Sierra Metals Inc Earnings Call
May 15, 2017 AM CEST
Thomson Reuters StreetEvents Event Transcript
E D I T E D V E R S I O N
SMT.TO - Sierra Metals Inc
Sierra Metals Inc Earnings Call
May 15, 2017 / 02:30PM GMT
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Corporate Participants
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* Edmundo Gontardo Guimaraes
Sierra Metals Inc. - CFO
* Gordon J. Babcock
Sierra Metals Inc. - COO
* Igor Alcides Gonzales Galindo
Sierra Metals Inc. - CEO, President and Director
* Michael McAllister
Sierra Metals Inc. - VP of Corporate Development
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Conference Call Participants
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* Jacques Wortman
Eight Capital, Research Division - Research Analyst
* James Young
West Family Investments, Inc. - Investment Analyst
* Leon G. Cooperman
Omega Advisors, Inc. - President, CEO, and Chairman
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Presentation
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Operator [1]
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Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sierra Metals First Quarter 2017 Results Conference Call. (Operator Instructions)
Thank you, and I will now turn the call over to Mike McAllister, Vice President of Corporate Development. Mr. McAllister, you may begin.
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Michael McAllister, Sierra Metals Inc. - VP of Corporate Development [2]
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Thank you, operator, and good morning everyone. Welcome to Sierra Metals Q1 2017 Results Conference Call.
On today's call, we are joined by Igor Gonzales, our President and CEO; Ed Guimaraes, our Chief Financial Officer; and Gordon Babcock, our Chief Financial Officer. Today's call will be followed by a question-and-answer period. Today's presentation is available for download, both through this webcast and the company's website at www.sierrametals.com. Last Thursday's press release, and the financial statements and the Management Discussion and Analysis are 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 not historical is considered forward-looking. For more information, please refer to our detailed cautionary note in last Thursday's press release and to the disclaimer on Page 2 of today's presentation. Please note that all dollar amounts mentioned on this call are in US dollars unless otherwise noted.
Before proceeding with the call, I would like to take a moment to properly introduce Igor Gonzales. Igor joined the Sierra Metals team as our new President and CEO on May 1. He has over 35 years of experience with major mining companies with world-class mineral assets. He most recently was the Vice President of Operations at Buenaventura, and prior to that, Igor worked for Barrick Gold Corp., initially as the President and General Manager of the Pierina Mine in Peru, and then as President of South America and most recently as their Chief Operating Officer with global responsibilities. Igor has worked with Southern Peru Copper and he's currently a director at Hudbay Minerals and Buenaventura. Igor holds a Bachelor of Science degree in Chemical Engineering and a Master of Science and Extractive Metallurgy. I would like to extend a very warm welcome to Igor on behalf of my colleagues. We're very happy that you've joined the Sierra Metals management team.
With that, I will now turn the call over to Igor, to give us any of review of the first quarter results.
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Igor Alcides Gonzales Galindo, Sierra Metals Inc. - CEO, President and Director [3]
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Thank you, Mike, and good morning, everyone. I would like to begin with an overview of the 2017 first quarter results for Sierra Metals as well as discuss the operational and exploration highlights for the quarter. With that, I must say that we are encouraged by the continued progress and achievement in both financial, operational and exploration results at Sierra during the first quarter. We believe that 2017 will be a year of significant growth at all 3 mines and for Sierra Metals as a whole. Following my summary highlights, Gordon Babcock will take us through the operational and exploration highlight, and then Ed Guimaraes will take us through the first quarter financial highlights and then we'll open the call for questions.
Looking at Slide #4, the first quarter of 2017 has built upon the significant achievements from 2016 in both financial performance and operational improvements implemented at the Yauricocha Mine. This has increased our production and key new geological discoveries from our brownfield exploration program with several new important discoveries.
In Q1 2017, the company reported revenue of $54.5 million and adjusted EBITDA of $25.4 million on throughput of 500,000 -- 529,695 tonnes and metal production of 3.1 million silver equivalent ounces, or 26.1 million copper equivalent pounds.
