SMTS - Earnings call transcript Q1 2022

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Operator

Hello everyone and a warm welcome to the Sierra Metals First Quarter 2022 financial results call. My name is Bethany and I will be your Operator today. [Operator Instructions]. I will now hand the floor over Christina Papadopoulos, Manager of Investor Relations at Sierra Metals. Christina, over to you.

Christina Papadopoulos

morning, good and you, everyone. Thank First Welcome results call. XXXX to Sierra's conference Quarter joined call Marchese, CFO. today's we by Guimaraes, On are our Ed Luis and our CEO, call period. a Today's followed question-and-answer be will by available The for or the website accompanying company's through sierrametals.com. today's is from presentation at the for call webcast download and website. Yesterday's the discussion and posted also the statements, release, are on press management's financial analysis the Company's based estimates, this to call contains is note and that expectations, current that earnings on like company's I'd information the beliefs. forward-looking

subject number forecasts, materially the of is as and to factors. Actual differ uncertainties, in information could other from forward-looking Our a forward-looking information. reflected or risks, results conclusions, our projections

and that materially that assumptions material applied information the forecasts, factors in in conclusions, are Additional and conclusion drawing projected. actual information results projections forecast could from material making the the to a differ factors or or about a forward-looking cause the

Via of I'd as which quarter's XXXX, noted. to call overview the U.S. to highlights, CEO, Ed Company's Guimaraes, the dollar by like information followed financial on Luis in otherwise available on reflected company's what's the an for call amounts As annual as EDGAR, for XXF, forward-looking turn our in well ahead of highlights. a Marchese of unless the summary over for now is the remainder CFO our in that are all publicly contained today's Please note is Form or form, dollars, mentioned information SEDAR, website. the

Luis Marchese

you, Thank morning, good Christina, and everyone.

service we significant in [Indiscernible]. to of personnel of reduction the grades mine equivalent fully Looking These and Yauricocha, achieve now development further particular, operate deliveries. QX from the coupled mining In of our Vaccination XX% quarter company's with with continued areas, and high-grade COVID-related Yauricocha prompted continue, further with the the the ore most due accessing operations plans continued Bolivar expected at production of decrease At significant improvement at restrictions, vaccinated in a various [Indiscernible] X, health Cusi impact reduced by in consistent at affected vaccination vaccinated with the and personnel, preparation to of [Indiscernible]. feel during ore Slide to efforts limitations personnel first the with end which safely, in issues. full with employees XXXX. have least We've copper seen quarter. to two to doses, efforts safeguard XXX% are during a with the delays

During [Indiscernible] zone The mining gave day. of the the we to production for the make current second our allow Esperanza Cachi new help of personnel that of plan. to be zone, to and and well levels target up lower boost expect located operating able that grades. our as at permitted capacity and is year high Yauricocha, due challenges, we will the levels, discovery the be in us throughput The into XX,XXX will early quarter seen mine per the the to throughput the new plan year decently between incorporated to we've into us operate laterally tonnes grade Cachi can the

full [Indiscernible] improvement as year. the continues, QX, probably throughout as pick picked the orebody these have [Indiscernible] At an have see Bolivar, We we early to we turn-around XXXX. unless

suffered. grades zone decrease developing mine XX% reduction particularly the in a there of With we is [Indiscernible] have within and was increasing [Indiscernible] becomes the four XX% the in quarters really and [Indiscernible] West as first-quarter years. margin. in The corporate difficult zone [Indiscernible]. gross reached Bolivar these Both mineral improvement, previous and are

As full improvement. we we turnaround preparation, the saw move the before that were expecting performance worsen we into may

great production at we North quarters, suspected next zone, X which support incremental plans mining and an day at first-quarter, Bolivar to we West began However, our several end. Bolivar will year can for up for by the end X,XXX provide tonnes of by prove per to this the the [Indiscernible]

