62 (Q2 2022 - $3.39), and AISC per copper equivalent payable pound1 was $3.02 (Q2 2022 - $5.49) for Q2 2023 due to a 25% decrease in operating costs per tonne combined with a 151% increase in copper equivalent payable pounds during the quarter as compared to Q2 2022.

The Cusi Mine, which the Company has classified as non-core, had Q2 2023 cash cost per silver equivalent payable ounce1 increase to $29.17 from $24.84 in Q2 2022 as a result of higher operating costs per tonne, largely attributable to lower throughput. Silver equivalent payable ounces declined 22% to 203 thousand ounces further impacting cash costs, and AISC per silver equivalent payable ounce1, which was $38.83 for Q2 2023 or 15% higher than Q2 2022.

Adjusted EBITDA(1) increased to $13.5 million for Q2 2023 from $1.4 million in the same quarter of 2022, driven by higher revenues, attributable to higher production and improved operating costs at the Bolivar Mine during Q2 2023.

Net income attributable to shareholders for Q2 2023 was $1.6 million (Q2 2022: a loss of $15.3 million) or $0.01 per share (basic and diluted) (Q2 2022: $0.00).

Cash flow generated from operating activities before movements in working capital of $11.6 million for Q2 2023 as compared to $1.6 million of cash used in operating activities in Q2 2022. The increase resulted from higher revenues during the quarter.

Cash and cash equivalents of $4.4 million and working capital of $(88.4) million as at June 30, 2023 compared to $5.1 million and $(84.4) million, respectively, at the end of 2022. Cash and cash equivalents decreased during H1 2023 as the $21.8 million used in investing activities and $6.9 million of cash used in financing activities exceeded the cash generated from operating activities of $27.9 million.

(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.

The following table displays average realized metal prices information for Q2 2023 and H1 2023 in comparison the same periods of 2022:

Realized Metal Prices

Six months ended June 30,

(In US dollars)

Q2 2023

Q2 2022

Variance %

2023

2022

Variance %

 

 

 

 

 
 


Silver (oz)

 $

24.17

 $

22.65

7%

 $

23.37

 $

23.30

0

%

Copper (lb)

 $

3.99

 $

4.30

-7%

 $

4.02

 $

4.42

-9

%

Zinc (lb)

 $

1.16

 $

1.79

-35%

 $

1.29

 $

1.74

-26

%

Lead (lb)

 $

0.96

 $

1.00

-4%

 $

0.96

 $

1.03

-7

%

Gold (oz)

 $

1,977

 $

1,872

6%

 $

1,934

 $

1,873

3

%

Outlook 2023

The Company is on-track to meet its 2023 production guidance, and has amended Yauricocha’s cost guidance for the remainder of the year (previously announced on March 28, 2023). Most notably, the Company expects slightly higher AISC costs at Yauricocha to be partially compensated by better than expected costs at Bolivar for the remainder of 2023. The table below summarizes the updated 2023 guidance from the Yauricocha and Bolivar mines as the Cusi mine has been classified as non-core and has been excluded from guidance.

Production

2023 Guidance (1)

2023 H1 (1)

 

Low

High

Actual

Silver (000 oz)

1,500

1,700

912

Copper (000 lbs) 

37,300

42,400

18,744

Lead (000 lbs)

14,000

15,400

6,708

Zinc (000 lbs) 

46,000

50,500

22,807

Gold (oz)

13,500

15,400

8,102

Copper equivalent pounds (000's) (2)

74,300

83,300

38,536

 
 
 
 


(1) 2023 Production guidance and actual production for H1 2023 exclude production from the Cusi mine, which the Company considers as a non-core asset.


(2) 2023 metal equivalent guidance was calculated using the following prices: $21.03/oz Ag, $3.55/lb Cu, $1.35/lb Zn, $0.93/lb Pb and $1,741/oz Au. Actual copper equivalent pounds produced have been recalculated using the same price for comparison purposes

Cost Guidance

 

 

 

 

 

Actual for H1 2023

 

 

Equivalent Production 

Cash costs range

AISC(2) range 

Copper Eq Lbs

Cash costs

AISC(2)

Mine

 

Range (1)

 per CuEqLb

 per CuEqLb

('000)

 per CuEqLb

 per CuEqLb

 
 
 
 
 
 
 
 


Yauricocha
Copper Eq Lbs ('000)
40,000 - 44,000
$1.81 - $1.88
$3.50 - $3.60

20,153

$2.16

$3.54

Bolivar
Copper Eq Lbs ('000)
34,500 - 39,500
$1.92 - $2.05
$3.02 - $3.25

18,383

$1.71

$3.06

 
 
 
 
 
 
 
 


(1) 2023 metal equivalent guidance was calculated using the following prices: $21.03/oz Ag, $3.55/lb Cu, $1.35/lb Zn, $0.93/lb Pb and $1,741/oz Au. Actual copper equivalent pounds produced have been recalculated using the same price for comparison purposes.


