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Wednesday, May 6, 2020
Sierra Metals (SMTS)(SMT:CA)
Resetting Expectations
As of April 24, 2020, Noble Capital Markets research on Sierra Metals is published under ticker symbols (SMTS and SMT:CA). The price target is in USD and based on ticker symbol SMTS. Research reports dated prior to April 24, 2020 may not follow these guidelines and could account for a variance in the price target.
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. Yauricocha is an underground polymetallic mine using the sublevel block caving and cut-and-fill mining methods. Bolivar is a copper-silver-zinc-gold underground mine using room-and-pillar mining method. The majority of the revenue is earned by selling of the mineral concentrates to its customers in Peru.
Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Lowering estimates. We are lowering our 2020 EPS and EBITDA estimates to $0.05 and $60.8 million from $0.12 and $81.5 million, respectively. The revised estimates reflect a lower first quarter Yauricocha mine EBITDA contribution due, in part, due to higher costs, and lower company-wide production and average realized metals prices for the balance of the year. While the Cusi mine was put in care in maintenance in response to Mexican government mandated work restrictions associated with COVID-19, we now assume the Cusi mine will remain in care and maintenance for the remainder of 2020. We expect the company to undertake more development work to position Cusi for greater production capacity and margin improvement. We have also lowered our 2021 EPS and EBITDA estimates to $0.19 and $108.6 million from $0.24 and $122.6 million to reflect lower metal prices and margins.
COVID-19 work restrictions. In Peru and Mexico, work restrictions are expected to continue until May 10 and May 30, respectively. In Mexico, operations in remote locations, including the Bolivar mine, may return to service as early as May 18. While it may take a few weeks to ramp up to normal production levels, we expect Yauricocha and Bolivar to resume production on May 11 and…
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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.
