Sierra Metals Reports Third Quarter 2024 Consolidated Financial Results

Sierra Metals Inc . (TSX: SMT | OTCQX: SMTSF | BVL: SMT) (“Sierra Metals” or the “Company”) reports consolidated financial results for the three-month (“Q3”) and nine-month (“9M”) periods ending September 30, 2024. The information provided below are excerpts from the Company’s Q3 2024 financial statements and Management’s Discussion and Analysis (“MD&A”), which are available on the Company's website ( www.SierraMetals.com ) and on SEDAR+ ( www.sedarplus.ca ) under the Company’s profile. Consolidated results include results from the Company’s Yauricocha Mine (“Yauricocha”) in Peru and the Bolivar Mine (“Bolivar”) in Mexico.

Ernesto Balarezo, Sierra Metals’ CEO, comments , “Sierra Metals continues to deliver strong operating and financial results. Yauricocha remains on track to reach its full capacity in Q4 2024, which would be an increase of more than 20% from a year ago. Meanwhile, Bolivar continues to deliver consistent operating results in each quarter. Given these strong operating results and growing expectations for Q4, we are pleased to announce that we expect to exceed our consolidated production guidance for 2024.”

Mr. Balarezo continued , “The improved operating performance has already started to show lower costs, and during this period of rising metal prices, we are generating higher operating cash flows and improving our financial position. We continue to deliver on our plan to create value for all our stakeholders.”

Conference Call & Webcast
Management will host a conference call and webcast at 12:00 pm ET on November 7, 2024 to discuss Q3 2024 consolidated operating and financial results. Participate on the telephone at 1-844-763-8274 (North America) or +1-647-484-8814 (rest of world) or register for the English webcast HERE or the Spanish webcast HERE .

Q3 2024 CONSOLIDATED OPERATING AND FINANCIAL HIGHLIGHTS

Q3 2024 Highlights

Revenue from payable metals of $70.9 million in Q3 2024 was an increase of 25% over the revenue of $57.0 million in Q3 2023, and a 23% increase over the revenue of $57.5 million in Q2 2024. Revenue increased during Q3 2024 as the Company sold 19% more copper pounds at higher metal prices as compared to Q3 2024.

Adjusted EBITDA ⁽¹⁾ increased to $20.4 million for Q3 2024 from $8.1 million in the same quarter of 2023, driven mainly by the increase in revenues attributable to higher throughput combined with higher copper grades. Adjusted EBITDA ⁽¹⁾ increased to $51.3 million for 9M 2024 from $38.1 million in the same period of 2023.

Yauricocha throughput averaged more than 3,000 tpd in Q3 2024; the mine is on track to achieve full capacity production of 3,600 tpd in Q4 2024.

Yauricocha doubled its copper production in Q3 2024 versus Q2 2024 due to the consistent increased throughput throughout the quarter and higher grades realized from the ramp up of production below the 1120 level.

Cash flow generated from operating activities before movements in working capital of $22.1 million for Q3 2024 as compared to $6.0 million of cash generated from operating activities in Q3 2023 were mainly due to higher revenues during Q3 2024.

Cash and cash equivalents of $18.6 million as at September 30, 2024 compared to $9.1 million at the end of 2023. Cash and cash equivalents as at September 30, 2024 increased to 18.6 million during the nine-month period as cash generated from operating activities of $40.2 million as well as cash from the loan refinancing of $18.2 million were partially offset by net cash used for investing activities of $40.4 million and loan interest payments of $7.0 million.

Sale of the Cusi Mine and its surrounding concessions was completed in July 2024, allowing the Company to direct its full efforts and resources to grow its two operating assets, Yauricocha and Bolivar.

COMPARISON TO 2024 GUIDANCE

Given operating performance for the first nine months of the year and expected performance in Q4 2024, the Company expects to exceed metal production guidance for the year 2024.

The tables below compare the 9M 2024 production versus 2024 annual production guidance from the Yauricocha and the Bolivar mines.

Production Guidance

By Mine

2024 Cost Guidance

Based on operating performance for the first nine months of the year and expected performance in Q4 2024, the Company expects to meet cost guidance for the year 2024.

NON-IFRS PERFORMANCE MEASURES

The non-IFRS performance measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers.

Non-IFRS reconciliation of adjusted EBITDA

EBITDA is a non-IFRS measure that represents an indication of the Company’s continuing capacity to generate earnings from operations before taking into account management’s financing decisions and costs of consuming capital assets, which vary according to their vintage, technological currency, and management’s estimate of their useful life. EBITDA comprises revenue less operating expenses before interest expense (income), property, plant and equipment amortization and depletion, and income taxes. Adjusted EBITDA has been included in this document. Under IFRS, entities must reflect in compensation expense the cost of share-based payments. In the Company’s circumstances, share-based payments involve a significant accrual of amounts that will not be settled in cash but are settled by the issuance of shares in exchange for cash. As such, the Company has made an entity specific adjustment to EBITDA for these expenses. The Company has also made an entity-specific adjustment to the foreign currency exchange (gain)/loss. The Company considers cash flow before movements in working capital to be the IFRS performance measure that is most closely comparable to adjusted EBITDA.

