Q4 2014 Sierra Metals Inc Earnings Call
Mar 27, 2015 AM EDT
SMT.TO - Sierra Metals Inc
Q4 2014 Sierra Metals Inc Earnings Call
Mar 27, 2015 / 02:30PM GMT
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Corporate Participants
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* Victoria Vargas
Sierra Metals Inc. - VP of IR
* Audra Walsh
Sierra Metals Inc. - President and CEO
* Ed Guimaraes
Sierra Metals Inc. - CFO
* Thomas Robyn
Sierra Metals Inc. - SVP Exploration
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Conference Call Participants
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* Ali Khan
Edgecrest Capital Holdings, Inc. - Analyst
* Cliff Hale-Sanders
Cormark Securities - Analyst
* Jim Young
West Family Investment - Analyst
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Presentation
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Operator [1]
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Good morning. My name is Mike, and I will be your conference operator today. At this time I would like to welcome everyone to the Sierra Metals Q4 and fiscal year 2014 year-end conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) At this time, I would like to turn the call over to Ms. Victoria Vargas, Vice President Investor Relations.
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Victoria Vargas, Sierra Metals Inc. - VP of IR [2]
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Thank you, Mike, and good morning, everyone. Welcome to Sierra's fourth-quarter and 2014 year-end conference call. On the call we are joined today by Audra Walsh, President and CEO; Ed Guimaraes, CFO; along with Thomas Robin, Senior Vice President Exploration. At the end of the call, there will be a question-and-answer period. Today's presentation is available for download both on (inaudible) and on the home page of the Company's website. Yesterday's related press release is also posted on the Company's website.
Before we start, I would like to remind everyone about our disclaimer that certain statements made today by the executive management team may contain forward-looking information. Anything non-historical is forward-looking. For more information, refer to our detailed cautionary note in yesterday's press release and the disclaimer on slide 2 of today's presentation. Please note that all dollar amounts mentioned in this call are US dollars unless otherwise noted.
With that, I will turn this call over to Audra Walsh, our President and CEO.
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Audra Walsh, Sierra Metals Inc. - President and CEO [3]
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Thank you, Victoria, and good morning, everyone. I will begin with a brief overview of our fourth-quarter and 2014 year-end results. And then, Ed will take us through our financial results for 2014, followed by Thomas giving us a recap of the 2014 exploration results and exploration budget for 2015. I will conclude our remarks by providing a summary of our production and CapEx guidance for 2015.
Before I begin, I would like to take a moment to thank all of our employees in Mexico, Peru, and Canada for their commitment over the last year in delivering another outstanding year of financial and operation -- operational results for our shareholders. This has been a team effort, and I am very proud to be leading this Company. As we begin the presentation, I will move ahead to slide 4, which summarizes our operational results.
2014 was a record year of metal production, driven by increased throughput at all of our mines. In 2014, the Company's metal production exceeded the high end of our guidance for silver, gold, lead, and zinc, while copper production was within the guidance range. Our 2014 fourth-quarter production of 875,400 silver ounces was the highest of any quarter in the history of the Company, as with our ore throughput.
For 2014, the Company produced 3.1 million ounces of silver and 11.8 million silver equivalent ounces, which, compared to 2013, represents a 19% and a 26% increase, respectively. Consolidated metal production for 2014 for silver, copper, lead, zinc, and gold increased by 23%, 42%, 29%, 5%, and 40%, respectively, compared to 2013. The increase in silver production was due to higher [plaque] throughput at all three mines and higher recoveries at Yauricocha and Cusi. The increase in copper production was due to the ramp-up from 1,000 tons per day to 2,000 tons per day at Bolivar during quarter-four 2013, which resulted in higher throughput for the full year of 2014.
Higher light grades and throughput at Yauricocha contributed to the increase in lead production in 2014. Also, the increase in zinc production was due to the increase of throughput at Yauricocha. The increase in gold production during 2014 was due to higher head grades and recoveries realized at the Bolivar and Cusi mines.
