TOPIC: Sierra Metals (TSX.V: SMT)

Sierra Metals Announces AGM Highlights And Engagement Of First Canadian Capital To Provide IR Services

Source: bit.ly/ZXQhv5

Vancouver, British Columbia - June 17, 2013 - Sierra Metals Inc. (TSXV: SMT) (BVL: SMT) (“Sierra Metals” or the “Company”) is pleased to announce that it has retained First Canadian Capital Corp. ("First Canadian") as a consultant to provide consulting and investor relations services.

First Canadian will introduce the Company to private investors, analysts, brokers, money managers and other financial professionals, and will generate market awareness for the projects, business and affairs of the Company.

Under the terms of the consulting agreement with First Canadian (the “Agreement”), Sierra Metals will pay First Canadian $7,000 per month for a twelve month initial term (with a right of termination by either party after six months) and grant 200,000 stock options at an exercise price of $2.50 per share, with vesting in accordance with the Agreement, the TSX Venture Exchange (the “TSXV”) policies and the Company's stock option plan. The stock options will expire and terminate upon the earlier of: (i) 15 months from the date of the execution of the Agreement; and (ii) 30 days after First Canadian ceases to provide any and all services set forth in the Agreement. The Agreement and related stock option issuance remain subject to the approval of the TSXV.

AGM Highlights

At the Annual and Special Meeting of Sierra Metals’ shareholders held on May 29, 2013 in Lima, Peru, all of the resolutions tabled were overwhelmingly approved by shareholders, including the re-election of J. Alberto Arias, Douglas F. Cater, Steven G. Dean, John S. Donnelly, Guillermo Kaelin, Philip Renaud and Daniel Tellechea as directors.

Included in the special resolutions approved at the meeting was an amendment of the Company’s articles to change the province in which the registered office of the Company is to be situated from the Province of Ontario to the Province of British Columbia. A reduction of the legal stated capital account in respect of the common shares of the Company was also approved by the shareholders.

About First Canadian Capital Corp

Based in Toronto and in the investor relations business for fifteen years, First Canadian has assisted numerous, small-cap and mid-tier corporations in gaining exposure and recognition within the global investment community. First Canadian’s core competencies are found in identifying quality assets and undervalued companies with high growth potential and providing effective investor relations and market awareness services to these companies. First Canadian is proud to have had two clients win the PDAC Prospector of the Year Award.

Sierra Metals advances towards tripling production at its Cusi mine during 2013 and announces new silver expansion plans beyond 2014, Chihuahua State, Mexico

Source: http://bit.ly/18wLjI5

Toronto, Ontario – May 28, 2013 – Sierra Metals Inc. (TSX-V:SMT)(BVL:SMT) (“Sierra Metals” or the “Company”) is pleased to report that the Company is on track to triple production at its Cusi property during 2013. Development of new access drifts at the La India mine and Minerva Mine is on time and daily production is now double that of 2012. The Cusi operation is scheduled to continue to expand and reach production of at least 500 tonnes per day within 4 months.

Press Release Highlights:

Continued development of the Santa Eduwiges mine to depth has revealed high grades of silver on Level 10A, with silver grades up to 5,836 g/t silver and 4.1 g/t Au over 0.9 m width.

Development of the La India mine (Candelaria, 20 de Noviembre, Durana and Saturno veins) is well advanced with the access drift now 200 m along the Candelaria vein. Grades up to 1,496 g/t silver and 5.4 g/t gold over 0.4 m have been encountered along the drift.

The Fatima cross-cut drift has cut the Candelaria vein and a newly-started drift along the vein has returned silver grades up to 189 g/t and 1.1 g/t gold over 1.0 m width.

Development of the Minerva Mine from a new adit has advanced 58 meters and cut the Minerva vein. Samples from Level 1 of the mine in an older drift returnedsilver grades of up to 1,237 g/t and gold up to 22.5 g/t over 0.3 m width.

