Silver-Gold Miner Uncovers Major Upside in Mexico as Prices Soar

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Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) released its audited financial results for the year ended December 31, 2024, marking the company's transition to commercial production at the Guitarra Mine Complex in Estado de Mexico, Mexico. The results reflect a six-month test mining and processing period that concluded at year-end, with full-scale commercial operations commencing on January 1, 2025.

The company generated US$6.5 million in revenue during the six-month test phase, including US$3.9 million in the fourth quarter. CEO Alex Langer noted in the company's news release, "These revenues reflect the six-month test mining program that started mid-2024 and wrapped up December 31, 2024 as Guitarra reached commercial production on January 1, 2025." The company reported a net loss of US$38,000 for the fourth quarter.

Cost of sales for the six-month period was US$5.1 million, translating to approximately US$22.40 per silver equivalent ounce. Fourth-quarter unit costs fell to US$20.95 per silver equivalent ounce from US$24.13 in the third quarter, indicating early signs of improved efficiency. Gross profit for the fiscal year totaled US$1.36 million.

Operationally, Sierra Madre processed 68,717 dry metric tonnes of mineralized material during Q3 and Q4, achieving average recoveries of 79 percent for silver and 84 percent for gold. The Guitarra facility met engineering standards for industrial production in December, having sustained operations at 86 percent of its nameplate capacity for over 60 days.

Concentrate shipments, initiated in late July under a 24-month off-take agreement with MRI Trading AG, amounted to 1,293 dry metric tonnes by year-end. These shipments contained an estimated 107,939 ounces of silver and 1,436 ounces of gold. In the fourth quarter alone, the company shipped 795 dry metric tonnes of concentrate.

Current assets, including cash, stood at US$3.5 million as of December 31, 2024. The company anticipates reduced unit costs and higher head grades in 2025 as full commercial production continues. 

Gold and Silver Markets Amid Structural Repricing and Macro Turbulence

In an April 21 commentary, technical analyst Clive Maund described the gold market as having entered "meltup mode" driven by what he called an "unprecedented confluence of economic and geopolitical factors." Maund highlighted long-term debt saturation, weakening U.S. dollar influence, and the global repudiation of traditional reserve assets as key contributors to the trend. He stated that "precious metals stocks should soar," and emphasized that the "still very low silver to gold ratio indicates that this bull market is still in its early stages."

Reuters reported on April 22 that gold prices briefly reached an all-time high of US$3,500.05 per ounce before retreating to US$3,372.68 later in the session. The pullback was attributed to remarks by U.S. Treasury Secretary Scott Bessent, who expressed hope for de-escalation in trade tensions with China. Despite the retreat, gold remained up 29 percent year-to-date and had already recorded 28 record highs in 2025. Kitco Metals senior analyst Jim Wyckoff noted that strength in equities and the U.S. dollar index weighed on gold prices during the session.

Also on April 22, Kitco News reported that the gold-to-silver ratio climbed to 105.77, its highest level in three years, as gold's safe-haven status drew disproportionate investor attention. While silver traded at US$32.70 per ounce, analysts observed its struggle to hold gains above US$33. Mike McGlone of Bloomberg Intelligence interpreted the elevated ratio as a potential recessionary indicator, explaining that peaks in the gold/silver ratio "typically precede highs in the jobless rate." Saxo Bank's Ole Hansen acknowledged short-term headwinds for silver but maintained that the metal was still supported by industrial demand, particularly within the energy transition sector. "Silver is projected to experience another supply deficit in 2025," Hansen stated, marking five consecutive years of shortfalls.

In an April 23 post by GoldFix, JP Morgan issued one of its strongest forecasts to date, calling for gold to reach US$3,675 per ounce by Q4 2025 and potentially exceed US$4,000 by mid-2026. The bank cited sustained central bank demand and structural global financial shifts as primary drivers, projecting net absorption of 710 tonnes of gold per quarter. JP Morgan described this demand as part of "a multi-year realignment of reserve assets at the sovereign level," driven by rising geopolitical risk and the reconfiguration of global trade dynamics. While noting downside risks — such as a potential easing of geopolitical tensions or renewed U.S. growth resilience — the bank stated that risks to the gold forecast were "skewed to the upside." On silver, JP Morgan anticipated underperformance through the first half of 2025, followed by a "catch-up window" later in the year, potentially pushing prices to US$39 per ounce.

Gearing Up for Growth: Guitarra Sets Stage for 2025 

Following the successful restart of the Guitarra Mine Complex, Sierra Madre has positioned itself for near-term growth. According to its April 2025 corporate presentation, the company is pursuing a three-pronged strategy: advancing full-scale production at Guitarra, planning district-scale exploration, and evaluating alternative underground mining methods to unlock additional value.

Guitarra is now fully operational, with all components of the 500-tonne-per-day processing facility running at capacity. In January 2025, Sierra Madre shipped 349 dry metric tonnes of concentrate and maintained 46 tonnes in inventory. The concentrate graded an average of 2,429 grams per tonne silver and 32.124 grams per tonne gold, according to provisional results.

Exploration across the Temascaltepec mining district remains a key focus. The company has mapped over 59 kilometers of mineralized quartz veins and breccias with more than 1,400 drill holes totaling 236,000 meters completed at the site. Management believes this district-scale potential could complement production growth at Guitarra. 

Analyst Sees Operational Upside and Re-Rating Potential for Sierra Madre

On February 24, VSA Capital Markets analyst Oliver O'Donnell issued a research report highlighting Sierra Madre Gold and Silver Ltd.'s transition to full commercial production at its La Guitarra project and the resulting operational momentum. O'Donnell stated that "with the company now consistently achieving throughput at commercial run rates and accessing higher grade material, this provides the platform to deliver profitability over the coming quarters." He added that these developments positioned Sierra Madre for a potential re-rating and outperformance relative to the sector.

O'Donnell reiterated a Buy rating and assigned a price target of CA$1.30 per share, which implied a 120 percent upside from the CA$0.59 level at the time of publication. He emphasized that "positive operating and financial results over the coming months will provide the catalysts to break out [of the recent trading range] to the upside," particularly given the supportive backdrop for both gold and silver.

The analyst reviewed the company's operational milestones, noting that Sierra Madre began commercial production at La Guitarra in July 2024 and reached industrial-scale throughput by December. In January, the company achieved record output, shipping 349.48 dry metric tonnes (dmt) of concentrate and maintaining 45.81 dmt in inventory. According to O'Donnell, the production gains were attributable to "successful debottlenecking of the plant and development improvements underground," and the opening of new underground zones that delivered higher-grade material.

VSA Capital adjusted its financial outlook based on the company's recent performance and rising metals prices. For 2025, the revised forecast included production of approximately 400,000 ounces of silver and 4,700 ounces of gold, generating expected revenue of US$25 million and EBITDA of US$10 million. The firm stated that Sierra Madre could self-finance an eventual doubling of throughput capacity from 500 to 1,000 tonnes per day, should management opt to move forward with expansion planning within two years.

O'Donnell also noted Sierra Madre's capital structure and major shareholders, identifying First Majestic Silver Corp. as the largest holder with a 44.5 percent stake. He concluded that with stable operations and improving grade consistency, Sierra Madre was positioned to generate sufficient cash flow to support future growth initiatives.

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 2.68% of the company, Executive Chairman and COO Gregory K. Liller owns 1.77%, Director Jorge Ramiro Monroy owns 1.32%, Director Alejandro Caraveo owns 1.26%, Director Kerry Melbourne Spong owns 0.57%, and Director Gregory F. Smith owns 0.14%.

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