Toronto, Ontario ¨C December 13, 2012 ¨C Sierra Metals Inc. (TSX-V:SMT)(BVL:SMT) (¡°Sierra Metals¡± or the ¡°Company¡±) is pleased to report that drilling at the Promontorio Mine of its Cusi property has encountered high grade silver mineralization over wide widths in what the Company believes is a previously-unknown vein within a deeper portion of the mine¡¯s disseminated zone.

Press Release Highlights:

• Drill hole DC12B509 penetrated 48.85 m (core length) averaging 753 g/t silver that includes a 33.8 m interval averaging 1,058 g/t silver.
  
• Development on Level 9 of the Promontorio mine has encountered high grade veins in the disseminated zone, with values up to 3,351 g/t Ag over 1.1 m.

¡°Drill hole 509 is the most impressive in the company¡¯s history for its combination of core length (48.85m) and silver grade (average 753 grams per tonne) and demonstrates that the Promontorio mine area contains excellent discovery potential.¡± stated Daniel Tellechea, President and CEO of Dia Bras Exploration. ¡°This intercept is the only 100 meters laterally and 100 meters vertically from our Level 9 workings and more drilling will be done to plan our development of this exciting area. This discovery is significant because the existing infrastructure at Level 9 can provide early access to these new high-grade zones. In fact, mine development work on Level 9 of Promontorio is encountering excellent grades in the disseminated-silver rock as well as previously-unknown high grade veins within the disseminated zone.¡±

DRILLING
As part of the Company¡¯s more aggressive exploration and development program for the Cusi property approved earlier in the year, during November, 2012 the Company drilled a total of 4,002 metres at the Cusi project. A total of 2,904 metres was drilled from the surface and 1,098 metres underground. For surface holes, two were drilled on the San Ignacio-El Gallo vein, one on Promontorio Viejo vein, and four at Santa Eduwiges area on the San Bartolo vein. For underground holes, three were drilled from Level 1 of the Promontorio mine and three from Level 10 of the Santa Eduwiges mine.

Assay results have been received for two holes drilled in the Cuerpo Oriente area of the Promontorio mine and the results are shown below. In each hole, only one intercept has been made and the true width and orientation of the mineralized zones are not known at this time but are inferred to be about 30-40% of the core length. Additional drilling is planned to determine these factors.

A drill hole location map can be found at http://www.sierrametals.com/_resources/news/nr_2012_12_13_1.jpg while a cross section can be found at http://www.sierrametals.com/_resources/news/nr_2012_12_13_2.jpg.

Promontorio Mine

* All holes have prefix DC12
** Only one hole has penetrated each mineralized zone and the true width and orientation of the bodies is not known at this time. Additional drilling is planned.

MINE Development

Promontorio Mine
Ramp development continues from Level 5 towards Level 6, with about 45 meters more development required to reach Level 6. This ramp is important because it provides access from the surface to the higher levels of the silver disseminated area at Promontorio which start at level 5.

Frente 800 SW (Level 2) advanced 22 metres on the El Gallo vein and back samples over a length of 10 metres and 1.21 metres width yielded the following results: 149 g/t Ag, 0.63% Pb and 0.09% Zn.

Frente 972 NE (Level 5) advanced along the K vein and back samples over a length of 16 metres and 1.26 metre width yielded the following: 213 g/t Ag, 0.16% Pb and 0.33% Zn.

Development in Level 9 has encountered several high-grade veins within the disseminated zone as shown in the sample location map, which can be found at http://www.sierrametals.com/_resources/news/nr_2012_12_13_3.jpg. Values up to 3,351 g/t Ag over 1.1 m occur in the veins.

Santa Eduwiges Mine
On Level 11, Frente 9408 SW advanced 8 metres and averaged 627 g/t Ag, 2.0% Pb, and 0.27% Zn over an average of 1.5 metres. This drift also advanced 30 metres on Vein C and averaged 292 g/t Ag, 0.80% Pb and 0.38% Zn over an average of 1.11 m. Frente 603 NE advanced 14 metres and averaged 834 g/t Ag, 0.58% Pb and 0.55% Zn over an average of 1.75 metre.

Also on Level 11, Frente 650 NE advanced 19 metres to encounter Vein B of San Bartolo. An 11 metre drift along the vein averaged 160 g/t Ag, 0.17% Pb and 0.13% Zn over an average of 0.8 metre. The drift was continued another 15 metres to communicate with a drift on the Santa Marina vein.

Quality Control
The technical content of this news release has been approved by Thomas L. Robyn, Ph.D., CPG, RPG, a Qualified Person as defined in NI 43-101.

About Sierra Metals
Sierra Metals Inc. 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.

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

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.