- None of the directors or officers of Sierra Metals have, or
intend to, tender their Common Shares to the Hostile Bid
- Amended Hostile Bid indicates lack of success in persuading
shareholders to tender their Common Shares to the initial offer
price of C$0.85 per Common Share
- Amended Hostile Bid continues to undervalue Sierra Metals
- Board of Directors continues to recommend that shareholders
REJECT the opportunistic hostile take-over offer and TAKE
NO ACTION
Sierra Metals Inc. (TSX: SMT | OTCQX: SMTSF | BVL: SMT)
(“Sierra Metals” or the “Company”) today confirms
that its board of directors (the “Board”) has carefully
reviewed the amendments to the opportunistic hostile take-over bid
(the "Hostile Bid") to acquire all of the outstanding common
shares of the Company (the “Common Shares”) by an affiliate
of Alpayana S.A.C. (“Alpayana”), and continues to recommend
that shareholders of Sierra Metals take no action and
REJECT the Hostile Bid by not tendering their Common
Shares.
The notice of variation and extension dated April 2, 2025 and
filed by Alpayana on April 4, 2025 increases the offer price from
C$0.85 per Common Share (the “Original Offer Price”) to
C$1.11 per Common Share (the “Revised Offer Price”), and
extends the expiry date of the Hostile Bid from April 14, 2025 to
April 25, 2025. Alpayana has also waived, among other things, its
condition that at least 662/3% of the outstanding Common Shares
must be tendered to the Hostile Bid, presumably in response to
lower-than-expected interest from shareholders of Sierra Metals.
The Hostile Bid remains subject to a significant number of
conditions which are not subject to materiality thresholds or
reasonableness standards or any other objective criteria, but
rather are in Alpayana's sole discretion. Further, even at the
Revised Offer Price, the Hostile Bid remains significantly below
the valuations seen in comparable transactions as outlined in the
Company’s Directors’ Circular dated January 13, 2025 (the
“Directors’ Circular”).
Sierra’s financial advisor, BMO Capital Markets has also
delivered an opinion (the “Inadequacy Opinion”) to the Board
and the Special Committee of independent directors (the “Special
Committee”), which reaffirms that, as of the date of the
opinion, and based upon and subject to the assumptions, limitations
and qualifications contained therein and such other matters as BMO
Capital Markets considered relevant, the Revised Offer Price is
inadequate from a financial point of view to the shareholders of
Sierra Metals.
Miguel Aramburu, Chair of the Board, commented:
“Alpayana continues to offer an inadequate price that
undervalues Sierra Metals and does not reflect full and fair value
for the Common Shares of the Company. The Board believes there is
far greater value inherent in the Company’s assets, particularly in
light of our strong financial and operating performance. We
recommend that shareholders reject the Hostile Bid as it is not in
the best interests of Sierra Metals or our shareholders.”
Response to Alpayana’s most recent claims
Alpayana’s news release issued on April 2, 2025 repeated several
of the unsubstantiated claims it first put forward in its take-over
bid circular dated December 30, 2024 (the “Take-Over Bid
Circular”). The Company fully addressed these claims in the
Directors’ Circular. In addition, Alpayana has made new assertions
relating to the Company, including the following:
- Alpayana calls into question the reliability of the Company’s
2025 guidance, based on adjustments made to preliminary financial
results during the 2024 year-end audit process. The Company
reaffirms its guidance that 2025 EBITDA1 is expected to be
approximately US$130 million2, representing year-over-year growth
of 75%. Furthermore, the Company reminds its shareholders that the
management team has successfully executed on all of its major
objectives over the past two years, delivering significantly
improved results and also met its guidance for 2024. The
adjustments reflected in the Company’s 2024 audited financial
statements are the result of a rigorous internal review initiated
by the Company’s new financial leadership team. Attempts to cast
doubt on the Company’s outlook based on responsible and transparent
financial corrections are misleading and fail to recognize the
significant operational and financial turnaround delivered by the
Company over the past two years.
