Sierra Metals announces financial results for Q4-2015 at its subsidiary Sociedad Minera Corona in Peru

• Restructuring process at the Mine continued to temporarily depress production

TORONTO, Feb. 16, 2016 /CNW/ - Sierra Metals Inc. (TSX:SMT)(BVL:SMT) ("Sierra Metals" or the "Company") announces the filing of Sociedad Minera Corona S.A.'s ("Corona") unaudited Financial Statements and Management Discussion and Analysis ("MD&A") for the fourth quarter of 2015 ("Q4 2015"). The Company holds an 81.8% interest in Corona. All amounts are presented in thousands of US dollars unless otherwise stated and have not been adjusted for the 18.2% non-controlling interest.

Corona's Financial Highlights for the Three Months Ended December 31, 2015

• $21.8 million of cash and cash equivalents as at December 31, 2015
• Revenues of US$ 12.1 million for Q4 2015
• Adjusted EBITDA of US$ (1.5) million for Q4 2015

Corona's Operational Highlights for the Three Months Ended December 31, 2015:

• Total tonnes processed: 193,710
• Silver equivalent production of 1.2 million ounces
• Copper equivalent production of 8.3 million pounds

The restructuring process at the Yauricocha Mine has continued to temporarily depress throughput and grades, resulting in significantly lower production of all metals during Q4 2015. The decrease in production was primarily due to lower ore grades being mined and throughput interruption caused by the management of water control issues.  The Company continued to focus on the improvement of mine sequencing, improvements to safety, design and the introduction of mechanized mining methods to the Mine. These implementations will enable the Company to benefit from best practices and production increases in the future. 

"Corona reported weaker financial and production results for the quarter as a consequence of lower metal prices and the introduction of important operational improvements that have temporarily impacted production levels, but that aim to structurally improve our operations and production capabilities", stated Mark Brennan, President and CEO of Sierra Metals.

He continued, "Corona continues to have a solid balance sheet and strong liquidity despite the challenges it faced in the second half of the year. It is a testament to the quality of the Yauricocha Mine that we have been able to meet our 2015 guidance in spite of the unanticipated need for a major restructuring program at the mine. The Yauricocha Mine shall continue to deliver growth for the Company and its shareholders with continued brownfield exploration success such as the recently announced Esperanza Zone discovery as well as from our production optimization program."

The following table displays selected unaudited financial information for the three months and year ended December 31, 2015:

(In thousands of US dollars, except cash cost and revenue		Three Months Ended		Year Ended
per tonne metrics)		December 31, 2015	December 31, 2014	December 31, 2015	December 31, 2014
Revenue	$	12,140	28,073	80,113	119,027
Adjusted EBITDA ^(1)		(1,453)	12,498	24,901	59,364
Cash Flow from operations		(4,794)	10,469	14,926	47,557
Gross profit (loss)		(272)	18,202	27,611	64,202
Income Tax Recovery (Expense)		364	(5,251)	(7,953)	(18,717)
Net Income (loss)		(4,441)	8,416	7,532	29,782
Net revenue per tonne of ore milled ^(2)		62.67	124.79	96.26	134.42
Cash cost per tonne of ore milled ^(2)		54.55	51.05	52.03	48.95
Cash cost per silver equivalent payable ounce ^(2)		10.03	6.31	7.45	4.34
All-In Sustaining Cost per silver equivalent payable ounce ^(2)		17.77	12.61	14.11	10.60
Cash cost per copper equivalent payable pound ^(2)		1.50	0.95	1.12	0.65
All-In Sustaining Cost per copper equivalent payable pound ^(2)	$	2.67	1.89	2.12	1.59
(In thousands of US dollars, unless otherwise stated)		December 31, 2015	December 31, 2014
Cash and cash equivalents	$	21,818	28,672
Assets		105,099	111,811
Liabilities		53,093	62,449
Equity		52,006	49,362

^1	Adjusted EBITDA includes adjustments for depletion and depreciation, interest expense and other financing costs, interest income, share-based compensation, Foreign Exchange (gain) loss and income taxes; see non-IFRS Performance Measures section of the Company's MD&A.
^2	All-In Sustaining Cost per silver equivalent payable ounce and copper equivalent payable pound are non-IFRS performance measures and include cost of sales, treatment and refining charges, sustaining capital expenditures, general and administrative expense, and selling expense, and exclude workers' profit sharing, depreciation and other non-cash provisions; Cash cost per silver equivalent payable ounce and copper equivalent payable pound, net revenue per tonne of ore milled, and cash cost per tonne of ore milled are non-IFRS performance measures; see non-IFRS Performance Measures section of the Company's MD&A.

