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Sierra Metals Inc. (SMTS) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribing – Aug 11, 2021 at 4:01AM

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SMTS earnings call for the period ending June 30, 2021.

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Sierra Metals Inc. (SMTS -4.18%)
Q2 2021 Earnings Call
Aug 10, 2021, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning. Welcome to the Sierra Metals' second-quarter 2021 financial results conference call. I would now like to turn the call over to Mike McAllister, VP of investor relations for Sierra Metals. Thank you.

Please go ahead, sir.

Mike McAllister -- Vice President, Investor Relations

Thank you, operator, and good morning, everyone. Welcome to Sierra Metals' second-quarter 2021 results conference call. On today's call, we are joined by Luis Marchese, our CEO; as well as Ed Guimaraes, our CFO. We are assuming that all published materials have been read.

And as such, today's presentation highlights the key issues of the quarter. However, I would like to highlight, as always, we are open for questions at the end of the presentation, which can expand upon other issues that might be of interest to those listening. The accompanying presentation for today's call is available for download through the webcast or from the company's website at sierrametals.com. Yesterday's press release the financial statements and the management discussion and analysis are also posted on the company's website.

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Turning in Slide 3. Before I turn the call over to management, I would like to indicate that this earnings call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs. This forward-looking information is subject to a number of risks, uncertainties, and other factors. Actual results could differ materially from our conclusions, forecast, or projections as reflected in the forward-looking information.

Additional information about the material factors that could cause actual results to differ materially from conclusions, forecasts, or projections in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information is contained in the company's annual information form, which is publicly available on SEDAR or EDGAR via Form 40-F or on the company's website.  Please note that all dollar amounts mentioned on today's call are in U.S. dollars unless otherwise noted. I would now like to turn the call over to Luis Marchese, our CEO, who will provide us with the second quarter highlights, as well as an outlook for the remainder of the year. Afterward, Ed Guimaraes, our CFO, will take us to the company's financial highlights for the quarter.

At the end of the call, Luis Marchese will provide a brief statement on the update of the strategic review process. With that, I will now turn the call over to Luis Marchese. 

Luis Marchese -- Chief Executive Officer

Thanks, Mike. Good morning, everyone. Turning now to the second-quarter highlights on Slide 4. One of the issues that still affecting our daily operations at all three mines is the COVID-19 pandemic.

As always, the safety of our workforce and the communities in which we operate remains paramount to the company. The pandemic has imposed various direct and indirect challenges to the company and management, which have hindered our ability to operate as effectively as expected this year. Some of the COVID-19 issues are still ongoing or are a residual effect from previous quarters on current operations. Direct impact issues have included lower workforce availability and additional costs related to management and prevention of COVID-19.

The residual effect from delays on mine development has forced production to come from a lower grade, higher tonnage areas in order to reach throughput targets. Lower grades have directly affected metal production in all three of our mines. Although the company was able to secure the production expansion permit to 3,600 tonnes per day of Yauricocha, it came with a delay from our initial expectations. On the other hand, the company also encountered problems related to significant underground water and high temperatures at the Cusi Mine, which may be less amenable to the planned production rates.

The issues at Cusi are being rectified with the completion of a raise bore, which will provide relief to the high temperatures and streamlining the pumping capacity at the mine.

Ed Guimaraes -- Chief Financial Officer

We seem to be having some technical difficulties. Good morning, everyone. I'll just pick up where Luis left off. If we turn to Slide 4, one of the biggest issues still affecting daily operations at all three mines is the COVID-19 pandemic.

As always, the safety of our workforce and the communities in which we operate remains paramount to the company. I believe -- Luis, are you able to join now? OK. The pandemic has imposed various direct and indirect challenges to the company and management, which have hindered our ability to operate as effectively as expected this year. Some of the COVID-19 issues are still ongoing or are a residual effect from previous quarters on current operations.

Direct impact issues have included lower workforce availability and additional costs related to management and prevention of COVID-19. I believe Luis is trying to connect. 

Luis Marchese -- Chief Executive Officer

Yeah. Thank you, Ed.

