Caledonia Mining Corporation Plc press release

Sierra Metals Reports Third Quarter 2018 Production Results

2018-10-10

NYSE - New York Stock Exchange · Jersey

Canada NewsWire

TORONTO, Oct. 10, 2018

TORONTO, Oct. 10, 2018/CNW/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) ("Sierra Metals" or "the Company") is pleased to report its third quarter 2018 production results.

Results are from Sierra Metals' three underground mines in Latin America: The Yauricocha polymetallic mine in Peru, and the Bolivar copper and Cusi silver Mines in Mexico.

Third Quarter 2018 Production Highlights

Silver production of 0.7 million ounces; a 44% increase from Q3 2017

Copper production of 8.6 million pounds; a 24% increase from Q3 2017

Zinc production of 20.8 million pounds; a 5% increase from Q3 2017

Lead production of 6.4 million pounds; consistent with Q3 2017

Gold production of 1,906 ounces; a 26% increase from Q3 2017

Total of 566,194 tonnes processed; a 12% increase from Q3 2017

The Company has been able to continue the successful production increases realized during the last year and a half. Q3 2018 consolidated production of copper increased 24% to 8.6 million pounds, silver increased 44% to 0.7 million ounces, lead remained consistent at 6.4 million pounds, zinc increased 5% to 20.8 million pounds and gold increased 26% to 1,906 ounces compared to Q3 2017.

Metal production at Yauricocha in Q3 increased due to higher ore throughput, higher copper and gold head grades, and higher recoveries of all metals, except gold. At Bolivar, higher ore throughput, higher head grades for all metals, and higher copper and gold recoveries resulted in a 13% increase in copper equivalent production in Q3 2018 compared to Q3 2017. At Cusi, the increase in ore throughput and higher silver head grades resulted in higher silver equivalent production.

Igor Gonzales, President, and CEO of Sierra Metals commented:_"I am pleased to see continued improvements in the production results for Q3 2018 including notable increases to consolidated metal production of silver, copper, zinc, and gold. In the third quarter the Company continued to build upon its strong performance in the first half of the year, despite the weather challenges we experienced at Bolivar. The Yauricocha Mine reported sequential solid production results, and the Cusi Mine continued with its tonnage improvements._

Yauricocha continues to perform with solid tonnage ore throughput in the third quarter. Final infrastructure in the Yauricocha tunnel was completed in the third quarter and the Company is now working to complete the tie-in connections to the existing surface infrastructure which should be completed in the fourth quarter, allowing for increased capacity and handling of larger volumes of ore and waste. The Yauricocha shaft also continues to be sunk to the 1270 level in the fourth quarter providing access to further reserves and resources at the Mine. Yauricocha will see consistent levels of ore throughput in 2018 due to a refurbishment of the lower part of the Mascota Shaft, currently underway, which may potentially cause a slowdown in production rates in the fourth quarter. However, this potential slowdown has already been factored into the Company's 2018 production guidance.

At Bolivar, the Company exceeded our year over year production levels, but due to significant rain events in the third quarter, which impacted operations, we experienced lower quarter over quarter production. We are hopefully through the worst of the rainy season and are back on track for the fourth quarter. Work continues on the installation of an additional mill in the fourth quarter which will help grind size optionality and improve recoveries at the plant. Production is expected to increase incrementally in Q4 2018 and we should be at the 3,600 tonne per day level during Q1 2019.

At Cusi, the Company realized continued improvements in tonnage in the third quarter, and the Mine realized a sequential increase in ore throughput and an 18% increase when compared to Q2 2018. The Company continues to increase mill feed from the Santa Rosa de Limazone, while mining selected structures in the older part of the mine. The addition of another ball mill will see the capacity increase from 650 tonnes per day to approximately 1,200 tonnes per day in early 2019."

