ANNOUNCEMENT TO THE AUSTRALIAN SECURITIES EXCHANGE: 28 NOVEMBER 2012 DRILLING UPDATE MABILO PROJECT The Directors of Sierra Mining Limited ( Sierra ) are pleased to announce further results from reconnaissance drilling at the Mabilo Project. Hole MDH-05 intersected a new zone of mineralised magnetite skarn over 62 metres from 51 metres in a vertical hole. The intersection grades; from 51-113m 62 m at 2.66 g/t Au, 2.76 % Cu, 10.5 g/t Ag and 48.82 % Fe. The hole is located approximately 300 m north of hole MDH-01, however it is interpreted to be a separate zone of magnetite skarn to that which was intersected in MDH-01 (as announced previously). Hole MDH-10 was drilled to further test the zone of mineralised magnetite skarn in MDH-05 and intersected magnetite skarn with visible chalcopyrite from 60.5 m to the end of hole at 123.4 metres. No assays have been received for hole MDH-10. Holes MDH-06 to MDH-09 were aimed at confirming and extending the mineralised magnetite skarn zone intersected in hole MDH-01. Angled holes MDH-07 and MDH-09 both intersected similar magnetite skarn with visible chalcopyrite over 60 metres vertical extent and over 50 metres lateral extent in a NS and EW direction respectively. Final assays have not been received for holes MDH-06 to MDH-09 at this time. Hole MDH-04 intersected magnetite skarn from 65 to 91.5 metres depth with only minor visible disseminated chalcopyrite. The magnetite skarn zone included 26 m at 0.39 g/t Au, 0.17 % Cu and 45.2 % Fe from 65 metres, including 68-70 m 2 m at 3.20 g/t Au, 1.45% Cu and 11.1 g/t Ag. The zone may be an extension of the magnetite skarn intersected in hole MDH-01. A second zone of mineralisation in MDH-04 from 140 to 176 metres graded 0.20 g/t Au, 0.36% Cu and 129 ppm Mo over 36 metres. The mineralisation is not hosted by magnetite skarn and indicates the significant potential for the discovery of large tonnage low grade porphyry Cu-Au type mineralisation below the high grade magnetite skarn zones at Mabilo. Drilling is ongoing with 10 holes having been completed to date. Enquiries: Matt Syme, Managing Director +61 8 9322 6322 or +61 417 906 717
Background The Mabilo Project is located in the Paracale Mineral District of Camarines Norte Province, Eastern Luzon, Philippines. In addition to epithermal gold mineralisation, the Paracale mineral district hosts a magnetite [+Cu, Au, Ag, Mo, Co, U] skarn belt developed in the Palaeogene Universal Formation, a sequence of andesitic volcanics, volcanic derived sediments and black shales which are intruded by diorite and dacite porphyries. The Larap Mine in the north west of the belt had historical production of approximately 20 mt of iron ore. GEOLOGY AND MINERALISATION OF THE PARACALE DISTRICT Figure 1 Regional geology of the Paracale Mineral District. Sierra s Mabilo and Nalesbitan Projects are located to the south of the main areas of historical production. The Mabilo Project comprises one permit application APSA-V-001 of approximately 498ha. It is centered on a window of outcropping garnet-magnetite skarn within the Universal Formation at the Venida deposit, which was originally worked as an iron mine producing approximately 3,000 tonnes of magnetite ore between 1963-65. A previous tenement holder, Goldfields Asia Ltd, drilled 10 diamond core holes (totaling 892.75m) in 1989 in the garnet-magnetite skarn surrounding the magnetite zones 2 2
previously mined in the Venida pit. A number of shallow intersections of up to 30m width at grades up to 3.15 g/t Au, 65 g/t Ag and 1.38% Cu were reported. The Au-Ag-Cu mineralisation was reported to be strongly associated with magnetite in the skarn, which grades outwards from mineralised garnet-magnetite skarn to wollastonite-garnet skarn with low levels of magnetite and precious minerals. The Venida pit is currently being worked by artisanal miners who exploit the oxidised garnet-magnetite skarn for supergene enriched gold, silver and copper in addition to iron. The area surrounding the Venida pit is covered by younger post mineralisation volcanics of the Quaternary Labo Volcanics which obscures the Universal Formation host sequence and