Sierra Metals Inc.

Good afternoon, everyone. Thank you for joining our call today.

Some housekeeping items before I pass the call to Ernesto Balarezo, our CEO; and Jean Pierre Fort, our CFO. The accompanying presentation for today's call is available for download from the Company's website at sierrametals.com.

Today's press release, the financial statements and the MD&A are all posted on our website and on SEDAR+. I'd like to note that this earnings call contains forward-looking information that is based on the Company's current expectations, estimates and beliefs and will also use terms that are non-IFRS performance measures.

Please review our Q3 2024 disclosure materials for the risks associated with these forward-looking information and the use of non-IFRS performance measures. Please note that all dollar amounts mentioned on today's call are in U.S.

dollars unless otherwise noted and that all unit cash costs and all-in sustaining costs are in a copper equivalent payable pound basis. I would now like to turn the conference over to Ernesto Balarezo, Chief Executive Officer for Sierra Metals.

Please go ahead.

Thank you, Lia. Let me begin, as we always do, by discussing our company's #1 priority, safety.

As seen on Slide 4, our focus is to continuously ensure we provide a workplace environment where all our employees and contractors are safe. Amongst the many initiatives undertaken during the quarter, the most significant was the risk management leadership program that advanced our technical competencies and leadership skills that are necessary to manage risks and critical controls across our operations effectively.

This training workshops reinforce our commitment to decision-making guided by safety and sustainable mining. Moving on to our performance for the quarter.

We released our third quarter 2024 production results on October 15 and our financial results earlier today. I assume everyone has had an opportunity to review them.

So, I will not be going into detail but we'll instead provide highlights as seen on this slide. On a consolidated basis, in the third quarter of 2024, our two operating mines, Yauricocha and Bolivar processed almost 669,000 tons of ore, which was 7% higher than the second quarter of 2024.

Breaking this down, production by metal was higher than in Q2 with copper production of 11 million pounds being 29% higher. Silver production of 503,000 ounces being 30% higher and gold production of nearly 4,000 ounces was 16% higher, all of which is encouraging given rise in metal prices.

At the same time, lead production was lower and zinc production flat. As a result of quarter-over-quarter improvements, cash flow from operations was over $22 million which was 48% higher than in Q2.

Jean-Pierre will provide more details on our stronger financial position shortly. I'll also remind everyone that we sold the Cusi mine and its surrounding concessions in early Q3, allowing the Company to receive $2.1 million in net proceeds and saved nearly $300,000 per month incurred and maintenance expenses.

More importantly, this allows us to direct our full efforts and resources to perform in both Yauricocha and Bolivar. Looking ahead to Q4, we expect a strong fourth quarter as Bolivar continues its steady state production level, near capacity and Yauricocha ramps up production towards full capacity.

As a result, I am pleased that both mines met our high expectations for the quarter, and therefore, very pleased to say that we expect to exceed our consolidated production guidance for the year. Moving on to Slide 6.

Bolivar processed nearly 402,000 tons of ore, which represents a 7% and 11% increase from Q2 2024 and Q3 2023, respectively. Copper, silver and gold production increased by 3%, 17% and 12%, respectively, when compared to Q2 2024.

Cash costs and all-in sustaining costs per pound for Q3 2024 were $2.42 and $3.23, respectively. Cash costs improved at Bolivar due to the combined impact of lower operating costs per ton and higher grades, we were -- which were partially offset by an increase in the sustaining capital expenditure.

The sustaining capital included the cost to develop a total of 3,800 meters, which included 1,700 meters to prepare new operating stopes for production and 2,100 meters for new ramps and underground accesses. Development in Q3 was focused on the Bolivar Northwest, Bolivar Northwest South, Dulce and Cieneguita zones.

Also shown on this slide, there are some of the major initiatives completed in Q3 and others now underway in Q4. A priority for us is to continually replace and grow our mineral reserves and resources.

Exploration works at Bolivar this quarter included drilling over 10,000 meters as part of an infill program in the Bolivar Northwest, Cieneguita and Dulce areas. The main purpose is to reclassify and further define the resources and extend the ore body to the northeast of Dulce.

Slide 8 shows our 2024 guidance range as compared to actual year-to-date production and costs. As indicated on this slide, given the production levels achieved to date, and our year-to-date cost compared to guidance, we expect a strong fourth quarter of operations.

Success at Bolivar is a key driver for the Company's overall performance. Moving on to Slide 9.

Yauricocha averaged a processing rate of over 3,000 tons per day or a total of nearly 267,000 tons in Q3, our highest in over two years. This was an increase of 5% over the previous quarter as the mine commenced extraction activities below the 1120 level.

Head grades and recoveries for copper, silver and gold improved in comparison to Q2 but dropped slightly for zinc and lead. The higher grades were due to increased contributions from the Esperanza zone and the copper rich zone of Pamela.

As a result of higher throughput, grades and recoveries, copper production was 97% higher with silver, gold -- with silver and gold higher by 43% and 41%, respectively, when compared to the previous quarter. Yauricocha's cash cost per pound was $3.25 and all-in sustaining costs were $3.75.

