Sierra Minerals Inc.
TSX : SIM

Sierra Minerals Inc.

April 29, 2009 17:33 ET

Sierra Minerals Announces Initial 43-101 Mineral Resource Estimate

170,144 Ounces of Gold in Measured & Indicated (9.7 Million Tonnes at 0.55 g/t Au) 74,177 Ounces of Gold in Inferred (5.6 Million Tonnes at 0.41 g/t Au)

TORONTO, ONTARIO--(Marketwire - April 29, 2009) - Sierra Minerals Inc. (TSX:SIM) ("Sierra" or the "Company") is pleased to announce that it has received the results of its initial National Instrument 43-101 ("NI 43-101") compliant, independent mineral resource estimate completed by Caracle Creek International Consulting Inc. ("CCIC"). The effective date of the estimate is January 31, 2009.



Table 1
Mineral Resource Estimate(1) Cerro Colorado Mine - Summary

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Measured Indicated
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Cut-off Avg. Contained Avg. Contained
Grade Tonnes Grade Gold Tonnes Grade Gold
(g/t Au) (000's) (g/t Au) (ounces(2)) (000's) (g/t Au) (ounces(2))
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0.20 157 0.50 2,520 12,369 0.47 187,899
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0.25 107 0.63 2,157 9,599 0.54 167,987
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0.30 89 0.70 1,994 7,602 0.62 150,422
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0.40 73 0.78 1,815 5,142 0.75 123,171
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Measured + Indicated Inferred
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Cut-off Avg. Contained Avg. Contained
Grade Tonnes Grade Gold Tonnes Grade Gold
(g/t Au) (000's) (g/t Au) (ounces(2)) (000's) (g/t Au) (ounces(2))
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0.20 12,526 0.47 190,419 8,575 0.35 95,533
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0.25 9,706 0.55 170,144 5,599 0.41 74,177
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0.30 7,691 0.62 152,416 3,810 0.48 58,468
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0.40 5,215 0.75 124,986 1,936 0.61 37,772
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(1) Mineral resources that are not mineral reserves do not have demonstrated
economic viability. The estimate of mineral resources may be materially
affected by environmental, permitting, legal, title, taxation,
sociopolitical, marketing or other relevant issues.
(2) ounces calculated using the following conversion rate: 1 troy ounce
equals 31.103 grams


Reported at a cut-off grade of 0.25 grams per tonne gold ("g/t Au"), Cerro Colorado's initial measured and indicated resource is estimated to be 170,144 ounces of gold contained in 9.7 million tonnes at a grade of 0.55 g/t Au. An inferred resource of 74,177 ounces of gold contained in 5.6 million tonnes at a grade of 0.41 g/t Au has also been estimated (Table 2). The Cerro Colorado mine is currently using an operating cut-off grade of 0.22 g/t Au, therefore, the mineral resources estimated at a cut-off grade of 0.25 g/t Au are most consistent with current operating parameters.



Table 2
Mineral Resource Estimate Cerro Colorado Mine - 0.25 g/t Au Cut-Off

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Measured + Indicated Inferred
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Cut-off Avg. Contained Avg. Contained
Grade Tonnes Grade Gold Tonnes Grade Gold
(g/t Au) (000's) (g/t Au) (ounces(1)) (000's) (g/t Au) (ounces(1))
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0.25 9,706 0.55 170,144 5,599 0.41 74,177
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(1) ounces calculated using the following conversion rate: 1 troy ounce
equals 31.103 grams


This new mineral resource estimate is based on a 3D geologic model constructed using 444 surface drill holes and 7561 blast holes to constrain the Cerro Colorado gold mineralization. Sample data has been composited to 5m intervals. The presence of potential outlier sample data has been evaluated and an appropriate top cut has been applied for gold (3.695 g/t Au). The grade of blocks measuring 10m by 10m by 5m were estimated using inverse distance squared methodology.

