Sierra Metals Divests Non-Core Mexican Asset, Completes Strategic Portfolio Realignment

Sierra Metals Inc. has finalized a binding commitment with Silverco Mining Corp. regarding the divestment of its Cusi Mine property in Chihuahua State, Mexico. The arrangement marks a pivotal moment in the company’s operational restructuring, enabling Sierra Metals to consolidate resources around its primary revenue-generating operations.

Transaction Structure and Financial Terms

Under the definitive framework, Silverco Mining Corp. will acquire the Cusi Mine concessions along with supporting infrastructure—including land holdings, operational equipment, and environmental licensing. The compensation package includes an upfront cash payment of US$2,500,000 at transaction close, coupled with a 2.0% net smelter royalty that will flow to Sierra Metals from future production. Additionally, Silverco retains the optionality to acquire half of the royalty stake (1.0%) by remitting US$5,000,000 in cash at any point in the future.

Strategic Rationale Behind the Divestment

The Cusi Mine had previously been transitioned into care and maintenance status following a formal sales process initiated in September 2023. By offloading this non-core asset, Sierra Metals can redirect operational bandwidth and capital allocation toward its two cornerstone mining operations: the Yauricocha facility in Peru and the Bolivar operation in Mexico. This portfolio streamlining reflects a deliberate strategy to optimize returns from higher-performing assets rather than maintain marginal operations.

Company Overview

Sierra Metals operates as a Toronto-listed mining enterprise with a strategic focus on copper extraction, supplemented by base metal and precious metal byproducts. The Yauricocha and Bolivar mines serve as the backbone of the company’s production base. Beyond near-term optimization efforts, Sierra Metals maintains an exploration pipeline with multiple brownfield discovery opportunities in both Peru and Mexico, positioned adjacent to existing mining infrastructure. The company’s extensive land concessions at each location provide medium to long-term mineral resource expansion potential.

Timeline and Regulatory Pathway

Transaction completion is projected for Q2 2024, contingent upon finalization of definitive agreements and receipt of necessary regulatory clearances. While the parties have committed to this framework, execution remains subject to standard closing conditions and cannot be guaranteed in its current form.

Advisory Support

Sierra Metals engaged SCP Resource Finance as its financial consultant, with Mintz LLP providing domestic legal guidance and RB Abogados offering Mexican legal expertise throughout the transaction process.