Mr. Ernesto Balarezo reports

SIERRA METALS PROVIDES A CORPORATE UPDATE

Sierra Metals Inc. has provided a corporate update on operations at its two underground mines in Latin America: the Yauricocha polymetallic mine in Peru and the copper-producing Bolivar mine in Mexico, and has reiterated that the company's board of directors continues to recommend shareholders reject the opportunistic hostile takeover bid launched by a subsidiary of Alpayana SAC.

Ernesto Balarezo, chief executive officer of Sierra Metals, commented: "I am very pleased to report that the investments we have made in our business units have resulted in record production levels for Sierra Metals. The operational enhancements have strengthened our financial position, and will enable the company to pursue sustainable growth safely and responsibly. I am excited about our record production and financial performance in 2024 and the opportunities ahead beyond 2025 to create lasting value for all Sierra Metals shareholders."

Mr. Balarezo addresses recent developments at Sierra Metals in a brief video.

The company previously reported its 2024 production results and 2025 guidance on Jan. 15, 2025, highlighting record consolidated throughput rates that drove metal production beyond 2024 guidance. This strong performance was achieved through safe and sustainable mining practices, supported by strategic capital and operational investments made over the past two years. Looking ahead, the company expects expanded production in 2025 to drive lower costs and higher margins, particularly amid rising metal prices. When comparing 2024 expected all-in-sustaining costs to 2025 forecasts, further improvement is likely, with Yauricocha at approximately $2.93 (U.S.) and Bolivar at around $3.38 (U.S.) per pound. Increasing margins should result in robust free cash flow, further strengthening the company's financial position.

The company expects 2025 earnings before interest, taxes, depreciation and amortization to be approximately $130-million (U.S.) as stated in the director circular. This represents significant year-over-year growth, expanding from an estimated $70-million (U.S.) in 2024 (expected) and $50-million (U.S.) in 2023 -- an 85-per-cent increase over 2024 projections and an approximately 158-per-cent rise compared with 2023. The resulting higher operating cash flow is expected to be more than adequate to finance the company's capital investment program and meet its debt repayment obligations.

As outlined above, Sierra Metals has demonstrated sustainable EBITDA progress over the past two years and believes in its ability to maintain this growth profile going forward. Companies with similar growth profiles typically command higher-than-average earnings and cash flow multiples in the capital markets.

As stated in the director circular, successful comparable transactions have, on average, been executed at significantly higher valuations than the 1.9 times enterprise value/forecasted 2025 EBITDA multiple offered by Alpayana. Sierra Metals' proven record of EBITDA growth and the undervalued multiple reflected in Alpayana's offer are key factors shareholders should consider while deciding to reject Alpayana's outstanding tender offer.

On Jan. 21, 2025, the company announced drill results at its Bolivar mine, which included copper grades that were higher than the current mineral resource estimate. Exploration remains a key priority for Sierra Metals, not only to replace mined resources but also to support the company's ambitious growth plans. Both deposits remain open at depth and along strike, suggesting potential to extend the mine life.

In 2024, the company refinanced its long-term debt into a $95-million (U.S.) facility, significantly enhancing its working capital and financial flexibility, while providing the necessary financing to execute its growth strategy. This refinancing was an instrumental part of the company's improved cash generation profile going forward. Year to date, the company continues to achieve strong production results and is exceeding its internal production forecasts.

Recommendation to continue to reject the opportunistic hostile takeover bid

The special committee of independent directors, established by the board in relation to the hostile bid, continues to evaluate a range of strategic options, working closely and actively with its external financial and legal advisers. As previously announced, the company has engaged BMO Capital Markets as financial adviser and is currently undertaking a robust process to evaluate strategic options to maximize long-term value for all shareholders and stakeholders. The special committee plans to report to the company's shareholders on its recommendations following the completion of this process.

As described in the director circular, the board unanimously recommends that Sierra shareholders reject the opportunistic hostile bid and not tender their common shares to the opportunistic hostile bid. Shareholders simply need to take no action to reject the hostile bid. The board's determination followed careful consideration, including advice from its financial and legal advisers, and the recommendation of the special committee. Furthermore, a majority of the company's shareholders have indicated to the company that they do not intend to accept the hostile bid.

Shareholders are encouraged to carefully review the director circular in its entirety. This document has been mailed to Sierra Metals shareholders and is available on SEDAR+ under the company's profile and on the company's website.

Sierra shareholders who have already tendered their common shares to the hostile bid and who wish to obtain assistance in withdrawing them are urged to contact their broker or Carson Proxy Advisors, Sierra's information agent and strategic shareholder adviser, by North American toll-free phone at 1-800-530-5189, and local and text at 416-751-2066 or by e-mail at info@carsonproxy.com.

SMI Zurich Investor Conference

Management invites investors and shareholders to meet with it at the SMI Zurich conference on March 18 and March 19, 2025.

Qualified person statement

Ricardo Salazar Milla (AIG No. 8551), corporate manager, mineral resources, of Sierra, is a qualified person as defined under National Instrument NI 43-101 (Standards of Disclosure for Mineral Projects). Mr. Salazar has reviewed and approved the scientific and technical content of this news release.

About Sierra Metals Inc.

Sierra Metals is a Canadian mining company focused on copper production with additional base and precious metal byproduct credits at its Yauricocha mine in Peru and its Bolivar mine in Mexico. The company is intent on safely increasing production volume and 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.