Sierra Metals Discovers significant New High-grade Zone at Its Cusi Silver Mine in Mexico

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1 NEWS RELEASE Sierra Metals Discovers significant New High-grade Zone at Its Cusi Silver Mine in Mexico 2/27/2017 New interpretation concept of Santa Rosa de Lima structure at Cusi Mine, based on exploration of the NW-SE regional structural system Many of the most important high-grade Silver deposits in Mexico are associated with NW-SE structural systems Drill campaign started in December 2016 to confirm theory has had remarkable consistency of good results Underground drift reached the structure confirming width/grades and is already sourcing development ore feed to Cusi s processing plant Historical Drill hole highlights include: Hole No. True Width (m) EQAg (g/t) Ag (g/t) Pb (%) Zn (%) Au (g/t) Cusi-628: Cusi Cusi Cusi Current Drill hole highlights include: Hole No. True Width (m) EQAg (g/t) Ag (g/t) Pb (%) Zn (%) Au (g/t) Cusi Cusi Cusi Cusi Cusi

2 Toronto, ON February 27, 2017 Sierra Metals Inc. (TSX: SMT) (BVL: SMT) ( Sierra Metals or the Company ) announcesthe discovery of new high grade silverintercepts occurring in the Santa Rosa de Lima complex located withinthe current Cusi Mine operational area. The Santa Rosa de Lima complex lies within a regional structure extending some 64 km. Extension on the Cusi propertyhas an anticipated length of 12 kilometers. The discovery comes as part of a reinterpretation of the Hydrothermal model and a drilling campaign consisting of 15,000 meters which beganin December To date, the Company has drilled 10,200 meters or about 79% of the planned program which is expected to be completed by the end of March2017.The Cusi Mineis located within the municipality ofcusihuiriachi in the central portion of Chihuahua State, Mexico. The mine area encompasses 11,657 hectares in the Sierra Madre Occidental Mountain Range.(See Figure 1). The Cusi Mineis located in the eastern part of the Sierra Madre Occidental Mountain Range. The Sierra Madre Occidental is the consequence of one of largest volcanic events in the world that occurred between the Cretaceous and the Tertiary periods. The Sierra Madre Occidental Range is formed by two volcanicgroups; the Upper Volcanic Complex (UVC) and Lower Volcanic Complex (LVC).The Sierra Madre Occidental is one of the largest known epithermal precious-metal metallogenic regionsand is host to numerouswell-known gold-silver producing mining districts including: Concheño, Ocampo, Bacis, Tayoltita, Topia, Guanacevi, La Cienega, Mulatos El Sauzaland Pinos Altos. The Cusi Mine is locatedwithin the Lower Volcanic Complex where there are also subvolcanic rocks that have a widedissemination of mineralization.the current operations at Cusi are being developed in secondary veins with a preferred NE-SW arrangement. The Santa Rosa de Lima structure has no clear evidence of surface hydrothermal activity although it is recognized for 12 kilometers.this area has an extensive relationship with the structural trend where the Los Gatos project (Sunshine Silver Mines Corporation)is located 40 kilometers to the SE of the Santa Rosa de Lima Zone. The mineralization atthe Santa Rosa de Lima structureis located 100 meters below the surface,and canoccasionally be observed at surface at the intersections of veins like Promontorio and Santa Edwiges. The Santa Rosa de Lima structurewas identified as a high priority targetthat began with the review of all existing geological information. Eight previous drill holes (2012) were studied and analyzed as they intercepted the zone of interest. (see below table 1.1) This is a truly exceptional development for the Cusi Mine and has the ability to be transformational to current operations stated Mark Brennan, President and CEO of Sierra Metals. He continued, We are very excited by the potential to add significant tonnage and ounces with much higher grades and notably increased widths to our current resource base. The discovery of a high-quality silver resource of this scale within our existing operation should have a very favorable economic outcome. Table 1.1 shows the results of the historical drilling (as previously disclosed?) No. Hole Width (m) Au (g/t) Ag (g/t) Pb (%) Zn (%) EQAg (g/t) 2