any additional skarn mineralisation. Ground Magnetic Survey A previous owner of the Project conducted a ground magnetic survey in the area in 2007. The survey was initially conducted on 100 m spaced EW lines and then in-filled on 50 m spaced lines over the large southern anomaly. The data was processed and modeled by a geophysical consultant who noted that the magnetic susceptibilities were extremely high and the strong anomalous lows [indicating highly magnetic rocks] were definitely indicating magnetite skarn mineralisation. Figure 2 - Total Magnetic Intensity [TMI] map from the 2007 ground magnetic survey at Mabilo. Note that strongly magnetic zones are marked by blue lows and weak magnetic intensity zones by red highs. 3 3
Much of the magnetite at the Venida pit was mined out prior to the survey, hence the relatively poor magnetic response over the Venida pit. Drilling indicated the Venida mineralisation dips shallowly to the south under cover which is confirmed by the presence of a magnetic anomaly immediately to the south of the Venida pit. Of greater interest are a number of much larger anomalies interpreted to represent magnetite and garnet magnetite skarn zones, and in particular the large anomaly in the southern part of the tenements. The geophysical consultant modeled seven highly magnetic target bodies as the sources for the southern ground magnetic anomalies. Figure 3 - Contoured TMI ground magnetic map with seven modeled highly magnetic targets [A-G] shown in pale blue and Sierra s completed drill hole locations in red. 4 4
Drilling Program The Project had not been drilled subsequent to the magnetic survey until Sierra instigated a reconnaissance drilling program at the large southern magnetic anomaly in late September 2012. The drilling program is aimed at testing the modeled magnetic anomalies and is expected to conclude in mid-december. Core samples are transported to the Company s field office and core yard for logging, sampling and storage. One metre, saw cut, half PQ and HQ cores are transported to the MacPhar/Intertec laboratory in Manila in the Company s vehicles. The samples are analysed for Au by a 50g Fire assay with an AAS finish. Cu, Ag, Mo, Fe, Pb, Zn along with a suite of other elements are analysed by ICP with OES or MS finishes. Duplicate, blank and standard samples submitted with the samples, along with the laboratories internal checking have returned consistent and repeatable results to date. The location of Sierra s drill holes are shown in Figure 3 above and in the table below. The results from initial geological logging and chemical analyses are summarised further below. Mabilo Project, Drill Locations Hole East North Elev. Inclination Azimuth EOH MDH 01 476063 1559988 116.1 90 145.4 MDH 02 476312 1559723 130.9 90 161.1 MDH 03 476551 1559901 128.5 90 124.6 MDH 04 476168 1559881 128.1 90 181.9 MDH 05 476110 1560280 111.3 90 129.8 MDH 06 476121 1560000 116.8 90 102.8 MDH 07 476078 1560036 114.5 50 180 136.0 MDH 08 476081 1560032 114.6 90 113.4 MDH 09 476107 1559968 117.7 50 270 143.7 MDH 10 476110 1560275 111.3 60 180 123.4 Table showing drill hole locations and orientations. All locations in WGS84, 51N projection. No down hole surveys have been conducted. Hole MDH-01 was completed at a depth of 145.4m and targeted on a modeled magnetic body between 70 and 180m depth. The hole intersected magnetite skarn with visible copper mineralisation between 36 and 86m in depth. As announced previously the hole intersected: 50 m at 3.90% Cu, 2.31 g/t Au, 14.09 g/t Ag and 51.95% Fe from 36-86m. 5 5
