Mr. Alexander Langer reports

SIERRA MADRE ANNOUNCES CLOSING OF $40 MILLION FIRST TRANCHE OF ITS $50 MILLION OFFERING

Sierra Madre Gold and Silver Ltd. has closed the first tranche of its previously announced brokered private placement offering pursuant to an agency agreement dated Jan. 14, 2026, entered into by the company, Beacon Securities Ltd., as lead agent and sole bookrunner, Canaccord Genuity Corp., BMO Capital Markets and VSA Capital Ltd., in connection with the offering. In connection with the first tranche, the company has issued 30,521,724 subscription receipts at a price of $1.30 per subscription receipt for gross proceeds of $39,678,241.20.

The offering is being conducted in conjunction with the company's proposed acquisition of the Del Toro silver mine in the Chalchihuites district in Mexico from First Majestic Silver Corp. (see the company's news release dated Dec. 17, 2025).

Each subscription receipt shall be deemed to be exercised, without payment of any additional consideration and without further action on the part of the holder thereof, for one common share of the company upon satisfaction of certain escrow release conditions, including the receipt of all required corporate, shareholder and regulatory approvals in connection with the transaction.

Pursuant to the closing of the first tranche, $38,568,280.26, being the gross proceeds of the subscription receipts issued under the first tranche less 50 per cent of the agents' fees (as defined below) and certain expenses of the agents, was placed into escrow and will be released to the company subject to and the completion or satisfaction of escrow release conditions as set out in the agency agreement. Provided that the escrow release conditions are satisfied prior to 5 p.m. Toronto time on May 14, 2026, the remaining 50 per cent of the agents' fees or $1,023,513.03 (and any interest earned thereon) will be released to the agents from the escrowed proceeds, and the balance of the escrowed proceeds (together with interest earned thereon) will be released to the company. However, in the event that the escrow release conditions are not satisfied by the release deadline, or if, prior to such time, the company advises the agents or announces to the public that it does not intend to satisfy the escrow release conditions, the escrowed proceeds together with the pro rata portion of any interest earned thereon (net of any applicable withholding tax) will be returned to the holders of the subscription receipts and the subscription receipts will be cancelled.

The company intends to close a second tranche of the offering, including the full exercise of the agents' option. The company intends to use the net proceeds of the offering to finance the completion of the transaction, for exploration and development of Del Toro following completion of the transaction and for general working capital purposes.

In connection with the closing of the first tranche, the company paid the agents a cash commission and corporate finance fee of $2,032,276.06, of which 50 per cent was placed into escrow, and issued to the agents 1,562,366 compensation options. Each compensation option entitles an agent to purchase one common share at the issue price during a term of 24 months from the closing of the first tranche.

The securities issued in connection with the offering are subject to a four-month hold period from the date of closing of the first tranche, in addition to any other restrictions under applicable law. The offering remains subject to certain conditions, including the receipt of final approval of the TSX Venture Exchange.

Certain directors and officers of the company subscribed for a total of 219,250 subscription receipts in the first tranche, for aggregate gross proceeds of $285,025. The placement to the interested parties constitutes a related party transaction within the meaning of Multilateral Instrument 61-101, Protection of Minority Securityholders in Special Transactions. The company has relied on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a), respectively, as the fair market value of the subscription receipts issued to the interested parties in connection with the offering does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101. The company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the offering as the details of the participation of interested parties had not been confirmed at that time.

About Sierra Madre Gold and Silver Ltd.

Sierra Madre Gold is a precious metals development and exploration company focused on the Guitarra mine in the Temascaltepec mining district, Mexico, and the exploration and development of its Tepic property in Nayarit, Mexico. The Guitarra mine is a permitted underground mine, which includes a 500-tonne-per-day processing facility that operated until mid-2018 and restarted commercial production in January, 2025.

The 2,600-plus-hectare Tepic project hosts low-sulphidation epithermal gold and silver mineralization with an existing historical resource.

Sierra Madre's management team has played key roles in managing the exploration and development of silver and gold mineral reserves and mineral resources. Sierra Madre's team of professionals has collectively raised over $1-billion for mining companies.

We seek Safe Harbor.