3 Cusi Cusi Cusi Cusi Cusi Cusi Cusi-551a Cusi Cusi Samples were dried, crushed and pulverized by ALS Chemex in Chihuahua City, pulp samples were shipped by ALS Chemex to their laboratory in Vancouver. 2. Silver equivalent ounces were calculated using the following prices: $18.30/oz Ag, $0.93/lbPb, $1.15/lb Zn, $1,283/oz Au. A program of 15,000 meters of drilling is currently in execution. This program is targeted to investigate an area of one kilometer in length and 500 meters in depth in the target area defined by the previous drillholes.drilling to date demonstrates that mineralization is consistent across the assessed area and lies between 1,850and 1,500 meters above sea level (150 to 550 meters below surface)in depth.to date there are four drills operating in the area to complete the program. Drilling will continue along the Santa Rosa de Lima Zone to the NW and SE in subsequent programs as the possibility exists to define a 12 kilometer zone. Table 1.2 shows the drilling results of the current drilling program. Hole From To Width True (m) Au Ag Pb Zn EQAg (gpt) (gpt) (%) (%) (%) Cusi Cusi ,25 1, ind

4 ind ind ind Cusi Cusi-5a Cusi Cusi Cusi-8a Cusi Cusi

5 Cusi-21a Cusi Cusi-22a Samples were dried, crushed and pulverized by ALS Chemex in Chihuahua City, pulp samples were shipped by ALS Chemex to their laboratory in Vancouver. 2. Silver equivalent ounces were calculated using the following prices: $18.30/oz Ag, $0.93/lbPb, $1.15/lb Zn, $1,283/oz Au. The discovery and evaluation to date of the Santa Rosa de Lima zone demonstrates very important potential in our operations at the Cusi Mine.We hope in the short term to have a better understanding of the 12 kilometerstructural extension containing the Santa Rosa de Lima zone stated J. Alonso Lujan, Vice President Exploration of Sierra Metals. Intercepts such as those returned in Cusi-6, Cusi-14 and Cusi-509 are common in epithermal deposits of bonanza (High grade). There is reasonable potential to expand the Santa Lima da Rosa zone todepth and along strike to the NW and SE as these areas have never been drill tested. We look forward to an exciting future exploring thesanta Lima da Rosa zoneand the surrounding district. 5

6 An overview of Cusi Project in relation to the Sierra Madre Occidental Mountain Rangeis shown in Figure 1. A plan map of the Cusi areais shown in Figure 2, Figure 3 shows the distribution of the drilling program that is being executed in Santa Rosa de Lima Zone. Figure 1. Overview Figure 2.- Plan View Figure 3.- Shows the distribution of the previous drillings and the current drilling program in the study area of the Santa Rosa de Lima Zone. Quality Control The quality assurance-quality control (QA-QC) program employed by Sierra Metals has been described in detail in the NI report for Bolivar dated May 31, 2013, prepared by Gustavson Associates in Denver, which is available for review. All samples are sent to ALS Chemex, samples were transported under Sierra Metals chain of custody to ALS Chemex (ISO 9001)in Chihuahua City, these were dried, crushed and pulverized by ALS Chemex in Chihuahua City, pulp samples were shipped by ALS Chemex to their laboratory in Vancouver, Canada. Drilling Methodology The procedures used during diamond drilling include: Holes are drilled to produce HQ (63mm) or NQ (48mm) sized core. The collar locations of all drill holes are surveyed using GPS and local coordinates. All drill core is washed realigned and digitally photographed prior to logging and sampling. Qualfied Persons All technical data contained in this news release has been reviewed and approved by Gordon Babcock, P.Eng., Chief Operating Officer and a Qualified Person under National Instrument Standards of Disclosure for Mineral Projects. About Sierra Metals Sierra Metals Inc. is a Canadian-based polymetallic mining company with production from its Yauricocha Mine in Peru, and its Bolivar and Cusi Mines in Mexico. The Company recently completed a very successful operational improvement program at it Yauricocha Mine and is now focused on completing a similar program at each of its Mexican operations in order to increase production volume, recoveries and modernize operations. Sierra continues to grow its mineral resources with several exciting brownfield opportunities such as the Esperanza Zone at the Yauricocha Mine, which went from first discovery to mining in less than one year. The Company has several other brownfield exploration opportunities at all three mines in Peru and Mexico that are within, or very close to, the existing mines. Sierra is actively exploring these opportunities and hopes to daylight them in the short-term. The Company has large land packages at all three mines with several regional, highly prospective targets providing longer-term exploration upside and mineral resource growth potential. 6

7 The Company s shares trade on the Lima Stock Exchange (Bolsa de Valores de Lima) and on the TSX under the symbol SMT. For further information regarding Sierra Metals, please visit or contact: Mike McAllister VP, Corporate Development Sierra Metals Inc. (416) info@sierrametals.com J.Alonso Lujan VP, Exploration Sierra Metals Inc. (51) (52) Mark Brennan President & CEO Sierra Metals Inc. (416) 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 forwardlooking 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 7