Sierra Geothermal Power Corp.
TSX VENTURE : SRA

Sierra Geothermal Power Corp.

December 29, 2009 18:07 ET

Sierra Geothermal Mails Management Circular for Proxy Battle

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 29, 2009) - Sierra Geothermal Power Corp. (TSX VENTURE:SRA) ("SGP") announced that it is mailing a management circular to its shareholders. The circular urges shareholders to support the current Board and oppose an attempt by dissidents to seize control of the Board at a special meeting scheduled for January 26, 2010.

In a letter to shareholders accompanying the circular, SGP's President and Chief Executive Officer Gary Thompson cautioned shareholders that the likely objective of the dissidents is to help a competitor, Ram Power Corp., to acquire SGP at a discount price. Below is the text of Mr. Thompson's letter.

Dear Fellow Shareholder,

Your vote has never been more important. A dissident shareholder, controlled by investor Richard Rule, is attempting for the second time to take control of your Board. We believe Mr. Rule's objective is to help our competitor Ram Power, Corp. to acquire SGP at a discount price.

Your Board is open to all strategic alternatives, including a transaction if it accurately reflects the value of SGP and your investment. A discount price transaction is not in the best interest of SGP's shareholders. We urge you to safeguard your investment and vote the GREEN proxy against Mr. Rule and in support of your Board and management.

Evidence for Mr. Rule's Discount Price Objective

Mr. Rule and his associates first disclosed their discount price objective to us in July 2009, as you will read in detail in the enclosed Management Circular. At the time Mr. Rule and his associates were developing a complex financial transaction to create Ram Power by combining a number of geothermal companies with a shell company. Mr. Rule wanted SGP to participate in the transaction at a price equivalent to $0.186 for each SGP share, an 18% discount to our market price then and a 31% discount to our recent market price of $0.27.

Your Board requested an explanation. Among other issues, your Board was concerned about the price premium provided to shareholders of Polaris Geothermal Inc., one of the geothermal companies involved in the proposed transaction. Put simply, your Board was aware that Mr. Rule and his associates faced a conflict of interest. They owned much more of Polaris than SGP. Your board had to ensure that the price for SGP was fair to all shareholders and was not providing a benefit to Mr. Rule and his associates at your expense.

Mr. Rule's Two Attempts to Take Control of SGP

Faced with your Board's questions, Mr. Rule launched his first attempt to take control of SGP. In July he requisitioned a special shareholders' meeting to remove your Board and replace it with an unnamed slate of nominees. This attempt failed as the requisition was defective.

Meanwhile, the proposed business combination advanced without SGP and established Ram Power as a new competitor. A company controlled by Mr. Rule is Ram Power's largest shareholder, with approximately 10%. This is much greater than Mr. Rule's ownership of approximately 5% of SGP and suggests that Mr. Rule's interests lie with Ram Power, not SGP.

On October 1, 2009, Mr. Rule renewed his effort to take control of your Board and advance Ram Power's agenda. A company he controls, Exploration Capital Partners 2005 Limited Partnership, served a second and corrected requisition for a SGP shareholders' meeting. This time, Mr. Rule wants to increase the number of directors from six to thirteen and elect seven hand-picked nominees to form a majority of the Board.

Mr. Rule's Nominees and Their Connections to Ram Power

Each of Mr. Rule's nominees has now or has recently had a connection to Ram Power or one of its predecessor companies and we believe that each nominee was chosen for his loyalty to Mr. Rule and Ram Power's agenda. We believe that if Mr. Rule takes control of SGP's Board, Ram Power will renew its efforts to acquire SGP at a discount and that these seven dissident nominees, as a majority of the Board, will facilitate this.

In summary, we believe that Mr. Rule seeks to pursue Ram Power's agenda at the expense of the other SGP shareholders. We believe that Mr. Rule seeks to enhance the value of his much larger financial stake in Ram Power by acquiring SGP at a discounted value through control of the Board and allowing Ram Power shareholders to benefit at your expense.

Your Current Board Deserves Support

Your current Board consists of a majority of independent directors with a strong track record of good performance and excellent corporate governance. The Board believes that SGP has attractive properties, knowledgeable management, a vibrant business and a promising future. SGP has performed very well against its peers in challenging economic times.

