PRESS RELEASE

Sierra Metals reports 2018 production

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Thursday, January 24, 2019

PRESS RELEASE

(This is an abridged version of the release. For the full version click here)

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TORONTO, Jan. 24, 2019 /PRNewswire/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (NYSE AMERICAN: SMTS) ("Sierra Metals" or "the Company") is pleased to report fourth quarter 2018 and full year 2018 production results, as well as 2019 production guidance. 2019 cost and capital expenditure guidance will be provided in February as the planning and costing of various capital projects, which have been recently added or modified, are currently being completed.

Results are from Sierra Metals' three underground mines in Latin America: The Yauricocha polymetallic mine in Peru, and the Bolivar copper and Cusi silver mines in Mexico.

2018 Consolidated Production Highlights

  • Silver production of 2.7 million ounces; a 17% increase from 2017
  • Copper production of 34.0 million pounds; a 27% increase from 2017
  • Zinc production of 76.8 million pounds; a 1% increase from 2017
  • Lead production of 27.7 million pounds; a 7% decrease from 2017
  • Gold production of 7,743 ounces; a 25% increase from 2017
  • Total of 2.3 million tonnes processed; a 16% increase from 2017

Fourth Quarter 2018 Production Highlights

  • Silver production of 0.7 million ounces; a 41% increase from Q4 2017
  • Copper production of 8.9 million pounds; a 20% increase from Q4 2017
  • Zinc production of 17.5 million pounds; a 10% decrease from Q4 2017
  • Lead production of 7.9 million pounds; a 39% increase from Q4 2017
  • Gold production of 2,137 ounces; a 34% increase from Q4 2017

The Company achieved record consolidated quarterly ore throughput during Q4 2018, as well as record quarterly ore throughput from the Bolivar and Cusi Mines. These results continued the Company's successful production increases realized during the first three quarters of 2018, which resulted in strong annual consolidated production figures.

Metal production at Yauricocha increased 14% in Q4 2018 compared to Q4 2017 due to 5% higher ore throughput, higher head grades of all metals, except zinc, and higher lead and gold recoveries. At Bolivar, 20% higher ore throughput, and higher silver and gold head grades resulted in a 16% increase in copper equivalent pounds produced in Q4 2018 compared to Q4 2017. The Cusi Mine realized a 258% increase in throughput which resulted in a 70% increase in silver equivalent ounces produced during Q4 2018 compared to Q4 2017.

During 2018, the annual consolidated production of silver, copper, zinc and gold increased 17%, 27%, 1%, and 25%, respectively, while annual consolidated lead production decreased 7% compared to 2017.

Igor Gonzales, President and CEO of Sierra Metals, commented: "I am very pleased with the Company's strong Q4 production results, which contributed to a solid year of production in 2018. The Company continues to reap the benefits of the successful operational improvement programs at all Mines.

The Company has completed expansion work at the Bolivar Mine and is ramping up to 3,600 tonnes per day while also implementing a throughput expansion at Cusi to 1,200 tonnes per day. The Company has also completed all of the necessary work and has submitted all of the required documentation to the authorities in Peru for its Yauricocha mine and expects to receive its Environmental Impact Assessment permit shortly. Furthermore, the Company has almost completed updated Life of Mine Plans, and is working to complete Pre-Feasibility and Feasibility studies, based on the encouraging PEA's results released for all three Mines, demonstrating positive economics, and supporting the potential for future important production expansions.

At Yauricocha, during Q4 2018, we have completed the refurbishment of the lower part of the Mascota Shaft as well as the infrastructure and tie-ins for the Yauricocha tunnel, allowing for faster turn-around in the cycle time of the trolley locomotives, and providing for increased capacity and handling of larger volumes of ore and waste. Tonnage through the tunnel can be ramped up further as larger locomotives and ore cars are added in the future.

In Q1 2019 the Yauricocha shaft continues to be sunk to the 1270 level to provide access to further reserves and resources at the Mine and loading pockets will be added later this year on the 1210 level. Also, work will commence on a ramp connecting the 920 level with the 720 level at Yauricocha providing for an additional 10,000 tonnes per month of increased capacity to move ore and waste from the mine."

He concluded, "2019 will be an important year for the Company as we ramp up production in Mexico while continuing to modernize and improve all Mines implementing best operational practices. These changes should allow the Company to increase metal production to new highs. Our Company wide ongoing brownfield exploration programs should also lead to further significant growth in reserves and resources, which will add to the value of our assets during the year ahead."