Sierra Metals had a third consecutive exceptional quarter in its operational and financial results aided by a stable metal price and continued production improvement at Yauricocha. During Q1 2017, the company continued to build upon the revenue and adjusted EBITDA realized during the previous quarter. The company achieved excellent returns in the first quarter with revenues up to 130% and adjusted EBITDA up to $21 million over Q4 2016. The consolidated all-in sustaining cost per silver equivalent payable ounce decreased by 21% to $12.84 as compared to Q1 2016.
During Q1 2017, consolidated metal production increased by 28% compared to Q1 2016, this was attributable to higher throughput, higher silver, copper and zinc head grades and as well as higher recoveries for all metals except gold at Yauricocha. Additionally, the company saw higher throughput and recoveries for all metals at Bolivar, partially offset by lower throughput, and head grades and recoveries at Cusi.
Continuing on Slide 5, in the first quarter 2017, Sierra Metals continues to make significant new discoveries in exploration. On February 27, 2017, the company announced the discovery of the Santa Rosa de Lima complex, which is a new high-grade zone at the Cusi Mine. With the completion of a 15,000-meters drilling program, the company is now engaged on a similar infill drilling program. Full final -- full results are expected to be released from the initial campaign in late June.
Subsequent to the end of Q1, the exploration discoveries have continued. On May 1, 2017, the company announced a new high-grade oxides zone at Yauricocha, referred to as the Esperanza North Zone. This in addition to the extension of the high-grade sulfide zone, referred to as the Cuye-Mascota zone, which included 69 meters of continuous sulfide mineralization. All the drilling which has taken place at the Yauricocha Mine will be included in an upcoming Mineral Resource and Reserve Estimate report, expected to be published for the Yauricocha Mine early in the fourth quarter of 2017.
Sierra is competing with the brownfield exploration program and definition drilling program at all 3 mines. We shall continue to provide proofs of concept for several key areas in addition to further successes and expected resource growth at all 3 mines.
With that, I will now turn the call over to Gordon Babcock, COO for the Operations and Exploration updates.
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Gordon J. Babcock, Sierra Metals Inc. - COO [4]
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Thank you, Igor, and welcome to Sierra. Good to have you as part of the team.
Turning now to the operational highlights on Slide 7. In Q1, 2017, Sierra processed a total of 530,000 tonnes, which represents an 11% increase over Q1 2016. The company produced over 3 million silver equivalent ounces or 26.1 million copper equivalent pounds in the first quarter of this year, representing a 28% increase over the first quarter of 2016 production guidance.
Again, as Igor said, it's attributed to higher throughput, higher silver, copper and zinc head grades and as well as higher recoveries for all metals except gold at Yauricocha. Additionally, the company saw higher throughput and recoveries of all metals at Bolivar, partially offset by lower throughput, head grades and recoveries at Cusi.
The company continues to benefit from operational improvements for Q1 at the Yauricocha mine, continuing with a similar program at Bolivar mine in Mexico. Our objective is productivity in metal production improvements, increase the efforts or transfer focus on reevaluating the mine development and definition zone program focusing on a new source estimate, including new areas such as the Santa Rosa de Lima area and others. This is anticipated to add to current resources -- current one's in light of which, we currently mine as well as improve silver, lead and zinc grades.
Looking now at Yauricocha. Silver equivalent production in Q1 2017 was 2.2 million ounces, representing 54% increase over Q1 2016. Sierra increases in the production of all metals, except gold at Yauricocha in Q1 2017 versus Q1 '16, with increases in production to silver 76%, copper 49%, zinc 21%, and last lead at 73%.
At Bolivar, the company had another quarter of consistent plant throughput of 243,974 tonnes processed, which represents an 11% increase in comparison to Q1 of 2016. The higher throughput and recoveries of all metals helped offset lower head grades encountered as a result in a 9% increase in copper equivalent production when compared to Q1 2016. Plant improvements such as the previous installation of a new vibrating screen and cyclones have been completed, there other are other events that have occurred as well. Copper production increased by 13% at Bolivar in first quarter of 2017 versus the first quarter 2016, offset by 3% lower silver production and 2% lower gold production.
The company's focus at Bolivar 2017 will be to improve production volume through the procurement of new equipment, which includes Scoops, Jumbos and Trucks expected to arrive in stages with full delivery to be complete by the end of the second quarter, and I believe it's going to be some of the equipment that will come in the third quarter as well. A lot of stuff. With the intention of moving more material from available production stopes within the mine.
