Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sierra Metals Inc (SMTSF, Financial) achieved record revenues of over $272 million in 2024, marking a 19% increase from 2023.
- The company exceeded its 2024 production guidance, with higher throughput rates leading to increased copper, zinc, and silver production.
- Yauricocha mine's development below the 1,120 level was completed on time and on budget, significantly enhancing production capacity.
- The refinancing of long-term debt into a $95 million facility improved financial flexibility and working capital.
- Sierra Metals Inc (SMTSF) reported a significant increase in adjusted EBITDA, reaching $74.2 million in 2024, a 44% rise from the previous year.
Negative Points
- Despite operational improvements, Sierra Metals Inc (SMTSF) faces challenges with an unsolicited takeover bid, which has been a market distraction.
- The company anticipates high capital expenditures of around $75 million in 2025, similar to 2024, impacting free cash flow.
- Bolivar mine's gold production decreased by 19% in Q4 2024 compared to Q4 2023.
- Sierra Metals Inc (SMTSF) is dealing with a significant intercompany loan balance of $55 million, which remains unresolved.
- The company is undervalued compared to peers, partly due to the ongoing takeover bid and market perception issues.
Q & A Highlights
Q: You mentioned an EBITDA projection of $130 million for this year. Can you clarify if this is accurate?
A: Yes, the EBITDA projection for this year is around $130 million. We expect it to remain steady over the next two years if current prices hold and production levels remain constant. - Ernesto Valdez, CEO
Q: What are your expectations for CapEx and free cash flow in the coming years?
A: CapEx is expected to be high this year, around $75 million, and likely similar next year. However, we anticipate a decrease in CapEx after that as we complete mine development and capacity expansion projects. - Ernesto Valdez, CEO
Q: With current metal prices, could the company achieve $150 million to $160 million in EBITDA?
A: While higher metal prices could improve our performance, we are currently guiding an EBITDA of $130 million due to ongoing high CapEx and debt repayments. - Ernesto Valdez, CEO
Q: What is the projected year-end debt for this year?
A: We expect the year-end debt to be around $85 million, as we plan to pay down approximately $10 million of principal. - Jean Pierre, CFO
Q: Can you provide your copper and gold price estimates for 2025?
A: Our projected copper price for 2025 is around $4.20 per pound, and for gold, it is $2,300 per ounce. - Jean Pierre, CFO
Q: What is the status of the intercompany loan with Minera Corona?
A: We have repaid the initial $25 million and are working on a mechanism to repay the remaining balance as part of our corporate debt refinancing. The current balance is around $55 million. - Jean Pierre, CFO
Q: Why are cash costs and all-in sustaining costs at Yauricocha expected to be lower in 2025?
A: The reduction is mainly due to increased production at Yauricocha, as we are now operating at full capacity. - Jean Pierre, CFO
Q: Are there any proposals for the sale, merger, or acquisition of Sierra Metals?
A: We are evaluating strategic options to maximize long-term shareholder value, led by a special committee of independent directors. Business as usual remains an option, but we are exploring opportunities that align with our long-term strategy. - Ernesto Valdez, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
