SMTS reports second quarter production results. Compared with the prior year period, second quarter production of copper was flat at 9.7 million pounds, while silver, lead and zinc decreased 31.6%, 20.6% and 17.2% to 572 thousand ounces, 6.4 million pounds and 13.7 million pounds, respectively. Gold production increased 8.7% to 2,762 ounces relative to the prior year period. Second quarter production was negatively impacted by government-mandated work constraints in Mexico and Peru. The decline in silver production was due to the Cusi mine being under care and maintenance. Despite the negative impact of COVID-related work restrictions, production levels were above our expectations due to a strong performance by the Bolivar mine.Updating estimates. We are increasing our 2020 and 2021 EPS estimates to $0.07 and $0.24 from $0.05 and $0.19, respectively. Our estimates reflect Cusi’s return to service in the third quarter and higher commodity prices. Recent strength in metals prices should support stronger second half financial performance. We forecast 2020 and 2021 EBITDA of $71.6 million and $123.8 million, respectively.Significant resource growth potential. The company has an enviable track record of growing resources through brownfield exploration to support planned capacity expansions. The recent discovery of a new high-grade silver zone should better position the Cusi mine for longer-term production expansion and greater profitability. In 2020, Sierra expects to complete over 35,000 meters of drilling as part of its brownfield exploration program. Rating is Outperform. Our rating is based on Sierra Metals’ attractive valuation and favorable long-term growth outlook driven by the company’s increasing production profile and productivity improvements.Read More >>