Gold-Silver Company Advances High-Grade Mexico Project

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Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has entered into an agreement with Beacon Securities Ltd. as lead agent and sole bookrunner for a private placement of up to 14.29 million units at a price of CA$0.70 per unit, for gross proceeds of approximately CA$10,003,000. Each unit will consist of one common share and one-half of one common share purchase warrant, with each full warrant exercisable at CA$0.85 for 12 months following issuance.

The offering is structured under Part 5A of National Instrument 45-106 and will utilize the Listed Issuer Financing Exemption. The company stated it intends to use the net proceeds primarily to expand the processing capacity of the La Guitarra mine in Mexico and for general working capital purposes.

According to the offering document dated July 15, 2025, which is available on SEDAR+ and the company's website, the offering is expected to close on or about July 24, 2025, subject to regulatory approvals, including TSX Venture Exchange approval. In a news release, President and CEO Alexander Langer confirmed the arrangement and provided no further comment at the time of publication.

Silver and Gold Sector Sees Surge in Investment and Production Amid Volatility

Silver and gold markets experienced notable momentum in mid-2025, driven by a combination of geopolitical uncertainty, inflationary pressures, and investor sentiment. According to Michael Ballanger of GGM Advisory Inc., writing on July 14, silver closed at US$39.08 following a nearly 5% daily gain, describing the move as a "bold statement" that marked silver's break from resistance in the US$35 to US$36 range. Ballanger noted that this rally was fueled by strong retail demand, commenting, "FOMO has finally arrived in the silver arena," and suggested that institutional short covering contributed to the sharp price movement.

Clive Maund, in a gold market update published July 15, wrote that while gold had recently entered a trading range after a strong spring rally, underlying market dynamics remained constructive. He highlighted that volume indicators for gold proxies remained positive and stated, “The Accumulation line has remained so strong, even rising to clear new highs.” Maund also pointed out that the gold bull market appeared “so powerful that it is unlikely to drop back that far,” even if a temporary dollar rally triggered a modest correction.

Stewart Thomson, writing on July 15, discussed the broader macroeconomic context impacting precious metals. He emphasized the role of tariffs, inflation, and shifting global sentiment, particularly in Asia. Thomson observed that "China’s industrial growth is improving without much stimulus" and suggested that this environment created a "spectacular October month finale for the metals and mining stocks rally." He also referenced a technical target of US$3,800 for gold, aligning with similar projections from Morgan Stanley analysts.

Peter Krauth, in a July 16 commentary for Silver Stock Investor, stated that silver had reached a 13-year high of US$38 and was up 31% year-to-date. He cautioned that momentum indicators suggested a potential pause in the rally, but added that "none of this potential weakness lessens the case for silver." Krauth cited the Silver Institute’s report that net inflows into silver exchange-traded funds (ETFs) reached 95 million ounces by June 30, already surpassing the full-year total for 2024.

Third-Party Expert Analysis Supports Operational and Financial Outlook

According to a July 9 research note from VSA Capital, analyst Oliver O’Donnell raised his target price on Sierra Madre Gold and Silver Ltd. from CA$1.30 to CA$1.40 per share, reflecting increased confidence in the company's operational plan and growth trajectory. At the time of his report, Sierra Madre shares were trading at approximately CA$0.73. O'Donnell maintained a Buy rating and highlighted a potential return of 92% based on the updated target.

O’Donnell wrote that Sierra Madre's management “now has robust visibility on a development plan that we believe can deliver consistency of grade and therefore stable margins.” He estimated that, at current metal prices, the operation could generate “cash flows of at least US$15 million per annum once at target zones for mining and run rates.” The analyst expected these target zones to be active by the end of 2025.

During a recent site visit to the La Guitarra project, O’Donnell observed progress toward transitioning from low-cost backfill materials (retaques) to higher-grade fresh ore from multiple zones, including Nazareno and Coloso. He stated that this transition “is the [one] we expect to deliver stronger profits over the next 18 months.” According to VSA’s modeling, Coloso could contribute ore with grades of 220 grams per tonne silver and 1.3 grams per tonne gold, which are significantly higher than current feedstock.

VSA’s report projected Sierra Madre’s EBITDA at approximately US$6 million for 2025, increasing to US$19 million in 2026 due to higher grades and greater throughput. O’Donnell also pointed to increased production consistency through new equipment acquisitions and the hiring of a metallurgist specializing in flotation, both funded by operational cash flow. He added, “Our assumption on recoveries is largely in line with what has been achieved so far, indicating that there could be upside unlocked in the future.”

O'Donnell noted that Sierra Madre expected 10% of ore to come from Coloso initially, rising to 30% in 2026. He also emphasized the potential for mill expansion beyond the current 520-tonne-per-day capacity, supported by exploration at the Eastern District and other targets.

In addition to operational progress, O’Donnell reported that First Majestic extended the maturity date of its US$5 million loan to Sierra Madre by one year, now due in 2027. He wrote that with forecasted 2026 cash flow of US$13.6 million, the company should be positioned to repay the loan without disrupting operations.

Exploration upside also factored into VSA’s positive assessment. O’Donnell stated that La Guitarra, Coloso, and the Eastern District each offer significant untested potential. He wrote, “The exploration upside, which could enable significant additional annual production as well as mine life extensions, is the kind of growth that would make this a valuable asset in a market where mergers and acquisitions are gathering pace.”

Based on these findings, O'Donnell concluded that Sierra Madre is not only positioned for profitability but also holds long-term growth potential through operational optimization and resource expansion.

Operational Progress and Future Development

The La Guitarra mine, located in the Temascaltepec district southwest of Mexico City, entered commercial production on January 1, 2025. During its first quarter of operations, Sierra Madre reported production of 165,093 silver-equivalent ounces and generated US$4.8 million in revenue, with a gross profit of US$1.2 million.

The mine currently operates a 500-tonne-per-day facility, with infrastructure in place for potential expansion. Development work at La Guitarra accelerated in early 2025, and the company began processing higher-grade material from the Coloso mine in April 2025. A new tailings facility with a 5.8-million-tonne capacity has also been permitted.

The company indicated that proceeds from the private placement will support further expansion efforts at the mine site. Sierra Madre’s presentation notes that its processing plant, crushing, and grinding circuits are already functional and expandable. Equipment purchases for underground development are currently being financed through operational cash flow.

La Guitarra's updated mineral resource estimate, completed in late 2023, included 27.2 million silver-equivalent ounces in the Indicated category and 20.2 million ounces in the Inferred category. The mine complex encompasses over 59 kilometers of untested structures, with exploration permits covering multiple zones in the region.

With weekly concentrate shipments ongoing and a reported Q1 all-in-sustaining cost of US$28.98 per silver-equivalent ounce sold, the company continues to refine its production operations while progressing toward higher throughput and potential efficiency gains.

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.