SIERRA MINING LIMITED 
By
The Directors of Sierra Mining Limited ("Sierra") are pleased to advise that the Philippines Mines and Geosciences Bureau ("MGB") has today issued the important Exploration Permit #014-
2013-V for the Mabilo Project, to the Company's Philippines associate, Mt Labo Exploration and
Development Corporation ("Mt Labo").
Mt Labo is now finalising plans to commence a new exploration drilling program at Mabilo.
A drilling training program at Mabilo in late 2012 discovered two areas of high grade Cu-Au-Ag magnetite skarn mineralisation, based on a ground magnetic survey conducted by a previous owner. The impending program is designed to drill out those zones with a view to estimating JORC compliant resources. The program will also test extensions to the known mineralisation as well as two previously untested magnetic targets.
Subsequent to the 2012 drill program, Sierra has completed a new ground magnetic survey, supervised and interpreted by Southern Geoscience Consultants ("SGC"). While the anomalies identified in the SGC survey are similar to those identified in the previous survey, the new data and interpretations are considered to be substantially more reliable, because of better data acquisition and the availability of drill core from previous drilling of the two magnetite skarn bodies, which allows more constrained modeling of the ground magnetic data.
Further details of the magnetic survey and proposed drill program are set out below.
A shareholders meeting will be held on 19 July 2013 to approve a joint venture pursuant to which Galeo Equipment and Mining Co, Inc ("Galeo") can earn a 36% interest in the Mabilo Project (down to 200m). The drill program will be undertaken by Galeo pursuant to the joint venture, if it is approved by shareholders.
In late 2012 Sierra completed 12 exploration drill holes aimed at magnetic targets defined by a previous holder of the tenement. The contoured magnetic data (blue indicates high magnetic background), modeled targets and drill holes completed by Sierra in 2012 are shown in Figure 1 below.
Figure 1. Contoured ground magnetics, modelled targets and location of Sierra's drilling
Drilling at 3 of the 5 target bodies tested intersected significant magnetite skarn mineralisation, with two of the intersections of magnetite skarn mineralisation containing high grade Cu, Au and Ag values. The third zone of magnetite skarn was only intersected in one hole (MDH-04) and has significantly lower Cu and Au grades in addition to more abundant pyrite. The two eastern most targets were not drilled due to land access issues.
Additional drilling on the two high grade magnetite skarn zones indicated consistent high grade Cu and Au grades and thickness. The drilling has not closed off the lateral extent of either body. The magnetite skarns have been affected by weathering and are variably altered to hematite. The upper section of the southernmost body in particular was weathered prior to deposition of the overlying cover rocks, leading to complete hematite replacement of the original magnetite and significant remobilisation of Cu and Au within the weathered skarn. Gold has been variably remobilised throughout the weathered skarn, whereas copper has been concentrated into a high grade supergene zone containing native copper at the base of the weathering profile.
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All three of the magnetite skarn bodies are in places surrounded by zones of significantly elevated Cu and Au values in the surrounding and underlying calcic skarn altered sediments indicating a large hydrothermal system and the potential for lower grade large tonnage mineralisation both adjacent to the magnetite skarns and within a causitive porphyry Cu-Au bearing intrusive.
The best intersections from Sierra's drilling were:
Table 1. Best intersections from Mabilo 2012 drilling program
The drilling indicated that the three magnetite bodies were thinner and occurred at shallower depths than indicated in the modeling of the previous ground magnetic data.
Subsequent to the 2012 drilling program, Sierra engaged Southern Geoscience Consultants (SGC) to review the previous magnetic survey. SGC identified deficiencies in the previous data acquisition procedures and recommended a new ground magnetic survey be undertaken.
The new ground magnetic survey is being conducted on 50m spaced lines, in-filled to 25m spacing over the priority areas, with readings taken at 5m spacing on all lines. The survey is undertaken by Sierra staff with an SGC consultant reviewing the data quality on a daily basis. The survey is ongoing but the data from the priority areas has now been processed and modeled by SGC. Figure 2 shows the total magnetic intensity TMI image for the ground magnetic work completed to date.
The survey data is considered to be superior in quality to that of the old survey data and the modeling of the new data is significantly better as geology logs and magnetic susceptibility readings from the recent drilling by Sierra have been used to constrain potential models for the magnetite bodies. It should be noted that the modeled magnetite bodies discussed below do not
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include hematite zones as hematite is not magnetic, therefore in places mineralisation may be more extensive than indicated by the modeled magnetic bodies.
Figure 2. TMI image for 2013 ground magnetic survey
SGC have modeled the new survey data using both 3D inversion modeling of the gridded data and 2D forward modeling based on individual survey lines adjacent to drill holes which intersected magnetite skarn mineralisation.
SGC have identified four targets for Sierra's upcoming drilling program, as shown in Figure 2. Two of these (the South East and North East Anomalies) are as yet untested by drilling. The North Body was previously tested by holes MDH-05, 10, 11 and 12 while the South Body was previously tested by holes MDH-01, 04, 07 and 09. The modeling has significantly extended the South Body to include the mineralisation in MDH-04 (previously interpreted to be a separate body) and a deep extension of the mineralisation to the SE as discussed further below.
The modeled magnetite mineralisation shown as the red stippled square in Figure 3 below correlates with modeled Target A from the previous ground magnetic survey. Sierra's drill holes MDH-05, 10, 11 and 12 were drilled to test the target with holes 05, 10 and 12 all intersecting Fe-Cu-Au mineralisation from approximately 50 to 110 m below surface. The new modeling shows that hole MDH-11 which intersected an extensive zone of low grade Au-Cu in
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predominantly hematite mineralisation was collared above but oriented away from the magnetite target zone.
