POLYMETALLIC PRODUCER

Transcription

1 CORPORATE PRESENTATION September 2017 POLYMETALLIC PRODUCER with exciting RESOURCE GROWTH POTENTIAL TSX: SMT NYSE AMERICAN: SMTS BVL: SMT

2 Forward Looking Statements Disclaimer Certain statements in this presentation constitute forward-looking information within the meaning of Canadian securities legislation. Forward-looking information relates to future events or the anticipated performance of Sierra and reflect management's expectations or beliefs regarding such future events and anticipated performance based on an assumed set of economic conditions and courses of action. In certain cases, statements that contain forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur" or "be achieved" or the negative of these words or comparable terminology. By its very nature forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual performance of Sierra to be materially different from any anticipated performance expressed or implied by such forward-looking information. These include estimates of future production levels; expectations regarding mine production costs; expected trends in mineral prices; changes in general economic conditions and financial markets; changes in prices for silver and other metals; technological and operational hazards in Sierra's mining and mine development activities; risks inherent in mineral exploration; uncertainties inherent in the estimation of mineral reserves, mineral resources, and metal recoveries; the timing and availability of financing; governmental and other approvals; political unrest or instability in countries where Sierra is active; labor relations and other risk factors disclosed in Sierra's Annual Information Form, which is available on SEDAR at Although Sierra has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking information, there may be other factors that cause its performance not to be as anticipated. Sierra neither intends nor assumes any obligation to update these statements containing forward-looking information to reflect changes in assumptions or circumstances other than as required by applicable law. There can be no assurance that forward-looking information will prove to be accurate as actual results and future events could differ materially from those currently anticipated. Accordingly, readers should not place undue reliance on forward-looking information. This presentation uses the terms "measured resources", "indicated resources" and "inferred resources" as such terms are recognized under National Instrument Standards of Disclosure for Mineral Projects ("NI ") adopted by the Canadian Securities Administrators. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a "preliminary assessment" as defined under NI Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. Gordon Babcock B.Sc., P.Eng., is the qualified person as defined in NI and Chief Operating Officer for Sierra Metals supervised the preparation of the operational scientific and technical information for Sierra Metals included in this presentation.

3 INVESTMENT HIGHLIGHTS A Base and Precious Metal Growth Story 3MINES 2 COUNTRIES 1SOLID INVESTMENT OPPORTUNITY Yauricocha Mine, Peru Bolivar Mine, Mexico Cusi Mine, Mexico

4 INVESTMENT HIGHLIGHTS A Base and Precious Metal Growth Story BROWNFIELD EXPLORATION & PRODUCTION Near-Mine Exploration Success and Further Potential SOLID FINANCIAL POSITION INCREASING FREE CASH FLOW STRONG GROWTH PRODUCTION OPTIMIZATION Successfully Implementing Modern Mining Practices Cash Position 1 US$31M 6M Adjusted EBITDA 1 US$43M Undrawn Credit Facilities US$16M Debt Position 1 US$66M Total Liquidity US$47M Net Debt Position 1 US$35M 1. As at June 30, 2017 per financial statements filed on SEDAR. 4

5 CAPITAL Structure Outstanding 1 RSU 1 Options 1 Fully Diluted M 1.5 M Nil M Major Shareholders Arias Resource Capital 50% Black Rock 10% Ingalls & Snyder 5% Omega Advisors 3% TSX ($CAD) NYSE Am. ($US) Recent Price 2 $2.94 $2.40 Actions to address liquidity include: NYSE American listing (July 11, 2017) Major shareholder willing to dilute below 50% 52 Week High 2 $3.75 $ Week Low 2 $1.70 $2.40 Market Cap $478.2 M $390.4 M Research Coverage H.C. Wainwright Scotiabank 1. As at Sep 1, As at Sep 20,

6 Consolidated Production Increasing Significant Brownfield Growth Potential Attributable Production in Silver Equivalent Ounces (M oz) E Base production levels E 6

7 Brownfield Exploration Plan Aggressively Drilling to Increase Resources Targeting increases in M&I resources through an aggressive exploration program on our target rich properties Q Update of Technical Reports for all three Mines 350,000 Drilling (meters) 330, , , , , ,200 Cusi (60,000) Mexico (170,000) 100,000 50, ,000 Cusi (48,000) Bolivar (17,000) Yauricocha (18,000) Bolivar (60,000) Yauricocha (43,200) Peru (160,000) Short Term Medium Term Longer Term (Jan 17 to Oct 17) (Nov 17 to Oct 18) (Nov 18 to Oct 22) 7

