No. 10-2016

Sierra Metals Provides Exploration Update for the Esperanza Zone,

Yauricocha mine Peru

Mineralized Zone Extended to the South and at Depth

___________________________________________________________________ Drill hole highlights include:

Hole E-ESP-03: 2.3% Cu, 2.6% Zn, 0.9% Pb, 0.74 gpt Au, 50.6 gpt Ag over 50.7m Hole E-ESP-03: 2.5% Cu, 5.4% Zn, 1.3% Pb, 0.81 gpt Au, 81.0 gpt Ag over 25.3m Hole E-ESP-04: 1.4% Cu, 0.4% Zn, 0.2% Pb, 1.72 gpt Au, 51.1 gpt Ag over 25.3m

Toronto, ON – May 24, 2016 – Sierra Metals Inc. (TSX: SMT) (BVL: SMT) (“Sierra Metals” or “the Company”) today announced the release of drill results for the Esperanza zone at its Yauricocha mine in Peru (drill results from January 1, 2016 to May 19, 2016). This news release is a follow-up to the initial news release dated January 28, 2016 which announced the discovery of the “Esperanza” zone which is located 400 meters north of the central mine area and along strike from current mining activities (also refer to the news release dated May 13, 2016 for discussion of Q1 2016 drill results). The Esperanza discovery comes as part of ongoing drill testing of priority targets at its Yauricocha Mine located 150km east southeast of Lima in the Yauricocha Mining District (Cordillera Occidental), Peru. The exploration program on the Esperanza zone is ongoing and drilling has successfully extended the mineralized zone to the south and at depth. The current strike length of the zone is approximately 250 meters and the vertical extent of the zone is approximately 250 meters. Since discovery of the zone in 2015, 54 holes (9856.3 meters) have been completed. A total of 39 holes (6673.6 meters) have been completed to date in 2016 (covered in this news release), including 35 delineation holes (5527.60 meters) and 4 additional exploration holes (1146 meters). The mineralized zone remains open at depth to the north and south and additional exploration drilling in these areas will take place once access is available on the 1070 level (within the next few months). Mark Brennan, President and CEO of Sierra Metals stated. "These results demonstrate that the ongoing exploration drill program, particularly holes E-ESP-02, E-ESP-03 and E-ESP-04, show continuity of wide, high-grade zones at depth by approximately 250 meters. It also defines new parallel mineralized structures that were previously unknown. The delineation drill program is concurrently providing additional information on closer drill spacing to support a NI 43-101 technical report which the Company plans to release in the near term." The Esperanza zone has returned some of the thickest sulfide intercepts in the 60 year mining history at Yauricocha. The delineation drilling to date has targeted the upper 100 meters of the Esperanza zone from the 870 level. Drilling indicates the upper portion of the zone consists of several well mineralized replacement structures that narrow upward. The delineation drilling is anticipated to continue through the remainder of the year and will provide the details necessary to define resources and reserves to rapidly advance into the production schedule. The Esperanza zone is located 400 meters north of (and along strike from) the Central Mine and is well situated to quickly bring into the Company’s mine plan. Most recently drill hole E-ESP-03 shown on Figure 8 below was drilled as a step out hole to test the depth extension of the mineralization intersected in ESP-14 shown on Figure 6 below (Jan 28, 2016 release Sierra Metals reported that hole ESP-14 returned a length weighted average of 3.2% Cu, 1.7% Zn, 0.4% Pb, 1.01 gpt Au, 48.5 gpt Ag over 69.2 meters (core thickness)). Drill hole E-ESP-03 successfully intersected mineralization approximately 55 meters south of drill hole ESP-14 and also confirmed the depth extension of mineralization approximately 120 meters below ESP-14. E-ESP-03 returned the following length weighted composite intervals: 2.3% Cu, 2.6% Zn, 0.9% Pb, 0.74 gpt Au, 50.6 gpt Ag over 50.7 meters (from 152.4 to 203.1 meters) and 2.5% Cu, 5.4% Zn, 1.3% Pb, 0.81 gpt Au, 81.0 gpt Ag over 25.3 meters (from 230.0 to 255.3 meters).

