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SIERRA METALS REPORTS RESULTS OF EXPLORATION AND DEVELOPMENT AT ITS THREE OPERATING MINES DURING 2014

12/23/2014

Vancouver, BC - December 23, 2014 - Sierra Metals Inc. (TSX:SMT)(BVL:SMT) (“Sierra Metals” or the “Company”) is pleased to announce the results of its successful exploration and development programs at its three operating mines during 2014. Highlights include:

Yauricocha Mine, Peru

    • Underground drilling has led to expansion and upgrading of mineralization at Yauricocha’s Central Mine and Cachi Cachi areas.
    • Five mineralized chimneys have been discovered within 400 meters of the Central Mine head frames.
    • Discovery of these chimneys has led to a new structural interpretation that indicates a similar area of mineralization may occur southwest of the Central Mine area; reconnaissance drilling is planned in 2015.

Cusi Mine, Mexico

    • Underground development has exposed several hundreds of meters of mineralized shoots in Cusi’s Promontorio and Santa Eduwiges mines, including:
      • 435 m cumulative shoot length averages 354 g/t Ag over 1.66 meter average width on Level 6 at the Promontorio Mine. Only El Gallo and San Nicolas shoots are in the current resource estimate.
      • 102 meter drift along an L Vein shoot averages 380 g/t Ag over 1.55 meter average width on Level 8 at the Promontorio Mine. This shoot is also outside the current resource estimate.
    • These results have increased the Company’s confidence that further development into areas identified by drilling may encounter mineralized shoots that are higher-grade and more extensive than indicated by the historic drilling pattern.

Bolivar Mine, Mexico

    • Underground drilling is expanding mineralization at Bolivar NW.
    • High-grade silver returned in drilling and surface sampling on La Sidra silver-gold vein system.

“Our exploration programs at Yauricocha, Bolivar and Cusi were once again a success, defining the resources to continue our mine-life as expected by our geologists. We have also identified additional high-priority near-by targets at all of our mine sites,” stated Audra Walsh, President and CEO of Sierra Metals. “In addition, we continue to have success in confirming resources and identifying new targets within and near the mines. We also have the potential for further discovery of precious and base metal mineralization on the 142,181.65 hectares we have in Mexico and the 50,339 hectares we have in Peru. We remain excited about the opportunities that exist within our portfolio of projects and will leverage this new understanding to maximize our exploration success as we advance our projects in 2015.”

YAURICOCHA MINE, PERU

Mine Resource Expansion

Central Mine Area

Drilling under the Antacaca and Rosaura ore bodies has demonstrated that mineralization continues to the southeast as expected by the Company’s geologists. In addition, in-fill drilling in these areas has increased management’s confidence level of the continuity of mineralization between drill holes.

A total of 5,043 meters of drilling was completed on the Antacaca and Rosaura orebodies during 2014. The program was highly successful, with 10 of 11 holes drilled at Antacaca between Levels 970 and 1320 intersecting mineralization of potential ore grade and width, and similar success for all 9 holes drilled at Rosaura between Levels 970 and 1220.

Links to Central Mine Maps and Tables:

Drilling under the Antacaca Sur ore body is in progress to explore the body to Level 1370 before year end. An additional six holes are planned in 2015 on Level 920 to test for extension of mineralization to the southeast of the Antacaca Sur ore body.

Cachi Cachi Mine

At Cachi Cachi, drilling has expanded mineralization to depth with a total of 3,057 meters drilled and 9 of 10 holes intersecting mineralization of potential ore grade and width.

Links to Cachi Cachi Maps and Tables:

Western Chimneys

Geologic mapping in the area southwest of the Central Mine area has led to the discovery of five mineralized chimneys, i.e., solution breccias, within 400 meters of the mine. Three of these trend in an E-W direction and are believed to be controlled by a fault, while the other two are aligned parallel to stratigraphy.

All five chimneys have been scraped and sampled in detail and two chimneys, Mascota Noroeste and Mascota Oeste Intermedio, have been tested by drilling. Two holes completed on Mascota Noroeste have returned the following results:

  • MNM 1: 85.9 g/t Ag, 3.20% Pb and 7.18% Zn over 13.0 meters.
  • MNM 2: 117.4 g/t Ag, 3.16% Pb and 6.31% Zn over 13.1 meters.

