Mr. Ernesto Balarezo reports

SIERRA METALS REPORTS STRONG FOURTH QUARTER & FULL YEAR 2023 CONSOLIDATED FINANCIAL RESULTS

Sierra Metals Inc. has released its financial results for the three months (fourth quarter (Q4)) and full year (FY) ending Dec. 31, 2023.

Ernesto Balarezo, chief executive officer of Sierra Metals, commented: "Two thousand twenty-three was a tremendous turnaround year for Sierra Metals. The team's efforts to identify and execute initiatives to increase efficiencies, reduce costs and enhance safety practices have allowed the company to deliver upon our operating and corporate objectives for the year. Our mines, Yauricocha and Bolivar, increased production and lowered costs, allowing us to meet production guidance and generate over $50-million of EBITDA [earnings before interest, taxes, depreciation and amortization] but, more importantly, we were able to operate at improved safety standards."

Mr. Balarezo continues: "Our strong performance in 2023 has provided a platform to position Sierra Metals for growth. With the Level 1120 permit now in hand at Yauricocha, we expect the mine to ramp back up to its full capacity later in 2024. In Bolivar, we are in the process of building a new tailings facility, which will allow us to increase our production capacity over the next two to three years by 50 per cent to 7,500 tpd [tonnes per day]. Furthermore, we are very excited about our huge land package and our exploration projects, and are actively looking for partnerships to develop these assets and maximize their potential. The company expects to publish new NI [National Instrument] 43-101 mineral reserve and resource reports shortly. We are committed to continue strengthening our balance sheet, optimizing and developing our operations to generate sustainable long-term value for our stakeholders."

Conference call and webcast

Management will host a conference call at 11 a.m. Eastern Time on March 18, 2024, to discuss Q4 and full-year 2023 operating and financial results. Details:

• Webcast: access on-line;
• Telephone: 1-800-319-4610 (toll-free Canada and United States) or 1-416-915-3239 (rest of world).

Two thousand twenty-three operating and financial highlights

The associated table displays selected financial and operational information for the three months and year ended Dec. 31, 2023.

Two thousand twenty-three consolidated full-year operating highlights:

• Consolidated 2023 copper equivalent production of 76.7 million pounds, an increase of 37 per cent over 2022, which met 2023 guidance. Year-over-year, copper, zinc, silver, gold and lead production increased 49 per cent, 14 per cent, 51 per cent, 76 per cent and 9 per cent, respectively.
• Bolivar mine in Mexico achieved a 116-per-cent increase in copper equivalent pounds production as compared with 2022. Year-over-year, copper, silver and gold production increased 105 per cent, 121 per cent and 126 per cent, respectively.
• Yauricocha mine in Peru achieved a 2-per-cent increase in copper equivalent pounds production as compared with 2022. Year-over-year, zinc, silver and lead production increased 14 per cent, 27 per cent and 9 per cent, respectively, while copper was the same while gold was down 12 per cent.
• Highlights for Q4 2023 production results were announced on Feb. 1, 2024.
• Yauricocha's cash cost per copper equivalent payable pound was $2.05 (2022 -- $2.23) which was above guidance, and the all-in sustaining cost (AISC) per copper equivalent payable pound of $3.56 (2022 -- $3.69) was within guidance.
• Bolivar's cash cost per copper equivalent payable pound was $1.87 (2022 -- $2.99) which was below guidance, and AISC per copper equivalent payable pound was $3.29 (2022 -- $5.07) was slightly above guidance.

Two thousand twenty-three consolidated financial highlights:

• Revenue from metals payable of $229.5-million in 2023, a significant increase of 39 per cent from 2022 annual revenue of $165.2-million. Revenues increased as a direct result of the production improvement at the Yauricocha and Bolivar mines.
• Adjusted EBITDA, excluding discontinued operations, of $50.3-million for 2023, an increase from the adjusted EBITDA of $9.6-million for 2022.
• Net loss attributable to shareholders, including discontinued operations, for 2023 was $19.3-million, or 11 cents per share (2022: net loss of $87.5-million, 53 cents per share). Net loss for the year ended 2023 includes an impairment charge of $2.5-million on the discontinued Cusi mine (2022: impairment charge of $25-million on the Bolivar mine and $25-million on the Cusi mine).
• Adjusted net income attributable to shareholders of $900,000, or one cent per share, for 2023 compared with the adjusted net loss of $21.2-million, or 13 cents per share, for 2022.
• Cash flow generated from operations before movements in working capital of $43.3-million for 2023 was higher than the $5.2-million in 2022, mainly due to higher revenues.
• Cash and cash equivalents of $9.1-million and working capital of negative $66.7-million as at Dec. 31, 2023, compared with $5.1-million and negative $78.1-million, respectively, at the end of 2022. Cash and cash equivalents increased during 2023 as the $50.2-million generated from operating activities was offset by $44-million used in investing activities and $2.2-million used in financing activities.

Subsequent to year-end

On Feb. 21, 2024, the company announced receipt of the environmental permit to develop and mine below the 1120 level at its Yauricocha mine. This permit should provide several significant benefits for Sierra Metals, such as potential operational enhancements, maximization of operating capacity and potential cost-efficiencies. With a modest development capital investment, the company anticipates ramping up to full production levels of 3,600 tonnes per day by Q4 2024.

Operating metrics versus guidance 2023

For FY 2023, the company met production guidance, and was generally within cash cost and AISC guidance for 2023.

Outlook for 2024

Management expects 2024 to be the year to consolidate the optimization efforts that started in 2023 and to establish the platform for growth. In 2023, under the guidance of the new management team, the company began a process of stabilization and optimization.

Prioritizing safety, employee engagement and streamlining operations have helped restore production levels, while strategic debt refinancing has stabilized the company's financial position. In February, 2024, the company obtained the environmental permit to develop and mine below the 1120 level at the Yauricocha mine. This permit provides several significant catalysts for Sierra Metals, such as operational enhancements, maximized operating capacity and cost-efficiencies. Using a modest development capital investment, the company anticipates ramping up to full production levels of 3,600 tonnes per day (40 per cent higher than current levels) by Q4 2024.

At Bolivar, the company will continue the construction of the new tailings dam, which is expected to be completed over the next three years, allowing the mine to increase its production capacity to 7,500 tpd in the future.

Identifying additional mineral resources at the company's core operating mines, Yauricocha and Bolivar, is another key priority. The company anticipates completion of revised mineral resources models during Q2 2024, followed by the corresponding National Instrument 43-101 technical reports.

Two thousand twenty-four cost guidance

A mine by mine breakdown of 2024 production guidance, cash costs and all-in sustaining costs are included in the associated table. Starting 2024, the company is modifying its definition of cash cost to include treatment and refining charges, selling costs, and general and administrative (G&A) costs. AISC includes cash costs and sustaining capital expenditure.

Two thousand twenty-four capex (capital expenditure) guidance

A breakdown by mine of the throughput and planned capital investments is shown in the associated table.

Total capital for 2024 is expected to range between $39.2-million and $49-million, with management retaining the option to adjust the capital expenditure plan depending on the business conditions. Sustaining capital mainly comprises mine development of up to $14.7-million ($8.9-million in Bolivar and $5.8-million in Yauricocha). The remaining sustaining capital expenditure consists of infill drilling and replacement of equipment at the mines.

Growth capital for 2024 is expected to range between $9.3-million and $11.6-million, focusing on the new tailings dam at Bolivar.

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.