At Cusi, the company processed silver ore of 34,541 tonnes, which represents a 31% decrease in Q1 2017 compared to Q1 2016. On an [all-in] basis, Cusi production accounts for a minimum contribution of 6.5% of total throughput for Sierra Metals. The decrease in processed ore is due to lower head grades and recoveries for all metals combined with lower throughput.
Note, the company is currently reevaluating the development in definition drilling program with the main focus on ore zones, which exhibit encouraging wider width in currently being mined and better grades with improvement in lead and zinc for the mineralized zones within this circuit.
The current drill program at Santa Rosa de Lima recently completed has highlighted wider mineralized zones and improved grades in the current known zones, this will lay the company with increasing resources at the Cusi operation. With the definition drilling program currently underway at this time, resource evaluation is moving in a very positive and rapid pace.
Please turn to Slide 8. Exploration remains a key aspect at all 3 of the mines. And during Q1 2017, the company drilled 80 holes totaling 11,711 meters at Yauricocha. Exploration drilling accounted for 19 holes of 5,008 meters at the Esperanza zone that continued with good work. Explore the continuity of the mineralization at depth and at Cachi Cachi to explore new mineralized zones.
Definition drilling accounted for remaining 61 holes or 6,703 meters at the Rosaura, Catas, Marita, Mascota, Contacto Oriental and in the Cuerpos Pequenos, that is in the main drill.
On May 1, 2017, the company announced the discovery of a new high-grade of lead and silver oxides zone, referred to as the Esperanza North zone, which is located between Esperanza and the Cachi Cachi Mine. Drilling took place from the Yauricocha tunnel located on the 720 level. This area had never been drilled before, and this discovery is important for the interpretation of the ore body extensions between Esperanza and Cachi Cachi, which are located approximately 1 kilometer apart.
Please turn to Slide 9. On May 1, 2017, the company also announced drilling results which demonstrate the extension of the high-grade sulfide zone, referred to as the Cuye-Mascota zone, which was discovered in November of 2016. Results included 69 meters of continuous sulfide mineralization. This zone is located 200 meters north of the central mine, going along strike from the current mining activities.
The diamond drill intercepts at the Cuye Ore zone are some of the widest intercepts of sulfide mineralization discovered in the company's recent history, and will be a priority for continuing exploration during the remainder of 2017.
The results of the current program confirm the Cuye orebody continues below 1270 level and company geologists have identified the transition zone of oxides to fresh zinc and silver sulfide mineralization in this drilling program, which has important economic relevance to its high grades, particularly, for zinc and copper.
Cuye was one of the main cash flow generators for this company 10 years ago and this appears to be at depth with similar widths and grades.
All drilling that has taken place will be included in an upcoming Mineral Resource and Reserve Estimate report, which is expected to be published for the Yauricocha Mine early in the fourth quarter of 2017.
We see greater opportunity to expand on high-value, near-mine tonnage in the near term, and the opportunities are numerous and by no means exhausted. One of the opportunities is the application of Titan 24, the physical program at the Yauricocha Mine, which will enable locating deep-seated sulphide target. This program has never been implemented at the Yauricocha Mine site. Sierra is optimistic that the program will bring positive results.
Please turn to Slide 10. At Bolivar Q1 2017, 3,189 meters were drilled in the following areas: 2,138 meters at the Bolivar West fault area and 1,051 meters were also drilled in the El Gallo area with the objective of finding the continuation of the El Gallo Inferior orebody, for a month or so orebody between the Mina de Fierro and the Bolivar Mine.
A Titan 24 geophysical survey was performed during Q1 2017 in the areas of Bolivar West and Northwest 11,500 meters for which final results are expected shortly.
On March 6, 2017, the company announced the results of an initial drill program at the La Sidra vein on the Bolivar property. Drilling is ongoing and continues to define high-grade silver-gold and polymetallic mineralization. The mineralized zone currently extends to over 500 meters in length to 300 meters in depth and is open along strike and down dip.
Drilling programs continue at the Bolivar West zone with future plans to drill Bolivar North West in the Skarn's with coincident strong chargeability and within resistivity zones detected during the recent Titan 24 Survey.
