Why Tender?

Significant Premium:  The Increased Offer Price represents a strong premium of approximately:

 

• 64% to the 30-day volume weighted average trading price of C$0.676 per Sierra Share on the TSX over the

30 trading days ended December 13, 2024 (being the last trading day prior to the announcement of
Alpayana’s intention to make the Offer);

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•  44% to the closing price of C$0.770 per Sierra Share on the TSX on December 13, 2024 (being the last

trading day prior to the announcement of Alpayana’s intention to make the Offer); and

 

•  41% to the closing price of the Sierra Share on the TSX on April 2, 2025, being the last trading day prior to

this announcement.

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​​Sierra Faces Significant Near and Long-Term Risks and Challenges. The Offer is compelling given the significant near and long-term risks and challenges Sierra faces including:

 

• Sierra is entering into a hostile macro-economic and local and international political environment with a vulnerable balance sheet and lack of scale. Sierra has high levels of expensive debt, a large working capital shortfall, an unpaid US$56.1 million obligation to its publicly listed subsidiary, Corona and high corporate expenses; along with being one of the highest cost per pound copper producers in the industry. Given Sierra’s thin margins, it is vulnerable to withstanding any potential unexpected production, labor, social, political, regulatory and/or macro challenges.

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• Sierra disclosed in its 2024 annual financial statement a restatement of its publicly released quarterly financial statements for 2024 and 2023. The audited 2024 results include a net adjustment to decrease inventory by approximately US$7.8 million and a corresponding increase in Cost of Sales by approximately US$5.31 million for nine months ended on September 30, 2024. This raises questions concerning the reliability of Sierra’s 2025 guidance. As a result of the identified error, the adjusted EBITDA for the first nine months of 2024 was reduced from US$51.3 million to US$45.92 million and net income was reduced from US$8.7 million to US$5.0 million.

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• There is a strong risk that if the Offer expires, Sierra shareholders may suffer further dilution potentially through another private placement. No announcement has been made by Sierra of any other potential offers for Sierra. Additionally, regulatory approvals in both Peru and Mexico are necessary for an acquisition of Sierra to take place; Alpayana has already secured these approvals. Alpayana expects that Sierra may need to undertake a capital raise of more than US$60 million4 just to normalize its working capital position. Sierra may also require additional fresh capital increases to reduce its expensive debt load and continue to fund its high Capex. This may result in further dilutive private placements, similar to the private placement undertaken in October 2023 at C$0.38 per share.

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• Corona does not appear to have the net worth to spin-off the Sierra obligation and Sierra does not appear to have the cash flows to repay Corona unless Sierra issues additional capital. If the Offer expires, Sierra will be asked to repay the obligation to Corona at fair market terms.
   

• Sierra’s reported Net Debt/EBITDA and FV/EBITDA are not reliable indicators in this case since they fail to recognize (i) that Sierra only owns 82% of Corona, and (ii) Sierra’s very high interest costs and high Capex affects debt service capacity and available income for dividends.​​

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Fully Funded Cash Offer. Alpayana is a credible counterparty with the resources and capability to close this acquisition based on its available cash. The Offer is not subject to any financing condition. 

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​The offer to purchase and circular and related documents were mailed to Sierra shareholders on December 30, 2024 and the Offer has commenced. The Offer to Purchase and Circular have been filed with the Canadian securities regulators on SEDAR+ under Sierra’s profile.

 

Alpayana Canada confirms that the condition to the Offer that PricewaterhouseCoopers LLP, as auditor to Sierra, deliver an unqualified audit opinion has been met. Alpayana also confirms that it has received the requisite Peruvian and Mexican regulatory approvals.

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