(2) AISC includes treatment and refining charges, selling costs, G&A costs and sustaining capital expenditure

Management continues to review performance throughout the year, while exploring value enhancing opportunities.

Q2 2023 Operating Highlights

The Company reported Q2 2023 production results on July 25, 2023. A summary follows below:

Yauricocha Mine, Peru

Throughput at the Yauricocha Mine for Q2 2023 was 244,315 tonnes, 11% higher than in Q1 2023, given that the Company has been able to maximize the extraction above 1120 level. However, when compared to Q2 2022, throughput is 23% lower. This anticipated decline was due to the continued depletion of the ore above the 1120 level. Copper equivalent pound production for Q2 2023 was 21% lower than Q2 2022 as the reduced throughput was partially offset by higher grades of lead, zinc and silver coming from the high-grade small ore bodies. Copper and gold grades declined due to the lower contribution from the Esperanza zone.

When compared to Q1 2023, there was a 6% increase in the copper equivalent production during Q2 2023, as the higher throughput was partially offset by the impact of lower copper grades, and recoveries for copper and silver.

Bolivar Mine, Mexico

Operating at 4,640 tonnes per day during Q2 2023, the Bolivar Mine achieved 405,987 tonnes of throughput, an increase of 36% and 58% over Q1 2023 and Q2 2022 respectively, attributable to substantial improvements in ventilation and drainage, which allowed for more meters of production drilling and better access to the mining zones. Grades were higher for all metals in comparison with Q1 2023 and Q2 2022, except for a slight decrease in gold grades as compared to Q1 2023. The increase in grades was effectively the direct result of mining in the Bolivar NW zone.

In Q2 2023, copper equivalent production was a record 10.7 million pounds, as the mine recorded an increased production for all metals. Copper, silver and gold production for Q2 2023 was up 139%, 149% and 187%, respectively, as compared to Q2 2022.

Cusi Mine, Mexico

The non-core Cusi Mine had lower Q2 2023 throughput and was negatively impacted by the availability of mining equipment and floodings during the quarter. Operating at 591 tonnes per day, the Cusi mine processed 51,750 tonnes, which was 12% lower than Q1 2023 and 22% lower than Q2 2022. Higher silver and lead grades combined with improved gold recoveries partially offset the impact of lower throughput resulting in silver equivalent production of 241 thousand ounces during Q2 2023, which was 5% and 15% below the silver equivalent production achieved in Q1 2023 and Q2 2022 respectively.

Conference Call and Webcast

Sierra Metals' senior management will host a conference call and webcast to discuss the Company's financial and operating results for the three months ended June 30, 2023. Details are as follows:

Date: 

August 14, 2023

Time: 

11:00 am (Eastern)

Webcast:

https://services.choruscall.ca/links/sierrametalsq22023.html

Telephone:

 
Canada/USA (toll free): 1-800-319-4610



 
Other: 1-416-915-3239

The webcast, along with presentation slides, will be archived for 180 days on www.sierrametals.com.

Non-IFRS Performance Measures

The non-IFRS performance measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers.

Non-IFRS reconciliation of Adjusted EBITDA

EBITDA is a non-IFRS measure that represents an indication of the Company’s continuing capacity to generate earnings from operations before taking into account management’s financing decisions and costs of consuming capital assets, which vary according to their vintage, technological currency, and management’s estimate of their useful life. EBITDA comprises revenue less operating expenses before interest expense (income), property, plant and equipment amortization and depletion, and income taxes.

Adjusted EBITDA has been included in this document. Under IFRS, entities must reflect in compensation expense the cost of share-based payments. In the Company’s circumstances, share-based payments involve a significant accrual of amounts that will not be settled in cash but are settled by the issuance of shares in exchange for cash. As such, the Company has made an entity specific adjustment to EBITDA for these expenses. The Company has also made an entity-specific adjustment to the foreign currency exchange (gain)/loss. The Company considers cash flow before movements in working capital to be the IFRS performance measure that is most closely comparable to adjusted EBITDA.

