Sierra planning to start production at Esperanza discovery in July

By
Friday, May 13, 2016

Canadian miner Sierra Metals, which also has operations in Mexico, said it plans to start production in July at a newly discovered area of its Yauricocha polymetallic mine in Peru in a bid to offset dwindling output.

Drilling is continuing at the underground mine's Esperanza target in Lima region's Yauyos province.

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The new area was discovered in January, COO Gordon Babcock said. Yauricocha, previously mined by state company Centromín, has been operating for 60 years.

Highlights of 5,361.8m drilled in 31 drill holes at Esperanza included 19m of 3.38% copper, 1.89% zinc, 0.68% lead, 0.52g/t gold and 110.16g/t silver, the Toronto-based company said in a statement.

"The process is to learn more about the zone. Production should begin at Esperanza in July," Babcock said in a conference call to discuss financial results. "We hope to buff up our production in the future at our operations in both Mexico and Peru."

Sierra, which last year shuffled its CEO, COO, exploration vice-president and director of corporate development, refinanced a US$48mn loan with Banco de Crédito del Perú to finance the company's acquisition of Peruvian polymetallic miner Minera Corona in 2011.

QUARTERLY EARNINGS

Sierra posted a US$5.1mn first quarter loss compared with a US$667,000 loss a year earlier due to declining metals prices and higher costs, Sierra said in its consolidated earnings statement. Sales dropped to US$23.7mn in the quarter from US$34.7mn.

Cash costs climbed to US$41.57/t of ore processed from US$38.05/t a year earlier even as silver prices fell 9% in the quarter and copper and zinc both declined 19%, the company said.

Sierra's first quarter silver output dropped to 588,000oz from 900,000oz a year earlier, while copper fell to 5.8Mlb from 6.5Mlb, lead declined to 8.3Mlb from 12.1Mlb and gold slide to 2,236oz from 2,661oz, the company said. Zinc production rose to 10.9Mlb from 10.5Mlb.

Sierra, which plans to expand its Bolívar and Cusi mines in Mexico and Yauricocha, set 2016 production guidance at 43.2-53.4Mlb zinc, 26.7-32.9Mlb lead, 24.4-30.1Mlb copper, 2.6-3.2Moz silver and 9,100-11,200oz gold. Sierra in 2015 produced 42.1Mlb zinc, 42.2Mlb lead, 23.2Mlb copper, 3.1Moz silver and 9,066oz gold.

Sierra is also developing the Adrico (gold), Victoria (copper-silver), Ipillo (poly-metallic) and San Miguel exploration projects in Peru in addition to the Bacerac (silver) and La Verde (gold) projects in Mexico.