This initial current mineral resource estimate has been completed Michelle Stone, P.Geo., of CCIC. Ms. Stone has reviewed pertinent geological information in sufficient detail to support the data incorporated in the mineral resource estimate. Ms. Stone is an Independent Qualified Person as defined under NI 43-101 and is responsible for the mineral resource estimate presented in this release.

The potential for a larger estimated mineral resource exists in the event that certain high grade samples turn out not to be outliers. Sierra will be implementing a revised sample quality assurance and control program to address this issue. The following table illustrates the estimated mineral resource at a cut-off grade of 0.25 g/t Au without applying a top cut to the sample data:



Table 3
Mineral Resource Estimate Cerro Colorado Mine - 0.25 g/t Au Cut-Off -
No Top Cut

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Measured + Indicated Inferred
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Cut-off Avg. Contained Avg. Contained
Grade Tonnes Grade Gold Tonnes Grade Gold
(g/t Au) (000's) (g/t Au) (ounces(1)) (000's) (g/t Au) (ounces(1))
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0.25 9,823 0.64 203,260 5,613 0.43 77,091
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(1) ounces calculated using the following conversion rate: 1 troy ounce
equals 31.103 grams


A technical report on the Cerro Colorado mine will be filed with SEDAR and published on the Sierra website within 45 days.

Historic Resource

As a basis for comparison, Kappes, Cassiday & Associates ("Kappes Cassidy") prepared a report dated April 20, 2005 in which they presented a historic mineral resource estimate for the property prepared from data provided by numerous sources. The estimate was based on 162 drill holes totaling 14,565 meters. The following historic mineral resource estimate does not conform to NI 43-101 standards, is not current and should not be relied upon.



Table 4
Historic Mineral Resource Estimate Cerro Colorado Mine

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Measured + Indicated Inferred
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Avg. Contained Avg. Contained
Tonnes Grade Gold Tonnes Grade Gold
(000's) (g/t Au) (ounces(1)) (000's) (g/t Au) (ounces(1))
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3,914 1.37 172,017 307 0.92 9,123
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(1) ounces calculated using the following conversion rate: 1 troy
ounce equals 31.103 grams


The Cerro Colorado gold mine has been in operation since 2003. From May 2003 to December 2004, prior to the Kappes Cassiday report, 8,392 ounces were produced. The mining statistics from 2005 to 2008 are shown in the following table:



Table 5
Mining Statistics Cerro Colorado Mine - 2005 to 2008

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2005 2006 2007 2008 Total
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Tonnes mined (000's) 2,074 3,032 3,194 3,625 11,925
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Strip Ratio 1.1 2.3 1.8 1.0 1.5
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Waste tonnes (000's) 1,108 2,108 2,039 1,856 7,111
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Ore tonnes (000's) 966 924 1,155 1,769 4,814
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Grade (g/t Au) 0.89 0.78 0.81 0.61 0.75
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Ounces placed 27,520 23,186 30,040 34,538 115,284
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Recovery (%) 54% 61% 59% 57% 57%
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Production (ounces) 14,870 14,085 17,606 19,669 66,230
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Based on historic metallurgical testwork, life-of-mine gold recovery is expected to be approximately 67% following final leaching. This suggests there are a further 10,000 to 11,000 ounces still to be recovered from the ore that has been placed on the leach pad from 2005 to 2008. The resources estimated by CCIC do not address ounces still on the leach pad. At a gold price of $900 per ounce, this would suggest the leach pad to contain a market value of approximately US$9.0 million of recoverable gold at extremely low cash costs as the largest expense of mining is already sunk. It is estimated that processing and other costs of completion, including transportation, refining and royalties would be approximately US$150 per ounce. In 2008, total cash operating costs at the Cerro Colorado mine were US$597 per ounce of gold sold.