Mr. Gonzales concluded, "The Company continues to realize improvements despite challenges and the groundwork has been set for further improvements, through the modernizing and implementation of best operational practices into 2019. We continue to realize positive returns on our capital investments, and the path has been set for continued growth at all our Mines. Our aggressive brownfield exploration programs at all Mines should provide even further growth in reserves and resources during the year ahead."

Consolidated Production Results

| | | | | | | | | | | | Consolidated Production | 3 Months Ended | 9 Months Ended | 2018 Guidance | | | | | | | | | Q3 2018 | Q3 2017 | % Var. | Q3 2018 | Q3 2017 | % Var. | Low | High | | | | | | | | | | | | | | Tonnes processed (mt) | 566,194 | 504,751 | 12% | 1,725,991 | 1,489,251 | 16% | | | | | | Daily throughput | 6,471 | 5,769 | 12% | 6,575 | 5,684 | 16% | | | | | | | | | | | | | | | Silver ounces (000's) | 728 | 507 | 44% | 2,015 | 1,821 | 11% | 2,474 | 2,886 | | | Copper pounds (000's) | 8,326 | 6,700 | 24% | 25,037 | 19,305 | 30% | 32,700 | 38,100 | | | Lead pounds (000's) | 6,358 | 6,358 | 0% | 19,766 | 23,968 | -18% | 19,100 | 22,300 | | | Zinc pounds (000's) | 20,772 | 19,877 | 5% | 59,286 | 56,543 | 5% | 62,900 | 73,400 | | | Gold ounces | 1,906 | 1,517 | 26% | 5,606 | 4,606 | 22% | 6,700 | 7,800 | | | | | | | | | | | | | | Silver equivalent ounces (000's)(1) | 4,447 | 3,797 | 17% | 13,540 | 10,762 | 26% | 13,900 | 16,210 | | | Copper equivalent pounds (000's)(1) | 23,628 | 21,851 | 8% | 71,717 | 68,996 | 4% | 89,184 | 104,005 | | | Zinc equivalent pounds (000's)(1) | 57,883 | 47,076 | 23% | 159,165 | 145,918 | 9% | 183,830 | 214,468 | | | (1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the following realized prices: $14.85/oz Ag, $2.79/lb Cu, $0.94/lb Pb, $1.14/lb Zn, $1,206/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2017 were calculated using the following realized prices: $16.86/oz Ag, $2.93/lb Cu, $1.08/lb Pb, $1.36/lb Zn, $1,280/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2018 were calculated using the following realized prices: $15.99/oz Ag, $3.02/lb Cu, $1.06/lb Pb, $1.36/lb Zn, $1,279/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2017 were calculated using the following realized prices: $17.31/oz Ag, $2.70/lb Cu, $/1.03lb Pb, $1.28/lb Zn, $1,253/oz Au. | | | | | | | | | |

Yauricocha Mine, Peru

The Yauricocha Mine processed 283,446 tonnes during Q3 2018, representing a 6% increase from Q3 2017. Zinc equivalent metal production in Q3 2018 increased by 16% due to higher ore throughput, higher copper and gold head grades, and higher recoveries for all metals, except gold. Silver production was 7% higher, copper production was 39% higher, zinc production was 5% higher, and gold production was 10% higher than Q3 2017, while lead production was consistent with Q3 2017.

The Company continues to see quarterly improvements at Yauricocha with higher zinc and copper production during Q3 2018 compared to Q2 2018 due to higher copper head grades, and higher recoveries of all metals, except lead. This continues to be assisted by the inclusion of more Cuerpos Chicos, which has higher zinc head grades, and the Esperanzaore which is a copper-rich ore zone. The Company is currently sourcing approximately 70% of its mill feed from the Esperanza Zone.

The positive economic results from the Yauricocha PEA report support the vision to grow and expand the mine and plant through incremental and sustainable growth stages from its current 3,000 tonnes per day, to 3,600 tonnes per day in 2019 with further expansion potential being studied via prefeasibility and feasibility studies. The expansion of capacity is a natural step that follows the substantial mineral reserve and resource increases over the past two years. The potential plant expansion should add incremental value to the asset by accelerating production levels, and significantly increasing operating cash flows which can be used to continue the on-going aggressive exploration drilling campaign at the mine.