The following table provides a reconciliation of Adjusted EBITDA to the condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022:

Three months ended June 30,

Six months ended June 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

Net income

 $

1,073

 

 $

(15,740

)

 $

3,212

 

 $

(13,610

)

Adjusted for:

 

 

 


Depletion and depreciation

 

9,267

 

 

9,453

 

 

16,810

 

 

18,616

 

Interest expense and other finance costs

 

2,788

 

 

950

 

 

4,987

 

 

1,717

 

NRV adjustments on inventory

 

1,079

 

 

2,677

 

 

1,555

 

 

5,218

 

Share-based payments

 

86

 

 

131

 

 

188

 

 

326

 

Costs related to COVID

 

-

 

 

273

 

 

-

 

 

1,584

 

Foreign currency exchange and other provisions

 

689

 

 

(301

)

 

2,061

 

 

1,562

 

Income taxes

 

(1,456

)

 

3,970

 

 

(82

)

 

1,988

 

Adjusted EBITDA

 $

13,526

 

 $

1,413

 

 $

28,731

 

 $

17,401

 

Non-IFRS reconciliation of Adjusted Net Income

The Company has included the non-IFRS financial performance measure of Adjusted Net Income, defined by management as the net income attributable to shareholders shown in the statement of earnings plus the non-cash depletion charge due to the acquisition of Corona and the corresponding deferred tax recovery and certain non-recurring or non-cash items such as share-based compensation and foreign currency exchange (gains) losses. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors may want to use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance in accordance with IFRS.

The following table provides a reconciliation of Adjusted Net Income to the condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022:

Three months ended June 30,

Six months ended June 30,

(In thousands of United States dollars)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

Net income attributable to shareholders

 $

1,638

 

 $

(15,266

)

 $

3,691

 

 $

(14,897

)

Non-cash depletion charge on Corona's acquisition

 

1,175

 

 

1,696

 

 

2,245

 

 

3,100

 

Deferred tax recovery on Corona's acquisition depletion charge

 

(359

)

 

(568

)

 

(686

)

 

(995

)

NRV adjustments on inventory

 

1,079

 

 

2,677

 

 

1,555

 

 

5,218

 

Share-based compensation

 

86

 

 

131

 

 

188

 

 

326

 

Foreign currency exchange loss

 

689

 

 

(301

)

 

2,061

 

 

1,562

 

Adjusted net income attributable to shareholders 

 $

4,308

 

 $

(11,631

)

 $

9,054

 

 $

(5,686

)

Cash cost per silver equivalent payable ounce and copper equivalent payable pound

The Company uses the non-IFRS measure of cash cost per silver equivalent ounce and copper equivalent payable pound to manage and evaluate operating performance. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

AISC per silver equivalent payable ounce and copper equivalent payable pound

AISC is a non‐IFRS measure and was calculated based on guidance provided by the World Gold Council (“WGC”) in June 2013. WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures.

Sierra Metals believes AISC is a more comprehensive measure than cash cost per ounce/pound for the Company’s consolidated operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver and copper from its current operations.

The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements. Sustaining capital expenditures excludes all expenditures at the Company’s new projects and certain expenditures at current operations which are deemed expansionary in nature.”

Consolidated AISC includes total production cash costs incurred at the Company’s mining operations, including treatment and refining charges and selling costs, which forms the basis of the Company’s total cash costs. Additionally, the Company includes sustaining capital expenditures and corporate general and administrative expenses. AISC by mine does not include certain corporate and non‐cash items such as general and administrative expenses and share-based payments. The Company believes that this measure represents the total sustainable costs of producing silver and copper from current operations and provides the Company and other stakeholders of the Company with additional information of the Company’s operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver and copper production from current operations, new project capital and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.

The following table provides a reconciliation of cash costs to cost of sales, as reported in the Company’s condensed interim consolidated statement of income for the three and six months ended June 30, 2023 and 2022:

Three months ended

Three months ended

(In thousand of US dollars, unless stated)
 

June 30, 2023

June 30, 2022

Yauricocha

Bolivar

Cusi

Consolidated

Yauricocha

Bolivar

Cusi

Consolidated

Cash Cost per Tonne of Processed Ore

 

 
 
 
 
 
 
 
 


Cost of Sales
 

24,630

 

19,439

 

6,534

 

50,603

 

29,779

 

16,722

 

7,435

 

53,936

 

Reverse: Workers Profit Sharing
 

-

 

-

 

-

 

-

 

(617

)

-

 

-

 

(617

)

Reverse: D&A/Other adjustments
 

(5,648

)

(3,414

)

(624

)

(9,686

)

(5,664

)

(3,346

)

(1,001

)

(10,011

)

Reverse: Variation in Inventory
 

718

 

850

 

186

 

1,754

 

(1,522

)

823

 

(862

)

(1,561

)

Total Cash Cost

 

19,700

 

16,875

 

6,096

 

42,671

 

21,976

 

14,199

 

5,572

 

41,747

 