- Alpayana speculates that the Company may undertake a dilutive
financing to service its debt. This statement disregards the
significant improvement in the Company’s balance sheet and the
outlook for increased cash generation as demonstrated by the
above-noted 2025 EBITDA guidance. As noted in the Directors’
Circular, the Company’s anticipated net debt / 2025E EBITDA ratio1
is already below the industry median. Sierra Metals has not
announced or initiated any new equity financing and any speculation
about dilution is unwarranted and ignores the Company’s current
trajectory and financial discipline.
- Alpayana notes that the Company has not announced any
alternative offers. The Special Committee continues to evaluate a
range of strategic options, working closely and actively with its
external financial and legal advisors. As previously announced, the
Company has engaged BMO Capital Markets as financial advisor and is
currently undertaking a robust process to evaluate strategic
options to maximize long-term value for all shareholders and
stakeholders. The Special Committee plans to report to the
Company’s shareholders on its recommendations following the
completion of this process.
- Alpayana alleges that the Company is “entering into a hostile
macro-economic and local and international political environment,”
a situation not referenced in its earlier materials. As previously
noted, the Hostile Bid is opportunistic and seeks to amplify market
dissonance in order to spook our shareholders into accepting an
offer price that undervalues Sierra Metals and does not reflect
full and fair value for the Common Shares of Sierra Metals.
The Directors’ Circular listed 12 reasons to reject the Hostile
Bid, supported by details on the Company’s operations, strategy and
financial position, as well as the higher valuations seen in
precedent transactions, while also refuting many of Alpayana’s
claims. In its news release Alpayana has offered no substantive
response that might help the Company’s shareholders make a
decision.
Recommendation to continue to REJECT the Hostile Bid
The Board unanimously recommends that Sierra Metals shareholders
REJECT the Hostile Bid and not
tender their Common Shares to the Hostile Bid.
Shareholders simply need to take no
action in order to REJECT the Hostile Bid.
The Board's determination was reached following careful
consideration of a number of factors, including advice from its
financial and legal advisors, and the recommendation of the Special
Committee, including the Inadequacy Opinion from BMO Capital
Markets reaffirming the inadequacy of the Revised Offer Price from
a financial point of view. Furthermore, none of the directors or
officers of Sierra Metals have, or intend to, tender their Common
Shares to the Hostile Bid.
Shareholders are encouraged to carefully review the Directors’
Circular in its entirety. This document has been mailed to Sierra
Metals shareholders and is available on SEDAR+ (www.sedarplus.ca)
under the Company’s profile, and on the Company’s website
(www.SierraMetals.com).
Any Sierra Metals shareholders who have already tendered
their Common Shares to the Hostile Bid and who wish to obtain
assistance in withdrawing them are urged to contact their broker or
Carson Proxy Advisors, Sierra Metal’s Information Agent and
strategic shareholder advisor, by North American toll-free phone at
1-800-530-5189, local and text: 416-751-2066 or by email at
info@carsonproxy.com.
NOTES:
- This is a non-IFRS measure. See "Non-IFRS Financial
Measures".
- These estimated results represent forward-looking information.
See "Financial Outlook" and “Forward-Looking Statements".
About Sierra Metals
Sierra Metals is a Canadian mining company focused on copper
production with additional base and precious metals by-product
credits at its Yauricocha Mine in Peru and Bolivar Mine in Mexico.
The Company is intent on safely increasing production volume and
growing mineral resources. Sierra Metals has recently had several
new key discoveries and still has many more exciting brownfield
exploration opportunities in Peru and Mexico that are within close
proximity to the existing mines. Additionally, the Company has
large land packages at each of its mines with several prospective
regional targets providing longer-term exploration upside and
mineral resource growth potential.
Non-IFRS Performance Measures
Certain financial measures and ratios within this news release
including "EBITDA" and "net debt to EBITDA" are not measures or
ratios recognized by International Financial Reporting Standards,
as issued by the International Accounting Standards Board ("IFRS").
