An anonymous director reports

SIERRA METALS PROVIDES UPDATE ON STRATEGIC REVIEW PROCESS

Sierra Metals Inc. has provided an update on its previously announced independent special committee process.

Special committee process

In October, 2022, a committee of the company's independent directors initiated a process to explore, review and consider options to optimize the operations of the company as well as financing, restructuring and strategic options in the best interests of the company.

The special committee process has resulted in the following progress toward improved operations and liquidity:

• Significant progress made toward stabilizing and optimizing operations, highlighted by a renewed commitment to safety and employee engagement and a more-hands-on approach to operations;
• Implementation of upgraded infrastructure, including pumping and ventilation at the Bolivar mine;
• Materially increased throughput in the first quarter of 2023 relative to Q4 2022;
• Immediate engagement on permitting for operations below the 1120 level at the Yauricocha mine;
• Transition of leadership roles to the new permanent appointments of Ernesto Balarezo as chief executive officer and Jose Fernandez-Baca as chief financial officer;
• Appointment of a vice-president of health and safety, a newly created position;
• Appointment of an internal auditor to review and monitor risks and provide business advisory support;
• Refinancing of secured debt repayment obligations that were due in 2023;
• Enhancing financial forecasting, cash flow monitoring and liquidity preservation;
• Completion of a diligent and comprehensive review of strategic transaction options, with the assistance of CIBC Capital Markets.

Completion of special committee mandate

In view of the progress made by the company following the establishment of the special committee and the achievement of key objectives of the special committee at this time, the special committee has recommended, and the board of directors of the company has approved, the conclusion of the special committee's mandate and the dissolution of the special committee.

The special committee's recommendations at the conclusion of the special committee process highlight the importance of:

• Additional near-term equity financing to provide working capital flexibility and to finance immediate capital expenditure needs. The company intends to pursue this objective.
• Financing for longer-term capital expansion, particularly below the 1120 level at the Yauricocha mine. The company will continue to take steps to optimize financing available for these purposes.
• Minimizing investment of resources in non-core assets, and continuing to identify opportunities to divest such non-core assets.

Based on the outcome of the strategic transaction review process conducted with CIBC Capital Markets, the company has concluded that it would not be in the best interests of the company to pursue any identified sale or business combination transactions at this time.

About Sierra Metals Inc.

Sierra Metals is a diversified Canadian mining company with green-metal exposure, including copper, zinc and lead production with precious metals byproduct credits, focused on the production and development of its Yauricocha mine in Peru and its Bolivar mine in Mexico. The company is focused on the safety and productivity of its producing mines. The company also has large land packages with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

We seek Safe Harbor.