SMTS - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to today's Sierra Metals Fourth Quarter and Full Year-End 2021 Financial Results. My name is Bailey, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to Christina Papadopoulos, Manager of Investor Relations. Christina, please go ahead.

Christina Papadopoulos

Thank you, operator and good morning, everyone. XXXX call. year-end Sierra's to results conference Welcome On our CEO; we are Luis Marchese, joined by Ed today's call, Guimaraes, our CFO.

uncertainties the VP financial posted for or as company's Yesterday's on estimates call I could also results available based our are would will from accompanying reflected information presentation a note the number addition, Sustainability forward-looking download projections to statements from and analysis on call materially call Affairs, forecasts like information. The differ release, management Corporate or risks, subject beliefs. is also and in press In is today's earnings contains Gabriel question-and-answer conclusions, other be discussion period. available sierrametals.com. the company's is be factors. that expectations, forward-looking website. that through any website a will Today's information this for Actual current the and our at for questions. and This the the company's followed by and Pinto, to forward-looking the of webcast

on a or drawing CFO, noted. in in Ed were financial over forward-looking the material CEO, could now or followed to by for available information Then that ahead XX-F unless are information amounts materially U.S. return the actual material look mentioned would on dollar which EDGAR on Luis like for an all otherwise call year's reflected overview we'll the form, note the a the is or call XXXX. Form in of company's to information Guimaraes, Luis factors our conclusion the as to SEDAR making Marchese, website. today's cause projection about back dollars forecast the publicly is contained for in turn a our applied in the that or projections and highlights. conclusions, results Please via or company's from highlights; our to that forecasts Additional assumptions and in forward-looking differ the annual factors information I

Luis Marchese

morning, good and Christina, everyone. you, Thank

X. Looking at Slide

you COVID-XX and aware, operations Sierra fully during keeping complications almost brought due contractors to successful As our vaccination workforce led in was very impact our pandemic a successful the XXX% due outbreak our the and of to XXXX operations. many from employees campaign vaccinated. are the of with closure on and

in operations While well foreign staffing health and remain currency underway remains of to that protocols top having our pleased safety state, requirements priority. are I levels. to XX dropped, our am employees the say normal

Cabrera, our Whitaker growing Jose welcome to will important three of strategic with and Oscar to context, positioning of the focus directors We to Board. made combined In value new perspective regional goal that Vizquerra of Santacruz of Chairman execute Board Board our we and were steel as Don copper all shareholders. appointed maximum Directors strategy and company with making XXXX, for and Directors. we experience provide our deliver as Their our independent Carlos expertise process review emerged metals. the changes from the the on During the to production and

successful extensive we coming conducted in annual and turnaround towards in mine maximum XX% equivalent XX% and regulatory an care terms lower for halted felt was mine developments, particularly QX of operations program the production the partially throughput operational at for declined of areas. allowing year. open June, of the to At the X,XXX mine end grade to initiated its production when in received the pass per will permitted metal throughput years. on compared compensated Bolivar, The a the increase In due decline Yauricocha higher XXXX. was day. overall, review permit But a reached before The capacity mining to the of ITM that tonnes by in limitations

and drilling processes Bolivar's right development of labs, the and infill ensuring with on as value. ventilation, backlog is lagging and balances true operations in people realize cumulative right others. focused camps place services, and well mining auxiliary to The and are infrastructure, such are ticks being optimize the We as mine as addressed

an for of filed stream a the also updated to Ed We with the the PEA continues, turn financial revenue to I review And determine At year. highlights for strategic iron production, mine. with appropriate to ore the in inclusion additional next potential the for providing will that, future. Cusi, review modeled steps the

Ed Guimaraes

and everyone. good morning, Thank Luis, you,

a increase throughput, operations. Slide X% a the million met company X. XXXX, adjusted of relatively million. income. the achieved reported our did net to our for to in metals noncash results to consolidated per $XX.X grades due metals which $XXX The to XXXX. in given attributed included reported impairment or remained a payable was Cash We of in as and consolidated year approximately compared strength production the although We year. XX% Cusi charge guidance $X.XX solid with in equivalent copper with million We to equated reported $XX finished adjusted cash. Turning up net the throughout related on our from employees to revised in a million loss EBITDA strong, $XX shareholders decline We impact the XXXX a of to decrease COVID-XX prices mine. share, XX% the Revenue flow

is was with silver in and in renewable gold, zinc be respectively. a realized lagged to in growth respectively. electric remained for which at revenue to years copper energy. in by saw Precious metals realized to half metals for X%, the second relatively XX%, but line with silver the led copper, continued gold XXXX, and we improvement respectively. to all at X% and and continues Lead followed prices compared by contribute XX% and demand with global of XXXX Our vehicles XX% previous XX% metal strong XXXX, demand continue revenue strong in and and with in at In increase continued the mix XX%, prices year expected driven and particularly by by

