Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has announced that the company has generated over US$2.4 million in revenues since the test mining and milling phase began at its La Guitarra mine complex. Sierra Madre reported that it has been processing an average of 350 tonnes per day of silver and gold mineralization over the past 30 days. This marks a significant milestone in its operational progress.
As of September 20, a total of 27,990 tonnes of material have been processed, and Sierra Madre has delivered eight shipments, totaling 466 dry metric tonnes of silver-gold concentrate, to MRI Trading. Concentrate grades have ranged between 2,752 grams per tonne (g/t) to 3,442 g/t silver and 28.65 to 38.45 g/t gold, with final assay results pending upon shipment to the smelters.
Ken Scott, Chief Financial Officer of Sierra Madre, commented in the news release, "This marks a significant financial milestone for Sierra Madre. The Guitarra team is continuing to do a great job of incrementally increasing the daily production rate. Our next test mining and processing goal is 400 tonnes per day, followed by commercial production of 500 tonnes per day before year-end."
Gold Market Momentum Boosts Outlook for Sierra Madre's Operations
According to John Newell on September 24, "Gold has historically been considered money, and the Dow Gold ratio helps investors gauge which asset — stock or gold — is outperforming the other." Newell further noted that through this ratio, he believes that "these markets could be entering another period where gold starts to outpace stocks," suggesting that current market conditions may favor the precious metal as inflationary pressures and economic instability rise.
According to analyst Oliver O'Donnell of VSA Capital, Sierra Madre Gold and Silver Ltd. was well-positioned to meet its commercial production rate target by Q4 2024.
This perspective aligns with broader trends in the sector. On September 18, Kitco reported that "Momentum in the gold market is creating significant value in the mining sector as prices push above US$2,600 an ounce."
In the article, Warwick Smith highlighted that as the market sentiment improved, "mining stocks are expected to be the biggest beneficiaries as investors start to recognize their value and growth potential." This reinforces the positive outlook for companies like Sierra Madre, which are well-positioned to benefit from the rising value of gold.
Stockhead also weighed in on September 13, stating that "Gold has reached a new high of US$2,568/oz," driven by shifting investor sentiment and favorable economic conditions. The rally in gold prices, spurred by investors buying back once-bearish bets, is creating opportunities for gold companies. As 321 Gold wrote on September 17, "Gold is in a sweet spot where gamblers can buy, and investors who buy only weakness should simply enjoy their core positions ride."
Key Milestones and Growth Targets for Sierra Madre's La Guitarra Mine
Sierra Madre's La Guitarra mine continues to gain momentum as the company focuses on ramping up operations. Test mining has been in continuous operation since June 25, 2024, with throughput rates steadily increasing. According to the company's investor profile, the next major milestones for Sierra Madre include achieving a test production rate of 400 tonnes per day, followed by commercial production at 500 tonnes per day before the end of the year. Additionally, the company expects to increase concentrate production to approximately 350 dry metric tonnes per month by year-end, which could significantly enhance revenue.
According to the presentation, Sierra Madre's management has extensive experience in the mining sector, with a track record of project discovery, advancement and monetization. The company's operational momentum, combined with its focus on maximizing silver and gold output from La Guitarra, positions it for further growth as it targets mid-tier silver producer status.
Analysts Highlight Strong Buy Ratings and Growth Potential for Sierra Madre
According to analyst Oliver O'Donnell of VSA Capital, Sierra Madre Gold and Silver Ltd. was well-positioned to meet its commercial production rate target by Q4 2024.
O'Donnell remarked, "With gold at all-time highs and silver up 23% year to date, these high prices, which likely have further to run in our view, provide strong tailwinds, mitigating commissioning risks." He further increased the target price for Sierra Madre to CA$1.30 per share, up from a previous target of CA$1 per share, implying a potential 176% return from its levels at the time of the report. O'Donnell also noted that the company remained a Strong Buy, backed by sufficient funding, with US$5 million in secured capital to achieve the targeted production rate of 500 tonnes per day.
*In a separate analysis on September 20, Technical Analyst Clive Maund rated Sierra Madre as an "Immediate Strong Buy." Maund highlighted the strategic backing of First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), which holds a significant stake in the company, stating that this support underscored the substantial potential of Sierra Madre.
He emphasized that Sierra Madre was well on track to restart operations at its La Guitarra mine and anticipated that the mine would process 500 tonnes of material per day by the year's end. Maund pointed out that "First Majestic's big interest in the company is a clear vote of confidence," especially as Sierra Madre had already secured an offtake agreement for 100% of the mine's output for 24 months.
Streetwise Ownership Overview*
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX)
Both analysts reinforced that Sierra Madre was on a solid trajectory, with Buy recommendations and significant growth potential based on current operational and financial milestones.
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 152.69 million shares outstanding and 102.07 million free float traded shares, while the company has a market cap of CA$86.2 million and trades in a 52-week range of CA$0.25 and CA$0.59.
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Important Disclosures:
- 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.
- 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.
- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- 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.
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* Disclosure for the quote from the Clive Maund article published on September 20, 2024
- For the quoted article (published on September 20, 2024), the Company has paid Street Smart, an affiliate of Streetwise Reports, US$1,500.
- Author Certification and Compensation: [Clive Maund of clivemaund.com] is being compensated as an independent contractor by Street Smart, an affiliate of Streetwise Reports, for writing the article quoted. Maund received his UK Technical Analysts’ Diploma in 1989. The recommendations and opinions expressed in the article accurately reflect the personal, independent, and objective views of the author regarding any and all of the designated securities discussed. No part of the compensation received by the author was, is, or will be directly or indirectly related to the specific recommendations or views expressed
Clivemaund.com Disclosures
The quoted article represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.
