Sierra Metals announces second quarter 2013 financial results of its subsidiary Sociedad Minera Corona in Peru

VANCOUVER, July 30, 2013 /PRNewswire/ - Sierra Metals Inc. (TSX:SMT)(BVL:SMT) ("Sierra Metals" or the "Company") announces the filing of Sociedad Minera Corona S.A.'s ("Corona") unaudited Financial Statements and Management Discussion and Analysis ("MD&A") for the second quarter of 2013. The Company holds an interest of 81.8% in Corona. All amounts are presented in thousands of US dollars unless otherwise stated and have not been adjusted for the 18.2% non-controlling interest.

Daniel Tellechea, President and CEO of Sierra Metals, commented: "Corona's production for the first half of 2013 was in line with our expectations and we anticipate meeting our 2013 guidance. In addition, Corona has successfully implemented cost reductions measures at the mine and plant reflected in the month of June. However, the overall financial results for the second quarter of 2013 reflect the significant decrease in commodity prices. We are in the process of analyzing additional cost reduction measures for the second half of 2013. Corona shows strong upside potential and the Company will continue with the development of a new shaft in the Central Mine Area. This project will improve the production profile in Peru in the medium term."

The following table sets out select unaudited financial information for the first half of 2013 and 2012:

Corona's Financial Highlights

• Net income of US$ 1.8 million or US$0.051 per share for the second quarter of 2013 compared to US$ 12.8 million or US$ 0.513 per share for the same period in 2012. Net income of US$ 11.0 million or US$0.305 per share for the first half of 2013 compared to US$ 37.4 million or US$ 1.040 per share for the same period in 2012.
• Adjusted EBITDA of US$ 11.4 million for the second quarter of 2013 compared to US$ 21.8 million for the same period in 2012. Adjusted EBITDA of US$ 28.6 million for the first half of 2013 compared to US$ 43.8 million for the same period in 2012. The adjusted EBITDA generated by Corona during 2013 was negatively impacted by the decrease in the commodity prices. The average realized price of silver and copper for the second quarter of 2013 has decreased 24% and 14%, respectively compared to the same period in 2012. The average realized price of silver and copper for the first half of 2013 has decreased 17% and 10%, respectively compared to the same period in 2012.
• Operating cash flows of US$ 2.9 million for the second quarter of 2013 compared to US$ 12.3 million for the same period in 2012. Operating cash flows of US$ 3.6 million for the first half of 2013 compared to US$ 18.4 million for the same period in 2012. The main drivers of operating cash flow on the first half of 2013 were EBITDA of US$ 28.6 million, uses of working capital for US$ 12.8 million and payment of taxes for US$ 12.1 million. The uses of working capital for US$ 12.8 million include a payment of the 2012 profit sharing liability for US$ 7.8 million. No other payments for profit sharing obligations are due during 2013. The rest of working capital items are expected to reverse over the next few quarters. Thus, we expect cash flows from operations to improve during the second half of the year.
• Income taxes of US$ 3.3 million for the second quarter of 2013 compared to US$ 4.7 million in the same period of 2012. Income taxes of US$ 7.6 million for the first half of 2013 compared to US$ 6.4 million in the same period of 2012.
• Revenues of US$ 27.3 million in the second quarter of 2013 compared to US$ 33.5 million for the same period in 2012. Revenues of US$ 60.6 million in the first half of 2013 compared to US$ 73.6 million for the same period in 2012.
• Cash and cash equivalents of US$ 25.8 million as of June 30, 2013 compared to US$ 72.1 million as of December 31, 2012. Cash and cash equivalents have decreased during the first half of 2013 mainly as a result of the dividend paid by Corona of US$ 38.8 million and capital expenditures of US $9.2 million.
• A negative silver ("Ag") cash cost of US$ 13.78 per ounce ("oz") at Yauricocha in the second quarter of 2013 compared to a negative cash cost of US$ 22.06 in the same period of 2012. A negative silver ("Ag") cash cost of US$ 18.14 per ounce ("oz") at Yauricocha in the second quarter of 2013 compared to a negative cash cost of US$ 27.63 in the same period of 2012.

Corona's Operational Highlights

• Silver ("Ag") production of 481,058 oz in the second quarter of 2013 compared to 544,707 oz for the same period in 2012. Silver production of 955,660 oz in the first half of 2013 compared to 1,037,139 oz for the same period in 2012.
• Copper ("Cu") production of 1.7 million pounds ("lb") in the second quarter of 2013 compared to 2.2 million lb for the same period in 2012. Copper production of 3.9 million pounds ("lb") in the first half of 2013 compared to 4.8 million lb for the same period in 2012.
• Lead ("Pb") production of 9.4 million lb in the second quarter of 2013 compared to 9.0 million lb for the same period in 2012. Lead ("Pb") production of 17.8 million lb in the first half of 2013 compared to 16.8 million lb for the same period in 2012.
• Zinc ("Zn") production of 12.1 million lb in the second quarter of 2013 compared to 11.5 million lb for the same period in 2012. Zinc ("Zn") production of 25.2 million lb in the first half of 2013 compared to 21.9 million lb for the same period in 2012.
• Gold ("Au") production from the Yauricocha Mine was 1,800 oz in the second quarter of 2013 and 2,876 oz for the same period in 2012. Gold ("Au") production from the Yauricocha Mine was 3,398 oz in the first half of 2013 and 5,901oz for the same period in 2012.

The following table sets out production results for the second quarter ended June 30, 2013 and 2012:

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".

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.

SOURCE Sierra Metals Inc.