Sierra Metals Reports Record Third Quarter 2016 Production Results

Company reports highest quarterly throughput in its history and second highest quarterly metals production

TORONTO, Oct. 17, 2016 /CNW/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") reports third quarter production results featuring record mine ore throughput for the Company, as well as record quarterly throughput at its Yauricocha Mine in Peru and at its Bolivar Mine in Mexico and the second highest quarter of metal production in its history.

Results are from Sierra Metals' three underground mines in Latin America: The Yauricocha polymetallic Mine in Peru and the Bolivar Copper mine and Cusi silver Mine in Mexico.

Third Quarter Highlights

• Total of 536,553 tonnes processed; a 19% increase from Q3 2015 production
• Silver equivalent production of 3.2 million ounces; a 25% increase from Q3 2015 production
• Copper equivalent production of 21.3 million pounds; a 25% increase from Q3 2015 production
• Increase of 8% in silver equivalent production for the Company during Q3 2016 vs Q2 2016
• Increase of 15% in silver equivalent production at Yauricocha during Q3 2016 vs Q2 2016
• Record throughput at both the Yauricocha and Bolivar Mines during Q3 2016

During Q3 2016, consolidated metal production increased compared to Q3 2015 production, and achieved the second best level of quarterly metals production in the Company's history, due to record plant throughput, higher head grades and higher recoveries at the Yauricocha Mine in Peru, as well as record plant throughput at the Bolivar Mine in Mexico. This was partially offset by a decrease in head grades at the Bolivar Mine and the decrease in throughput, head grades and recoveries at the Cusi Mine.

"I am very pleased to see significant benefits from the operational improvement program at the Yauricocha Mine continuing to have a strong impact on operational results." commented Mark Brennan, President and CEO of Sierra Metals. "We anticipate improved consolidated results quarter over quarter in the current year."

He continued, "Mexico also saw benefits at both mines as a result of plant improvements. In Bolivar, the installation of a new screening plant and cyclones resulted in improved recoveries, while at Cusi, the installation of a screening plant, a zinc circuit and an improved cyclone rack resulted in recovery and grade improvements in the lead and zinc circuits. The ongoing focus at Bolivar will be to improve the value per tonne of ore mined while at Cusi, grade control and selective mining practices will be the focus.

He concluded, "The effect of optimizing our mining practices to reduce costs, implementing best practices and modernizing all our mines combined with very successful brownfield exploration and development programs at our Yauricocha Mine and at both Bolivar and Cusi, should provide a significant improvement in shareholder value in the near term."

Consolidated Production Results

Consolidated Production	3 Months Ended					9 Months Ended			2016 Guidance
	Q3 2016	Q2 2016	% Var.	Q3 2015	% Var.	Q3 2016	Q3 2015	% Var.	Low	High
Tonnes processed (mt)	536,553	503,988	6%	452,082	19%	1,516,760	1,407,863	8%
Daily throughput	6,132	5,760	6%	5,167	19%	5,778	5,363	8%
Silver ounces (000's)	812	780	4%	691	17%	2,179	2,502	-13%	2,600	3,200
Copper pounds (000's)	6,156	5,245	17%	4,709	31%	17,238	17,701	-3%	24,400	30,100
Lead pounds (000's)	11,650	10,655	9%	11,026	6%	30,561	34,257	-11%	26,700	32,900
Zinc pounds (000's)	14,435	14,218	2%	9,332	55%	39,571	32,812	21%	43,200	53,400
Gold ounces	2,305	2,197	5%	2,026	14%	6,737	6,864	-2%	9,100	11,200
Silver equivalent ounces (000's)^(1)	3,201	2,965	8%	2,557	25%	8,748	8,994	-3%	10,400	12,800
Copper equivalent pounds (000's)^(1)	21,284	19,714	8%	17,002	25%	58,162	59,798	-3%	69,100	85,300
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Yauricocha Mine, Peru

The Yauricocha Mine processed a total of 237,429 tonnes in Q3 2016 representing a 23% increase compared to Q3 2015. Higher metal production was driven by higher plant throughput, higher silver, copper and zinc head grades from the polymetallic and lead-oxide concentrates; higher recoveries of all metals, except zinc, which were a consequence of higher head grades in the ore sources available to be mined in Q3 2016 versus Q3 2015 as the Esperanza Zone was brought into production.