At again, and XX% cash now that increased XXXX. payable charges Compared attributable increase had sustaining a costs Bolivar as charges copper at that, cash resulted equivalent increase refining and in labor XXXX decrease in payable X. at increased now in to of well at Yauricocha treatment At higher combined were the in XX% Cusi, XXX% turn in silver due the the cash deferred the Bolivar, XXXX, costs, copper pounds increase from At Yauricocha, combined as capital mostly the and Turning Cusi, XX% XX% decrease refining to call saw with again, higher a reinstated. projects Bolivar. costs and in costs, increase pounds by in line Yauricocha projects charges with to higher which all-in treatment sustaining higher increase both a anticipated in to in due decrease equivalent At had and we in Slide driven a increased we XXXX, With Luis. due to increase I as costs, which to operating XX% that in back payable capital costs costs will costs XXXX. to COVID that sustaining sustaining to deferred and the and increased higher been advancement which refining sustaining were and in with all-in cash capital a All-in offset costs were which costs XXX% were XX% capital ounces, equivalent each related partially were higher costs. we mine. expenditures, have offset a we by cash treatment from saw operating across

Luis Marchese

Thanks, Ed.

full the for the Yauricocha. Yauricocha, running allocated infill will Brownfield as at At base plant still an we mining of the obtained are to tailings Slide mining capacity different XXXX. work plan be dam of on lower the to grades will gain and Access Cachi capital year. Esperanza, drilling of to mine flexibility at a increased during targeted to development of This current to started below mine benefit mine development, in plan remain previously, Cachi improving on Bolivar, from focus target the additional so tonnes until access permitting higher for zone At higher current levels. will an is Turning the areas we indicated on the and located turnaround with X expansion grades with throughput we resource the as continuing advantage the Yauricocha infrastructure ahead of focus to certainty includes process ventilation to the mine levels, along deep X,XXX the shaft, and camp. at exploration have well regain day intense mining mine. looking the an between including will as per the compensate the goal and We operations.

improving continue strength camps mine prices, optimistic efficiencies, concluded. end complete facilities, resource Mineral also for tunnel an connecting of performance the in update year. further lowering Operational and XXXX. the and production the year. also the by revenue stronger the the and a will reduced Yauricocha the well with we in of At second Cusi, operating of auxiliary average into that expansion to objective will we by equipment X,XXX mill, rate which expenditures per on as the both this improved as to are day are tonnes end of on haulage mineral mine tailings and Work as upgrading to once the with around by allocate as year improve achieving replacement. we also well efficiencies of costs capital contribution the metal a ventilation, throughput to and on continue expect development At Bolivar, mine CapEx dam pumping expected mine services, towards half We lab continue Bolivar the work see production expansion. QX payment will low plant be with we initiatives facility continued plan With expansion, Reserve of including

strategic mentioned, review for options As the to Cusi. examine continues

the emphasis placed company's we strategy, a of part new heightened have on also As ESG.

X Peru the we completed with of and inaugural plan further XXXX, already strategic our to report. years, and In the targets. for Scopes carbon X have three Mexico sustainability defining last our objective the We report emissions for

a as we to for on This the expect healthy company year, of X. committed our communities. We sustainability sustainability publish to financially. develop operations and In well our The report. first as workforce remains are of I Sierra's strategy Slide well-defined by surrounding ESG ensuring conclusion, mentioned, delivery as the our

$XX strong with sheet in a million have cash. balance We

of noncontrolling equivalents financing million million activities interest. the decreased cash shareholders was debt the million, in - $XX.X from total $X XXXX of and in Our payment $X.X used included of million. net at financing in of installments generated during used amounting as interest to and debt $XX.X repaying generation and $XX.X million to Cash cash million investing dividend activities, used $XX.X $X.X $XX.X million cash to activities with million. year-end operating loan Cash exceeded million, $XX activities of payment BCP a

flows cash will strong operating For XXXX, will improved the continue improve be cost to focus company's production environment. by what and price supported metal anticipate to analysts on be reductions a base

that We continue retain back capital committed to cash to our prices shareholders. projects experience mine to per the the will are Management With to now ultimately should prices operating allocation adjusted will and changes the advance within share the flows, any that, I will value, of our metal the benefiting turn all call option expenditures limit Christina. to and growth year. the

