Cara Community GSM 50: Sierra Metals

Sierra Metals (TSX: SMT) (NYSE Amex: SMTS) reviewed 10-06-2020

Market Cap: 237 Million (USD)

Share Price: 1.45 (USD)

Shares outstanding: 162,810,554 as of 30 June 2020

Cash:     $40.7 M (USD) as of 30 June 2020

Debt:     $99 M (USD) via Credit facility as of 30 June 2020

Current operations: Yes

Insiders: Low

Institutional: 25 institutions hold 65% of float


Investor Presentation:

CEO: Luis Marchese

Good mining jurisdictions — three Operating mines in Peru and Mexico

Has a large number of development properties, also in Peru and Mexico

Operating Mines:

Yauricocha (Peru) – Ag (14%) and small amt of Au (2%); mostly Zinc-Copper-Lead

Bolivar (Mexico) – 70% Cu, 16% Au, 14% Ag; produced 13,500 tons of Copper in 2019

Cusi (Mexico) – Silver mine with 7% lead; produced 1M oz. of silver in 2019; grade 180 g/ton

Cusi has potential to increase silver production; the company mostly mines copper, lead, and zinc and has a current silver production only of about 25%

They have 10 properties in Chihuahua Mexico and another four in Peru. Five are in late-stage development

Bottom line:

  • This is a little tough to value due to the overweighting of base metals. Yet, the company has been finding nice grade silver and is drilling. All-in costs for silver (free-cash-flow) ~$11 oz (USD)
  • The 1.5M at $24 silver is $36M (USD) represents ~15% of their mkt cap
  • Approx $74.25M copper value is 31% of mkt cap (calc at $2.75 / pound)
  • Trading at the mid-point of the 52-wk range of $0.45-$2.75 USD
  • No position, but considering it

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