Holes MDH-02 and MDH-03 were targeted on modeled magnetic target bodies F and G to the south east of MDH-01 and failed to intersect significant mineralisation, although alteration in hole MDH-02 suggests it may be adjacent to magnetite skarn mineralisation. Hole MDH-04 was a vertical hole completed to a depth of 181.9 metres, targeting a fourth modeled target [body D] between 100 and 240 metres depth. The hole intersected magnetite skarn mineralisation from 65 to 91.5 metres depth, with only minor visible disseminated chalcopyrite. The magnetite skarn zone graded 26 m at 0.39 g/t Au, 0.17 % Cu and 45.2 % Fe from 65 to 91 metres, including 68-70 m - 2 m at 3.20 g/t Au, 1.45% Cu and 11.1 g/t Ag. A second zone in MDH-04 from 140 to 176 metres graded 0.20 g/t Au, 0.36% Cu and 129 g/t Mo. The mineralisation occurs within calcic skarn alteration with widespread ferruginous staining. The lack of magnetite skarn and the Cu-Au-Mo geochemical signature in this zone indicates the significant potential for the discovery of porphyry Cu- Au type mineralisation below the skarn zones at Mabilo. Hole MDH-05 was a vertical hole completed to a depth of 129.8 metres testing a modeled magnetic target [body A] located in a separate ground magnetic anomaly approximately 300 m to the north of Hole MDH-01. The hole intersected a ferruginous clay zone (representing oxidised and weathered magnetite skarn) from 50.8 to 61.5 metres overlying magnetite skarn with widespread chalcopyrite from 61.5 to 113 metres. The combined zone returned: 51-113 m 62 m at 2.66 g/t Au, 2.76 % Cu, 10.5 g/t Ag and 48.82 % Fe, comprising: - 51-61 m 10 m at 4.27 g/t Au, 4.69 % Cu, 18.4 g/t Ag and 24.67 % Fe; and - 61-113 m 52 m at 2.35 g/t Au, 2.39% Cu, 9.1 g/t Ag and 53.47 % Fe. As with the magnetite skarn zone intersected in holes MDH-01, MDH-07 and MDH-09 [body B] the upper part of the zone is weathered and oxidised, representing an old weathering surface subsequently buried by the emplacement of the Labo volcanics. The oxidised zone in this hole is deeper and less developed than in body B. It has elevated Cu and Au levels although no native copper was observed in this hole. The magnetite skarn in this hole is considered to be a separate zone to that intersected in MDH-01 as they are separated by a prominent zone of low-magnetic rocks and a barren drill hole [MDH-08]. Hole MDH-06 was drilled 50 metres to the east of hole MDH-01 and outside the modeled target [body B]. The hole failed to intersect the magnetite skarn zone and is interpreted to have intersected garnet endo-skarn alteration of a diorite intrusive rock. 6 6
Minor chalcopyrite and molybdenum occurs along fracture zones. Final assays have not been received for this hole. Figure 4. Interpreted North-South long section along 476,100m E, viewed looking to the east, showing the two discrete zones of Cu-Au-Ag bearing magnetite skarn intersected in drilling to date. The zones are separated by an altered diorite indicated by a magnetite poor zone in the ground magnetic survey. Hole MDH-07 was collared 50 metres north of hole MDH-01 and drilled at an angle of 50 degrees to the south to verify and test the extent of the mineralisation in MDH-01. The hole intersected magnetite skarn mineralisation between 43.2 and 122.6 metres indicating approximately 60 m vertical and 50 metres lateral [NS] extent of the mineralised zone. The mineralisation intersected has a similar profile to that seen in adjacent hole MDH-01. From 43.2 to 69.5 metres the mineralisation is very weathered with limonite, hematite, goethite, magnetite and chalcocite. Native copper occurs from 65-69.5 metres at the base of the oxidation zone. From 69.5 to 122.6 metres the magnetite skarn is unweathered and associated with widespread, visible, disseminated chalcopyrite mineralisation. No assays have been received. Hole MDH-08 was a vertical hole collared adjacent to Hole MDH-07 drilled to test the margin of the modeled magnetic body B. The hole intersected widespread garnet 7 7
endoskarn alteration of a possible diorite precursor but did not intersect any magnetite skarn mineralisation. Minor chalcopyrite and molybdenum occurs along fracture zones. No assays have been received. Hole MDH-09 was drilled to test the east-west extent of the magnetite skarn zone [body B] 30 metres south of hole MDH-01. The hole intersected magnetite skarn mineralisation between 35 and 120 metres representing approximately 65 metres vertical extent and 50 metres lateral extent in an east-west direction. The mineralisation intersected has a similar vertical profile to that seen in holes MDH-01 and MDH-07. From 35 to 65 metres the mineralisation is very weathered with limonite, hematite, goethite, magnetite and chalcocite. Native copper occurs from 51-65 metres at the base of the oxidised zone. From 65 to 120 metres the magnetite skarn is unweathered and associated with widespread visible disseminated chalcopyrite mineralisation. In places it contains zones of pre-cursor calcic skarn altered rock. No assays have been received. Figure 5. East-west section along 1,559,990N, viewed looking to the north showing the zone of Cu-Au-Ag bearing magnetite skarn intersected in MDH-01 and MDH-09. 8 8