Cash cost per ounce of payable silver at Yauricocha and Cusi decreased by 134% and 15%, respectively, during the fourth quarter of 2014, compared to the same period in 2013. The reduction was due to an increase in ounce of payable silver and byproduct credits due to the increase in throughput. Cash cost per pound of payable copper at Bolivar increased by 9% during the fourth quarter of 2014 compared to the same period of 2013. The decline in silver prices impacted the byproduct credits at Bolivar during the fourth quarter of 2014 compared to the same period in 2013.
On an annual basis, cash cost per ounce of payable silver at Yauricocha was a negative $21.25, a decrease of 76% compared to 2013. At Cusi, the cash cost per silver payable ounce decreased 43% from $15.70 in 2013 to $8.92 in 2014 and was attributed to higher plant throughput which resulted in higher ounce of payable silver and lead byproduct credits.
Bolivar's cash cost per pound of payable copper remained consistent with 2013 as the increase in the pound of payable copper was offset by the decrease in the byproduct credits due to the decline in silver prices. The cash flow generated from operations during 2014 was $60.1 million, a significant increase as compared to the cash flow of $26.7 million in the previous year, despite lower commodity prices. The investment made to increasing milling capacity at our Bolivar and Cusi projects in Mexico really helped us boost the Company's metal production during 2014. The consistently strong performance of the Yauricocha mine, combined with the growth at our Mexican mines, resulted in the Company achieving an exceptional year of metal production and low operating cost.
Now I will turn it over to Ed for the financial overview.
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Ed Guimaraes, Sierra Metals Inc. - CFO [4]
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Thanks, Audra. Good morning, everyone. I would like to start by reviewing our cash flows, which provide the clearest perspective on our financial performance. I have summarized our changes in cash for Q4 2014 on slide 6. During Q4, operating cash flow before income taxes paid was $16 million. We spent $11 million on capital expenditures in Mexico and Peru, and we paid $4 million of income tax in Peru. We paid $3.7 million of interest and principal repayments on our debt as well as $3.3 million of dividends to our non-controlling interest shareholders in our Corona subsidiary. This reduced our cash balance from $46.7 million at September 30, 2014, to $41.3 million at year end.
On slide 7, we show the same buildup of our cash flow for the entire calendar year. Our annual operating cash flow before income taxes paid was $72.3 million. We spent $40 million on capital expenditures in Mexico and Peru, $11.6 million on income tax in Peru, and $0.7 million of special mining duties in Mexico. $14.8 million on interest and principal repayments on our debt, and $7.1 million on dividends to our non-controlling interest shareholders in our Corona subsidiary, and $1.5 million of dividends to our common shareholders. This reduced our cash balance from $44.9 million at December 31, 2013, to $41.3 million at year end.
The $40 million of capital expenditures in 2014 were focused on key development projects and processing plant expansion. Total expenditures at Yauricocha were $15.9 million and included tunnel and shaft construction, mine development, and exploration. At Bolivar, we spent $7.4 million on mine development and exploration, including the power line project. Capital expenditures at Cusi totaled $16.7 million and were mainly directed toward mine development and exploration and increasing the mill processing capacity.
Turning to the financial highlights on slide 8, despite declines of 21%, 8%, and 10% in realized silver, lead, and copper prices, respectively, during the fourth quarter of 2014, compared to the fourth quarter of 2013, the Company reported revenues of $40.9 million, which was a 12% increase from the same period in 2013. Revenues of $172.6 million in 2014 increased by 20% compared to 2013 despite declines in realized silver and copper prices of 19% and 7%, respectively. The increase in revenues was due to higher plant throughput at all three lines as well as higher head grades and recoveries for silver, lead, and copper at Yauricocha.
