Silver and Gold Mining Operations Show Strong Progress and Growth Potential

1. Sierra Madre Gold and Silver Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madre Gold and Silver Ltd.
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Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has revealed promising results from test mining operations at its La Guitarra silver-gold mine complex in Estado de Mexico. Since June 25 of this year, the company has been actively conducting test mining and processing, with throughput rates reaching up to 504 wet metric tonnes per day in October. Over the period from October 1 to 18, the average daily throughput has been 428 wet metric tonnes.

The flotation plant has been in continuous operation, achieving an average silver recovery of 78%, while gold recoveries have increased from 74% in June to 87% in October. Since the start of test operations, the company has processed over 39,000 tonnes of mineralized material. They have shipped 690.44 dry metric tonnes of concentrate to MRI Trading with provisional payment grades of 2,903 grams per tonne of silver and 34.74 grams per tonne of gold. Sierra Madre is ramping up mining and processing activities as it anticipates beginning commercial production by the end of 2024.

Why Gold and Silver?

On October 17, Barchart reported that silver and other precious metals were experiencing strong growth due to increased market uncertainties and bullish investor sentiment. The article stated, "Silver and gold are experiencing a strong resurgence, fueled by growing market uncertainties and bullish investor sentiment. The upside potential for silver is significant in the coming months."

It added, "As inflation continues to impact the global economy, precious metals like silver are positioned for substantial gains, with silver showing remarkable resilience in the current environment."

In an October 18 report from Reuters, silver was projected to reach even higher prices in the near future, driven by industrial demand and heightened investor activity. The report highlighted, "Silver is expected to reach US$35 per ounce within the next three months," pointing out that "silver has already seen a 6% rise to US$33.58, fueled by strong industrial demand and investor interest amid ongoing global uncertainties." Additionally, the report noted that silver "continues to benefit from its dual role as both an industrial metal and a safe-haven asset during times of geopolitical tension and market instability."

As Money Metals wrote on October 21, silver had an impressive breakout, driven by heavy trading volumes and short-covering. "Silver surged 6.38% on Friday, breaking decisively through the US$32.50 resistance level, supported by strong trading volumes. This marks the start of the next phase of the silver bull market," the article explained.

It added, "The silver market is seeing significant interest from institutional investors, and the surge in prices is likely to continue as supply constraints and industrial demand remain strong." The report also noted that "traders scrambling to cover short positions contributed to the heavy volume, signaling that major institutions are starting to back silver's rise, reducing the likelihood of a false breakout."

What's Driving Sierra Madre?

Sierra Madre is moving closer to full-scale production at La Guitarra, and multiple catalysts are expected to support the company's progress. The company's investor presentation highlights several near-term drivers. These include the ramp-up to the  commercial production processing capacity of 500 tonnes per day by year-end.  

The company is also exploring new opportunities within the La Guitarra complex, including the development of the D-2 vein, which lies outside of the 2023 resource estimate, as well as the commencement of test stope development in the San Rafael II area.

What Analysts Are Saying

In an October 23 research note from The Flying Frisby, Dominic Frisby highlighted the significant potential in the silver sector, stating, "Silver has broken through resistance at US$30-33, and now sits around US$35, with the potential to rise to US$50." He added that in the current market environment, silver miners could see substantial gains if silver continues its upward trajectory, noting, "When silver moves, it moves fast . . . the miners will go to the moon." Frisby specifically mentioned a silver miner that is "just coming into commercial production and therefore due a re-rating," indicating a promising future for companies at this stage.

Earlier, in a report from Caesars Report on October 6, 2024, the newsletter shared its positive outlook for Sierra Madre Gold & Silver as it progresses with operations at La Guitarra. The report noted that the company was "running La Guitarra at 350 tonnes per day," with expectations to reach 500 tonnes per day by year-end.

Furthermore, it highlighted the company's revenue generation, stating, "Sierra Madre has already received US$2.4 million in revenue from the sale of concentrates." The report underscored that this performance sets the company on a solid path to declare commercial production later in the year.

Ownership and Share Structure

Sierra Madre provided a breakdown of the company's ownership and share structure, where management and founders own approximately 24.8% of the company. According to Reuters, President and CEO Alexander Langer owns 1.96% of the company, Executive Chairman and COO Gregory K. Liller owns 1.78%, Director Jorge Ramiro Monroy owns 1.33%, Director Alejandro Caraveo owns 1.16%, Director Kerry Melbourne Spong owns 0.43%, and Director Gregory F. Smith owns 0.16%.

Institutional investors own 12.9% of the company. Commodity Capital A.G. owns 4.4%, Reuters reported.

First Majestic Silver Corp. is a strategic investor and owns 44.9% of the company.

The rest is with retail and high-net-worth investors.

There are 153.94 million shares outstanding and 102.07 million free float traded shares, while the company has a market cap of CA$98.5 million and trades in a 52-week range of CA$0.25 and CA$0.70.