SMTS - Sierra Metals (SMTS)(SMT:CA) - Growth Outlook Supported by Planned Expansions and Rising Metals Prices
First quarter 2021 financial results. Sierra Metals reported first quarter 2021 adjusted net income attributable to shareholders of $4.4 million, or $0.03 per share, compared with $1.2 million, or $0.01 per share, during the prior year period. Adjusted EBITDA increased 57.1% to $25.3 million compared with $16.1 million in the prior year period. Our EPS and EBITDA estimates were $0.05 and $28.4 million. First quarter production results were impacted by some transitory operational issues that resulted in production from lower grades of ore mined at the Yauricocha and Bolivar mines.Updating estimates. We have trimmed our 2021 EPS and EBITDA estimates to $0.32 and $163.3 million from $0.36 and $166.1 million, respectively. Our estimates reflect modestly lower metal production, increased costs, and a higher tax rate. These impacts are partially offset by higher metals price assumptions. We forecast 2021 production of 4.4 million ounces of silver, 11.4 thousand ounces of gold, 44.6 million pounds of copper, 32.7 million pounds of lead, and 105.0 million pounds of zinc. Despite a slower start to the year than previously anticipated, we expect the company to show operational improvement throughout the year. Additionally, planned expansions coupled with rising metals prices bode well for 2022 and beyond.Metals pricing outlook remains favorable. Sierra is well-positioned to benefit from rising metals prices. Copper futures prices have risen 34.7% year to date through May 7 and 18.7% since the end of the first quarter. Lead and zinc futures prices are up 14.3% and 10.2% year-to-date and 4.0% and 7.8% since the end of the first quarter, respectively. Iron ore futures prices are up 31.1% year-to-date and 22.4% since the end of the first quarter. Gold and silver prices are up 6.9% and 11.8%, respectively, since the end of the first quarter.Rating remains Outperform. In our opinion, Sierra Metals offers an attractive valuation and favorable long-term growth outlook driven by a favorable metals price outlook and the company’s increasing production profile. Read More >>