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Sierra Metals Announces Update On Litigation With Polo Y Ron Minerals

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION IN THE UNITED STATES

Toronto, Ontario - January 25th, 2013 - Sierra Metals Inc. (TSX-V: SMT) (“Sierra Metals” or the “Company”) reports that the State Court of Chihuahua, Mexico (the “State Court”) has overturned a previously announced resolution of the 8th Civil Court of the Judicial District of Morelos in Chihuahua (the “8th Civil Court”), which absolved the Company from the claims brought against it by Polo y Ron Minerals, S.A. de C.V. (“P&R”). The State Court has ordered the Company to: (i) transfer 17 mining concessions relating to its Bolivar project to P&R; and (ii) pay USD$422,674 to P&R.

On October 26, 2009, P&R sued the Company and one of its subsidiaries, Dia Bras Mexicana, S. A. de C. V. (“DBM”), claiming damages for the cancelation of an option agreement (the “Option Agreement”) regarding the San Jose properties in Chihuahua, Mexico (the “San Jose Properties”). The Company believes that it has complied with all of its obligations pertaining to the Option Agreement. On October 28, 2011, the 8th Civil Court issued a resolution absolving the Company from the claims brought against it by P&R on the basis that P&R did not provide evidence to support any of its claims. P&R appealed this resolution to the State Court. The Company plans to mount a vigorous appeal of this ruling of the State Court.

The San Jose Properties are not located in any areas where DBM currently operates, nor are such properties included in any resource estimates of the Company.

About Sierra Metals

Sierra Metals is a Canadian mining company focused on precious and base metals from its Yauricocha mine in Peru and its Bolivar mine in Mexico. The Company is also advancing its Cusi silver project in Mexico from advanced development into commercial production. 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. Projects in Mexico include Bacerac (silver) in the state of Sonora, La Verde (gold) at the Batopilas Property in the state of Chihuahua, and Las Coloradas (silver) at the Melchor Ocampo Property in the state of Zacatecas.

The Company’s shares trade on the Bolsa de Valores de Lima and TSXV under the symbol “SMT”.
For further information on Sierra Metals, please visit www.sierrametals.com or contact:

Daniel Tellechea
President & CEO
Sierra Metals Inc.
1 (866) 493‐9646
  Matt Morrish
Director, Investor Relations
Sierra Metals Inc.
1 (866) 493‐9646

This press release does not constitute an offer to sell or solicitation of an offer to buy the securities in the United States or any other jurisdiction. The Common Shares will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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.