VANCOUVER, Aug. 12, 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 second 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.

Audra Walsh, President and CEO of Sierra Metals, commented: "Sierra continued reporting strong financial results during the second quarter of 2014. Main drivers include solid ore production growth, especially in Mexico. In addition, the Company has increased operating efficiencies and has continued implementing cost reduction measures to further increase its operating cash flow generation. On current metal prices, we expect to maintain strong financial results during the second half of 2014."

The following table sets out select unaudited financial information for the three and six months ended June 30, 2014 and 2013:

Financial Events

• Revenues of $45.6 million for the three months ended June 30, 2014 compared to $36.2 million for the same period in 2013. Revenues of $87.3 million for the six months ended June 30, 2014 compared to $77.8 million for the six months ended June 30, 2013. Sierra has achieved stronger revenues during the first half of 2014 despite lower prices mainly due to higher lead and silver grades and recoveries, higher throughput capacity at Bolivar and Cusi, and higher volume of concentrate sold at Yauricocha.

• Adjusted EBITDA of $21.3 million for the three months ended June 30, 2014 compared to $12.9 million for the same period in 2013. Adjusted EBITDA of $38.5 million for the six months ended June 30, 2014 compared to $31.4 million for the same period in 2013. The increase in adjusted EBITDA for 2014 compared to 2013 is mainly due to the increase in revenues as a result of the production ramp up in Bolivar from 1,000 tpd to 2,000 tpd since late in 2013, the higher silver and lead head grades and recoveries at Cusi, and the higher lead head grades and higher silver and lead recoveries at Yauricocha. In addition, the Company recorded higher gross margins during the period as a result of the measures taken to increase operating efficiencies and reduce costs. Moreover, the Company has improved its EBITDA results over the last quarters in Peru due to higher metal production and lower operating costs, and in Mexico due to higher throughput levels and economies of scale.
• Cash flow generated from operations of $10.7 million for the three months ended June 30, 2014 compared to $5.8 million for the same period in 2013. Cash flow generated from operations of $21.5 million for the six months ended June 30, 2014 compared to $7.6 million for the same period in 2013. The increase in cash flow is mainly the result of higher revenues generated, higher gross margins and lower payments of workers' profit sharing and taxes during 2014.
• Adjusted net income attributable to shareholders of $9.5 million or $0.06 per share for the three months ended June 30, 2014 compared to $3.6 million or $0.02 per share for the same period in 2013. Adjusted net income attributable to shareholders of $16.6 million or $0.10 per share for the six months ended June 30, 2013 compared to $11.4 million or $0.07 per share for the same period in 2013.
• Net income attributable to shareholders of $2.4 million or $0.01 per share for the three months ended June 30, 2014 compared to a loss of $9.8 million ($0.06 per share) for the same period in 2013. Net income attributable to shareholders of $4.5 million or $0.03 per share for the six months ended June 30, 2014 compared to a loss of $13.1 million ($0.08 per share) for the same period in 2013. The increase in net income attributable to shareholders is mainly due to the measures that the Company has been implementing since the second half of 2013 in Mexico and Peru to increase operating efficiencies and reduce costs, the decrease in the non-cash depletion charge on Corona's acquisition, and the increase in concentrate sold.
• A factor depressing ‎reported net income to shareholders is the non-cash depletion charge in Peru, which for the three months ended June 30, 2014 was $9.1 million (2013 - $16.7 million) and the six months ended June 30, 2014 was $17.4 million (2013- $33.1 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 $371.0 million amortized over the total proven and probable reserves and measured and indicated resources of the mine. The Company has been successful in reducing the depletion expense year over year as a result of the increase in the mineral reserves at Yauricocha based on the NI 43-101 reports dated October 2012 and November 2013.
• By-product cash cost per ounce of silver of a negative US$ 19.67 at Yauricocha, by-product cash cost per ounce of silver of US$ 5.29 at Cusi and by-product cash cost per pound of copper of US$ 1.51 at Bolivar for the three months ended June 30, 2014 compared to a by-product cash cost per ounce of silver of negative US$ 10.01 at Yauricocha, by-product cash cost per ounce of silver of US$ 17.10 at Cusi and by-product cash cost per pound of copper of US$ 1.77 at Bolivar for the same period of 2013.
• Cash and cash equivalents of $42.1 million as at June 30, 2014 compared to $44.9 million at the end of 2013. Cash and cash equivalents have decreased by $2.8 million during the six months ended June 30, 2014 mainly due to the capital expenditures incurred in Mexico and Peru of $14.5 million, repayment of loans and credit facilities including interest of $5.8 million, and dividends paid to shareholders and non-controlling interest totaling $4.2 million, partially offset by $21.5 million of operating cash flow.

Exploration Events

• On April 16, 2014, the Company announced that development was proceeding along the Monaco shoot of the Milagro vein at its Cusi property, Mexico. The Monaco shoot contains high grades of gold and silver, and has been developed along a 170 m strike length. The shoot is open to depth and a ramp is being driven to reach deeper levels of the shoot.
• On April 24, 2014, the Company announced that development in the Gallo Superior Magnetita ore body of its Bolivar mine in Mexico was started and mining of this body began in June. In addition, The Company initiated an aggressive exploration program on the Bolivar property, outside the main mine area. The focus of the program will be to test several precious metals targets that have been identified by the Company's geologists over several years, which are, La Lilly, Veta Piedras Verde, La Sidra, La Cilica and Reyna de Oro.
• On May 6, 2014, the Company announced that drilling to depth at the Central Mine Area of its Yauricocha Property, Peru, demonstrated that the Catas orebody extends at least an additional 130 meters to depth. On June 20, 2014, the Company also announced that drilling of three additional holes in the Central Mine Area demonstrated that the Antacaca orebody extends at least an additional 250 meters to depth.

Production Results

Corporate Events

• On June 17, 2014, the Company announced the results of its Annual and Special Meeting of shareholders held on June 12, 2014 in Lima, Peru.

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".

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

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.