The modeled thickness of the mineralisation is 47m, which is based on a magnetic susceptibility cut-off of 0.7 SI units in holes 5, 10 and 12 and the ground magnetic data. However, in reality the mineralisation is thicker as the upper part of the body is more hematite rich and therefore below the magnetic susceptibility cut-off and outside the modeled magnetic body. Hematite altered skarn overlying the magnetite in MDH-05 (the only vertical hole) graded 4.56 g/t Au,
5.02% Cu and 22.74% Fe over 9 metres from 51 metres depth.
Figure 3. Northern mineralised body (based on 2D modeling) and location of Sierra's drill holes.
South BodyModeling of the South Body suggests that the zone intersected in Holes MDH-01, 07 and 09 is continuous with the mineralisation intersected in MDH-04, although they are represented as two intersecting but different orientated modeled bodies in Figure 4 below. The northernmost of the two bodies is flat-lying and modeled as 50 metres thick at a magnetic susceptibility cut-off of 0.7
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SI units. This zone is significantly weathered to hematite in the upper parts with a high grade copper zone (with native copper) at the base of the weathering and therefore, the mineralisation is thicker than indicated by the modeled magnetic body. The lithological variation in the mineralisation in MDH-01 (the only vertical hole) is shown in the table below.
From | To | metres | Lithology | Au g/t | Cu % | Fe % |
26 | 40 | 14 | Hematite, clays | 2.25 | 0.27 | 36.13 |
40 | 52 | 12 | Hematite/magnetite | 2.66 | 9.32 | 46.61 |
52 | 86 | 34 | Magnetite skarn | 2.16 | 2.39 | 55.23 |
Figure 4. Southern mineralised body (based on 2D modeling) and location of Sierra's drill holes.
The larger southern part of the zone was only intersected in Hole MDH-04 which is now interpreted to have intersected the upper NE edge of a large SW dipping body. The magnetite skarn interval in MDH-04 was shorter (22 metres) and had lower Cu and Au grades (22m at
0.44 g/t Au, 0.20 % Cu and 45.67 % Fe from 65 metres) than other holes which intersected magnetite skarn. There is no obvious hematite zone but the magnetic susceptibility readings for the magnetite interval are low (average of 0.19 SI units) suggesting pervasive alteration of magnetite to other non-magnetic Fe oxide minerals along fractures and grain boundaries. The presence and down dip extent of this modeled body is largely based on the 3D modeling of the ground magnetic data taking into account the better constrained mineralisation immediately to
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the north as well as the North Body further to the north. The orientation and dimension of the body is based on 2D modeling taking into account the MDH-04 intersection.
SGC noted that "The forward 2D magnetic models, constrained by previous drilling results, produced good model fits for the shallow targets (ie the Northern Target and the northern extent of the Southern Target). There is a strong degree of confidence in these modeling results. The deeper SE limb of the Southern Target is less well constrained and confidence in the modeling is lower."
This target is located approximately 700 m to the east of the southern body and has not been drilled tested, therefore the model is not constrained by drill hole magnetic susceptibility data. The modeled body is similar in size to the northern body and northern part of the southern body. The top of the target is modeled as approximately 85m below surface but the presence of a possible weathered hematite zone above the modeled magnetic zone would increase the thickness of the mineralisation as well as reduce the depth to mineralisation.
Figure 5. Modeled South-East Anomaly and proposed drill hole.
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North-East Anomaly
The North-East Anomaly is a less intense but more extensive magnetic anomaly over a strike length of 250 to 300m. The anomaly trends ENE to WSW and is located approximately 650m along strike from the Venida artisanal workings. The anomaly is lower in amplitude than the anomalies over the North and South bodies and the SE Anomaly. Modeling suggests the anomaly is caused by at least two bodies or magnetic trends interpreted to dip steeply to the NNW (Figure 6). The tops of the modeled bodies are interpreted to be relatively shallow (48 and
52m below surface) thus magnetite may be extensively weathered to hematite and the two modeled magnetic bodies may represent the less weathered core zones of a more extensive hematite body.
Figure 6. Modeled magnetic targets for the North-East Anomaly and three proposed drill hole locations. Note that two sets of modeled targets (shown in purple and orange) based on two lines are shown for the two NNE dipping bodies.
SGC note that the TMI data has been modeled using 2D forward and 3D inversion modeling routines, neither of which method has produced robust results, due to the low amplitude and high noise levels in the TMI signal. The 3D inversion algorithm produced a weakly magnetic, amorphous body that strikes to the northeast and plunges steeply to the north while 2D forward modeling of selected profiles indicates two moderately north-dipping, moderately magnetic
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bodies that extend from 50 to 150m below surface. There is a higher level of confidence in the northern modeled magnetic body, therefore two of the three proposed drill holes, have been targeted on the northern body.
Proposed Drill Program
The upcoming drilling program is intended to:
1. Allow estimation of mineral resources on the North and South Bodies intersected initially in holes 1 and 5 previously.
2. Test the modeled extension previously encountered in hole 4 and if results warrant, generate sufficient information to estimate a mineral resource.
3. Test the previously undrilled South-East and North-East anomalies.
4. Test any other substantial targets generated by the ground magnetic survey.
The drill program is expected to comprise initially 16-20 vertical diamond core holes from 100-
150m deep. If the initial results validate the SGC model for the large SW dipping block, up to 15 further holes (to 300m max) may be required to test the deeper extensions and generate data for a mineral resource estimation.
All drilling will be undertaken by Galeo Equipment and Mining Co, Inc pursuant to the Joint Venture agreement described in the announcement to the ASX dated 13 May 2013. The program is expected to commence as soon as final planning is completed and permissions granted.
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" as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (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.
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