Sierra Metals Increases Resources by 86% at its Yauricocha Mine in Peru Following a 4-Year Track Record of Resource Growth

VANCOUVER, March 31, 2015 /CNW/ - Sierra Metals Inc. (TSX:SMT)(BVL:SMT) ("Sierra Metals" or the "Company") is pleased to announce that Yauricocha's combined Measured and Indicated Mineral Resources have been increased by over 5,270,000 tonnes, representing an 86% increase over the previously reported mineral resource.  Over the same period, Mineral Reserves have been reduced by approximately 1,017,000 tonnes following mine depletion, the exclusion of brownfields zones (Victoria and Ipillo Mines) and the application of current metal prices and smelter terms.

Press Release Highlights:

• Total Proven and Probable Mineral Reserves for Yauricocha are 5,377,000 tonnes averaging 75.5 g/t silver, 1.41% lead, 0.80% copper, 2.34% zinc and 0.92 g/t gold; down from 6,394,000 tonnes at October 1, 2013.
  
  
• Total Measured and Indicated Mineral Resources for Yauricocha, inclusive of the Mineral Reserves, are 11,411,000 tonnes averaging 55.4 g/t silver, 0.85% lead, 0.83% copper, 1.73% zinc and 0.76 g/t gold; up from 6,139,000 tonnes at October 1, 2013.
  
  
• The 16% reduction in reserve tonnage is due to several factors including the change in modelling methodology, the exclusion of 350,000 tonnes from Victoria and Ipillo Mines, the application of the current metal price and concentrate sales environments, and the elevated depletion of relatively higher grade reserves from the Mascota ore body since October 1, 2013.
  
  
• The 86% increase in resource tonnage is predominantly in the Indicated category of polymetallic mineralization and is the result of the successful exploration programs that have extended ore bodies at depth in the Central Mine area.
  
  
• The updated silver equivalent grade ("AgEq") for the Proven and Probable Reserves is 338.6 g/t.  Although this cannot be directly compared with the previous AgEq estimate of 360.6 g/t, the reduction is indicative of the change to the current reserves based upon the existing metal prices and concentrate sales terms.

"The latest estimate of resources and reserves for Yauricocha reflects several significant advances for Sierra and continues a 4-year track record of resource growth since we bought the Yauricocha Mine in 2011," said Ms Audra Walsh, the Company's President and CEO.  "Resources at the time of the acquisition were less than 4 million tonnes and they have increased to 11 million tonnes by the end of 2014.  Our investment in exploration drilling has been complemented with investment in technical systems and training of our personnel.  Together with our independent consultant we have improved the resource estimation methodology in line with best industry practice.  With this change we are confident that our model better reflects the reality of the mineralization and that we have a reliable predictive tool for future business evaluation."

"The resource and reserve grades have also been impacted by the focused production from the high grade Mascota ore body over the last year.  Although we have exploration drilling that indicates its extension at depth, sufficient drilling was not performed prior to the cut-off date of this resource estimate.  Our expectation is that the Mascota ore body will contribute positively to future resource and reserve estimates."

"The exclusion of the reserve tonnages from Mina Ipillo and Mina Victoria is a conservative measure at this time and is deemed to be temporary, although Indicated Resources remain at Mina Ipillo.  Additional evaluation of their associated operating and capital costs is required to consider them to be at the same level of confidence as our other reserves.  We are in the enviable position of not relying on these deposits for business success in the foreseeable future, but will prioritize them relative to the other opportunities currently before us."

"Yauricocha's reserves continue to provide strong cash flow even under the current metal price environment and concentrate sales terms.  This provides a great deal of stability to Sierra, enables us to strengthen our balance sheet and beneficially situates us for future growth – organic or external."

Ms Walsh added, "as outlined in the recent press release updating exploration activities (December 23, 2014) Yauricocha presents abundant, high value targets and many of those would have short lead time to production if warranted.  This gives us great confidence in the belief that Yauricocha will continue operating far beyond the life of the current reserve estimate." 

Mineral Resource Estimate

The effective date of this resource estimate is December 31, 2014 and was completed by Gustavson Associates, LLC.  Thomas Matthews, MMSA QP, Principal Resource Geologist with Gustavson, is the Qualified Person responsible for this resource estimate.  Gustavson Associates validated the database used for resource estimation, created domain wireframes corresponding to the main mineralized zones, interpolated grade into block models within these mineralized bodies, and reviewed the mine-mill reconciliation results.  Gustavson considers the resource to meet industry standard practices, and to be CIM and NI 43-101 compliant.

