Through its wholly owned subsidiary, Dia Bras Peru S.A.C., Sierra Metals acquired 82% of Minera Corona, S.A. ("Corona") in May of 2011. Corona owns 100% of the Yauricocha Mine. Yauricocha, is an underground mine located in western central Peru in the Yauyos province, approximately 12 km west of the Continental Divide. The Yauricocha property covers 18,778 hectares that straddle a 20 km strike length of the prolific Yauricocha fault, a major ore controlling structure in this part of western central Peru. The mine is at an average altitude of 4,600 meters and has been producing for more than 68 years. Ore is processed at the on-site Chumpe plant using a combination of crushing, grinding and flotation and is permitted to produce at a rate of 3,150 tonnes per day, which is expected to increase to 3,600 tonnes per day during 2019 upon receipt of the ITS permit. A preliminary economic assessment released in June 2018, studies increasing production to 5,500 tonnes per day in 2021.
The ore is treated in two separate circuits and is extracted from three different types of deposits which include the following:
A polymetallic deposit, containing silver, lead, zinc, copper, and gold
A lead oxide deposit, containing lead, silver and gold
A copper oxide deposit, containing copper, silver, lead and gold
EXPLORATION
Peru is one of the most prolific polymetallic producing regions of the world. Sierra Metals controls a large area of prospective claims, exceeding 50,000 hectares of mining claims within the country.
The exploration program has the following goals:
Brownfield programs within and close to existing mines to exploit near mine targets that can be converted into resources and reserves and brought into the existing mine plans within a shorter period of time
Developing a pipeline of open pit and underground opportunities through a district scale study that incorporates various geological data layers, historical drill hole and mine data
Bolivar
The Bolivar Mine is comprised of 12 mining concessions and is part of the 15,217-hectare Bolívar Property land package within the municipality of Urique, in the Piedras Verdes mining district of Chihuahua State, Mexico. During 2012, the Company achieved its first full year of commercial production at the Piedras Verdes plant, located 6 km from the Bolivar Mine. Since then, production has increased from an initial capacity of 1,000 tonnes per day to a current production rate of 3,600 tonnes per day. A PEA study released in July 2018, studied increasing production to 5,000 tonnes per day in 2020.
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The effective date of the Bolivar mineral reserve and resource estimate is December 31, 2019. Details of the estimate are provided in the Company’s March 31, 2020 press releases and within a NI 43-101 technical report filed on SEDAR on May 14, 2020. Copper equivalent is based on the following metal prices: US$17.82/oz Ag, US3.08/lb Cu and US$1,354 Au. Totals for Proven and Probable are diluted for internal waste. Metallurgical recovery assumptions are based on actual plant data for 2019 and are 78.6% Ag, 88% Cu, and 62.9% Au. The equivalency expression is designed to present an in-situ copper equivalent, considering the recovered value of the other metals expressed in the value of copper percent.
The equation is: CuEq = ((Ag*Ag$*Agrec)+(Cu*Cu$*Curec)+(Au*Au$*Aurec)) / (Cu$*Curec).
The Bolivar Mine comprises of 12 mining concessions and is a contiguous portion of the 15,217 hectare Bolívar Property land package within the municipality of Urique, in the Piedras Verdes mining district of Chihuahua State, Mexico. During 2012, the Company achieved its first full year of commercial production at the Piedras Verdes plant, which is located 6 kilometers from the Bolivar Mine that had an initial capacity of 1,000 tonnes per day. In September 2013, the Piedras Verdes plant further increased its daily throughput capacity to 2,000 tonnes per day by installing a new circuit. In 2018, an additional mill was added to help grind size optionality and improve recoveries at the plant. Production increased incrementally throughout 2019, surpassing the initial Company goal of 3,600 tonnes per day and finishing off the year with a throughput capacity of 4,200 tonnes per day. In 2020 Bolivar's througput capacity increased further to 5,000 tonnes per day and the Company completed a preliminary economic assessment in October 2020, which examined doubling production to 10,000 tonnes per day between 2024 to 2026. The Company is now conducting Pre-feasibilty Studies to further assess the economics of such an expansion.
The ore is treated using a flotation process in a copper circuit and is extracted from various copper skarn deposits which include the following:
A copper skarn deposit, containing copper, silver and gold
EXPLORATION
The Bolivar Property is situated within the Piedras Verdes Mining District, which is within the major north-northwest trending Sierra Madre Precious Metals Belt extending across the states of Chihuahua, Durango and Sonora in northwestern Mexico. In general, rocks in the area trend northwest and dip gently to the northeast. These rocks are also cut by several northwest and northeast-trending faults.
