Resource World Magazine

24 www.resourceworld.com A P R I L / M A Y 2 0 1 4 Sierra Metals Inc. (formerly Dia Bras Exploration Inc.) [SMT-TSX, Lima] has developed into a mid-tier Latin American metal producer with its three operating mines, producing five commodities on an ongoing basis with a revenue mix of 32% silver, 25% copper, 21% zinc, 16% lead, and 6% gold. Two (Bolivar and Cusi) are located in Mexico, and one (Yauricocha) in the high Andes of Peru. According to Thomas Robyn, Senior VP of Exploration, "All three mines have tremendous upside potential for more ore." Yauricocha's long history of mining includes production (especially silver) through significant decades of the twen - tieth century by private as well as public mining groups. The geology (stratigraphy, structure, and intrusive history) is well known and mineralization extensively studied. Imagine a geological setting in which one property hosts enough ore depos - its to mine five different ore metals with indications of surrounding abundance of more resources; where an active mine has a history of production for more than 60 years while never losing money and is still ongoing; and where remote location and underground mining give these activities a relatively small ecological footprint. Add a company bent on exploring for more resources, with a thrust toward mini - mizing production costs as it improves methods, infrastructure, and equipment while continuing and even increasing mining output. This is the scenario for Sierra Metals Corp.'s Yauricocha property. Sierra Metals owns 82% of Corona, which operates the five-commodity mine at Yauricocha, Peru. Production figures for the fourth quarter of 2013 compared to 2012 were down for three metals (gold, silver, and copper), steady for zinc, and up somewhat for lead. As long-term production continues, more emphasis is placed on exploration of more targets, such as Adrico (gold), Victoria (copper and silver), and Ipillo (polymetallic), all located on the Yauricocha property, and the San Miguelito (gold) in Peru. A geo - logical look at the Yauricocha area shows extensive faulting (structural prep) and prospective stratigraphic units in contact with Miocene intrusives known for their mineralizing fluids. Studies from a technical report on Yauricocha suggest possible production of 9.0 million ounces of silver, 63,600 tonnes of lead, 3,000 tonnes of zinc, 16,800 tonnes of copper, and about 29,800 ounces of gold from 4.7 million tonnes of ore in five years of continued mining. At cur - rent mining rates, this production would not exhaust known supplies of proven and possible reserves, and another two years of mine life are predicted. By the time current reserves are depleted, Sierra Metals expects to bring on production in extended areas now being explored and developed. Meanwhile, Sierra Metals continues production at two mines in northwest - ern Mexico, Bolivar and Cusihuiriachic (Cusi) in Chihuahua, as it makes further "efforts to push ourselves down the cost-production curve." According to an interview with Thomas L. Robyn on February 24, 2014, the copper-zinc skarn zone currently being mined at Bolivar represents less than 5% of the known mineralized rock on the property, and it has not been fully explored. The company has recently emphasized updating known resources with new geological work and estimates. It has built a new mill at Bolivar, doubling its Cu-Ag-Zn production to 2,000 tpd. The Bolivar Mine, located in the Sierra Madre, employs many people from the local community. In similar improvements, production of silver at the low-sulphidation epithermal Cusi mine has increased from 400,000 oz to 700,000 oz (2014 guidance) while decreasing cost, and further develop - ments are planned. So far two zones are being mined – the Promontorio and Santa Eduwiges – and three more targets are moving toward commercial production (La India, Minerva, and San Juan mines). In addition to production and devel - opment at the Bolivar and Cusi mines in Mexico, both 100%-owned, Sierra Metals is exploring for additional gold at La Verde – Batopilas property in Chihuahua, silver at Bacerac in Sonora and Las Coloradas at Melchor Ocampo in Zacatecas. Goals for 2014 include continuing efforts to reduce cash costs on all mine sites, as well as to increase known resources by exploration, drilling, and further report - ing, and upgrade existing infrastructure. As announced in January, Sierra Metals' consolidated production guidance for 2014 is estimated to approach 2,695,000 oz silver; 24,100,000 lbs copper; 33,000,000 lbs lead; 45,800,000 lbs zinc; and 8,200 oz gold. Soon we can look forward to new technical reports defining the latest resource figures for all of the company's active mining properties. n Onward and upward with polymetallic production at Sierra Metals by Jennifer S. Getsinger, PhD, PGeo MINING "Imagine a geological setting in which one property hosts enough ore deposits to mine five different ore metals."

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