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PEA shows iron ore adds appeal to Sierra's Bolivar mine

A preliminary economic assessment has validated Sierra Metals’ move to produce iron ore at its Bolivar polymetallic mine in Mexico.
PEA shows iron ore adds appeal to Sierra's Bolivar mine PEA shows iron ore adds appeal to Sierra's Bolivar mine PEA shows iron ore adds appeal to Sierra's Bolivar mine PEA shows iron ore adds appeal to Sierra's Bolivar mine PEA shows iron ore adds appeal to Sierra's Bolivar mine

Sierra Metals’ Bolivar mine in Mexico

Ngaire McDiarmid

Reporter

"The economics in this PEA confirms the rationale for approving this project in April of this year, which is proceeding on a fast track basis," CEO Luis Marchese said.

The updated PEA put the after-tax NPV8 at US$361 million compared with $283 million in a 2020 PEA.

"The incremental benefit includes iron ore production and increasing production to 10,000 tonnes per day from 5,000tpd is now estimated to have an after-tax NPV8 of $78.2 million, an IRR of 69% versus an NPV of $57.4 million and an IRR of 27.9% previously reported," Sierra said.

The update estimated a 14-year mine producing 551 million pounds of copper, 150,000 ounces of gold, 12.9 million ounces of silver and 5.7Mt of 62% iron concentrate.

Sierra had last week reduced its 2021 production guidance and raised its costs outlook for its three mines due to COVID-19 and operational challenges.

It's now expecting to produce 67-69 million pounds copper-equivalent at Yauricocha in Peru, 31-33Mlb Cu-eq at Bolivar and 1.27-1.4Moz silver-equivalent at Cusi in Mexico - or a total 110-115Mlb Cu-eq, down from 130-141Mlb Cu-eq.

It revised 2021 capex up from $78 million to $100 million due to constructing the iron ore processing plant at Bolivar.

The company was continuing to consider "all options" as part of a strategic review and expected to provide a detailed report on progress in the coming weeks. 

Sierra had cash and equivalents of $76.1 million and $17.2 million net debt at June 30.

Its shares (TSX: SMT) are trading near the middle of a one-year span and closed down 4.4% to C$3.01 yesterday, valuing it about $492 million (US$390 million).