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Not for dissemination in the United States or through U.S. newswires
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All dollars are Canadian unless otherwise noted
Sierra Metals Inc. is pleased to announce that it has closed a non-brokered private placement (the “Private Placement”) to issue 43,107,360 common shares of the Company (“Common Shares”) at a price of $0.38 per common share for aggregate gross proceeds of $16,380,796.80, a portion of which has closed in escrow.
As of October 13, 2023, the Company has received $12,837,133.40 in connection with the issuance of 33,781,930 Common Shares in the first tranche of the Private Placement. $3,543,663.40, representing the funds for the second tranche of the Private Placement, are being held by the Company in escrow, pending satisfaction of conditions established by the Toronto Stock Exchange (the “TSX”).
Ernesto Balarezo Valdez, Sierra Metals’ CEO, stated, “We are pleased with the tremendous support we have received from shareholders and management as we have worked hard this year to stabilize and optimize our operations. Their participation in this Private Placement and their financial support validates our strategy to surface value for all our stakeholders.”
The proceeds from the Private Placement will be used to fund growth activities at the Company’s mines at Yaruicocha, Peru and Bolivar, Mexico, and for strategic capex and general working capital purposes.
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Common Shares issued pursuant to the Private Placement will be subject to a statutory hold period.
Directors and management of the Company participated in the Private Placement for an aggregate amount of 3,079,126 Common Shares, representing approximately 7.14% of the total financing.
Insiders of the Company (the “Participating Insiders”) participated in the Private Placement for an aggregate amount of 2,361,453 Common Shares. Such participation is considered a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). In completing the Private Placement, Sierra Metals relied on the applicable exemptions from the formal valuation and minority security holder approval requirements available under Sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, on the basis that neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Private Placement, insofar as it involves the Participating Insiders, exceeds 25% of the Company’s market capitalization calculated in accordance with MI 61-101. The Company did not file a material change report 21 days prior to the closing of the Private Placement as the details relating to the participation of the Participating Insiders were not settled until shortly prior to the closing of the Private Placement. Further information regarding the Private Placement will be provided in a material change report to be filed by the Company.
The Private Placement was among the alternatives considered by Sierra Metals as part of the Company’s strategic review process conducted with the assistance of CIBC Capital Markets
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