Positive PEA Results For Doubling Output At Cusi Mine

TORONTO - Sierra Metals Inc. reported Preliminary Economic Assessment (PEA) regarding the Company’s Cusi Mine, located in Chihuahua State, Mexico. Highlights of the PEA include: After-tax Net Present Value (NPV): US$81 Million at an 8% discount rate assuming a long term silver price of US$20/oz; Incremental benefit of increasing the production to 2,400 TPD from 1,200 TPD is estimated to have an after tax NPV (@8%) of US$28.1 million, and IRR of 46.8%; Net After-tax Cash Flow: US$134 Million; Life of Mine & Sustaining Capital Cost: US$91 Million; Total Operating Unit Cost: US$35.24/tonne and US$8.83/oz silver equivalent; Plant Processing Rate after expansion: 2,400 tonnes per day (TPD); Average LOM Grades for Silver 127.2 g/t (4.1 oz/t), Gold 0.12 g/t, Zinc 0.48% and Lead 0.34%; and Mine Life: 13 years based on existing Mineral Resource Estimate; Life of Mine Silver Payable Production: 33.4 million ounces.

Luis Marchese, CEO, said, “I am very encouraged by the results of this PEA which support the Company’s organic growth strategy and plan to profitably develop and expand the Cusi Mine production rate to 2,400 TPD from today’s capacity of 1,200 TPD, based on current analyst consensus silver metal price estimates of US$20 per oz long-term. The Company plans to continue with its disciplined approach of profitable growth and now plans to proceed with the next step of the completion of a prefeasibility study to further de-risk the plan and determine the best path forward. The PEA study compared the value of the current operations at Cusi at 1,200 TPD against several output expansion alternatives from 2,400 to 3,500 TPD and determined 2,400 TPD as the optimum production level based on our current mineral resource base. Cusi is the smallest of our three mining operations, however, its silver resources which include 31.3 million ounces of Measured and Indicated plus 23 million ounces of Inferred provide Sierra Metals with economic leverage to the improving silver market fundamentals. We are continuing with our strategy to increase the value of the Company on a per share basis. This builds upon the demonstrated success we have shown with increasing our current mineral resource base and improving the throughput at all mines.”

The Property is in the Cusihuarachi District of Chihuahua State, Mexico, approximately 135 km southwest of Chihuahua City. Epithermal mineralization has been mined in the area since its discovery in the early 1800’s. Mineralization is bound between regionally significant northwest trending faults; eight mineralized zones are recognized at the property, mineralized zones are up to 10 meters across and include silicified faults, veins, and breccias. Seven epithermal veins are recognized at the property, veins typically range between 0.5 and 2.0 meters wide, dip steeply, extend 100 to 200 meters along strike, and extend up to 400 meters depth. Vein orientations range between northeast and northwest.