Tonnes Processed
 

244,315

 

405,987

 

51,750

 

702,052

 

317,087

 

256,372

 

66,721

 

640,180

 

Cash Cost per Tonne Processed

US$

80.63

 

41.57

 

117.80

 

60.78

 

69.31

 

55.38

 

83.51

 

65.21

 

Six months ended 

Six months ended 

(In thousand of US dollars, unless stated)
 

June 30, 2023

June 30, 2022

Yauricocha

Bolivar

Cusi

Consolidated

Yauricocha

Bolivar

Cusi

Consolidated

Cash Cost per Tonne of Processed Ore

 

 
 
 
 
 
 
 
 


Cost of Sales
 

46,522

 

34,371

 

12,346

 

93,239

 

53,709

 

32,717

 

14,108

 

100,534

 

Reverse: Workers Profit Sharing
 

-

 

-

 

-

 

-

 

(617

)

-

 

-

 

(617

)

Reverse: D&A/Other adjustments
 

(10,771

)

(5,715

)

(1,233

)

(17,719

)

(10,444

)

(6,527

)

(2,090

)

(19,061

)

Reverse: Variation in Inventory
 

1,126

 

1,374

 

211

 

2,711

 

(2,013

)

(583

)

(292

)

(2,888

)

Total Cash Cost

 

36,877

 

30,030

 

11,324

 

78,231

 

40,635

 

25,607

 

11,726

 

77,968

 

Tonnes Processed
 

463,460

 

705,004

 

110,872

 

1,279,336

 

632,337

 

443,928

 

154,645

 

1,230,910

 

Cash Cost per Tonne Processed

US$

79.57

 

42.60

 

102.14

 

61.15

 

64.26

 

57.68

 

75.83

 

63.34

 

The following table provides detailed information on Yauricocha’s cash cost and all-in sustaining cost per copper equivalent payable pound for the three and six months ended June 30, 2023 and 2022:

YAURICOCHA

Three months ended

Six months ended 

(In thousand of US dollars, unless stated)

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

 

Cash Cost per zinc equivalent payable pound

 
 
 
 


Total Cash Cost

19,700

 

21,975

36,877

 

40,635

Variation in Finished inventory

(718

)

1,523

(1,126

)

2,013

Total Cash Cost of Sales

18,982

 

23,498

35,751

 

42,648

Treatment and Refining Charges

6,697

 

7,677

11,438

 

14,529

Selling Costs

803

 

911

1,418

 

1,630

G&A Costs

2,477

 

2,840

4,910

 

4,523

Sustaining Capital Expenditures

3,897

 

3,750

4,941

 

7,718

All-In Sustaining Cash Costs

32,856

 

38,676

58,458

 

71,048

Copper Equivalent Payable Pounds (000's)

8,279

 

11,410

16,516

 

20,100

Cash Cost per Copper Equivalent Payable Pound

2.29

 

2.06

2.16

 

2.12

All-In Sustaining Cash Cost per Copper Equivalent Payable Pound

3.97

 

3.39

3.54

 

3.53

The following table provides detailed information on Bolivar’s cash cost, and all-in sustaining cost per copper equivalent payable pound for the three and six months ended June 30, 2023 and 2022:

BOLIVAR

Three months ended

Six months ended 

(In thousand of US dollars, unless stated)
 

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

 

 

Cash Cost per copper equivalent payable pound

 

 
 
 
 


Total Cash Cost

 

16,875

 

14,199

 

30,030

 

25,607

Variation in Finished inventory
 

(850

)

(823

)

(1,374

)

583

Total Cash Cost of Sales
 

16,025

 

13,376

 

28,656

 

26,190

Treatment and Refining Charges
 

2,819

 

2,537

 

4,984

 

4,585

Selling Costs
 

2,335

 

1,126

 

3,871

 

2,089

G&A Costs
 

1,437

 

1,115

 

2,754

 

1,930

Sustaining Capital Expenditures
 

7,350

 

3,545

 

10,898

 

7,557

All-In Sustaining Cash Costs

 

29,966

 

21,699

 

51,163

 

42,351

Copper Equivalent Payable Pounds (000's)
 

9,908

 

3,951

 

16,726

 

6,761

Cash Cost per Copper Equivalent Payable Pound

(US$)

1.62

 

3.39

 

1.71

 

3.87

All-In Sustaining Cash Cost per Copper Equivalent Payable Pound

(US$)

3.02

 

5.49

 

3.06

 

6.26

The following table provides detailed information on Cusi’s cash cost, and all-in sustaining cost per silver equivalent payable ounce for the three and six months ended June 30, 2023 and 2022:

