VANCOUVER, May 13, 2014 /CNW/ - Sierra Metals Inc. (TSX:SMT) (BVL:SMT) ("Sierra Metals" or the "Company") is pleased to report the filing of its unaudited Financial Statements and Management Discussion and Analysis ("MD&A") for the first quarter of 2014. All amounts are presented in US dollars unless otherwise stated. For the complete Financial Statements and/or MD&A please visit the Company's website www.sierrametals.com or SEDAR at www.sedar.com.

Daniel Tellechea, President and CEO of Sierra Metals, commented: "Sierra reported strong financial results during the first quarter of 2014 despite a 32% decline in silver prices compared to the first quarter of 2013. The main drivers for these results include the production ramp up and economies of scale achieved at our Mexican operating unit and operational efficiencies attained in Peru. The Company is on track to meet its production guidance for 2014 and we will continue executing our exploration and development activities during the year."

The following table sets out the selected quarterly financial results:

Financial Events

• Adjusted net income attributable to shareholders of $7.2 million or $0.05 per share for the three months ended March 31, 2014 compared to $7.8 million or $0.05 per share for the same period in 2013.
  
  
• Net income attributable to shareholders of $2.1 million or $0.01 per share for the three months ended March 31, 2014 compared to a loss of $3.2 million ($0.02 per share) for the same period in 2013. The increase in net income attributable to shareholders is mainly due to the decrease in the non-cash depletion charge on Corona's acquisition.
  
  
• A large component of the net income and loss of every period is the non-cash effect of the acquisition of Corona in Peru, which for the three months ended March 31, 2014 was $8.3 million and for the three months ended March 31, 2013 was $16.4 million. The non-cash depletion charge is based on the aggregate fair value of the Yauricocha mineral property at the date of acquisition of Corona of $371.0 million amortized over the total proven and probable reserves and measured and indicated resources of the mine. The Company has been successful in reducing the depletion expense year-over-year as a result of the increase in the mineral reserves at Yauricocha based on the NI 43-101 reports dated October 2012 and November 2013.
  
  
• Adjusted EBITDA of $17.2 million for the three months ended March 31, 2014 compared to $18.4 million for the same period in 2013. This decrease was mainly a result of lower commodity prices, which was partially offset by the higher EBITDA generated in Mexico due to the production ramp up in Bolivar and Cusi.
  
  
• Cash flow generated from operations of $10.8 million for the three months ended March 31, 2014 compared to $2.4 million for the same period in 2013. This increase was mainly the result of an $8.3 million positive impact on working capital driven by lower inventories, higher accounts payable, and lower payments of workers' profit sharing and taxes in Peru.
  
  
• Revenues of $41.7 million for the three months ended March 31, 2014 compared to $41.6 million for the same period in 2013. Main drivers include higher production levels in Mexican operating unit partly offset by lower commodity prices. Average realized market prices were as follows:

• Cash and cash equivalents of $40.0 million as at March 31, 2014 compared to $44.9 million at the end of 2013. Cash and cash equivalents have decreased by $4.9 million during the first quarter of 2014 mainly due to the capital expenditures incurred in Mexico and Peru of $7.9 million, $2.9 million of dividends paid to shareholders and non-controlling interest, repayment of loans and credit facilities including interest of $4.9 million, partially offset by $10.8 million of operating cash flow.

• Negative by-product cash cost per ounce of silver of $21.11 at Yauricocha, by-product cash cost per ounce of silver of $10.70 at Cusi and by-product cash cost per pound of copper of $1.57 at Bolivar for the three months ended March 31, 2014 compared to negative by-product cash cost per ounce of silver of $18.86 at Yauricocha, by-product cash cost per ounce of silver of $16.48 at Cusi and by-product cash cost per pound of copper of $1.47 at Bolivar for the same period of 2013.

Operational Events

• Total silver production of 728,211 ounces ("oz") in the first quarter of 2014 compared to 610,407 oz for the same period of 2013. A 19% increase year-over-year.
  
  
• Total copper production of 5.7 million pounds ("lb") in the first quarter of 2014 compared to 4.1 million lb for the same period of 2013. A 41% increase year-over-year.
  
  
• Total lead production of 12.2 million lb in the first quarter of 2014 compared to 8.5 million lb for the same period of 2013. A 43% increase year-over-year.
  
  
• Total zinc production of 12.7 million lb in the first quarter of 2014 compared to 13.3 million lb for the same period of 2013. A 4% decrease year-over-year.
  
  
• Total gold production of 2,485 oz in the first quarter of 2014 compared to 1,598 oz for the same period of 2013. A 55% increase year-over-year.

Exploration Events

• On March 27, 2014, the Company reported a 70% increase in Silver Resources Ounces and 40% increase in silver grade for Indicated Resources at its Cusi Mine. These resources are in two areas of the Cusi Mine currently in commercial production, Promontorio and Santa Eduwiges, as well as in other mines where the Company is doing underground development, such as La Gloria/Minerva, Monaco/Milagro and others. This resource estimate was prepared by Gustavson Associates, LLC ("Gustavson") of Lakewood, Colorado.
  
  
• Total estimated Indicated Mineral Resources for the Cusi property with exploration drilling and mine sampling information as of December 31, 2013 are:
  • 1,665,000 tonnes averaging 232 g/t Ag at a cut-off grade of 90 g/t silver, which contains 12,416,000 oz of silver, a 70% increase in silver ounces, a 40% increase in silver grade and a 20% increase in tonnes from the previous resource estimate (see press release of July 17, 2013).
• Total estimated Inferred Mineral Resources are:
  • 2,737,000 tonnes averaging 227 g/t silver at the same cut-off grade, which contains 20,020,000 oz of silver, a 37% increase in silver ounces and a 66% increase in tonnes.

This resource estimate report incorporates drilling and underground sampling done from January 1 to December 31, 2013. Since the last resources report (filed on August 23, 2013), a total of 24,776 metres was drilled; 20,415 meters from surface and 4,361 meters underground.

Corporate Events

• On January 6, 2014, Sierra regretfully announced the passing on December 31, 2013 of John Donnelly, a director of the Company and Chairman of the Audit Committee. The current Chairman of the Company's Audit Committee is Doug Cater, a board member of Sierra since June 2009.
  
  
• On January 9, 2014, the Company announced its fourth quarterly cash dividend of approximately C$2.5 million, or C$0.016 per common share of the Company (each, a "Common Share"), payable on January 31, 2014 to the holders of the issued and outstanding Common Shares as of the close of business on January 21, 2014.
  
  
• On March 10, 2014, Sierra announced that, on Friday March 7th, its Yauricocha Mine in Peru temporarily shut down its mining and processing operations due to certain difficulties involving a group of workers employed by some of Sierra's mining contractors that provide services to the Company. On Sunday March 9th, the parties reached an agreement regarding the workers' requests and the Yauricocha Mine resumed operations. The mine is currently operating normally.
  
  
• On March 26, 2014, the Company declared a dividend of C$0.005 per common share to the holders of issued and outstanding shares as of the close of business on April 10, 2014. On April 30, 2014 the Company paid a dividend for a total of $0.7 million (C$0.8 million).

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on 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 Bolsa de Valores de Lima and the Toronto Stock Exchange 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. Other than statements of historical fact, all statements are "forward-looking statements", which involve various known and unknown risk and uncertainties and other factors, including market conditions that may affect the Company's ability to execute its current business plan. 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 and until 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.