Hole 10 was collared adjacent to MDH-05 and drilled at a 60 degree angle to the south to test the extent of the mineralisation and the contact with the diorite to the south of MDH-05. The hole intersected magnetite skarn mineralisation with visible disseminated chalcopyrite from 60.5 metres to the end of the hole at 123.4 metres. The hole was terminated in magnetite skarn mineralisation due to drilling difficulties. No assays have been received. Interpretation The reconnaissance drilling conducted to date has partly validated the geophysical modeling conducted by previous explorers. Five of the seven modelled magnetic bodies have been drill tested, with magnetite skarn mineralisation being detected at three of them, although at much shallower levels than indicated by the geophysical modelling. Two modelled targets in the south west of the area have not yet been tested due to difficulty in gaining access to the area. At least two distinct zones of blind magnetite skarn mineralisation containing significant grades of Au, Cu, Ag and Fe have been discovered. The two zones discovered in holes MDH-01 and MDH-05 have similar thickness and grades but are considered to be different bodies of mineralisation, as they are separated by a magnetite poor zone in the ground magnetic survey, confirmed as barren altered diorite where intersected in MDH- 08. The magnetite skarn located in MDH-04 may represent an extension of target body B intersected in MDH-01, although further drilling will be required to test this possibility. Due to uncertainty about the quality of the original magnetic survey data and the variable results from drill testing of the modeled bodies (including mineralisation being either absent or at shallower levels than indicated by modeling), the Company has contracted Southern Geoscience Consultants (SGC) to review the original magnetic data, re-model that data and to plan a new more detailed ground magnetic survey to be conducted in the new year. After re-processing the original magnetic data SGC have proposed a different model for the magnetite distribution, which is being considered by the Company. Including the Venida pit mineralisation, Cu-Au bearing skarn has been outlined at 3 sites over approximately 1 kilometre within the tenement, much of which is obscured by the overlying Labo Formation. A more detailed magnetic survey and more sophisticated modeling utilising the initial results of reconnaissance drilling (including magnetic susceptibility readings of core) will enable a better understanding of geology and more focused drilling program. Magnetite skarn mineralisation such as the zones discovered to date is commonly genetically and spatially related to porphyry copper mineralisation. The low grade Cu- 9 9
Au-Mo mineralisation beneath the skarn zone in hole MDH-04 is a typical porphyry geochemical signature, which indicates the potential for discovery of large tonnage low grade porphyry Cu-Au mineralisation beneath the high grade magnetite skarn zones. The information in this report relating to exploration results, mineral resources or ore reserves is based on information provided to Mr Robert McLean by Sierra Mining Limited. Mr McLean is an independent consultant geologist and is a corporate member of the Australian Institute of Mining and Metallurgy. Mr McLean has the relevant qualifications, experience, competence and independence to be considered an Expert under the definitions provided in the Valmin Code and Competent Person under the JORC Code. Mr McLean consents to the inclusion in the report of the matters based on the information he has been provided and the context in which it appears. 10 10