Sierra Metals (SMTS) Q2 2024 earnings summary

Executive summary

• Q2 2024 production was 16.8 million copper equivalent pounds from 630,000 tons of ore, down 4% year-over-year, but in line with expectations and positioned for a stronger second half of 2024.

• Q2 2024 marked a transitional quarter with planned downtime at Bolivar for a new crusher and ongoing development at Yauricocha below the 1120 level, both mines generating strong cash flow from operations.

• Safety initiatives included critical risk management, new risk champions, and empowering employees to halt unsafe work, aiming for zero harm.

• Community engagement focused on health, education, and infrastructure, including water projects and educational support in Peru and Mexico.

• The company reaffirmed 2024 production and cost guidance, expecting improvements in grades and throughput in H2 2024.

Financial highlights

• Q2 2024 consolidated net revenue ranged from $57.5 million to $63.1 million, with H1 2024 net revenue reaching $120 million.

• Q2 2024 cash flow from operations before working capital was up to $16.5 million; H1 2024 cash flow was $31.4 million, up 30% year-over-year.

• Adjusted EBITDA from continuing operations was $12.9 million in Q2 and $30.8 million in H1, up 3% year-over-year.

• Cash position as of June 30, 2024, was $22.5 million, nearly 150% higher than year-end 2023 and double Q1 2024.

• Net income from continuing operations was $4.9 million in Q2 2024, up from $3.9 million in Q2 2023.

Outlook and guidance

• 2024 annual production, cost, and capital expenditure guidance reaffirmed, with H1 2024 production tracking within guidance ranges.

• Yauricocha is expected to reach full capacity of 3,600 tons per day by Q4 2024, a 40% increase over current levels.

• Bolivar production is anticipated to increase in H2 2024 as water issues are resolved and new equipment is operational.

• Ongoing search for partners to support greenfield exploration in Peru and Mexico.