Mexico Exploration

Sierra Metals holds one of the largest land packages in the Cusi Silver mining district with over 230,000 hectares of property in the region. A brief summary of the principle exploration properties in the region has been provided below.

Arechuyvo Property

The Arechuyvo Property is a skarn-hosted copper-gold prospect. An exploration program is planned for the property in 2012 after field work is completed on other projects. Some exploration work had previously commenced with stream sediment sampling and will continue in 2012 with the objective of identifying drill targets.

Batopilas Property

This project contains three exploration prospects. The La Verde prospect is a 25 square kilometre, low to medium sulphidation gold prospect that is currently undergoing preliminary exploration activities, including stream-sediment and rock-chip channel sampling, to define drill targets on this large anomaly. The Company began reconnaissance exploration work on this project during its 2011 field season, with encouraging results. Work will continue in 2012 to identify drill targets. The Corralitos prospect is a molybdenum-copper deposit that was partially drilled by a previous owner in 1997 and drilled by Dia Bras in 2011 with encouraging results. Additional drilling is planned in 2012. Finally, the Satevo porphyry system prospect is currently being prepared for preliminary field work to be conducted in 2012.

Maguarichic Property

The Maguarichic Property hosts epithermal hot spring gold prospects. Maguarichic will be explored in 2012. In November 2010, Fresnillo, Plc. (“Fresnillo”), and the Company reached an amicable agreement whereby Fresnillo gave up its 30% interest in all of Maguarichic, and the Company transferred approximately 30% of the land concessions it held in the western section of the concessions to Fresnillo. The Company now holds 100% direct interest in its remaining Maguarichic Property.

Moris Property

The Moris Property is one of the Company’s precious metals projects, and is being evaluated for near term small-scale production. The Moris Property is a low sulphidation epithermal gold and silver prospect that incorporates several historic mines.

Oribo Property

The Oribo Property hosts a skarn anomaly prospective for copper-gold mineralization. Previously explored by another mining company in the late 1990s, this prospect is scheduled for field reconnaissance and exploration drilling in 2012

Bacerac Property

Dia Bras has identified a target at San Patricio within the Bacerac property, an area of old (artisanal) workings. Confirmation sampling by Dia Bras over an interval of 8.3 m during the exploration program yielded weighted averages of 2.3 g/t gold and 1,722 g/t silver, along with significant sampled values of copper and lead. The Company’s geologists have sampled, trenched and mapped the San Patricio area in preparation for a drilling program in 2012.   The results were reported earlier and include a 23.5 m trench length averaging 0.59 g/t Au and 200.2 g/t Ag.

Zacatecas Properties

The Zacatecas Properties include the Las Coloradas, San Julian and Cerro Gordo properties. The Las Coloradas Property is located approximately 20 kilometres north of the polymetallic operations at the Peñasquito mine. Las Coloradas is a polymetallic (silver-lead-zinc-copper-gold) prospect, and Dia Bras drilled the property in 2010, which included such results as 129.6 m averaging 72.6 g/t Ag, 1.38% Pb and 1.62% Zn (drill hole DLC10B005). The San Julian Property is located approximately 50 kilometres due west of the Las Coloradas Property and covers the majority of a historic mining district that initially produced high grades of precious and base metals at a small scale from mines in the center of the property land package. The Cerro Gordo Property is located approximately 50 kilometres from the Peñasquito mine. The property covers a magnetic anomaly, identified by the Servicios Geológicos Mexicanos (“SGM”), which is often associated with the intrusion-related carbonate replacement deposits known in the region.

Durango State Property

The East Durango Property is subject to a joint venture agreement with Quaterra Resources, Inc. (Quaterra). Quaterra may earn up to 75% interest in the concession by spending $0.5 million in exploration and development work on the property by September 15, 2012. Quaterra must also maintain the property in good standing by completing the semi-annual tax payments and minimum required annual work expenditures.