Ed Guimaraes -- Chief Financial Officer

OK. I -- apologies, everyone. We're having some technical difficulties. Luis is joining in from Lima.

The full effect from delays on mine development has forced production to come from a lower grade, higher tonnage areas in order to reach throughput targets. Lower grades have directly affected metal production in all three of our mines. Although the company was able to secure the production expansion permits to 3,600 tonnes per day at Yauricocha, it came with a delay from our initial expectations. On the other hand, the company also encountered problems related to significant underwater -- underground water and high temperatures at its Cusi Mine, which made it less amenable to the planned production rates.

The issues at Cusi are being rectified with the completion of a raise bore, which will provide relief to the high temperatures and streamlining the pumping capacity at the mine. I will now turn it over to Luis Marchese.

Luis Marchese -- Chief Executive Officer

Thank you, Ed. Sorry for the technical difficulty. We have also increased treatment charges -- we have also seen increased treatment charges due to price participation escalators from off-takers. Unit costs were also affected mainly due to indirect freight costs, which is still mostly incurred despite lower metals production.

We continue to take proactive measures to mitigate the potential impact from COVID-10, and we continue to test and quarantine employees before they can join the active workforce and continue to monitor our employees daily. I would also mention that while the Peruvian and Mexican governments vaccination efforts are bringing vaccines to the population in our areas of influence, starting with the most at risk in the communities, the situation, however, is not yet under control, and COVID-19 remains a significant risk for our personnel, communities, and our business. The company has engaged proactively with the local authorities to support their efforts and to facilitate vaccination efforts nearby our operations. Turning now to Slide 5.

In reflecting on the previously mentioned challenges and their impact on operations in the first half of 2021, we saw the need to revise our production, cost, and EBITDA guidance to align with the outlook for the year. We continue to work on the challenges and issues with the second half of the year expected to be stronger than the first half. With that, copper equivalent production is now expected to fall between 110 million and 115 million pounds this year. Cash costs are turning higher due to the previously mentioned reasons, and we will see increased overall costs in 2021.

Based on the new production and cost guidance ranges, management has also revised EBITDA guidance, which is now expected to range between $130 million to $140 million for the year. Finally, with the inclusion of the capex to construct a new iron ore processing plant at Bolivar, we are now revising capital expenditures for the year to 100 million. The company balance sheet remains strong and an increase in capital expenditure and the repayment of loans for approximately $19 million, which will be lower the overall debt position to approximately 80 million at the year's end. Despite the challenges we faced in relation to the pandemic in the second quarter, the company continued to see improvements in consolidated throughput, revenue, EBITDA, and net income over the same period in 2020 and over the previous quarter in 2021.

Looking ahead to 2021. Turning to Slide 6 and looking ahead in 2021. Despite the unexpected challenges we are facing, we continue to see strong growth opportunities for the company. Even more so as we emerged from the pandemic, we increased vaccination rates among our employees.

Short-term opportunities include the production of iron ore concentrate and accelerated stage production increases at Bolivar, continuous improving initiative refractory cost in Cusi while we are completing preliminary feasibility studies to evaluate a 53% throughput expansion at the Yauricocha Mine and the potential downing of production at the Bolivar and Cusi Mines. We also continue with our brownfield exploration products while reactivating our brands at our extensive land position in Peru and Mexico. We will continue to speak further about cash flow and liquidity improvements in the future, the benefit of expected production and grade improvements, and strong metal prices. The company is making the necessary capital investments in infrastructure improvements to continue growing production and improving costs.

We remain committed to the company's present and sustainable growth, and more importantly, to improving the per-share value of benefit on shareholders. With that, I will now turn the call over to Ed for the second-quarter financial results. 

Ed Guimaraes -- Chief Financial Officer

Thanks, Luis. Turning now to Slide 7. The company had a relatively good second quarter despite COVID-19 and other operational challenges. We reported a 50% -- 54% increase to our consolidated throughput as well as adjusted EBITDA of $38 million.

