Sierra Metals Inc. is a significant mineral property holder in Mexico with a land package of over 142,000 hectares. A brief summary of the principle exploration properties in the region is presented below.


The Company began reconnaissance exploration work on the Batopilas property in 2011 with encouraging results. The presence of visible free gold in stream sediments was identified over an 8 km2 area within the 25 km2 La Verde alteration area and is a high-priority target for detailed follow-up work for high- to medium-sulphidation gold mineralization. The property also hosts the Corralitos prospect, a molybdenum-copper deposit that was partially drilled by a previous owner in 1997 and drilled by the Company in 2011 with encouraging results. The primary target at Corralitos is stockwork-hosted molybdenum mineralization adjacent to a major NNE-trending fault.


The Maguarichic property is host to epithermal hot spring gold prospects. 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.


The Moris Property is a low-sulphidation epithermal gold and silver prospect that incorporates several historic mines and is being evaluated for potential near-term small-scale production.


On the Bacerac property, Sierra is targeting an area of historic workings known as the San Patricio prospect, where initial confirmation sampling over an interval of 8.3 m yielded weighted averages of 2.3 g/t Au and 1,722 g/t Ag, along with significant values of copper and lead. The Company’s geologists have mapped, trenched and sampled the San Patricio area, with reported results including a 23.5 m trench length averaging 0.59 g/t Au and 200.2 g/t Ag. Mineralization is hosted by shallow-dipping breccias.

Core drilling by Sierra resulted in a low recovery of samples from the breccias zones and further drilling is planned with RC (reverse circulation) method in order to improve sample recovery from the target breccias.