Corona's Financial Highlights for the Three Months and Year Ended December 31, 2015

• Cash and cash equivalents of US$ 21.8 million as at December 31, 2015 compared to US$ 28.7 million as at December 31, 2014. Cash and cash equivalents decreased by US$ 6.9 million. This was mainly driven by US$ 14.9 million of operating cash flow offset by US$ 12.1 million of capital expenditures and US$ 9.3 million of financing activities, including dividends paid of US$ 4.9 million;
• Revenues of US$ 12.1 million for Q4 2015 compared to US$ 28.1 million in Q4 2014 and revenues of US$ 80.1 million for the year ended December 31, 2015 compared to US$ 119.0 million for the same period in 2014. The decrease in revenue was due to the decrease in production, decrease in head grades for all metals, and the decreases in the price of silver (17%), copper (19%), lead (14%), zinc (9%) and gold (8%) during 2015 compared to 2014.
• Cash cost per silver equivalent payable ounce (at the Yauricocha Mine) of US$10.03 for Q4 2015 compared to US$6.31 for Q4 2014 and US$ 7.45 for the year ended December 31, 2015 compared to US$ 4.34 for the same period in 2014. All-in sustaining cost ("AISC") per silver equivalent payable ounce of US$ 17.77 for Q4 2015 compared to US$ 12.61 for Q4 2014 and US$ 14.11 for the year ended December 31, 2015 compared to US$ 10.60 for the same period in 2014. The increase in AISC during Q4 and the year ended December 31, 2015 was due to the decrease in plant throughput and ore feed head grades due to the decrease in available production from higher grade zones in the Mine; and additional costs related to the mechanization and water management controls continuing to be implemented at the Mine;
• Adjusted EBITDA of US$ (1.5) million for Q4 2015 compared to US$ 12.5 million for Q4 2014 and US$ 24.9 million for the year ended December 31, 2015 compared to US$ 59.4 million for the same period in 2014. The decrease in adjusted EBITDA for 2015 is due to the decrease in plant throughput, head grades and metal prices for all metals, and the increase in costs, previously discussed,
• Operating cash flow of US$ (4.8) million for Q4 2015 compared to US$ 10.5 million for Q4 2014 and US$ 14.9 million for the year ended December 31, 2015 compared to US$ 47.6 million for the same period in 2014;
• Net loss of US$ (4.4) million, or US$ (0.12) per share, for Q4 2015 compared to net income of US$ 8.4 million, or US$ 0.23 per share, for Q4 2014. Net income of US$ 7.5 million, or US$ 0.21 per share, for the year ended December 31, 2015 compared to US$ 29.8 million, or US$ 0.83 per share, for the same period in 2014.

Corona's Operational Highlights for the Three Months and Year Ended December 31, 2015:

The following table displays the production results for the three months and year ended December 31, 2015:

Yauricocha Production		3 Months Ended			12 Months Ended
		Dec 31, 2015	Dec 31, 2014	% Var.	Dec 31, 2015	Dec 31, 2014	% Var.
Tonnes processed (mt)		193,710	224,986	-14%	832,225	885,495	-6%
	Daily throughput	2,214	2,571	-14%	2,378	2,545	-6%
Silver ounces		287,140	595,340	-52%	1,791,056	2,121,565	-16%
Copper pounds (000's)		1,047	2,304	-55%	5,567	7,697	-28%
Lead pounds (000's)		6,814	11,632	-41%	39,430	46,714	-16%
Zinc pounds (000's)		9,265	13,399	-31%	42,077	54,256	-22%
Gold ounces		1,041	1,360	-23%	5,018	5,683	-12%
Silver equivalent ounces (000's)^(1)		1,239	2,157	-43%	6,614	8,194	-19%
Copper equivalent pounds (000's)^(1)		8,259	14,378	-43%	44,094	54,625	-19%

(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $20/oz Ag, $3.00/lb Cu, $0.85/lb Pb, $0.95/lb Zn, $1,250/oz Au.

Quality Control

All production technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on precious and base metals from its Yauricocha Mine in Peru, its Bolivar Mine and Cusi Mine in Mexico. In addition, Sierra Metals is exploring several precious and base metal targets in Peru and Mexico. Projects in Peru include Adrico (gold), Victoria (copper-silver) and Ipillo (polymetallic) at the Yauricocha property in the province of Yauyos and the San Miguelito gold properties in Northern Peru. Projects in Mexico include Bacerac (silver) in the state of Sonora, and La Verde (gold) at the Batopilas property in the state of Chihuahua.

The Company's shares trade on the Bolsa de Valores de Lima and the Toronto Stock Exchange under the symbol "SMT".

Forward-Looking Statements

Except for statements of historical fact contained herein, the information in this press release may constitute "forward-looking information" within the meaning of Canadian securities law. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events or results. These statements reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.

SOURCE Sierra Metals Inc.

regarding Sierra Metals, please visit www.sierrametals.com or contact: Mike McAllister, Director, Corporate Development, Sierra Metals Inc., 1 [phone], [email protected]; Ed Guimaraes, CFO, Sierra Metals Inc., 1 [phone]; Mark Brennan, President & CEO, Sierra Metals Inc., 1 [phone]