We also reported positive free cash flow and net income, and we finished the quarter with approximately $76 million in cash. These results are the product of evolving optimized operations and expansions ramp up despite the negative effects of COVID-19. Overall, the company continues to have solid financial and operational performances, which we expect to continue into the second half of 2021. Our revenue mix by metal continues upper followed by silver and it is expected that copper will continue to take a leading role in the company's metal mix of production and revenue going forward.

In Q2 2021, we saw an improvement in all realized metal prices. Copper continued to improve in the first half of 2021 and remains strong currently. Precious metals and zinc have also remained relatively strong. Turning now to Slide 8.

Compared to the same period in 2020, cash costs were higher at all mines. The reasons have been previously disclosed on this call, but again, this is mainly due to lower metal production, which is attributable to lower head grades from reduced tonnage contributions from higher grade zones and operational issues at Cusi. We finished the quarter -- and if we turn to Slide 9, we finished the quarter with $76 million in cash and have total net debt of $17.2 million. The company has commenced the repayment of its debt facility in June this year with an initial installment of $6.25 million, and we will continue to make quarterly $6.25 million installments to the last installment that occurred in March 2025.

The company continues to have a strong balance sheet, working capital, and cash position to support capital expenditures, debt repayment, and growth initiatives. Based on our current budgeting process and current strong metals price environment, this scenario could provide support for an attractive dividend policy in the future. Management remains committed to the company's prudent and sustainable growth plan and more importantly, improving the per-share value, benefiting all shareholders. And with that, I will now turn the call back over to Luis, who will provide a brief update on the strategic review process announced in January of this year.

Luis?

Luis Marchese -- Chief Executive Officer

Thank you, Ed. Turning now to Slide 10. I would like to give a brief update on the strategic review process that we originally announced in January of this year. Let me first state that we strongly believe the company has a strong foundation for a solid valuation in the market and in return for shareholders.

Despite current challenges, the company benefits from a strong EBITDA performance at current metal prices and a solid financial position to build additional value into the future. It has a current number of exciting, actionable organic growth opportunities, particularly at Bolivar and Yauricocha, and a large land package for growth in the future, both near mine and further. The process is still ongoing and considering all options, we expect to be able to provide a more detailed report on the process in the coming weeks. Let me finish my presentation by highlighting the strengthening of our company's focus on environmental, social, and government structure and initiatives provided an increasingly complex and challenging environment in which to operate.

In that sense, it's important to mention that we're also considering the ongoing fluid changes in the political landscape of both jurisdictions, Peru and Mexico, for our current strategic plan. That is the presentation portion of this call. We would now like to open the call to questions for participants. Operator, please open the lines.

Questions & Answers:


Operator

[Operator instructions] 

Ed Guimaraes -- Chief Financial Officer

Operator, your line is on mute. We won't be able to hear you.

Operator

[Operator instructions]

Ed Guimaraes -- Chief Financial Officer

Operator, can you open the line?

Operator

The line is open.

Ed Guimaraes -- Chief Financial Officer

Well, you better announce the first caller, it's Mark Reichman from NOBLE Capital, and open his line.

Operator

Your first question comes from Mark Reichman.

Mark Reichman -- NOBLE Capital Markets -- Analyst

Good morning, and thank you. I will just have two questions. The first was on the iron ore processing plant. If there was any -- if you could just kind of elaborate on the timing there, and when you might expect it to go into production in 2022, you know, the ramp-up or perhaps when you might provide a little more guidance around that asset?

Luis Marchese -- Chief Executive Officer

Thanks, Mark. Can you hear me? We are continuing with this project on a fast track basis, Mark. So, as we speak, we are looking at the different parts of the process at the same time. We will be issuing PEA for Bolivar including the magnetite project in the coming weeks.

We are finalizing it. And that will give you some more detail on the actual economics. Actually, it will be very exciting economics at this point. In terms of timing, we are expecting it to be in full production in the second quarter of next year.

Mark Reichman -- NOBLE Capital Markets -- Analyst

OK. And the second question was just on the production guidance. You know, the full-year 2021 production guidance looks pretty straightforward. The only one that I called my attention to was on the zinc, you know, given the first-half production numbers relative to the full-year guidance.

