Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has received important regulatory approval from SEMARNAT, Mexico's federal environmental agency, for enhancements at their Guitarra Mine and Mill complex. This approval allows the company to implement a series of significant modifications. These include transitioning to dry stack tailings deposition at the active Tailings Facility Site, TSF 1-3, which promotes a more environmentally responsible disposal method and maximizes the use of existing tailings footprint. Additionally, the company is approved to construct a Tailings Filter Plant next to the existing mill and to utilize paste backfill using the tailings for underground mine workings. The modifications also permit the establishment of 58 new surface drilling pad locations, which can potentially expand the mining operation's reach and efficiency.
The State of Precious Metals
Gold and silver have long had an allure for potential investors, but their place in the current climate has attracted attention. Bob Moriarty at 321 Gold pointed this out on May 14, writing, "Gold could spit and hit a new all-time high while silver is a few pennies from the highest it has been in thirteen years."
The question then turns to sustainability. On May 11, Excelsior Prosperity's Shad Marquitz saw a potential jump in silver prices as a shot that the market could use to see a long-term increase towards higher goal. Marquitz explained, "...while we may still see some weakness in price in the metal, it has also been encouraging to see silver and the precious metals resource stocks holding up better and gaining a little ground on gold. That is precisely the kind of confirming signal we want to see in the overall (precious metals) sector."
The Catalysts From This Announcement
The recent regulatory approvals offer Sierra Madre a range of strategic advantages that position the company for future growth. As specified in the company's news release, one of the most significant catalysts is the enhanced operational efficiency through the adoption of dry stack tailings and paste backfill usage. This shift not only aligns Sierra Madre with modern, sustainable mining practices but also optimizes resource use—like water—and space within the mine, reducing the environmental impact of operations.
Additionally, the construction of the Tailings Filter Plant alongside the transition to dry stack tailings will likely extend the operational life of the mine. These facilities enable Sierra Madre to manage increased capacity and handle tailings more effectively, ensuring that operations remain compliant with environmental standards while minimizing potential liabilities.
The approval of new drilling sites significantly boosts the exploration potential of the area and lead to the discovery of new resources, enhancing the company’s asset base and potentially increasing its market value. Lastly, Sierra Madres’s commitment to conducting additional geotechnical studies and drilling during the upcoming rainy season underlines its dedication to informed, data-driven decision-making. This approach will optimize the final layout and functionality of the tailings management system, ensuring sustainable and efficient operations in the long term. These catalysts collectively enhance Sierra Madre's market position by emphasizing sustainability, efficiency, and strict adherence to environmental regulations.
What They're Saying About Sierra Madre
The price of gold and silver were noted by Sierra Madre CEO Alex Langer in an interview with Dominic Frisby in October. He also looked at how the company looks beyond that. Langer admitted that, "As shareholders, you have to be pragmatic. You never know what's going to happen with the price of metals. So we always want to make sure we're delivering in terms of increasing shareholder value."
Future projects add to that value, as was spotlighted by Thibaut Lepouttre of Caesars Report on May 15. Lepouttre remarked, "Sierra Madre Gold and Silver Ltd. has confirmed the company has signed and received the proceeds of a US$5M loan provided by First Majestic Silver. . .the proceeds of the loan will immediately be used by Sierra Madre to get the La Guitarra mine and mill ready to restart operations."
It's one of the reasons VSA Capital analyst Oliver O'Donnell stood by the "buy" rating for Sierra Madre in a May 13 research note. "We again highlight management's past operational experience of the asset as well as the significant exploration upside and long-term scalability making the risk-reward aspect [with] Sierra Madre highly favorable," O'Donnell wrote.
Ownership and Share Structure
Streetwise Ownership Overview*
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX)
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.
According to Refinitiv, there are 152.69 million shares outstanding and 73.21 million free float traded shares, while the company has a market cap of CA$67.05 million and trades in a 52-week range of CA$0.25 and CA$0.74.
| Want to be the first to know about interesting Gold and Silver investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
- Sierra Madrea 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.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madrea Gold and Silver Ltd.
- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
For additional disclosures, please click here.
