Silver Production Soars to New Heights at Guitarra Mine

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Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has announced record monthly production for January 2025 at its 100% owned Guitarra Mine Complex in Estado de Mexico, Mexico. This milestone marks the company's highest output since the mine's restart, with full commercial production officially achieved on January 1, 2025. The mine and processing plant are operating at a capacity of 500 wet metric tonnes per day, with weekly gold and silver concentrate deliveries underway.

In January alone, Sierra Madre shipped 349.48 dry metric tonnes of concentrate, with an additional 45.81 tonnes in inventory. The provisional weighted average silver grade of these shipments was 2,429 grams per tonne, while gold averaged 32.124 grams per tonne. According to the company, detailed financial and production figures will be released quarterly, with year-end financials expected in April 2025 and first-quarter results in May 2025. Gregory Smith, P. Geo., Director of Sierra Madre and a Qualified Person under NI 43-101 standards, reviewed and approved the technical data disclosed.

Sierra Madre's Guitarra Mine is a fully permitted underground operation with a 500 tonnes-per-day processing facility. 

Silver's Industrial Surge and Gold's Record-Breaking Rally

In a January 14 report, Citizen Watch reported a surge in silver demand driven by advancements in solid-state battery technology, which are pivotal for electric vehicles and renewable energy storage solutions. The report estimated that "if just 20% of global car production adopts this technology, the annual demand for silver could skyrocket to 16,000 metric tons," signaling a potential strain on global silver supplies, which hovered around 25,000 metric tons annually.

By January 22, FX Empire observed that while silver prices edged higher, they lagged behind gold's rally due to subdued market interest and concerns over industrial demand from China. The report noted, "Concerns over weak Chinese industrial demand weigh on silver's outlook for electronics and manufacturing use," reflecting uncertainty around global economic conditions and their impact on silver consumption.

On January 23, Kitco News published the StoneX 2025 Annual Metals Outlook, which projected silver to lead the metals sector with a 14% gain for the year. StoneX analysts Rhona O'Connell and Natalie Scott-Gray stated, "Even after its strong performance in 2024 (+22%), silver, the precious-industrial hybrid, is expected to collect the laurels in 2025," driven by sustained demand from the solar industry and a tightening supply-demand balance that shifted into a deficit in late 2024.

January 30 saw significant commentary on gold's performance. Bloomberg reported that gold hit a new all-time high, reaching US$2,798.59 per ounce, as a weaker dollar and concerns over potential tariffs under President Trump's administration boosted safe-haven demand. Phil Streible, chief market strategist at Blue Line Futures, commented, "When you get rising inflation, and you get declining growth, you get stagflation, then gold is one of the best-performing commodities in that environment."

On the same day, Kitco described gold's surge as a result of a "perfect storm" of global economic factors. April gold futures climbed to US$2,852.40, fueled by a weaker dollar, geopolitical uncertainties, and central bank bullion accumulation. Ryan McIntyre of Sprott noted, "The latest rally in gold prices likely reflects a combination of rising uncertainty about U.S. policies and a weaker dollar following the disappointing fourth-quarter GDP report."

Recently, on February 5, John Newell of John Newell & Associates outlined a long-term bullish outlook for gold, suggesting the potential for prices to reach as high as US$8,000 per ounce. He emphasized historical patterns, noting, "Gold's ability to hold and increase its value over time sets it apart from fiat currencies and other asset classes," reinforcing its status as a reliable store of value in volatile economic environments.

Sierra Madre's Growth Strategy: Expanding Resources and Optimizing Production at Guitarra Mine

According to Sierra Madre's latest corporate presentation, the Guitarra Mine is positioned for growth through exploration and operational expansion. The company is actively exploring over 59 kilometers of untested mineralized structures within the Temascaltepec mining district. Management anticipates that continued exploration could unlock additional high-grade resources, building on the 27.2 million silver-equivalent ounces in indicated resources and 20.2 million silver-equivalent ounces in inferred resources reported in 2023.

Furthermore, Sierra Madre is evaluating mining options to optimize production, including underground bulk mining methods. With all parts of the Guitarra operation running at full capacity for over 90 days, the company is considering plant capacity expansions to meet increasing demand. Upcoming catalysts include the release of quarterly production reports, ongoing exploration results, and potential updates to resource estimates. These developments are expected to support Sierra Madre's growth strategy as it advances toward becoming a mid-tier silver producer.

Strong Growth Outlook Backed by Beacon Securities' Buy Rating

On December 10, Beacon Securities analyst Bereket A. Berhe maintained a Speculative Buy rating on Sierra Madre Gold and Silver Ltd. with a CA$0.85 target price following a site visit to the La Guitarra Mine. Berhe highlighted accelerated production plans, noting, "The company expects to declare commercial production at 500tpd, reach 650tpd by 2026, and 1,000tpd by 2027 — five years ahead of our model."

Operational performance exceeded expectations, with the mill running 24/7 and mining active 20 hours daily. Berhe reported silver recoveries at 80% and gold at 85%, surpassing the projected ~75%. He also noted the potential for expansion to 1,200tpd with minimal capital needs, supported by existing infrastructure.

Valuation was based on 58% of La Guitarra's resources, projecting 1.77 million silver-equivalent ounces annually at an AISC of US$19/oz, with a post-tax NPV5% of US$208 million. Berhe noted Sierra Madre's shares were trading at a discount, with a 177% upside to the target price at the time of the report.

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.