For all mineralization types, resources are presented at a cut-off which corresponds to the value of recoverable metal of $37 per tonne; this value being the approximate value of direct mining and processing costs at Yauricocha.  Metal prices used in this determination were $18.10/oz silver, $0.95/lb lead, $3.02/lb copper, $0.91/lb zinc and $1,241/oz gold.  Metal recovery was set at historical performance for each mineralization type.

Resource Estimate Effective Date December 31, 2014

Table 1: Measured Resources

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	1,675,000	330.9	62.2	1.02	0.73	2.77	0.81	3,350	17,037	12,211	46,347	43,550
Copper	10,000	567.5	102.6	0.70	3.50	1.61	0.73	31	67	334	154	224
Copper Oxides	16,000	614.5	108.6	2.40	4.99	5.00	0.48	56	385	800	802	247
Oxides	67,000	962.7	344.1	10.43	0.67	2.69	2.37	745	7,020	453	1,808	5,135
Mina Ipillo (Polymetallic)	-	-	-	-	-	-	-	-	-	-	-	-
Total	1,767,000	359.0	73.6	1.39	0.78	2.78	0.87	4,182	24,509	13,798	49,110	49,156

Table 2: Indicated Resources

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	9,056,000	222.1	36.0	0.31	0.82	1.46	0.69	10,489	28,246	74,248	132,268	200,236
Copper	8,000	571.0	118.3	0.83	3.40	1.80	0.83	30	66	272	144	214
Copper Oxides	26,000	1,368.7	693.4	8.39	5.53	1.36	0.26	584	2,199	1,449	356	219
Oxides	553,000	731.6	283.9	7.62	0.87	2.76	1.67	5,050	42,164	4,828	15,272	29,639
Mina Ipillo (Polymetallic)	168,900	662.2	140.8	1.33	1.32	6.34	1.30	765	2,246	2,229	10,708	7,059
Total	9,812,000	261.7	53.6	0.75	0.84	1.54	0.74	16,153	74,922	83,027	158,750	230,308

Table 3: Measured and Indicated Resources

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	10,731,000	239.1	40.1	0.42	0.81	1.66	0.71	13,838	45,284	86,459	178,615	243,786
Copper	18,000	569.1	109.7	0.76	3.45	1.70	0.78	62	133	606	298	438
Copper Oxides	42,000	1,082.4	471.4	6.12	5.33	2.74	0.34	640	2,584	2,249	1,158	467
Oxides	621,000	756.7	290.4	7.93	0.85	2.75	1.74	5,795	49,184	5,281	17,080	34,774
Mina Ipillo (Polymetallic)	168,900	662.2	140.8	1.33	1.32	6.34	1.30	765	2,246	2,229	10,708	7,059
Total	11,411,000	280.7	57.5	0.85	0.83	1.73	0.76	20,335	99,431	96,825	207,860	279,464

Table 4: Inferred Resources

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	1,871,000	1,209.2	203.0	1.52	4.33	8.48	3.26	12,214	28,357	81,022	158,644	196,206
Copper	30	470.0	135.5	0.74	2.46	2.95	1.41	0	0	1	1	1
Copper Oxides	4,500	1,353.8	649.7	10.96	5.10	0.94	1.31	93	489	228	42	188
Oxides	278,000	774.8	339.5	7.48	0.92	2.46	1.57	3,030	20,765	2,554	6,829	14,013
Mina Ipillo (Polymetallic)	-	-	-	-	-	-	-	-	-	-	-	-
Total	2,153,000	1,153.7	221.5	2.30	3.89	7.69	3.04	15,337	49,611	83,804	165,516	210,407

The mineral reserves are included within these mineral resources.  Quality and grade are estimates and are rounded to reflect the fact that the resource estimate is an approximation. Mineral resources are not mineral reserves and do not demonstrate economic viability.  There is no certainty that all or any part of the mineral resource will be converted to mineral reserves.  Quantities may not sum due to rounding.

