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

VANCOUVER, Oct. 30, 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 third quarter of 2014 (Q3 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.

Corona's Financial Highlights For The Third Quarter of 2014:

• Net Income of US$ 8.2 million or US$ 0.228 per share for Q3 2014; a 109% increase over Q3 2013;
• Adjusted EBITDA of US$ 18.6 million for Q3 2014; a 94% increase over  Q3 2013;
• Operating cash flow of US$ 18.0 million for Q3 2014; a 214% increase over Q3 2013;
• Revenues of US$ 32.0 million for Q3 2014; a 46% increase over Q3 2013; and
• Negative by-product cash cost per ounce of silver of US$ 24.26 at Yauricocha for Q3 2014; a 115% decrease over Q3 2013.

Audra Walsh, President and CEO stated: "For the third quarter of 2014 we delivered on our commitment to increase production while continuing to reduce costs and improve margins as we remain focused on maximizing cash flows. Consistent with this focus, Corona's team achieved higher production levels and lower cash cost per ounce, which resulted in higher operating cash flows, adjusted EBITDA and profit levels for the third quarter of 2014. The main drivers for these positive results have been the measures that the Company has been implementing since the third quarter of 2013 to increase operational efficiencies and reduce costs. Corona is committed and on track to meet its production guidance for 2014 and continues its efforts to be a low cost producer."

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

Corona's Financial Highlights

• Net income of US$ 8.2 million or US$ 0.228 per share for the third quarter of 2014 compared to US$ 3.9 million or US$ 0.109 per share for the same period in 2013.  Net income of US$ 21.4 million or US$ 0.594 per share and US$ 14.9 million or US$ 0.414 per share for the nine months ended September 30, 2014 and 2013, respectively.
• Adjusted EBITDA of US$ 18.6 million for the third quarter of 2014 compared to US$ 9.6 million for the same period in 2013. Adjusted EBITDA of US$ 46.9 million and US$ 38.2 million for the nine months ended September 30, 2014 and 2013, respectively. The increase in adjusted EBITDA for the third quarter and the nine month period ended September 30, 2014 compared to 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 that  has been implementing since the third quarter of 2013.
• Operating cash flow of US$ 18.0 million for the third quarter of 2014 compared to US$ 5.7 million for the same period in 2013. Operating cash flow of US$ 37.3 million and US$ 9.2 million for the nine month period ended September 30, 2014 and 2013, respectively. The increase in operating cash flow is mainly the result of the higher revenues, higher gross margins and a US$ 12.0 million positive impact on working capital driven by workers' profit sharing and tax adjustments in 2014.
• Revenues of US$ 32.0 million for the third quarter of 2014 compared to US$ 21.9 million for the same period in 2013. Revenues of US$ 91.0 million and US$ 82.5 million for the nine month period ended September 30, 2014 and 2013, respectively. The increase in revenues for the third quarter and the nine month period ended September 30, 2014 compared to 2013 is mainly as a result of higher lead grades, higher silver and lead recoveries and a higher volume of concentrate sold. This was partially offset by the decrease in silver and copper commodity prices compared to 2013.
• Cash and cash equivalents of US$ 40.3 million as at September 30, 2014 compared to US$ 36.2 million as of December 31, 2013. Cash and cash equivalents increased by US$ 4.1 million mainly driven by US$ 37.3 million of operating cash flow, offset by US$ 20.8 million of dividend payments, US$ 11.5 million of capital expenditures and US$ 0.8 million of financing activities.
• Negative by-product cash cost per ounce of silver of US$ 24.26 at Yauricocha for the third quarter of 2014 compared to a negative by-product cash cost per ounce of silver of US$ 11.27 for the same period of 2013. Negative by-product cash cost per ounce of silver of US$ 21.71 and US$ 13.38 at Yauricocha for the nine month period ended September 30, 2014 and 2013, respectively. Lower cash cost per ounce of silver during the three and nine month period ended September 30, 2014 compared to 2013 is driven by lower cash cost per tonne processed and higher by-product credits. This is the result of the cost reduction measures that the Company has been implementing since the third quarter of 2013 and which have resulted in operating efficiencies and cost savings. The largest reductions in the mining cost for 2014 have been achieved in the cost of supplies, contractor services and labor costs. The largest reductions in the plant costs have been achieved in the cost of supplies (reagents and ball mills) and maintenance costs. Also, the cost per tonne has decreased due to the higher production levels achieved in 2014 compared to 2013.

Corona's Operational Highlights:

• Total tonnes processed of 224,970; an 11% increase over Q3 2013
• Silver production of 552,677 ounces; a 24% increase over Q3 2013
• Copper production of 1.9 million pounds; a 30% increase over Q3 2013
• Lead production of 12.2 million pounds; a 46% increase over Q3 2013
• Zinc production of 14.7 million pounds; a 20% increase over Q3 2013
• Gold production of 1,369 ounces; an 18% decrease over Q3 2013

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

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on production of 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 Lima Stock Exchange (Bolsa de Valores de Lima) and on the TSX 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. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events or results.  These statements reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. 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 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.