(All $ figures reported in USD)

• Revenue from metals payable of $62.7 million in Q2 2023, a 25% increase from Q2 2022.
• Adjusted EBITDA⁽¹⁾ of $13.5 million in Q2 2023, significantly higher than the Adjusted EBITDA⁽¹⁾ of $1.4 million in Q2 2022.
• Operating cash flows before movements in working capital⁽¹⁾ of $11.6 million in Q2 2023, compared to $(1.6) million Q2 2022.
• Net income attributable to shareholders in Q2 2023 was $1.6 million versus a loss of $15.3 million in Q2 2022.
• Copper equivalent production of 21.7 million pounds in Q2 2023; a 22% increase from Q2 2022.
• Consolidated cash costs per copper equivalent payable pound⁽¹⁾ in Q2 2023 of $2.11 and consolidated All-In Sustaining Costs per equivalent payable pound (“AISC”)⁽¹⁾ of $3.64 were 15% and 8% lower, respectively, than the same quarter of 2022.

⁽¹⁾ This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.

Management will host a conference call and webcast to discuss Q2 2023 Results today, August 14, 2023, at 11:00 AM (EDT). Click here to register.

Sierra Metals Inc. (TSX: SMT | OTC: SMTSF) ("Sierra Metals" or "the Company") today reported financial results for the three-month (“Q2”) and six-month (“H1”) period ended June 30, 2023, showing total revenues of $62.7 million and adjusted EBITDA⁽¹⁾ of $13.5 million on throughput of 702,052 tonnes and metal production of 21.7 million copper equivalent pounds in Q2 2023.

Ernesto Balarezo Valdez, CEO of Sierra Metals, commented, “The second quarter of 2023 delivered strong operating and financial performance. Our Bolivar mine had record copper equivalent production for the quarter and far exceeded our expectations on costs. Our other core operation, the Yauricocha mine, continued its positive trend of quarter-over-quarter production increases. Both operations still have room for improvements, especially at Yauricocha where we are on track to obtain, by year-end, all required permits needed to operate below the 1120 level, which will allow us to mine in a larger ore body. As a result of our strong first half of 2023, we are well on our way to meeting our 2023 production guidance. Overall, we are very encouraged with the momentum we are building across our business.”

^{(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.}

Q2 2023 Consolidated Financial Summary

The information provided below are excerpts from the Company’s Q2 2023 financial statements and Management’s Discussion and Analysis, which are available on the Company's website (www.SierraMetals.com) and on SEDAR (www.sedar.com) under the Company’s profile.

Revenue from metals payable was $62.7 million in Q2 2023, representing an increase of 25% over the revenue in Q2 2022 of $49.9 million and a 7% increase over the revenue in Q1 2023 of $58.5 million. The increase in revenue was largely driven by higher metal sales at the Bolivar mine, which recorded a 151% increase in copper equivalent sales compared to Q2 2022 and a 45% increase over Q1 2023.

The Yauricocha Mine had a cash cost per copper equivalent payable pound¹ of $2.29 (Q2 2022 - $2.06), and an AISC per copper equivalent payable pound¹ of $3.97 (Q2 2022 - $3.39) for Q2 2023. The increase in unit cash costs and AISC was mainly due to the 27% decrease in copper equivalent payable pounds as compared to Q2 2022.

^{(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.}

Bolivar’s cash cost per copper equivalent payable pound¹ was $1.62 (Q2 2022 - $3.39), and AISC per copper equivalent payable pound¹ was $3.02 (Q2 2022 - $5.49) for Q2 2023 due to a 25% decrease in operating costs per tonne combined with a 151% increase in copper equivalent payable pounds during the quarter as compared to Q2 2022.

The Cusi Mine, which the Company has classified as non-core, had Q2 2023 cash cost per silver equivalent payable ounce¹ increase to $29.17 from $24.84 in Q2 2022 as a result of higher operating costs per tonne, largely attributable to lower throughput. Silver equivalent payable ounces declined 22% to 203 thousand ounces further impacting cash costs, and AISC per silver equivalent payable ounce¹, which was $38.83 for Q2 2023 or 15% higher than Q2 2022.

Adjusted EBITDA⁽¹⁾ increased to $13.5 million for Q2 2023 from $1.4 million in the same quarter of 2022, driven by higher revenues, attributable to higher production and improved operating costs at the Bolivar Mine during Q2 2023.

Net income attributable to shareholders for Q2 2023 was $1.6 million (Q2 2022: a loss of $15.3 million) or $0.01 per share (basic and diluted) (Q2 2022: $0.00).

Cash flow generated from operating activities before movements in working capital of $11.6 million for Q2 2023 as compared to $1.6 million of cash used in operating activities in Q2 2022. The increase resulted from higher revenues during the quarter.

Cash and cash equivalents of $4.4 million and working capital of $(88.4) million as at June 30, 2023 compared to $5.1 million and $(84.4) million, respectively, at the end of 2022. Cash and cash equivalents decreased during H1 2023 as the $21.8 million used in investing activities and $6.9 million of cash used in financing activities exceeded the cash generated from operating activities of $27.9 million.