8 Strategic Growth Building Resources and Infrastructure for Increased Production BROWNFIELD EXPLORATION INFRASTRUCTURE UPDATES FEASABILITY & ENGINEERING STUDIES CONSTRUCTION & OPERATION Exploration of Target Rich Properties Short, Medium and Longer Term Drilling Programs Targeting Increases in M&I Resources Update of NI Technical Reports Upgrading of infrastructure and equipment Optimum plant size Best technology to process new resources Expansion and building of new mines and mills to grow production to the optimal size and design

9 DIVERSIFIED 3 Projects in 2 Countries Revenue Mix (12 months ending Jun 30, 2017) 21% SILVER 3% GOLD 25% COPPER 33% ZINC 18% LEAD YAURICOCHA BOLIVAR CUSI LOCATION YAUYOS, PERU CHIHUAHUA, MEXICO CHIHUAHUA, MEXICO OWNERSHIP 82% 100% 100% STAGE PRODUCTION PRODUCTION PRODUCTION / DEVELOPMENT MINE TYPE UG UG UG MILL THROUGHPUT 2,800 TPD 2,800 TPD 600 TPD METALS Ag, Cu, Zn, Pb, Au Cu, Ag, Au Ag, Pb, Au, Zn ADJUSTED EBITDA (2016) $34.3M 1 $5.1M $6.4M 1. Assumes 100% ownership of Yauricocha 9

10 SOLID Financial Position Figures in US ($000 s) M-2017 Revenue 143, , , , ,089 Adjusted EBITDA 1 54,502 72,597 32,317 41,887 42,981 Capex (44,017) (39,866) (37,600) (25,400) (19,608) Free Cash Flow 10,290 31,410 (5,125) 18,903 20,547 Cash and Cash Equivalents 44,930 41,273 25,102 42,145 31,121 Debt Outstanding 93,515 81,879 76,086 78,681 67,760 Net Debt 2 48,585 40,603 50,984 36,537 34,639 Adjusted EBITDA $72.6 $86.0 Net Debt / Adj EBITDA 1.6x $54.5 $32.3 $ x 0.6x 0.9x 0.3x E E Adjusted EBITDA includes adjustments for depletion and depreciation, interest expenses and other finance costs, interest income, share-based compensation, Foreign Exchange (gain) loss and income taxes. 2. Consolidated debt minus total cash and cash equivalents. 3. 6M-2017 results have been annualized for FY 2017E. 4. Includes $20M of Debt repayment in

11 PRODUCTION 2017 Production & Costs vs Guidance 6M-2017 Production 2017 Guidance Mine Yauricocha Bolivar Cusi Total Low High 2016 Actual Copper Eq. (M lb) Copper Eq. (M lb) Silver Eq. (M oz) Silver Eq. (M oz) M-2017 Costs 2017 Cost Guidance Cash Costs per Equivalent Oz / Lb Sold AISC 1,2 per Equivalent Oz / Lb Sold Cash Costs per Equivalent Oz / Lb Sold AISC 1,2 per Equivalent Oz / Lb Sold 2016 Actual AISC 1,2 Yauricocha (Ag Eq Oz) $7.39/oz $10.60/oz Yauricocha (Ag Eq Oz) $9.58/oz $12.29/oz $13.11/oz Bolivar (Cu Eq Lb) $1.14/lb $1.89/lb Bolivar (Cu Eq Lb) $1.08/lb $1.74/lb $2.28/lb Cusi (Ag Eq Oz) $10.82/oz $22.72/oz Cusi (Ag Eq Oz) $10.90/oz $19.66/oz $20.41/oz Silver equivalent ounces and copper equivalent pounds were calculated using the following prices: $19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $0.1.05/lb Zn, $1,369/oz Au 2. All-In-Sustaining-Costs (AISC) include treatment and refining charges, selling costs, g&a and sustaining capex 11