The following table provides a reconciliation of adjusted EBITDA to the condensed interim consolidated financial statements for the three months and nine months ended September 30, 2024 and 2023:

Non-IFRS reconciliation of adjusted net income
The Company has included the non-IFRS financial performance measure of adjusted net income, defined by management as the net income attributable to shareholders shown in the statement of earnings plus the non-cash depletion charge due to the acquisition of Corona and the corresponding deferred tax recovery and certain non-recurring or non-cash items such as share-based compensation and foreign currency exchange (gains) losses. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors may want to use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance in accordance with IFRS.

The following table provides a reconciliation of adjusted net income to the condensed interim consolidated financial statements for the three months and nine months ended September 30, 2024 and 2023:

Cash cost per copper equivalent payable pound
The Company uses the non-IFRS measure of cash cost per copper equivalent payable pound to manage and evaluate operating performance. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate cash flows. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company considers cost of sales per copper equivalent payable pound to be the most comparable IFRS measure to cash cost per copper equivalent payable pound and has included calculations of this metric in the reconciliations within the applicable tables to follow.

All-in sustaining cost per copper equivalent payable pound
AISC is a non‐IFRS measure and is calculated based on guidance provided by the World Gold Council (“WGC”). WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures.

AISC is a more comprehensive measure than cash cost per pound for the Company’s consolidated operating performance by providing greater visibility, comparability and representation of the total costs associated with producing copper from its current operations.

The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements. Sustaining capital expenditures excludes all expenditures at the Company’s new projects and certain expenditures at current operations which are deemed expansionary in nature.”

Consolidated AISC includes total production cash costs incurred at the Company’s mining operations, including treatment and refining charges and selling costs, which forms the basis of the Company’s total cash costs. Additionally, the Company includes sustaining capital expenditures and corporate general and administrative expenses. AISC by mine does not include certain corporate and non‐cash items such as general and administrative expense and share-based payments. The Company believes that this measure represents the total sustainable costs of producing copper from current operations and provides the Company and other stakeholders of the Company with additional information of the Company’s operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of copper production from current operations, new project capital and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.

The following table provides a reconciliation of cash costs to cost of sales, as reported in the Company’s condensed interim consolidated statement of income for the three months and nine months ended September 30, 2024 and 2023:

The following table provides detailed information on Yauricocha’s cash cost and all-in sustaining cost per copper equivalent payable pound for the three months and nine months ended September 30, 2024 and 2023:

The following table provides detailed information on Bolivar’s cash cost, and all-in sustaining cost per copper equivalent payable pound for the three months and nine months ended September 30, 2024 and 2023:

Additional non-IFRS measures

The Company uses other financial measures, the presentation of which is not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. The following other financial measures are used:

• Operating cash flows before movements in working capital - excludes the movement from period-to-period in working capital items including trade and other receivables, prepaid expenses, deposits, inventories, trade and other payables and the effects of foreign exchange rates on these items.

The terms described above do not have a standardized meaning prescribed by IFRS, and therefore the Company’s definitions are unlikely to be comparable to similar measures presented by other companies. The Company’s management believes that their presentation provides useful information to investors because cash flows generated from operations before changes in working capital excludes the movement in working capital items. This, in management’s view, provides useful information of the Company’s cash flows from operations and are considered to be meaningful in evaluating the Company’s past financial performance or its future prospects. The most comparable IFRS measure is cash flows from operating activities.

About Sierra Metals
Sierra Metals is a Canadian mining company focused on copper production with additional base and precious metals by-product credits at its Yauricocha Mine in Peru and Bolivar Mine in Mexico. The Company is intent on safely 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 in Peru and Mexico that are within close proximity to the existing mines. Additionally, the Company has large land packages at each of its mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

For further information regarding Sierra Metals, please visit www.sierrametals.com .

Forward-Looking Statements
This press release contains forward-looking information within the meaning of Canadian securities legislation. Forward-looking information relates to future events or the anticipated performance of Sierra and reflect management's expectations or beliefs regarding such future events and anticipated performance based on an assumed set of economic conditions and courses of action. In certain cases, statements that contain forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur" or "be achieved" or the negative of these words or comparable terminology. By its very nature forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual performance of Sierra to be materially different from any anticipated performance expressed or implied by such forward-looking information.

Forward-looking information is subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, the risks described under the heading "Risk Factors" in the Company's annual information form dated March 15, 2024 for its fiscal year ended December 31, 2023 and other risks identified in the Company's filings with Canadian securities regulators, which are available at www.sedarplus.ca .

The risk factors referred to above are not an exhaustive list of the factors that may affect any of the Company's forward-looking information. Forward-looking information includes statements about the future and is inherently uncertain, and the Company's actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. The Company's statements containing forward-looking information are based on the beliefs, expectations, and opinions of management on the date the statements are made, and the Company does not assume any obligation to update such forward-looking information if circumstances or management's beliefs, expectations or opinions should change, other than as required by applicable law. For the reasons set forth above, one should not place undue reliance on forward-looking information.

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