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SIERRA METALS REPORTS POSITIVE DRILL RESULTS AT ESPERANZA DEPOSIT

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Continues to intersect high-grade sulfide intercepts in drill program on the deepest level of the mine at the 1070 level horizon

Current Program Drill hole highlights include:

Hole D-ESP-02: 1.54% Cu, 3.99% Zn, 1.49% Pb, 0.70 gpt Au, 52.42 gpt Ag over 48.5m

Hole D-ESP-03: 1.03% Cu, 17.43% Zn, 7.56% Pb, 0.35 gpt Au, 154.38 gpt Ag over 22.1m

Hole D-ESP-01B: 3.34% Cu, 2.62% Zn, 1.02% Pb, 0.67 gpt Au, 76.39 gpt Ag over 34.50m

Toronto, ON – October 24, 2016 – Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (“Sierra Metals” or “the Company” - http://www.commodity-tv.net/c/mid,1323,Interviews/?v=295965 )today announced the results of its continuing drill program targeting the maiden discovery of its new high grade sulfide zone, referred to as the “Esperanza” zone, located 400 metres north of the central mine area and 100 metres along strike from current mining activities. The results reveal the zone is open on strike and at depth and comes as part of an ongoing drill program at this high priority target at the Yauricocha Mine located 150 kilometers southeast of Lima in the Yauricocha Mining District (Cordillera Occidental), Peru.

The company continues with the exploration, development and definition drill program on the Esperanza ore body from the 1070 level of the mine which is the deepest level in the mine. The program continues to realize intercepts at depth (100 meters below previously drilled holes) in two holes drilled at -50 degree angles as well as with five horizontal holes providing evidence of increased mineralization at the 1070 level. Drilling will continue from the 1070 level horizon with additional flat holes to the south of hole D-ESP-05 as well with additional inclined holes at depth.

The current program reports seven holes drilled with assay results from ALS Minerals Laboratories. The program identified the continuance of the orebody on the 1070 level with an intermittent strike length of 150 meters with widths varying from 2m to sections in excess of 20 meters with zones of lead and zinc sulfide mineralization as well as zones of predominantly copper sulfide mineralization. At depth, mineralization continues below the 1170 level horizon.

The current drill program has, in addition to intercepts at the Esperanza zone, also intercepted new “Cuerpos Pequenos” ore bodies with high grade lead, zinc, silver values (one such zone is noted in TABLE 1 and identified as the “Millet” zone).

These new small ore bodies on the 1070 level were not present in the upper part of the mine near the Central orebody nor in the Mascota mining area. There exists a possibility that this type of discovery could also be present in the Central ore body zone to the East of Esperanza on the 1070 level horizon since this area has not been explored or developed to the extent of Esperanza.

Hole D-ESP-03 from 90.20 to 112.30 meters (22.10 meter intercept) depicts the mineralized structure with sulfide minerals Galena, Sphalerite, Pyrite which we have named Millet with the following grades: 154.38 gpt Ag; 7.56 % Pb; 1.03 % Cu; 17.43% Zn and 0.35 gpt Au.

“The extension of the Esperanza mineralized zone at the 1070 level and below to the 1170 level horizon continues to demonstrate the untapped potential of this area close to the existing mine production areas” stated Gord Babcock, COO Sierra Metals. “As it stands now the Esperanza zone extends from the 870 to below the 1170 level of the mine and has a demonstrated strike length in excess of 240 meters in the upper levels of the mine. We are optimistic that the mineralization will continue to the South and North on strike. In addition to the continued positive progress on the Esperanza main zone, the presence of additional mineralized new “Cuerpos Pequenos” zones in the marble unit has also been a welcome addition from the drilling program. We look forward to continuing to explore this area and opening up the untapped potential at the Yauricocha mine.”

Mark Brennan, President and CEO of Sierra Metals commented “Esperanza remains one of the most important discoveries in the history of the Yauricocha mine and in the history of Sierra Metals. The Esperanza zone is unique due to its high-grade copper, silver, and zinc sulfide intercepts, along with the significant width of its mineralized zones and its proximity to existing mine infrastructure. Esperanza was first announced in January this year and began mining the upper levels in July, demonstrating a very quick turn-around time from discovery to production. Esperanza will continue to positively impact head grades and cash flow for the remainder of 2016 and beyond.”

He continued, “Unlocking Yauricocha’s potential through brownfield exploration and new discoveries such as the Esperanza zone and now the new “Cuerpos Pequenos” zones are a key part of the Company’s growth strategy. Having completed key aspects of the operational improvements program we continue to work to improve production capabilities and we are very excited by the continued growth potential of the Esperanza zone and look forward to continuing to growing all our assets through further brownfields discoveries.”

Table 1 - Length Weighted Composite Intervals

Hole	From	To	Meters	Ag(gpt)	Pb %	Cu %	Zn %	Au(gpt)	Zone Name
D-ESP-01	3.70	7.30	3.60	137.04	9.44	0.20	15.89	0.21
D-ESP-01	15.50	17.00	1.50	45.20	3.25	0.14	7.03	0.11
D-ESP-01	70.90	72.00	1.10	103.64	2.64	1.42	7.31	0.08
D-ESP-01	73.50	81.50	8.00	254.57	1.91	5.85	3.36	0.13
D-ESP-01	113.30	147.80	34.50	50.47	0.61	1.93	0.92	0.59	Esp.
D-ESP-01 Incl.	113.30	126.10	12.80	78.79	0.99	2.99	1.39	0.88	Esp.
D-ESP-01 Incl.	132.00	134.00	2.00	12.15	0.01	1.31	0.02	0.41	Esp.
D-ESP-01 Incl.	137.00	144.00	7.00	43.15	0.49	2.20	0.66	0.32	Esp.
D-ESP-01 Incl.	146.00	147.80	1.80	175.44	2.38	3.12	3.17	0.25	Esp.

