Value Microcaps Junior Miners

[dr_airtime]

SMT.TO - talked to Corp Dev..

..guy Mike Macallister. Will provide a more thourough update later but here is a quick summary.

- Formerly Dia Bras. Bought flagship Yauricochoa from rich Mexican Family who was not operating mine with long-term sustainability in mind. Family still owns about 10%.

- Apparently since 2011 they have been using jack-leg drilling (manual labour intensive drilling for development) instead of more efficient mechanized jumbo drilling. Should be some opex upside from planned transition. Mine still low cost even with this! (Peru Labour costs)

- Arias Resource Capital owns 51% in two funds. One of the funds has expired and has to liquidate within 2 years so plan is likely to put entire company up for sale in 2017. Have your attention? They won't sell without doing more drilling with the recent discovery of Esparanza zone.

- Although mine has operated for 60 years, it started up on a mountain and althought they are deep, there is a horizontal tunnel out to the processing plant at the 720 level so current mining is only 200m below that tunnel. There are water issues they are encountering as they go deeper though that required them to pre-drill water removal wells before development. See slide 11. Basically, not that deep from an opex perspective.

http://s2.q4cdn.com/485819848/files/doc_presentations/2016/SMT-Corp-Pres-April-2016.pdf

- The Esparanza zone is the most significant discovery in history of mine. They have alread extended a ramp into the zone and plan to start producing from here in Q3-2016. Mike mentioned 5% copper-equivalent but am confirming that number as it is a mix of copper-silver-gold-lead-zinc-silver. See slide 11 above as the ramp is apparently already extended to Esparanza. There is a limestone barrier they never drilled across before this is the reason it took so long to find. Could be large resource upside on the other side.

- this is PR for the Esparanza zone that will be brought into production in Q3.

http://www.sierrametals.com/investors/news-releases/press-release-details/2016/Sierra-Metals-discovers-a-significant-new-high-grade-zone-at-its-Yauricocha-mine-in-Peru/default.aspx