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Sierra Metals Reports Consolidated Financial Results for the First Quarter Of 2021

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Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) ("Sierra Metals" or "the Company") today reported revenue of $69.6 million and an adjusted EBITDA of $25.6 million on the throughput of 774,421 tonnes and metal production of 25.5 million copper equivalent pounds or 3.7 million silver equivalent ounces, or 79.8 million zinc equivalent pounds for the three-month period ended March 31, 2021.

Image 1: Piedras Verdes Mill at Bolivar (Photo: Business Wire)

Image 1: Piedras Verdes Mill at Bolivar (Photo: Business Wire)

Despite the decline in quantities of payable metals due to ongoing COVID-19 related operational challenges and external factors, the Company generated higher revenues, adjusted EBITDA and operating cash flows during Q1 2021.

The Yauricocha Mine achieved 14% higher throughput in Q1 2021 compared to Q1 2020, despite the various operational challenges posed by the COVID-19 pandemic. Zinc equivalent production dropped 9% as compared to Q1 2020. In terms of copper equivalent pound, the decline was 21% due to a higher increase in copper prices than the zinc prices compared to Q1 2020. Metal production declined (except zinc and silver) as ore grades fell due to a decline of tonnage contributions from the high-grade cuerpos chicos zones. The copper-rich Esperanza zone also had some operational issues that have since been resolved. Cash costs per copper equivalent payable pound increased 26%, whereas cash costs per zinc equivalent payable pound increased by 9% as compared to Q1 2020. AISC per copper equivalent payable pound increased by 14%, as the increase in cash cost was partially offset by lower treatment and refining charges and lower sustaining capital. AISC per zinc equivalent payable pound increased by 4% as compared to Q1 2020.

The Bolivar Mine processed 371,608 tonnes in Q1 2021, representing a mere 2% decrease from tonnes processed in Q1 2020, despite the ongoing challenges due to COVID-19 and bad weather at the beginning of the quarter. The decrease in throughput combined with lower grades resulted in a 20% decrease in copper equivalent pounds produced during Q1 2021 as compared to Q1 2020. Cash costs and AISC per copper equivalent payable pound increased by 37% and 57%, respectively, as compared to Q1 2020.

The Cusi Mine achieved 2% lower throughput at 30% higher silver grades during Q1 2021, resulting in 17% higher silver equivalent production as compared to Q1 2020. Cash costs per silver equivalent ounce decreased by 17%, but AISC per silver equivalent payable ounce was in line with Q1 2020, as higher sustaining capital offset the impact of the increase in silver equivalent payable ounces in Q1 2021.

Consolidated production of silver increased 1% to 1.0 million ounces, copper decreased 33% to 7.9 million pounds, lead decreased 1% to 9.0 million pounds, zinc increased 11% to 24.1 million pounds, and gold decreased 28% to 2,636 ounces compared to Q1 2020.

Luis Marchese, CEO of Sierra Metals, commented, "The safety of our workforce and the communities in which we operate is paramount. The COVID-19 pandemic has enacted various direct and indirect challenges which have affected our ability to operate as effectively as expected. Additionally, an extended power outage at Cusi affected our operations during the quarter. Despite these challenges, we still had solid revenue and adjusted EBITDA tempered by higher costs due to lower metal production and a decline in ore grades. We continue to work through the challenges and issues, and we expect to see improvement as we progress throughout the year."

He continued, "Looking ahead, the year continues to be busy with many exciting developments such as the anticipated receipt of the Informe Tecnico Minero ("ITM") permit at Yauricocha, which will allow us to increase throughput by 20%. We also continue advancing the completion of Preliminary Feasibility Studies for all mines, examining increases in throughput starting in 2024. We also expect to begin construction of an iron ore processing plant at Bolivar, expected to produce 500,000 tonnes per year of 62% iron ore fines. This is expected to enhance Bolivar's profitability while also lowering our transportation and tailing development costs. Furthermore, we continue with our brownfield and greenfield exploration programs. We have had recent success in the area between the Esperanza and Cachi Cachi zones with the discovery of high-grade copper silver and zinc oxide material as reported in a press release dated April 13, 2020."

He concluded, "The Company continues to have a strong balance sheet to support the Company's capital expenditures and growth initiatives. While we are facing challenges from COVID-19 currently, the mid-term plans remain in place."

The following table displays selected financial and operational information for the three months ended March 31, 2021:

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

March 31, 2021

March 31, 2020

Operating
Ore Processed / Tonnes Milled

 

774,421

 

740,698

 

Silver Ounces Produced (000's)

 

961

 

948

 

Copper Pounds Produced (000's)

 

7,895

 

11,775

 

Lead Pounds Produced (000's)

 

9,004

 

9,079

 

Zinc Pounds Produced (000's)

 

24,123

 

21,646

 

Gold Ounces Produced

 

2,636

 

3,657

 

Copper Equivalent Pounds Produced (000's)1

 

25,496

 

31,170

 

Zinc Equivalent Pounds Produced (000's)1

 

79,778

 

84,466

 

Silver Equivalent Ounces Produced (000's)1

 

3,741

 

4,751

 

 
Cash Cost per Tonne Processed

$

47.54

$

46.73

 

Cost of sales per AgEqOz

$

11.48

$

8.96

 

Cash Cost per AgEqOz2

$

11.02

$

8.43

 

AISC per AgEqOz2

$

19.62

$

14.71

 

Cost of sales per CuEqLb2

$

1.69

$

1.37

 

Cash Cost per CuEqLb2

$

1.62

$

1.29

 

AISC per CuEqLb2

$

2.88

$

2.25

 

Cost of sales per ZnEqLb2

$

0.54

$

0.50

 

Cash Cost per ZnEqLb2

$

0.52

$

0.47

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