Skarn-type Cu-Zn-Ag-Au mineralization in the Bolivar area is structurally controlled and forms mineralized zones that are close to structures. Mineralized zones occupy pre-existing fault structures and extensional openings formed during mineralization.
The exploration program has the following goals:
Brownfield programs within and close to existing mines to exploit near mine targets that can be converted into resources and reserves and brought into the existing mine plans within a shorter period of time
Developing a pipeline of open pit and underground opportunities through a district scale study that incorporates various geological data layers, historical drill hole and mine data
Cusi
The Company's Cusi Mine is located in Chihuahua State, Mexico, approximately 135 kilometres from Chihuahua City. The Property encompasses 73 concessions covering 11,665 hectares over a range of elevation of 2,000 to 2,500 meters above sea level in the Sierra Madre Occidental Mountain Range. Ore is processed at the Mal Paso Mill located approximately 40 km from the Cusi Mine. Production has increased from 600 tonnes per day in Q3 2018 to its current capacity of 1,000 tonnes per day and construction is underway to increase it to 2,400 tonnes per day in 2020.
The effective date of the mineral resource estimate is August 31, 2020.
Resources are presented at a 95 g/t Ag cut-off grade.
Details of the estimate are provided in the Company's November 18, 2020 press release and a NI 43-101 compliant technical report filed in December, 2020.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The Company's Cusi Mine is located in Chihuahua State, Mexico, approximately 135 kilometres from Chihuahua City. The Property encompasses 73 concessions covering 11,665 hectares over a range of elevation of 2,000 to 2,500 meters above sea level in the Sierra Madre Occidental Mountain Range.
Although commercial production was declared in January 2013, the Cusi Mine is still considered to be somewhat in the development stage as portions of the mines production comes from development rock within the Santa Rosa de Lima zone. Mill throughput at the Company`s Mal Paso plant increased from 450 to 650 tonnes per day in 2018 and is on-track to reach 1,200 tonnes per day in Q2 2019. In June 2018, the Company released a preliminary economic assessment examined to increase the production rate to 1200 tonnes per day in 2019 and to 2,700 tonnes per day in 2021.
The Mal Paso Plant, located 44 km from the Cusi Mine, uses a conventional crushing-milling-flotation circuit to recover the minerals and to produce commercial quality concentrates. Ore is delivered from the mine to the plant in 20 tonne trucks. Cusi processing facilities include two interconnected process plants, containing conventional ball mill and flotation plants fed from a crushing circuit. The flotation circuit has the ability to produce lead and zinc concentrates.
EXPLORATION
Exploration at Cusi is currently focused on the Cusi Fault and the Santa Rosa de Lima vein complex . The Cusi Fault extends on the Company’s property for a length of 12 kilometers. The Cusi Mine lies within the Sierra Madre Occidental Mountain Range and located within the municipality of Cusihuiriachi in the central portion of Chihuahua State, Mexico. In addition to Santa Rosa de Lima vein complex, the company is exploring within the San Nicolas Fault and the Border Fault. Additionally there are numerous satellite exploration targets which are the subject of drilling and exploration drifts.
The exploration program has the following goals:
Brownfield programs within and close to existing mines to exploit near mine targets that can be converted into resources and reserves and brought into the existing mine plans within a shorter period of time
Developing a pipeline of open pit and underground opportunities through a district scale study that incorporates various geological data layers, historical drill hole and mine data
Silver (000 oz)
2,716
3,375
3,465
3,527
Copper (000 lb)
33,968
39,889
44,262
31,757
Lead (000 lb)
27,714
35,452
32,972
30,816
Zinc (000 lb)
76,831
81,083
81,868
79,281
Gold (oz)
7,743
11,632
13,771
9,572
3 Months Ended 12 Months Ended
December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
Tonnes Processed (mt) 277,531 311,946 1,256,847 1,117,860
Silver (000 oz) 331 430 1,716 1,803
Copper (000 lb) 3,836 4,759 14,856 19,726
Lead (000 lb) 5,430 7,040 29,113 31,605
Zinc (000 lb) 14,913 21,612 79,281 81,868
Gold (oz) 957 1,112 4,059 4,292
Bolivar 3 Months Ended 12 Months Ended
December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
Tonnes processed (mt) 227,722 383,607 1,349,602 1,480,588
Copper (000 lb) 2,235 5,867 16,901 24,536
Zinc (000 lb) 0 0 0 0
Silver (000 oz) 57 149 551 772
Gold (oz) 634 2,017 4,751 8,860
December 31, 2020
December 31, 2021
December 31, 2020
Tonnes processed (mt) 84,804 82,683 295,771 230,429
Silver (000 oz) 417 343 1,260 890
Lead (000 lb) 581 590 1,703 11,367
Zinc (000 lb) 0 0 0 0
Gold (oz) 272 234 762 619
A detailed summary of 3 and 12 Months Ended December 31, 2021 production
War Triggering a Commodity Squeeze: Own Critical Green Energy Metals
By Editor -
March 3
The Russia-Ukraine War has trigged a significant squeeze in nearly all major commodities. We analyze green metals of interest and the companies best positioned. Copper: Sierra Metals & Hudbay; Lithium: SQM & Lithium Americas & Vanadium: Largo.