12 YAURICOCHA MINE Escondida Cuye/Mascota Esperanza In Continuous Operation Since 1948 (69 Years)

13 PERU Yauricocha Polymetallic Mine Ownership 82% Tonnes M Ag (g/t) Cu (%) Pb (%) Zn (%) Au (g/t) Ag Eq (g/t) Ag Eq (M oz) Size Commodities Operation Mill throughput Annual Production Concentrates Reserve Life Deposit Type Exploration 18,000 Hectares Silver, lead, zinc, copper, gold Underground mine: sub-level caving & cut and fill. 2,800 tpd 7.0 M oz Silver Equivalent Polymetallic Circuit Lead, Copper and Zinc cons Lead Oxide Circuit Lead Oxide con Copper Oxide Circuit Copper Oxide con 4.3 years+ Open High-temperature, carbonate-replacement deposit Significant Upside Potential P&P M&I* Inf *Includes P&P Details of the reserve & resource estimates for Yauricocha are presented in the Appendix. TAILINGS 13

14 PERU Yauricocha Production & Costs Production M-2017 Revenue Mix For the 12 months ending Jun 30, 2017 Tonnes processed 885, , , ,092 Tonnes per day 2,545 2,378 2,563 2,795 Copper Eq (M lbs) Silver Eq (M oz) % ZINC 19% SILVER 12% COPPER 23% LEAD 1% GOLD Financial Summary M-2017 Revenue ($000 s) $119,027 $80,113 $97,290 $76,360 Adjusted EBITDA ($000 s) $60,035 $22,894 $34,264 $39,280 Cash Cost per tonne processed $46.64 $52.65 $55.78 $61.13 Cash Cost per Ag Eq ounce produced $5.66 $7.54* $7.77* $7.95 All-in Sustaining Cost per Ag Eq ounce produced 2 $11.93 $14.19* $13.11* $ Silver equivalent ounces and copper equivalent pounds were calculated using the following prices: $19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz Au. 2. All-in Sustaining Costs include Treatment and Refining Charges, Selling Costs, G&A Costs and Sustaining Capex * Restructuring of operations Ag Eq M oz Silver Equivalent Production (M oz)

15 Esperanza Zone Discovery Exploration Success at Yauricocha Escondida Zone Esperanza North Zone Esperanza Ore Body 15

16 Esperanza & Escondida Zone Discovery Exploration Success at Yauricocha Esperanza Zone at Central Mine Escondida Zone at Cachi-Cachi Mine Hole ESP 15 is 183 meters from Collar to exit of mineralization Contains intercept of 70 meters of polymetallic mineralization with many more smaller rich veins Ag Pb Cu Zn Au Width Hole No. (gpt) (%) (%) (%) (gpt) (m) ESC over 7.6 ESC over 3.8 ESC over 3.8 ESC over 5.5 ESC over 30.2 Escondida is the largest deposit found at Cachi-Cachi. High grade Zinc potential will contribute additional mineral resources Escondida has a strike length of over 300 meters Extends the foot print of the Cachi-Cachi mine to over one kilometer in the direction of Esperanza and Yaurichocha s central mine zone 16

17 YAURICOCHA MINE Longitudinal Section Cachi Cachi Mine Central Mine Catas & Cuye are the same orebody at depth Cuerpos Chicos/Cuerpos Pequenos Average width: 1-5 Meters NSR of Rock: $300/tonne The areas continue to be defined as part of the definition drilling program Esperanza Area Average width: Meters NSR of Rock: $ /tonne Central Mine Area Average width: 6-8 Meters NSR of Rock: $60-80/tonne 17

18 YAURICOCHA MINE Regional Growth Potential Targets Land Package: 180 km 2 (18,000 Hectares) Very large mining concession with 18,000 Hectares Central Mine Area Chonta Trend La Fortuna Yauricocha Fault Kilkasca Current brownfield exploration and drilling focused on the Central Mine Area which is only a small portion of the total land package La Fortuna has significant outcrops of copper and further drilling will determine the potential for higher grade copper source Kilkasca was a former producing mine, halting production while still in ore, with mine life remaining. This represents a very high value target for future organic growth and expansion Ipillo 2,500m 18

19 BOLIVAR MINE Year over year production tonnage increases

20 MEXICO-BOLIVAR MINE Bolivar Copper Mine Ownership 100% Tonnes M Ag (g/t) Cu (%) Au (g/t) Cu Eq (%) Cu Eq (M lb) Size Commodities Operation Mill throughput Annual Production Concentrates Reserve Life 15,217 Hectares Copper, silver, gold Underground mine: room and pillar 2,800 tpd 21.2 M Lbs Copper Equivalent Copper with silver and gold byproduct credits 5 years+ Open Prob Ind* Inf *Includes Probable Details of the reserve & resource estimates for Bolivar are presented in the Appendix. Deposit Type Copper-zinc skarn Exploration Significant Upside Potential 20

