Movers and SHAKERS
Thursday, January 9, 2020
Sierra Metals (SMTS)
Plan to Return Capital in 2020 Highlights Confidence in Sustainable Free Cash Flow Growth
Sierra Metals Inc is a precious and base metals producer in Latin America. The company acquires, explores, extracts, and produces mineral concentrates consisting of silver, copper, lead, zinc and gold in Mexico and Peru. Its activity includes the operation of the Yauricocha Mine in Peru, and the Bolivar and Cusi mines in Mexico. Yauricocha is an underground polymetallic mine using the sublevel block caving and cut-and-fill mining methods. Bolivar is a copper-silver-zinc-gold underground mine using room-and-pillar mining method. The majority of the revenue is earned by selling of the mineral concentrates to its customers in Peru.
Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Returning capital to shareholders. The company’s Board of Directors has approved a plan to return up to US$30 million to shareholders in 2020. Sierra Metals intends to commence an issuer bid under which the company will offer to repurchase up to US$15 million of its common shares from shareholders. The offering will be conducted using a modified Dutch auction. Terms of the offer will be announced in the second quarter of 2020. As of September 30, 2019, common shares outstanding were 162,636,500.
Share repurchases or dividends? The Board is evaluating how to return the remaining US$15 million, including the potential for additional issuer bids. Going forward, management expects to be able to return, on an annual basis, a significant portion of its excess free cash flow to shareholders. We think this could be executed through additional share repurchases or...
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.