The increase in revenues and decrease in costs contributed to significant increases in earnings and net income in 2014 compared to 2013 on both a quarterly and annual basis. The adjusted EBITDA for Q4 2014 was $15 million, representing a 21% increase compared to the fourth quarter of 2013. And the adjusted EBITDA for the full year 2014 increased by 35% over 2013 to $74.2 million. The decline in silver and lead prices in the fourth quarter lead to a decrease in adjusted EBITDA for the fourth quarter compared to the previous three quarters in 2014.
Turning to the balance sheet and liquidity on slide 9, we ended the year in a strong financial position with $41.3 million of cash and $49 million of undrawn credit facilities which, combined, give us total liquidity of over $90 million. The Company's net debt was reduced by 16% during 2014 to $40.6 million at year end compared to 2013. The Company has principal and interest payment obligations of approximately $17 million to be paid in each of the next four years.
Metal prices have weakened thus far in 2015. We will continue to monitor the price environment and its potential impact on long-term cash flows and will set initiatives to protect our cash balance accordingly. I would like to highlight the sensitivity of our profit to changes and exchange rates.
Approximately 70% of our costs at Yauricocha are denominated in Peruvian nuevo sols, and approximately 60% of our costs in Mexico are denominated in Mexican pesos. At year end, the sol to US dollar exchange rate was 2.98, and the Mexican peso to US dollar exchange rate was 14.74. Thus far, in 2015, the sol and peso have weakened further against the US dollar, both by 3%. A 10% decrease in the value of the sol and peso against the US dollar would result in an increase of $2.7 million and $1.7 million in the Company's net income, respectively. We are confident that our financial position, together with future cash flows from our three producing mines and available loan facilities, will be sufficient to support the Company's financial commitments for the next year.
With that, I will turn the call over to Thomas for the exploration update as we remain focused on unlocking value in this area, given the success we had last year.
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Thomas Robyn, Sierra Metals Inc. - SVP Exploration [5]
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Thank you, Ed, and good morning, ladies and gentlemen. 2014 was a good year for exploration at all three of our properties. Slide 11 summarizes our 2014 exploration results. At Yauricocha, underground drilling in 2014 resulted in expansion and upgrading the mineralization at both the central and Kochi, Kochi mines, the results of which will be incorporated in an updated reserve and resource estimate expected to be released during the second quarter. Deep drilling in the central mine has also provided confirmation of the continuity and large vertical extent of the ore bodies at depth. On the catalyst ore body, for example, we have intersected multiple zones of high-grade copper and zinc to a depth of 1,145 meters from surface, which is over 500 meters below our current working level at the mine.
Planned exploration in 2015 will continue to delineate the extension of mineralization of various ore bodies of the central mine and further explore the potential extensions to the northwest and southeast. Drilling in 2015 will also follow up on the success of expanding mineralization to depth at Yauricocha's Kochi, Kochi mine.
One of the more interesting developments from our 2014 program was the discovery of five mineralized chimney [breches] in an area just 400 meters west of the central mine. Our initial drill testing in 2014 intersected multiple mineralized bodies and returned grades of up to 181 grams of silver and 10% zinc. We will be following up with exploration drilling from both surface and underground in the year ahead.
At Bolivar, underground drilling in 2014 was successful in expanding the copper, gold, and silver mineralization at Bolivar Northwest, which lies approximately 1.5 kilometers northwest of El Gallo, where we are currently mining. Bolivar Northwest is only 500 meters from the Alta Lay mine, and workings can be extended from there to connect the two. Exploration in 2014 also focused on the La Sidra silver-gold quartz vein system, which has a 2.5-kilometer strike line. High-grade silver and gold occur over a 500-meter length in surface sampling, and limited drilling has also encountered high grades of gold and silver.
The 2015 exploration program at Bolivar will be directed towards resource expansion at Bolivar Northwest as well as the Ulta Lay and step-out zones, both of which are also approximal to the central mining area. We will also be conducting surface exploration drilling on several targets, including La Sidra, as already mentioned, and two other promising targets known as Lilly Norte and Nathalie Fault.
