Toronto, Ontario ¨C April 15, 2013 ¨C Sierra Metals Inc. (TSXV: SMT) (BVL: SMT) (¡°Sierra Metals¡± or the ¡°Company¡±), formerly Dia Bras Exploration, is pleased to announce the filing of its audited Financial Statements and Management Discussion and Analysis (¡°MD&A¡±) for 2012. All amounts are presented in Canadian dollars unless otherwise stated. For the full Financial Statement or MD&A please visit the Company¡¯s website www.sierrametals.com or SEDAR at www.sedar.com.

Daniel Tellechea, President and CEO of Sierra Metals, commented: “Sierra Metals has had an outstanding growth in 2012; 1) the acquisition of Yauricocha, 2) the announcement of commercial Production at Bolivar in Mexico, and 3) Management¡¯s dedication to maximizing operating efficiencies. Furthermore, 2012 has been the strongest fiscal and operational year in the Company¡¯s history given the significant improvements achieved on both production and resources. Sierra Metals continues to strive towards its objective of becoming a low-cost precious and base metals mining Company in Latin America by expanding operations at all three producing assets¡±. 

The following table sets out the selected annual financial results:

¹ A cautionary note regarding non-GAAP measures is included in section 14 of the MD&A.
² Consolidated debt minus cash and cash equivalents.

• Net loss attributable to shareholders of $28.7 million ($0.19 per share) for 2012 compared to a loss of $13.3 million ($0.12 per share) for 2011. For the fourth quarter 2012, net loss attributable to shareholders of $10.7 million ($0.07 per share) compared to a loss of $0.8 million ($0.01 per share) for the same period in 2011.


• A main component of the net loss for 2012 is a non-cash depletion charge in Peru of $76.9 million. The units of production depletion charge is based on aggregate fair value of the Yauricocha mineral property at the date of acquisition of Corona of $363.9 million amortized over the total proven and probable reserves of the mine.  In the event that additional reserves and resources are identified this depletion charge will be prospectively adjusted in future periods. 


• As a result of an updated internal cash flow forecast, management has updated its estimate of the effective tax rate applicable to deferred taxes in Peru. Accordingly, the Company recorded an $8.2 million increase in the deferred tax liability and a one-time non-cash expense during the fourth quarter of 2012 by the same amount.


• Adjusted net income attributable to shareholders (excluding the non-cash depletion charge described above) of $48.3 million or $0.32 per share for 2012 compared to $23.2 million or $0.20 per share for 2011, an increase of 108%. For the fourth quarter 2012, adjusted net income of $6.5 million or $0.04 per share compared to $15.4 million or $0.11 per share for the same period in 2011, a decrease of 58%. The main driver affecting the fourth quarter is the on-time deferred tax adjustment described above.


• EBITDA of $83.8 million for 2012 compared to $42.8 million for 2011, a 96% increase. For the fourth quarter 2012, EBITDA of $12.7 million compared to $17.7 million for the same period in 2011, a 28% decrease.


• Cash flow generated from continuing operations of $60.5 million for 2012 compared to $42.7 million for 2011, a 42% increase. For the fourth quarter of 2012, cash flow generated from continuing operations of $23.2 million compared to $14.1 million in the same period in 2011, a 65% increase.


• Cash and cash equivalents of $79.8 million at the end of 2012 compared to $20.1 million at the end of 2011, a 297% increase.


• Revenues of $179.7 million for 2012 compared to $100.7 million for 2011, a 78% increase. For the fourth quarter 2012, revenues of $43.4 million compared to $35.8 million for the same period in 2011, a 21% increase.


• Silver cash cost of US$(27.28) per ounce (¡°oz¡±) in Yauricocha and copper cash cost of US$1.40 per pound (¡°lb¡±) at Bolivar for 2012 compared silver cash cost of US$(29.43)/oz and US$1.18/lb for 2011.

Liquidity and Capital Resources

• Increased cash position by $59.7 million during 2012 to $79.8 million. Main drivers include strong operating cash flows generated from continuing operations of $60.4 million; net proceeds from disposal of Corona¡¯s hydroelectric asset for $25.8 million; higher capital expenditures made during the year of $27.5 million; the acquisition of Plexmar Resources Inc. for $5.8 million; and the $44.4 million private placement completed in June 2012.