And I was just wondering if there were any -- if you want to maybe comment on kind of the differences between, say, the first half and what your expectation is in the second half relative to the zinc production?

Luis Marchese -- Chief Executive Officer

Thank you, Mark. The zinc production is very much influenced by the sequencing at the mine in Yauricocha. So, the plan just reflects what the sequencing is allowing us to bring to the market as soon as possible. As I -- as we mentioned before, we have some residual effects from the COVID pandemic and that has influenced our development plan at the mine.

So, we are trying to reach as soon as possible to a higher grade area. But what is on the guidance is what we can -- we feel that we can achieve between now and the year-end.

Mark Reichman -- NOBLE Capital Markets -- Analyst

Great. Thank you very much.

Luis Marchese -- Chief Executive Officer

Thank you.

Operator

The next question will come from Heiko Ihle with H.C. Wainwright. Please go ahead.

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

Hey, can you guys hear me OK? 

Luis Marchese -- Chief Executive Officer

Yes.

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

Can you hear me OK?

Luis Marchese -- Chief Executive Officer

Yes, we can hear you, Heiko. Thank you.

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

Perfect. For Bo -- thanks for taking my question. For Bolivar, you state in your release that Mina de Fierro is a larger ore body with greater tonnages, so far so good. But you also mentioned that the head grades and recoveries are lower than at Bolivar West.

Going to the recoveries, is the change in the recoveries attributable to just being different rock, is it tougher to chase grade? Just a short -- I mean, what is the difference, how meaningful is it, and how long-lasting is it?

Luis Marchese -- Chief Executive Officer

Yeah. Mina de Fierro is a lower grade mining area compared to Bolivar. And the reason for the lower recovery is because it's [Inaudible] have no recoveries. So, on one hand, it hits the metallurgy as compared with Bolivar West.

But on the other hand, it's giving us the opportunity to bring the magnetite as an important by product. So, on one hand, we may have a slightly lower grade and slightly lower recoveries because of the method there -- the sort of order you have. But on the other hand, it's going to give us some additional revenue coming from the magnetite in the near future.

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

That makes sense. You also mentioned some delayed capital expenditure in the release that -- and also specialized technical oversight as it relates to your impact from COVID. Just thinking of load, I mean, how much is actually longer lasting or even possibly permanent, and can you crack on a little bit of what exactly it is and costs incurred, please?

Luis Marchese -- Chief Executive Officer

I'm sorry, I do not understand your question very well.

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

Yeah. You mentioned delayed capital expenditures in the release related to COVID. And you mentioned the specialized technical oversight also related to COVID. I assume that's some consultants and some safety people.

But, I mean, just thinking of load, how much of that -- of those expenditures are longer-lasting, possibly permanent, and can you just maybe granulate down a little bit on what exactly they are?

Luis Marchese -- Chief Executive Officer

OK. Well, you know, due to COVID, there are some delays capital expenditure higher from -- we had to -- in Peru, we have I would think one of the toughest lockdowns in the world. And that pretty much precluded people from going to the site. And also, as you are aware, as you might be aware, Peru has had the highest number of deaths in the world.

So that has made us prioritized, within this tragedy, our expenditure at the mine. So, for example, the Yauricocha chart, which was going ahead, we have stopped it for some time, and now we are retaking some expenditure in terms of development. We also had to delay. So, we are retaking this sort of expenditure as we are seeking.

And that's going to go between now and potentially even next year. The other -- the specialized technical consultant is, for example, on our greenfield exploration, we've been -- we wanted to bring some fairly specialized person that knows the sort of core values that we are willing to explore. But many events have been stuck in their own countries due to these lockdowns all over the place. So, these lockdowns changing from one point to another plus the restrictions that we've had on site have stopped us from bringing these specialized persons into our operations.

And that has pretty much delayed our ability to move forward with these initiatives.

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

Very good. Thank you, guys, so much. I'll get back in the queue.

Luis Marchese -- Chief Executive Officer

Thank you, Heiko.

Operator

Your next question comes from Lee Cooperman from Omega Family.

