Sierra Metals announces financial results for Q3-2015 at its subsidiary Sociedad Minera Corona in Peru

TORONTO, Nov. 2, 2015 /CNW/ - Sierra Metals Inc. (TSX:SMT)(BVL:SMT) ("Sierra Metals" or the "Company") announces the filing of Sociedad Minera Corona S.A.'s ("Corona") unaudited Financial Statements and Management Discussion and Analysis ("MD&A") for the third quarter of 2015 ("Q3 2015"). The Company holds an 81.8% interest in Corona. All amounts are presented in thousands of US dollars unless otherwise stated and have not been adjusted for the 18.2% non-controlling interest.

Corona's Financial Highlights for the Three Months Ended September 30, 2015

• $29.9 million of cash and cash equivalents as at September 30, 2015
• Operating cash flow of US$ 12.4 million for Q3 2015
• Adjusted EBITDA of US$ 2.8 million for Q3 2015
• Revenues of US$ 17.1 million for Q3 2015
• Cash cost per silver payable ounce of US$ 3.33 at the Yauricocha Mine for Q3 2015

Corona's Operational Highlights for the Three Months Ended September 30, 2015:

• Total tonnes processed: 193,558
• Silver equivalent production of 1.4 million ounces
• Copper equivalent production of 9.6 million pounds

The decrease in throughput at Yauricocha was due to additional work being performed to drill drainage holes to de-water certain areas of the Mine as well as the Company's focus on improving mine sequencing and implementing improvements to safety, design and in the mechanized mining methods being used at the Mine. These implementations will enable the Company to benefit from improved safety practices and production increases in the future. 

"Corona reported weaker financial and production results as a consequence of lower metal prices and important operational improvements that have temporarily changed production plans, but that aim to structurally improve our operations and production by the  latter part of 2015", stated Mark Brennan, President and CEO of Sierra Metals. "Additional safety, de-watering work and the implementation of modern mining techniques currently underway at Yauricocha have caused some reduction in production in the near-term but these changes will benefit the Company with increased production and better safety in the future", He continued, "Corona continues to have strong cash flow generation, a solid balance sheet and remains on path to meet its production guidance for 2015.  The Company remains a low cost producer and will continue to demonstrate the Yauricocha Mine's full economic potential."

The following displays selected unaudited financial information for the three and nine months ended September 30, 2015:

Corona's Financial Highlights for the Three and Nine Months Ended September 30, 2015

• Cash and cash equivalents of US$ 29.9 million as at September 30, 2015 compared to US$ 28.7 million as at December 31, 2014. Cash and cash equivalents increased by US$ 1.2 million. This was mainly driven by US$ 19.7 million of operating cash flow, offset by US$ 9.8 million of capital expenditures and US$ 8.5 million of financing activities, including dividends paid of US$ 4.9 million;
• Revenues of US$ 17.1 million for Q3 2015 compared to US$ 32.0 million in Q3 2014 and revenues of US$ 68.0 million for the nine months ended September 30, 2015 compared to US$ 91.0 million for the same period in 2014. The decrease in revenue was due to the decrease in production and the decreases in the price of silver (19%), copper (17%), lead (14%), zinc (4%) and gold (8%) during the first nine months of 2015 compared to the same period in 2014
• Operating cash flow of US$ 12.4 million for Q3 2015 compared to US$ 18.0 million for Q3 2014 and US$ 19.7 million for the nine month period ended September 30, 2015 compared to US$ 37.3 million for the same period in 2014. The decrease in operating cash flow was due to the decrease in production which resulted in a decrease in sales combined with a decrease in prices for all metals; partially offset by positive working capital adjustments realized during Q3 2015;
• Cash cost (recovery) per silver payable ounce (at the Yauricocha Mine) of US$ 3.33 for Q3 2015 compared to US$ (24.26) for Q3 2014 and US$ (7.25) for the nine month period ended September 30, 2015 compared to US$ (21.71) for the same period in 2014. The increase in by-product cash costs during Q3 and the nine month period ended September 30, 2015 was due to the decrease in plant throughput previously discussed; the reduction of by-product credits, which were the result of the lower metal prices mentioned above, and lower head grades for copper, zinc and gold;
• Adjusted EBITDA of US$ 2.8 million for Q3 2015 compared to US$ 18.6 million for Q3 2014 and US$ 26.4 million for the nine months ended September 30, 2015 compared to US$ 46.7 million for the same period in 2014. The decrease in adjusted EBITDA for 2015 is mainly due to the decrease in plant throughput and revenues previously discussed; and
• Net income of US$ 0.04 million, or US$ 0.001 per share, for Q3 2015 compared to US$ 8.2 million, or US$ 0.23 per share, for Q3 2014. Net income of US$ 12.0 million, or US$ 0.33 per share, for the nine months ended September 30, 2015 compared to US$ 21.4 million, or US$ 0.59 per share, for the same period in 2014.

Corona's Operational Highlights for the Three and Nine Months Ended September 30, 2015:

The following table displays the production results for the three and nine months ended September 30, 2015:

Quality Control

All production technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on precious and base metals from its Yauricocha Mine in Peru, its Bolivar Mine and Cusi Mine in Mexico. In addition, Sierra Metals is exploring several precious and base metal targets in Peru and Mexico. Projects in Peru include Adrico (gold), Victoria (copper-silver) and Ipillo (polymetallic) at the Yauricocha property in the province of Yauyos and the San Miguelito gold properties in Northern Peru. Projects in Mexico include Bacerac (silver) in the state of Sonora, and La Verde (gold) at the Batopilas property in the state of Chihuahua.

The Company's shares trade on the Bolsa de Valores de Lima and the Toronto Stock Exchange under the symbol "SMT".

Forward-Looking Statements

Except for statements of historical fact contained herein, the information in this press release may constitute "forward-looking information" within the meaning of Canadian securities law. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events or results. These statements reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.

SOURCE Sierra Metals Inc.