It is also apparent that the grade associated with the historic resource was not representative of the actual grade of the deposit. It is however, extremely important to note that the Company has been successful in not only replacing annual production, but in also growing the size of the estimated mineral resource. Sierra has mined more ore tonnes in the last four years than were estimated to be contained in the historic resource. Overall, the mineralized tonnage associated with the Cerro Colorado deposit has grown almost five times from that included in the historic resource estimate. While the historic resource estimate is not NI 43-101 compliant, the following table forms the best basis for some form of continuity of estimated mineral resources considering that the Company has been mining for a number of years without a NI 43-101 compliant mineral resource estimate:



Table 6
Pro Forma Continuity of Mineral Resource Estimate - Cerro Colorado Mine

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Measured + Indicated Inferred
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Avg. Contained Avg. Contained
Tonnes Grade Gold Tonnes Grade Gold
(000's) (g/t Au) (ounces(1)) (000's) (g/t Au) (ounces(1))
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Historic
estimate(2) 3,914 1.37 172,017 307 0.92 9,123
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Less: 2005-2008
production (4,813) 0.75 (115,109) - - -
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Grade adjustment - - (72,805) - - (5,076)
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Subtotal (899) 0.55 (15,897) 307 0.41 4,047
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Resource
additions 10,605 0.55 186,041 5,292 0.41 70,130
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NI 43-101
estimated
mineral
resource(3) 9,706 0.55 170,144 5,599 0.41 74,177
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(1) ounces calculated using the following conversion rate: 1 troy ounce
equals 31.103 grams
(2) this historical resource is not NI 43-101 compliant, is not current or
reliable, and therefore should not be relied upon.
(3) reported at a 0.25 g/t Au cut-off grade.


The Company is on track to begin processing at an annualized rate of 30,000 ounces during the second half of 2009. Applying a 67% recovery rate to the estimated mineral resource, the Company feels that this processing rate could be sustained for five to six years. In addition, there is excellent potential to expand this initial mineral resource estimate. The Cerro Colorado deposit is structurally controlled and remains open both laterally and at depth. As a result, the Company has employed a structural geology specialist as its new Geology Manager with a view to increasing the size of the estimated mineral resource at the mine and establishing an estimated mineral resource on surrounding concessions.

Commenting on the initial NI 43-101 resource estimate, Michael Farrant, President and CEO of Sierra stated, "We are extremely pleased to finally have an independent NI 43-101 compliant estimate of our mineral resources around which we can begin to build a valuation of the Company. We have long believed that Sierra was significantly undervalued in the marketplace as a gold producing Company but were challenged with proving it. Given the prevailing gold price, a cost structure which should decline on a per ounce basis given a continuing weak Mexican peso and an increase in production rates, the investing community can use this independently estimated mineral resource to determine their own assessment of the Company's value. By any measure, we expect that to be significantly higher than our current market capitalization. We believe that the completion of this process is an extremely important step in seeing the true value of Sierra reflected in its share price."

About Sierra Minerals

Sierra Minerals is a Canadian based gold production and exploration company. The Company owns and operates the Cerro Colorado Gold Mine in Sonora, Mexico. All gold production is un-hedged and the Company expects to produce approximately 25,000 to 30,000 ounces of gold in 2009. The Company's exploration pipeline includes an extensive regional land package which covers over 34,000 hectares in Sonora, Mexico. Further information about Sierra Minerals and the Cerro Colorado Gold Mine can be found on the Company's website at www.sierraminerals.ca.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This news release includes "forward-looking information", as such term is defined in applicable securities laws. The forward-looking information includes, without limitation, the success of exploration activities and other similar statements concerning anticipated future events, conditions or results that are not historical facts including the extent of future production from the Cerro Colorado Gold Mine. These statements reflect management's current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward looking information is inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond the Company's control. Such factors include, among others, risks and uncertainties relating to exploration and development; the ability of the Company to obtain additional financing; the Company's limited operating history; the need to comply with environmental and governmental regulations; political and economic instability and general civil unrest in Mexico, if any; potential defects in title to the Company's properties; fluctuations in currency exchange rates; fluctuating prices of commodities; operating hazards and risks; competition; and other risks and uncertainties, including those described in the Company's other regulatory filings filed with the Canadian Securities Administrators and available at www.sedar.com. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. All statements are made as of the date of this news release and the Company is under no obligation to update or alter any forward-looking information.

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