Christina Papadopoulos

Thanks available, be and presentation Luis. should go the is please following Instructions] the of would there open always portion Operator, now ends line. questions open like call. from this questions. to call, ahead participants. call the We [Operator to the further That Management

Operator

of Reichman [Operator today Mark Our from question Instructions] NOBLE Capital Partners. first of comes

Mark Reichman

on is question guidance? current implications the plans How you Cusi, PEA and this, then values write-down? after-tax recent carrying most including first in the discuss are NPV So your following the the the of the realistic value the could review XXXX for strategic your

EdGuimaraes

for Mark, question. your Thanks, Yes.

Cusi. So terms process, the in to as QX, we know, decided divest in of you

We There visits. formal with of underway are interest diligence now parties. terms is Due in is a in process. various site

progressing. is that So

of X,XXX given so there. get likelihood NPV the are was norm, sorting the than that And the And given accounting really, were And but what's But detailed to that, to of taken. in still for of the expansion too an we what Cusi. in that, of in stage. and was was our saying the or was reasoning the speak. impairment on really the expansion that that - - the Cusi a maintaining terms not in of of the potential isn't it's Sierra, doesn't company, technical expansion exercise. levels impairment a the Because very for us had current tonnes an likelihood really that situation in going terms per And that's that. probability it was there PEA terms was the the In - it is why at we terms that even most a scenario not likely not divestiture, became to conceptual outstanding things, side day, not still it focus. to of much much And ore less the that was to -

Our on green getting around Yauricocha, Bolivar on metals, steelmaking and those opportunities. focus and turning is on focusing track

the in somebody scenario if that's the asset. terms is terms than to So - really be gave in still that impairment. there of it of for we crux bid, who the prioritization in will successful - of potentially their expansion more likely in But ours, just hands a it will is that

Mark Reichman

XXXX, or versus appear looking a expectations that Yauricocha. second expecting is Okay. at and but both it Bolivar and would - versus at Yauricocha question you're the just at improvements And mines, then big EBITDA Cusi decline by Cusi

kind address decline the just expected Yauricocha? you could at of So

EdGuimaraes

Yes. XXXX not restriction in to late for really expecting - we're The where - get on that the XXXX. Yauricocha permitting that until point,

So the restriction because we're of into that ultimately grades. areas have that mine of lower

So grades we're expecting Yauricocha. for this primary next year and That's at into year the reason. lower

Operator

from today comes Ihle Wainwright. Instructions] next from Heiko The [Operator question

Heiko Ihle

It's Heiko from Wainwright. H.C.

sites? back your you and on that You staffing that inflation, talk can talk But earlier that inflation seeing levels Great maybe wage levels. on to factors on at obviously. about call bit route expand seeing to normal you're are hear, general bit with answer well a mentioned can just a you're mine what this you

Luis Marchese

Thank you, Luis. Heiko. This is

I the it's and guess, an some actually equipment people into to months. the next that is we on is industry are human actual in consumables have is yet. We what but seeing supply that getting not for in and But noticeable chain our obviously, what difficult resource feeling are the we it. still turning coming the end, of inflation, that's there. going operations. many for hope are seen difficulty I a guess inflation we recruiting seeing parts But

Heiko Ihle

improvements You Bolivar bit release. for the It the same press And you about the QX. site operational mentioned thing talked in in the call. your this of a out on earlier at then in strategy also laid

on you on seeing? it us year? XX. sort kind, so basis you'd You the color Can even went I provide put the PEA specific the remainder be back you've quarter-by-quarter just And been again. of walk expectations of through through a if improvements August the what some maybe for of

Luis Marchese

Okay. been mentioned backlog infill during question, -- COVID. Heiko. worse it I development. drilling as and only well, for with in have mean presentation as Thank In the you we the Bolivar, That's for years. of a carrying I of our backlog got mine

full that are I the we for on that's terms mine And up and us now in on to mine of development. by on on improvement the to more more we that reduce going the accompanied catching and what infrastructure. focus drilling the So on the year, the tend and flexibility is backlog, to also can have take uncertainty more ore how increase might. And that's development we be so guess,

bring grade three ventilation borders the create three new to mine. the these of into circuit three going are areas to We

the improving are services. We auxiliary

We are improving the labs.

