Sierra Metals sets new monthly production record at its Yauricocha Mine in Peru

• Company files NI 43-101 Technical Report for Yauricocha Mine and is set to commission larger capacity hoist at the Mascota Shaft
• Company seeks permission from Shareholders for share consolidation as predecessor to potential U.S. listing

TORONTO, Sept 12, 2016 /PRNewswire/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") is very pleased to announce that the Yauricocha Mine achieved historic production in August, 2016.  The Mine produced 82,149 Dry Metric Tonnes ("DMT"), or 2,733 tonnes per day on average for the month which is the most ever produced in one calendar month in the history of the Mine, exceeding the previous best month achieved in December 2014 of 80,900 DMT. 

Plant production at the Chumpe Mill at the Yauricocha Mine also set a historic record for the month of August, 2016 with production totalling 79,554 DMT which exceeds the previous best month of October 2014 when 74,997 DMT were produced.

"These are remarkable achievements that would have been deemed highly unlikely just ten short months ago when we began our operational improvement program at the Mine" commented Mark Brennan, President and CEO of Sierra Metals.  "The operations team led by our COO, Gord Babcock, began the modernization and operational improvements at the mine starting late in the third quarter of last year. They have done a great job in putting the Yauricocha Mine into position for driving both higher value per tonne of ore and production volume."  He continued "That said there will be volatility in both parameters as we move forward and work to complete certain aspects of the improvement program, however the bar is steadily moving higher as we begin to see the benefits of our efforts."

New Hoist Installation at Mascota Shaft 720 Level, Yauricocha Mine

Starting on November 1, 2016 Sierra Metals plans to transition from the current operating surface hoist to a new Hepburn 104 x 45 double drum 1100 HP production hoist currently installed on the 720 level, where it will service the Mascota Shaft. This new hoist has an installed capacity of 106,000 metric tonnes ("MT") per month based on Hepburn performance data. The hoist is capable of servicing the mine from the 680 level to the 1400 level, which is the undeveloped lower part of the mine (approximately 715 metres deep). 

The new hoist will be hoisting from the 680 level to below the 1070 level (last level accessible from Mascota shaft) so that the hoisting distance is reduced to approximately 365 metres.  With the shorter hoist distance, we expect to achieve other benefits including reduced hoist time, improved duty cycle as well as less hoist rope in movement in the shaft. Overall, once final commissioning and implementation is complete, management expects that there may be more opportunity to benefit from increased hoisting capacity in excess of the 106,000 MT per month capacity due to the shorter skipping distance.

The new hoist is expected to increase the current hoisting capacity by approximately 30,000 MT per month, and will help as we continue with our goal of increasing production in the future at Yauricocha. The current CIR hoist has an installed capacity to skip 70,000 MT per month from the mine.

As part of the installation and transition from surface to the 720 level we anticipate that there will be a 25-day shutdown and a planned production shortfall for November of approximately 42,000 MT.  The Company has started stockpiling material on surface to help mitigate the effects of the shutdown.  Production levels are expected to return to normal starting in December. 

Sierra Metals announces filing of NI 43-101 Technical Report on the Yauricocha Mine in Peru

Sierra Metals has filed a technical report prepared in accordance with National Instrument 43-101 ("NI 43-101") on the Yauricocha Mine (the "Report").  The Report supports the disclosure made by the Company in its news release dated August 11, 2016 entitled "Sierra Metals Updates Mineral Reserve and Resource Estimate for Yauricocha Mine, Peru." and there are no material differences in the mineral reserves and resources contained in the Report from those disclosed in the news release.

The Report included maiden Reserves and Resource for the recently discovered Esperanza zone with:

• Proven and Probable Mineral Reserves of 1,520,000 tonnes averaging 51.8 g/t silver, 1.20% copper, 1.12% lead, 2.87% zinc and 0.43 g/t gold.
• Measured and Indicated Resources of 2,534,000 tonnes averaging 68.9 g/t silver, 1.71% copper, 1.26% lead, 3.23% zinc and 0.55 g/t gold.
• Inferred Mineral Resources of 1,541,800 tonnes averaging 69.0 g/t silver, 1.87% copper, 0.92% lead, 2.49% zinc and 0.63 g/t gold.

