Vancouver, BC ¨C September 09, 2013 ¨C Sierra Metals Inc. (TSX:SMT)(BVL:SMT) (¡°Sierra Metals¡± or the ¡°Company¡±) is pleased to announce that development in the Santa Eduwiges mine at its Cusi property has opened two new areas of bonanza grade silver mineralization, the Monaco and Veta del Contacto areas.  In addition, on-going mapping and sampling of the La Gloria vein at its Cusi property has returned high grades of silver over significant strike lengths.  Moreover, mapping of the Milagro and San Rafael veins gave encouraging visual results.

Press Release Highlights:

• BONANZA GRADES IN SANTA EDUWIGES (EL MONACO VEIN): Development into the Monaco vein of the Santa Eduwiges Mine has encountered bonanza grades of gold (¡°Au¡±) and silver (¡°Ag¡±), such as 2.45 m averaging 1,925 g/t Ag & 3.90 g/t Au and 1.9 m averaging 8,240 g/t Ag & 32.21 g/t Au.  This is a mine working level that is starting to contribute to Cusi¡¯s ore production.
  
• BONANZA GRADES IN SANTA EDUWIGES (VETA DEL CONTACTO): Development into the Veta del Contacto of Santa Eduwiges has encountered bonanza grades of silver, such as 2.1 m averaging 1,686 g/t Ag & 0.72 g/t Au and 1.0 meters averaging 2,350 g/t Ag & 0.60 g/t Au.  Drilling has confirmed its extension over 200 meters below the mine development level with high silver grades.
  
• WIDE NEW HIGH-GRADE VEIN AT SANTA EDUWIGES: A drift excavated along Level 11 towards the Red Fault and its intersection with Santa Marina vein has entered a 4-5 meters wide vein and 15 samples across it assayed an average of 221 g/t Ag.
  
• SURFACE SAMPLING AT LA GLORIA YIELDS BONANZA GRADES: Sampling on the surface along the La Gloria vein along a strike length of approximately 200 m returned an average of 263 g/t silver over an average width of 0.7m from 31 samples (SW shoot). Sampling along another portion of the La Gloria vein along a strike length of approximately 220 m returned an average of 144 g/t silver over an average width of 0.7m from 12 samples (NE shoot).  Mapping and sampling of the Milagro and San Rafael veins identified similar zones along the mineralized veins; assays are pending.

Daniel Tellechea, President and CEO of Sierra Metals, commented: ¡°Our work at Cusi continues to demonstrate the major upside for precious metals potential of the property.  As we develop deeper into the Santa Eduwiges mine we are finding veins very rich in gold and silver and in this case bonanza gold and silver grades in areas where we are currently conducting mine development and production  These results are extremely important as the Company has access to three separate bonanza-grade precious metals mining fronts, the two announced in this press release plus ¡°La Azucarera¡± in Promontorio.  The Company should have access to a fourth bonanza grade silver zone at the Santa Rosa de Lima area that is between Promontorio and Santa Eduwiges, which mine development should access in October, 2013.  In addition, our surface work is demonstrating that there are high grades of silver on the surface in veins that have seen little to no development such as La Gloria, yet are close to our main operating areas.The exploration upside of this property is very high and continues to yield positive results.  Our NI 43-101 resource update scheduled for early next year will include these new areas, as our NI 43-101 resource released in July, 2013 had a cutoff date of drill and development results as of December, 2012.¡±

Surface Work

The Company has been conducting detailed surface mapping in the northwestern portion of its Cusi property at 1:1,000 and 1:500 scales.  Recent work has been focused to the west and south of the Santa Eduwiges mine, covering the La Gloria, Milagro and San Rafael veins.  Assay results have been received for samples collected along the La Gloria vein and have identified two potential ore shoots.  These are called herein the NE and SW La Gloria shoots.  The NE shoot begins about 400 meters southwest of the intersection of the La Gloria and Minerva veins, and averages 144 g/t silver over an average vein width of 0.7 meters.

The SW shoot is about 100 meters southwest of the NE shoot and averages 263 g/t silver over an average vein width of 0.7 meters.

Assay results from the surface sampling along the inferred shoots of the La Gloria vein are given in Table 1.

The Minerva ramp is being extended in two directions, one of which is along the La Gloria vein.  As of August 29, the ramp was within 10-20 meters of the La Gloria NE shoot and should be well into the shoot by end-September, at depths of 100-150 meters below the surface.  The second direction is a switchback to deeper levels of the Minerva vein, which should encounter the vein 70-80 meters below old workings in approximately six weeks.

Mine Development and Mining

In addition to mine development at La Gloria and Minerva, development is also progressing at the Promontorio, Santa Eduwiges and Candelaria Mines.  Highlights are as follows:

At Santa Eduwiges:

• Level 1 (El Monaco): Development has entered a new area called Monaco, which yields bonanza grades of silver and gold as shown in Figure 2.  The high-grade vein is up to 4 meters in width and has been developed along a 30 meter length.  Face sampling across the vein yielded the following results:
  
  
  
  • 2.45 meters averaging 1,925 g/t Ag and 3.90 g/t Au;
    
  • 2.6 meters averaging 1,520 g/t Ag and 7.58 g/t Au;
    
  • 2.6 meters averaging 772 g/t Ag and 5.76 g/t Au;
    
  • 3.05 meters averaging 1,248 g/t Ag and 4.21 g/t Au;
    
  • 3.8 meters averaging 378 g/t Ag and 1.42 g/t Au.