^{(1) This is a non-IFRS performance measure. See the Non-IFRS Performance Measures section of the press release.}

The following table displays average realized metal prices information for Q2 2023 and H1 2023 in comparison the same periods of 2022:

Outlook 2023

The Company is on-track to meet its 2023 production guidance, and has amended Yauricocha’s cost guidance for the remainder of the year (previously announced on March 28, 2023). Most notably, the Company expects slightly higher AISC costs at Yauricocha to be partially compensated by better than expected costs at Bolivar for the remainder of 2023. The table below summarizes the updated 2023 guidance from the Yauricocha and Bolivar mines as the Cusi mine has been classified as non-core and has been excluded from guidance.

Production

Cost Guidance

Management continues to review performance throughout the year, while exploring value enhancing opportunities.

Q2 2023 Operating Highlights

The Company reported Q2 2023 production results on July 25, 2023. A summary follows below:

Yauricocha Mine, Peru

Throughput at the Yauricocha Mine for Q2 2023 was 244,315 tonnes, 11% higher than in Q1 2023, given that the Company has been able to maximize the extraction above 1120 level. However, when compared to Q2 2022, throughput is 23% lower. This anticipated decline was due to the continued depletion of the ore above the 1120 level. Copper equivalent pound production for Q2 2023 was 21% lower than Q2 2022 as the reduced throughput was partially offset by higher grades of lead, zinc and silver coming from the high-grade small ore bodies. Copper and gold grades declined due to the lower contribution from the Esperanza zone.

When compared to Q1 2023, there was a 6% increase in the copper equivalent production during Q2 2023, as the higher throughput was partially offset by the impact of lower copper grades, and recoveries for copper and silver.

Bolivar Mine, Mexico

Operating at 4,640 tonnes per day during Q2 2023, the Bolivar Mine achieved 405,987 tonnes of throughput, an increase of 36% and 58% over Q1 2023 and Q2 2022 respectively, attributable to substantial improvements in ventilation and drainage, which allowed for more meters of production drilling and better access to the mining zones. Grades were higher for all metals in comparison with Q1 2023 and Q2 2022, except for a slight decrease in gold grades as compared to Q1 2023. The increase in grades was effectively the direct result of mining in the Bolivar NW zone.

In Q2 2023, copper equivalent production was a record 10.7 million pounds, as the mine recorded an increased production for all metals. Copper, silver and gold production for Q2 2023 was up 139%, 149% and 187%, respectively, as compared to Q2 2022.

Cusi Mine, Mexico

The non-core Cusi Mine had lower Q2 2023 throughput and was negatively impacted by the availability of mining equipment and floodings during the quarter. Operating at 591 tonnes per day, the Cusi mine processed 51,750 tonnes, which was 12% lower than Q1 2023 and 22% lower than Q2 2022. Higher silver and lead grades combined with improved gold recoveries partially offset the impact of lower throughput resulting in silver equivalent production of 241 thousand ounces during Q2 2023, which was 5% and 15% below the silver equivalent production achieved in Q1 2023 and Q2 2022 respectively.

Conference Call and Webcast

Sierra Metals' senior management will host a conference call and webcast to discuss the Company's financial and operating results for the three months ended June 30, 2023. Details are as follows:

The webcast, along with presentation slides, will be archived for 180 days on www.sierrametals.com.

Non-IFRS Performance Measures

The non-IFRS performance measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers.

Non-IFRS reconciliation of Adjusted EBITDA

EBITDA is a non-IFRS measure that represents an indication of the Company’s continuing capacity to generate earnings from operations before taking into account management’s financing decisions and costs of consuming capital assets, which vary according to their vintage, technological currency, and management’s estimate of their useful life. EBITDA comprises revenue less operating expenses before interest expense (income), property, plant and equipment amortization and depletion, and income taxes.

Adjusted EBITDA has been included in this document. Under IFRS, entities must reflect in compensation expense the cost of share-based payments. In the Company’s circumstances, share-based payments involve a significant accrual of amounts that will not be settled in cash but are settled by the issuance of shares in exchange for cash. As such, the Company has made an entity specific adjustment to EBITDA for these expenses. The Company has also made an entity-specific adjustment to the foreign currency exchange (gain)/loss. The Company considers cash flow before movements in working capital to be the IFRS performance measure that is most closely comparable to adjusted EBITDA.

The following table provides a reconciliation of Adjusted EBITDA to the condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022:

Non-IFRS reconciliation of Adjusted Net Income

The Company has included the non-IFRS financial performance measure of Adjusted Net Income, defined by management as the net income attributable to shareholders shown in the statement of earnings plus the non-cash depletion charge due to the acquisition of Corona and the corresponding deferred tax recovery and certain non-recurring or non-cash items such as share-based compensation and foreign currency exchange (gains) losses. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors may want to use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance in accordance with IFRS.