21 MEXICO-BOLIVAR MINE Production & Costs Production M-2017 Revenue Mix For the 12 months ending Jun 30, 2017 Tonnes processed 665, , , ,911 Tonnes per day 1,903 2,373 2,715 2,497 Silver Eq (M oz) % 14% GOLD SILVER Copper Eq (M lbs) % COPPER Financial Summary M-2017 Revenue ($000 s) $41,712 $41,778 $33,267 $22,913 Adjusted EBITDA ($000 s) $13,054 $4,227 $5,120 $5,290 Cash Cost per tonne processed $33.19 $27.90 $24.37 $22.53 Cash Cost per Cu Eq pound produced $1.82 $1.34 $1.15 $1.23 All-in Sustaining Cost per Cu Eq pound produced 2 $2.31 $2.33 $2.28 $ Silver equivalent ounces and copper equivalent pounds were calculated using the following prices: $19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz Au. 2. All-in Sustaining Costs include Treatment and Refining Charges, Selling Costs, G&A Costs and Sustaining Capex Cu Eq M lbs Copper Equivalent Production (K lbs)

22 MEXICO-BOLIVAR MINE Bolivar Northwest and Bolivar West Targets 1 Bolivar NW Bolivar 2 Bolivar West El Gallo Titan 24 Geophysical Survey completed on Bolvar West and Northwest areas resulting in 24 anomalies and 8 high value drill targets 17,000 Meters of drilling program taking place in 2017 with the majority occurring at Bolivar West where high grade copper intercepts have occurred 28 holes (12,300 meters), recently completed which provided the Company with good Copper, Zinc and Silver grades. This detailed drill data will be used to update the current resources at the Bolivar mine in Q Bolivar West average grade of 2.55% copper equivalent with an average true width of 9.1 meters, which is significantly above El Gallo s current resource grade and current head grades. TSX SMT BVL SMT Bolivar West still has further potential resource growth prospects and remains open 22 to the northeast.

23 MEXICO-BOLIVAR MINE Ore Value Growth via Brownfield Exploration 10 BOLIVAR MINE 23

24 CUSI MINE Reinterpretation of Geology New High-Grade Silver Discovery

25 MEXICO-CUSI MINE Cusi Silver Mine Ownership 100% Size Commodities Operation Mill throughput 11,671 Hectares Silver, zinc, lead, gold Underground mine in development; cut and fill 600 tpd Tonnes M Ag (g/t) Pb (%) Zn (%) Au (g/t) Ag Eq (g/t) Ag Eq (M oz) Ind Inf Details of the resource estimates for Cusi are presented in the Appendix. Annual Production 1.1 M Oz Silver Equivalent Concentrates Deposit Type Exploration Lead and Zinc concentrates with significant silver High-grade, low sulphidation epithermal deposit Significant Upside Potential Revenue Mix For the 12 months ending Mar 31, % 12% LEAD 4% GOLD ZINC 75% SILVER 25

26 MEXICO-CUSI MINE Proven and Highly Prospective (BOLIVAR) 26

27 MEXICO-CUSI MINE Ore Value Growth via Brownfield Exploration The Cusi Fault is a 64 kilometer regional structure 12 kilometers of the Cusi Fault containing the Santa Rosa de Lime Zone lie within Sierra Metals property boundaries Santa Rosa de Lima Zone Open 1.7 km Open 12km 27

28 MEXICO-CUSI MINE Santa Rosa de Lima Zone Average grade of the intercepts for entire program of 29,500 meters is 372 g/t Eq. silver with Average true width of 3.8 meters. Step out drilling extends silver mineralization beyond the Santa Rosa de Lima zone with similar high-grade characteristics. Zone extended from 1 km to 1.7 km all within the 12 km structure running inside Sierra Metals property boundary. Data from total drill program on the zone of 29,500 meters will be incorporated into a new mineral resource for the Cusi Mine in Q4. 28

29 MEXICO-CUSI MINE Santa Rosa de Lima Zone Mine Design Long Hole Mine Plan Ramps have been completed to the upper portion of the Santa Rosa de Lima zone 250 meters below surface Drifts are being developed for long hole mining 29