The Company continues to see positive improvements from the restructuring at Yauricocha and introduction of the Esperanza zone into the production schedule in Q3 2016 as evidenced by a 15% increase in silver equivalent production over Q2 2016. The Company also saw an increase in the production of all metals with increases in production of silver 18%, copper 81%, zinc 2%, lead 12% and gold 18%.

 A summary of production from the Yauricocha Mine for Q3 2016 has been provided below:

Yauricocha Production		3 Months Ended					9 Months Ended
		Q3 2016	Q2 2016	% Var.	Q3 2015	% Var.	Q3 2016	Q3 2015	% Var.
Tonnes processed (mt)		237,429	215,510	10%	193,558	23%	660,519	638,515	3%
	Daily throughput	2,713	2,463	10%	2,212	23%	2,516	2,432	3%
	Silver grade (g/t)	106.80	107.34	-1%	96.45	11%	96.73	107.62	-10%
	Copper grade	0.51%	0.39%	31%	0.33%	53%	0.55%	0.53%	4%
	Lead grade	2.69%	2.93%	-8%	3.24%	-17%	2.64%	3.08%	-14%
	Zinc grade	3.06%	3.30%	-7%	2.41%	27%	3.02%	2.59%	16%
	Gold Grade (g/t)	0.70	0.64	9%	0.73	-4%	0.66	0.72	-9%
	Silver recovery	66.81%	62.26%	7%	62.88%	6%	62.84%	68.07%	-8%
	Copper recovery	65.33%	51.98%	26%	54.28%	20%	57.43%	60.96%	-6%
	Lead recovery	75.75%	68.49%	11%	73.33%	3%	70.51%	75.29%	-6%
	Zinc recovery	87.73%	87.53%	0%	90.76%	-3%	86.61%	89.94%	-4%
	Gold Recovery	27.25%	27.79%	-2%	25.52%	7%	26.85%	26.83%	0%
Silver ounces (000's)		545	463	18%	377	44%	1,291	1,504	-14%
Copper pounds (000's)		1,740	959	81%	770	126%	4,561	4,520	1%
Lead pounds (000's)		10,652	9,550	12%	10,127	5%	27,145	32,616	-17%
Zinc pounds (000's)		14,040	13,708	2%	9,332	50%	38,030	32,812	16%
Gold ounces		1,458	1,236	18%	1,158	26%	3,756	3,977	-6%
Silver equivalent ounces (000's)^(1)		2,138	1,852	15%	1,542	39%	5,486	5,718	-4%
Copper equivalent pounds (000's)^(1)		14,216	12,314	15%	10,254	39%	36,478	38,018	-4%
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Bolivar Mine, Mexico

Bolivar had another quarter of record plant throughput in Q3 2016 of 250,260 tonnes which was a 21% increase compared to Q3 2015. The record throughput and higher recoveries for all metals helped offset the lower head grades encountered for all metals, and resulted in a 10% increase in copper equivalent production in Q3 2016 compared to Q3 2015.

Copper production of 4.4 million pounds increased 12%, silver production of 95,000 ounces increased 12%, and gold production of 583 ounces decreased 12% in Q3 2016 compared to Q3 2015. The increase in metal production was driven by the higher plant throughput and higher recoveries for all metals during Q3 2016.

The Company expects to see improved production as a result of higher throughput, better head grades and higher recoveries throughout the remainder of this year and into 2017 by concentrating on the development and extraction of higher grade material from known mineralized areas within the Bolivar concession.