At Cusi, surface and underground drilling in 2014 concentrated on expanding and upgrading the resources for the Promontorio and Santa Eduwiges mines, and testing for depth extension of several of the veins. In addition, underground development work at the Promontorio mine exposed several hundred meters of mineralized shoots, some of which lie outside the current resource estimate. The 2015 program will focus on expansion of the currently defined resources as well as surface exploration drilling of five high-priority target areas.
Turning to slide 12, the 2015 exploration program was budgeted at $9 million to drill over 75,000 meters. Our priority is to continue expanding and upgrading the reserves and resources at all three mines and follow up on a number of promising exploration targets. Over 16,000 meters are allocated at Yauricocha, 21,000 meters at Bolivar, 37,000 meters at Cusi, and 4,000 meters at two regional projects in Mexico. 2015 is going to be a very busy and exciting year on the exploration front.
Now, to Audra for the Company's 2015 outlook and guidance.
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Audra Walsh, Sierra Metals Inc. - President and CEO [6]
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Thank you, Thomas. Moving on to slide 13, the consolidated production guidance highlights the continued production tasks the Company expects to maintain in 2015. We anticipate our 2015 ounce of equivalent silver to be between 10.9 million and 12.6 million ounces of equivalent silver. We expect the cash costs per silver payable ounce to remain at approximately a negative $14 to negative $17 at Yauricocha and a cash cost per ounce of payable silver to be between $6.50 and $7.50 at Cusi.
At Bolivar, guidance projects the cash cost per pound of payable copper to be between $1.20 and $1.40, which represents a decrease of approximately 12% compared to 2014 due to the ramp-up of 2,500 tons per day at the Piedras Verdes mill in the second half.
For 2015, our projected capital expenditures are estimated to be between $30 million and $40 million. However, the Company may change its capital spending plans for the balance of 2015 and 2016 depending on commodity prices, the financial position of the Company, and the result of feasibility studies and other factors. The major components of the capital expenditure budget relate to the continued enhancement to the mine infrastructure at Yauricocha, increasing mill capacity mill at Bolivar, and providing greater access to the underground mining areas in Cusi.
In summary, the Company expects to continue expanding and upgrading the mineral reserves and resources at all three mines minds through mine development and exploration, and continue to deliver solid production and financial results during 2015 and beyond. We are a low-cost producer with a naturally hedged production profile given (inaudible) diversification across five metals. Our strong financial position allows us to maintain our capital investment in mine development and exploration at a time when many producers are cutting back on these expenditures. This should position us well for future growth for years to come.
With that, we are happy to answer any questions. Please note that some of our management team members are online at different locations, so there may be a brief pause after you ask your question. Now, back to the operator for questions.
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Questions and Answers
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Operator [1]
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(Operator Instructions) Ali Khan, Edgecrest Capital.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [2]
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I guess I will start my questions with Yauricocha. See in the press release that you are seeking permission to increase the throughput at the plant at 3,000 tons per day. Just wondering if you are targeting this increase for the second half and whether the CapEx and production increases are included in the guidance.
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Audra Walsh, Sierra Metals Inc. - President and CEO [3]
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High, Ali. Thank you for the question. In regards to Yauricocha, yes, that is correct. We are planning for the increase in the second half, and we do include the production increases as well as capital related to that within our guidance.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [4]
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Okay. Good. And on to Bolivar, now that you have the quick connection, can you provide some granular details on the steps needed to upgrade the mill capacity?
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Audra Walsh, Sierra Metals Inc. - President and CEO [5]
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(multiple speakers). At Bolivar, at the moment, we are working on our 50-foot thickener redesign, and that should be done in early April. And we're going to turn and look at our 40-foot thickener redesign, which we are targeting end of May, early June. And so we plan to be able to start getting up to a steady 2,500 by this third quarter of this year.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [6]
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Okay. So I guess production is going to be back-end loaded. But do you realize immediate cost savings in the first half?