Development at the La India Mine has advanced 168 m

The San Juan Mine has been developed and production will commence during the fourth quarter at a rate of 80-100 tpd.
“Our Cusi operation continues to advance on time with the objective of reaching production of at least 500 tonnes per day by October this year”, stated Daniel Tellechea, President & CEO of Sierra Metals. “This will complete Phase One of our development of this large silver district, which was the acquisition, exploration, development and pilot mining of the property to reach commercial production and mill throughput of 500 tpd. At that rate and with our budgeted silver grade and recovery, the objective is to have an annualized silver production of over 1,000,000 ounces per year. Phase Two will begin during 2014, consisting of exploration and development with the objective of achieving production of at least 2,000 tpd by 2015 with a new mill on site. For each 500 tpd increment in mine production, we expect a similar proportional increment in silver production. The Cusi project will be the major driver for increasing the Company’s global silver production.”

An NI 43-101 resource report is in progress and is expected to be completed during the third quarter of this year. The decision to construct a new mill will be subject to an economic study and financing in place. The Company’s Cusi Property encompasses 60 concessions covering 11,319 hectares that include 12 inactive mines, each located on a mineralized structure, and which lie within 40 kilometres of the Malpaso Mill. These mines produced high-grade silver but became inactive due to revolution, silver price collapses and world-wide depression in the first half of the 20th Century.

The Company’s objective for the Cusi property in 2013 is to advance underground development from five mines, the Santa Eduwiges, Promontorio, La India, Minerva and San Juan Mines to allow mining and development both laterally and at depth. This will bring to five the total of producing mines at the Cusi project. Management believes that Cusi is only starting to reveal its full silver potential.

Mine Development Accelerates at Cusi in Five Mines

Sierra Metals is advancing development of the Minerva Mine, San Juan Mine, Promontorio Mine, La India Mine (Candelaria, 20 de Noviembre, Durana and Saturno veins)and Santa Eduwiges Mine to achieve production from these mines of 500 tonnes per day or more in the fourth quarter of 2013 (link to Cusi map here). Development work is being done by a combination of the Company’s employees plus contractors. Production during the first quarter of this year has already nearly doubled from that of last year, reaching 315 tpd (see press release of April 30, 2013) as opposed to an average of 170 tpd during 2012. This increase in production is due mainly to expanded production from the Santa Eduwiges Mine with additional production from the Promontorio Mine.

Table 1: Selected Samples from Cusi project, Chihuahua

Sample # Sample Width (m) Ag g/t Au g/t Pb % Zn % Mn % Mine or Vein
14642 0.90 5,836 4.1 1.366 1.273 0.475 S. Eduwiges
14643 0.40 2,700 1.1 1.393 1.046 0.661 “
14644 0.30 1,709 0.3 1.635 0.942 0.064 “
14645 0.70 1,639 0.3 1.342 2.686 0.863 “
14646 0.50 322 0.8 0.486 0.588 0.569 “

208629 0.60 199 ind* 0.164 0.458 2.869 Candelaria
208630 0.80 448 ind 0.506 0.551 5.312 “
450140 0.60 165 ind 0.206 0.423 3.784 “
450141 0.50 120 ind 0.105 0.351 3.757 “
450142 0.80 127 ind 0.210 0.304 2.236 “
1803 1.00 189 1.2 0.066 0.075 1.334 “
1804 0.40 1,496 5.4 0.359 0.157 2.122 “

12055 0.30 1,237 22.5 1.36 0.15 3.03 Minerva
12057 0.25 536 3.3 0.50 0.05 2.68 “
12059 0.35 281 1.2 0.11 0.03 1.66 “
12061 0.45 1,987 3.8 0.23 0.08 4.98 “
12075 0.60 349 2.3 0.14 0.03 2.04 “
12078 0.50 272 1.5 0.03 0.03 1.02 “
12080 0.80 364 7.2 0.09 0.04 0.36 “
12081 0.40 674 3.3 0.17 0.03 2.04 “
12083 0.25 257 2.3 0.09 0.04 0.85 “
12089 0.65 408 1.8 0.14 0.09 3.34 “
12091 0.80 558 3.8 0.47 0.13 3.28 “
12092 0.80 262 1.6 0.19 0.09 1.58 “
*ind = less than detection limit

