TORONTO--(BUSINESS WIRE)--$SMT #Minerals--Sierra Metals Inc. (TSX:SMT, BVL:SMT) (“Sierra Metals” or the “Company”) announces the filing of Sociedad Minera Corona S.A.’s (“Corona”) audited Financial Statements and the Management Discussion and Analysis (“MD&A”) for the fourth quarter of 2019 (“Q4 2019”).

The Company holds an 81.8% interest in Corona. All amounts are presented in US dollars unless otherwise stated and have not been adjusted for the 18.2% non-controlling interest.

Corona’s Highlights for the Three Months Ended December 31, 2019

• Revenues of US$42.2 million vs. US$39.2 million in Q4 2018
• Adjusted EBITDA of US$17.9 million vs. US$17.6 million in Q4 2018
• Total tonnes processed of 321,701, a 20% increase and a new record vs. 268,363 in Q4 2018
• Net production revenue per tonne of ore milled decreased by 5% to US$136.82
• Cash cost per zinc equivalent payable pound lower by 17% at US$0.43 in Q4 2019
• All in sustaining cost (“AISC”) per zinc equivalent payable increased 11% to US$0.81 in Q4 2019
• Zinc equivalent production of 58.1 million pounds vs. 40.6 million pounds in Q4 2018
• US$35.0 million of cash and cash equivalents as at December 31, 2019
• US$61.8 million of working capital as at December 31, 2019

The Company achieved record quarterly equivalent metal production and ore throughput from the Yauricocha Mine during Q4 2019, which has helped continue to make up for the lost production realized during the illegal strike in March and April 2019. Revenues increased by 8%, and Adjusted EBITDA increased by 2% during Q4 2019 compared to Q4 2018. Cash flows generated during Q4 2019 allowed the Company to fund its capital expenditure programs despite a challenging base metal price environment and significant increases in zinc treatment and refining costs. Cash costs per zinc equivalent payable pound were 17% lower while AISC per zinc equivalent payable pound were 11% higher in Q4 2019 compared to Q4 2018. Additionally, there was a build-up of approximately 4,160 tonnes of saleable concentrate including copper concentrate (978 lbs.), zinc concentrate (2,369 lbs.) and lead concentrate (816 lbs.) that was not shipped in Q4 2019 which affected revenue and realized metal production, but which is expected to be realized in Q1 2020.

Igor Gonzales, President and CEO of Sierra Metals commented, “I am pleased with Yauricocha’s performance in the fourth quarter which saw increases to revenue and consistent adjusted EBITDA compared to the same quarter in 2018. However, we realized both lower revenue and adjusted EBITDA on a year over year basis due to lower incomes resulting from increases to Zinc treatment and refining charges and a concentrate inventory build-up that was not shipped. We continue to reap the benefits of investments made at the Mine through increases in production tonnage as well as through lower cash costs, however we have seen a small increase in AISC due to higher treatment charges, sustaining capital costs and a small decrease in the net production revenue per tonne of ore milled mainly due to lower incomes.”

He continued, “Looking ahead, 2020 continues to be an important time for projects, improvements, and exploration at Yauricocha. We recently completed and published the Yauricocha NI 43-101 Reserve and Resource Update. We are continuing surface drilling at Don Leona and Kilcaska which are high value, exploration targets and will hopefully have some news flow with results before the end of the first quarter. Additionally, work has been completed on the next level of the tailings deposition facility, needed for the expansion of Yauricocha to the 3,600 tonnes per day level. Furthermore, we continue to sink the Yauricocha shaft towards the 1270 level to provide the Company access to further reserves and resources in the Mine. Finally, work has commenced on the ramp connecting the 820 level with the 720 level of the Yauricocha Mine providing for an additional 10,000 tonnes per month of increased capacity to move ore and waste from the Mine. These improvements will assist us with the increase of production levels to the 3,600 tonne per day level at Yauricocha once the required permits are received from the authorities.”

He concluded, Corona continues to have a solid balance sheet and strong liquidity. Management remains optimistic that continued operational efficiencies and future operational and resource growth are possible at Yauricocha.”