30 INVESTMENT HIGHLIGHTS A Base and Precious Metal Growth Story BROWNFIELD EXPLORATION & PRODUCTION Near-Mine Exploration Success and Further Potential SOLID FINANCIAL POSITION INCREASING FREE CASH FLOW STRONG GROWTH PRODUCTION OPTIMIZATION Successfully Implementing Modern Mining Practices Cash Position 1 US$31M 6M Adjusted EBITDA 1 US$43M Undrawn Credit Facilities US$16M Debt Position 1 US$66M Total Liquidity US$47M Net Debt Position 1 US$35M 1. As at June 30, 2017 per financial statements filed on SEDAR. 30

31 CONTACT Information Investor Relations Sierra Metals Inc. Mike McAllister VP, Corporate Development T: TF: E: Corporate Office TD South Tower 79 Wellington Street West, Suite 2100 Toronto, ON M5K 1H1 T: TF: Follow us: 31

32 APPENDIX APPENDIX

33 PEER COMPARISON Base Metals Capitalization P/NAV EBITDA EBITDA Margin EV / EBITDA Company Mkt Cap EV (US$ mm) (US$ mm) (ratio) (US$ mm) (US$ mm) % % (ratio) (ratio) Lundin Mining $5,344 $4, x $933 $903 48% 46% 5.1x 5.2x HudBay Minerals $2,079 $2, x $566 $675 44% 50% 5.2x 4.3x Trevali $988 $1, x $172 $345 38% 46% 6.4x 3.2x Nevsun $677 $ x $70 $129 25% 37% 9.4x 5.1x Taseko $453 $ x $124 $90 40% 29% 5.1x 7.1x Capstone Mining $453 $ x $129 $167 26% 32% 5.8x 4.5x Imperial Metals $289 $1, x $78 $136 21% 31% 12.9x 7.3x Sherritt $276 $ x $135 $155 59% 90% 5.7x 4.9x Copper Mountain $143 $ x $63 $94 27% 34% 7.9x 5.3x Average: 0.8x $252 $299 36% 44% 7.0x 5.2x Sierra Metals $473 $ x $88 $120 43% 52% 6.1x 4.4x Source: Scotiabank sourced from Company filings, S&P Capital IQ (1) As at September 10,

34 HISTORICAL Financial Performance Revenue ($M) Adjusted EBITDA ($M) Operating CF before WC ($M) M M M 2017 CAPEX ($M) Cash and Cash Equivalents ($M) 1 Debt ($M) M M As of Jun 30, M

35 DEBT Breakdown As at June 30, 2017 BCP Acquisition Credit Facility BCP $20M Credit Facility 1 Revolving Line of Credit Facilities 2 FIFOMI Mexican Government Debt Facility Who s Debt: DiaBras Peru Corona Corona DiaBras Mexico Amount (USD): $43.2M $9.5M $8.7M $4.3M Term: months 5 Maturity Date: Aug 31, 2020 Oct 17, 2018** May 5, 2017 Dec 23, 2019 Interest Rate: 3M LIBOR % 3M LIBOR + 4.5% 1.9% TIIE % Payment Schedule: Quarterly Quarterly Monthly Monthly Use of Proceeds: Corona s Acquisition CAPEX Working Capital Working Capital 1. Funds cannot be drawn on this facility past October Revolving Line of Credit facilities are with BNS ($5M) and Interbank ($3.7M) 3.TIIE: Tasa de Interes Interbancaria del Banco de Mexico $45.0 Million acquisition facility has a $24 million bullet payment due in August of 2020 the remainder was amortized starting in