20,000 meters of drilling has been budgeted with 9,500 meters of infill drilling at La Sidra and 11,500 meters at the Bolivar West and Northwest zones. Drilling is currently taking place at this time at Bolivar West. The purpose of these programs is to define the existing known areas. Once final results are available from the Titan 24 geophysical program, we will be drilling on those targets.
Please turn to Slide 11. At Cusi, we are reevaluating the opportunity as we gain greater insights to the geological segment and possible ramifications of that evaluation. Drilling continues at the Santa Rosa de Lima area as well as definition drilling in other areas of the mine.
On February 27, 2017, Sierra announced the discovery of the high-grade silver intercepts occurring in the Santa Rosa de Lima complex located within the current Cusi Mine operational area. The Santa Rosa de Lima complex lies within a regional structure extending some 64 kilometers. This extension on the Cusi property has an anticipated length of 12 kilometers.
The discovery comes as part of reinterpretation of the Hydrothermal model and a drilling campaign consisting of 15,000 meters which began in December 2016 and has now been completed. The structural mineralization widths from this program range from 1.5 meters to 10 meters wide, with an average width of 4.16 meters. Full results from the program are expected to be released in late June. Subsequent to the completion of the initial drilling campaign, the company has also commenced an additional drilling campaign consisting of 15,000 meters of infill drilling, which is approximately 25% complete.
Drilling is targeted to investigate an area of once -- 1 kilometer in length and 500 meters in depth in a target area defined by previous drill holes released. Drilling to date demonstrates mineralization is consistent across the assessed area and lies between 150 to 550 meters below surface. Currently, we have 4 drill rigs operating to complete the infill drilling program and 2 additional exploration rigs drilling to expand the zone through step-out drilling.
Future drilling will continue along the Santa Rosa de Lima Zone to the Northwest and Southeast as the possibility exists to define a 12-kilometer zone.
In summary, in the first quarter of 2017, we have continued to build upon the achievements of 2016, and the company is on track with these strong production growth attributed to brownfield exploration success. Sierra continues to execute its solid plans which is expected to reap to a stronger future benefiting the company and its shareholders.
With that, I now turn the call over to Ed Guimaraes, our CFO for the financial review.
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [5]
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Thanks, Gord. As mentioned, the company had a very strong first quarter and benefited from stabilized metal prices as well as record throughput at the Yauricocha and Bolivar Mines. Along with strong operational results realized during the quarter, cash flow generation continues to improve and provide the company with a healthier balance sheet and increased liquidity. The company realized revenues of $54.5 million in the first quarter of 2017, which represented a 130% increase compared to the first quarter of 2016. Realized metal prices in the first quarter were also higher for all metals, including 65% higher for zinc, 30% higher for lead, 24% higher for copper, 16% higher for silver and 2% higher for Gold.
In addition to the higher metal prices realized, the increase in annual revenues are primarily attributable to the 11% increase in throughput and the increase in silver, copper and lead head grades and higher recoveries for all metals, except gold at Yauricocha. The 11% increase in throughput and higher recoveries for all metals at Bolivar partially offset by a 31% decrease in throughput and lower head grades and recoveries for all metals at Cusi.
Adjusted EBITDA of $25.4 million for Q1 2017 increased by $21 million compared to $4.4 million in Q1 2016. The increase in adjusted EBITDA was primarily due to the $26 million increase in revenue at Yauricocha. Yauricocha's Q1 2017 cash cost per silver equivalent payable ounce was $7.39 versus $8.69 in Q1 2016, and the all-in sustaining cash cost per silver equivalent payable ounce was $10.60 versus $15.16 in Q1 2016. The decrease in the all-in sustaining cash cost per silver equivalent payable ounce during Q1 2017 was due to an increase in silver equivalent payable ounces as a result of higher throughput and ore feed head grades from the increase in available production from higher grade zones in the mine. Also, lower treatment in refinancing costs -- sorry, treatment in refining costs were incurred during Q1 2017 resulting from improved terms within renegotiated sales contracts with our off-takers.