Santa Eduwiges Mine: This mine is where the bulk of pilot mining production was done last year. As development has progressed to deeper levels at Santa Eduwiges this year, silver grades have increased as Table 1 shows. Development of Level 10A of the Santa Eduwiges Mine continues to encounter high grades of silver, as shown in the sample map (link to Santa Eduwiges Level 10A here).

Promontorio Mine: Development of the new access ramp has reached Levels 5 and 7 and accessed the block known as "La Azucarera" (the sugar bowl), which has an average silver grade of 284 g/t and will provide significant mineralized rock when production reaches 500 tonnes per day.

Moreover, the Promontorio ramp is nearing level 8 and will reach La Azucarera in about 150 meters, after which development and mining of this block will begin. Development of the ramp will then be extended to level 9 for further development of La Azucarera and nearby veins.

Minerva Mine: This mine is being reopened and is where historically the highest gold grades have been found in this mining district. Sampling of the Minerva Mine supports the earlier reported high gold levels in that mine (see press release of May 10, 2010).

Level 1 of the Minerva Mine, which was sampled in 2010, was re-sampled this year in order to obtain manganese grades, which had not been determined during the earlier work. The re-sampling numbers shown above are within the same range and are consistent with the earlier reported numbers, the highest of which were 32.7 g/t gold and 2,530 g/t silver. The Minerva vein is being developed from a new adit located about 100 m to the north of the sampled area with the objective of reaching un-mined portions of the vein below the sampled area of Level 1. (link to Minerva Level 1 here)

La India Mine: This mine is also being reopened. Development in the La India Mine will result in near-term production from two separate veins, the Durana and Candelaria veins (link to La India area map here). The Fatima and Candelaria tunnels are developing the Candelaria vein at locations about 400 m apart. The Candelaria tunnel has been developed over a length of 200 m (link to Candelaria tunnel map here) and has encountered high grades of gold and silver, as shown in Table 1.

The La India tunnel will eventually be extended about 100 m to reach the Saturno vein, which will result in production in this mine from three separate veins.

San Juan Mine: This mine is also in the process of being reopened this year. The San Juan Mine has been developed and production will commence during the fourth quarter at a rate of 80-100 tonnes per day.

Milling: At the present, mineralized rock is shipped 35 km to the Company’s wholly-owned Malpaso mill. Construction of a mill on site will reduce logistics and transport costs, and it is the Company’s objective to have a 2,000 tpd mill operating on site by 2015. The decision to construct a new mill will be subject to an economic study and financing in place.

Method of Analysis
Samples were prepared at the Company’s lab facility at its Malpaso lab 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, duplicate samples, and check assays by commercial laboratories such as Chemex.

Quality Control
The technical content of this news release has been approved by 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, its Bolivar mine and Cusi 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, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.

The Company’s shares trade on the Bolsa de Valores de Lima and TSXV under the symbol “SMT”.

Sierra announces payment of inaugural quarterly cash dividend of $2.5M

Source: http://bit.ly/13Moiy8

Toronto, Ontario – May 1, 2013 – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra” or the “Company”) is pleased to announce that the Company has completed its first quarterly cash dividend payment of $2.5 million, or $.016 per common share (“Common Share”), to shareholders on April 30, 2013. The Company announced its inaugural $10.0 million cash dividend policy on February 12, 2013 (see press release dated February 12, 2013 here) as a result of substantial production increases and significant cash flows from operations realized in 2012.

