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Monday, January 16, 2017 Derek Macpherson

SMT Advances Spin-off of Northern Peru Assets

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Sierra Metals Inc (TSX:SMT, BVL:SMT) announced the filing of a preliminary prospectus as part of the previously announced spin-off of its northern Peru exploration assets. Sierra intends to spin out its 320 km2 Las Lomas property in Peru by distributing shares of its newly formed Peruvian subsidiary, Cautivo Mining Inc., to existing shareholders. To adjust its share capital in accordance with the impact of the transaction, the company intends to reduce Sierra shares by an amount equal to the fair market value of the Cautivo shares distributed. While conditions of the transaction have not been finalized we view the spin-off positively as besides reducing holding costs, this could provide Sierra shareholders with the potential to obtain value for this non-core asset. Coupled with the continued exploration success at the Esperanza zone and operational improvements at its Yauricocha mine in Peru, the transaction could contribute to Sierra’s efforts in bringing about the capital structure changes needed to improve the stock’s liquidity, which we believe has the potential to positively benefit Sierra’s share price.  read more


Friday, November 18, 2016 Derek Macpherson

SMT Finds Another New Near Mine Zone at Yauricocha

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported the discovery of Cuye-Mascota, a new sulphide zone, during brownfield exploration at its Yauricocha mine in Peru. This discovery, along with the discovery of the Esperanza zone earlier this year, highlight the near-infrastructure discovery potential at the company’s flagship asset. As well, the results on average returned above resource grades, suggesting the higher grades that the company is currently mining may continue beyond the Esperanza zone, which would benefit medium-term cash flow. In our view, this discovery along with ongoing operational improvements should position Sierra to facilitate the capital structure changes needed to improve the stock’s liquidity, which we believe has the potential to positively benefit Sierra’s share price.  read more


Tuesday, November 15, 2016 Derek Macpherson

SMT’s Q3 Financials Reflects Strong Operating Results

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported strong Q3 financial results which reflected the quarter’s strong operating results that were largely attributable to the company’s success at Yauricocha and its emphasis on improving operations. As a result, company-wide cash costs declined 27% QoQ and 33% YoY to US$6.71/oz AgEq. Consolidated all-in sustaining costs (AISC) declined 18% QoQ and 32% YoY to US$12.55/oz AgEq. Of note, although throughput at Sierra’s Cusi mine in Mexico was down 6% YoY, the mine’s cash costs decreased by ~9% QoQ and YoY while AISC was up 4% QoQ but down 49% YoY on the back of higher recoveries, higher gold and lead grades and the commencement of zinc production earlier this year. The company’s EPS in the quarter was ~US$0.01/sh and CFPS was US$0.10/sh. Continued exploration success at the Esperanza zone and operational improvements at Yauricocha should position Sierra to facilitate the capital structure changes needed to improve the stock’s liquidity, which we believe has the potential to positively benefit Sierra’s share price.  read more


Thursday, November 03, 2016 Derek Macpherson

SMT’s Strong Production Results Lower Yauricocha Costs

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported strong Q3 financial results from the Peruvian subsidiary, Sociedad Minera Corona (81.8% owned), which holds the company’s flagship Yauricocha mine. After reporting strong Q3 production results from Yauricocha two weeks ago, as expected cash costs declined materially. The combination of higher grades and increased throughput resulted in all-in sustaining costs (AISC) declining by 17% QoQ and 19% YoY to US$11.80/oz AgEq and cash costs declining 30% QoQ and 25% YoY to US$6.55/oz AgEq. Besides the benefit of the higher grade Esperanza zone, the cost reduction is likely also reflective of the company’s continued focus on improving its operations. We note that Sierra also announced that Q4 production from Yauricocha is expected to be impacted by a planned 25-day mining shutdown to upgrade the existing shaft hoist.  read more


Monday, October 24, 2016 Derek Macpherson

SMT Expands Esperanza

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) reported results from its ongoing drill program at the higher grade Esperanza zone at its Yauricocha mine in Peru. The results reveal that the 240m zone is open on strike to the North and South, and at depth with mineralization continuing below the 1170 level horizon. In addition, smaller previously unknown high grade orebodies were identified at the 1070 level. We view the results positively as the expansion of the higher-grade Esperanza zone should benefit the mine’s economics. The improving operations (post on Q3 production results) and the demonstration of exploration upside at its flagship Yauricocha mine should position Sierra to being able to facilitate the capital structure changes needed to improve the stock’s liquidity, which we believe has the potential to positively benefit Sierra’s share price.  read more


Monday, October 17, 2016 Derek Macpherson

Sierra Metals Announces Record Quarterly Production

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Sierra Metals Inc. (TSX:SMT,BVL:SMT), as anticipated, released strong third quarter production results featuring record throughput and its second best level of quarterly metals production. Overall copper equivalent production was up 25% YoY, 24% higher than in Q1 2016 and saw an 8% improvement QoQ (Figure 1). As mentioned in previous posts, the strong Q3 was driven by higher grades (Esperanza zone) and increased throughput from the company’s flagship Yauricocha mine. Similarly, Bolivar’s production benefited from record throughput; however, lower grades resulted in production being up only ~10% YoY and essentially flat QoQ. We believe continued operational execution by Sierra should facilitate the capital structure changes needed to improve the stock’s liquidity, which we believe has the potential to benefit Sierra’ share price.  read more


Wednesday, October 05, 2016 Derek Macpherson

Another Record Month Implies a Strong Q3 for SMT

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Sierra Metals Inc. (TSX:SMT, BVL:SMT) announced that the Yauricocha mine and mill followed up a record August with a record September. In September, average throughput was 2,789 tpd, just ahead of August’s at 2,733 tpd and compares favourably to Q2’s throughput of 2,463 tpd. This supports our view that Sierra is posed for a strong Q3, as they begin mining the higher grade Esperanza zone as discussed in previous posts. As well, the company plans to spin its northern Peru exploration properties out to shareholders, which besides reducing holding costs, could provide Sierra shareholders a higher value for these assets. We continue to expect Q3 production and financial results to be a positive catalyst for Sierra’s share price.  read more


Tuesday, October 04, 2016 Derek Macpherson

RCKS Fall Mining Showcase Presenter Preview

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On Thursday October 6th, Red Cloud Klondike Strike Inc. will be hosting its 4th Annual Fall Mining Showcase. The event, that will offer attendees the opportunity to meet with a number of companies, features presentations from 20 companies and a buy-side discussion panel comprised of three of the industry’s most influential fund managers. Visit the event page for more details on the day’s schedule. In this post we provide a brief preview on the 20 presenting companies and 8 banner sponsors that will also be in attendance.  read more


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