• Net debt position of $9 million as of December 31, 2012 compared to a net debt position of $95 million as of December 31, 2011.

Operational Highlights

• Silver (¡°Ag¡±) production of 2,620,735 oz for 2012 compared to 1,517,079 oz in 2011, a 73% increase. For the fourth quarter of 2012, silver production of 683,937 oz compared to 605,121 oz for the same period in 2011, a 13% increase.


• Copper (¡°Cu¡±) production of 15.9 million lb for 2012 compared to 10.5 million lb in 2011, a 51% increase. For the fourth quarter of 2012, copper production of 4.3 million lb compared to 3.5 million lb for the same period in 2011, a 25% increase.


• Lead (¡°Pb¡±) production of 35.7 million lb for 2012 compared to 19.6 million lb in 2011, an 82% increase. For the fourth quarter of 2012, lead production of 8.7 million lb compared to 8.0 million lb for the same period in 2011, a 9% increase.


• Zinc (¡°Zn¡±) production of 59.0 million lb for 2012 compared to 36.3 million lb in 2011, a 62% increase. For the fourth quarter of 2012, zinc production of 14.7 million lb compared to 10.7 million lb for the same period in 2011, a 38% increase.


• Gold (¡°Au¡±) production at the Yauricocha mine was 10,491 oz in 2012. During the fourth quarter of 2012 a total of 2,181 oz of gold were produced compared to nil for 2011.

The following table sets out consolidated production results for the quarter and year ended December 31, 2012 and 2011. Please note that the production figures presented below include 100% of Yauricocha¡¯s figures for that period. No adjustments have been made for the portion applicable to the non-controlling interest.

¹ Includes Yauricocha Mine production only for the ownership period of Sociedad Minera Corona S.A.(SMC) from May 26, 2011 to Dec 31, 2011.

Exploration Highlights

• On August 30, 2012 an updated NI 43-101 technical report was released on the Bolivar Property, Chihuahua State, Mexico identifying the following resources:

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• Measured and Indicated Resources: 15,404,000 tonnes at grades of 19.4 grams/tonne (¡°g/t¡±) silver, 0.79% copper and 1.01% zinc at a mill feed cut-off grade of 0.66% copper equivalent (¡°CuEq¡±).


• Inferred Resources: 6,164,000 tonnes at grades of 18.1 g/t Ag, 1.26% copper and 0.78% zinc at a mill feed cut-off grade of 0.66% CuEq. 

• On September 6, 2012 an updated NI 43-101 technical report on the Yauricocha Property, Yauyos Province, Peru identifying the following reserves and resources:

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• Proven and Probable Reserves: 4,162,940 tonnes at grades of 119.70 g/t of silver, 2.81% lead, 0.70% copper, 2.57% zinc and 0.92 g/t of gold.


• Measured and Indicated Resources (inclusive of reserves): 4,181,390 tonnes at grades of 121.28 g/t of silver, 2.91% lead, 0.72% copper, 2.54% zinc and 0.93 g/t of gold.


• Inferred Resources: 1,794,330 tonnes at grades of 58.62 g/t of silver, 1.57% lead, 0.64% copper, 1.08% zinc and 1.10 g/t gold.

About Sierra Metals

Sierra Metals is a Canadian mining company focused on precious and base metals from its Yauricocha mine in Peru (the ¡°Yauricocha Property¡±) and its Bolivar mine in Mexico. The Company is also advancing its Cusi silver project in Mexico from advanced development into commercial production. 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. Projects in Mexico include Bacerac (silver) in the state of Sonora, La Verde (gold) at the Company¡¯s Batopilas property in the state of Chihuahua, and Las Coloradas (silver) at the the Company¡¯s Melchor Ocampo property in the state of Zacatecas.

The Common Shares trade on the Bolsa de Valores de Lima and the TSXV under the symbol ¡°SMT¡±.

For further information on Sierra Metals, please visit www.sierrametals.com or contact:

Neither the TSXV nor its Regulation Services Provider (as such term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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. Other than statements of historical fact, all statements are ¡°forward-looking statements¡±, which involve various known and unknown risk and uncertainties and other factors, including market conditions that may affect the Company¡¯s ability to execute its current business plan.  Actual results may 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.