Press Release Highlights:

Sierra paid its first quarterly cash dividend of $2.5 million, or $0.016 per Common Share, on April 30, 2013.
During 2012, Sierra achieved record production from all operations and announced its strongest fiscal year to date with revenues of $179.7 million, earnings (EBITDA) of $83.8 million and cash flows from operations of $60.5 million.
Sierra’s strong cash flows during 2012 were used to pay down the Company’s working capital line in Mexico, complete the acquisition of Plexmar and pay the 2013 first quarter cash dividend payment to shareholders.
The Company is focused on a fiscally responsible growth strategy that will increase shareholder value through increased production. The proceeds of the $44.4 million private placement completed in June 2012 have been allocated to increasing the production profile of the Company’s mines in Peru and Mexico.
Sierra intends to pay a total cash dividend of approximately $10.0 million, or $0.064 per Common Share, for 2013 and anticipates the announcement of its second quarter cash dividend will take place on or after June 30, 2013.
Daniel Tellechea, President and CEO of Sierra Metals, commented “Sierra Metals is very pleased to announce its first cash dividend payment to shareholders of $2.5 million. The acquisition of the Yauricocha mine and announcement of commercial production at the Bolivar mine have resulted in record production for the Company during 2012. Additionally, these low-cost, highly profitable mines have also resulted in strong cash flows allowing Sierra to lower its net-debt and enact the new 2013 $10.0 million cash dividend policy.”

During 2012, Sierra Metals focused on maximizing operational efficiencies at the Yauricocha mine in Peru and the Bolivar mine in Mexico with 2012 marking the first full year of production at both operations. This resulted in the Company achieving record production with revenues of $179.7 million, earnings (EBITDA) of $83.8 million and cash flow from operations of $60.5 million. Among other things, these strong cash flows were used to pay down working capital loans in Mexico, complete the acquisition of Plexmar and pay the Company’s first inaugural cash dividend. At the end of 2012, the Company had a cash balance of $79.8 million and net-debt of $9.0 million.

The Company is committed to a fiscally responsible growth strategy of increasing near mine reserves and resources while adding value through production growth at all three producing mines. In June 2012, the Company completed a $44.4 million private placement (see press release dated June 7, 2012) with proceeds dedicated to increasing the production profile of the Company by:

Accelerating mine development at the Cusi Mine, which announced commercial production of 200 (“tpd”) tpd on January 1, 2013;
Doubling throughput capacity at the Piedras Verdes mill (located 6 km from the Bolivar mine) from 1,000 tonnes per day to 2,000 tpd, with an anticipated completion date in the second quarter of 2013; and,
Developing a new internal shaft and haulage drift in the Central Mine area of the Yauricocha property to access deeper levels of the mine and increase production capacity, anticipated to be completed in late 2015.
Sierra Metals anticipates the announcement of its second quarter cash dividend will take place on or after June 30, 2013.

Sierra Metals Announces Record First Quarter 2013 Production Results

Toronto, Ontario – April 30, 2013 – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra” or the “Company”) is pleased to announce its production results for the first quarter of 2013.

Press Release Highlights:

Total tonnes processed of 317,637 in the first quarter of 2013 compared to 286,022 tonnes in the same period of 2012. An 11% increase year-over-year.

Total silver (“Ag”) production of 610,407 ounces (“oz”) in the first quarter of 2013 compared to 584,284 oz for the same period of 2012. A 4% increase year-over-year.

Total copper (“Cu”) production of 4.1 million pounds (“lb”) in the first quarter of 2013 compared to 3.9 million lb for the same period of 2012. A 5% increase year-over-year.

Total lead (“Pb”) production of 8.6 million lb in the first quarter of 2013 compared to 7.9 million lb for the same period of 2012. An 8% increase year-over-year.

Total zinc (“Zn”) production of 13.3 million lb in the first quarter of 2013 compared to 13.6 million lb for the same period of 2012. A 2% decrease year-over-year.