The previously discussed operating improvements resulted in a slightly lower costs as compared to Q2. As you would expect, the focus for the quarter was on mineral extraction below the 1120 level.

This included constant improvements in equipment utilization and increasing existing shaft usage. Replacing mineral reserve and resources is just as important as Yauricocha.

In Q3, underground exploration at Yauricocha was focused on replacing mineral resources and nearly 8,800 meters of diamond drilling were completed in the main mineralized bodies. Polymetallic ore and copper were intercepted, which will replace the mineral depleted during 2024.

As seen on this slide, surface exploration was focused on carrying out detailed geological work and geochemical sampling to define the polymetallic area in the El Paso Fortuna and Vizcachita zone. We also have other high-priority brownfield targets identified that we will work on shortly.

Indicated on Slide 11, we expect a strong fourth quarter of operations as we ramp up to full capacity. Furthermore, given the results to date, we expect Yauricocha to beat annual cost guidance.

We are very pleased with the progress being made at Yauricocha and expect to announce shortly our achievement of hitting capacity throughput rates. Now over to Jean-Pierre to discuss our financial results.

Thank you, Ernesto. I will now provide the key financial highlights of the third quarter of 2024.

Overall, our stronger operating performance continues to improve our financial position. Net revenues in Q3 were $70.9 million, our highest quarter in more than three years.

This was an increase of 23% of our revenues in Q2 2024 and was 25% higher than in Q3 2023. Higher revenues were mainly driven by a 19% increase in copper sales and higher metal prices during the period when compared to Q3 2023.

Adjusted Q3 EBITDA from continuing operations has been our highest over the last two years, increasing to $20.4 million from $8.1 million in the same quarter of 2023. On a year-to-date basis, adjusted EBITDA from continuum operations increased to $51 million from $38 million in the same period of 2023.

I'll also point out that we have generated as much EBITDA in the first nine months of 2024 as we did in all 2023. Cash flow generated from operating activities before movements in working capital were $22.1 million from Q3 2024 when compared to $6 million generated in the same quarter a year ago.

Net income attributable to shareholders for Q3 2024 was $3.8 million compared to a net loss of $9.3 million in the same period in 2023. As of the end of Q3, our net debt to last 12 months EBITDA ratio was 1.2x, which is lower than in the previous quarter.

We expect the ratio to improve as we progress our operational and cost efficiency plans throughout the next coming months. Cash and cash equivalents as of September 30, 2024 increased to $18.6 million during the nine-month period.

This is a result of cash generated from operating activities of $40.2 million plus the net cash obtained from the refinanced loan of $18.2 million that were partially offset by the net cash used for investing activities of $40.4 million. Capital investments mainly consisted of underground development in both mines, new equipment purchases, concentrator plant improvements required to meet throughput increases, expenditures at the Yauricocha shaft, the integration panel at Bolivar as well as in pumping and ventilation systems in both sites.

In summary, all of our key financial metrics are trending in the right direction. Our financial position has improved significantly on a year-over-year basis, and we are well positioned to continue executing our operating plans.

Back to you now, Ernesto.

Thank you, Jean Pierre. Shifting now to another very integral part of our business, which is partnering with our local communities on important initiatives that benefit everyone.

Our focus continues to be on health, education and community entrepreneurship. Shown on this slide are some images of the events and initiatives undertaken this quarter in Mexico and Peru.

In summary, the Slide 14 is a reminder of our ambitious 2024 plans and our achievements to date. We continue to check all the boxes as we achieve our goals this year, but we are not done.

During Q4, we expect the Yauricocha to meet full production capacity of 3,600 tons per day. I'll remind everyone that we received a permit to mine below the 1120 level in late February.

So it is remarkable that we have gotten to this stage in just eight months. Meanwhile at Bolivar, plants continue to rapidly expand the tailings facility, allowing the plan to grow from a throughput rate of 5,000 tons per day to first 7,500 tons per day and then to 10,000 tons within the next few years.

And lastly, we continue to seek partners to help us uncover value from our large and prospective greenfield land packages in Mexico and Peru. In closing, I want to congratulate the Sierra Metals team.

As we continue to deliver quarter-over-quarter since January 2023, I truly believe that we have built a foundation to achieve amazing things to continue building shareholder value. With that, I hand the call back to the operator to start the Q&A session.

Operator?

We have a couple of questions coming from the Spanish webcast. I will start with this one.

When Yauricocha is operating at full capacity, can we expect costs -- what can we expect costs to be?

Well, we expect cash cost levels to be lower than what they are now. We'll provide that guidance in our 2025 outlook.

So, I would ask whoever the person is that ask the question to wait for our 2025 guidance, but I think they are going to be good.

And the other one is so far in Q4, what has the Yauricocha production been?

I don't think I'm allowed to say it, but we're very pleased what I'll say is that we are very pleased with the operations trending and there -- it is truly going in the right direction. So far, we haven't promised anything that we haven't been able to accomplish.

And we have said that in Q4, we will be at full capacity. So I continue to say it and to promise that to the shareholders and the market.

We have no further questions. I'll hand the call over to Ernesto for closing comments.

Well, thank you for taking the time to join us today. Please reach out should you have any questions.

And have a good day, everyone. Thank you very much.