Monday, August 15, 2022
Sierra Metals (SMTS)
Unexpected 2Q Loss; Anticipate a Stronger Second Half
Sierra Metals Inc. is a diversified Canadian mining company with Green Metal exposure including increasing copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peru and Mexico that are within close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Second quarter financial results. Sierra Metals reported an adjusted net loss of $11.6 million, or $(0.07) per share, compared with net income of $5.9 million, or $0.04 per share, during the prior quarter. We had forecast net income of $5.2 million, or $0.03 per share. Adjusted EBITDA amounted to $1.4 million compared to $16.0 million during the prior quarter. Second quarter financial results reflected lower metal prices and margin, along with an $11.0 million mark-to-market adjustment to unsettled open sales positions at the end of the second quarter due to the decline in metal prices toward the end of the second quarter. Revenue from metals payable decreased to $49.9 million compared to $57.2 million during the first quarter of 2022.
Adjusting estimates. Sierra lowered its 2022 production guidance and now expects to produce between 70.0 million and 78.0 million copper equivalent pounds compared with prior guidance of 79.5 million to 89.7 million pounds. The revised forecast reflects a slower operational turn-around at the Bolivar mine and the impact of underground flooding at the Cusi mine during the second quarter. EBITDA is now expected to be in the range of $61.0 million to $67.0 million compared to prior guidance of $90.0 million to $105.0 million. We have lowered our full year 2022 EPS and EBITDA estimates to $0.06 and $63.9 million from $0.18 and $89.1 million, respectively. …
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.
