Sierra Minerals Inc.

Sierra Minerals Inc.

February 28, 2009 00:55 ET

Sierra Minerals Announces Non-Brokered Private Placement Offering

Receives First Tranche of $1,500,000 and Updates Corporate Debt Facilities

TORONTO, ONTARIO--(Marketwire - Feb. 27, 2009) -


Sierra Minerals Inc. (TSX:SIM) ("Sierra" or the "Company") today announces a non-brokered private placement offering of up to 10,000,000 units at $0.20 per unit. Each unit consists of one common share and one half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one additional common share at a price of $0.30 for a period of 24 months from the closing of the offering. The Company received the first tranche of the private placement in the amount of $1,500,000 for 7,500,000 units. The proceeds of the offering will be used to make certain debt repayments (see "Warman Loans" below for further comments), capital improvements required to expand production at the Cerro Colorado gold mine from 20,000 ounces per year to approximately 30,000 ounces per year and for general working capital purposes. No fees are payable in respect of this offering.

The balance of the non-brokered private placement of up to another 2,500,000 units is expected to close in a second tranche within the next week.

The Company also wishes to provide the following update on its various corporate debt facilities:

Warman Investments Pty. Ltd. Loans:

The Company also announces it has agreement with Warman Investments Pty. Ltd. ("Warman") to restructure an outstanding US$1,950,000 principal loan. The Company has agreed to repay US$500,000 in principal and all outstanding and unpaid interest on the loan out of proceeds from the non-brokered private placement. The balance of US$1,450,000 is to bear interest at 8% payable quarterly and repayable as follows: US$150,000 on or before June 30, 2009, US$350,000 on or before September 30, 2009, US$500,000 on or before December 31, 2009 and US$450,000 on or before March 31, 2010.

The Company also paid US$105,000 to settle a separate approximately US$115,000 20% interest rate loan to Warman.

Aggra Performance Ltd. Loan:

The Company also renegotiated an originally US$200,000 principal convertible debenture held by Aggra Performance Ltd., eliminating the convertibility feature. The loan bears interest at 15% and provides for the following payments: US$20,000 on or before January 15, 2009 (paid), US$20,000 on or before February 15, 2009 (paid) US$20,000 on or before March 15, 2009, US$20,000 on or before April 15, 2009, US$20,000 on or before May 15, 2009 and the remainder due on or before June 15, 2009. There is no penalty for early repayment. The outstanding principal balance currently stands at US$71,213.

Keith Piggott Loan:

As disclosed in a news release dated December 24, 2008, the Company successfully renegotiated the terms of this US$70,000 loan. The annual interest rate was lowered to 4% retroactively to September 15, 2007 and the due date was set as December 31, 2009. During February 2009, the Company paid US$20,000 towards principal and unpaid interest. The outstanding principal balance currently stands at US$54,005.

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 20,000 to 30,000 ounces of gold in 2009. Sierra is currently completing its initial NI 43-101 mineral resource estimate at Cerro Colorado which is expected to be completed in Q1 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


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 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.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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