Mr. Ernesto Balarezo reports

SIERRA METALS 2023 YEAR IN REVIEW

Sierra Metals Inc. has provided the following letter to shareholders.

Dear fellow shareholders,

Two thousand twenty-three proved to be a pivotal year for Sierra Metals. With a new management team in place and armed with tremendous support from our board of directors, we developed and successfully implemented a strategy this year that not only stabilized all aspects of our business, but also put in place a foundation for long-term growth.

Let me provide a few highlights of this year's turnaround:

Operations:

• Safety: We continue to make great strides in our safety performance. It is no coincidence that our improved safety record has resulted in enhanced operations. Safety is, and will always be, a priority at Sierra Metals.
• Production: It was a tremendous year at our two core mines, Bolivar and Yauricocha. We are very pleased to see Bolivar achieve record production levels while establishing a plan to get Yauricocha back on course to achieving, and potentially surpassing, historical production levels. With increased production levels and lower costs, our operations are once again cash flow positive.
• Resources growth: Just as important as the production improvements, the future of our operations is through growing our mineral resources. At Bolivar and Yauricocha, we replaced our mined ore by 108per cent and 104per cent, respectively. We continue to be active on site with further drilling and exploration works taking place at both mine sites.

Community relations:

• Just like safety, one of our pillars for success is to invest and partner within our local communities. Throughout 2023, we conducted various important initiatives that included health workshops, water awareness campaigns and scholarships. We have been able to see higher levels of engagement with local communities.

Corporate:

• Debt refinancing: Our banking partners worked with us to refinance our existing loans to provide relief as we worked on improving operations. We look forward to continued productive discussions as we look to grow our business together.
• OTCQX Best Market: We uplisted to the OTCQX this year in an effort to increase visibility and accessibility for our current and prospective U.S. and international investors.
• Operational focus: The Cusi silver mine in Mexico was placed on care and maintenance, allowing management to direct full effort and resources to optimize the company's two core assets at Yauricocha and Bolivar.
• Private placement: As a major vote of confidence, we raised $16-million this year mainly from insiders and existing shareholders. The financing shows us that our key shareholders, management and board believe in our vision for Sierra Metals. Management participated with almost 10 per cent of the placement.
• Share price: Throughout 2023, Sierra's share price increased by more than 210 per cent, moving from 24 cents to 75 cents.
• Permitting: Management commenced the process to obtain the permit required to operate below the 1120 level in Yauricocha.

In summary, in 2023, we've built a team that has been able to stabilize and create value across our very strong base of assets by generating positive cash flow from the operations, increasing production, lowering costs and growing mineral resources -- all in a safe and responsible manner.

I want to thank all the various stakeholders -- including local communities, contractors, lenders and others -- that have supported us throughout the year, our employees for their dedication, our board for its guidance and our shareholders for their continued support as we all move Sierra Metals forward.

For the present year, we see Sierra Metals operating both Yauricocha and Bolivar under the highest safety standards. On the operational side, we expect to see Yauricocha ramping up its production as we are able to access better zones in the underground mine, and we expect Bolivar to maintain production at steady levels of approximately 5,000 tons per day. Furthermore, Sierra Metals will continue to improve its balance sheet and be more efficient in every aspect of our business.

As always, feel free to call (1-866-721-7437) or e-mail (info@sierrametals.com) should you want to talk about Sierra Metals.

Sincerely,

Ernesto Balarezo

Chief executive officer and director

About Sierra Metals Inc.

Sierra Metals is a Canadian mining company focused on copper production with additional base and precious metals byproduct credits at its Yauricocha mine in Peru and Bolivar mine in Mexico. The company is intent on safely increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities in Peru and Mexico that are within close proximity to the existing mines. Additionally, the company has large land packages at each of its mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

We seek Safe Harbor.