the a increase our XX the mining far least drilling in Bolivar during correct the of the taking upgrade With where have equivalent production board we can quarter, consolidated of we in resulted with company our the as mine production This on XX.X doubt housing [Indiscernible] to before several to place. operations backlog, throughput further two other at production consolidated our operational at saw initiatives. especially Cusi quarter, during facilities, recovery finally, of and higher helped track among done had in million at creating operating to that so we of no that report performance equivalent into despite our a increase XX% corporate of continued and XX% is high the We investments reach We a A anticipated in mine, first for production cost the of temperatures Bolivar. quarters production of the And is improvement, alleviating operations profile at the year. investment our during year first-quarter, last silver guidance pounds. a While grade, same last period with [Indiscernible] mine's the this are are an the update addition and seen million substantial year. guidance plan development copper we company's first accordingly. support earning coupled infrastructure services, [Indiscernible] processes, [Indiscernible] and raised XX% the slightly improvement the most auxilliary operations the improve facilities our

XXXX. Looking ahead in

Turning to X. Slide

mine restrictions graded mining despite our culture, anything, higher were to fifth. As the of or levels of

we've or will yearly reach non. on are of new CMS our throughput the XX per maximum for tonnes high-grade impact ability We XX,XXX to positively reaping focused throughput target. levels from along at Highest day. mining

delivery with same; new price. use full ways mining finding and other to constrains, Our remains at at within focus current and continued capacity metals our in Yauricocha the strength especially

$XX and pounds. new guidance We phone $XX make least part quarter margin the meters a additional meet provide exploration that our the between and the to patterns information the now. potentially Bolivar And with structural additional is ventilation in continue the and per is suspected we expansion, lead on a West corporate the value to anticipated continues the that doing for require our in work we Fortuna the high-value of expect zone report. the equivalent proposed supporting first of in continues we're North building during to correlations will start for the attained for the including focus [Indiscernible] We've on they X,XXX yearly underline making may a production through date. original up year, structured on of a with new target half million our bulk of it also At ore Bolivar and Improve production. physical the The the year will production, infrastructure, price our work new to our [Indiscernible] target. Yauricocha to and [Indiscernible] find to day. tonnes we further market. plans quarterly Moreover, X,XXX campaign of of Whereas increased finding year Yauricocha, high-value second

turnover Additionally, as day with take mine the point is strategy per of the location, the actual may to tonnes [Indiscernible] our change development priorities of [Indiscernible] you XXXX. and where the get new the at and [Indiscernible] has can the fleet shift. [Indiscernible] X,XXX a in Bolivar is [Indiscernible] our rate operations of timing in installation to a

infill our time is focus the whatever problem, continue ore. is to classification being, For drilling for

ventilation, could we floor plant increase plant, mean plan of the including mine development and the so and to the [Indiscernible], We which continue manufacturing purchase needs, with development [Indiscernible] provides value, in the integration communication, connecting mine improvements. additional

production support Infill is where year improved and year within track, later silver [Indiscernible] At In gold it We to equivalent very with development a contribution provide development year projects can needs that high-grade [Indiscernible] this expect around in with to metal replacements tonnes high-grade Bolivar terms production silver the operations, the of the a mine review that, processing strength gold, the on will of we [Indiscernible] prices, I we're money provide the is day. of million of turn or report theme a [Indiscernible] throughput and focused will values XXXX. of initiate to optimization see include to X.XX by [Indiscernible] stronger highlights. company per contribution continues first Bolivar EBITDA. operating ounces. development. [Indiscernible] and we from land [Indiscernible] campaign X.XX that for continue positive continued in mine. and And order that silver and end million and mineral that now system support a continue target as Ed the drilling we will a to this two areas, to and Cusi towards And efficiencies and guidance expected the into financial which on quarter to can Bolivar X,XXX equipment the company's revenue We've [Indiscernible] optimistic Additional

Ed Guimaraes

everyone. morning good and Luis for Thanks

to Turning Slide X.

continued year. our operations with XX% months XXXX. grades decrease in copper, production of the first the reported this We a With except and consolidated to compared XX% during all quarter and early in throughput, the the a of COVID-XX to copper for on decrease impact a to decline of equated our equivalent consolidated employees