A summary of production from the Yauricocha Mine for Q3 2018 is provided below:

| | | | | | | | | | Yauricocha Production | 3 Months Ended | 9 Months Ended | | | | | | | | Q3 2018 | Q3 2017 | % Var. | Q3 2018 | Q3 2017 | % Var. | | | | | | | | | | | | Tonnes processed (mt) | 283,446 | 268,178 | 6% | 838,285 | 757,270 | 11% | | | | Daily throughput | 3,239 | 3,065 | 6% | 3,193 | 2,890 | 11% | | | | | | | | | | | | Silver grade (g/t) | 58.68 | 58.94 | 0% | 59.12 | 71.76 | -18% | | | Copper grade | 0.98% | 0.79% | 24% | 0.94% | 0.76% | 23% | | | Lead grade | 1.16% | 1.26% | -8% | 1.23% | 1.60% | -23% | | | Zinc grade | 3.65% | 3.73% | -2% | 3.59% | 3.73% | -4% | | | Gold Grade (g/t) | 0.59 | 0.56 | 5% | 0.58 | 0.53 | 8% | | | | | | | | | | | | Silver recovery | 75.47% | 73.99% | 2% | 72.92% | 75.72% | -4% | | | Copper recovery | 72.55% | 68.07% | 7% | 69.38% | 63.84% | 9% | | | Lead recovery | 84.03% | 81.82% | 3% | 83.48% | 84.22% | -1% | | | Zinc recovery | 90.95% | 89.40% | 2% | 89.25% | 89.45% | 0% | | | Gold Recovery | 17.08% | 17.27% | -1% | 16.44% | 16.68% | -1% | | | | | | | | | | | Silver ounces (000's) | 404 | 376 | 7% | 1,162 | 1,323 | -12% | | | Copper pounds (000's) | 4,428 | 3,178 | 39% | 12,039 | 8,152 | 48% | | | Lead pounds (000's) | 6,114 | 6,112 | 0% | 18,993 | 22,503 | -16% | | | Zinc pounds (000's) | 20,772 | 19,717 | 5% | 59,215 | 55,758 | 6% | | | Gold ounces | 911 | 827 | 10% | 2,553 | 2,171 | 18% | | | | | | | | | | | | Zinc equivalent pounds (000's)(1) | 42,854 | 36,856 | 16% | 116,749 | 111,224 | 5% | | | (1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the following realized prices: $14.85/oz Ag, $2.79/lb Cu, $0.94/lb Pb, $1.14/lb Zn, $1,206/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2017 were calculated using the following realized prices: $16.86/oz Ag, $2.93/lb Cu, $1.08/lb Pb, $1.36/lb Zn, $1,280/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2018 were calculated using the following realized prices: $15.99/oz Ag, $3.02/lb Cu, $1.06/lb Pb, $1.36/lb Zn, $1,279/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2017 were calculated using the following realized prices: $17.31/oz Ag, $2.70/lb Cu, $/1.03lb Pb, $1.28/lb Zn, $1,253/oz Au. | | | | | | | |

Bolivar Mine, Mexico

The Bolivar Mine processed 227,690 tonnes in Q3 2018, representing a 2% increase over Q3 2017. The higher ore throughput, higher head grades for all metals, and higher copper and gold recoveries resulted in a 13% increase in copper equivalent production in Q3 2018 compared to Q3 2017. In Q3 2018, copper production increased by 11% to 3,898,000 pounds, silver production increased 23% to 94,000 ounces, and gold production increased 45% to 911 ounces compared to Q3 2017. The decrease in throughput at Bolivar during Q3 2018 compared to Q2 2018 was due to extremely inclement weather, including torrential rain, that occurred at Bolivar during the August and September, which is typical this time of year during the rainy season.