Bolivar's Q1 2017 cash cost per copper equivalent payable pound was $1.14 versus $1.41 in Q1 2016. And the all-in sustaining cash cost per copper equivalent payable pound was $1.89 versus $2.35 in Q1 2016. The decrease in all-in sustaining cash cost per copper equivalent payable pound was due to an increase in copper equivalent payable pounds as a result of an 11% higher throughput and higher recoveries realized for all metals during Q1 2017.
Cusi's Q1 2017 cash cost for silver equivalent payable ounce was $10.82 versus $3.88 in Q1 2016. And the all-in sustaining cash cost for silver equivalent payable ounce was $22.72 versus $12.88 in Q1 2016. The all-in sustaining cash cost for silver equivalent payable ounce increased due to an increase of $0.4 million in sustaining capital expenditures related to stope and drift development within the mine during Q1 2017 as the company is currently reevaluating its development plan following a successful reinterpretation of the mine's geology. The decline in silver head grades and recoveries resulted in fewer silver equivalent payable ounces, which also contributed to the higher all-in sustaining cost for silver equivalent payable ounce in Q1 2017 compared to Q1 2016.
Cash flow generated from operations before movements in working capital was $22.8 million for Q1 2017 compared to $5 million in Q1 2016. The increase in operating cash flow is mainly the result of higher revenues generated and higher gross margins realized.
I would now like to review our cash flows, which provide the clearest perspective on our financial performance. I have summarized the changes in cash during Q1 2017 on Slide 14. During the first quarter, our operating cash flows were $11 million, we spent $9.8 million on capital expenditures in Mexico and Peru and paid $5.2 million of interest in principal repayments on our credit facilities in Peru and Mexico. We also paid $0.5 million in dividends to noncontrolling interest shareholders. These items decreased our cash balance from $42.1 million as of December 31, 2016, to $38 million as at March 31, 2017.
Turning to the balance sheet and liquidity on Slide 15, we have ended the first quarter of 2017 in a strong financial position with $38 million in cash and total debt of $75 million. The company's net debt was $37 million at the end of the quarter. The company expects that the 2017 EBITDA will be greater than the current debt outstanding at the end of the year. The company has principal payment obligations on its loans and credit facilities of approximately $16 million to be paid in 2017, $14 million to be paid in 2018, $8 million to be paid in 2019 and $29 million to be paid in 2020. We are confident that our financial position, together with a potential future cash flow generation from our 3 producing mines, including the recently discovered Esperanza and Cuye-Mascota zones at Yauricocha, the La Sidra in Bolivar West and Northwest zones at Bolivar and the Santa Rosa de Lima Zone at Cusi will be sufficient to support the company's financial commitments in 2017 and beyond.
I'll now turn the call back to Mike.
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Michael McAllister, Sierra Metals Inc. - VP of Corporate Development [6]
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Thanks, Ed. That ends the presentation portion of this call. We would now like to open the call up to questions from participants. Operator, if could you please open the line.
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Questions and Answers
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Operator [1]
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(Operator Instructions) Your first question comes from the line of Lee Cooperman of Omega Advisors.
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Leon G. Cooperman, Omega Advisors, Inc. - President, CEO, and Chairman [2]
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I guess if you were to build out your most perspective new discoveries, what level of CapEx would be necessary to achieve that? Your CapEx has been, I guess, last year was $25 million. Maybe you could tell us what your budgeting this year for CapEx? And what would it be if you were to develop some of these elephant feet as you referred to them as?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [3]
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Lee, I'll take the first part of the question, and thanks for the question. In terms of our CapEx and what we budgeted, we're expecting to spend about $25 million on CapEx at our mines this year. In addition, we're looking to spend about $25 million on our exploration programs as well at all 3 mines. In terms of future spending and the potential on where we see future spending, that's still uncertain at this time. We still haven't developed our budget for next year, but that will be definitely a consideration in terms of the spend, not only for 2018 but over the next 5 years. (inaudible)
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Leon G. Cooperman, Omega Advisors, Inc. - President, CEO, and Chairman [4]
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Would you expect to be debt-free, theoretically, at the end of the year? Between your EBITDA, you're running at a run rate of about over $100 million minus your CapEx. Would you expect to be debt-free if you chose no other alternative to use your funds?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [5]
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If we choose no other alternative to use the funds, we still likely wouldn't have been debt-free because we do have taxes to pay at -- from our Yauricocha operation. But we would be close, I'm not going to venture too far away from saying we would be close to that. But we do have major expenditure of programs in place.