Lee Cooperman -- Omega Advisors -- Analyst

Hi. There's a lot of things I want to cover. But I have to say that I'm very confused about what you're saying about the strategic review process. You just said a moment ago that it wasn't over.

It was initiated in January of this year. You've had 8 months to figure out what's going on. And I think the shareholders are deserving of a more fulsome explanation. Have we gotten bids that were inadequate? Have we gotten no bids? What is the story? What is going to change in the next two or three weeks that did not -- that we didn't have any decision last eight months? You held out the comment.

You said you have more to say in two or three weeks. Why don't you just share that with your investors in an open mic? That's question number one. Very disappointed in how you've addressed it. We've waited eight months for an explanation of what's going on and then you get a very superficial inadequate explanation, OK.

So, why don't you just come clean and tell us what's going on? We realized we're not in a distressed situation, so we don't have to take any bid. Is it that we've got inadequate bids, we've got no bids, what is going to happen in the next two or three weeks that didn't happen in the last eight months? Help me out, OK. That's question number one.

Luis Marchese -- Chief Executive Officer

Lee, do you want to bring on the questions and then I reply, or --

Lee Cooperman -- Omega Advisors -- Analyst

Well, yeah, that's fine. That's number one. Number two, how -- you know, you kept on reiterating up until today 170, 180, whatever was EBITDA guidance. It just seems it's not a good thing for you and investor relations and the shareholders to basically be so far off your prior guidance and not make any revisions well before the earnings report.

So, I would chastise you, frankly, embarrassing your investors and the analysts that cover you if they care as to why you did not give a profit warning well before you reported. That would be a second question -- that's not a question, it's a statement, OK. Third, what -- do you have any kind of view about 2022? In other words, in a broad scale of things, you know, do you anticipate a material improvement in EBITDA? Do you think we'll remain at this low level of EBITDA compared to previous expectations? What is your thinking about 2022? Will all of the exco patients and all the hedges that you have, what can you tell us about 2022? Then getting back to 2021, what is your expected year-end cash position likely to be? Do you expect to be in a net cash position? And then your capex for the year, your free cash flow for the year, and year-end cash position are they similar for 2022? That would be interesting. And then, you made an allusion to a dividend policy.

You obviously weren't ready to pay a dividend now. What's going to have to happen for you to pay a dividend in the future? These would be some of my questions.

Luis Marchese -- Chief Executive Officer

Thank you, Lee.

Lee Cooperman -- Omega Advisors -- Analyst

I'll give you one other question. Who is in charge? You know, the chairman of the board is on a critical call. The chairman of the board isn't even been on the call. Who is in charge of making decisions for the company? You know, generally, the chairman of the board represents the shareholders.

He's on the call, which disappoints me. So, in terms of corporate governance, who's in charge?

Luis Marchese -- Chief Executive Officer

OK. Thank you, Lee. Who is in charge is the board of directors if your call is on the board of directors, and this is a management call, Lee, so that's the reason we are hearing it.

Lee Cooperman -- Omega Advisors -- Analyst

Because the strategic review process has been a major issue, it seems to me that the chairman of the board should be involved on the call. That's my personal opinion, which you could disregard, but that's my personal opinion.

Luis Marchese -- Chief Executive Officer

No, no, we don't disregard your opinion.

Lee Cooperman -- Omega Advisors -- Analyst

Well, you have as I've alerted your people in the past to what I thought you should be covering, and we don't cover it. So, you've done a good job of ignoring what was well intention sophisticated input. But good, we don't want to change the nature of the call. I'm trying to figure -- the most important thing is, what were you trying to say about the strategic review process that's going to change in the next few weeks that has not happened in the last eight months? And then secondly, year-end cash position this year, anticipated, and what you think 2022 could look like? I see big increases in production planned and I got to imagine efficiency improve.

So, I would think that 2022 could be a very good year for us, and you make no comment to about it. And then, here we are in the -- this year is almost over. But go ahead, the floor is yours.