The Company continues to define higher grade ore sources at Bolivar West and Bolivar Northwest which are expected to come into the mine plan by the second half of 2019. However, as a short-term planning strategy, the Bolivar Mine continues to focus on developing and mining the El Gallo Inferior zone to centralize operations, optimize equipment usage and to improve productivity. The Company remains confident that ore throughput can be increased to 3,600 tonne per day level during Q1 2019 as outlined in the Bolivar PEA study.

A summary of production for the Bolivar Mine for Q3 2018 is provided below:

| | | | | | | | | | Bolivar Production | 3 Months Ended | 9 Months Ended | | | | | | | | Q3 2018 | Q3 2017 | % Var. | Q3 2018 | Q3 2017 | % Var. | | | | | | | | | | | | Tonnes processed (mt) | 227,690 | 223,339 | 2% | 759,106 | 660,250 | 15% | | | | Daily throughput | 2,602 | 2,552 | 2% | 2,892 | 2,520 | 15% | | | | | | | | | | | | Copper grade | 0.99% | 0.92% | 8% | 0.97% | 0.97% | 0% | | | Silver grade (g/t) | 17.25 | 14.23 | 21% | 17.23 | 15.02 | 15% | | | Gold grade (g/t) | 0.17 | 0.14 | 18% | 0.16 | 0.17 | -6% | | | | | | | | | | | | Copper recovery | 78.30% | 77.89% | 1% | 80.17% | 78.76% | 2% | | | Silver recovery | 74.27% | 74.52% | 0% | 77.06% | 76.39% | 1% | | | Gold recovery | 68.59% | 61.62% | 11% | 70.49% | 56.70% | 24% | | | | | | | | | | | Copper pounds (000's) | 3,898 | 3,522 | 11% | 12,998 | 11,152 | 17% | | | Silver ounces (000's) | 94 | 76 | 23% | 324 | 244 | 33% | | | Gold ounces | 911 | 629 | 45% | 2,805 | 2,089 | 34% | | | | | | | | | | | | Copper equivalent pounds (000's)(1) | 4,790 | 4,235 | 13% | 15,902 | 13,683 | 16% | | | (1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the following realized prices: $14.85/oz Ag, $2.79/lb Cu, $0.94/lb Pb, $1.14/lb Zn, $1,206/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2017 were calculated using the following realized prices: $16.86/oz Ag, $2.93/lb Cu, $1.08/lb Pb, $1.36/lb Zn, $1,280/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2018 were calculated using the following realized prices: $15.99/oz Ag, $3.02/lb Cu, $1.06/lb Pb, $1.36/lb Zn, $1,279/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2017 were calculated using the following realized prices: $17.31/oz Ag, $2.70/lb Cu, $/1.03lb Pb, $1.28/lb Zn, $1,253/oz Au. | | | | | | | |

Cusi Mine, Mexico

Total ore processed increased by 316% in Q3 2018 to 55,058 tonnes when compared to Q3 2017 and increased 18% when compared to Q2 2018. Silver equivalent production increased 186% compared to Q3 2017.

Silver production of 231,000 ounces increased 319% in Q3 2018, silver head grades were 2% higher, and ore throughput was 316% higher than Q3 2017 as the Company has successfully transitioned to mining the recently developed Santa Rosa de Limazone. This zone was being developed for the majority of 2017 as ramps were being prepared to access the minable stopes within the deposit.

The Company is currently mining selected higher-grade structures at the old mine, the San Antoniovein, as well as the Santa Rosa de Limastructure containing improved head grades to the mill at Cusi. The Company has successfully increased tonnage from the Santa Rosa de Limazone to approximately 70% of the current mill feed, as well as other zones in the areas previously developed with a different mandate to produce from disseminated mineralized zones to ensure that the mill is operating at its capacity of 650 tonnes per day. Additionally, structural development at the Santa Rosa de Limazone will be completed using long hole mining versus the existing cut and fill methodology which should result in lower costs going forward.