$XX Although not XXXX. decreased EBITDA fully decline strong to from metal prices which $X.X share revenues XX% offset finished attributable production metals revenue to in million income and million QX to million compared and compared $X.XX lower the quarter with $XX.X was and when on of million, lower cash. margins income share. the per shareholders continued, XX% were Adjusted they able We a net $X.XX in resulting XXXX. decrease net a from to reported We $X.X gross of per QX or or adjusted payable approximately

revenue copper, by XX%, previous and be three contribute revenue XX% and at to silver and Our X% gold by by mix at led with zinc line in and metal to continue months’ respectively. X% quarters, respectively. continues XX% followed Lead

Slide continue the a with improvement pounds equivalent in XX% realized by saving X% global Yauricocha. payable a compared saw increased compared Zinc demand, prices XX% driven to energy lagged infrastructure X, modest X%. XX% with an increase to to a supply a QX, strong decrease, and driven costs by in green now and cost while cash XXXX, the slightly Looking QX realized a gold efforts to XXXX, lead and at we at see in revolution. decrease XX% copper, prices increase was increase in owns, a and Turning copper Silver

and comparing over we seen have result grades in a to Given few QX last XXXX zones to in quarters, quarter. continued costs past which trend downward higher-grade [Indiscernible], of to the our the mine in inability

cash In have addition Bolivar, of below operating extent last March mine been contract. during XXX% the resulted XXXX to Mines as equivalent not have At A all-in increased compared XX% our QX ounces end. so costs in QX impacted last mentioned strike closer payable were costs mine year still XXXX, throughput transportation were costs when Had sustaining of as tonnage impacted a also while XX% this and significantly XX%. sustaining efficiencies by When XX% first Cusi, week into resort Driven lower targets, positive cash to to the QX, earlier, to [Indiscernible] slightly costs negatively compensated unsold turnaround copper this lower is some increase concentrate to a by mining respectively, by XXXX. quarter At nationwide grades to $X and to by quarter-over-quarter. pounds, quarter which year. equivalent and improved decline improvements that grades. was by in XXX%. Bolivar's also costs core operating tonne. and also resulted this the had in a Overall, and performance at by impacted trend a increased would've decreased per investments improved by times to which quarter, compared grades, of and XX%, while the inventory costs by for in costs all-in sustaining in cash XXXX in are cash XX% in an XX% this resulted for all-in per we higher payable to event both Higher silver program costs. costs increase by developed pound. far compared a decrease provided stockpiles, seeing

impact the Russia increased explosives, QX, quarter of in cost throughput by during Silver quarters. drilling increased. cost quarter-over-quarter. the XX% inflation - also equipment equivalent XXXX, cash increased Looking the at fuel, The the while increased. of comparison a line cost with were of Global X% the inputs previous Ukraine have payable ounces conflict, also and ongoing and to recorded

cash unit. resulted However, in in costs per cash higher costs the increase

March million as XXst, QX, per On general to all-in decreased XXXX. related treatment sustaining on X% at administrative as capital sustaining refining in Costs lower XXXX. products, cost conclusion, the resulting Slide decreased, charges to $XX.X hand, and cash a compared other ounce. costs the and reported In when in as X, by all-in and company well sustaining expenditures,

$X.X Our total and debt at activities, to due in equivalents activities. quarter well debt million. quarter first million local prepayment Cash other lines in during with facilities used million decreased $X.X further used million credit activities, and in $XX.X offtakers. was available cash has of financing used to a of and investing the its the the as The bank, access end short-term with company $XX.X as cash with million, lines, $XX.X operating net commercial

adjust Christina. review metal now year. metal XXXX, prices dramatic capital through cost cash improved to the reduction flows will the of be price production base metals on With prices operating back should remainder that, the to experience the Management I changes For will and within a retains and the focus expenditures option company's call to supported continue improve turn by any strong environment. will the

Christina Papadopoulos

questions call. ask of and for answers. lines. let's fairness, you keep the their open to to participants And That call limit [Indiscernible] now of a two this the In Ed. may [Indiscernible] interest the we questions open to the [Indiscernible] and Thanks, presentation Operator, time

Operator

Thank you. [Operational Noble Instructions]. Mark, Markets. From please go Capital ahead.

Mark Reichman

I you. few And questions. good just Thank a got morning.

First -- mine the the by of is recovery the balance production over with in guidance.

