Ms. Audra Walsh reports

SIERRA METALS ANNOUNCES THIRD QUARTER 2014 FINANCIAL RESULTS OF ITS SUBSIDIARY SOCIEDAD MINERA CORONA IN PERU

Sierra Metals Inc. has filed Sociedad Minera Corona SA's (Corona) unaudited financial statements, and management discussion and analysis for the third quarter of 2014. The company holds an 81.8-per-cent interest in Corona. All amounts are presented in U.S. dollars unless otherwise stated and have not been adjusted for the 18.2-per-cent non-controlling interest.

Corona's financial highlights for the third quarter of 2014:

• Net income of $8.2-million or 22.8 cents per share for third quarter 2014, a 109-per-cent increase over third quarter 2013;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $18.6-million for third quarter 2014, a 94-per-cent increase over thrid quarter 2013;
• Operating cash flow of $18-million for third quarter 2014, a 214-per-cent increase over third quarter 2013;
• Revenues of $32-million for third quarter 2014, a 46-per-cent increase over third quarter 2013;
• Negative byproduct cash cost per ounce of silver of $24.26 at Yauricocha for third quarter 2014, a 115-per-cent decrease over third quarter 2013.

Audra Walsh, president and chief executive officer, stated: "For the third quarter of 2014 we delivered on our commitment to increase production while continuing to reduce costs and improve margins as we remain focused on maximizing cash flows. Consistent with this focus, Corona's team achieved higher production levels and lower cash cost per ounce, which resulted in higher operating cash flows, adjusted EBITDA and profit levels for the third quarter of 2014. The main drivers for these positive results have been the measures that the company has been implementing since the third quarter of 2013 to increase operational efficiencies and reduce costs. Corona is committed and on track to meet its production guidance for 2014, and continues its efforts to be a low-cost producer."

The attached table sets out select unaudited financial information for the three and nine months ended Sept. 30, 2014, and 2013.

                   
                       FINANCIAL HIGHLIGHTS
       (in thousands of U.S. dollars except cash cost per ounce)

                               Three months ended      Nine months ended     
                                         Sept. 30,              Sept. 30, 
                                 2014        2013       2014        2013

Revenue                       $32,043     $21,923    $90,954     $82,477 
Adjusted EBITDA(1)             18,592       9,592     46,866      38,192  
Cash flow from operations      17,982       5,730     37,319       9,218                             
Gross profit                   18,286       8,251     46,150      34,695  
Income taxes                   (5,743)     (2,295)   (13,467)     (9,862)  
Net income                      8,201       3,916     21,366      14,905  
Cash cost per ounce of
silver (Yauricocha)(2)         (24.26)     (11.27)    (21.71)     (13.38)  

Notes:
(1) Adjusted EBITDA is defined by management as EBITDA adjusted 
for non-cash and non-recurring items including foreign exchange gain (loss).
(2) Cash costs include cost of sales, treatment and refining charges,
and selling expense, and exclude workers profit sharing, depreciation
and other non-cash provisions. Cash costs are calculated based on the
ounces of payable silver sold for each of the reporting periods.

Corona's financial highlights:

• Net income of $8.2-million or 22.8 cents per share for the third quarter of 2014 compared with $3.9-million or 10.9 cents per share for the same period in 2013. Net income of $21.4-million or 59.4 cents per share and $14.9-million or 41.4 cents per share for the nine months ended Sept. 30, 2014, and 2013, respectively;
• Adjusted EBITDA of $18.6-million for the third quarter of 2014 compared with $9.6-million for the same period in 2013. Adjusted EBITDA of $46.9-million and $38.2-million for the nine months ended Sept. 30, 2014, and 2013, respectively. The increase in adjusted EBITDA for the third quarter and the nine-month period ended Sept. 30, 2014, compared with 2013 is mainly due to the increase in revenues and higher gross margins recorded during the period. This has been the result of the measures taken by the company to increase operating efficiencies and reduce costs that have been implementing since the third quarter of 2013;
• Operating cash flow of $18-million for the third quarter of 2014 compared with $5.7-million for the same period in 2013. Operating cash flow of $37.3-million and $9.2-million for the nine-month period ended Sept. 30, 2014, and 2013, respectively. The increase in operating cash flow is mainly the result of the higher revenues, higher gross margins and a $12-million positive impact on working capital driven by workers profit sharing and tax adjustments in 2014;
• Revenues of $32-million for the third quarter of 2014 compared with $21.9-million for the same period in 2013. Revenues of $91-million and $82.5-million for the nine-month period ended Sept. 30, 2014, and 2013, respectively. The increase in revenues for the third quarter and the nine-month period ended Sept. 30, 2014, compared with 2013 is mainly as a result of higher lead grades, higher silver and lead recoveries, and a higher volume of concentrate sold. This was partially offset by the decrease in silver and copper commodity prices compared with 2013;
• Cash and cash equivalents of $40.3-million as at Sept. 30, 2014, compared with $36.2-million as of Dec. 31, 2013. Cash and cash equivalents increased by $4.1-million mainly driven by $37.3-million of operating cash flow, offset by $20.8-million of dividend payments, $11.5-million of capital expenditures and $800,000 of financing activities;
• Negative byproduct cash cost per ounce of silver of $24.26 at Yauricocha for the third quarter of 2014 compared with a negative byproduct cash cost per ounce of silver of $11.27 for the same period of 2013. Negative byproduct cash cost per ounce of silver of $21.71 and $13.38 at Yauricocha for the nine-month period ended Sept. 30, 2014, and 2013, respectively. Lower cash cost per ounce of silver during the three- and nine-month period ended Sept. 30, 2014, compared with 2013 is driven by lower cash cost per tonne processed and higher byproduct credits. This is the result of the cost-reduction measures that the company has been implementing since the third quarter of 2013, and which have resulted in operating efficiencies and cost savings. The largest reductions in the mining cost for 2014 have been achieved in the cost of supplies, contractor services and labour costs. The largest reductions in the plant costs have been achieved in the cost of supplies (reagents and ball mills), and maintenance costs. Also, the cost per tonne has decreased due to the higher production levels achieved in 2014 compared with 2013.

Corona's operational highlights:

• Total tonnes processed of 224,970, an 11-per-cent increase over third quarter 2013;
• Silver production of 552,677 ounces, a 24-per-cent increase over third quarter 2013;
• Copper production of 1.9 million pounds, a 30-per-cent increase over third quarter 2013;
• Lead production of 12.2 million pounds, a 46-per-cent increase over third quarter 2013;
• Zinc production of 14.7 million pounds, a 20-per-cent increase over third quarter 2013;
• Gold production of 1,369 ounces, an 18-per-cent decrease over third quarter 2013.

The attached table sets out production results for the three and nine months ended Sept. 30, 2014, and 2013.

                            YAURICOCHA PRODUCTION

                          Three months ended Sept. 30      Nine months ended Sept. 30,
                                2014             2013          2014              2013
                                                                                      
Silver production (oz)       552,677          447,145     1,526,225         1,402,805      
Copper production ('000 lb)    1,899            1,458         5,393             5,347    
Lead production ('000 lb)     12,194            8,338        35,082            26,099        
Zinc production ('000 lb)     14,668           12,268        40,857            37,435        
Gold production (oz)           1,369            1,673         4,323             5,071

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