Arias Resource Capital Fund II L.P. and Arias Resource Capital Fund II (Mexico) L.P. (the “Nominating Shareholders”), together with other affiliates of Arias Resource Capital and its principal (together with the Nominating Shareholders, “ARC”) holding approximately 27% of the outstanding shares of Sierra Metals Inc. (“Sierra” or the “Company”) (TSX: SMT), announces the filing and mailing of its dissident proxy circular (the “Circular”) in advance of the Company’s annual meeting of shareholders scheduled to be held on at 2:00 p.m. (Eastern time) on June 28, 2023 (the “Meeting”).

ARC is soliciting proxies for the election of five highly qualified and competent nominees – J. Alberto Arias, Derek White, Daniel Tellechea, Ricardo Arrarte, and Alonso Checa (collectively, the “ARC Nominees”) – to the Company’s Board of Directors (the “Board”). ARC is Sierra’s largest shareholder holding approximately 27% of the outstanding shares in the Company and has been a committed long-term investor since 2008. ARC understands Sierra’s assets and its long-term potential as well as the importance of a refreshed Board to urgently turnaround the Company.

ARC nominees intend to act swiftly to resolve Sierra’s mounting losses, share price collapse and financial liquidity challenges, and to restore the Company to its previous track record of excellence and value creation prior to mid-2021.


The current Sierra Board owns less than 1% of the Company’s outstanding shares and is not motivated to protect shareholder investments. It is responsible for the destruction of over 91% shareholder value in the two years since ARC representatives left the Board in mid-2021.

Under the current Board, the Company’s share price has been in a freefall. Sierra’s recent public announcements have made it clear that the Company’s operational and financial problems persist. The incumbent Board has an inadequate plan to turnaround the Company and to restore shareholder value while choosing to shift blame on others for their poor performance.


ARC believes that shareholders should reconstitute the Sierra Board by electing the ARC Nominees, who have the right mix of skills and prior experience in turning around the Company. When ARC representatives previously served on the Board, Sierra shareholders saw returns of 93.12% in 2020 and 188.33% cumulative (9.64% annualized) from 2010 until mid-2021. The Company’s market cap grew to more than US$600 million in Q2 2021 when ARC representatives were on the Board compared to the current market cap of below US$50 million.

The ARC Nominees have in-country experience in the mining and metals industry in Peru and Mexico, expertise in geological, mining and metallurgical engineering, experience in permitting and community engagement, and expertise in mining finance and M&A transactions in the metals sector. ARC believes that there is no better group of people to restore Sierra to its prior levels of profitability, as we have achieved previously.

Details of ARC’s five-point plan, its five nominees, its case for change, its information circular and previous press releases related to this matter, are available on


Sierra recently announced that it has agreed to covenants in a material credit facility that effectively entrench management for the foreseeable future. This blatant entrenchment tactic during the pendency of ARC’s proxy solicitation campaign has undercut the ability of shareholders and future directors to make managerial decisions.


All shareholders should be very aware that an offer for more than eight times the current market value of Sierra was rejected by the Board in Fall 2021, being subsequent to ARC representatives leaving the Board. In its May 12, 2023 press release, Sierra told shareholders “[t]he strategic review concluded in October 2021 without having identified a buyer for the Company or other strategic alternatives.”

After being publicly called out by ARC, the Company later admitted in its May 18, 2023 press release that “[Sierra] did enter into negotiations with another party which offered a cash and share deal with no premium to the market price of Sierra’s shares at the time of the bid. [Sierra] further negotiated with the proposed buyer, resulting in a revised cash and share offer with a small premium to the then market price" and that “it did not accept [such offer].”

Accordingly, given that the Company’s market capitalization in October 2021 was approximately US$400 million, there appears to have been an offer valued at hundreds of millions of dollars that the Board rejected. A Board that has failed twice in two different strategic processes, rejecting valuable offers to shareholders, should not be allowed to continue its mandate.


Sierra says its Q1 2023 performance has “improved significantly” by comparing its latest numbers with the worst period in the Company’s recent history - a transparent tactic that ignores the long-term value created by ARC during its leadership of the Company. Here are the facts:

  • Cash and cash equivalent balance have been reduced to $3.9 million compared to US$74.33 million on March 31, 2021, when ARC representatives were on the Board.
  • Q1 2023 EBITDA is still 40% below Q1 2021 EBITDA – the last full quarter when ARC representatives were still on the Board.
  • Sierra has negative working capital of $83.0 million, with current liabilities having ballooned to $157.3 million.
  • The Company had to take out a bridge loan of $6.3 million to meet its first quarterly principal repayment in 2023.
  • Net income has risen by a paltry US$9,000 over Q1 2022 and remains 43% below the Q1 2021 net income, the last full quarter when ARC representatives were on the Board.
  • Operationally, consolidated throughput is still well below the Company’s installed capacity, while costs continue to be high by historical standards.
  • All mines except Bolivar are accumulating losses.