As you know, we have been able to secure financing and we are actively pursuing our business plan. With the recent successful completion of almost $11 million in equity financings and the support of US$10 million in grants from the U.S. Department of Energy, our overall plan for our Tier One projects is to advance at least 50 megawatts to bankable feasibility during 2010. If we achieve this, we believe we will be on our way to production and long-term stable revenue.

While your Board is willing to consider any reasonable offer to acquire SGP, we would only be interested in a transaction that makes sense for SGP and all of its shareholders, and we intend to continue to question any effort to be bought out at less than fair value.

RECOMMENDATION TO SHAREHOLDERS:

The Board urges you to vote on the GREEN proxy AGAINST the resolution to increase the size of the Board and WITHHOLD your vote on the resolution to elect seven dissident nominees.

Regardless of the number of shares you own, you must take action and cast your vote today by completing and returning only the GREEN proxy.

A special shareholders' meeting of SGP has been scheduled for 10:00 a.m. on January 26, 2010 at Suite 800 – 885 West Georgia Street, Vancouver, British Columbia, Canada. The meeting will be held to consider the proposals to have Mr. Rule's seven hand-picked nominees appointed to your Board. We believe these nominees are not up to the task of leading SGP into the future. We urge you to read the Management Circular and support the current Board and management.

If you have any questions or need assistance in completing your GREEN proxy, please call Laurel Hill Advisory Group at toll free 1-888-534-1149 or email at assistance@laurelhillag.com and they will be happy to help.

Yours truly,

Gary Thompson, Chief Executive Officer, President and Director

How to Cast Your Vote

The Management Circular and related proxy materials, including the GREEN proxy, have been mailed to persons who were shareholders of record as of the close of business on December 15, 2009. Investors and security holders may obtain a free copy of these documents on our website at www.sierrageopower.com/proxy at the Canadian securities regulators web site www.sedar.com and by mail. You can request the materials by contacting SGP's Investor Relations department, Sierra Geothermal Power Corp., Suite 500 – 666 Burrard Street, Vancouver, B.C., Canada, V6C 3P6, or by telephone: 1-800-563-5631, or by email at info@sierrageopower.com.

SGP and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from SGP's shareholders in connection with the proposed acquisition. Information concerning the interests of SGP's management who are participating in the solicitation is set forth in the Management Circular.

If you have any questions or need assistance in completing your GREEN proxy, please call Laurel Hill Advisory Group at toll free 1-888-534-1149 or email at assistance@laurelhillag.com and they will be happy to help.

About Sierra Geothermal Power Corp.

Sierra Geothermal Power Corp. is a renewable energy company focused on the exploration and development of clean, sustainable geothermal power. It is based in Vancouver, British Columbia and listed on the TSX Venture Exchange under the symbol SRA. Its portfolio of geothermal projects located in Nevada and California exceeds 365 square kilometres (90,000 acres) and has a combined total estimated capacity of greater than 500 MW. SGP intends to finance development by utilizing a combination of corporate equity, joint venture partnerships and project debt, with the support of US government grants and loan guarantees. To find out more about Sierra Geothermal Power Corp. (TSX VENTURE:SRA) visit our website at www.sierrageopower.com.

On behalf of the Board of Directors

Gary Thompson, Chief Executive Officer, President and Director

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This press release contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for future operations. In some cases you can identify forward-looking statements by the use of terminology such as "may", "should", "anticipates", "believes", "expects", "intends", "forecasts", "plans", "future", "strategy", or words of similar meaning. Forward looking statements in this news release include statements about SGP's belief that the dissident nominees will facilitate the acquisition of SGP by Ram Power, Corp. at a discount price; its belief in its plan to advance at least 50 megawatts to bankable feasibility during 2010 and that if it achieves this it will be on its way to production and long-term stable revenue; its belief that the Board would be interested in a transaction that makes sense for SGP and all of its shareholders; that the Board intends to continue to question any effort to be bought out at less than fair value; and that SGP intends to finance the development of its portfolio of projects through a combination of equity and/or joint ventures. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks inherent in our industry, the poor capital markets and other risks identified by us in our periodic filings on SEDAR (which can be viewed at www.sedar.com). Any of these risks could cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of its business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this press release. Except as required by applicable law, including the securities laws of Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

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