Luis Marchese

so for those meet you Mark. still we to question. guidance numbers. Thanks the Hi, Yes, expect

Ed Guimaraes

once just corporate It's some QC sounds for then of the and XX Slides just was higher to just those a provide but line opportunities. function you you you've a your just just Yauricocha it's of more thought, it Well, think little what plans a of really get could guidance. that there help of a bridge first a kind were was I terms to some quarter, for uplift. particular experienced longer-term little clarity. if the second be question I fine depth might XXXX, hard if got And well, production. in you And is, I Fortuna you great quite kind provide mining on-field, the of maybe clarity a And because presentation, In at permit. a little sometimes items like And inflation but Bolivar bit the maybe thinking, the in than to some on of means then after more costs, stickiness some could

Luis Marchese

of we've XXXX Puma, which For in routine. been our area mark All level restrictions. mining the current is

by answer, really looking is So [Indiscernible] more finding in good are we reinterpretation, [Indiscernible] the large and in in see consular were in area, operating which areas we that we high-grade the [Indiscernible] like successful Good development there of presentation doing fall some finding into guess found because these in the zone area hopefully are I level these and we the that.

does this almost okay rising is of to smaller are all you rate the give As the the are larger that the happens cultural great you make will production? values small, years, make benefited high-grade or needs most that the or actually below their and in [Indiscernible] what What now profitabilities. [Indiscernible] from the terms that how the repurchase of means under it. has repurchase over mean knowing mine of will these Now, of usually aware,

tuner. So we the Above replacing news. by mine the would grade. is as are This [Indiscernible], particularly finding extent we the the good from [Indiscernible] really by below usually core high-grade

there. we've The that all each the facilities good [Indiscernible]. ventilation, which got our destruction other We've got the we very panel. is have got [Indiscernible], is power. news We've of main where

production we is months. the particularly highlighted developing now This [Indiscernible], in we're presentation. good very news a as So a our few in

Mark Reichman

really very you That's Thank much. helpful.

Operator

Our please comes Wainwright ahead. Co. go Heiko question from from next & Ihle Heiko,

Heiko Ihle

of food, given news obviously, just spikes. saw commodity with Hi, costs its energy a And is the from H.C. in price an your Heiko rise issue. inflation some protests Wainwright. I improve

call. every so single on actually are earnings What but also, any And been of It's are and if [Indiscernible] just have you seeing you far. much to [Indiscernible] comes how costs as have fuel as your doing it what gone you much at mitigate in can? We all, up?

Luis Marchese

[Indiscernible] essentially we with well as changed concerns, rate. Yeah, Heiko, as

the so we certainly similar, trying partakers improve was of in [Indiscernible] we and also other XX% having to at are use items explosives looking [Indiscernible] remained $X.XX. the and budgeting has are it's up, that there fairly the And large come those if and [Indiscernible] we Around [Indiscernible]. a effectiveness intensive of but it, so can hasn't much us and of [Indiscernible] when a market as power costs as can fuel manage power We're and that dollar rate intensive we moving much bit but the [Indiscernible] about in of we're to our much. on per we closer [Indiscernible] exchange affected not not is so a the process Now now [Indiscernible]. about but fuel, are do we and will is

Heiko Ihle

this this Bolivar talk about much market. on very [Indiscernible] be high-grade exploring this how you you to spending much think at in this I actually call, an good on but exploration question guess please? do the And area material might are is area? that's in Earlier located year you How zinc impossible answer,

Luis Marchese

Heiko and we going that to We're that become patient be expect could in works has the just million imagine to will called but good to targeting have from that the a comparable talking really depending to the for. close corporate far get, Much might we processing we're is will but production being COVID so deposit. and then we dollar in [Indiscernible] tied quite to how spend other we quite volume plans Sierra that, great -- but was it on working financially we're La before to we're and certainly when we to what to get now is we from -- with relevant we do [Indiscernible] some been corporate for right can starting we one additional time we

Mark Reichman

you. much, so all to best the Thanks

Operator

Family go comes Leon from Imax ahead. at Office. Please The next question Cooperman

