Sierra Reports Revenue Increase Despite Lower Metals Prices

Sierra Metals Inc. (TSX:SMT) filed its unaudited financial statements and management discussion and analysis for 2014′s second quarter, commenting that its revenue came to $45.6 million, up from $36.2 million in the year-ago period. A number of factors enabled the company to achieve that result despite lower metals prices.

Other Q2 financial highlights include:

• Adjusted EBITDA of $21.3 million for the three months ended June 30, 2014 compared to $12.9 million for the same period in 2013. Adjusted EBITDA of $38.5 million for the six months ended June 30, 2014 compared to $31.4 millionfor the same period in 2013. The increase in adjusted EBITDA for 2014 compared to 2013 is mainly due to the increase in revenues as a result of the production ramp up in Bolivar from 1,000 tpd to 2,000 tpd since late in 2013, the higher silver and lead head grades and recoveries at Cusi, and the higher lead head grades and higher silver and lead recoveries at Yauricocha.  In addition, the Company recorded higher gross margins during the period as a result of the measures taken to increase operating efficiencies and reduce costs. Moreover, the Company has improved its EBITDA results over the last quarters in Peru due to higher metal production and lower operating costs, and in Mexicodue to higher throughput levels and economies of scale.

• Cash flow generated from operations of $10.7 million for the three months ended June 30, 2014 compared to $5.8 million for the same period in 2013. Cash flow generated from operations of $21.5 million for the six months endedJune 30, 2014 compared to $7.6 million for the same period in 2013.  The increase in cash flow is mainly the result of higher revenues generated, higher gross margins and lower payments of workers’ profit sharing and taxes during 2014.

• Adjusted net income attributable to shareholders of $9.5 million or $0.06 per share for the three months ended June 30, 2014 compared to $3.6 million or $0.02 per share for the same period in 2013. Adjusted net income attributable to shareholders of $16.6 million or $0.10 per share for the six months ended June 30, 2013 compared to $11.4 millionor $0.07 per share for the same period in 2013.

Audra Walsh, Sierra’s president and CEO, commented:

Sierra continued reporting strong financial results during the second quarter of 2014. Main drivers include solid ore production growth, especially in Mexico. In addition, the Company has increased operating efficiencies and has continued implementing cost reduction measures to further increase its operating cash flow generation. On current metal prices, we expect to maintain strong financial results during the second half of 2014.

Click here to read the full Sierra Metals Inc. (TSX:SMT) press release.