Sierra Metals announces second quarter 2014 financial results of its subsidiary Sociedad Minera Corona in Peru

VANCOUVER, July 31, 2014 /CNW/ - 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 2014. The Company holds an 81.8% interest 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.

Audra Walsh, Sierra's new President and CEO, stated: "Corona has achieved higher production levels and lower cash cost per ounce, which resulted in higher operating cash flows, adjusted EBITDA and profit levels for the second quarter of 2014. The main drivers for these positive results have been the measures that the Company has been implementing since the second half of 2013 to increase operational efficiencies and reduce costs. Corona is committed to meet its production guidance for 2014. I look forward to working with the team at Corona in their continual efforts to be a low cost producer."

The following table sets out select unaudited financial information for the three and six months ended June 30, 2014 and 2013:

Corona's Financial Highlights

• Net income of US$ 7.0 million or US$ 0.194 per share for the second quarter of 2014 compared to US$ 1.8 million or US$ 0.051 per share for the same period in 2013.  Net income of US$ 13.2 million or US$ 0.366 per share and US$ 11.0 million or US$ 0.305 per share for the six months ended June 30, 2014 and 2013, respectively.
• Adjusted EBITDA of US$ 15.4 million for the second quarter of 2014 compared to US$ 11.4 million for the same period in 2013. Adjusted EBITDA of US$ 28.3 million and US$ 28.6 million for the six months ended June 30, 2014 and 2013, respectively. The increase in adjusted EBITDA for the second quarter of 2014 compared to the second quarter of 2013 is mainly due to the increase in revenues and higher gross margins recorded during the period. This has been the result of the measures taken by the Company to increase operating efficiencies and reduce costs and which it has been implementing since the second half of 2013.
• Operating cash flow of US$ 10.5 million for the second quarter of 2014 compared to US$ 2.7 million for the same period in 2013. Operating cash flow of US$ 19.3 million and US$ 3.5 million for the six month period ended June 30, 2014 and 2013, respectively. The increase in operating cash flow is mainly the result of the higher revenues and gross margins and a US$ 8.5 million positive impact on working capital driven by lower payments of workers' profit sharing and taxes in 2014.
• Income taxes of US$ 4.2 million for the second quarter of 2014 compared to US$ 3.3 million in the same period of 2013. Income taxes of US$ 7.7 million and US$ 7.6 million for the six month period ended June 30, 2014 and 2013, respectively.
• Revenues of US$ 31.0 million for the second quarter of 2014 compared to US$ 27.3 million for the same period in 2013. Revenues of US$ 58.9 million and US$ 60.6 million for the six month period ended June 30, 2014 and 2013, respectively. The increase in revenues for the second quarter of 2014 compared to the second quarter of 2013 is mainly as a result of the higher lead head grades, higher silver and lead recoveries and a higher volume of mineral sold. This was partially offset by the decrease in the commodity prices compared to 2013.
• Cash and cash equivalents of US$ 33.9 million as at June 30, 2014 compared to US$ 36.2 million as of December 31, 2013. Cash and cash equivalents decreased by US$ 2.3 million mainly driven by US$ 19.3 million of operating cash flow, offset by US$ 14.6 million of dividend payments, US$ 6.4 million of capital expenditures and US$ 0.6 million of financing activities.
• Negative by-product cash cost per ounce of silver of US$ 19.67 at Yauricocha for the second quarter of 2014 compared to a negative by-product cash cost per ounce of silver of US$ 10.01 for the same period of 2013. Negative by-product cash cost per ounce of silver of US$ 20.33 and US$ 14.29 at Yauricocha for the six month period ended June 30, 2014 and 2013, respectively. Lower cash cost per ounce of silver during the first half of 2014 compared to 2013 is driven by lower cash cost per tonne processed and higher by-product credits. This is the result of the measures that the Company has been implementing since the second half of 2013 and which have resulted in operating efficiencies and cost savings.

Corona's Operational Highlights

• Silver ("Ag") production of 479,254 oz in the second quarter of 2014 compared to 481,058 oz for the same period in 2013. Silver ("Ag") production of 973,548 oz and 955,660 oz for the six month period ended June 30, 2014 and 2013, respectively.
• Copper ("Cu") production of 1.8 million pounds ("lb") in the second quarter of 2014 compared to 1.7 million lb for the same period in 2013. Copper ("Cu") production of 3.5 million pounds ("lb") and 3.9 million pounds ("lb") for the six month period ended June 30, 2014 and 2013, respectively.
• Lead ("Pb") production of 11.2 million lb in the second quarter of 2014 compared to 9.4 million lb for the same period in 2013. Lead ("Pb") production of 22.9 million pounds ("lb") and 17.8 million pounds ("lb") for the six month period ended June 30, 2014 and 2013, respectively.
• Zinc ("Zn") production of 13.5 million lb in the second quarter of 2014 compared to 12.1 million lb for the same period in 2013. Zinc ("Zn") production of 26.2 million pounds ("lb") and 25.2 million pounds ("lb") for the six month period ended June 30, 2014 and 2013, respectively.
• Gold ("Au") production from the Yauricocha Mine was 1,480 oz in the second quarter of 2014 and 1,800 oz for the same period in 2013. Gold ("Au") production of 2,954 oz and 3,398 oz for the six month period ended June 30, 2014 and 2013, respectively.

The following table sets out production results for the three and six months ended June 30, 2014 and 2013:

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, and La Verde (gold) at the Batopilas property in the state of Chihuahua.

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.