Name: Cusi mine.

Location: The Cusi mine is located in Chihuahua state in Mexico.

Holding and Controlling Company: Sierra Metals.

Brief Description: The Cusi mine is an operating mine with extensive supporting infrastructure and underground development. The property comprises 73 mineral concessions.

Brief History: Gold and silver were first discovered and exploited in the Cusi area at the San Miguel and La Candelaria zones in 1687, continuing until the Mexican War of Independence, which started in 1810 and ended in 1821.

From 1821 to 1881 the actual operations and production history in the vicinity of Cusi are not known.

From 1881 to 1890, mining operations were conducted by Don Enrique Mining. The Helena Mining company bought the property in 1896 and continued with mining operations until 1911.

The property was bought by Cusi Mexicana from Helena Mining company in 1911. Mining at the Cusi project area occurred intermittently from 1910 to 1920 during the Mexican Revolution.

Cusi Mining Company of American capital acquired the concessions of the Cusi project area from 1920s to 1937.Mining from the Cusi property was suspended from 1937 to 1970s. Mining operations took place in several mines in the Cusi property area. Limited mining was carried out by Minera Cusi in the 1980s and no quantities were reported.

Products: Silver, gold, lead and zinc.

Geology/Mineralisation: The Cusi region ranges from the andesitic volcanism of late Mesozoic to Eocene age, to the issuance of rhyolitic tuffs and ignimbrites of the Oligocene-Miocene age.

The Oligocene Bufa Formation ignimbrite forms the dominant topographic feature in the Cusi area. Older andesites in the area are members of the Loma del Toro Formation, located mostly to the north and north-east of the mineralised Bufa Formation.

The Cusi fault is a regional north-west-trending fault that may have localised and then faulted the caldera. Within the caldera, adjacent to the Cusi fault, a rhyolite dome has been identified which hosts much of the mineralisation in the district. Hydrothermal mineralisation at Cusi was episodic and accompanied by structural movement.

Galena, sphalerite and chalcopyrite are the predominant sulphide commonly ranging from 5% to 10%, with occasional massive sulphide zones. Historical mining activity in the district exploited a series of planar veins that cut a lower andesitic volcanic unit and an upper rhyolitic unit.

The veins occur in north-west and north-east-striking faults that appear to define an overall transtensional regime. All veins contain quartz, with a variety of crustiform and banded textures typical of the epithermal environment.

Reserves: Not stated.

Resources: Total indicated resources as at January 31, 2017, were estimated at 1.99-million tonnes grading 237 g/t silver, 0.16 g/t gold, 0.53% lead and 0.53% zinc.

Total inferred resources as at January 31, 2017, were estimated at 1.20-million tonnes grading 305 g/t silver, 0.14 g/t gold, 0.51% lead and 0.64% zinc.

Mining Method: Underground mine.

Major Infrastructure and Equipment: The mine includes two tailings dams, waste rock disposal areas and processing plant sites.
Sierra acquired the Malpaso mill, which is located 35 km north-west of the Cusi mine, in 2004. Power supply to the mill is supplied through a 1 290 KW power line.

Process water and water for the mining operations is sourced from the underground workings at the mine property while potable water is trucked in.

Prospects: Sierra is re-evaluating its development plan at the mine following a successful reinterpretation of the mine’s geology. Data from a recently completed 15 000 m drilling programme focused on the high-grade Santa Rosa de Lima zone to increase tonnage and grade at Cusi, has been encouraging.

Drilling in this area is based on a new conceptual interpretation of the Santa Rosa de Lima structure at the Cusi mine. This interpretation is based on exploration drilling of the north-west to south-east regional structural system and demonstrates that mineralisation is consistent across the assessed area.

Management plans to focus on improving head grades and maintaining production at about 400 t/d while stockpiling ore at the plant and producing it in batches.

The company also plans to improve head grades at the Santa Rosa de Lima zone to focus on the reinterpretation of geology at Cusi.

Contact: Sierra Metals investor relations Mike McAllister

Contact Details:

Sierra Metals

Tel +1 866 493 9646

Email info@sierrametals.com

Website http://www.sierrametals.com