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Audra Walsh, Sierra Metals Inc. - President and CEO [7]
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With Bolivar, we had planned for the power line in our budget to be completed in March, and we hit that target. So we do have within our budget the decreased cost of not having to have the back-up generators running.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [8]
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Okay. And where would the magnetized recovery circuit, do you expect to start it anytime soon?
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Audra Walsh, Sierra Metals Inc. - President and CEO [9]
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We did an economic analysis of the magnetite circuit last month. And at this moment, with the current prices and where they are at, it is not an economic decision that we would take. However, we are keeping our eye on it to determine when is the right time to start it up.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [10]
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Okay. And moving onto Cusi, I guess this is the much-awaited catalyst for you guys. Do you guys have a timeline for the release of the PFS?
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Audra Walsh, Sierra Metals Inc. - President and CEO [11]
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Ali, we are looking at Cusi very carefully to make sure we make the right decision on how we want to grow it and what we want to do. At this moment, I don't have a timeline for the release.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [12]
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Okay. But, is there going to be an updated resource estimate this year for Cusi?
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Audra Walsh, Sierra Metals Inc. - President and CEO [13]
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Yes, we do plan to do an updated resource estimate.
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Ali Khan, Edgecrest Capital Holdings, Inc. - Analyst [14]
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Okay. Good. That will be all from me, guys. Thank you so much for the conference call.
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Operator [15]
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Cliff Hale-Sanders, Cormark Securities.
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Cliff Hale-Sanders, Cormark Securities - Analyst [16]
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Just a couple of quick questions to follow up on that. The first one is really I just want to make sure I understand what is going on at Yauricocha. Obviously, unit costs in Q4 on a per-ton basis look very impressive for down at $41, $42 a ton. The guidance for 2015 is a bit of an uptick back to the higher 40s. Just wondering, there, if that is more conservatism built in there, or is there some sequencing issue at the mine? That is my first question.
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Audra Walsh, Sierra Metals Inc. - President and CEO [17]
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Okay. Thanks for joining us today. As far as Yauricocha, the fourth quarter we did have a higher production within our mine plan that was -- it was our planned mining sequencing. And so the production of the higher 40s is due to the mine sequencing as well. So it is really in line with the mine plan.
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Cliff Hale-Sanders, Cormark Securities - Analyst [18]
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Okay. Yes. There is nothing to change there. What I want to know is, based on your guidance, what level of, I guess, built into that 47 number that you have, FX rates are you using? Are you fairly conservative relative to where they are today, or should we expect some improvement if things stay as depressed as they are today?
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Ed Guimaraes, Sierra Metals Inc. - CFO [19]
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I think a good basis would be using where they are today.
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Cliff Hale-Sanders, Cormark Securities - Analyst [20]
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Okay. And, Ed, since you piped in there, and Audra, you can also add to this, just looking at your balance sheet, obviously, you have additional credit available to you right now. With your cash, and if I am reading the balance sheet correctly, you have about $30 million of loans payable over the course of the next year. Not to say it is too tight, but what level of tightness in the balance sheet would you view as prudent or are you comfortable going to in the downside case scenario if the market does not improve over the next 12 months as a way to guide for when you might have to look at trimming some of your expenditures both on the CapEx and on the exploration front?
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Ed Guimaraes, Sierra Metals Inc. - CFO [21]
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Well, that is something we are constantly focused on. And I think from a level of comfort, maintaining a cash balance of above $25 million is prudent. We are in the works -- we have a very good relationship with our current lenders. There is a strong appetite out there to look at refinancing as well from other potential lenders. So that is something I am considering as well. But, again, that is all driven by commodity prices going forward and the amount of CapEx that we would ultimately trim down, if you will to that buffer.
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Cliff Hale-Sanders, Cormark Securities - Analyst [22]
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Okay. And just going on from the CapEx, obviously, the underground infrastructure at Yauricocha has been underway now for, if my memory is right, a couple of years. Just wondering if you could give us a bit of a high-level view where the status is on the new tunnel and how much more work actually has to be done on the underground work there to complete all the new infrastructure.