CUSI

Three months ended

Six months ended 

(In thousand of US dollars, unless stated)
 

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

 

 

Cash Cost per silver equivalent payable ounce

 

 
 
 
 


Total Cash Cost

 

6,096

 

5,572

11,324

 

11,726

Variation in Finished inventory
 

(186

)

862

(211

)

292

Total Cash Cost of Sales
 

5,910

 

6,434

11,113

 

12,018

Treatment and Refining Charges
 

173

 

341

323

 

845

Selling Costs
 

252

 

245

496

 

616

G&A Costs
 

128

 

550

412

 

1,245

Sustaining Capital Expenditures
 

1,405

 

1,191

2,259

 

2,297

All-In Sustaining Cash Costs

 

7,868

 

8,761

14,603

 

17,021

Silver Equivalent Payable Ounces (000's)
 

203

 

259

429

 

674

Cash Cost per Silver Equivalent Payable Ounce

(US$)

29.17

 

24.84

25.91

 

17.83

All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce

(US$)

38.83

 

33.83

34.05

 

25.25

The following table provides detailed information on the Company’s consolidated cash cost, and all-in sustaining cost per copper equivalent payable pound for the three and six months ended June 30, 2023 and 2022:

CONSOLIDATED

Three months ended

Six months ended 

(In thousand of US dollars, unless stated)
 

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Total Cash Cost of Sales

 

40,917

43,308

75,520

80,856

All-In Sustaining Cash Costs

70,690

69,136

124,224

130,420

Copper Equivalent Payable Pounds (000's)
 

19,414

17,551

35,736

27,707

Cash Cost per Copper Equivalent Payable Pound

(US$)

2.11

2.47

2.11

2.92

All-In Sustaining Cash Cost per Copper Equivalent Payable Pound

(US$)

3.64

3.94

3.48

4.71

Additional non-IFRS measures

The Company uses other financial measures, the presentation of which is not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. This includes:

• Operating cash flows before movements in working capital - excludes the movement from period-to-period in working capital items including trade and other receivables, prepaid expenses, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items.

This term does not have a standardized meaning prescribed by IFRS, and therefore the Company’s definition is unlikely to be comparable to similar measures presented by other companies. The Company’s management believes that their presentation provides useful information to investors because cash flows generated from operations before changes in working capital excludes the movement in working capital items. This, in management’s view, provides useful information of the Company’s cash flows from operations and is considered to be meaningful in evaluating the Company’s past financial performance or its future prospects. The most comparable IFRS measure is cash flows from operating activities.

Qualified Persons

Ricardo Salazar Milla, Corporate Manager of Mineral Resources is a member of the Australian Institute of Geoscientist and is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects. Mr. Salazar has reviewed and approved the scientific and technical content of this news release.

About Sierra Metals

Sierra Metals is a diversified Canadian mining company with green metal exposure including copper, zinc and lead production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru and its Bolivar Mine in Mexico. The Company is focused on the safety and productivity of its producing mines. The Company also has large land packages with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

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Forward-Looking Statements

This press release contains forward-looking information within the meaning of Canadian securities legislation. Forward-looking information relates to future events or the anticipated performance of Sierra and reflect management's expectations or beliefs regarding such future events and anticipated performance based on an assumed set of economic conditions and courses of action, including the accuracy of the Company’s current mineral resource estimates; that the Company’s activities will be conducted in accordance with the Company’s public statements and stated goals; that there will be no material adverse change affecting the Company, its properties or its production estimates (which assume accuracy of projected ore grade, mining rates, recovery timing, and recovery rate estimates and may be impacted by unscheduled maintenance, labour and contractor availability and other operating or geo-political uncertainties on the Company’s production, workforce, business, operations and financial condition); the expected trends in mineral prices, inflation and currency exchange rates; that all required approvals will be obtained for the Company’s business and operations on acceptable terms and on the timelines that are currently anticipated by management; that there will be no significant disruptions affecting the Company's operations. In certain cases, statements that contain forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur" or "be achieved" or the negative of these words or comparable terminology. Forward-looking statements include those relating to the Company’s guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines (including receipt of all requisite permits to mine below the 1120 level at Yauricocha); the grades of the ore bodies below the 1120 level at Yauricocha. By its very nature forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual performance of Sierra to be materially different from any anticipated performance expressed or implied by such forward-looking information.

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 March 28, 2023 for its fiscal year ended December 31, 2022 and other risks identified in the Company's filings with Canadian securities regulators, which filings are available at www.sedar.com.

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.

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For further information regarding Sierra Metals, please visit www.sierrametals.com or contact: Investor Relations Sierra Metals Inc. [phone] [e-mail]