Luis Marchese -- Chief Executive Officer

Thank you, Lee. Let me start with that question with the view of 2022. And that's a very important question, we think, for everyone. We are currently stabilizing our operations.

That's what our aim is. And we are working in the backlog of capital expenditure that we have to make sure that we win to the foot. Our issue in this first half of the year is one of sequencing. It's not that the ore has -- it's not there.

The ore is still there, but we are sequencing it differently. So, we have going to higher tonnage, lower grade areas because they were closer and we had to prioritize tonnage to make sure that we were producing to the fullest with our infrastructure, so that has been the key. As we are coming out the COVID-19 situation, which has been a real tragedy around us, we are bringing eventually the higher grade areas to the plant. So, that's what's happening in 2022.

And we're also expecting to have higher production because we have the permit in Yauricocha to bring it to 3,600 tonnes per day, which is good news. So, all in all, we are expecting 2022 to be much better in terms of production. So, -- and we reflect that on our guidance once we release it to the market. In terms of the process, we certainly understand that this has taken longer than usual, but we are leaving at unusual times.

I mean, we work in two different jurisdictions. And the business to the mine and the due diligence are complex processes that in this sort of situation, environment usually will take longer. So, that's as far as I can comment in terms of the process. As we said, the process is ongoing and we'll come back to the market once we have the results.

And certainly, we are working very hard on that.

Lee Cooperman -- Omega Advisors -- Analyst

Well, my question is, what are you going to learn in the next three weeks that you didn't learn in the last eight months. If you said something like the virus has made it very difficult for interested parties to get access to the mine, I could understand that, but you're giving no explanation as to why the process has taken so long. And this is where I think you're hurting yourself.

Luis Marchese -- Chief Executive Officer

That's the reason pretty much, Lee.

Lee Cooperman -- Omega Advisors -- Analyst

Yeah, but why don't you say that, why do you have to be asked that question? Why don't you just say that and volunteer it, basically, that the process is taking longer because the virus is complicated? You know, whatever.

Luis Marchese -- Chief Executive Officer

Thank you. I think that's what we can leave on the call with you, Lee. But anyway, I will leave the cash position and dividend policy for Ed to explain. Thank you.

Ed Guimaraes -- Chief Financial Officer

Thanks. Thanks, Lee. In terms of -- just on our EBITDA, we did revise EBITDA, 130 to 140. And we have not yet provided guidance for '22, but we can expect for next year that given the extra revenue stream from iron ore production, as well as increased production, and if we assume that metal prices will remain and indications appear to be that way.

And despite COVID, we should see higher EBITDA. There's no question for higher EBITDA for 2022. In terms of -- 

Lee Cooperman -- Omega Advisors -- Analyst

What about other -- what about the range of that whereas --

Ed Guimaraes -- Chief Financial Officer

It's too early. The magnetite -- until we release the economics on the magnetite, which is coming in next week, Lee, that's going to play an important factor. And I prefer to wait until we have that PDA announce and then we could speak to the economics. In terms of year-end and the cash balance, if you look at the revised guidance, we expect to end the year with between 40 million and 45 million in cash, after the capex requirements that we're factoring in of 100 million.

And in addition, we have to pay $18.75 million of debt. So, -- but I expect next year, capex will likely remain strong. We are in a significant plant expansion across our mines. So, we still have heavy capex.

But all in all, it should be a much better year compared to 2021.

Lee Cooperman -- Omega Advisors -- Analyst

Well, the $93.8 million of debt you're saying at the end of the year will be that minus $18.75 million, right, is that what you're saying? 

Ed Guimaraes -- Chief Financial Officer

You got it.

Lee Cooperman -- Omega Advisors -- Analyst

So, $80 million -- yeah, that's 75.05 million, and you have cash before so you have net debt about what we have now. But you have spent a lot of money on capex than you have funded.

Ed Guimaraes -- Chief Financial Officer

Right.

Lee Cooperman -- Omega Advisors -- Analyst

And would you expect to generate cash next year?

