Sierra Metals (SMT:CA) – Lowering Estimates


Wednesday, March 01, 2023

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Weaker than expected Yauricocha financial results. Sierra Metals’ subsidiary Sociedad Minera Corona S.A, whose principal asset is the Yauricocha mine in Peru, recently filed its financial results for the fourth quarter and full year 2022. Fourth quarter and full year EBITDA were $(6.1) million and $14.2 million, respectively, compared with $19.0 million and $88.0 million during the prior year periods. Recall Sierra holds an 81.8% interest in Corona whose financial results have not been adjusted for the 18.2% non-controlling interest.

Lowering estimates. We have lowered our fourth quarter and full year 2022 EBITDA and EPS estimates to reflect weaker than expected performance at the Yauricocha mine in Peru. We forecast fourth quarter EBITDA and EPS of $(3.5) million and $(0.07), respectively, compared to our previous estimates of $0.4 million and $(0.05). For the full year, we project EBITDA of $10.0 million and a loss per share of $(0.17) compared with our previous estimates of $13.9 million and $(0.15), respectively. Our 2023 EBITDA and EPS estimates remain unchanged at $37.3 million and $(0.04). While our quarterly estimates reflect steady improvement, operational uncertainty associated with production at the company’s mines clouds our confidence in 2023 estimates.


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