A summary of production for the Bolivar Mine for Q3 2016 has been provided below:

Bolivar Production		3 Months Ended					9 Months Ended
		Q3 2016	Q2 2016	% Var.	Q3 2015	% Var.	Q3 2016	Q3 2015	% Var.
Tonnes processed (mt)		250,260	236,252	6%	206,318	21%	705,398	619,136	14%
	Daily throughput	2,860	2,700	6%	2,358	21%	2,687	2,359	14%
	Copper grade	0.96%	1.00%	-4%	1.08%	-11%	1.00%	1.15%	-13%
	Silver grade (g/t)	14.76	18.51	-20%	17.27	-15%	17.13	20.98	-18%
	Gold grade (g/t)	0.13	0.20	-36%	0.27	-52%	0.20	0.29	-33%
	Copper recovery	83.52%	82.54%	1%	80.39%	4%	81.28%	83.93%	-3%
	Silver recovery	80.31%	75.76%	6%	74.53%	8%	77.03%	80.80%	-5%
	Gold recovery	55.34%	48.07%	15%	36.58%	51%	48.91%	40.65%	20%
Copper pounds (000's)		4,417	4,286	3%	3,939	12%	12,676	13,182	-4%
Silver ounces (000's)		95	106	-10%	85	12%	299	338	-11%
Gold ounces		583	743	-22%	660	-12%	2,185	2,383	-8%
Silver equivalent ounces (000's)^(1)		803	806	0%	727	10%	2,368	2,497	-5%
Copper equivalent pounds (000's)^(1)		5,339	5,362	0%	4,833	10%	15,747	16,603	-5%
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Cusi Mine, Mexico

Total ore processed of 48,863 tonnes during Q3 2016 decreased 6% compared to Q3 2015. Higher head grades for gold and lead, and higher recoveries for all metals, except silver, as well as the start of zinc concentrate production from the plant, during Q1 2016, helped offset the decrease in throughput which resulted in a 10% decrease in silver equivalent production.

Silver production of 172,000 ounces decreased 25%, gold production of 265 ounces increased 27%, while lead production of 1.0 million pounds increased 11% compared to Q3 2015. The Mine also produced 0.4 million pounds of zinc which was the third quarter of zinc production at Cusi.

A summary of production for the Cusi Mine for Q3 2016 has been provided below:

Cusi Production		3 Months Ended					9 Months Ended
		Q3 2016	Q2 2016	% Var.	Q3 2015	% Var.	Q3 2016	Q3 2015	% Var.
Tonnes processed (mt)		48,863	52,226	-6%	52,206	-6%	150,842	150,212	0%
	Daily throughput	558	597	-6%	597	-6%	575	572	0%
	Silver grade (g/t)	158.08	181.50	-13%	175.34	-10%	171.56	176.11	-3%
	Gold grade (g/t)	0.27	0.23	18%	0.22	21%	0.26	0.20	30%
	Lead grade	1.11%	1.19%	-7%	0.97%	13%	1.23%	0.64%	94%
	Zinc grade	1.04%	1.15%	-10%	0.00%	N.A.	1.19%	0.00%	N.A.
	Silver recovery	69.10%	69.14%	0%	77.59%	-11%	70.81%	77.65%	-9%
	Gold recovery	62.84%	57.12%	10%	55.96%	12%	62.61%	51.92%	21%
	Lead recovery	83.83%	80.97%	4%	80.10%	5%	83.29%	77.77%	7%
	Zinc recovery	35.27%	38.53%	-8%	0.00%	N.A.	38.95%	0.00%	N.A.
Silver ounces (000's)		172	211	-19%	228	-25%	589	660	-11%
Gold ounces		265	217	22%	208	27%	796	504	58%
Lead pounds (000's)		999	1,105	-10%	899	11%	3,415	1,641	108%
Zinc pounds (000's)		394	510	-23%	0	N.A.	1,541	0	N.A.
Silver equivalent ounces (000's)^(1)		260	307	-15%	288	-10%	893	779	15%
Copper equivalent pounds (000's)^(1)		1,729	2,038	-15%	1,914	-10%	5,937	5,176	15%
(1) Silver equivalent ounces & copper equivalent pounds were calculated using the following metal prices: $14.96/oz Ag, $2.25/lb Cu, $0.75/lb Pb, $0.73/lb Zn, $1,113/oz Au.

Quality Control

All 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 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 metals 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 on the TSX 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 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.

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SOURCE Sierra Metals Inc.

regarding Sierra Metals, please visit www.sierrametals.com or contact: Mike McAllister, Vice President, Corporate Development, Sierra Metals Inc., Tel: [phone], TF: 1 [phone], Email: [email protected]; Mark Brennan, President & CEO, Sierra Metals Inc., Tel: [phone], TF: 1 [phone]