36 Base Metals London Metal Exchange (LME) Inventories 36

37 COST BREAKDOWN Cost of Sales, Cash Cost, and AISC The following tables provide detailed information on cost of sales, cash cost, and all-in sustaining cost per silver equivalent payable ounce and copper equivalent payable pound for the three months ended March 31, 2017 and 2016: Consolidated: Yauricocha: Three months ended Six months ended (In thousand of US dollars, unless stated) June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Total Cash Cost of Sales 23,864 24,716 46,221 40,787 All-In Sustaining Cash Costs 40,955 40,906 75,835 69,689 Silver Equivalent Payable Ounces (000's) 2,485 2,560 5,201 4,323 Cost of Sales per Silver Equivalent Payable Ounce (US$) Cash Cost per Silver Equivalent Payable Ounce (US$) All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce (US$) Copper Equivalent Payable Pounds 21,253 21,900 44,486 36,976 Cost of Sales per Copper Equivalent Payable Pound (US$) Cash Cost per Copper Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Copper Equivalent Payable Pound (US$) (In thousand of US dollars, unless stated) Three months ended June 30, 2017 June 30, 2016 Six months ended June 30, 2017 June 30, 2016 Cash Cost (recovery) per silver payable ounce Total Cash Cost 15,376 11,941 29,898 23,421 Variation in Finished inventory 620 3,578 (372) 1,251 Total Cash Cost of Sales 15,996 15,519 29,526 24,672 Treatment and Refining Charges 2,446 4,980 4,501 8,709 Selling Costs 1, ,093 1,534 G&A Costs 1,496 1,102 2,728 2,227 Sustaining Capital Expenditures 4,336 1,289 5,948 2,629 All-In Sustaining Cash Costs 25,370 23,806 44,796 39,771 Silver Equivalent Payable Ounces (000's) 1,884 1,617 3,716 2,670 Cost of Sales per Silver Equivalent Payable Ounce (US$) Cash Cost per Silver Equivalent Payable Ounce (US$) All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce (US$) Copper Equivalent Payable Pounds 16,114 13,824 31,785 22,833 Cost of Sales per Copper Equivalent Payable Pound (US$) Cash Cost per Copper Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Copper Equivalent Payable Pound (US$)

38 COST OF SALES Cost of Sales, Cash Cost, and AISC Bolivar: Cusi: (In thousand of US dollars, unless stated) Cash Cost per copper payable pound (In thousand of US dollars, unless stated) Cash Cost (recovery) per silver payable ounce Three months ended June 30, 2017 June 30, 2016 Three months ended June 30, 2017 June 30, 2016 Six months ended June 30, 2017 June 30, 2016 Total Cash Cost 5,084 6,237 9,844 12,048 Variation in Finished inventory 723 (335) 2,843 - Total Cash Cost of Sales 5,807 5,902 12,687 12,048 Treatment and Refining Charges 981 1,470 2,524 3,049 Selling Costs ,531 1,466 G&A Costs ,204 1,397 Sustaining Capital Expenditures 2,579 2,435 4,091 3,662 All-In Sustaining Cash Costs 10,672 11,367 22,037 21,622 Silver Equivalent Payable Ounces (000's) ,205 1,148 Cost of Sales per Silver Equivalent Payable Ounce (US$) Cash Cost per Silver Equivalent Payable Ounce (US$) All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce (US$) Copper Equivalent Payable Pounds 4,287 5,810 10,306 10,176 Cost of Sales per Copper Equivalent Payable Pound (US$) Cash Cost per Copper Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Copper Equivalent Payable Pound (US$) Six months ended June 30, 2017 June 30, 2016 Total Cash Cost 2,118 2,223 3,938 4,729 Variation in Finished inventory (58) 1, (662) Total Cash Cost of Sales 2,060 3,295 4,007 4,067 Treatment and Refining Charges 1, ,977 1,560 Selling Costs G&A Costs Sustaining Capital Expenditures 1,229 1,116 2,535 2,040 All-In Sustaining Cash Costs 4,913 5,733 9,002 8,296 Silver Equivalent Payable Ounces (000's) Cost of Sales per Silver Equivalent Payable Ounce (US$) Cash Cost per Silver Equivalent Payable Ounce (US$) All-In Sustaining Cash Cost per Silver Equivalent Payable Ounce (US$) Copper Equivalent Payable Pounds 852 2,266 2,395 3,967 Cost of Sales per Copper Equivalent Payable Pound (US$) Cash Cost per Copper Equivalent Payable Pound (US$) All-In Sustaining Cash Cost per Copper Equivalent Payable Pound (US$)

39 Production Guidance and Production by Metal 6M-2017 Production 2017 Guidance 2016 Mine Yauricocha Bolivar Cusi Total Low High Actual Silver (M oz) Silver (M oz) Copper (M lb) Copper (M lb) Lead (M lb) Lead (M lb) Zinc (M lb) Zinc (M lb) Gold (K oz) Gold (K oz) Copper Eq. (M lb) Copper Eq. (M lb) Silver Eq. (M oz) Silver Eq. (M oz) Yauricocha Production M-2017 Tonnes processed 885, , , ,092 Tonnes per day 2,545 2,378 2,563 2,795 Silver ounces (M oz) Copper (K lbs) 7,697 5,567 6,281 4,975 Lead (K lbs) 46,714 39,430 36,440 16,392 Zinc (K lbs) 54,256 42,077 54,805 36,041 Gold ounces 5,683 5,018 4,664 1,334 Copper Eq (M lbs) Silver Eq (M oz) Bolivar Production M-2017 Tonnes processed 665, , , ,911 Tonnes per day 1,903 2,373 2,715 2,497 Silver ounces (M oz) Copper (K lbs) 14,946 17,629 17,109 7,630 Gold ounces 2,485 3,216 2,986 1,460 Copper Eq (M lbs) Silver Eq (M oz) Silver equivalent ounces and copper equivalent pounds were calculated using the following prices: $19.50/oz Ag, $2.28/lb Cu, $0.85/lb Pb, $1.05/lb Zn, $1,369/oz Au. 39