The following table provides a reconciliation of Adjusted Net Income to the condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022:

Cash cost per silver equivalent payable ounce and copper equivalent payable pound

The Company uses the non-IFRS measure of cash cost per silver equivalent ounce and copper equivalent payable pound to manage and evaluate operating performance. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

AISC per silver equivalent payable ounce and copper equivalent payable pound

AISC is a non‐IFRS measure and was calculated based on guidance provided by the World Gold Council (“WGC”) in June 2013. WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures.

Sierra Metals believes AISC is a more comprehensive measure than cash cost per ounce/pound for the Company’s consolidated operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver and copper from its current operations.

The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements. Sustaining capital expenditures excludes all expenditures at the Company’s new projects and certain expenditures at current operations which are deemed expansionary in nature.”

Consolidated AISC includes total production cash costs incurred at the Company’s mining operations, including treatment and refining charges and selling costs, which forms the basis of the Company’s total cash costs. Additionally, the Company includes sustaining capital expenditures and corporate general and administrative expenses. AISC by mine does not include certain corporate and non‐cash items such as general and administrative expenses and share-based payments. The Company believes that this measure represents the total sustainable costs of producing silver and copper from current operations and provides the Company and other stakeholders of the Company with additional information of the Company’s operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver and copper production from current operations, new project capital and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.

The following table provides a reconciliation of cash costs to cost of sales, as reported in the Company’s condensed interim consolidated statement of income for the three and six months ended June 30, 2023 and 2022:

The following table provides detailed information on Yauricocha’s cash cost and all-in sustaining cost per copper equivalent payable pound for the three and six months ended June 30, 2023 and 2022:

The following table provides detailed information on Bolivar’s cash cost, and all-in sustaining cost per copper equivalent payable pound for the three and six months ended June 30, 2023 and 2022:

The following table provides detailed information on Cusi’s cash cost, and all-in sustaining cost per silver equivalent payable ounce for the three and six months ended June 30, 2023 and 2022:

The following table provides detailed information on the Company’s consolidated cash cost, and all-in sustaining cost per copper equivalent payable pound for the three and six months ended June 30, 2023 and 2022:

Additional non-IFRS measures

The Company uses other financial measures, the presentation of which is not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. This includes:

• Operating cash flows before movements in working capital - excludes the movement from period-to-period in working capital items including trade and other receivables, prepaid expenses, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items.

This term does not have a standardized meaning prescribed by IFRS, and therefore the Company’s definition is unlikely to be comparable to similar measures presented by other companies. The Company’s management believes that their presentation provides useful information to investors because cash flows generated from operations before changes in working capital excludes the movement in working capital items. This, in management’s view, provides useful information of the Company’s cash flows from operations and is considered to be meaningful in evaluating the Company’s past financial performance or its future prospects. The most comparable IFRS measure is cash flows from operating activities.

Qualified Persons

Ricardo Salazar Milla, Corporate Manager of Mineral Resources is a member of the Australian Institute of Geoscientist and is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects. Mr. Salazar has reviewed and approved the scientific and technical content of this news release.

About Sierra Metals

Sierra Metals is a diversified Canadian mining company with green metal exposure including copper, zinc and lead production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru and its Bolivar Mine in Mexico. The Company is focused on the safety and productivity of its producing mines. The Company also has large land packages with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

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Forward-Looking Statements

This press release contains 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, including the accuracy of the Company’s current mineral resource estimates; that the Company’s activities will be conducted in accordance with the Company’s public statements and stated goals; that there will be no material adverse change affecting the Company, its properties or its production estimates (which assume accuracy of projected ore grade, mining rates, recovery timing, and recovery rate estimates and may be impacted by unscheduled maintenance, labour and contractor availability and other operating or geo-political uncertainties on the Company’s production, workforce, business, operations and financial condition); the expected trends in mineral prices, inflation and currency exchange rates; that all required approvals will be obtained for the Company’s business and operations on acceptable terms and on the timelines that are currently anticipated by management; that there will be no significant disruptions affecting the Company's operations. 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. Forward-looking statements include those relating to the Company’s guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines (including receipt of all requisite permits to mine below the 1120 level at Yauricocha); the grades of the ore bodies below the 1120 level at Yauricocha. 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.

Forward-looking information is subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, the risks described under the heading "Risk Factors" in the Company's Annual Information Form dated March 28, 2023 for its fiscal year ended December 31, 2022 and other risks identified in the Company's filings with Canadian securities regulators, which filings are available at www.sedar.com.

The risk factors referred to above are not an exhaustive list of the factors that may affect any of the Company's forward-looking information. Forward-looking information includes statements about the future and is inherently uncertain, and the Company's actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. The Company's statements containing forward-looking information are based on the beliefs, expectations, and opinions of management on the date the statements are made, and the Company does not assume any obligation to update such forward-looking information if circumstances or management's beliefs, expectations or opinions should change, other than as required by applicable law. For the reasons set forth above, one should not place undue reliance on forward-looking information.

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