Sienna Gold Inc.
TSX VENTURE : SGP
BVLAC : SGP

Sienna Gold Inc.

September 27, 2011 09:00 ET

2010-2011 has Been Very Positive for Sienna Gold

CALGARY, ALBERTA--(Marketwire - Sept. 27, 2011) - Sienna Gold Inc. (TSX VENTURE:SGP) (BVLAC:SGP)

The year 2010-2011 has been very positive for Sienna Gold. The Company has accomplished a great deal in a short period of time. It has had drilling success, defined a major new exploration target, constructed 8 km of new roads, and assembled an excellent geological team in Perú. During 2011 the Company also secured financing in the gross amount of $11,099,765, by the issuance of shares and the exercise of warrants. The Company recorded financing costs of $574,326. These funds enable Sienna to push forward with resource definition and a pre-feasibility study for a small gold mine. The company also developed a new website, which can be viewed at www.siennagold.com.

Exploration update

A 4000 m drill program confirmed a major gold-silver-mineralized structure at Callanquitas (see press release of June 14, 2011). Mineralization consists of a main structure with numerous subsidiary structures with lower grades. The program confirmed deep oxidized gold-silver mineralization along a strike length of at least 900 m long. The structure is open north and south and at depth. Surface rock sampling (see press release September 20, 2011) indicates that high gold-silver grades occur over a large vertical interval (up to 400 m). Furthermore, there is excellent potential for high grade oreshoots; drill intersections include some bonanza silver grades of more than 5 kg/tonne. The target is becoming increasingly interesting for its silver content.

Mining and Production

The Company is taking steps to put the Domo and Tesoros areas of Igor into production. Two environmental impact assessments (EIA) were started during 2011. An EIA for continued drilling, a so-called semi-detailed EIA (SD-EIA), has been submitted. Approval will allow Sienna to mobilize drills for an infill drilling program to better define resources.

A 250 tonnes per day (tpd) plant planned in 2006 is still envisioned with the capital cost projected at about $10 million. This plant is intended to process the resources included in our 43-101 report, filed on SEDAR.

Indicated Resource Estimate Summary (this table reproduced from 43-101)


Tonnes

Grades (gpt)

Ounces
Gold Silver Gold Silver Gold Equ.
Tesoros Indicated 490,700 3.9 138 61,500 2,177,300 84,900
Domo Indicated 208,000 5.3 120 34,400 802,600 44,000
Total Indicated 698,700 4.3 133 97,000 2,979,800 128,900

Inferred Resource Summary (this table reproduced from 43-101)


Tonnes

Grades (gpt)

Ounces
Gold Silver Gold Silver Gold Equ.
Tesoros Inferred 87,900 1.6 300 4,500 847,900 13,600
Domo Inferred 252,000 5.5 175 44,600 1,418,000 59,700
Total Inferred 339,900 4.5 207 49,100 2,265,900 73,300

Operating costs will be determined once metallurgical testing is able to establish the parameters. The capital cost estimate is based on the assumption that the plant is constructed via EPCM (Engineering Procurement and Construction Management), not as a turnkey project.

Whole-ore agitated leaching is envisaged. This is widely used in northern Perú and has proven robust and effective. It is also relatively simple to construct and operate. Contract mining will be used, thus there is no requirement for mining equipment.

A comprehensive pre-feasibility study will probably not be available until 2013 because more geological information is required, permits need to be issued, informal miners evicted, and surface rights acquired. The Company will then make a production decision.

Community Relations

The Company completed an agreement with the community of Callanquitas for two years in December 2010. This is an exceptional achievement. Most similar agreements with communities in the area are for only 6 months to 1 year. The communities at and around Igor support the Company and appreciate the benefits, such as employment, that it provides.

Political Climate

An election took place in Perú in 2011. The new president is Ollanta Humala. Initially, investors feared that the new government would be unfavourable to mining. In line with many companies operating in Perú, Sienna Gold's share price declined dramatically. However, it now appears that President Humala's views and actions create a favourable investment climate. As with many commodity-rich countries, whether developed or developing, President Humala has proposed a new mining tax. This appears to be a fair tax, applied to operating profit and based on the commodity sales price. Judging by cabinet appointments and polices, the government is unlikely to upset the favourable investment climate enjoyed in Perú for the last 20 years. The Company is convinced Perú will remain a 'mining country'. The Sienna share price will improve as the Company continues to explore and grow the gold-silver resources at Igor.

The Future

The Company has set a target of 1 million ounces of gold. The discovery at Callanquitas should help approach this target. The Company has recently signed a contract for a drilling program of 10 000 m at Callanquitas, to start on October 15, 2011. This drilling, which will cost $2.5 million, will take place systematically on east-west fences, 100 m apart. The aim will be to define an Inferred resource for the top 200 m of the structure. This will consist of infill and step-out drilling to extend the strike length of the structure.

To broaden its portfolio, the Company is also seeking out new projects in Perú, Colombia, Chile and other countries.

John Rucci, Chairman

Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

The TSX Venture Exchange has neither approved nor disapproved of the information contained herein.

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