Resource World Magazine

J U N E / J U L Y 2 0 1 7 www.resourceworld.com 59 Sierra Metals earns $2.55 million in Q1 2017 by Ellsworth Dickson SIERRA METALS INC. [SMT-TSX; Lima; DBEXF-OTC] posted a third consecutive exceptional quarter of operational and financial results, aided by stable metal prices and continued production improve- ments at the 82% indirectly owned Yauricocha Mine in central Peru. The company reported revenues of $54.5 million, and adjusted earnings before interest, taxes, depreciation and amortization of $25.4-million (net income $2.558 million) on throughput of 529,695 tonnes and significantly improved metal production of 3.1 million silver equivalent ounces or 26.1 million copper equivalent pounds for the three-month period ended March 31, 2017. Results below are from Sierra Metals' three underground mines in Latin America: the Yauricocha polymetallic mine as well as the Bolivar copper mine and the Cusi silver mine, both 100%-owned opera- tions in Chihuahua, northern Mexico. Q1 2017 Production Highlights • Total tonnes processed of 529,695; an 11% increase over Q1 2016 • Silver equivalent production of 3.0 mil- lion ounces; a 28% increase from Q1 2016 • Copper equivalent production of 26.1 million pounds; a 28% increase from Q1 2016 • Increase of 54% in silver equivalent pro- duction and 21% increase in throughput at Yauricocha during Q1 2017 vs Q1 2016 These excellent quarter-over-quarter improvements in Q1 saw revenues up 130%, adjusted EBITDA up by $21.0 mil- lion, and a decline in the consolidated all-in sustaining cost (ASIC) per silver equivalent payable ounce and copper pay- able pound. During Q1 2017, the increased consoli- dated metal production of 28% compared to Q1 2016 was due to higher throughput, higher silver, copper and zinc head grades as well as higher recoveries for all metals, except gold, at Yauricocha. Additionally, the company saw higher throughput and recov- eries of all metals at Bolivar but this was partially offset by lower throughput, head grades and recoveries of all metals at Cusi. In mid-April, Sierra Metals released an updated mineral resource estimate for the Cusi Mine. Total indicated resources stand at 1,990,000 tonnes averaging 237 g/t sil- ver, 0.53% lead, 0.53% zinc, 0.16 g/t gold; or 283 g/t AgEq and 18.3 Moz AgEq. Total inferred resources are 1,200,000 tonnes averaging 305 g/t silver, 0.51% lead, 0.64% zinc, 0.14 g/t gold, or 354 g/t AgEq and 13.7 M oz AgEq. The company has also prepared an updated mineral resource for the Bolivar Mine. Total indicated resources are pegged at 9,335,000 tonnes averaging 18.1 g/t sil- ver, 0.90% copper and 0.30 g/t gold, or 1.23% CuEq. Total inferred resources are 9,055,000 tonnes averaging 17.9 g/t silver, 0.86% copper and 0.33 g/t gold, or 1.20% CuEq. Total probable reserves are 4,327,000 tonnes averaging 17.5 g/t silver, 0.85% cop- per and 0.31g/t gold, or 1.18% CuEq. The updated NI 43-101 resource reports were filed to meet an upcoming US listing requirement and do not reflect any of the recent discoveries or drilling at Bolivar and Cusi. Addendums will be coming closer to year end to include this data which should improve the reserves and resources at those projects. Brownfield exploration programs con- tinue at all three mines and management is optimistic that they will continue to add high value tonnage going forward. Sierra Metals also discovered a new high-grade oxide zone, the Esperanza North Zone, located between the Esperanza Zone and Cachi-Cachi Mine at Yauricocha. "Sierra Metals continues to deliver value and growth to investors in the first quarter with a solid financial performance," said Igor Gonzales, President and CEO of Sierra Metals. "The company saw very significant increases in revenue, cashflow and adjusted EBITDA over the prior quarter as well as over the same quarter in 2016. This solid performance is attributable to a very suc- cessful operational improvements program at the Yauricocha Mine, continued work to develop new areas for higher grade ore at Bolivar and the reinterpretation of geology at the Cusi Mine which promises to drive increased grade and tonnage in the future. It is also thanks to the hard work and dedi- cation of our team at Sierra Metals without whom these achievements would not be possible." He added, "Sierra Metals' very strong balance sheet and liquidity will allow for continued operational successes as well as numerous growth opportunities and devel- opments planned this year. A commitment to continued successful brownfield exploration programs will drive in due time, substantial production growth and increase economic returns at all three of the company's mines." n MINING The Yauricocha polymetallic mine in central Peru. Photo courtesy Sierra metals Inc.

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