Total gold (“Au”) production from the Yauricocha Mine was 1,598 ounces in the first quarter 2013 compared to 3,025 ounces for the same period of 2012. A 47% decrease year-over-year.
Daniel Tellechea, President and CEO of Sierra Metals, commented: “We are pleased with the production results from all operations during the first quarter of 2013 and they remain in line with Sierra’s 2013 production guidance. The Company is focused on expanding throughput at its Bolivar and Cusi mines in the first half of this year and remains dedicated to increasing global reserves and resources while adding value through production growth. Sierra continues to strive towards its objective of becoming a premier, low-cost precious and base metals mining company in Latin America.”


Read the full release: http://bit.ly/157go7f

Sierra Metals announces pre-feasibility study to provide supporting details for the Bolivar Mine, Mexico

Source: http://bit.ly/11PuEdf

Toronto, Ontario – April 24, 2013 – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra Metals” or the “Company”; previously Dia Bras Exploration) is pleased to provide this revised news release which includes additional supporting details on the pre-feasibility study completed by Gustavson Associates, LLC (“Gustavson”) of Lakewood, Colorado, for its Bolivar copper-zinc-silver mine located in Chihuahua State, Mexico announced on April 17, 2013. The study, mine plan and reserve estimate are based on Gustavson’s work and mine plan.

Press Release Highlights:

Proven and Probable reserves total 7,456,806 tonnes at 1.044% CuEq averaging 19.5 g/t silver, 0.759% Cu, 0.329% Zn. Gold contents average 0.226 g/t but were not included in the CuEq calculation, but were included within the project’s economics.
The reserves are based on the October 15, 2012 NI 43-101 Technical Report on Resource, which reported 15,404,000 tonnes of Measured and Indicated Resources averaging 19.4 g/t silver, 0.79% copper, and 1.01% zinc at a cut-off grade of 0.66% CuEq. Gold contents, applicable only to portions of the Gallo Superior and Gallo inferior zones that were modelled, averaged 0.226 g/t and were added to the Resource model in January 2013 using the same data used to do the NI 43-101 Technical Report on Resource.
Of the modelled tonnage, approximately 80% of the Measured and Indicated Resources are mineable. Only the Gallo Inferior deposit and a portion of the Gallo Superior were modelled in the pre-feasibility study because additional drilling is required to convert M&I resources of Alta Ley and Gallo Superior to Proven and Probable Reserves.
Economic results show capital costs of US$43.0 million, with initial cost of approximately US$7.0 million and sustaining capital over the Life of Mine of approximately US$36.0 million
The project has an estimated pre-tax NPV of US$135.6 Million and a post-tax, base case NPV of US$91.7 million, at an 8% discount rate.
At a production rate of 2,000 tonnes per day, these reserves provide a 10-year mine life with an additional year of processing from the stockpile for a total of 11 years.
Bolivar is in commercial production at a rate of 1,000 tons per day and is expected to double its production capacity to 2,000 tons per day by Q2 2013.
Sierra Metals has conducted exploration, development and mining at the Bolívar Mine since 2003. Exploration includes geologic mapping and diamond core drilling in the El Gallo, Increíble and Alta Ley areas, which are located within the area of resource modeling, and in the La Narizona, La Montura, La Pequeña and El Val areas, which are located outside the area of resource modeling. Pilot mining has been conducted and has provided valuable information regarding metallurgy, recovery rates, smelter treatment and refining charges, etc.

Bolivar built its new Piedras Verdes ore processing mill in 2010-2011 and declared commercial production in November 2011 with a processing capacity of 1,000 tonnes per day. The data of prior production were used in the development of the pre-feasibility study preparation and as a guide to continued mining as well as doubling of production capacity to 2,000 tons per day, which will be effective by the end of April 2013.

This work resulted in a NI 43-101 and CIM compliant resource estimate (see press release of August 30, 2012), which is the basis for this pre-feasibility study. Table 1 shows the Measured and Indicated Resources of each deposit with the compliant resource estimate broken out by Measured, Indicated and Measured+Indicated. Table 1A shows the Resources by each deposit.

