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NI 43-101 Technical Report on Resources and Reserves Yauricocha Mine Yauyos Province, Peru

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NI 43-101 Technical Report on Resources and Reserves Yauricocha Mine Yauyos Province, Peru NI 43-101 Technical Report on Resources and Reserves Yauricocha Mine Yauyos Province, Peru Effective Date: June 30, 2016 Report Date: September 9, 2016 Report Prepared for: Sierra Metals, Inc. 79 Wellington Street West, Suite 2100 P.O. Box 157 Toronto, Ontario, M5K 1H1 Canada Report Prepared by SRK Consulting (U.S.), Inc. 1125 Seventeenth Street, Suite 600 Denver, CO 80202 SRK Project Number: 470200-120 Signed by Qualified Persons: Matthew Hastings, MSc Geology, MAusIMM (CP), Senior Consultant (Resource Geology) Jon Larson, BS Mining Engineering, MBA, MAusIMM, MMSAQP, Principal Consultant (Mining Engineer) Jeff Osborn, BEng Mining, MMSAQP, Principal Consultant (Mining Engineer) Fernando Rodrigues, BS Mining, MBA, MAusIMM, MMSAQP, Practice Leader/Principal Consultant (Mining Engineer) Daniel H. Sepulveda, B.Sc. Metallurgist, SME-RM John Tinucci, PhD, PE, President/Practice Leader/Principal Consultant (Geotechnical Engineer) Reviewed by: Ben Parsons, MSc, MAusIMM (CP), Principal Consultant (Resource Geologist) Joanna Poeck BEng Mining, SME-RM, MMSAQP, Senior Consultant (Mining Engineer) SRK Consulting (U.S.), Inc. NI 43-101 Technical Report on Resources and Reserves– Yauricocha Mine Page ii Table of Contents 1 Summary ....................................................................................................................... 1 1.1 Property Description and Ownership .................................................................................................. 1 1.2 Geology and Mineralization ................................................................................................................ 1 1.3 Status of Exploration, Development and Operations .......................................................................... 1 1.4 Mineral Processing and Metallurgical Testing .................................................................................... 1 1.5 Mineral Resource Estimate ................................................................................................................. 2 1.6 Mineral Reserve Estimate ................................................................................................................... 7 1.7 Mining Methods ................................................................................................................................. 11 1.8 Recovery Methods ............................................................................................................................ 12 1.9 Project Infrastructure ......................................................................................................................... 13 1.10 Environmental Studies and Permitting .............................................................................................. 14 1.11 Capital and Operating Costs ............................................................................................................. 14 1.12 Economic Analysis ............................................................................................................................ 15 1.13 Conclusions and Recommendations ................................................................................................ 16 1.13.1 Geology and Mineral Resources ........................................................................................... 16 1.13.2 Mining and Reserves ............................................................................................................. 17 1.13.3 Environmental and Permitting ............................................................................................... 17 1.13.4 Infrastructure and Tailings ..................................................................................................... 18 1.13.5 Economic Analysis ................................................................................................................ 18 2 Introduction ................................................................................................................ 19 2.1 Terms of Reference and Purpose of the Report ............................................................................... 19 2.2 Qualifications of Consultants (SRK).................................................................................................. 19 2.3 Details of Inspection .......................................................................................................................... 20 2.4 Sources of Information ...................................................................................................................... 20 2.5 Effective Date .................................................................................................................................... 21 2.6 Units of Measure ............................................................................................................................... 21 3 Reliance on Other Experts ........................................................................................ 22 4 Property Description and Location .......................................................................... 23 4.1 Property Location .............................................................................................................................. 23 4.2 Mineral Titles ..................................................................................................................................... 24 4.2.1 Nature and Extent of Issuer’s Interest ................................................................................... 27 4.3 Royalties, Agreements and Encumbrances ...................................................................................... 27 4.3.1 Debt ....................................................................................................................................... 27 4.3.2 Royalties and Special Taxes ................................................................................................. 28 4.4 Environmental Liabilities and Permitting ........................................................................................... 28 MH/MLM Yauricocha_NI43-101_TR_470200.120_Rev16_SH.docx September 2016 SRK Consulting (U.S.), Inc. NI 43-101 Technical Report on Resources and Reserves– Yauricocha Mine Page iii 4.5 Other Significant Factors and Risks.................................................................................................. 29 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ........ 30 5.1 Topography, Elevation and Vegetation ............................................................................................. 30 5.2 Accessibility and Transportation to the Property .............................................................................. 30 5.3 Climate and Length of Operating Season ......................................................................................... 30 5.4 Sufficiency of Surface Rights ............................................................................................................ 31 5.5 Infrastructure Availability and Sources.............................................................................................. 33 5.5.1 Power .................................................................................................................................... 33 5.5.2 Water ..................................................................................................................................... 33 5.5.3 Mining Personnel ................................................................................................................... 33 5.5.4 Potential Tailings Storage Areas ........................................................................................... 33 5.5.5 Potential Waste Disposal Areas ............................................................................................ 33 5.5.6 Potential Processing Plant Sites ........................................................................................... 33 6 History......................................................................................................................... 34 6.1 Prior Ownership and Ownership Changes ....................................................................................... 34 6.2 Exploration and Development Results of Previous Owners ............................................................. 34 6.3 Historic Mineral Resource and Reserve Estimates .......................................................................... 35 6.4 Historic Production ............................................................................................................................ 35 7 Geological Setting and Mineralization ..................................................................... 36 7.1 Regional Geology.............................................................................................................................. 36 7.2 Local Geology ................................................................................................................................... 38 7.3 Significant Mineralized Zones ........................................................................................................... 42 7.3.1 Mineralogy ............................................................................................................................. 44 8 Deposit Type .............................................................................................................
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