Drill hole E-ESP-04 shown on Figure 9 below was also drilled to test the southern extension of the mineralized intercept in hole ESP-14 (E-ESP-04 drilled tested the zone 65 meters south of hole E-ESP-03). E-ESP-04 successfully intersected the Esperanza zone approximately 120 meters south of the intercept in hole ESP-14 and returned the following length weighted composite intervals: 1.4% Cu, 0.4% Zn, 0.2% Pb, 1.72 gpt Au, 51.1 gpt Ag over 25.3 meters (from 170.4 to 195.7 meters). Refer to table 1 (below) for significant composite intervals from January 1 to May 19, 2016 drilling.

Drill stations are now being prepared on the 1070 level to access the southern extension of the Esperanza zone and the Company will focus on exploring both the northern and southern depth extensions of the Esperanza zone over the course of the next 12 months. Table 1: Significant length weighted composite intervals returned from January 1 to May 19, 2016 (D=delineation hole, E= Exploration hole) Exploration Holes

BHID From To Core

Width

Est Horiz Thk Ag gpt Pb% Cu% Zn% Au gpt

E-ESP-01 201.0 203.2 2.2 1.2 198.1 0.9 1.0 12.3 0.35

E-ESP-01 220.0 222.0 2.0 1.1 139.9 0.9 1.4 5.2 0.21

E-ESP-02 102.6 107.0 4.4 1.6 20.0 4.3 0.1 8.5 0.37

E-ESP-02 108.4 113.5 5.1 1.9 123.8 9.8 0.2 17.3 0.75

E-ESP-02 150.5 159.0 8.5 3.1 50.0 0.6 2.4 0.9 0.74

E-ESP-02 165.0 175.8 10.8 4.0 88.2 0.3 3.1 0.5 0.51

E-ESP-02 265.4 276.5 11.1 4.1 49.1 2.2 1.8 5.3 0.44

E-ESP-03 23.2 30.2 7.0 2.9 26.5 5.7 0.1 9.8 0.78

E-ESP-03 incl. 23.2 24.6 1.4 0.6 80.4 17.3 0.4 27.8 0.76

E-ESP-03 87.4 97.8 10.4 4.3 53.2 8.5 0.2 15.8 0.39

E-ESP-03 152.4 203.1 50.7 21.1 50.6 0.9 2.3 2.6 0.74

E-ESP-03 incl. 168.0 180.0 12.0 5.0 83.7 0.6 5.1 2.5 0.75

E-ESP-03 230.0 255.3 25.3 10.6 81.0 1.3 2.5 5.4 0.81

E-ESP-03 incl. 234.0 242.0 8.0 3.3 145.7 0.4 5.7 0.8 0.98

E-ESP-03 and incl. 246.0 255.0 9.0 3.8 76.2 2.9 0.8 13.3 0.51

E-ESP-03 274.0 282.0 8.0 3.3 73.2 0.2 4.3 0.1 1.65

E-ESP-04 170.4 195.7 25.3 10.4 51.1 0.2 1.4 0.4 1.72

E-ESP-04 incl. 182.0 193.0 11.0 4.5 77.8 0.1 2.8 0.1 3.10

E-ESP-04 and incl. 190.0 193.0 3.0 1.2 120.8 0.1 6.2 0.3 7.44

Delineation Holes

BHID From To Core

Width

Est Horiz

Thk Ag gpt Pb% Cu% Zn% Au gpt

D-ESP-01 71.3 75.0 3.7 2.8 35.2 3.3 0.3 19.2 0.33

D-ESP-01 117.5 119.9 2.4 1.8 62.9 4.8 0.1 8.2 0.12

D-ESP-01 124.6 126.3 1.7 1.3 528.7 8.7 2.9 15.1 0.41

D-ESP-02 113.15 124.0 10.85 10.5 98.0 1.0 1.7 1.7 0.75

D-ESP-02 incl. 113.15 117.0 3.85 3.7 171.8 2.0 4.3 1.7 0.57 D-ESP-03 126.0 128.0 2.0 1.9 48.3 2.3 0.3 5.2 0.08

