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Sierra Metals Inc.


Sierra Metals Inc. is a Canadian mining company focused on 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 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, La Verde (gold) at the Batopilas property in the state of Chihuahua and Las Coloradas (silver) at the Melchor Ocampo property in the state of Zacatecas.

The information provided below is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.

Expert Comments:

Ali Khan, Edgecrest Capital (10/24/14) "Sierra Metals Inc. reported strong Q3/14 production results, showing a marked increase over the previous quarter for all metals. . .we remain confident that the company is able to meet and exceed its production guidance for the year on the back of strong operational results."

The Gold Report Interview with Christos Doulis (9/22/14) "Sierra Metals Inc.'s Yauricocha is a polymetallic underground mine in the mountains of Peru that has low-cost cash costs per ounce of silver—usually in the negative $20/oz range—because of byproduct credits. The company will survive a period of weak metals prices and because of its polymetallic nature, an investor is not betting on only one commodity. The base metals add an industrial component. The Arias Resource Group, a Peruvian company, owns a large equity position in Sierra Metals, so Yauricocha doesn't get a lot of attention. There are not many assets like it. I have a $2.60 target and a Buy rating. [Sierra owns roughly 82% of Yauricocha.] A publicly listed company on the Peruvian Exchange owns the other chunk. This 18% interest is in a Peruvian publicly traded vehicle (Corono) that commands a high valuation because of the dividends associated with it. Sierra's cash flows are going to go into its Mexican assets—Cusi and Bolivar, which are ramping up as we speak. Yauricocha is the engine that provides the cash for the growth of the company in Mexico." More >

Ali Khan, Edgecrest Capital (8/22/14) "Sierra Metals Inc.'s growing production profile is delivering steady cash flows from three operationally derisked assets. . .by 2017, we expect 50% production growth from 2014 levels to deliver 4.3 Moz silver driven by the commissioning of a new mill at the Cusi mine. We are initiating coverage on the company with a Buy rating and a target of CA$2.50."

Christos Doulis, PI Financial (7/29/14) "We believe Sierra Metals Inc.'s flagship mine, Yauricocha, has great prospectivity and will likely produce well beyond the current ~7-year mine life based on existing NI 43-101 compliant reserves. . .we are initiating coverage on the company with a target price of $2.60/share, representing 1.2x our net asset value per share estimate and 8.4x our 2014 cash flow per share estimate, and a Buy recommendation."

Patrick Morton, RBC Capital Markets (7/15/14) "Sierra Metals Inc. has announced drill results identifying zones of high-grade zinc mineralization at its Cachi Cachi mine, located 1,200m northwest of the Yauricocha central mine area, demonstrating further upside potential. These results follow a first phase of deep drilling at Yauricocha completed this year, which identified high-grade zinc intercepts at the Antacaca and Catas ore bodies, including 4.1m grading 28.83% zinc at Catas. Drill highlights from the latest 19 holes at Cachi Cachi include 5.1m grading 288.3 g/t silver, 20.57% zinc and 3.05% lead. . .Sierra Metals remains our preferred small-cap base metals producer."

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Patrick Morton, RBC Capital Markets (7/8/14) "We continue to highlight Sierra Metals Inc. as an attractive investment. It combines solid production base with threeoperating assets in relatively low-risk jurisdictions, attractive commodity diversification, 50% organic growth between 2013 and 2015, and free cash flows averaging $50–75M per year beginning in 2015. The likely sale of a the major shareholder's 52% stake in the company represents a major catalyst for the shares, and in our view makes Sierra an acquisition target in the near term."

Patrick Morton, RBC Capital Markets (6/5/14) "Sierra Metals Inc. has made significant strides in the past two years and is becoming a free cash flow producer; we upgrade to Outperform with a CA$3/share target price. . .given the company's stable and growing operating base, solid balance sheet, relatively low political risk exposure in Peru and Mexico, and operating track record, in our view it should not trade at a discount to its larger peers."

The Mining Report Interview with Ricardo Carrión (6/3/14) "Sierra Metals Inc. has the benefit of having a well-known polymetallic asset that has been in operation for decades, the Yauricocha mine, which is owned through the subsidiary and local listed company, Mincor. In Mexico Sierra operates the Cusi and Bolivar mines. Those mines have a great history in terms of silver production. We also overweight the benefit of having a geographical diversification—Peru and Mexico.