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Audra Walsh, Sierra Metals Inc. - President and CEO [23]
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Okay. I will take that one. As far as the Yauricocha tunnel, the stage one went from Mina Central to Kochi, Kochi. And we completed the earthworks in December 2014 on that. On stage II, going from Kochi, Kochi to (inaudible), we will finish that one at the end of this year. And so the tunnel is expected to be finished this year. There will still be some infrastructure work that has to happen in early the first quarter of 2016.
As far as the Yauricocha shaft, the borehole to the surface is completed, and we plan to have the winches functioning at the lower levels at the end of quarter two. And we are about 37% on that one. I would -- I was at the site on Wednesday, and very excited with the progress that they have made. They are doing a really good job and really controlling the costs. As far as Kochi, Kochi, we are at 76% completed and we should finish that one in quarter three.
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Cliff Hale-Sanders, Cormark Securities - Analyst [24]
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Perfect. That is it for me for now.
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Ed Guimaraes, Sierra Metals Inc. - CFO [25]
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Cliff, if I may, as well, just to go back to your previous question, you did state correctly that on our balance sheet we are showing current loans payable of $30 million. I just wanted to point out that included in that amount is $11 million of revolving lines of credit, which, in essence, would reduce that from a cash outflow. We are looking at about $17 million of interest loan repayments (multiple speakers).
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Cliff Hale-Sanders, Cormark Securities - Analyst [26]
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So you could just circulate that one if necessary.
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Ed Guimaraes, Sierra Metals Inc. - CFO [27]
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Exactly. I just wanted to clarify that.
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Operator [28]
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(Operator Instructions) Jim Young, West Family Investment.
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Jim Young, West Family Investment - Analyst [29]
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I have got several questions. First, to start off, is the follow-up with respect to the new tunnel and shaft at Yauricocha. You talked about the timelines. Are both the tunnel and shaft also either on budget, ahead of budget or exceeding budget? If you could just clarify that, please.
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Audra Walsh, Sierra Metals Inc. - President and CEO [30]
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Our costs are on track for what we budgeted for them. So we are on track with that.
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Jim Young, West Family Investment - Analyst [31]
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Okay. Great. Then, secondly, with respect to your production guidance for 2015, at the low end of 10.8 million silver equivalent ounces, that is about 8% down from your 2014 guidance. And it just seems that -- and your upside is 12.6 million --. It just seems that with the improvements at Bolivar, at Cusi, and at Yauricocha, I guess I am just trying to reconcile why your low-end guidance would be down 8% from 2014's actual results.
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Audra Walsh, Sierra Metals Inc. - President and CEO [32]
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I think part of the problem with the silver equivalent ounces is the prices that you have to use to calculate where it ends up being. So that is part of that fluctuation as well.
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Jim Young, West Family Investment - Analyst [33]
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So if you use constant silver prices, where would the low end be?
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Ed Guimaraes, Sierra Metals Inc. - CFO [34]
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We don't have that readily available.
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Jim Young, West Family Investment - Analyst [35]
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Okay. And then, at Bolivar, where -- could you clarify how much in cost savings do you expect to see from having the power line operational for the next three quarters?
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Audra Walsh, Sierra Metals Inc. - President and CEO [36]
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The annual cost to do the back-up generators was just over $1 million; it was about $1.2 million. So if you extrapolate from that, you can see that that is about where our savings is as far as the back-up generator. On top of that -- yes, for the diesel cost. On top of that, Jim, of course, you get the improved efficiencies of having the steady-state line. And we have incorporated that into our budget after March of this year with the higher throughput in the later quarters.