A third hole on Mascota Noroeste is in progress.

Mascota Oeste Intermedio is the largest chimney discovered to date and has been exposed at surface over an area of 85 by 25 meters. Drilling has intersected multiple mineralized bodies as well as karst cavities, and has returned grades up to 181 g/t Ag and 10.60% Zn. Full details of the drill intercepts are presented in Figure 5. Intersection widths presented for all the drill holes on the western chimneys are downhole core lengths; estimated true widths have yet to be determined.

The western chimneys are geologically similar to the high-grade, Ag-Pb-Zn Mascota oxide ore body currently being mined in the Central Mine, which averages 200-300 g/t Ag, 6-10% Pb and 1-3% Zn. Lower silver, lead and zinc grades obtained from surface sampling and shallow drilling of the western chimneys compared to those currently being mined at depth on the Mascota body may be due to near surface secondary leaching.

Follow-up surface and underground drilling of the chimney discoveries is planned for 2015.

In addition, the discovery of the western chimneys has led to a new structural interpretation that indicates a possible “mirror” pattern to mineralization in the area, such that another major area of mineralization similar to the Central Mine area could occur to the west-southwest of it. Detailed mapping followed by reconnaissance drilling based on this concept is planned for late 2015.

Implications for Mine Resources

Drilling and exploration during 2014 have demonstrated that the limits of ore-grade mineralization have not been reached at the Yauricocha Mine and further expansion of the mine’s resources and reserves is expected. The results of this year’s drilling will be incorporated in an updated NI 43-101 compliant resource and reserve estimate on the property, planned for Q1 2015.

Geologic mapping has led to the recognition of a regional fault southwest of and parallel to the Yauricocha Fault. A structural analysis has identified additional targets for Central Mine-type mineralization along this parallel fault and reconnaissance drilling is planned for Q4 2015.

CUSI MINE, CHIHUAHUA, MEXICO

Mine Development Progress

At the Cusi property (Figure 6), development of the Promontorio Mine on Level 6 has progressed with the extension of workings along several veins including the San Nicolas, El Gallo, and the K & L veins.

Figure 7 presents a plan section on Level 6 of several development drifts along ore shoots showing length and average grades of the shoots. Assay results from underground sampling of the ore shoots are presented in the following table.

Table 1a: Silver Grades from Various Ore Shoots on Level 6, Promontorio Mine

Vein
Sampling
Length
(m)
Average
Width
(m)
Average
Grade
Ag (g/t)
# of Sample
Lines
# of
Samples
per Length
El Gallo, Line 1
42
1.63
320
9
21
El Gallo, Line 2
24.4
1.44
146
19
40
El Gallo, Line 3
10.3
1.3
709
6
13
El Gallo, Line 4
4
1.62
500
3
7
El Gallo, Line 5
6.6
1.97
680
4
13
El Gallo, Line 6
6.6
1.88
814
9
12
San Nicolas, Line 1
25
1.23
182
12
23
San Nicolas, Line 2
34
2.78
219
15
58
Splay of S. Nicolas
40
1.95
201
14
46
San Nicolas South
25
2.6
653
12
41
Promontorio (?)
40
1.00
277
17
30
L, Line 1
65
2.4
241
24
72
L, Line 2
22
1.68
237
6
15
K, Line 1
47
0.9
245
26
40
K, Line 2
26.3
1.2
110
9
9
K, Line 3
16.8
0.9
128
6
6
Total for all Veins
435
1.66
354
191
446

The ore shoots exposed on Level 6 (elevation 1,920 meters) have a cumulative length of 435 meters, an average width of 1.66 meters and an average grade of 354 g/t silver. Of these shoots, only the El Gallo and San Nicolas are included in the current resource estimate for the Cusi Mine. Mining of the San Nicolas South vein above Level 6 is in progress and development along these shoots on Level 9 (elevation 1830 meters) is underway to allow for stoping of 90 m blocks between the two levels. Completion of this work is expected in Q2 2015.

Drifting on Level 8 has also exposed several zones of ore shoots. For example, Figure 8 shows a drift along the L Vein exposing an ore shoot totaling 102 meters in length that grades 380 g/t Ag over an average width of 1.55 meters. This shoot also lies outside of the current resource estimate.