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Operator [6]
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(Operator Instructions) Your next question comes from the line of Jacques Wortman from Eight Capital Partners.
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Jacques Wortman, Eight Capital, Research Division - Research Analyst [7]
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I guess, this is a question for Gord Babcock. I could hear most of your commentary but missed some of your comments regarding Yauricocha, so apologies if you covered this. Can you speak to the 2017 mine plan and the ability to maintain these higher throughput in grades and recoveries at Yauricocha over the balance of the year? And I guess the second part of the question is a bit tougher. Conceptually, how will you target in sequence, in bringing the new zones that you're getting in your exploration into the end of the 2018 mine plan and beyond? I'm just trying to get a sense of how to look at the mine on a go-forward basis.
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Gordon J. Babcock, Sierra Metals Inc. - COO [8]
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Well basically, where we're sitting right now, we're going to focus on the following the same line of production. We have in recent drill programs we've just completed, and this is going to coming out in the very near future in the Resource and Reserve Estimate, we've got our operational improvements that are ongoing. We've got some good intercepts in our Cuerpos Chicos, in areas that are contiguous to the main zones such as Esperanza, Rosaura, Catas. The increase in -- of better grade at depth in the central mine zone has been very encouraging. So I think it's going to be -- it's not going to be assuring because Yauricocha is a difficult mine, but we're focused in developing the areas in the right direction here. And the sweetener for our operations as we said in Cuerpos Chicos, the high-grade silver, zinc and lead in excess. So that's what we're looking at and it's going to be very similar for 2018.
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Igor Alcides Gonzales Galindo, Sierra Metals Inc. - CEO, President and Director [9]
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Just to expand on what Gord indicated, in parallel to our exploration program which had been mentioned, we're also doing significant improvements in infrastructure at the mine, because we know that that goes hand-in-hand, especially in the production mine to exploration. So Gord is working, for example, in shaft improvement and upgrades, deepening shafts and also very, very important in ventilation for the entire mine. So that's going to help us in the development of the resources and to be ready when they are -- they become a mineable resource.
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Operator [10]
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And your next question comes from the line of Jim Young from West Family Investment.
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James Young, West Family Investments, Inc. - Investment Analyst [11]
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Yes, I got a couple of questions. First for Igor, welcome as a CEO and since you been on the board for several years already, you know these assets, but my question is, what are your plans to maximize the per-share value for Sierra Metals shareholders over the medium term?
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Igor Alcides Gonzales Galindo, Sierra Metals Inc. - CEO, President and Director [12]
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Yes, well first of all, what are -- my plans, basically, are to do very solid and basic mining development programs. In other words, continue with our exploration results, improve the operations, in general, that's do an upgrade and optimization. And then, also make sure that our resource grows in a manner, which can be auditable. And once we have that, then look at into the expansion of our operating plants, if necessary. So right now, we're reviewing all our equipment strategies. We're redoing that and we won't commit to our Board a revised operating strategy that keeps the basic mining concepts at the heart of the strategy.
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James Young, West Family Investments, Inc. - Investment Analyst [13]
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Okay. And the -- another question is, there's been some discussion, or I think some talk about listing on the New York Stock Exchange. Can we get an update as to where that stands?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [14]
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Sure. Jim, I can provide you with an update. Yes, so we're hoping to have the listing in place by early June and the reason we've kind of -- there has been a delay is we wanted to include the Q1 financial results in our listing application as well as our management information circular as well, which is just being finalized now.
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James Young, West Family Investments, Inc. - Investment Analyst [15]
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Okay, great. And next question is with respect to the all-in sustaining cost of $12.84 that you posted in the first quarter of 2017, can you give us a sense as to where this is headed over the next couple of quarters?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [16]
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I expect these costs to remain fairly consistent with Q1.
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James Young, West Family Investments, Inc. - Investment Analyst [17]
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Are there any opportunities to bring it even lower?
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Gordon J. Babcock, Sierra Metals Inc. - COO [18]
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We'll increase throughput and go lower, Jim. Our focus is to get back to where we were before. So our targeting those types of things.
