The company said the construction of the processing plant, to be located at the company's Bolivar Mine in Chihuahua State, Mexico, will be complete by December. An initial expenditure of $5.2 million for early procurement and contracting on the project has been approved.

The plant, which will produce 62% iron ore fines concentrate, will concentrate the magnetite as an additional process to the existing copper concentrator plant there, through a series of magnetic drums and regrinding equipment.

"The iron ore market is presenting value-enhancing opportunities for Sierra Metals and the company is taking decisive action to extract value from its existing iron ore-copper mineral resources," Luis Marchese, chief executive of Sierra Metals.

He added that the plant will have additional benefits for the company, including reduced haulage costs of its copper concentrate by rail.

The company raised the prospect of magnetite as a by-product at Bolivar in a Preliminary Economic Assessment released last November.

The same PEA noted plans to grow the Bolivar Mine's copper production rate to 10,000 t/d in 2024 from today's capacity of 5,000 t/d.