Wednesday, April 17, 2019

Sierra Metals (SMTS)

How Does The Worker Strike Affect 2019 Production Expectations?

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.  

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• SMTS reports first quarter production results.  Compared with the prior year period, first quarter production of silver increased 16.3% to 691 thousand ounces, lead production increased 10.2% to 6.9 million pounds and gold production increased 1.7% to 1,986 ounces.  Copper and zinc production declined 4.4% and 9.8% to 7.7 million and 16.4 million pounds, respectively.  Compared to the fourth quarter of 2018, production of copper, lead, gold, zinc and silver fell 13.4%, 12.5%, 7.1%, 6.4% and 1.4%, respectively.  The Yauricocha mine experienced a 14% reduction in throughput during the first quarter due to a worker’s strike that resulted in 12 days of lost production.  Management has maintained its 2019 production guidance range and we think there may be opportunities to gain lost ground throughout the remainder of the year.
• Updating estimates.  While we are making no changes to our 2020 EPS or EBITDA estimates, we are trimming our 2019 EPS and EBITDA estimates to $0.19 and $101.2 million from $0.20 and $103.9 million, respectively.  Our 2019 revi...