Leon Cooperman

healthy. safe And much. hope very you everybody Thank and is

can year. Guimaraes. you That Ed us to with CapEX, directed flow. towards us could we for maybe, look help give tie question. would your this Ed range therefore and where that a -- And range first you're comfortable of this is together, be this Maybe my EBITDA cash free So

your better think maybe image. virtues a the a at split that than the category think year it a price And went Second, finally, you the hope and you rather elevating upon the stock stock sustainable. but budgets, as I a luck. butt? and expected the you'll $X.XX we I good a wish a this of end dividend of reverse about I by stock price you, last company to us we're cheapened price. And thought is Board Have know cigar getting based much based way dividend of gives of you management dividend being lines? go upon a determined with the Thank with your along things you budgets to at this year the than in of pay be think if do position and of a

Ed Guimaraes

for thanks questions. those Thankfully,

between turnaround, So be have XX-XXX EBITDA, we'll probably $XX -- to production meet between of liquidity million. over the believe maybe any somewhere Probably CapEx, respect in hope million. we're well. over definitely to EBITDA, little to mad we're $XX million that burn, next terms for may we stands Again, and was in bit but have turn with we than yet option better CapEx the we $XX couple terms have AppFolio still million of wanting which months. guidance produce $XX shortfalls, a the the we depending I ensure our sufficient things the tracking the will come under to of expected around. QX that, maintaining we're on there But so to to

has hammered whole are [Indiscernible] NAD, question In there's slowly gotten space. of any more the [Indiscernible] and mining terms price share no

Sierra mining the globally than share it's depressed more fair definitely -- think prices. rest. I companies But have suffered has seen say most that to

coverage NAD I speculate So to do and terms I they an price. call would analysts idea really on job is, share and provide I where you a then on target everyone in really provide want of don't you, research again really reports done review good encourage an the believe can target and the our to analyst what have

[Indiscernible] In terms of

Leon Cooperman

[Indiscernible] reverse split the dividend intentions.

Ed Guimaraes

that as just [Indiscernible] we to No, well. yeah. wanted Oh, mention now

In terms that yes, the reverse of something. split, is

advantages cosmetic little I'm a is that going I about more think that It's there, that, in arithmetic an but at. of past bit to There's in know to the it is that. something -- it on list. it's really fairly anything and go you lot we from something doing is But of it's look really perspective. else, have my happy something more best on way terms a of the it to it than and we -- but I discussed the about on my speak is can

really depend on get that close terms strength We'll we not better the where to dividend, now, of turnaround, think prices. early dividend too through it's for make the given make September dividend, of say, to let's It's that much on I -- when In the are but big the will the a in be now But call. August, call. to a position, we metal

Leon Cooperman

Remind your me of debt. the terms

You have a of quarterly debt? amortization

Ed Guimaraes

for That's million per process XXXX. million the quarter $X.XX the million so correct, We're it's $XX $XX of a refinancing Lee, year. in

We our soon, very and have those good hope an been supportive. going I you make much response. have announcement they very appreciate with we Thank approving discussions for to very relations and banks but well your it. extremely with are

Leon Cooperman

you. Thank

Operator

go Jim next Jim, Young The comes at ahead. please Instructions] Midwest investments. question [Operator from

Unidentified Analyst

update Hi. was management on Everyone Because Cusi my an impression team status give asset. what to that as please? to its us just divesting is focused the the

Ed Guimaraes

some to willing also to to the Cusi cash, for well, be looking there From think it we'd financial royalty. It's Jim. thermal for And the focus, does we not as in process Yeah. right invest year. off, continue can really But made are investments with epi Cusi characteristics. would represents given because Thanks, now Cusi see and our could I willing investments need in Cusi. revenue. good or of yearly, a you we to QX our being perspective, of see Infrastructure, focus pay be our have XX% acquired last results. that you in our really paid sort primary wherewithal, a know, that

be play Cusi, results though it's to are we And then this be Whether should able it's, So financial And, even again, the conference we're priority or The to for all we're out. to process. in sure. these really call. ensuring our provide update should year. happy by to retain an with a especially find, done we our that certainly need next seeing we're going process not things

Unidentified Analyst

And Okay. is you and your regarding have first-quarter ahead EBITDA, little of secondly, million said that Thank you. a you'd that correct? expectation; $XX bit

Luis Marchese

And Yes. certainly, not that low prices.

So prices. stop this other won't

Unidentified Analyst

Okay.