The effective date of this resource estimate is April 5, 2013, and was completed by Gustavson as an independent report by Zachery J. Black, Qualified Person as defined by NI 43-101. Mineral resources are not mineral reserves and do not demonstrate economic viability. There is no certainty that all or any part of the mineral resource will be converted to mineral reserves.

Table 1: Total Resources for the Bolívar Mine

Total Bolivar Measured Resources
Cutoff
Tonne
Copper Equivalent
Silver
Copper
Zinc
Gold
Cueq (%)
(x 1000)
%
lbs. (x 1000)
gpt
oz. (x 1000)
%
lbs. (x 1000)
%
lbs. (x 1000)
gpt
oz. (x1000)
0.66%
8,847
1.35%
264,205
22.3
6,333
0.87%
169,423
0.98%
190,851
0.2
49.6
Total Bolivar Indicated Resources
0.66%
6,557
1.14%
164,706
15.6
3,285
0.67%
97,316
1.05%
151,389
0.2
30.8
Total Bolivar Measured + Indicated Resources
0.66%
15,404
1.26%
428,912
19.4
9,619
0.79%
266,739
1.01%
342,240
0.2
80.4
Note: Gold grade is not included in copper equivalent calculation and is only estimated in El Gallo Superior and El Gallo Inferior.


Table 1A: M&I Tonnes and Grade by Deposit

Zone
Tonnes
Ag (gpt)
Cu (%)
Zn (%)
CuEq (%)
Au (gpt)
El Gallo Superior
2,041,527
30.920
1.226
0.468
1.663
0.208
El Gallo Inferior
8,550,959
20.820
0.757
0.366
1.064
0.243
Increible
-
-
-
-
-
Not Modeled
Alta Ley
4,811,788
12.161
0.649
2.530
1.446
Not Modeled
Total
15,404,274
19.454
0.785
1.055
1.263
0.236
Note: CuEq>0.66 AND M&I



The equation for copper equivalent is presented below.

Equation for Copper Equivalent







Values used for copper equivalent calculation are provided below:

Copper
$3.56 per pound
82% recovery
Zinc
$0.96 per pound
81% recovery
Silver
$26.28 per ounce
77% recovery.
Gustavson received diamond drill data for 683 drill holes located within the area of the underground mine workings, and in the Bolívar III, Bolívar IV, Piedras Verdes, and El Gallo concessions to characterize the skarn-type mineralization. Data from these holes as well as underground mapping and sampling were included in the study.

The recovered tonnes, including dilution, for each area were then scheduled for production. The total tonnes and grades shown in Table 2 constitute the Reserve Statement for the Bolivar Project as of the date of this pre-feasibility report. These tonnes are mined from only the El Gallo Superior and El Gallo Inferior. Additional information, namely additional drill holes, is required to move the Measured and Indicated tonnes at Alta Ley to reserves.

On an overall recovery of the Gallo Deposits, 7.46 million tonnes are mined from the Gallo deposits (2.04 + 8.55 million tonnes for a total of 10.59 million tonnes). This is an overall recovery of 70.5% of the material modeled. However, from the economic model where only the final logical mine layout was used, the recoveries of the mineable Resources range from 76.0 % to 83.5%. Essentially the mine plan recovers 70.5% of the M+I, but recovers 76-83% of the M+I.

This Reserves Statement has an effective date of April 5, 2013 and was completed by Gustavson as an independent report under the supervision of Karl D. Gurr, Qualified Person as defined by NI 43-101.

Table 2: Combined Reserve Statement for the Bolivar Project

RoM Tonnes + Diluted Grades
Tonnes
Ag gpt
Cu %
Zn %
CuEq % (no Au)
Au gpt
RoM - Proven
4,339,914
22.52
0.84%
0.19%
1.11%
0.223
RoM - Probable
3,116,893
15.35
0.65%
0.52%
0.95%
0.231
Total P+P
7,456,806
19.52
0.76%
0.33%
1.04%
0.226


Economic parameters used in the calculation are shown in the Appendix below.