40 CONSOLIDATED Reserve and Resource Table Reserves - Proven and Probable Contained Metal Tonnes Ag Cu Pb Zn Au AgEq CuEq Ag Cu Pb Zn Au AgEq CuEq (x1000) (g/t) (%) (%) (%) (g/t) (g/t) (%) (M oz) (M lb) (M lb) (M lb) (K oz) (M oz) (M lb) Yauricocha Proven , Probable 2, , Proven & Probable 3, , Bolivar Probable 4, , Total Proven & Probable 8, , Resources - Measured and Indicated Contained Metal Tonnes Ag Cu Pb Zn Au AgEq CuEq Ag Cu Pb Zn Au AgEq CuEq (x1000) (g/t) (%) (%) (%) (g/t) (g/t) (%) (M oz) (M lb) (M lb) (M lb) (oz) (M oz) (M lb) Yauricocha Measured 1, , Indicated 6, , Measured & Indicated 7, , Bolivar Indicated 9, , Cusi Indicated 1, , Total Measured & Indicated 19, , Resources - Inferred Contained Metal Tonnes Ag Cu Pb Zn Au AgEq CuEq Ag Cu Pb Zn Au AgEq CuEq (x1000) (g/t) (%) (%) (%) (g/t) (g/t) (%) (M oz) (M lb) (M lb) (M lb) (oz) (M oz) (M lb) Yauricocha Inferred 3, , Bolivar Inferred 9, , Cusi Inferred 1, , Total Inferred 14, ,

41 NOTES Reserve and Resource Estimate Yauricocha Mine: 1. The effective date of the mineral reserve and resource statement for the Yauricocha Mine including Mina Central, Cachi-Cachi, Mascota and Cuerpos mineral reserve and resource estimate is Dec 31, The effective date for Esperanza is June 30, Details of the estimate are provided in the Company s August 11, 2016 press release.a NI compliant technical report to support the estimate has been filed on SEDAR as of September 12, Measured and Indicated Resources include Proven and Probable Reserves 2. Silver equivalent is based on the following metal prices: US$16.76/oz Ag, US$2.28/lb Cu, US$0.86/lb Pb and US$0.94 Zn and US$1,251/oz Au. 3. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Bolivar Mine: 1. The effective date of the Bolivar mineral reserve and resource estimate is Sep 31, Details of the estimate are provided in the Company s Apr 11, 2017 press releases and a NI compliant technical report filed on SEDAR on Apr 19, Measured, Indicated and Inferred Resources include Proven and Probable Reserves. 2. Copper equivalent is based on the following metal prices: US$18.30/oz Ag, US2.43/lb Cu and US$1,283 Au. 3. Totals for proven and probable are diluted for internal waste. 4. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Cusi Mine: 1. The effective date of the Cusi mineral resource estimate is Jan 31, Details of the estimate are provided in the Company s April 13, 2017 press release and within a NI compliant technical report filed on SEDAR on April 17, Mineral resources that are not mineral reserves do not have demonstrated economic viability. 41

