Sierra Metals Inc.

Hello and welcome to the Sierra Metals third quarter 2021 financial results call. My name is Emma and I'll be your operator today. If you'd like to ask a question at the end of the presentation, please press star followed by the number one on your telephone keypad. If you'd like to retract your question for any reason, please press star followed by the number two. It's now my pleasure to hand the call over to Mike McAllister, Vice President of Investor Relations to begin. Please go ahead.

Good morning, everyone. Welcome to Sierra Metals' third quarter 2021 results conference call. On today's call, we are joined by Luis Marcansi, our CEO, and Ed Diamaris, our CFO. We are assuming that all published materials have been read, and as such, today's presentation highlights the key issues of the quarter. However, I would like to highlight that, as always, we are open for questions at the end of the presentation, which can expand upon other issues that might be of interest to those listening. In the interest of time, we are allowing all participants to ask two questions, and we are asking that participants respect this request. Further questions can be addressed through email or follow-up calls after the conference call. The accompanying presentation for today's call is available for download through the webcast or from the company's website at sierrametals.com. Yesterday's press release, the financial statements, and the management discussion and analysis are also posted on the company's website. Before I turn the call over to management, I would like to indicate that this earnings call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs. This forward-looking information is subject to a number of risks, uncertainties, and other factors. Actual results could differ materially from our conclusions, forecasts, or projections as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from their conclusions, forecasts, or projections in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, as reflected in the forward-looking information, is contained in the company's annual information form, which is publicly available on CDAR or EDGAR via form 40F or on the company's website. Please note that all dollar amounts mentioned on today's call are in U.S. dollar unless otherwise noted. I would now like to turn the call over to Luis Marchese, our CEO, who will provide us with the third quarter highlights, as well as an outlook for the remainder of the year. Afterwards, Ed Guimaraes, our CFO, will take us through the quarter's financial highlights. With that, I will now turn the call over to Luis Marchese.

Thanks, Mike. Good morning, everyone. Turning now to the third quarter highlights on slide four. After reading yesterday's press release, you are now aware that Q3 was an exceptionally difficult quarter for the company. We have been dealing with the residual effects of COVID-19, which includes delays on mine development, infield drilling, maintenance, high personnel turnover, infrastructure backlog, and others, which have affected throughput, grade, and metallurgical performance. While Yabrikocha and Puzi are now back on track, the Bolivar mines have experienced limitations on mine development, infotainment and equipment availability during the past year, which is heavily impacting throughput, upgrades and recoveries. While these issues are believed to be temporary in nature, we are very focused in improving the current situation are currently conducting a comprehensive review of all the operational processes at the Bolivar mine, from geology to the mine, as well as at the mill. We intend to incorporate the findings of these reviews into the Bolivar mine operations to allow for a return to a normal, steady, and profitable state of operations at the mine. The early findings and contingencies coming from this review are being incorporated into the 2022 Bolivar Mine Budget, currently being prepared, to provide stakeholders with an updated projection of the Bolivar Mine's capabilities and operations potential going forward. Despite the significant challenges in the quarter, including lower throughput and metal production, stronger metal prices have supported revenue. Additionally, foreign exchange rates have worked in our favor, starting to offset the large associated cost of COVID-19 at Jauricocha, which benefited the company. After reviewing the nature of these limitations moving forward and taking into consideration previously revised production guidance, we felt it was prudent to lower the EBITDA and CAPEX guidance and increase cost guidance for Bolivar to better reflect the expected outcome for 2021. Turning now to slide five. Production guidance remains unchanged with copper equivalent production expected to range between 110 to 115 million pounds. However, due to the previously mentioned and rapidly changing issues at our Mexican operations, primarily at the Bolivar mine, We have lowered our EBITDA guidance range from $130 to $140 million to now range between $105 to $110 million. We have also lowered our expected capital expenditure guidance, previously set at $100 million, to now range between $75 to $80 million. This, in part, is due to the deferral of our magnetized R&R project at the Bolivar mine in 2022. as the iron ore and freight markets normalize and where we complete the required detail engineering and land access process. Finally, given the issues at the Bolivar mine, we have adjusted expected costs higher to reflect what is now expected to be the range for 2021. Cash costs for 2021 are now expected to range between $167 to $175 up from the previously provided guidance of 152 to 140 per copper equivalent pound. All in sustaining cash costs are now expected to range between 330 to 347, up from the previously provided guidance of 260 to 274 per copper equivalent pound. I would like to mention that despite these challenges, we have a strong focus on improving operations, but we are continuing to push for production and stabilization and growth at all three mines. Scaling up production and reducing unit costs remain a priority. Additionally, we are emerging from the harsh restriction imposed by COVID-19. We continue to see improvements in availability of our workforce as vaccination rates continue to improve which should help us to return to more normalized operations. Metals prices have and are expected to remain relatively strong during this period of transition. Turning to slide six. I'm looking ahead to the remainder of 2021-2022. Despite the unexpected challenges we are facing, we continue to see encouraging growth opportunities for the company. Opportunities still include the production of iron ore concentrate and accelerated stage scaling up of production at Bolivar. Continuous improvement initiatives at Jaricocha and Cusi, while we are completing preliminary feasibility studies. We also continue with our brownfield exploration plans, especially at near-mountain opportunities, including between Casca and Tipumachay areas near Jaricocha Mine, where we recently received new permits, as well as La Cidra at La Montura near the Bolivar Mine. We also plan to reactivate our green food programs at our extensive land position in Peru and Mexico. The company is making the necessary capital investments and infrastructure improvements to continue growing production and improving costs. We remain committed to the company's prudent and sustainable operation and growth, and more importantly, to improving the pressure value benefiting all shareholders. With that, I will now turn the call over to Ed for the third quarter financial results.