Ed Guimaraes -- Chief Financial Officer

That all depends on the capex. It's too early, but I can't see why we couldn't, given the strong production profile increase, the 20% increase that we have in Yauricocha, increase metal stream from iron ore. That should all drive positive cash flow and, again, --

Lee Cooperman -- Omega Advisors -- Analyst

Maybe if I could make an observation with your permission. Generally speaking, when you're going through a strategic review process and you let people into your data room, you give them numbers. So, you must be giving prospective buyers of the company your best guess about 2022 with all of the exco patients and all the possible scenarios, what are you telling the buyers? It seems to me, with increased production with the magnetite plant and you could do EBITDA well over $200 million next year. I hesitate to make any forecast because we've been so off from what we've said in the past.

But it would seem to me, with the kind of capex you're spending and present prices and improvement in efficiency, that this company should generate EBITDA well over 200 million next year. Is that something that is not realistic in your mind or in that range of possibilities?

Ed Guimaraes -- Chief Financial Officer

I can't comment on that, Lee. It's still too early to comment on that.

Lee Cooperman -- Omega Advisors -- Analyst

When are you going to comment, on December 31, 2022? Excuse me.

Ed Guimaraes -- Chief Financial Officer

Hopefully, in the coming weeks, Lee.

Lee Cooperman -- Omega Advisors -- Analyst

Coming weeks. You know, you've had eight months to prepare for this call and everything is in the coming weeks. It doesn't make any sense to me, but what do I know? Very good. So, what are the questions that I asked that we didn't get to? Why would you wait so long to revise guidance? Why do you want to embarrass your analytical community and produce results, $40 million less than you were telling people and did not give revised guidance? Is your accounting system such that you didn't know about this a month or two ago?

Ed Guimaraes -- Chief Financial Officer

We issued our production results in August, early August, maybe about two weeks ago. And with that, we are considering revising guidance. Given the sequencing issues that Luis referred to, it's not -- this isn't a desktop exercise where you just basically, oh, let's just change the mill price assumptions, let's put in lower production, and let's just go ahead and revise EBITDA. You're essentially updating one of your life of mines, and it's a very complicated process.

Lee Cooperman -- Omega Advisors -- Analyst

Right. Let me ask you this. In the past, you used to produce a slide with the NAV of the company. If taking what you guys know now, do you have an opinion on your net asset value?

Ed Guimaraes -- Chief Financial Officer

There's quite a lot of research on that in terms of published data on that. And I know what you're referring to, Lee. That PEA from three years ago, I believe. Back in 2018, we pulled that, yes.

The PEAs are much larger than what was published then. And if you look at the recent bank independent research, that should give you an indication as well of NAV. And that's above where we're currently trading that's for sure.

Lee Cooperman -- Omega Advisors -- Analyst

By a lot. I would assume the NAV would be approaching $6 per share. Do you disagree with that number?

Ed Guimaraes -- Chief Financial Officer

I don't disagree with that number.

Lee Cooperman -- Omega Advisors -- Analyst

OK. Thank you. No more questions. Good luck, guys.

Ed Guimaraes -- Chief Financial Officer

Thank you, Lee.

Operator

There are no further questions in queue. I would now like to turn the call back over to Mike McAllister for closing comments.

Mike McAllister -- Vice President, Investor Relations

Operator, that concludes today's call. On behalf of the management team, I would like to thank all participants for joining us today, and I'd like to offer our sincere apologies for today's technical difficulties with our conference call service operator. This will be rectified so that it does not happen again in the future. A replay of the webcast and all the materials can be found on our website at sierrametals.com.

If there are any further questions or concerns, you may reach out to us after today's call. Our contact information can be found in today's presentation, as well as on the company's website. Thank you, operator. Please conclude the call.

Operator

[Operator signoff]

Duration: 49 minutes

Call participants:

Mike McAllister -- Vice President, Investor Relations

Luis Marchese -- Chief Executive Officer

Ed Guimaraes -- Chief Financial Officer

Mark Reichman -- NOBLE Capital Markets -- Analyst

Heiko Ihle -- H.C. Wainwright & Co. -- Analyst

Lee Cooperman -- Omega Advisors -- Analyst

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Sierra Metals Inc.
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