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James Young, West Family Investments, Inc. - Investment Analyst [19]
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Okay. And the next question is really for Gord. Gord, can you give us a sense from Esperanza, how much of the ore is actually being processed at the Chumpe mill at this point? And what is the value of this rock relative to other rock that is being processed at the mill be? Because it's my understanding that the Esperanza ore is much higher quality and better grade, which would suggest that it's a higher revenue per tonne. And in addition, give a sense as to what the Esperanza north rock looks like relative to Esperanza?
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Gordon J. Babcock, Sierra Metals Inc. - COO [20]
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In reality, Jim, the Esperanza block is slightly better grade than the central mine zone. But what is really interesting about the Esperanza zone is that literally contiguous to the Esperanza zone, we've been finding these -- we call them Cuerpos Chicos are really high-grade silver, lead, zinc, copper zones. And that has been instrumental in blending with the Esperanza zone to bring us well over the $150 a tonne range. So that's in the positive side of the exploration program. What we've been doing, our definition drilling, we defined the blocks, we found the new zones towards the North on the 920 level, for instance, of the Esperanza zone. And just before you get to that zone, we found more mineralized areas at higher-grade intercepts. So our concern in the past is that, what do we do? And we don't have any more Cuerpos Chicos, but this mine is programmed to be fairly consistent in the delivery of these high-grade zones. So it's been very positive. That's how we've been able to maintain the grades.
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James Young, West Family Investments, Inc. - Investment Analyst [21]
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Okay, and Gord, another question is, with respect to Esperanza in the entire press releases, you've indicated that it's been opened to the north and opened to depth. Is that still the case or have you found any limitations in the Esperanza area at this point?
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Gordon J. Babcock, Sierra Metals Inc. - COO [22]
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Yes, that's correct. It's still open, open at depth, open to the North. And you've got other things happening to the South but there's mineralization going down -- it comes in other mineralization zones come into the play.
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James Young, West Family Investments, Inc. - Investment Analyst [23]
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Okay, great. And the last question is that, I have is for Ed. Ed, regarding the EBITDA that you've posted of $25.4 million. As I recall in the past that the first quarter has typically been a little bit seasonally lower EBITDA generation, and I'm just wondering, post-restructuring if this is still the case for Sierra Metals overall?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [24]
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Thanks, Jim. Yes, historically Q1 has been a soft quarter and we did have a rainy season. You could see even at Yauricocha with the huaicos that they were significant, b ut not necessarily disrupting the operations per se, we still made our concentrate deliveries and the mine was still produced. So historically, yes, it has been a soft quarter and we're hoping we're going to see Cusi possibly improve somewhat. Yauricocha is fairly consistent now.
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James Young, West Family Investments, Inc. - Investment Analyst [25]
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And the rain issue that you alluded to for the first quarter, have they abated insofar in the second quarter?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [26]
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Yes, they have.
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Operator [27]
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Your next question comes from the line of the Lee Cooperman from Omega Advisors.
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Leon G. Cooperman, Omega Advisors, Inc. - President, CEO, and Chairman [28]
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Just another question. You own 82% of Yauricocha, is the 18% owned by a one individual or company or is it publicly traded? And are you prohibited from attempting to buy the 18% to go to 100%?
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Edmundo Gontardo Guimaraes, Sierra Metals Inc. - CFO [29]
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Thanks, Lee. So the remaining 18% is held, 50% of which, 9%, is held with the Gubbins family, which were the previous owners of Corona, and the remaining 9% or 50% would be widely held on the Lima Stock exchange. In terms of a potential buyback or an increase, if you will, of our position, that's a consideration as well and there's nothing really preventing us from doing so and we're evaluating this option as we speak.
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Operator [30]
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And there are no further questions at this time. I turn the call back over to the presenters.
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Michael McAllister, Sierra Metals Inc. - VP of Corporate Development [31]
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Thanks, operator. That concludes today's call. On behalf of the management team, I would like to thank all participants for joining us today. A replay of the webcast and materials can be found on our website. If there are any further questions or concerns, you may reach out to us at any time after today's call. Our contact information can be found on Slide 16 of today's presentation as well as on the company website. Thank you, operator. Please conclude the call.
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Operator [32]
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This concludes today's conference call, you may now disconnect.
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