Mr. Aquin George of Kingsdale reports

ARIAS RESOURCE CAPITAL ALERTS SIERRA METALS SHAREHOLDERS - PURPOSELY MISLEADING PRESS RELEASE PLEDGES SUPPORT FOR BOARD; CONCERNS THAT BOARD MAY BE TRADING VOTES FOR ACCESS TO FINANCING OPPORTUNITIES

Arias Resource Capital Fund II LP and Arias Resource Capital Fund II (Mexico) LP, together with other affiliates of Arias Resource Capital and its principal, holding approximately 27 per cent of the outstanding shares of Sierra Metals Inc., caution Sierra Metals shareholders regarding the questionable tactics that Sierra Metals' incumbent directors may be resorting to to entrench themselves in advance of the company's annual meeting of shareholders scheduled to be held at 2 p.m. Eastern Time on June 28, 2023. Concerned shareholders should attend the meeting, to be held virtually by live audio webcast, on-line.

Purposely misleading press release claiming support for incumbent Sierra Metals nominees

On the evening of June 15, 2023, a purposefully misleading press release was disseminated over Canadian newswire services and filed under Sierra Metals' profile on SEDAR, purportedly on behalf of one of Peru's most prominent banks. The press release stated that it was the bank's apparent intention to vote 3.6 per cent of the outstanding Sierra Metals shares in favour of the company's proposed board slate, while parroting the allegations about ARC and its nominees featured in the company's management information circular cover letter and directing inquiries to the personal e-mail account at Gmail of an individual named Alberto Gubbins.

After being alerted to the purposefully misleading press release by ARC, the bank confirmed that this press release was not issued or authorized by the bank. On June 16, 2023, a correction was issued by the newswire service identifying Mr. Gubbins as the sole source of the press release.

ARC is aware that Mr. Gubbins has been in recent contact with Sierra Metals' board member and chief executive officer, Ernesto Balarezo. It is ARC's understanding that the two met on or about May 22, 2023.

As the beneficiary, Sierra Metals should immediately publicly confirm that it was wholly unaware of the June 15, 2023, purposefully misleading press release prior to its dissemination, disclose what actions, if any, it took to avoid the market being misled, and disclose Sierra Metals', and its directors' and executives', relationship and dealings with Mr. Gubbins and other supporting shareholders.

If Sierra Metals fails to do so, shareholders must question the lengths to which the company is prepared to go to sway the results of the meeting and whether shareholders' voices will actually be heard.

Offering dilutive financing arrangements for votes?

ARC is extremely concerned, and other Sierra Metals shareholders should be as well, that if re-elected, the board may provide a minority group of friendly shareholders who vote in favour of them at the meeting with the opportunity to acquire Sierra Metals shares at prices that are not reflective of Sierra Metals' fundamental value, while substantially diluting all other shareholders. Sierra Metals itself effectively raised the potential for a quid pro quo arrangement when it stated, in part the following.

"[Sierra Metals] received unsolicited communications from shareholders who collectively hold 24,728,870 shares (approximately 15 per cent of the outstanding shares) advising [Sierra Metals] that they intend to support the nominees of [Sierra Metals]. ... Certain of these shareholders have indicated that they are willing to provide further financial support to Sierra Metals" (1).

When faced with the above allegation, Sierra Metals confirmed that "the shareholders who have contacted the company have expressed their interest to support future financings of Sierra Metals should the opportunities present themselves" but issued a carefully worded, limited denial of any "financial arrangements or agreements between the company and the supportive shareholders respecting the voting for the board's nominees" (2).

Sierra Metals should immediately publicly disclose the nature of the communications with these unsolicited shareholders and confirm that there are absolutely no financial or non-financial agreements, arrangements or understandings (written or oral) between the company and any shareholders respecting the voting for the board's nominees.

If Sierra Metals fails to do so, shareholders should be extremely wary of dilutive financings following the meeting should the current board be re-elected.

Time is running out. Vote today.

ARC is soliciting proxies for the election of five highly qualified and competent nominees -- J. Alberto Arias, Derek White, Daniel Tellechea, Ricardo Arrarte and Alonso Checa -- to the board. ARC is Sierra Metals' largest shareholder holding approximately 27 per cent of the outstanding shares in the company and has been a committed long-term investor since 2008. ARC understands Sierra Metals' assets and its long-term potential, as well as the importance of a refreshed board to urgently turnaround the company.

The ARC nominees intend to act swiftly to resolve Sierra Metals' mounting losses, share price collapse and financial liquidity challenges and to restore the company to its previous record of excellence and value creation prior to mid-2021.

The yellow proxy must be received prior to 5 p.m. Eastern Time on Friday, June 23, 2023, to make your vote count. Do not wait. Vote right away.

Shareholders can call or text Kingsdale Advisors on 1-888-370-3955 (toll-free in North America), e-mail contactus@kingsdaleadvisors.com or chat with an adviser for more information.

Advisers

ARC has retained Kingsdale Advisors as its strategic shareholder, communications and proxy adviser and Stikeman Elliott LLP as its legal adviser.

Sierra Metals trades on the Toronto Stock Exchange under the symbol SMT.

(1) Page 4 of the cover letter to Sierra Metals' management information circular dated May 29, 2023.

(2) Sierra Metals' press release dated June 14, 2023.

We seek Safe Harbor.