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Russia-Ukraine War: Sanctions Having a Wide Ranging Impact on Commodities
The unprecedented sanctions on Russia are having a wide-ranging impact across the commodity complex, since the beginning of the conflict the Bloomberg Commodity Index (a basket of 23 commodities) has spiked 10%.
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Vital energy commodities have spiked significantly, European natural gas prices are up +153% year-to-date and oil prices are up +44%.
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Russia’s Significant Positioning in Major Commodities
Russia is a major producer of many key commodities. Of world production Russia is 12% of oil production, 17% of natural gas, 6% of aluminum, 6% of nickel and 4% of
Averting a Global Energy Crisis: Green Energy Metals of High Strategic Interest
The major sanctions on Russia will likely be in effect for a protracted period, the developed world’s key focus will be to avert a global energy crisis.
We highlight three energy green metals of high strategic interest:
1. Copper
2. Lithium
3. Vanadium
Copper
Copper is a critical metal for the green economy, a key input for electric vehicles, wind and solar. Goldman Sachs projects green copper demand as a percent of total copper demand will rise from 4% in 2020 to 16% by 2030.
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Sierra Metals: 70% Discount vs. Peers
Relative to it’s small & mid cap copper producer peer group, Sierra Metals trades at a 70% discount on blended valuation fundamentals (forward price-to-cashflow, forward EV/EBITDA and forward price-to-sales).
Sierra Metals offers a diversified exposure across the metals complex, as of Q3-2021 copper and silver were the top two contributors by revenue, 38% and 21% respectively.
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Hudbay: 45% Discount vs. Peers
Hudbay trades at a 45% discount vs copper peers on blended valuation fundamentals (forward price-to-cashflow, forward EV/EBITDA and forward price-to-sales).
Hudbay is well-positioned on the cash cost curve relative to global copper peers and the company has a strong operational track record.
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Lithium
Lithium is a foundational metal for the electric vehicle market, strong EV demand puts the market in structural deficit till the end of the decade.
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SQM: 30% Discount to Large Cap Peer Albemarle
SQM (NYSE:SQM) is the second largest lithium producer in the world behind Albemarle (NYSE:ALB). The company has double the ROE vs ALB (30% vs. 15%) and trades at a 30% discount on forward EV/EBITDA.
The company announced strong Q4 2021 results, pricing for their lithium has increased 3-fold over the last year.
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Lithium Americas: 35% Discount to NPV
Lithium Americas (NYSE:LAC) is pre-production lithium company, with it’s projects having a sizeable and steady production growth through the end of the decade. It is expected that Lithium America’s projects should have attractive positions on the cost curve.
Lithium Americas trades at a 35% discount to consensus NPV of $40/share.
Vanadium
Vanadium is the strategic resource efficiency and battery metal, low carbon technology and batteries will drive demand over the next decade.
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Largo: 85% Discount to Life of Mine NPV
Largo (TSX:LGO, NYSE:LGO) is the vanadium pureplay, it is among the 3 largest producers of the metal. Largo is one of the lowest cost producers in the industry and the company currently trades at an 85% discount to its life of mine NPV ($4.2 billion).
Of important note, the life of mine NPV does not factor in the significant upside in Largo’s vanadium redox flow battery business. Additionally, Largo trades at a sizeable discount vs. its green metal peers.
Yauricocha
Through its wholly owned subsidiary, Dia Bras Peru S.A.C., Sierra Metals acquired 82% of Minera Corona, S.A. ("Corona") in May of 2011. Corona owns 100% of the Yauricocha Mine. Yauricocha is an underground mine located in western central Peru in the Yauyos province and covers an area of 18,778 hectares that straddle a 20 km strike length of the prolific Yauricocha fault. The mine is at an average altitude of 4,600 meters and has been producing for more than 70 years. Ore is processed at the on-site Chumpe plant and is permitted to produce at a rate of 3,150 tonnes per day, expected to increase to 3,600 tonnes per day in 2019. A PEA study released in June 2018, studied increasing production to 5,500 tonnes per day in 2021.
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