D-ESP-04 no significant composite intervals

D-ESP-05 no significant composite intervals

D-ESP-06 124.1 127.7 3.6 3.2 174.6 8.4 1.1 18.1 0.30

D-ESP-06 138.0 151.2 13.2 11.9 81.3 3.8 0.3 8.2 0.92

D-ESP-07 116.1 118.7 2.6 2.2 54.0 7.5 0.1 14.1 0.20 D-ESP-07 151.0 156.0 5.0 4.3 137.0 0.8 1.0 1.8 0.52

D-ESP-08 57.05 59.6 2.55 2.5 203.5 17.4 0.2 21.3 0.32

D-ESP-09 no significant composite intervals

D-ESP-10 115.35 118.0 2.65 2.6 247.6 0.6 4.7 0.9 0.46

D-ESP-11 190.3 192.4 2.1 1.2 41.5 4.6 0.1 7.2 0.04

D-ESP-11 215.3 217.6 2.3 1.3 120.7 0.6 5.4 2.4 0.38

D-ESP-12 134.6 141.0 6.4 5.6 44.4 0.4 1.6 0.8 0.60

D-ESP-13 67.85 87.0 19.15 12.4 110.2 0.7 3.4 1.9 0.52

D-ESP-13 incl. 74.0 87.0 13.0 8.4 142.5 1.0 4.3 2.7 0.55

D-ESP-13 151.0 178.0 27.0 17.4 94.6 1.6 3.0 3.6 0.41

D-ESP-13 incl. 151.0 163.1 12.1 7.8 154.9 0.5 5.6 1.3 0.56

D-ESP-13 and incl. 169.0 178.0 9.0 5.8 59.6 4.0 1.0 8.6 0.27 D-ESP-14 no significant composite intervals