the mine We are camps. expanding

whole terms early a of expenditure full should year. bring going take it's us, in where in to I That's the So mine eventually it guess, to be. year, the next turnaround

de Fierro. our have mining what is terms the Northwest, of But of Mina Bolivar and which better been of we West weeks Now time, tunnel in couple a at mining. production, have than currently Bolivar we finished in the mine, new ago, are same we grades area which a in

April into into end June production. able ore up mining with the be we development, the actual the itself, starting to - So with will

of grade. us in terms in tonnage of and help terms So that's going to

we because for Northwest production. Bolivar. going HX between that's to difference cash of made with this why - So also difference and we a going feel HX that Bolivar this turnaround make between And funding is help flow us to to terms the keep that's in

next we that, CapEx able this of very top X,XXX bringing a so expansion. of will had Now mill planned available of be low per this that. be installation at tonnes with or day doing instead should late on we And early have capacity Bolivar, a for CapEx. year, to this year we We by low X,XXX are

So that, half the whole it on this should said iron results next us that, fully. on ore. better top should are second giving we year, start turnaround Having by work, of the at looking

the magnetite for are which approved time We now. for installing the Board engineering and doing and the bring it have we to the for announced will ore plant, we get iron eventually, second

Heiko Ihle

one good sound got answer. you just doesn't full. all comprehensive, like I I to It very question Very may. quick if follow-up, And that

sales of in and XX.X% with XXXX for cost production in Your compared XXXX others. XX.X% was Bolivar

all what quarter? for the sales two improvements there's year, some us give come you might mean at on think QX, the these weeks I Assuming that least to ideas of maybe for only cost in be left your fruition, given really

EdGuimaraes

Heiko, you. Yes. Thank

going Our cost stay XXXX. continue I there the going an QX, and to relatively we're they're in think, high, to of half see only sales, really for to improvement of second

Heiko Ihle

Okay.

So half? not in but second QX,

EdGuimaraes

the when is improvement, half we'll Second biggest see yes. likely

Operator

up, we a Capital Next Reichman NOBLE question Partners. have follow-up from Mark from

Mark Reichman

of driver wondering two a was in - half whether I was mines? you've or that difference half if kind was second first other the production the got hefty accounts the it of there could half for pretty second Because you deposit half? it seem of was one production? Whether which like XXXX gold. uplift for of the and in curious And that the second at the mine just whether the Yauricocha? the was clarify between just gold that kind I

Luis Marchese

sorry. Bolivar. I'm difference Mark. you, is you, Thank - The Heiko thank in

grain my and Bolivar has Northwest Bolivar. going the rest start mining higher of silver Northwest, in to answer, I are we gold a and Bolivar than As mentioned previous

a be to good title byproduct gold second fairly the and at going of starting byproduct credit silver half. from Bolivar that's So in

Mark Reichman

see. I

Okay. time window you to And when of processing put plant magnetite the you've there it on be the out then in expect dates you and terms narrowed - plant, of completed in Bolivar? terms down have magnetite the producing processing be when of any kind might at

Luis Marchese

out we could certainty are Board in Mark. with to should are eventually to start on It's by QX. right the It's we we And eventually, good be it the engineering more got But and turnover building, but good - have it's the If to QX, confident North depending the we a economics. expecting how conditions. project. actual be taking be got numbers it the done coming we in Yes, take that we going QX. get see fairly will concentrate of America. in XXX,XXX then, right tonnes It's

the can from We have the bringing North nearby. to right the port. from infrastructure customers benefit that places, parallel is grade high. take it are in will really America not We There faraway and

Operator

questions [Operator to there further go like Papadopoulos There As ahead. Instructions] for back no registered. remarks. pass the are closing further please Christina, no currently questions I'd call registered. Christina are to

Christina Papadopoulos

concludes joining out the you for you, on On at like are call. website today's reach That today. us team, sierrametals.com. all questions call. any materials after participants there today's to thank If can of of us found operator. be would management further may to Thank and the concerns, webcast I behalf or A replay all our

conclude Our website. Thank today's as well contact can now be on We company's the information as operator. found you, call. the presentation in

Operator

participation. for all you Thank

now disconnect You your may lines.

Sierra Metals (SMTSF) 17 Mar 222021 Q4 Earnings call transcript