The following table displays selected financial information for the three months and year ended December 31, 2019:

¹ Adjusted EBITDA includes adjustments for depletion and depreciation, interest expense and other financing costs, interest income, share-based compensation, Foreign Exchange (gain) loss and income taxes; see non-IFRS Performance Measures section of the Company’s MD&A.

² All-In Sustaining Cost per zinc equivalent pound sold are non-IFRS performance measures and include cost of sales, treatment and refining charges, sustaining capital expenditures, general and administrative expense, and selling expense, and exclude workers' profit sharing, depreciation, and other non-cash provisions; Cash cost zinc equivalent pound sold, net production revenue per tonne of ore milled, and cash cost per tonne of ore milled are non-IFRS performance measures; see non-IFRS Performance Measures section of the Company’s MD&A.

Corona’s Financial Highlights for the Three Months and Year Ended December 31, 2019

• Revenues of $42.2 million for Q4 2019 compared to $39.2 million in Q4 2018 and revenues of $156.0 million for the year ended December 31, 2019, compared to $168.7 million for the same period in 2018. The increase in revenues for Q4 2019 compared to Q4 2018 was largely driven by higher production due to a 20% increase in tonnes processed, higher head grades for all metals, except silver and copper, and higher recoveries for all metals. Revenues were higher for the quarter despite significant increases to zinc treatment and refining charges and unsold inventory of approximately 4,160 tonnes of concentrate at year end. The 8% decrease in revenues for the year ended December 31, 2019, compared to the same period in 2018 was due to increased zinc treatment and refining charges off set by an 1% increase in tonnes processed, higher head grades for all metals and higher recoveries for all metals except zinc and an increase in silver prices (5%) and gold prices (11%).
• Cash cost per zinc equivalent pound sold at the Yauricocha Mine of $0.43 for Q4 2019 compared to $0.52 for Q4 2018 and $0.45 for the year ended December 31, 2019, compared to $0.52 for the same period in 2018. All-in sustaining cost (“AISC”) per zinc equivalent pound sold of $0.81 for Q4 2019 compared to $0.73 for Q4 2018 and $0.78 for the year ended December 31, 2019, compared to $0.73 for the same period in 2018. The increase in the AISC per zinc equivalent payable pound for Q4 2019 and full year 2019 as compared to the same periods in 2018 was a combined result of higher zinc treatment and refining charges and higher sustaining costs offset partially by the impact of higher zinc equivalent payable pounds sold.
• Adjusted EBITDA of $17.9 million for Q4 2019 compared to $17.6 million for Q4 2018 and $64.0 million for the year ended December 31, 2098, compared to $82.7 million for the same period in 2018. The consistent adjusted EBITDA for Q4 2019 and the decreased in adjusted EBITDA for year ended December 31, 2019, compared to the same periods in 2018, was due to the decrease in revenues discussed previously.
• Operating cash flows before movements in working capital of $18.3 million for Q4 2019, compared to US$17.3 million for Q4 2018, and $63.9 million for the year ended December 31, 2019, compared to $83.2 million for the same period in 2018. The consistent operating cash flows before movements in working capital for Q4 2019 and the decreased operating cash flows before movements in working capital year ended December 31, 2019, compared to the same periods in 2018 was primarily due to the decrease in revenues, discussed previously.
• Cash and cash equivalents of $35.0 million as at December 31, 2019, compared to $17.9 million as at December 31, 2018. Cash and cash equivalents increased by $17.1 million which was driven by operating cash flows of $17.5 million, repayment of loan by related parties of $9.8 million, offset by capital expenditures of $25.9 million and repayment of short-term working capital loan of $5.0 million.
• Net income of $10.3 million, or $0.29 per share for Q4 2019 compared to net income of $7.8 million, or $0.22 per share for Q4 2018. Net income of $34.6 million, or $0.96 per share, for the year ended December 31, 2019, compared to $46.1 million, or $1.28 per share, for the same period in 2018.

Corona’s Operational Highlights for the Three Months and Year Ended December 31, 2019:

The following table displays the production results for the three months and year ended December 31, 2019, for further production details please refer the Company’s Q4 production press release dated January 23, 2020: