Sierra Metals Reports Exceptionally Wide Drill Intercepts at The Cuye-Mascota Zone and Discovers New Zone With High Silver Grades at Yauricocha, Peru

New Discovery and Wide, High-Grade Extension of Zone Demonstrates the Potential to Increase Mineral Resources Near Current Operations in the Short Term

The drilling program delineating extensions of the Cuye-Mascota zone include:

• Hole Mas-30: 68.9 meters of 32.5g/t Ag, 1.43% Cu, 3.28% Zn, 0.70g/t Au; including 29.6 meters of 2.0% Cu, 0.9g/t Au; and 7.9 meters of 18.7% Zn, 62.6g/t Ag
  
  
• Hole Mas-31: 12.0 meters of 6.6% Cu, 5.7% Zn, 24.9g/t Ag; and 2.8 meters of 456g/t Ag, 26.0% Pb, 19.0% Zn
  
  
• Hole Mas-33: 24.6 meters of 8.3% Cu, 3.2% Zn; and 21.0 meters of 3.5% Cu, 6.0% Zn, 132g/t Ag

Esperanza North New Discovery Drill hole highlights include:

• Hole ESP-02: 0.5 meters of 2,050.0g/t Ag, 30% Pb; and 3.0 meters of 465.27g/t Ag, 1.99% Zn, 16.29% Pb, 5.84g/t Au
  
  
• Hole ESP-03: 2.4 meters of 985.21g/t Ag, 30% Pb, 2.40g/t Au
  
  
• This discovery is approximately in the mid-point between the Esperanza orebody discovered in early 2016 and the Cachi Cachi Mine
  
  
• This area had never been drilled before and the discovery is important for the interpretation of the orebody extensions between Esperanza and Cachi Cachi which are one kilometer apart

TORONTO, May 1, 2017 /CNW/ - Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ("Sierra Metals" or "the Company") today announced the discovery of a new high-grade oxides zone, referred to as the Esperanza North zone, which is located between the Esperanza zone and Cachi-Cachi Mine. The Company also announced drilling results which demonstrate the extension of the high-grade sulfide zone, referred to as the Cuye-Mascota zone which was discovered in November 2016. This zone is located 200 meters north of the central mine area, along strike from current mining activities. The new discovery and extension come as part of an ongoing brownfield drilling program that is testing priority targets at the Yauricocha Mine located 150 kilometers east southeast of Lima in the Yauricocha Mining District (Cordillera Occidental), Peru. All drilling that has taken place will be included in an upcoming Mineral Resource and Reserve Estimate report that is expected to be published for the Yauricocha Mine in the fourth quarter of 2017.

Drilling for the new Esperanza North zone took place from the Yauricocha tunnel which is located on the 720 level as the company drilled between limestone (Jumasha) and Granodioritic intrusive with an objective of identifying the contact face.

Igor Gonzales, President and CEO of Sierra Metals stated: "The new discovery at Esperanza North represents an important new high-grade silver mineralized structure in an area that was never drilled before and that opens the possibility of the discovery of additional orebodies along the Yauricocha fault in between Esperanza orebody and Cachi Cachi orebody which are all aligned along this fault. Also, of significant importance are the three drill holes we are reporting today at the Cuye-Mascota Extension which contain some of the widest, high-grade structures ever intersected for Sierra Metals at the Yauricocha mine in Peru and confirm important extensions of the recently identified Cuye-Mascota discovery.  Similar to our Esperanza discovery in early 2016 the high-grade Cuye-Mascota zone is in close proximity to our existing operations, which make their economic potential more meaningful." He continued "The Company has made a strong commitment to brownfield exploration in 2017 and results such as the ones released today demonstrate that this is an investment that is paying off with the potential to further grow our mineral resources. Continued exploration programs are planned with an aim to add high value tonnage going forward in 2017 as the drilling focuses on new discoveries and expansion of areas in close proximity to existing operations."

Alonso Lujan, VP Exploration of Sierra Metals commented: "Results to date at Esperanza North demonstrate mineralized sectors with high-grade oxides and sulphides consisting of mainly silver, lead, zinc and gold as shown in Table 1 below. This also confirms the existence of hydrothermal events in the area which could lead to the discovery or much larger orebodies as well as the transition to primary sulphides which have better recovery rates.  The company will continue drilling at depth from the 1070 level."

He continued, "The results to date at Cuye-Mascota demonstrate the identification of copper mineralization, which correlates with the historic Cuye orebody in the upper levels of the mine. The potential for further extensions still exists, with the Cuye-Mascota zone which is still open at depth below 1370 level and longitudinally to NW and SE. Additionally the current program has also intercepted new "Cuerpos Pequenos" ore bodies with of remarkable high-grade silver, lead and zinc as shown in Table 1."

The Cuye orebody had been previously mined up from surface to the 870m level horizon of the Yauricocha mine and it used to be one of the main cashflow generators 10 years ago at Yauricocha. The orebody historically was predominantly a copper sulfide deposit which shrank to only many small structures below the 870 level.  Exploration carried out during 2011 and 2012 was unsuccessful between the 870m and 1020m level horizon, which was the lowest level Company geologists could drill at that time.  The results of the current drilling program on the 1070 level confirm according to the mine geologists that the Cuye orebody continues at depth to below the 1270 level. Geologists have also identified the transition zone of oxides to fresh lead, zinc and silver sulfide mineralization in this drilling program which also has an important economic relevance to its high grades, particularly for copper.

The diamond drill intercepts at the Cuye Ore Body are one of the best discoveries in the company´s recent history. This ore body is of the replacement type, it is embedded in the contact between the Jumasha limestone and the intrusive (monzonitic composition). Within the intrusive, endoskarn horizons are present due to the metasomatic activity in the contact with the limestone host.  In the contact area of the mineralized zones with the intrusive host geologists noted high concentrations of argilites. The minerals present are friable pyrite, chalcopyrite and hydrothermal calcosine in the center of the ore body, with sphalerite and galena in lower proportions, forming a halo around the limestone contact. Diamond drill core logs have shown evidence of intrusions of dioritic composition, apparently younger than the monzonitic intrusions, which are responsible for the mineralized fluids and ore body formation in the Cuye Area. It is very important to continue exploring the Cuye Area during the rest of the year.

Table 1 - Length Weighted Composite Intervals for Cuye-Mascota

Table 2 - Length Weighted Composite Intervals for Esperanza North

All reported intercepts are core length as further drilling is required to determine true thicknesses.

Figures 1 and 2 are the cross sections of Cuye-Mascota showing the position of the mineralized areas. A map of Level 1270 with drilling executed at Cuye-Mascota zone is shown in Figure 3. 

Figure 4 is a plan map of Level 720 with drilling executed at Esperanza North zone. Figures 5 and 6 are cross sections of Esperanza North showing the position of the mineralized areas.

Figure 1 – Cross Section – 1

Hole 30 is the one of widest intercepts drilled of sulfide mineralization in Yauricocha's history.

Figure 2 – Cross Section – 2

Multiple high-grade wide intercepts in Mascota and Cuye from drill holes 27, 31, 33 in oxide and sulfide zones

Figure 3 - Plan View – Level 1270

Plan view location of drill 30 vs discovery drill holes reported in November 2016.

Figure 4 - Plan View – Level 720

Plan view of Esperanza North discovery.  These holes were drilled from the newly completed 720 level Yauricocha Tunnel. Drill intercepts were located between Esperanza and Cachi Cachi which was an area previously inaccessible and never drilled before.

Figure 5 – Cross Section – 2

High-silver/lead grade intercepts in oxide and sulfide zones.

Figure 6 – Cross Section – 3

High-silver/lead grade intercepts on oxides.

Quality Control

All samples were dried, crushed and pulverized by the Chumpe Lab at site, pulp samples were shipped by ALS Peru S.A. Lab (Chemex) to their laboratory in Lima, Peru.

The quality assurance-quality control (QA-QC) program employed by Sierra Metals has been described in detail in the NI-43-101 report for Yauricocha dated December 9, 2016, prepared by SRK Consulting in Denver, which is available for review on Sedar. Standards and blanks are inserted into the sample stream and duplicate samples are sent to the ALS Peru S.A. lab (Chemex) in Lima as per internal quality control procedures. 

Qualfied Persons

The technical content of this news release has been approved by Gordon Babcock, Qualified Person as defined in NI-43-101.

About Sierra Metals

Sierra Metals Inc. is Canadian based growing polymetallic mining company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peru and Mexico that are within or very close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several highly prospective regional targets providing longer term exploration upside and mineral resource growth potential.

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.

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SOURCE Sierra Metals Inc.