So the get a lower or then could give us $XX progression you million and remainder quarters, the of September quarterly June guidance XXXX the the with for would December? [Indiscernible] to range? there end

Luis Marchese

I line somewhat QX the see second QX think you then being uptake half, and should going in see in Jim. with really significant you the to

still really So it's sticking.

guidance first broken If you I we'll believe the ranges at be year. this look second-half, in half those and by

Unidentified Analyst

similar in fourth for drive ramp of going suggest to [Indiscernible], the I fourth to the not what's that third as you're quarters clear if Well, looking third the for quite level the I'm the a and quarter. up show EBITDA the and significant Okay. single-core should quarter ramp-ups.

So can what's please? understand us you help improvement, drive that going to

Luis Marchese

really It's scale. to Bolivar X,XXX the per at the going to day. up tonnes significant. working really X,XXX being It's scale. be That's

Unidentified Analyst

Okay. Thank you.

Operator

ahead. comes Asset Chen, Management. Lynn please The Chen Lynn at next with question from go

Unidentified Analyst

you. the how water Peru answered. level, you -- issue water that for taking Most my for would water one How question for challenging see, just get level. do take? Thank been of you mine long permit the to instance, map I'm Thank then the below Hi. and is the to curious, has my of questions.

Luis Marchese

mindset for related We [Indiscernible] impact fairly full you've level, Thank And draw the progress has take issue [Indiscernible] different -- told to in which to history of are reach in three you and to on as Channel process X that that XX a complicated or, workloads meeting up robust their and those own into processes environmental can treatment. years minute got too. order as fee us.

with that finish into go of these I on number new major to started we and for next foresee We apply issues good and [Indiscernible] we don't and been through and then would a has year process was conduct because the the areas. running on the years. quite those in for expect then process So mining areas year to [Indiscernible] last areas to who's we the that

just communities [Indiscernible] we and to follow the the with have and process So keep [Indiscernible] the

Unidentified Analyst

for And great. congratulations, Okay Thank your you. high-grade underground. recent then discovery

So it's too to now have or size relatively the -- how it's early -- -- side tell? of do you right that discovery it

Luis Marchese

still [Indiscernible]. Thank will grade be for it's believe it it's the been congratulation. I is [Indiscernible] to that but more your that mining that the help think us tonnage, which than over going early, years, Yeah, high you and these we've about grade [Indiscernible] we that replace the low

still ore but nature give So it's want going to looking [Indiscernible] to that that we're us similar particularly still understate we we don't bodies, relevant may grade. will area, tell. And to so some I other but more the hopeful in that higher are able be some find

Unidentified Analyst

take will you. I others it the offline. maybe [Indiscernible] Thank you. Thank Great.

Luis Marchese

Thank you.

Operator

Office. follow-up question from ahead. a Leon Omega Please at have We Cooperman Family go

Leon Cooperman

leadership any on just I industry Thank into government you. going in of negative? in Peru, What's was insight the friendly, of moves the country? company-friendly, curious the industry latest terms

Luis Marchese

is we difficult different of government speed that with not deal necessarily [Indiscernible] how case. really Actually, that's because on the there a [Indiscernible]. industry. [Indiscernible] the the supporting just That's phases has shown [Indiscernible] question your

job. So small new few now the offering And experience. a of entities. it's ministry is [Indiscernible]. our now on a if the fees the [Indiscernible]. I'm the considering have technical months and only the required people [Indiscernible] very that in [Indiscernible] are concerns These are But particularly don't with that, of experience that

a answer. how But So we question it's works. it to will see difficult

Unidentified Analyst

for you Appreciate it. Do have question your thank easy Good you want and an me to response. ask luck you you?

good Okay, luck.

Luis Marchese

you. Thank Thank you.

Operator

remarks. final hand back any for no so it have We further questions, I'll

Christina Papadopoulos

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

conclude please the well call. contact presentation, today's found the in Pay. Our Flex be as can as operator, on you, company's information Thank

Operator

you This quarter Financial concludes joining us. Results Thank the Sierra XXXX crew. first Metals for

You lines. may disconnect your now

Sierra Metals (SMTSF) 12 May 222022 Q1 Earnings call transcript