Sierra has put a lot of effort and funds to improve these operations. In the case of Yauricocha, it is developing a 5.5 km tunnel that will benefit the current production. The completion of this work will occur sometime this year. One aspect to take into account is that the subsidiary is valued at a higher level than the parent company. Mincor currently has a market cap of $260M and Sierra's is $246M. In the case of Bolivar, the only pending item is to connect the mine to the national grid. This event can boost the production from 2,000 tpd to 2,500 tpd. Regarding Cusi, we see significant potential, mainly because Sierra will allocate this year US$8.5M in exploration and mine development, the largest investment scheduled by Sierra in 2014. As a matter of fact, we witnessed good results early this year with the discovery of a high-grade zone named Azucarera. This demonstrates the aggressive strategy that the company is following. We were satisfied after the site visit to these mines, and it's important to recall the great potential on the exploration side. Here we have an excellent example of a company with production plus exploration catalysts for the market in the near term. " More >

Anthony Vaccaro, The Northern Miner (3/3/14) "Sierra Metals Inc.'s Cusi is a property teeming with potential. The first thing that is striking about Cusi is its amount of prospective zones. . .taking all of the zones at Cusi together, the site winds up hosting Indicated resources of 1.38 Mmt grading 166 g/t silver, 0.3% lead and 0.29% zinc for 7.3 Moz silver. It also has Inferred resources of 1.7 Mmt grading 273 g/t silver, 0.14% lead and 0.09% zinc for 14.6 Moz silver."

Itinerant, Seeking Alpha (12/27/13) "Positive developments in all three of Sierra Metals Inc.'s mines suggest potential upside for the company amid a diversified operating base. . .our analysis has led us to believe that Sierra Metals has set itself up in a sweet spot that will lead to substantial value creation in 2014."

Bob Moriarty, 321 Gold (12/2/13) "I have to give kudos to the management and staff of Sierra Metals Inc. They are planning for the future and executing a well laid out plan from the past. If you are a silver bug you need to put Sierra Metals on your radarscope. Its leverage to silver is excellent and higher prices for the metal will immediately flow right to the bottom line. . .the company going to be a big silver producer in a couple of years. I expect Sierra to be a big and profitable silver producer."

Henry Lazenby, Mining Weekly (11/4/13) "Sierra Metals Inc. is one of only 3 companies in the top 100 junior miners on the TSX Venture Exchange that paid a dividend in 2013. . .meanwhile, many juniors had cut costs and some had achieved their goal of graduating to the TSX, as Vancouver-based Sierra Metals did this summer."

Henry Lazenby, Mining Weekly (9/30/13) "Base metals miner Sierra Metals Inc. has doubled the milling capacity at its Bolivar copper-zinc-silver mine, located in the Piedras Verdes mining district in Mexico, to 2 Ktpd after installing a leased 1,250 kVA generator. . .since Sept. 20, the Piedras Verdes mill has increased daily throughput. . .the company intends to operate the Piedras Verde mill at 2 Ktpd throughout 2014, and will evaluate a further increase to 3 Ktpd during 2015."

Anthony Vaccaro, The Northern Miner (8/26/13) "Sierra Metals Inc. has grown its global Measured and Indicated resource from 1.4 Mt metal in 2010 to its current level of 2 Mt; increased metal in the ground has been accompanied by growing production. While the company only produced 230 Koz silver and 2.9 Mlb copper in 2010, this year it expects to produce 2.92 Moz silver and 23.1 Mlb copper."

RBC Capital Markets (8/15/13) "Sierra Metals announced that drilling at its Yauricocha mine in Peru has identified a wide, high-grade, silver-lead-zinc orebody at depth in the Cachi Cachi zone. The results include intercepts well above the historical average mined grades at Cachi Cachi, including. . .4.6m true width averaging 226 g/t silver, 18.16% lead and 19.42% zinc in the Escondida body of the Cachi Cachi mine. . .these results continue to confirm extension potential at the mine."

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