D-ESP-02	6.70	9.00	2.30	75.67	3.56	0.32	8.41	0.38
D-ESP-02	91.00	93.00	2.00	3.43	0.01	0.01	3.51	0.04
D-ESP-02	116.00	164.50	48.50	52.42	1.49	1.54	3.99	0.70	Esp.
D-ESP-02 Incl.	116.00	122.00	6.00	31.48	0.88	0.18	3.35	0.43	Esp.
D-ESP-02 Incl.	126.70	149.40	22.70	45.46	0.35	2.65	1.00	0.73	Esp.
D-ESP-02 Incl.	149.40	160.00	10.60	90.61	5.33	0.22	13.41	0.71	Esp.
D-ESP-02 Incl.	160.00	164.50	4.50	45.12	0.07	1.90	0.12	1.06	Esp.

D-ESP-03	0.60	2.20	1.60	24.71	3.95	0.06	8.96	0.22
D-ESP-03	17.95	21.00	3.05	14.10	0.71	0.05	3.59	0.06
D-ESP-03	90.20	112.30	22.10	154.38	7.56	1.03	17.43	0.35	Millet
D-ESP-03	123.00	125.00	2.00	73.54	2.88	0.33	7.79	0.50
D-ESP-03	145.00	147.30	2.30	123.41	12.18	0.42	17.58	0.25
D-ESP-03	179.70	184.40	4.70	118.12	0.46	0.98	0.60	0.47	Esp.

D-ESP-04	126.00	128.00	2.00	41.14	0.88	0.75	2.86	0.32
D-ESP-04	138.00	140.00	2.00	130.97	0.71	3.71	1.63	0.32
D-ESP-04	228.00	229.10	1.10	12.69	3.19	0.07	5.83	0.29	Esp.

D-ESP-05	3.85	9.95	6.10	119.80	9.91	0.15	13.87	0.29
D-ESP-05	9.95	14.70	4.75	49.99	2.98	0.11	5.18	0.09
D-ESP-05	98.40	126.90	28.50	37.12	0.39	0.80	0.82	0.35	Esp.
D-ESP-05 Incl.	98.40	103.00	4.60	85.92	1.40	0.61	2.51	0.29	Esp.
D-ESP-05 Incl.	110.50	115.70	5.20	53.98	0.32	2.51	0.94	0.77	Esp.

D-ESP-01B	13.70	14.00	0.30	87.77	2.94	0.18	4.84	0.06
D-ESP-01B	14.90	16.40	1.50	77.35	4.16	0.13	10.56	0.31
D-ESP-01B	131.80	166.30	34.50	76.39	1.02	3.34	2.62	0.67	Esp.
D-ESP-01B Incl.	131.80	142.30	10.50	18.73	1.88	0.14	5.72	0.36	Esp.
D-ESP-01B Incl.	142.30	166.30	24.00	101.61	0.64	4.75	1.27	0.81	Esp.

D-ESP-01A	6.50	8.20	1.70	61.65	1.50	0.22	2.39	0.17
D-ESP-01A	13.55	15.80	2.25	102.08	3.68	0.33	5.77	0.39
D-ESP-01A -Incl.	116.00	133.00	17.00	56.51	0.47	0.92	1.25	0.51	Esp.
D-ESP-01A -Incl.	117.10	119.00	1.90	56.06	2.61	0.52	6.25	1.25	Esp.
D-ESP-01A -Incl.	128.10	133.00	4.90	100.67	0.12	2.01	1.05	0.21	Esp.

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

A plan map of the Yauricocha mine area is shown in Figure 1, Figure 2,3 are cross sections through the Esperanza zone at the 1070 level depicting transverse sections from inclined holes D-ESP 01B and D-ESP-01A (reference section lines are noted in Figure 1 in yellow highlights).

Method of Analysis

Samples are prepared at ALS MINERALS (Chemex) – Lima. Assay using ICP-AES and atomic absorption for silver, zinc, lead and copper. Gold is fire assayed with atomic absorption finish. Diamond drill core samples which are sent for analysis consist of one half HQ or NQ size drill core which is split on site, one half is assayed remainder stored on site.

Quality Control

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 September 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 P.Eng, COO Sierra Metals and Qualified Person as defined in NI-43-101.

About Sierra Metals

Sierra Metals Inc. is a Canadian mining company focused on production of 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 metals 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 Lima Stock Exchange (Bolsa de Valores de Lima) and on the TSX under the symbol “SMT”.

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

Mike McAllister

Vice President, Corporate Development
Sierra Metals Inc.
Tel: +1 (416) 366-7777

Email: info@sierrametals.com

In Europe:

Swiss Resource Capital AG

Jochen Staiger

info@resource-capital.ch

www.resource-capital.ch

Mark Brennan

President & CEO

Sierra Metals Inc.

Tel: +1 (416) 366-7777

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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SIERRA METALS REPORTS POSITIVE DRILL RESULTS AT ESPERANZA DEPOSIT