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Thursday, April 16, 2020
Sierra Metals (SMTS)
Rising to the Challenge
Sierra Metals Inc is a precious and base metals producer in Latin America. The company acquires, explores, extracts, and produces mineral concentrates consisting of silver, copper, lead, zinc and gold in Mexico and Peru. Its activity includes the operation of the Yauricocha Mine in Peru, and the Bolivar and Cusi mines in Mexico. Yauricocha is an underground polymetallic mine using the sublevel block caving and cut-and-fill mining methods. Bolivar is a copper-silver-zinc-gold underground mine using room-and-pillar mining method. The majority of the revenue is earned by selling of the mineral concentrates to its customers in Peru.
Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.
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SMTS reports first quarter production results. Compared with the prior year period, first quarter production of copper, zinc and lead increased 52.3%, 31.8% and 30.5% to 11.8 million pounds, 21.6 million pounds and 9.1 million pounds, respectively. Gold production increased 84.1% to 3,657 ounces, while silver production increased 37.2% to 948 thousand ounces. The increases were driven by greater throughput as a result of capacity expansions and higher grades of ore.
Updating estimates. We are lowering our 2020 EPS and EBITDA estimates to $0.12 and $81.5 million from $0.21 and $109.5 million, respectively. Additionally, we have lowered our 2021 EPS and EBITDA to $0.24 and $122.6 million from $0.28 and $137.7 million, respectively. By comparison, 2019 Adj. EBITDA amounted to $65.3 million. Our revised 2020 estimates reflect lower production due to second quarter 2020 government-mandated work restrictions, lower base metals prices, and modestly lower production from Cusi for the balance of 2020. Our 2021 revisions are largely related to…
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
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certification and important disclosures included in the full report.
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