Sierra Metals announces record 2012 annual production results and issues 2013 production guidance

TORONTO, Jan. 21, 2013 /CNW/ - Sierra Metals Inc. (TSX-V:SMT) (BVL:SMT) ("Sierra Metals" or the "Company") is pleased to announce its 2012 annual and fourth quarter production results and to issue production guidance for 2013.

Daniel Tellechea, President and CEO of Sierra Metals, commented: "Sierra Metals achieved another record breaking year of production in 2012. Increase in production was the result of Management's efforts to consolidate operations in Peru and Mexico and the realization of subsequent operating efficiencies. The Company is pleased to issue its first production guidance in 2013 as it strives to become a premier precious and base metal producer in Latin America."

Mine Operations

The Company achieved record-breaking production results for the second consecutive year as 2012 marked the first full year of production at the Yauricocha Mine and commercial production at the Bolivar Mine. The Company achieved a total of 1,269,849 tonnes of ore processed (compared to 657,086 tonnes in 2011) from all operations, representing a 33% increase year-over-year. A summarized table of consolidated production results is presented below.

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

Yauricocha Mine, Peru

The Yauricocha Mine in Peru continued to be the Company's largest producing mine with a total of 872,869 tonnes processed in 2012 (compared to 488,417 tonnes in 2011). In the fourth quarter of 2012 a total of 222,821 tonnes was processed (compared to 199,991 tonnes in the same period of 2011). Mineralization at the Yauricocha Mine is hosted in three different zones including the Copper, Lead-Oxide ("Oxides") and Polymetallic ore bodies.

During 2012, aggregate production of these ore bodies was 2,143,971 oz of Ag, 9.1 million lb of Cu, 35.2 million lb of Pb, 49.9 million lb of Zn and 10,491 oz of Au. During the fourth quarter of 2012 aggregate production from these ore bodies was 547,114 oz Ag, 2.2 million lb Cu, 8.6 million lb Pb, 13.8 million lb of Zn and 2,181 oz Au.

A summary of production from the Yauricocha Mine for the year-end and the fourth quarter of 2012 have been provided below.

¹ For a detailed summary of production for the Yauricocha Mine please click here.
² Includes Yauricocha Mine production only for the ownership period of Corona from May 26, 2011 to Dec 31, 2011.

Bolivar Mine, Mexico

Since the announcement of commercial production on November 29, 2011, the new Piedras Verdes mill has continued to increase the production profile of the Bolivar Mine. During 2012, total ore processed at the Bolivar Mine increased 129% with 312,952 tonnes processed compared to 136,715 tonnes in 2011. This resulted in 2012 production of copper increasing 118% with a total of 6.8 million lb produced compared to 3.1 million lb in 2011. Additionally, silver production increased by 53% in 2012 to 191,285 oz compared to 125,037 oz in 2011. This increase in production was the result of increased throughput even though silver grades decreased 35% to 24.58 g/t Ag in 2012 compared to 37.74 g/t Ag in 2011.  Despite this substantial increase in throughput during 2012, zinc production decreased 37% to 9.1 million lb compared to 14.4 million lb in 2011. The decrease in zinc production resulted from a lower head-grade of 1.81% in 2012 compared to 5.57% in 2011.

During the fourth quarter of 2012 total ore processed increased 93% with a total of 93,704 tonnes processed (an average of 31,234 tonnes per month) compared to 48,461 tonnes processed in the same period of 2011. This resulted in copper production increasing 132% to 2.2 million lb in the fourth quarter compared to 0.9 million in the same period 2011. Additionally, silver production increased 96% with 55,143 oz produced compared to 28,184 oz in the same period of 2011. Despite the substantial increase in throughput during the fourth quarter, zinc production declined 57% to 0.9 million lb compared to 2.1 million lb in the same period of 2011. This decrease was the result of a 64% decline in zinc grades to 0.94% in the fourth quarter of 2012 compared to 2.63% in the same period of 2011.

A summary of production from the Bolivar Mine for the year-end and the fourth quarter of 2012 have been provided below.

¹ For a detailed summary of production for the Bolivar Mine please click here.

Cusi, Mexico

Total production at Cusi increased 163% in 2012 with 84,027 tonnes processed compared to 31,954 tonnes in 2011. The higher tonnage is explained by the additional processing of 29,903 tonnes of tailings at the Malpaso mill while Cusi's material accounted for 54,125 tonnes. In this context, the combined effect of historic tailings and Cusi's material during 2012 drove silver and lead grades down to 157 g/t and 0.50%, compared to 185 g/t and 0.90% in 2011, respectively.

Total production at Cusi increased 202% in the fourth quarter of 2012 with 26,550 tonnes processed compared to 8,804 tonnes in the same period in 2011. The higher tonnage is explained by the additional processing of 11,053 tonnes of historic tailings at the Mal Paso mill while Cusi's material accounted for 15,496 tonnes. In this context, the combined effect of historic tailings and Cusi's material during the fourth quarter of 2012 drove silver and lead grades down to 154 g/t and 0.46%, compared to 192 g/t and 0.67% in the same period of 2011, respectively.

A summary of production from the Cusi operation for year-end and the fourth quarter of 2012 have been provided below.

¹ For a detailed summary of production for the Cusi Project please click here.

2013 Production Guidance

Sierra Metals is pleased to issue its production consolidated guidance for 2013. The Company's production estimates for 2013 have been provided below.

Quality Assurance

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 and Senior Vice President, Exploration, for Sierra Metals, Inc.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on precious and base metals from its Yauricocha mine in Peru 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 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 TSXV under the symbol "SMT".

This press release does not constitute an offer to sell or solicitation of an offer to buy the securities in the United States or any other jurisdiction. The Common Shares will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in 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 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.

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SOURCE: Sierra Metals Inc.