SMTS - Sierra Metals (SMTS)(SMT:CA) - Peruvian Operations Turn in Better than Expected 2Q Financial Results
Sociedad Minera Corona financial results. Sierra Metals reported financial results for its 81.8%-owned Peruvian subsidiary that owns the Yauricocha mine. Second quarter adjusted EBITDA amounted to $25.9 million which represented a 59.8% increase compared to $16.2 million earned in the first quarter of 2021 and was above our estimate. Compared to the first quarter of 2021, revenue, gross profit, and net income increased 21.2%, 59.6%, and 142.6% to $50.8 million, $25.9 million, and $12.6 million, respectively. Second quarter financial results benefited from higher average realized metals prices and the application of new commercial copper terms since April 2021 that included a decrease in treatment and refining charges.Updating estimates. We are increasing our 2021 EPS and EBITDA estimates to $0.27 and $147.1 million from $0.25 and $140.5 million, respectively. Our second quarter 2021 EPS and EBITDA estimates have been increased to $0.06 and $34.5 million from $0.05 and $31.0 million, respectively. We think there could be further upside to our second half estimates. Sierra received the final permit to increase throughput at Yauricocha to 3,600 tonnes per day. We expect the company to exit 2021 with aggregate capacity of 9,800 tonnes per day across all three mines. Longer-term expansions could increase capacity to nearly 18,000 tonnes per day by year-end 2024.Second quarter financial results. The company will release second quarter 2021 financial results after the market close on August 9 and will host an investor call on August 10 at 10:30 am ET.Rating remains Outperform. The Yauricocha mine performed well during the second quarter despite operational challenges associated with the pandemic. While metal grades were negatively impacted during the second quarter due to delays in the contribution from the Esperanza zone, this has since been addressed. Our rating is based on the company’s attractive long-term growth outlook and valuation. Read More >>