Silver Equivalency is represented as a recovery-adjusted value for silver, lead, copper, and zinc, represented as silver-equivalent grade according to the formula:

AgEq =

Ag + (Pb*Ppb*Rpb*22.05)+(Cu*Pcu*Rcu*22.05)+(Zn*Pzn*Rzn*22.05)+(Au*Pau*Rau/31.1035)
(Pag* Rag/31.1035)

Where the symbols represent:

Table 5:  Silver Equivalent Calculation Values

Metal	Symbol	Grade Units	Price	Price Symbol	Recovery Symbol
Silver	Ag	g/t	18.10 $/ozt	Pag	Rag
Lead	Pb	%	0.96 $/lb	Ppb	Rpb
Copper	Cu	%	3.02 $/lb	Pcu	Rcu
Zinc	Zn	%	0.91 $/lb	Pzn	Rzn
Gold	Au	g/t	1,241 $/ozt	Pau	Rau

Recovery	Polymetallics	Copper	Oxides	Cu Oxides
Rag	59.76%	63.90%	31.98%	49.71%
Rpb	80.32%	0.00%	54.20%	28.38%
Rcu	69.65%	89.86%	0.00%	39.20%
Rzn	88.65%	0.00%	0.00%	0.00%
Rau	13.90%	7.50%	52.57%	10.01%

Metals price assumptions are based on 6-month trailing averages as of the effective date of the resource estimation.  Six month averages were used as a proxy for spot prices, because the 3-year averages which Gustavson typically employs are significantly higher and might overstate the resource and economics.  Recovery assumptions are based on 2-year trailing average production recoveries for the Chumpe plant.

The reader is advised that the silver equivalency stated here is based upon updated price and recovery factors; therefore a direct comparison with previous resource and reserve estimates should not be made.

Mineral Reserve Estimate

The effective date of this reserves estimate is December 31, 2014.  The mineral reserve was estimated by applying modifying factors to the mineral resources.  Yauricocha is an operating mine, with significant production history.  Because of this, the primary basis for the modifying factors applied for reserves definition is actual historic cost, recovery, and mine planning data.  Gustavson considers the reserves to meet industry standard practices, and to be CIM and NI 43-101 compliant.

Mineral reserves are defined as that portion of mineral resources which are economically extractable, and for which there is mining access planned.   The stated reserves include factors for dilution, ore loss, and mine-mill reconciliation.  Therefore the grades are somewhat less than the resources, and the tonnages are somewhat higher.  Reserves are presented at a NSR cut-off based on value of recoverable metal, less an allowance for refining costs.  Cutoffs vary by zone, include all operating costs and G&A, and reflect mining cost assumptions for each zone. Cutoffs vary from $42 to $87 per tonne depending on mining method. However due to bulk mining methods employed, some marginal value blocks inside of stope shapes are included as reserves.

Reserve Estimate Effective Date December 31, 2014

Table 6: Yauricocha Proven Mineral Reserves

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	1,108,000	348.5	65.2	1.17	0.68	3.07	0.81	2,320	13,014	7,493	33,963	28,749
Copper	10,000	444.5	80.3	0.58	2.74	1.34	0.57	27	60	283	138	189
Copper Oxides	18,000	523.1	88.8	1.96	4.31	4.32	0.39	50	346	760	762	221
Oxides	72,000	775.1	276.1	8.41	0.59	2.30	1.91	638	6,047	422	1,655	4,427
Total	1,207,000	377.6	78.2	1.61	0.74	3.02	0.87	3,036	19,467	8,958	36,518	33,586

Table 7: Yauricocha Probable Mineral Reserves

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	3,607,000	270.4	43.3	0.48	0.78	2.24	0.86	5,017	17,465	28,093	80,871	99,942
Copper	9,000	447.3	92.6	0.69	2.66	1.50	0.65	26	60	230	130	181
Copper Oxides	32,000	1,111.3	538.3	6.97	4.69	1.12	0.46	559	2,250	1,514	362	478
Oxides	522,000	671.0	263.5	7.00	0.76	1.55	1.47	4,422	36,516	3,982	8,089	24,731
Total	4,170,000	327.4	74.8	1.35	0.81	2.15	0.93	10,024	56,291	33,819	89,452	125,332

Table 8: Yauricocha Proven and Probable Mineral Reserves

		Grades						Contained Metal
Mineralization Type	Tonnes (t)	AgEq (gpt)	Ag (gpt)	Pb (%)	Cu (%)	Zn (%)	Au (gpt)	Ag koz	Pb (T)	Cu (T)	Zn (T)	Au oz
Polymetallic	4,714,000	288.7	48.4	0.65	0.75	2.44	0.85	7,338	30,479	35,586	114,834	128,691
Copper	19,000	445.8	86.0	0.63	2.71	1.41	0.61	52	119	513	268	370
Copper Oxides	50,000	903.5	379.5	5.20	4.56	2.25	0.44	609	2,596	2,274	1,124	699
Oxides	594,000	683.6	265.0	7.17	0.74	1.64	1.53	5,060	42,564	4,404	9,744	29,158
Total	5,377,000	338.6	75.5	1.41	0.80	2.34	0.92	13,059	75,758	42,778	125,970	158,918

Quality and grade are estimates and are rounded to reflect the fact that the reserve estimate is an approximation. Quantities may not sum due to rounding.