D-ESP-15 118.9 120.9 2.0 1.7 69.5 10.0 0.1 15.2 0.13

D-ESP-15 145.8 147.7 1.9 1.6 43.6 7.6 0.1 9.4 0.06

D-ESP-15 152.0 164.6 12.6 10.5 57.7 2.3 0.6 5.0 0.34

D-ESP-15 incl. 153.0 159.0 6.0 5.0 83.5 3.9 0.8 7.8 0.41

D-ESP-16 115.3 116.9 1.6 1.3 148.8 7.0 0.3 18.5 0.29

D-ESP-17 no significant composite intervals

D-ESP-18 114.1 118.0 3.9 3.4 20.8 2.0 0.1 4.7 0.18

D-ESP-18 135.0 140.0 5.0 4.3 56.2 0.2 2.8 0.9 0.30

D-ESP-18 142.0 150.0 8.0 6.9 30.9 2.9 0.7 7.0 0.82

D-ESP-18 incl. 145.0 150.0 5.0 4.3 29.1 4.6 0.3 10.6 0.81

D-ESP-19 no significant composite intervals

D-ESP-20 no significant composite intervals

D-ESP-21 no significant composite intervals

D-ESP-22 no significant composite intervals

D-ESP-23 71.2 77.9 6.7 5.2 39.3 2.7 0.6 20.2 0.53

D-ESP-23 93.35 99.1 5.75 4.4 156.2 8.1 0.5 18.7 0.45

D-ESP-23 118.0 119.9 1.9 1.5 43.7 4.5 0.1 10.1 0.23

D-ESP-23 166.0 170.0 4.0 3.1 207.7 1.6 0.6 3.5 1.06

D-ESP-24 42.4 60.1 17.7 7.4 240.1 0.3 5.5 1.1 0.34

D-ESP-24 incl. 42.4 57.2 14.8 6.2 274.3 0.1 6.4 0.3 0.34

D-ESP-25 no significant composite intervals

D-ESP-26 22.9 25.0 2.1 1.8 131.6 11.5 0.1 16.2 0.26

D-ESP-26 106.0 109.1 3.1 2.6 178.6 0.9 2.5 2.9 0.43

D-ESP-26 122.7 124.8 2.1 1.8 161.3 1.1 2.7 2.2 1.25

D-ESP-27 116.1 119.0 2.9 2.4 74.2 5.1 0.2 11.1 0.19

D-ESP-27 152.5 163.0 10.5 8.8 213.1 1.3 1.0 8.5 0.55

D-ESP-27 incl. 152.5 157.0 4.5 3.8 346.4 1.3 1.3 5.7 0.70

D-ESP-27 and incl. 158.3 163.0 4.7 3.9 120.1 1.5 0.9 13.1 0.42

D-ESP-28 48.0 54.7 6.7 6.1 63.0 2.0 0.1 4.8 0.06 D-ESP-28 incl. 52.3 54.7 2.4 2.2 76.3 2.3 0.2 8.8 0.12

D-ESP-28 120.8 123.3 2.5 2.3 208.5 2.5 5.3 10.1 0.44

D-ESP-29 no significant composite intervals

D-ESP-30 108.0 112.0 4.0 3.9 154.9 0.6 1.0 0.8 0.57

D-ESP-30 incl. 108.4 110.0 1.6 1.6 266.3 0.7 1.7 0.4 0.51

D-ESP-31 145.0 157.0 12.0 8.6 23.6 0.0 2.3 0.0 0.70

D-ESP-31 incl. 154.0 157.0 3.0 2.2 26.5 0.0 3.6 0.1 1.60

D-ESP-31 163.05 167.9 4.85 3.5 25.8 0.0 6.3 0.0 0.38

D-ESP-31 incl. 163.05 165.6 2.55 1.8 37.8 0.0 10.1 0.0 0.44

D-ESP-32 112.6 119.6 7.0 5.7 65.5 9.8 0.2 14.3 0.41

D-ESP-32 123.8 125.9 2.1 1.7 112.2 9.7 0.2 12.6 0.27

D-ESP-33 no significant composite intervals

D-ESP-34 124.0 131.9 7.9 7.7 151.3 2.9 2.4 6.0 0.36

D-ESP-34 incl. 126.0 131.9 5.9 5.7 187.1 3.3 2.8 6.8 0.41

D-ESP-35 107.9 112.0 4.1 3.9 422.1 0.4 10.7 0.4 1.21

D-ESP-35 139.0 142.0 3.0 2.9 39.7 0.7 1.2 3.6 0.00

A plan map of the Yauricocha mine area is shown in Figure 1, Figure 2 is a plan map through the Esperanza zone at the 920 level and Figures 3, 4, 5, 6, 7, 8 & 9 are cross sections through the Esperanza zone (reference lines for the cross sections are located on Figure 2).

Figure 1 - Plan View (deposit scale)

Figure 2 - Plan View (Esperanza Zone)

Figure 3 – Cross Section 1

Figure 4 - Cross Section 2

Figure 5 – Cross Section 3

Figure 6 – Cross Section 4

Figure 7 – Cross Section 5

Figure 8 – Cross Section 6

Figure 9 – Cross Section 7

Method of Analysis

Samples are prepared at the Yauricocha lab facilities at the Chumpe Mill, which is located on site. Drill core samples from the mine are assayed utilizing two procedures. Silver, lead, zinc and copper are assayed by atomic absorption. Gold is fire-assayed with an atomic absorption finish. Diamond drill core samples sent for analysis consist of half NQ size or BQ size drill core which is split 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 May 25, 2012, prepared by Gustavson Associates 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 Matthew Wunder, B.Sc, P.Geo. 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

Director, Corporate Development Sierra Metals Inc. (416) 366-7777 Email: info@sierrametals.com

Matthew Wunder

Vice President, Exploration Sierra Metals Inc. (416) 366-7777

Mark Brennan

President & CEO Sierra Metals Inc. (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.