The non-IFRS measures and ratios presented do not have any
standardized meaning prescribed by IFRS and are therefore unlikely
to be directly comparable to similar measures or ratios presented
by other issuers. EBITDA is a non-IFRS measure that represents an
indication of the Company’s continuing capacity to generate
earnings from operations before taking into account management’s
financing decisions and costs of consuming capital assets, which
vary according to their vintage, technological currency, and
management’s estimate of their useful life. EBITDA comprises
revenue less operating expenses before interest expense (income),
property, plant and equipment amortization and depletion, and
income taxes. Net debt to EBITDA is calculated as total debt minus
cash and cash equivalents divided by EBITDA and indicates a
company’s leverage and its capacity to service debt using
operational cash flow. Investors are cautioned that non-IFRS
financial measures and ratios should not be construed as
alternatives to other measures of financial performance calculated
in accordance with IFRS. The foregoing non-IFRS financial measures
and ratios are provided to assist investors with their evaluation
of Sierra Metals. The Company considers these non-IFRS financial
measures to be important indicators in assessing its performance.
See the "Non-IFRS Performance Measures" section in Sierra Metal's
management's discussion and analysis for the year ended December
31, 2024 and the section “Non-IFRS Financial Measures” in the
Directors’ Circular for further information on the definition,
calculation and reconciliation of certain non-IFRS financial
measures.
Financial Outlook
This news release contains financial outlooks about Sierra
Metal's prospective results of operations including, without
limitation, anticipated EBITDA for the 12 months ended December 31,
2025 which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth under "Forward-Looking
Statements". Readers are cautioned that the assumptions used in the
preparation of such financial outlooks, although considered
reasonable by management at the time of preparation, may prove to
be imprecise and, as such, undue reliance should not be placed on
financial outlooks. Sierra Metals' actual results, performance or
achievements could differ materially from those expressed in, or
implied by, these financial outlooks. Sierra Metals has included
the financial outlooks in order to provide readers with a more
complete perspective on the Company’s future operations and such
information may not be appropriate for other purposes. Sierra
Metals disclaims any intention or obligation to update or revise
any financial outlooks, whether as a result of new information,
future events or otherwise, except as required by law.
Forward-Looking Statements
This news release contains forward-looking information within
the meaning of Canadian securities legislation. Forward-looking
information relates to future events or the anticipated performance
of Sierra Metals and reflect management's expectations or beliefs
regarding such future events and anticipated performance based on
an assumed set of economic conditions and courses of action. In
certain cases, statements that contain forward-looking information
can be identified by the use of words such as "plans", "expects",
"is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "would", "might", or "will be taken", "occur" or
"be achieved" or the negative of these words or comparable
terminology. By its very nature forward-looking information
involves known and unknown risks, uncertainties and other factors
that may cause actual performance of Sierra Metals to be materially
different from any anticipated performance expressed or implied by
such forward-looking information. Forward-looking statements in
this news release include, but are not limited to, management’s
expectations regarding future EBITDA, the ability to complete
potential strategic alternatives to maximize shareholder value and
the timing thereof and statements regarding Alpayana and the
Hostile Bid.
Forward-looking information is subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking information, including,
without limitation, the risks described under the heading "Risk
Factors" in the Company’s annual information form dated March 26,
2025 for its fiscal year ended December 31, 2024 and other risks
identified in the Company’s filings with Canadian securities
regulators, which are available at www.sedarplus.ca.
The risk factors referred to above are not an exhaustive list of
the factors that may affect any of the Company’s forward-looking
information. Forward-looking information includes statements about
the future and is inherently uncertain, and the Company’s actual
achievements or other future events or conditions may differ
materially from those reflected in the forward-looking information
due to a variety of risks, uncertainties and other factors. The
Company’s statements containing forward-looking information are
based on the beliefs, expectations, and opinions of management on
the date the statements are made, and the Company does not assume
any obligation to update such forward-looking information if
circumstances or management's beliefs, expectations or opinions
should change, other than as required by applicable law. For the
reasons set forth above, one should not place undue reliance on
forward-looking information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250409711955/en/
For further information regarding Sierra Metals, please visit
www.SierraMetals.com or contact:
Investor Relations Sierra Metals Inc. +1 (866) 721-7437
info@sierrametals.com
Media Relations John Vincic Principal Oakstrom Advisors
+1 (647) 402-6375 john@oakstrom.com
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