Quality Control

The quality assurance-quality control (QA-QC) program employed by Sierra Metals has been reviewed by Gustavson.  Gustavson considers that the QA-QC program meets industry standards, and to be CIM and NI 43-101 compliant.

Mining and Economics

Yauricocha is an underground mine which has been in continuous operation for over 60 years.  Mining at Yauricocha is accomplished by various extraction methods, principally sublevel caving and overhand cut and fill stoping.  Ore is processed at the Chumpe plant, which operates three process streams, Polymetallic, Copper, and Oxide, to produce as many as five marketable concentrates.

All reserves will be processed at the operation's current flotation plant with resultant concentrates of copper, lead oxides, lead sulfides and zinc transported off-site under processing contracts with the operation's customers.  Mining is all underground, with processing and tailings storages nearby.

There is no IRR or payback period, as the mine is in operation, therefore there is no initial capital required for start-up.

The production decision was not based on a feasibility study of Mineral Reserves demonstrating economic viability.  There is an increased uncertainty and economic and technical risks of failure associated with this production decision. Production and economic variables may vary considerably, due to the absence of a complete and detailed site analysis according to and in compliance with NI 43-101 Standards of Disclosure specific risk analysis.

The mineral resource and reserve estimate was prepared by Thomas Matthews, MMSA QP, Principal Resource Geologist with Gustavson Associates, LLC. Mr. Matthews  is a qualified person as defined by NI 43-101 and has reviewed and approved the contents of this press release with respect to the mineral resource and reserve estimate at the Yauricocha Mine.

A NI 43-101 compliant technical report supporting the disclosure of the mineral resource and reserve estimate will be filed on SEDAR within 45 days of this press release.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on the production of precious and base metals from its Yauricocha Mine in Peru, and 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 Lima Stock Exchange (Bolsa de Valores de Lima) and the Toronto Stock Exchange under the symbol "SMT".

Cautionary Statement Regarding Forward-Looking Information

Except for statements of historical fact, the statements in this press release contain certain "forward-looking information" within the meaning of Canadian securities laws. Forwardlooking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements include, but are not limited to, statements regarding the Company's estimation of mineral reserves and resources and the realization of mineral reserve estimates (including all assumptions), the prospectivity of the Yauricocha Project, the ability to identify new resources and convert resources and exploration potential into reserves, the timing, nature and success of exploration activities. Forwardlooking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forwardlooking statements, including, among others, the accuracy of mineral grades and related assumptions, inherent operating risks, planned expenditures, proposed exploration and development at the Yaurichocha Project, operating and economic aspects of the Yaurichocha Project, as well as those risk factors identified in the Company's Annual Information Form filed under the Company's SEDAR profile. Such statements are based on a number of assumptions which may prove to be incorrect, including assumptions about: business and economic conditions; commodity prices and the price of key inputs such as labour, fuel and electricity; credit market conditions and conditions in financial markets generally; revenue and cash flow estimates, production levels, development schedules and the associated costs; ability to procure equipment and supplies and on a timely basis; the timing of the receipt of permits and other approvals for projects and operations; the ability to attract and retain skilled employees and contractors for the operations; the accuracy of reserve and resource estimates; the impact of changes in currency exchange rates on costs and results; interest rates; taxation; and ongoing relations with employees and business partners. Should one or more of the foregoing risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the 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.

Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources

This press release uses the terms "measured," "indicated" and "inferred" resources. We advise investors that while those terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred" resources" have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

SOURCE Sierra Metals Inc.

regarding Sierra Metals, please visit www.sierrametals.com or contact: Audra Walsh, President & CEO, Sierra Metals Inc., 1 [phone]; Victoria Vargas, Vice President, Investor Relations, Sierra Metals Inc., 1 [phone], Email:[email protected]