Wall sampling along the drift yielded the following results:

• 
  
  
  
  • 4.0 meters averaging 342 g/t Ag and 1.45 g/t Au;
    
  • 1.9 meters averaging 8,240 g/t Ag and 32.21 g/t Au.
    
  • 1.9 meters averaging 844 g/t Ag and 1.84 g/t Au;
    
  • 3.1 meters averaging 710 g/t Ag and 2.61 g/t Au;
    
  • 2.2 meters averaging 278 g/t Ag and Au below detection limit.

The vein is being developed to the northeast and will be drilled to depth.

• Level 11  has also been extended to the Cusi Fault and has cut high-grade mineralization (Veta del Contacto ¨C Santa Eduwiges).  The miners have drifted 40 m along the vein, which they call Veta del Contacto because it is along the same major fault (Cusi Fault) as Veta del Contacto at Promontorio Mine, located about 800 meters to the northwest.  Twelve face samples were collected along the 40 m drift length of the vein with the following results:
  
• 2.1 meters averaging 1,686 g/t silver and 0.72 g/t gold;
  
• 1.35 meters averaging 548 g/t Ag and 0.11 g/t gold;
  
• 1.7 meters averaging 491 g/t Ag and 0.49 g/t Au;
  
• 2.45 meters averaging 578 g/t Ag and 0.27 g/t Au;
  
• 2.3 meters averaging 91 g/t Ag and 0 g/t Au;
  
• 1.0 meter averaging 2,350 g/t Ag and 0.60 g/t Au;
  
• 2.5 meters averaging 50 Ag g/t and 0 g/t Au;
  
• 2.3 meters averaging 113 g/t Ag and 0 g/t Au;
  
• 1.8 meters averaging 73 g/t Ag and 0 g/t Au;
  
• 0.6 meters averaging 1,632 g/t Ag and 2.0 g/t Au;
  
• 1.0 m averaging 570 g/t Ag and 0 g/t Au; and, 
  
• 0.8 meters @ 300 g/t Ag and 0.3 g/t Au

Development is continuing along the vein and a positive ramp is being driven to access the vein on Level 10, when mining will begin.  In addition, a decline will be driven to Levels 12 and 13, with 30 m spacing between levels.  It will take about 5 months to drive from Level 11 to Level 12, a total of 360 meters.

The vein in this area has also been cut by three drill holes, which yields a vertical distance of 200 m and a horizontal distance of 100 m for this zone.  The results from these holes are shown in Table 2 below:

Table 2: Selected Drill Samples from Santa Eduwiges

* All drill holes have prefix DC
** na = not assayed

A second ramp will be driven from Level 11 to Level 12 to mine the San Antonio vein where it has been defined by six drill holes.

A drift excavated along Level 11 towards the Red Fault and its intersection with Santa Marina vein that is 4-5 meters wide; 15 samples across the vein assayed an average of 221 g/t Ag.

At Promontorio:

• Level 6: development is along Veta K, Veta El Gallo and an un-named vein.  There is a 20 meter separation between Veta K and the next level.  This is Fte. 660 SW, where the vein is 0.8-0.9 meters wide and contains grades ranging from 300 to 400 g/t silver.
  
• Level 7: an old drift is being rehabilitated and widened; then two cross-cuts will be made to Santa Rosa de Lima in the NE & W directions. The ramp to Level 8 is also being excavated.
  
• Level 9: an old drift is being rehabilitated and expanded, and will be extended to Santa Rosa de Lima.  A decline is being driven to the alphabet veins and will be extended to Level 10.  Also, on El Gallo Level 9 an old drift is being rehabilitated.  Backfill in an old stope will be sampled.

At Candelaria:
The drift to the northwest towards La India vein has cut the 20 de Noviembre vein and contains good mineralization in the southwestern side of the drift.  The northeast side of the drift is barren and is thought to have possibly encountered a fault.  Three back samples have been taken at the beginning of a crosscut along the vein.  Two samples across the vein yielded 2.0 meters averaging 150 g/t silver and 1.7 meters @ 121 g/t silver.  A back sample along the vein yielded 3.65 m averaging 169 g/t silver.  The crosscut will be extended to follow this mineralization.

Method of Analysis

Surface samples were prepared at the ALS Chemex lab facility in Chihuahua, Mexico, and analyzed by ICP and AA methods at their facilities in Vancouver, Canada. Diamond drill samples sent for analysis consisted of NQ-size and BQ-size diamond core split on site, prepared by the ALS Chemex sample preparation laboratory in Chihuahua, Mexico, and assayed for Au by 50 g fire assay with AA finish.  Assays for Ag, Pb, Zn, Cu and trace elements are analyzed by Induction Coupled Plasma (ICP-41) on 50g split sample at the ALS Chemex North Vancouver Laboratory.  Over-limits of Ag and base metals are assayed by OG-46 method.  Higher results of Au & Ag are assayed by GRA-21 method.

Mine samples were prepared at the Company¡¯s lab facility at its Malpaso lab and analyzed by atomic absorption for Cu, Zn, Pb, Bi, Co, Mn, Sb, Cd and Fe.  Gold and silver are analyzed by fire assay method.  The Malpaso laboratory follows the quality control methodology recommended by CANMET of Canada, such as assaying of blanks, duplicate samples, and check assays by commercial laboratories such as Chemex.

Quality Control

The quality assurance-quality control (QA-QC) of Dia Bras at Cusi has been described in detail in Gustavson Associates¡¯ NI 43-101 report of August 23, 2013.

The technical content of this news release has been approved by Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101.

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, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.

The Company¡¯s shares trade on the Bolsa de Valores de Lima and the Toronto Stock Exchange under the symbol ¡°SMT¡±.

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

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 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.