Alpayana S.A.C. ("Alpayana"), today announced that it has commenced a formal all-cash offer (the "Offer") to acquire all of the issued and outstanding common shares (the "Common Shares") of Sierra Metals Inc. (TSX: SMT) ("Sierra") through its newly formed Canadian wholly-owned subsidiary ( "Alpayana Canada").

The offer to purchase and circular (the "Offer to Purchase and Circular") and related documents were mailed to Sierra shareholders (the "Shareholders") on December 30, 2024 and the Offer commenced the same day. The Offer to Purchase and Circular have been filed with the Canadian securities regulators on SEDAR+ under Sierra's profile.  Alpayana has also completed the required anti-trust filings in Mexico and Peru.  The Offer material is available on www.sierrametalscashoffer.com.

Under the terms of the Offer, Shareholders who tender their Common Shares will receive C$0.85 in cash for each Common Share. The Offer represents a significant premium of approximately 26% to the 30-day volume weighted average trading price of C$0.676 per Common 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); and a 10% premium based on the closing price of C$0.770 per Common Share on the TSX on December 13, 2024. The Offer is open for acceptance until 5:00 p.m. (Toronto time) on April 14, 2025, unless the Offer is extended, accelerated or withdrawn by Alpayana Canada in accordance with its terms. 

The Offer allows Shareholders to monetize the current value of Sierra with a premium rather than continuing to be exposed to the structural stand-alone risks associated with the hurdles that Sierra faces. Sierra's continued structural problems, including lack of scale, high production costs, high expensive debt load and high corporate expenses relative to revenues, make its Shareholders highly vulnerable to foreseeable challenges in the Latin American debt markets, when access to additional capital is likely to be difficult. After approximately US$150 million in accumulated net losses over the last 10 years, Shareholders are encouraged to take advantage of this unique opportunity allowing for the redeployment of capital in more viable alternatives.

For Alpayana, despite the listed challenges, it views the acquisition of Sierra as an attractive opportunity as Alpayana has the resources available to eliminate the high corporate expense, the high yield debt and inject fresh capital to support the capex required to support the company's growth and cover the working capital shortfall. Alpayana also anticipates that its existing mining platform will be better suited to take advantage of economies of scale in advancing the asset.

REASONS TO TENDER TO THE OFFER  

OFFER DETAILS

The Offer is conditional upon specified conditions being satisfied or where permitted, waived by Alpayana Canada. These conditions include, without limitation: more than 50% of the outstanding Common Shares on a fully diluted basis being validly deposited under the Offer and not withdrawn; Alpayana Canada having determined, in its sole judgment, that no material adverse effect exists; and receipt of all necessary regulatory approvals. 

The Offer is not subject to a financing condition. Alpayana intends to fund the Offer from cash on hand. All cash payments under the Offer will be made in Canadian dollars; however, a Shareholder can elect to receive payment in U.S. dollars by checking the appropriate box in the letter of transmittal.

Alpayana encourages Shareholders to read the full details of the Offer set forth in the Offer to Purchase and Circular, which contains the full terms and conditions of the Offer and other important information, as well as detailed instructions on how Shareholders can tender their Common Shares to the Offer. Shareholders should consult their own tax advisors having regard to their own particular circumstances to determine the particular tax consequences to them of a disposition of Common Shares pursuant to the Offer, a compulsory acquisition or subsequent acquisition transaction.

FOR MORE INFORMATION AND HOW TO TENDER SHARES TO THE OFFER

Shareholders who hold Common Shares through a broker or intermediary should promptly contact them directly and provide their instructions to tender to the Offer, including any U.S. Dollar currency election. The deadline for Shareholders to tender their shares is April 14, 2025, 5:00 p.m. (Toronto Time). Your financial intermediary may require more time to deposit your shares before the deadline, please follow the deadline your intermediary provided.

Registered Shareholders should complete the letter of transmittal and follow the instructions provided in the offering documents mailed to them.

ABOUT ALPAYANA CANADA AND ALPAYANA

Alpayana Canada is a Canadian wholly-owned subsidiary of Alpayana and was incorporated for the sole purpose of making the Offer. Alpayana is a family-owned private mining company committed to the development and promotion of sustainable and responsible mining. It strives to leave a positive and meaningful legacy by prioritizing the well-being of its employees, the communities it impacts and the environment. Alpayana has been operating mines in Peru for over 38 years, has a successful M&A track record, and experience in developing projects with discipline and with a view on long term intrinsic value. Alpayana is currently debt-free and has annual revenues over US$500 million.

ADVISORS

McCarthy Tétrault LLP is acting as Canadian legal counsel to Alpayana Canada and Alpayana. Rebaza, Alcà¡zar & De Las Casas is acting as Peruvian legal counsel and Creel, Garcà­a-Cuéllar, Aiza y Enriquez, S.C. is acting as Mexican legal counsel to Alpayana Canada and Alpayana. Shorecrest Group is acting as the Depositary and Information Agent to Alpayana Canada and Alpayana in respect of the Offer. LXG Capital is acting as the sole financial advisor to Alpayana.

DISCLAIMERS

This news release is for informational purposes only and does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities. The Offer will be made solely by, and subject to the terms and conditions set out in, the formal Offer to Purchase and Circular, letter of transmittal and notice of guaranteed delivery. The Offer will not be made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This document contains "forward-looking statements" (as defined under applicable securities laws). These statements relate to future events or future performance and reflect Alpayana Canada and Alpayana's expectations, beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements include, but are not limited to, statements regarding: the Offer, reasons to accept the Offer and expectations that such reasons continue to be prevailing and risks and challenges facing Sierra. Such forward-looking statements reflect Alpayana Canada and Alpayana's current beliefs and are based on information currently available. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", "target", "intend", "could" or the negative of these terms or other comparable terminology.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating these statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions (including slowing economic growth, inflation and rising interest rates) and the dynamic nature of the industry in which Sierra operates.

Although the forward-looking information contained in this document is based upon what Alpayana Canada and Alpayana believe are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements contained in this document are made as of the date of this document and should not be relied upon as representing views as of any date subsequent to the date of this document. Except as may be required by applicable law, Alpayana Canada and Alpayana do not undertake, and specifically disclaim, any obligation to update or revise any forward-looking information, whether as a result of new information, further developments or otherwise.

Neither Alpayana Canada, Alpayana nor any of their subsidiaries, affiliates, associates, officers, partners, employees, representatives and advisers, make any representation or warranty, express or implied, as to the fairness, truth, fullness, accuracy or completeness of the information contained in this document or otherwise made available, nor as to the reasonableness of any assumption contained herein, and any liability therefore (including in respect of direct, indirect, consequential loss or damage) is expressly disclaimed. Nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future and no reliance, in whole or in part, should be placed on the fairness, accuracy, completeness or correctness of the information contained herein.

 

SOURCE Alpayana S.A.C.

SOURCE: Alpayana S.A.C.

For assistance or to ask any questions, Shareholders should visit
www.sierrametalscashoffer.com or contact Shorecrest Group at 1-888-637-5789 (North
American Toll Free Number) or 647-931-7454 (outside North America), or by email at
contact@shorecrestgroup.com.

COMTEX_461380086/2197/2024-12-30T18:13:00