Resource World Magazine

A P R I L / M A Y 2 0 2 0 www.resourceworld.com 23 "Our team continues to be focused on the health and safety of our work force, commented Igor Gonzales, President and CEO of Sierra Metals. He went on to say that the company plans to facilitate a quick and efficient ramp-up back to nor - mal production levels once the suspension of non-essential activities is lifted. COVID-19 IMPACT ON COMPANY AND OPERATIONS A State of Emergency was declared on March 16, 2020 by the Peruvian Government in an effort to contain the spread of the COVID-19 Virus. As a result, Sierra Metals sent home about 500 employees at its Yauricocha Mine and has maintained a skeleton crew to oversee critical aspects of the operation. More recently, on April 1st, the Mexican Federal Government announced a suspension of all non-essential activities for 30 days. Sierra Metals stated it will maintain an essential services crew at its Bolivar Mine site and it will put the Cusi Mine on care and mainte - nance during this period. Due to uncertainty of the effect that the COVID-19 pandemic could have on the company's operations and financial condition, Sierra Metals is implementing proactive and reactive mitigation measures to minimize any potential impacts COVID- 19 may have on its people, communities, operations, supply chain, and finances. This also includes preserving capital and deferring capital programs where appro - priate, to improve liquidity. Towards that end, Sierra Metals is postponing a US $30 million share buyback plan that it announced in early January this year. HIGHLIGHTS FROM 2019 Sierra Metal's ambition is to crown itself as Latin America's premier low-cost pre- cious and base metals producer. Based on the company's 2019 production results, it is definitely moving in the right direction. In a recent press conference Sierra Metal's management highlighted the fact that all three of its mines increased produc - tion in 2019 and are on track to increase production in the coming years. Sierra's consolidated production throughput in 2019 tallied to 2.7 million tonnes and rep- resented a 15% increase in throughput over 2018. Copper production was up 17% over 2018 results to 39.9 million lbs and was responsible for the lion's share of revenue (38%) in 2019. Zinc production was up 6% to 81.1 million lbs and accounted for 25% of revenue. Silver production was up 24% to 3.4 million ounces and took a 19% piece of the revenue pie. Lead production was up 28% to 35.5 million lbs and gold production jumped 50% to 11,632 ounces. Lead and gold account for 12% and 6% of Sierra's overall revenue in 2019. KEY FISCAL HIGHLIGHTS OF 2019 Sierra reported revenue from production of US $229.0 million in 2019, a decrease of 1% from $232.4 million in 2018 due to lower realized metal prices and higher treatment charges related to zinc. The company tabled an adjusted EBITDA of US $65.3 million in 2019 which is a 27% drop from US $89.8 million in 2018. This was due to lower consolidated revenues and higher operating costs at all three mines. All-In sustaining costs (AISC) in 2019 were 8% higher at Yauricocha, 34% higher at Bolivar, and 40% higher at Cusi versus 2018. This was attributed to higher cash costs, higher treatment and refining costs, and higher sustaining capital expen - ditures at all the mines. Operating cash flows before movements in working capital were US $66.4 million in 2019. This represents a 26% drop from US $90.1 million in 2018. At the end of 2019, Sierra Metals had US $43.0 million of cash and cash equiva - lents and a net debt of US $56.8 million. The company's net income attributable to shareholders was $0.03 per share. "I am very pleased with the compa- ny's performance in 2019," commented Igor Gonzales. "The company continues to realize positive returns on the capital investments and operational improvement efforts at all of our mines. We have a strong balance sheet and we are preparing to SIERRA METALS LEFT: The Chumpe mill at the Yauricocha Mine in central Peru. Photo courtesy Sierra Metals Inc.

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