Sierra Metals Inc. (TSX:SMT) (BVL:SMT) (NYSE:SMTS) (“Sierra Metals” or “the Company”) confirms that it received an unsolicited, non-binding letter of intent (the “LOI”) following the close of business on October 27, 2022 from Compañia Minera Kolpa S.A. (“Kolpa”), among others.

The LOI outlines indicative terms for a proposed: (a) business combination of Kolpa and Sierra Metals; and (b) concurrent financing by an investment firm (collectively, the “Proposal”).

The LOI was submitted by Kolpa with its shareholders Arias Resource Capital Fund II L.P. and Arias Resource Capital Fund II (Mexico) L.P., among others. The LOI states that Arias Resource Capital Fund II L.P. and Arias Resource Capital Fund II (Mexico) L.P. and other members of the Arias Group (and principals) hold approximately 27% of the common shares of Sierra Metals.

As previously announced, a Special Committee of the independent members of Sierra Metals’ Board of Directors (the “Special Committee”) was formed with a mandate that includes exploring, reviewing and considering financing, restructuring and strategic options in the best interests of Sierra Metals.

The Special Committee is reviewing and considering the Proposal, with the assistance of financial and legal advisors to the Special Committee and to the Company. The Special Committee will consider the benefits of the Proposal to the Company and its stakeholders and all viable alternatives that may be or may become available to the Company. No decisions or recommendations have been made by the Special Committee regarding the transactions that are the subject of the Proposal at this time and the LOI has not been executed by the Company. Shareholders do not need to take any action with respect to the Proposal at this time.

The Company will continue to provide appropriate disclosure of any material developments as they arise.

Sierra Metals Receives Non-binding Letter Of Intent From Compania Minera Kolpa