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Jim Young, West Family Investment - Analyst [37]
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Okay. And if you think that you can get up to 2,500 tons per day at Bolivar by the third quarter, what -- above and beyond 2,500 times a day, what are your plans and how much additional capital expenditures would that require to get to that level? Are you thinking 3,000 tons a day, 4,000 tons a day, or et cetera? What is your thought process with the future at Bolivar?
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Audra Walsh, Sierra Metals Inc. - President and CEO [38]
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Yes. It is a good question, Jim. We are doing an engineering study right now on where we are going to go. And you actually quite named the two different steps that we are looking at, one which is 3,000 and the other one which is 4,000. We haven't finished detailing that study out on what the costs are going to be. But we are definitely planning a second step after this year.
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Jim Young, West Family Investment - Analyst [39]
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Okay. And when would you expect this engineering study to be concluded?
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Audra Walsh, Sierra Metals Inc. - President and CEO [40]
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It should be done at the end of this quarter, early next quarter.
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Jim Young, West Family Investment - Analyst [41]
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Okay. And then, at Yauricocha, it looked like in your MD&A you said that the 43-101 is going to be released by March 31. Can you give us some sense as to what the preliminary information shows?
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Audra Walsh, Sierra Metals Inc. - President and CEO [42]
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Sorry, Jim. I cannot.
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Jim Young, West Family Investment - Analyst [43]
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Will that be released by the 31st?
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Audra Walsh, Sierra Metals Inc. - President and CEO [44]
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That isn't our plan as yet.
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Jim Young, West Family Investment - Analyst [45]
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And is there any plan for updating the 43-101 in 2015 for Bolivar?
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Audra Walsh, Sierra Metals Inc. - President and CEO [46]
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We have had discussions. We haven't made a final decision on that yet.
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Jim Young, West Family Investment - Analyst [47]
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And lastly, at Cusi, why the delay for the pre-feasibility study?
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Audra Walsh, Sierra Metals Inc. - President and CEO [48]
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The Cusi is a very extensive ore body. And we want to make sure as we go through this that we do the best we possibly can in figuring out what the size and step should be. And with the new information that we received in 2014, it allowed us to continue to advance our thinking. And we want to just make sure that as we step this, we step it right and we do it with the appropriate due diligence.
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Jim Young, West Family Investment - Analyst [49]
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So do you think that this is something that we could expect to hear more about by the end of the June quarter, or is this going to be a year-end 2015 or even a 2016 issue?
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Audra Walsh, Sierra Metals Inc. - President and CEO [50]
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Jim, it is difficult for me to put a timeline on it. As we put a lot of money into the exploration, as we are finding out new information, it is giving us a lot better understanding of where we are going to be. And so I can't put a timeline to it right now.
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Jim Young, West Family Investment - Analyst [51]
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Okay. And then, I guess, lastly, can you just update us with your thoughts with respect to a timetable for value creation at Sierra Metals, given that Alberto's Fund II terminates in October of 2016?
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Audra Walsh, Sierra Metals Inc. - President and CEO [52]
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Yes. So just a correction. The Fund I is the one that is going to be in October of 2016. You know, Jim, as you pointed out, we would agree that our share price, like many companies, has lots of upside potential. And as a management team, we are excited about that. At this moment, what we can control is our operation. And we are working really hard at making sure operations perform, that we have a strong balance sheet, and that we are delivering value through organic growth. That is where our main focus is, is on what we can control. On top of that, we are in discussions with strategic planning with our Board on a quarterly basis looking at opportunities and seeing what we can do to unlock the value of this Company.
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Jim Young, West Family Investment - Analyst [53]
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Okay, great. Well, thank you very much.
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Operator [54]
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(Operator Instructions) There are no further questions at this time. I will turn the call back over to the presenters.
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Audra Walsh, Sierra Metals Inc. - President and CEO [55]
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Thank you, operator. Well, I would like to thank everyone for joining us this morning. And we look forward to talking to you again soon as we reveal how we have started off in 2015. Thank you.
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Operator [56]
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This concludes today's conference call. You may now disconnect.
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