Gold and Silver Output from Guitarra Mine in Mexico Increases

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. In addition, Silver Crown Royalties Inc. has a consulting relationship with Street Smart an affiliate of Streetwise Reports. Street Smart Clients pay a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Silver Crown Royalties Inc.
3.  James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
4.  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.

Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has announced the commencement of full commercial production at its 100%-owned Guitarra mine complex in Estado de Mexico, Mexico. Effective January 1, 2025, the mine and processing facilities have been operating at a steady capacity of 500 wet metric tonnes per day for the past 90 days, achieving key operational benchmarks. The company reports significant increases in monthly gold and silver concentrate shipments, inventory, stockpiles of freshly mined material, and revenues.

According to CEO Alex Langer in the company's news release, the milestone marks an important step forward, "We are delighted to announce full commercial production at Guitarra. This will allow us to share proper mining statistics, including revenues, costs, profits, and an all-in-sustaining cost (AISC) per ounce of silver."

Chief Operating Officer Gregory Liller attributed the achievement to the dedicated efforts of the operational team. "The maintenance and plant personnel repaired and rebuilt the existing equipment on budget and ahead of schedule. Above all, everyone has worked together to develop safe and efficient operating procedures and a cost-conscious outlook," Liller said.

Operational highlights from the 2024 test mining phase at the Guitarra mine complex include concentrate shipments totaling 1,292.5 dry metric tonnes, with a weighted average silver grade of 2,594.2 grams per tonne and a gold grade of 34.93 grams per tonne. An additional 94.6 tonnes of concentrate remained in inventory at the year-end.

Precious Metals Resilience Amid Geopolitical and Economic Shifts

The precious metals sector has seen renewed interest as geopolitical tensions, economic uncertainty, and industrial demand trends continue to drive attention toward gold and silver. Silver, in particular, has emerged as a key focus for its dual role as both an industrial and a monetary metal.

On January 3, Akhtar Faruqui of FX Street highlighted that silver prices surged to approximately US$29.50 per ounce due to safe-haven demand amidst geopolitical tensions. These include conflicts in the Middle East and the Russia-Ukraine war. Faruqui noted that the industrial use of silver could rise, supported by expectations of economic recovery in China, with Chinese policymakers implementing measures to stimulate growth in manufacturing and construction.

Bereket A. Berhe of Beacon Securities provided an in-depth assessment following a site visit to the La Guitarra mine. He gave Sierra Madre a Buy rating and highlighted the company's efficient progress toward commercial production

Peter Bures of Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX; QS0:FSE) emphasized the enduring appeal of silver as an investment in a January 6 commentary.

Bures explained that silver possesses unique attributes, such as its atomic scarcity, decentralized nature, and essential role in modern electronics, which differentiate it from traditional currencies and cryptocurrencies.

Bures argued, "Silver is as scarce as Bitcoin by definition. As is Bitcoin, silver is acceptable anywhere on earth, but it requires no apps or explanations." He also underlined silver's long history as a reliable store of value, noting its strategic importance in green technologies and electronics.

Jaime Carrasco of Canaccord Genuity Wealth Management highlighted silver's untapped potential in the Silver Crown article. Carrasco stated, "Silver is my favorite asset class because the price has not inflated during the 35+ years of my career, and very few investors own any. In my opinion, this is about to change because of silver's strategic importance to electronics and a green future." Carrasco emphasized the current supply deficit and the comparative affordability of silver versus gold, which was trading above US$2,500 per ounce at the time.

Dominic Frisby provided additional insights into the precious metals sector in his January 8 edition of The Flying Frisby. While forecasting a modest 12.5% increase in gold prices to US$3,000, he suggested that silver and gold remain essential assets for wealth preservation. Frisby remarked that silver's strategic importance and dual-purpose role in industry and monetary systems make it a compelling option for investors seeking diversification.

Driving Growth: Key Milestones and Expansion Potential at La Guitarra

Sierra Madre's Guitarra mine is set up for future growth through multiple operational and development optionalities, as noted in the company's December 2024 investor presentation. The mine's current capacity of 500 wet metric tonnes per day ensures steady concentrate production, with expectations of approximately 350 dry metric tonnes of silver-gold concentrate per month. Weekly concentrate shipments and ongoing revenues are projected to maintain the company's financial stability.

The district-wide exploration and mine development program at Guitarra further bolsters its long-term potential. The company has identified over 59 kilometers of mineralized quartz veins and breccias in the Temascaltepec district, providing substantial exploration opportunities. Concurrently, the functional and expandable 500-tonne-per-day crushing, grinding, and flotation facility is supported by existing infrastructure upgrades and permits, providing potential future expansion optionality.

Upcoming milestones include quarterly production and financial reports.

Expert Assessments Reinforce Sierra Madre's Progress

On December 9, Bereket A. Berhe of Beacon Securities provided an in-depth assessment following a site visit to the La Guitarra mine. He gave Sierra Madre a Buy rating and highlighted the company's efficient progress toward commercial production, noting, "The asset shows very well. SM currently is moving at a determined pace to bring the La Guitarra mine into commercial production in early Q1/25." Berhe commended the operational improvements, observing that mining and milling rates were "well ahead of our expectation." He emphasized the operational readiness of the site, with the mill operating continuously at 500 tonnes per day (tpd) and the company testing higher recoveries for silver and gold. Beacon Securities maintained a speculative buy rating with a 12-month target price of CA$0.85, underscoring the potential for a 177% return based on the December 9 closing price.

Ten days later, in their December 19 Caesars Report, analysts praised Sierra Madre's successful transition to industrial production at the Guitarra mill, citing cumulative production of approximately 44,000 ounces of silver and 660 ounces of gold during October and November. The report noted, "Seeing a cumulative production of approximately 97,000 silver-equivalent ounces is quite nice." It also highlighted the discovery of new veins outside of the current NI 43-101 resource calculation, reflecting the mine's potential for further resource expansion.

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 Refinitiv, 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%, Refinitiv reported.

First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE) is a strategic investor and owns 44.5% 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$80 million and trades in a 52-week range of CA$0.25 and CA$0.70.