Gustavson is of the opinion that these deposits could potentially yield more Reserves as data collection and interpretation continue, based on current conditions.

Quality Assurance

The technical content of this news release has been approved by Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101 and Senior Vice President, Exploration, for Sierra Metals, Inc. and Donald E. Hulse of Gustavson Associates LLC, Qualified Person as defined by 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 in Mexico. The Company is also advancing its Cusi silver project in Mexico from advanced development into commercial production. 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. Projects in Mexico include Bacerac (silver) in the state of Sonora, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.

Sierra Metals announces first proven and probable ore reserves at the Bolivar mine, Mexico supporting a 10-year mine life at its expanded output rate of 2,000 TPD

Source: http://bit.ly/11hKyhI

Toronto, Ontario – April 17, 2013 – Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) (“Sierra Metals” or the “Company”; previously Dia Bras Exploration) is pleased to announce that a pre-feasibility study has been completed by Gustavson Associates, LLC of Lakewood, Colorado, for its Bolivar copper-zinc-silver mine located in Chihuahua State, Mexico. The study, mine plan and reserve estimate are based on Gustavson’s work and mine plan on a lower-grade portion of the resources, mainly at its El Gallo Inferior deposit. The evaluation of the higher grade portions of the mine still require further technical studies, which should result in additional resources and continued feed of ore to its processing plant and potentially lead to future reserve additions over the next 10 months.

Press Release Highlights:

Bolivar now has Proven and Probable ore reserves totalling 7,456,806 tonnes at 1.044% Cu-Equivalent averaging 19.5 g/t silver, 0.759% Cu, 0.329% Zn. Gold contents average 0.226 g/t but were not included in the CuEq calculation, but were included within the project’s economics.

These reserves are in the Gallo Inferior deposit, which is the lower-grade portion of resources defined in the October 15, 2012 NI 43-101 Technical Report. The October 2012 report defined 15,404,000 tonnes of Measured and Indicated Resources averaging 19.4 g/t silver, 0.79% copper, and 1.01% zinc at a cut-off grade of 0.66% CuEq. Gold contents averaged 0.226 g/t and were added to the Resource model in January 2013 using the same data used to do the NI 43-101 Technical Report.

Out of the 15.4 million tonnes of Measured and Indicated Resources, 6.1 million tonnes of the highest grades deposits (i.e. Alta Ley and portions of Gallo Superior deposits) were not included at this stage in the reserve calculation because more data are required for mine planning purposes. Additional drilling is underway to complete mine planning in order to convert these Measured and Indicated resources to Proven and Probable Reserves.

Of the modelled tonnage of 9 million tonnes of the lower grade Measured and Indicated Resources, approximately 80% were converted to ore reserves.

At a production rate of 2,000 tonnes per day, these reserves provide a 10-year mine life with an additional year of processing from the stockpile for a total of 11 years.

Bolivar is currently in commercial production at an ore throughput rate of 1,000 tons per day and should double its production capacity to 2,000 tons per day by the end of May 2013.
Daniel Tellechea, President and CEO of Sierra Metals, commented: “Sierra Metals advances another major step in the Company’s evolution with the completion of this pre-feasibility study that defines for the first time in the history of the Bolivar mine a formal proven and probable reserve. Not only does Bolivar have reserves now for the next 10 years at its expanded 2,000 ton per day mill, but we are conducting additional significant drilling in two areas to add to its mine life. First, we are drilling those portions of the Gallo Superior and Alta Ley that did not have sufficient density of drilling for mine planning purposes to generate a reserve. It is important to note that the Gallo Superior and Alta Ley measured and indicated resources are higher grade than Gallo Inferior. Second, we are focusing our exploration drilling in target areas that have been defined by geophysics and fault extensions from the Alta Ley mine in order to increase resources and grade. These faults controlled high-grade copper-zinc mineralization in the Superior portion of the Alta Ley area, and during 2005-2011 we processed 681,305 tonnes averaging 1.65% copper and 8.47% zinc. Our new targets are mineralized zones of similar grade.”

