Sierra Metals Announces Favourable Federal Court Ruling on Litigation Pertaining to its Bolivar Property in Mexico

TORONTO, Feb. 12, 2016 /CNW/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") is pleased to report a positive outcome in the legal dispute between Polo & Ron Minerals ("P&R") and Dia Bras Exploration Inc., (the Company's previous name) and Dia Bras Mexicana a subsidiary of Sierra Metals, that holds its Bolivar and Cusi properties in Mexico.

The Second Federal Collegiate Court on Civil and Labor Matters of the Seventeenth circuit in the State of Chihuahua ("the Federal Court") has issued a new judgment where Magistrates José Rigoberto Dueñas Calderón, Cuauhtémoc Cuellar de Luna and Adriana Martínez Lara have unanimously ruled that the Federal court has ruled that the Eighth Civil Court of the Judicial District of Morelos in Chihuahua and the Fifth Civil Hall of the Superior Court of justice of the State of Chihuahua  (the "State Courts") lacked jurisdiction to rule on issues concerning mining title and that no previous rulings by the State Courts against the company shall stand.

The Federal Court has ordered the cancellation of the previous resolution by the State Court. The Federal Court's verdict in the amparo is final and non-appealable.

In October 2009 Polo & Ron sued Dia Bras Exploration Inc., (the Company's previous name) and Dia Bras Mexicana claiming damages for the cancelation of an option agreement (the "Option Agreement") regarding the San Jose properties in Chihuahua, Mexico (the "San Jose Properties"). Please see press release dated December 1, 2009.

The San Jose Properties are not located in any areas where Dia Bras Mexicana currently operates, nor are these properties included in any resource estimates of the Company.

In October 2011, the Eighth Civil Court of the Judicial District of Morelos in Chihuahua issued a resolution that absolved the Company from the claims brought against it by P&R on the basis that P&R did not provide evidence to support any of its claims. P&R appealed this resolution to the State Court, which overruled the previous resolution and ordered the Company to: (i) transfer to P&R 17 mining concessions from the Company's Bolivar project, including the mining concessions where mine operations are located; and (ii) pay US$422,674 to P&R. Please see press release dated November 11, 2011.

The Company believes that it has complied with all of its obligations pertaining to the Option Agreements.

The company has vigorously defended its position by applying the proper legal resources necessary to defend its position. Sierra continues to believe that the original claim is without merit.

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, and its Bolivar Mine and Cusi Mine in Mexico. In addition, Sierra Metals is exploring several precious and base metals 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.