Access to higher-grade veins in Promontorio is progressing, including a drift on Level 6 that has cut the Veta del Contacto Promontorio vein and another driven on Level 10 that has crossed the Cusi Fault and the high-grade Santa Rosa de Lima vein.

Work is well advanced to bring the Promontorio Mine to an expected production capacity of 500-600 tonnes per day. The main Promontorio ramp has been driven from the surface to Level 10.5 (elevation 1,805 meters), thereby providing for ore extraction from both the Promontorio shaft and the ramp. The extended ramp will also allow for accelerated development of other veins in the mine including the Azucarera stockwork body.

At the Santa Eduwiges Mine, development continues on the Mexicana, Carta Blanca, Tascates and San Antonio veins, as well as at and near the intersections of the Alphabet Veins and Norte 1 & 2 veins.

Construction of the new 300 meter deep shaft at Santa Eduwiges (San Bartolo shaft) has begun, which is expected to more than triple production capacity from the mine and provide easier ore haulage. The two-compartment shaft will operate with two 3-tonne skips and is rated at 1,000 tonnes capacity while operating 12 hours per day. The shaft can be deepened to 550 meters and still maintain this haulage rate. The shaft is expected to be operational in 16 months, or about the second quarter of 2016.

Drilling Progress

The Company has drilled a total of 11,390 meters this year in both underground and surface holes. Of these, 2,748 meters were drilled from the surface including 2,124 meters at Santa Eduwiges, 417 meters at Promontorio, 711 meters at La Gloria and 1,071 meters at San Nicolas. An additional 7,067 meters were drilled from underground including 3,272 meters at Santa Eduwiges, 2,835 meters at Promontorio and 51 meters at La India.

The objective of the drilling was twofold: first, to increase the certainty of the current resource, moving more tonnes and ounces from Inferred to Indicated categories, and second, to test the depth extent of several of the veins.

Veins at the Promontorio Mine

Multiple veins at Promontorio are parallel either to the NE-trending Promontorio Main Vein (A) and the Alphabet Veins or to the NW-trending San Nicolas Vein. Several ore shoots occur in these veins, which are being developed on Levels 6 and 8, and have been drilled at depth to allow for mine planning and resource estimates.

Table 2a shows the more significant intercepts from drill holes at the Promontorio Mine. A complete list of results is presented in Table 4.

Table 2a: Selected Drill Intersections from Underground Drill Holes, Promontorio Mine

Hole
#*
From
(m)
To
(m)
Core
Length
(m)
Est. True
Width
(m)
Au
g/t
Ag
g/t
Pb
%
Zn
%
Mn
%
Vein
Name
M206
6.20
9.00
2.80
2.66
0.00
155
0.09
0.13
1.00
Gallo
 
26.10
26.75
0.65
0.61
0.00
831
0.04
0.07
0.42
Gallo Back
M209
17.65
22.25
4.85
2.89
0.12
451
0.35
0.42
0.21
Gallo
M210
25.55
28.00
2.45
2.30
0.00
114
0.10
0.20
0.59
L
 
133.55
135.05
1.50
1.48
0.00
202
0.93
0.31
0.12
Gallo Back
 
137.25
138.40
1.15
1.13
0.00
474
0.62
0.12
0.17
M216
43.40
44.10
0.70
0.55
0.00
110
0.19
0.27
1.16
L
 
47.20
47.65
0.45
0.33
0.75
487
0.45
0.28
0.43
L
 
70.60
72.50
1.90
1.42
0.09
164
0.30
0.61
3.19
L
M221
106.70
109.50
2.80
2.47
0.00
259
0.17
0.13
0.49
Gallo
M222
14.00
18.00
4.00
3.65
0.00
186
0.06
0.07
0.18
S. Nicolas
M223
56.90
58.30
1.40
1.23
0.00
166
0.11
0.11
2.10
L
 
99.20
105.00
5.80
4.90
0.08
443
0.33
0.26
0.51
Gallo

* All holes have prefix DC14; M = underground hole

Veins at Santa Eduwiges Mine

Table 3a shows the more significant intercepts from drill holes at the Santa Eduwiges Mine. A complete list of results is presented in Table 5.

