Sierra Metals announces third quarter 2013 financial results of its subsidiary Sociedad Minera Corona in Peru

VANCOUVER, Oct. 31, 2013 /PRNewswire/ - 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 2013. The Company holds an interest of 81.8% 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.

Daniel Tellechea, President and CEO of Sierra Metals, commented: "Corona's results for the third quarter of 2013 decreased revenues were attributed to both lower commodity prices and lower metal production relative to the same period in 2012. However, Corona has achieved solid progress on the implementation of cost reduction measures during the quarter that have partially mitigated the effect of a less favorable commodity price environment. Corona is a mature and profitable operation that has maintained strong net income margins across several price cycles."

The following table sets out select unaudited financial information as of September 30, 2013 and 2012:

Corona's Financial Highlights

• Net income of US$3.9 million or US$0.109 per share for the third quarter of 2013 compared to US$6.7 million or US$0.185 per share for the same period in 2012. Net income of US$14.9 million or US$0.414 per share for the first nine months of 2013 compared to US$44.1 million or US$1.226 per share for the same period in 2012.
• Adjusted EBITDA of US$9.6 million for the third quarter of 2013 compared to US$23.8 million for the same period in 2012. Adjusted EBITDA of US$38.2 million for the first nine months of 2013 compared to US$67.6 million for the same period in 2012. The adjusted EBITDA generated by Corona during 2013 was negatively impacted by the decrease in the commodity prices and lower metal production driven by higher dilution in head grades at Yauricocha.
• Operating cash flow of US$4.2 million for the third quarter of 2013 compared to US$17.6 million for the same period in 2012. Operating cash flow of US$7.8 million for the first nine months of 2013 compared to US$36.0 million for the same period in 2012. The main drivers of operating cash flow on the first nine months of 2013 were EBITDA of US$38.2 million, uses of working capital for US$17.8 million and payment of taxes for US$16.7 million. The uses of working capital include the payment of a 2012 profit sharing liability for US$7.8 million. No other payments for profit sharing obligations are due during 2013. The rest of working capital items are expected to reverse over the next few quarters.
• Income taxes of US$2.3 million for the third quarter of 2013 compared to US$11.5 million in the same period of 2012. Income taxes of US$9.9 million for the first nine months of 2013 compared to US$18.0 million in the same period of 2012.
• Revenues of US$21.9 million in the third quarter of 2013 compared to US$40.0 million for the same period in 2012. Revenues of US$82.5 million in the first nine months of 2013 compared to US$113.6 million for the same period in 2012.
• Cash and cash equivalents of US$22.4 million as of September 30, 2013 compared to US$72.1 million as of December 31, 2012. Cash and cash equivalents have decreased during the first nine months of 2013 mainly as a result of the dividend paid by Corona of US$43.3 million and capital expenditures of US$13.5 million.
• A negative silver cash cost of US$11.25 per ounce ("oz") at Yauricocha in the third quarter of 2013 compared to a negative cash cost of US$17.46 in the same period of 2012. A negative silver cash cost of US$13.37 per oz at Yauricocha in the first nine months of 2013 compared to a negative cash cost of US$ 21.44 in the same period of 2012.

Corona's Operational Highlights

• Silver production of 447,145 oz in the third quarter of 2013 compared to 559,719 oz for the same period in 2012. Silver production of 1,402,805 oz in the first nine months of 2013 compared to 1,596,858 oz for the same period in 2012.
• Copper production of 1.5 million pounds ("lb") in the third quarter of 2013 compared to 2.0 million lb for the same period in 2012. Copper production of 5.3 million lb in the first nine months of 2013 compared to 6.9 million lb for the same period in 2012.
• Lead production of 8.3 million lb in the third quarter of 2013 compared to 9.8 million lb for the same period in 2012. Lead production of 26.1 million lb in the first nine months of 2013 compared to 26.6 million lb for the same period in 2012.
• Zinc production of 12.3 million lb in the third quarter of 2013 compared to 14.1 million lb for the same period in 2012. Zinc production of 37.4 million lb in the first nine months of 2013 compared to 36.1 million lb for the same period in 2012.
• Gold production from the Yauricocha Mine was 1,673 oz in the third quarter of 2013 and 2,409 oz for the same period in 2012. Gold production from the Yauricocha Mine was 5,071 oz in the first nine months of 2013 and 8,301 oz for the same period in 2012.

The following table sets out production results for the third quarter ended September 30, 2013 and 2012:

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, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.

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. Other than statements of historical fact, all statements are "forward-looking statements", which involve various known and unknown risk and uncertainties and other factors, including market conditions that may affect the Company's ability to execute its current business plan.  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.

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