42 PROVEN & EXPERIENCED Management Team Igor Gonzales, President & Chief Executive Officer Mr. Gonzales has more than 35 years of experience in the mining industry, most recently he was Vice President Operations at Buenaventura and prior to that was with Barrick Gold from 1998 to 2013 where he most recently held the position of Executive VP and COO. Prior to joining Barrick, he served in various roles with Southern Peru Copper Gordon Babcock, P.Eng., Chief Operating Officer Over 34 years of experience in mine production management, project development, engineering, exploration and mine consulting in precious, base metals and aggregate operations in the Americas. Most recently COO at Jaguar Mining and has previously worked for Nyrstar, Breakwater Resources, Coeur Mining Inc., Milpo, The Hochschild group in Peru, Muscocho Explorations, and The Noranda Group Ed Guimaraes, Chief Financial Officer 25 years experience in the mining industry, most recently in a consulting role and Board directorships, senior management positions with Aur Resources between 1995 and 2007, ultimately serving as Executive Vice-President, Finance and Chief Financial Officer. Prior to 1995, worked in the Toronto mining group of PricewaterhouseCoopers Alonso Lujan, Vice President Exploration 26 years international experience in mineral exploration with a positive track record for increasing companies' resources, output and company value. Mr. Lujan most recently spent 6 years with Mata-Trafigura as the General Manger Prior to that he worked with Hochschild Mining and Minas de Bacis SA de CV Americo Zuzunaga, CP(Geologist by Mining Engineer), Vice President Corporate Planning Over 30 years of international experience in mining operations, mine and business planning, engineering studies (PEA, PFS, FS), Project Management and optimizing development. Mr. Zuzunga was most recently at BISA as a Technical Studies Manager and previously worked at BHP Billiton in successive planning roles. Previously he has been employed with Antamina, Yanacocha and Southern Peru Copper Augusto Chung, CP(Metallurgist), Consultant to Sierra Metals 34 years metallurgical and mine management experience with a positive track record for increasing companies' output and company value. Mr. Chung was most recently with Rio Alto Mining as the Vice President of Projects. Prior to that he worked with Milpo, Barrick and Antamina and Southern Peru Copper Dante Vargas, Vice President, Human Resources and Continuous Improvement Over 40 years of experience in management, strategic planning, organizational effectiveness and security & risk management in different countries in Latin America. Most recently he was the Operational Excellence Manager for Buenaventura.. Previously he was with Barrick South America and Barrick Peru, where he managed the implementation of HR processes and systems and managed large projects including participation in the construction of the Pascua Lama project Mike McAllister, Vice President, Corporate Development 12 years experience working with public mining companies the last 7 as a mining specialized investor relations professional. Mr. McAllister previously worked for Avion Gold which was Acquired by Endeavour Mining, Savary Gold, Alder Resources and Black Iron in their Investor Relations and Corporate Development programs. Previously Mr. McAllister worked at BMO Capital Markets in the Metals & Mining Group

43 EXPERIENCED & ACCOMPLISHED Board of Directors Alberto Arias, Chairman & Director Mr. Arias has over 21 years of experience in the field of international mining finance. He is the founder and President of Arias Resource Capital Management LP ( ARCM ). Prior to ARCM, he was Managing Director & Head of Equity Research for Metals and Mining at Goldman Sachs and a former mining analyst at UBS Igor Gonzales, President & Chief Operating Officer Mr. Gonzales has more than 35 years of experience in the mining industry, most recently he was Vice President Operations at Buenaventura and prior to that was with Barrick Gold from 1998 to 2013 where he most recently held the position of Executive VP and COO. Prior to joining Barrick, he served in various roles with Southern Peru Copper. Doug Cater, Director Mr. Cater, a seasoned geologist with over 30 years of experience in the gold mining and exploration business and is currently Vice President, Exploration at Kirkland Lake Gold. He also serves as a Council member of the Association of Professional Geoscientists of Ontario (APGO), representing the Southwest Ontario district Steven Dean, Director Mr. Dean has extensive international experience in the mining industry and is currently the Chairman & CEO of Atlantic Gold. Previously Mr. Dean was the President of Teck Cominco (now Teck Resources). Prior to joining Teck, he was a founding director of Normandy Poseidon Group (which became Normandy Mining) as well as founder of PacMin Mining Dionisio Romero Paoletti, Director Mr Romero is Chairman of the Board of Directors of Credicorp and Banco de Credito BCP, Peru's largest bank, and has been the Chief Executive Officer of Credicorp (NYSE: BAP) since Mr. Romero is a graduate of Brown University with a degree in Economics and earned an MBA from Stanford University Philip Renaud, Director Mr. Renaud is Managing Director of LB Advisors, a European investment advisory firm involved in private financings. Prior to joining LB he was a founding partner of Change Capital Partners, a 300 million Euro private equity fund 43

44 CONTACT Information Investor Relations Sierra Metals Inc. Mike McAllister VP, Corporate Development T: TF: E: Corporate Office TD South Tower 79 Wellington Street West, Suite 2100 Toronto, ON M5K 1H1 T: TF: Follow us: 44