Table 3a: Selected Drill Intersections from Underground Drill Holes, Santa Eduwiges Mine

Hole
#*
From
(m)
To
(m)
Core
Length
(m)
Est. True
Width
(m)
Au
g/t
Ag
g/t
Pb
%
Zn
%
Mn
%
Vein
Name
M192
60.50
62.40
1.90
1.69
0.98
348
0.87
2.55
0.17
Mexicana
M201
115.90
117.35
1.45
1.36
0.30
352
1.12
3.66
0.15
S. Antonio
M203
89.50
94.00
4.50
4.48
0.00
304
0.74
0.37
0.05
S. Antonio Alto
M229
22.50
24.70
2.20
2.15
1.40
319
0.35
0.51
0.90
M230
25.60
26.80
1.20
1.04
0.80
260
1.77
1.28
1.48

* All holes have prefix DC14; M = underground hole

2014 Drill Results

Drilling at the Cusi property has continued throughout 2014 and results are presented in Table 6.

Implications for Mine Resources

Development of both the Promontorio and Santa Eduwiges mines has progressed significantly during 2014 so that substantially more development ore is being processed at the Company’s Malpaso plant. Production during recent months has averaged about 500 tpd and the target throughput of 600 tpd is expected to be achieved in early 2015.

The combination of underground and surface drilling and development work continues to delineate mineralized extensions of known veins and is also identifying new veins. The Company’s management is confident that continued expansion of the Cusi operations will occur over the next few years.

BOLIVAR MINE, CHIHUAHUA, MEXICO

Drilling Progress

Drilling of the Bolivar NW area continues to intercept potentially economic grades of copper, gold and silver. For example, drill hole DB14B448 returned 6.70% copper, 1.30 g/t gold and 64.2 g/t silver over 1.75 meters estimated true width (212.35 - 214.10 meter down hole).

At the La Sidra silver-gold vein system, surface sampling on a partial exposure of the vein returned 323 g/t silver and 0.35 g/t gold over 1.4 meters. Surface drilling continues and has encountered 3-10 meter wide zones of mineralized vein (Figure 9).

Assay results received to date for La Sidra include only one drill interval from ALS Chemex: Drill hole DB14B460 returned 441 g/t silver and 0.510 g/t gold from 48.85 to 52.70 meters down hole (estimated 3.0 meter true width; Figure 10). Drill hole DB14B462 intersected the vein from 115.30 to 126.60 meters down hole (estimated 3.0 meter true width) returning preliminary assay results of 319 g/t silver and 3.374 g/t gold from the Company’s Piedras Verde lab. Check assays of this interval by ALS Chemex are pending.

Method of Analysis

Samples were prepared at the Company’s lab facilities at its Malpaso and Piedras Verde labs and analyzed by atomic absorption for Cu, Zn, Pb, Bi, Co, Mn, Sb, Cd and Fe. Gold and silver are analyzed by fire assay method. The Malpaso laboratory follows the quality control methodology recommended by CANMET of Canada, such as assaying of blanks, standards, duplicate samples, and check assays by commercial laboratories such as ALS Chemex.

Check samples are submitted to ALS Chemex lab facility in Chihuahua, Mexico, and analyzed by ICP and AA methods at their facilities in Vancouver, Canada.

Quality Assurance

The quality assurance-quality control (QA-QC) programs at the Company’s operating mines have been described in detail in various Gustavson Associates’ NI 43-101 technical reports; visit the Company’s web page to view individual reports.

The technical content of this news release has been approved by Sierra Metals Senior Vice President, Exploration, Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101.


About Sierra Metals
Sierra Metals Inc. is a Canadian mining company focused on 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 metal 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 the Toronto Stock Exchange under the symbol “SMT”.

For further information regarding Sierra Metals, please visit www.sierrametals.com or contact:

Audra Walsh
President & CEO
Sierra Metals Inc.
1 (866) 493‐9646
Thomas Robyn
Senior Vice President, Exploration
Sierra Metals Inc.
1 (866) 493‐9646
Victoria Vargas
Vice President, Investor Relations
Sierra Metals Inc.
1 (866) 493‐9646
info@sierrametals.com
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. Other than statements of historical fact, all statements are “forward-looking statements”, which involve various known and unknown risk and uncertainties and other factors, including market conditions that may affect the Company’s ability to execute its current business plan. Such statements include without limitation: statements regarding estimates of mineral reserves and resources; other drilling results; future production capacity; and mine plans. 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 and until 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.