The Report also included Reserves and Resources for all of Yauricocha (including Esperanza) with:

• Proven and Probable Mineral Reserves of 3,787,000 tonnes averaging 61.1 g/t silver, 0.84% copper, 1.15% lead, 2.92% zinc and 0.62 g/t gold.
• Measured and Indicated Mineral Resources of 7,871,000 tonnes averaging 60.8 g/t silver, 1.12% copper, 0.94% lead, 2.70% zinc and 0.67 g/t gold.
• Inferred Mineral Resources of 3,745,000 tonnes averaging 49.1 g/t silver, 1.33% copper, 0.58% lead, 1.86% zinc and 0.53 g/t gold.

Notes on Reserve and Resource Estimate

The effective date of the mineral reserve and resource statement for the Yauricocha Mine including Mina Central, Cachi-Cachi, Mascota and Cuerpos mineral reserve and resource estimate is Dec 31, 2015. The effective date for Esperanza is June 30, 2016. Details of the estimate are provided in the Company's August 11, 2016 press release. A NI 43-101 compliant technical report to support the estimate has been filed on SEDAR on September 12, 2016. Measured and Indicated Resources include Proven and Probable Reserves.

Silver equivalent is based on the following metal prices: US$16.76/oz Ag, US$2.28/lb Cu, US$0.86/lb Pb and US$0.94 Zn and US$1,251/oz Au.

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

For a specific breakdown of each category of resources (measured, indicated and inferred) and reserves (proven and probable), please refer to the Report.

The Report dated September 9, 2016 is was prepared by SRK Consulting and is entitled "NI 43-101 Technical Report on Resources and Reserves Yauricocha Mine Yauyos Province, Peru" and was prepared by independent "Qualified Persons" (as that term is defined in NI 43-101) under the direction of:

• Matthew Hastings, MSc Geology, MAusIMM (CP), Senior Consultant (Resource Geology)
• Jon Larson, BS Mining Engineering, MBA, MAusIMM, MMSAQP, Principal Consultant (Mining Engineer)
• Jeff Osborn, BEng Mining, MMSAQP, Principal Consultant (Mining Engineer)
• Fernando Rodrigues, BS Mining, MBA, MAusIMM, MMSAQP, Practice Leader/Principal Consultant (Mining Engineer)
• Daniel H. Sepulveda, B.Sc. Metallurgist, SME-RM
• John Tinucci, PhD, PE, President/Practice Leader/Principal Consultant (Geotechnical Engineer)

The Report is available for review on both SEDAR (www.sedar.com) and the Company's website (www.sierrametals.com).

Sierra seeking permission from shareholders for share consolidation as predecessor to potential U.S. listing

Sierra Metals is seeking permission from its shareholders to consolidate the issued and outstanding common shares ("Common Shares") of the Company (see the Company's management information circular dated as of August 27, 2016 (the "Circular") filed on Sedar on September 6, 2016). The Circular seeks an amendment to the Company's articles to consolidate the issued and outstanding Common Shares on the basis of one Common Share for every two Common Shares issued and outstanding, or such other consolidation ratio that the Board deems desirable to a maximum of one post-consolidation Common Share for every five pre-consolidation Common Shares.

Sierra Metals has been considering whether a listing on a US stock exchange could benefit the Company. However, to qualify for listing the price of the Common Shares must meet a minimum threshold. As such, the Company would first need to complete a consolidation designed to increase the price of the Common Shares.  A final decision to proceed with a listing on a U.S. exchange has not been made and the Company may elect not to proceed with a listing even if the consolidation is approved by the shareholders.

Quality Control

All technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on production of precious and base metals from its Yauricocha Mine in Peru, and its Bolivar Mine and Cusi Mine in Mexico. In addition, Sierra Metals is exploring several precious and base metals targets in Peru and Mexico. Projects in Peru include Adrico (gold), Victoria (copper-silver) and Ipillo (polymetallic) at the Yauricocha Property in the province of Yauyos and the San Miguelito gold properties in Northern Peru. Projects in Mexico include Bacerac (silver) in the state of Sonora and La Verde (gold) at the Batopilas Property in the state of Chihuahua.

The Company's shares trade on the Lima Stock Exchange (Bolsa de Valores de Lima) and on the TSX under the symbol "SMT".

Forward-Looking Statements

Except for statements of historical fact contained herein, the information in this press release may constitute "forward-looking information" within the meaning of Canadian securities law. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events or results.  These statements reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.

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SOURCE Sierra Metals Inc.