Sierra Metals announces 2012 fourth quarter and annual financial results of its subsidiary Sociedad Minera Corona in Peru

TORONTO, Feb. 15, 2013 /CNW/ - Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) ("Sierra") ("the Company") is pleased to announce the filing of Sociedad Minera Corona S.A.'s ("Corona") 2012 fourth quarter and annual unaudited financial statements and management's discussion and analysis. The Company holds an ownership 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 "Sierra is pleased with the continued success of the Corona acquisition. Corona is a low-cost producer with strong cash flow generating capacity that has added substantial value to the Company since May 2011. The Yauricocha Mine will continue to be an integral part of the Company's operations as the development of the new shaft at depth will lead to increases in production over the coming years".

The following table sets out select unaudited financial information for the fourth quarter and year ended December 31, 2012 and 2011:

(In thousands of US dollars, unless stated)		3 months ended			Year ended
		Dec 31, 2012	Dec 31, 2011		Dec 31, 2012		Dec 31, 2011
Revenue	US$	35,989	$	31,363	$	149,566	$	144,603
EBITDA		15,013		19,667		81,392		93,569
Operating cash flows		14,248		15,351		56,273		68,275
Income Taxes		4,650		8,252		30,385		27,836
Net Income		7,455		15,883		47,660		63,444
Cash Cost per oz of Ag (Yauricocha)		(15.46)		(15.78)		(20.46)		(30.99)

 

Corona's Financial Highlights (US$000)

• Net income of US$7,455 or US$0.207 per share for the fourth quarter of 2012 compared to US$15,883 or US$0.442 per share for the same period in 2011. Net income of US$47,660 or US$1.325 per share and US$63,444 or US$1.763 per share, for the year ended December 31, 2012 and 2011, respectively.
• EBITDA of US$15,013 for the fourth quarter of 2012 compared to US$19,667 for the same period in 2011. EBITDA of US$81,392 and US$93,569 for the year ended December 31, 2012 and 2011, respectively. The main drivers for the decrease in EBITDA include: a decrease in revenue per tonne due to lower copper production, higher cash costs resulting from increases in production levels and higher costs of consumables and third party services.
• Operating cash flows of US$14,248 for the fourth quarter of 2012 compared to US$15,351 for the same period in 2011. Operating cash flows of US$50,852 and US$68,275, for the year ended December 31, 2012 and 2011, respectively. In addition to lower EBITDA levels, the decrease in operating cash flows during 2012 was driven by higher taxes resulting from the new mining tax law established in Peru during the fourth quarter of 2011.
• Income taxes of US$4,650 for the fourth quarter of 2012 compared to US$8,252 in the same period of 2011. Income taxes of US$30,385 and US$27,836 for the year ended December 31, 2012 and 2011, respectively.
• Cash and cash equivalents of US$72,071 as of December 31, 2012 compared to US$14,935 as of December 31, of 2011.
• Revenues of US$35,989 for the fourth quarter of 2012 compared to US$31,363 for the same period in 2011. Revenues of US$149,566 and US$144,603, for the year ended December 31, 2012 and 2011, respectively. Despite a revenue increase of 3% during 2012, the revenue per tonne decreased as a result of a change in Corona's revenue mix.
• A negative silver ("Ag") cash cost of US$15.46 per ounce ("oz") at Yauricocha in the fourth quarter of 2012 compared to a negative cash cost of US$15.78 per oz in the same period of 2011. A negative cash cost of US$ 20.46 per oz for the year ended December 31, 2012 compared to a negative cash cost US$ 31.99 per oz in 2011.

Corona's Operational Highlights

• Silver production of 547,114 oz in the fourth quarter of 2012 compared to 530,449 oz for the same period in 2011. Silver production of 2,143,971 oz and 2,071,208 for the year ended December 31, 2012 and 2011, respectively.
• Copper ("Cu") production of 2.2 million pounds ("lb") in the fourth quarter of 2012 compared to 2.5 million lb for the same period in 2011. Copper production of 9.1 million lb and 13.5 million lb for the year ended December 31, 2012 and 2011, respectively.
• Lead ("Pb") production of 8.6 million lb in the fourth quarter of 2012 compared to 7.9 million lb for the same period in 2011. Lead production of 35.2 million lb and 32.6 million lb for the year ended December 31, 2012 and 2011, respectively.
• Zinc ("Zn") production of 13.8 million lb in the fourth quarter of 2012 compared to 8.6 million lb for the same period in 2011. Zinc production of 49.9 million lb and 34.3 million lb for the year ended December 31, 2012 and 2011, respectively.
• Gold ("Au") production from the Yauricocha Mine was 2,181 oz in the fourth quarter of 2012 and 10,491 oz for the year ended December 31, 2012.
• On October 19, 2012 the Company's Board of Directors unanimously approved the constructions of an internal shaft as well as a new gallery at the 720m level, suited for the use of train engines. The total investment will be approximately US$26,593 and it is expected to be executed in 27 months.

The following table sets out production results for the fourth quarter and year ended December 31, 2012 and 2011:

Yauricocha Production^1	3 Months Ended			Year Ended
	Dec 31,2012	Dec 31, 2011	% Var.	Dec 31, 2012	Dec 31, 2011	% Var.
Silver production (oz)	547,114	530,449	3%	2,143,971	2,071,208	4%
Copper production (000 lb)	2,172	2,525	-14%	9,061	13,506	-33%
Lead production (000 lb)	8,571	7,871	9%	35,200	32,572	8%
Zinc production (000 lb)	13,803	8,579	61%	49,888	34,294	45%
Gold Production (oz)	2,181	N.A.	N.R.	10,491	N.A.	N.R.

 

Corona's Exploration Highlights

• On September 12, 2012 the Company identified a significant tonnage target below the central mine workings at the Yauricocha Mine. The potential of the target below the known mine workings is approximately 5-6 million tonnes, roughly averaging 90-110 g/t Ag, 2-3% Pb, 0.5-1.0% Cu, 2-3% Zn and 0.6-1.0 g/t Au. This target is in addition to the reserves and resources previously announced on September 6, 2012 and the Company will continue to explore this new zone in the fourth quarter of 2012 and 2013.

Quality Assurance

The technical content of this news release has been approved by Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101 and Head of Exploration for Sierra Metals Inc.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on precious and base metals from its Yauricocha mine in Peru and its Bolivar mine in Mexico. The Company is also advancing its Cusi silver project in Mexico from advanced development into commercial production. 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. 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 TSXV under the symbol "SMT".

This press release does not constitute an offer to sell or solicitation of an offer to buy the securities in the United States or any other jurisdiction. The Common Shares will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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.

For further information on Sierra Metals, please visit www.sierrametals.com or contact:

Daniel Tellechea
President & CEO
Sierra Metals Inc.
1 (866) 493‐9646

Matt Morrish
Director, Investor Relations
Sierra Metals Inc.
1 (866) 493‐9646