MECHANIZATION THE KEY TO BOOSTING PRODUCTION

MECHANIZATION THE KEY TO BOOSTING PRODUCTION

IGOR GONZÁLEZ President and CEO of Sierra Metals

Q: What is the company’s strategy for developing its mines? A: One of the first steps we undertook when I joined the company was to create a management strategy. This strategy is quite simple. We have significant brownfield exploration potential at our three mines, so our first phase is to focus precisely on brownfield exploration. Once we identify new resources, we start working to increase our reserve resources via 43-101s. Last year, we increased resources at the Cusi mine by 130 percent and by 83 percent at our Bolivar mine, both located in Chihuahua. We also succeeded in increasing reserves at the Yauricocha mine in Peru by 134 percent. After translating our strategies into material value, we started working on the expansion of our operations. Our first step was to take Cusi from 300-400t/d to 650t/d by mid-2018 and then to 1,200t/d by January 2019. We are in the ramp-up period and undertaking the calculations for Cusi to become self-sustaining, which implies the production of 2,400t/d. This is our guidance for 2019 and we expect to reach that target by 4Q19. We need to prepare the mine at the plant level to

Sierra Metals is a mid-tier precious and base metals producer in

Latin America. It owns and operates three mines in commercial

production, including the Bolivar and Cusi mines in Mexico. The

company is focused on expanding global reserves and resources

sustain this growth. We increased the section of the main ramp from 3.5x3.5m to 5x5m. This allowed us to bring in larger equipment, surface equipment and to mechanize the entire mine. As this increased productivity, we are able to feed the plant at 1,200t/d and eventually at 2,400t/d. We also installed a ball mill, cyclones and crushers.

Q: How are you facing the challenge of automating your mines and reconfiguring your human capital to meet this new reality? A: Rather than fully automating our mines, we want to fully mechanize them. In all the areas where we used to employ labor, we are striving to implement Jumbos and other equipment that can do the job with just an operator or remote controls. While it is true that we are using less labor, we are also putting our equipment under the stress of working more operational hours. This requires a more detailoriented maintenance program. So, we use fewer operational people but more specialized and technical people. We have several partners from different countries helping our drive to mechanize our operations. All their new equipment comes with technical support. We have spent over US$10 million just in mechanizing the Bolivar mine and about US$4 million at Cusi. We also changed the mining method at Bolivar and Cusi to longwall mining, although we also use sublevel caving.

| VIEW FROM THE TOP

MECHANIZATION THE KEY TO BOOSTING PRODUCTION

IGOR GONZÁLEZ

President and CEO of Sierra Metals

| VIEW FROM THE TOP

MECHANIZATION THE KEY TO BOOSTING PRODUCTION

IGOR GONZÁLEZ

President and CEO of Sierra Metals

| VIEW FROM THE TOP

MECHANIZATION THE KEY TO BOOSTING PRODUCTION

IGOR GONZÁLEZ

President and CEO of Sierra Metals