A summary of production for the Cusi Mine for Q3 2018 is provided below:

| | | | | | | | | | Cusi Production | 3 Months Ended | 9 Months Ended | | | | | | | | Q3 2018 | Q3 2017 | % Var. | Q3 2018 | Q3 2017 | % Var. | | | | | | | | | | | | Tonnes processed (mt) | 55,058 | 13,234 | 316% | 128,600 | 71,730 | 79% | | | | Daily throughput | 629 | 151 | 316% | 490 | 274 | 79% | | | | | | | | | | | | Silver grade (g/t) | 156.27 | 153.72 | 2% | 153.35 | 161.83 | -5% | | | Gold grade (g/t) | 0.14 | 0.26 | -45% | 0.16 | 0.26 | -39% | | | Lead grade | 0.26% | 1.01% | -75% | 0.34% | 1.16% | -70% | | | Zinc grade | 0.32% | 1.08% | -71% | 0.36% | 1.17% | -69% | | | | | | | | | | | | Silver recovery | 83.49% | 84.10% | -1% | 83.45% | 66.67% | 25% | | | Gold recovery | 32.97% | 55.71% | -41% | 38.40% | 58.47% | -34% | | | Lead recovery | 78.00% | 83.51% | -7% | 79.54% | 80.05% | -1% | | | Zinc recovery | 0.00% | 50.90% | -100% | 6.89% | 42.57% | -84% | | | | | | | | | | | Silver ounces (000's) | 231 | 55 | 319% | 529 | 254 | 108% | | | Gold ounces | 84 | 61 | 36% | 248 | 346 | -28% | | | Lead pounds (000's) | 243 | 247 | -1% | 773 | 1,465 | -47% | | | Zinc pounds (000's) | 0 | 160 | -100% | 71 | 785 | -91% | | | | | | | | | | | | Silver equivalent ounces (000's)(1) | 253 | 88 | 186% | 606 | 425 | 43% | | | (1) Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2018 were calculated using the following realized prices: $14.85/oz Ag, $2.79/lb Cu, $0.94/lb Pb, $1.14/lb Zn, $1,206/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for Q3 2017 were calculated using the following realized prices: $16.86/oz Ag, $2.93/lb Cu, $1.08/lb Pb, $1.36/lb Zn, $1,280/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2018 were calculated using the following realized prices: $15.99/oz Ag, $3.02/lb Cu, $1.06/lb Pb, $1.36/lb Zn, $1,279/oz Au. Silver equivalent ounces and copper and zinc equivalent pounds for 9M 2017 were calculated using the following realized prices: $17.31/oz Ag, $2.70/lb Cu, $/1.03lb Pb, $1.28/lb Zn, $1,253/oz Au. | | | | | | | |

Quality Control

All technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

Americo Zuzunaga, MAusIMM CP (Mining Engineer) and Vice President of Corporate Planning is a Qualified Person and chartered professional qualifying as a Competent Person under the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Augusto Chung, FAusIMM CP (Metallurgist) and Consultant to Sierra Metals is a Qualified Person and chartered professional qualifying as a Competent Person on metallurgical processes.

About Sierra Metals

Sierra Metals Inc. is Canadian based growing polymetallic mining company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Minesin Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peruand Mexicothat are within close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

The Company's Common Shares trade on the Bolsa de Valores de Limaand on the Toronto Stock Exchange under the symbol "SMT" and on the NYSE American Exchange under the symbol "SMTS".

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Forward-Looking Statements

This press release contains "forward-looking information" and "forward-looking statements" within the meaning of Canadian and U.S. securities laws related to the Company (collectively, "forward-looking information"). Forward-looking information includes, but is not limited to, statements with respect to the Company's operations, including anticipated developments in the Company's operations in future periods, the Company's planned exploration activities, the adequacy of the Company's financial resources, and other events or conditions that may occur in the future. Statements concerning mineral reserve and resource estimates may also be considered to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if and when the properties are developed or further developed. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives", "potential" or variations thereof, or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking information.