Shareholders should be very concerned that, if re-elected, the incumbent Board may provide a minority group of friendly shareholders that vote in favour of them with the opportunity to acquire Sierra shares at prices that are not reflective of Sierra’s market value, while substantially diluting all other shareholders. Why does ARC suspect these arrangements and why should shareholders be concerned? Because Sierra effectively disclosed this quid pro quo arrangement when it said:

“[Sierra] received unsolicited communications from shareholders who collectively hold 24,728,870 Shares (approximately 15% of the outstanding Shares) advising [Sierra] that they intend to support the nominees of [Sierra] … certain of these shareholders have indicated that they are willing to provide further financial support to Sierra Metals.”1

Any such agreement, arrangement or understanding to this effect is unconscionable in the current circumstances and, if these arrangements exist, they should be publicly disclosed immediately by Sierra.


The YELLOW proxy must be received prior to 5:00 p.m. (Toronto time) on Friday, June 23, 2023 to make your vote count. Don’t Wait, Vote Right Away.

Shareholders can call or text Kingsdale Advisors on 1.888.370.3955 (toll free in North America), email, or chat with an advisor on for more information.


ARC has retained Kingsdale Advisors as its strategic shareholder, communications and proxy advisor and Stikeman Elliott LLP as its legal advisor.


Arias Resource Capital, founded in 2007, is a Miami-based private equity firm in the metals sector that invests in critical materials empowering the clean energy revolution.


This news release contains forward-looking information within the meaning of applicable securities laws (“forward-looking statements”) and are prospective in nature. These forward-looking statements are not based on historical facts, but rather on current expectations and may include projections about future events and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”, “will”, “may”, “should”, “could”, “believes”, “potential” or “continue” and similar expressions, or the negative thereof. Forward-looking statements in this news release include, without limitation, statements regarding the potential benefits, contributions and development of the ARC Nominees and the expected impact and results of Sierra’s corporate governance practices, and Sierra’s intentions regarding dilutive financings. There are numerous risks and uncertainties that could cause actual results and ARC’s plans and objectives to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements in this news release, including, without limitation, the risks described under the headings such as “Cautionary Statement – Forward Looking Information” and “Risk Factors” in Sierra’s annual information form dated March 28, 2023 for its fiscal year ended December 31, 2022, and other risks identified in Sierra’s filings with Canadian securities regulatory authorities which are available under Sierra’s profile on SEDAR at The forward-looking statements speak only as of the date hereof and, other than as required by applicable law, ARC undertakes no duty or obligation to update or revise any forward-looking information or statements contained in this news release as a result of new information, future events, changes in expectation or otherwise.


In connection with the Nominating Shareholders’ solicitation of proxies in respect of the Meeting, the Nominating Shareholders have filed and mailed the Circular and the YELLOW form of proxy to Sierra shareholders.

Any solicitation made by ARC will be made by it and not by or on behalf of the management of Sierra. All costs incurred for any solicitation will be borne by ARC, provided that, subject to applicable law, ARC may seek reimbursement from Sierra of ARC’s out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with any successful result at a meeting of Sierra shareholders. Proxies may be solicited by ARC pursuant to the Circular. Solicitations may be made by or on behalf of ARC by mail, telephone, fax, email or other electronic means as well as by newspaper or other media advertising, and in person by directors, officers and employees of ARC, who will not be specifically remunerated therefor. ARC may also solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian laws. ARC may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on its behalf, which agents would receive customary fees for such services. In particular, ARC has engaged Kingsdale Advisors (“Kingsdale”) to act as ARC’s shareholder and communications advisor and to act as its strategic shareholder advisor and proxy solicitation agent to solicit proxies in the United States and Canada. Pursuant to this engagement, Kingsdale will receive an initial fee of C$150,000, plus a customary fee for each call to and from shareholders. Proxies may be revoked by instrument in writing by a shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law and the articles or by-laws of Sierra. None of ARC nor, to its knowledge, any of its associates or affiliates, has any material interest, direct or indirect: (i) in any transaction since the beginning of Sierra’s most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Sierra or any of its subsidiaries; or (ii) by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted on by Sierra at the Meeting, other than the election of directors to the board of Sierra or as disclosed in accordance with applicable law.

See the Circular for further information regarding the Nominating Shareholders, ARC and the ARC Nominees. A copy is available under Sierra’s profile on SEDAR at

Sierra trades on the Toronto Stock Exchange under the symbol “SMT”. Sierra’s head office is located at 77 King Street West, Suite 400, Toronto, Ontario M5K 0A1.


Aquin GeorgeDirector, Special SituationsKingsdale Advisors647-265-4528

1 Page 4 of the Cover Letter to Sierra’s Management Information Circular dated May 29, 2023.

A photo accompanying this announcement is available at

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