Sierra Metals has conducted exploration, development and mining at the Bolívar Mine since 2004. Exploration includes geologic mapping and diamond core drilling in the El Gallo, Increíble and Alta Ley areas, which are located within the area of resource modeling, and in the La Narizona, La Montura, La Pequeña and El Val areas, which are located outside the area of resource modeling. Pilot mining has been conducted and has provided valuable information regarding metallurgy, recovery rates, smelter treatment and refining charges, etc.

Bolivar built its new Piedras Verdes ore processing mill in 2010-2011 and declared commercial production in November 2011 with a processing capacity of 1,000 tonnes per day. The data of prior production were used in the development of the pre-feasibility study preparation and as a guide to continued mining as well as doubling of production capacity to 2,000 tons per day, which will be effective by the end of May 2013.

This work resulted in a NI 43-101 and CIM compliant resource estimate (see press release of August 30, 2012), which is the basis for this pre-feasibility study. Table 1 shows the Measured and Indicated Resources of the compliant resource estimate.

Table 1: Deposit M+I with Tonnes and Grade

Zone Tonnes Ag (gpt) Cu (%) Zn (%) CuEq (%) Au (gpt)
El Gallo Superior 2,041,527 30.920 1.226 0.468 1.663 0.208
El Gallo Inferior 8,550,959 20.820 0.757 0.366 1.064 0.243
Increible - - - - - Not Modeled
Alta Ley 4,811,788 12.161 0.649 2.530 1.446 Not Modeled
Total 15,404,274 19.454 0.785 1.055 1.263 0.236
Note: CuEq>0.66 AND M&I

Gustavson received diamond drill data for 683 drill holes located within the area of the underground mine workings, and in the Bolívar III, Bolívar IV, and Piedras Verdes concessions to characterize the skarn-type mineralization. Data from these holes as well as underground mapping and sampling were included in the study.

The recovered tonnes, including dilution, for each area were then scheduled for production. The total tonnes and grades shown in Table 2 constitute the Reserve Statement for the Bolivar Project as of the date of this pre-feasibility report. These tonnes are from only portions of the El Gallo Superior and El Gallo Inferior. Additional information, namely additional drill holes, is required to upgrade the Measured and Indicated tonnes at Alta Ley plus un-mined areas of Gallo Superior to reserves.

On an overall recovery of the Gallo Deposits, 7.46 million tonnes are mined from the Gallo Superior and Inferior deposits (2.04 + 8.55 million tonnes for a total of 10.59 million tonnes). This is an overall recovery of 70.5% of the material modeled. However, from the economic model where only the final logical mine layout was used, the recoveries of the mineable Resources range from 76.0 % to 83.5%. Essentially the mine plan recovers 70.5% of the M+I, but recovers 76-83% of the mineable M+I.

This Reserves Statement has an effective date of December 31, 2012 and was completed by Gustavson as an independent report under the supervision of Karl D. Gurr, Qualified Person as defined by NI 43-101.

Table 2 Combined Reserve Statement for the Bolivar Project

RoM Tonnes + Diluted Grades Tonnes Ag gpt Cu % Zn % CuEq % (no Au) Au gpt
Waste 0 0.00 0.00% 0.00% 0.00% 0.000
RoM - Measured - Proven 4,339,914 22.52 0.84% 0.19% 1.11% 0.223
RoM - Indicated - Probable 3,116,893 15.35 0.65% 0.52% 0.95% 0.231
Waste - Inferred 102,002 14.56 0.62% 0.56% 0.91% 0.234
Total P+P 7,456,806 19.52 0.76% 0.33% 1.04% 0.226
Total P+P+Waste 7,558,808 19.45 0.76% 0.33% 1.04% 0.227
RoM = Run of mine

Gustavson believes that these deposits may have additional potential as data collection and interpretation continue, but this reserve statement provides a snapshot at this point in time. Continued exploration success at the mine may justify further production expansion in the future.

Quality Assurance

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