Sierra Madre Gold and Silver has recently achieved commercial production at its La Guitarra Mine Complex. Can you share more details about this milestone and its significance for the company?
Sierra Madre is Mexico’s newest silver and gold producer. We announced commercial production at our La Guitarra mine in Estato de Mexico, Mexico, on 1 January 2025.
With this commercial production announcement, the Guitarra mine, La Guitarra processing plant, and all aspects of the operation are now steadily running at the 500 tonne per day (t/d) nameplate capacity. We’re particularly proud of the fact that we have been able to bring this past-producing operation back on-line in just over 18 months after acquiring it from First Majestic Silver.
As La Guitarra is now in commercial production, we are excited to start providing investors with detailed production, revenue, and costs numbers, starting with Q1 2025, which will represent our first full quarter of commercial operations. Since we had decided to fast-track the restart of La Guitarra without publicly available studies – such as a pre-feasibility – we are not able to provide forward guidance at this time. However, the first quarter production and financials releases will allow investors to see how the operation is performing and will also provide an opportunity for a re-rate of our stock.
January 2025 also marked a record monthly production for the Guitarra Mine Complex.
What do these increased levels of production mean for the success of Sierra Madre Gold and Silver?
January was a record month for La Guitarra under Sierra Madre with 349.48 dry metric tonnes of concentrate shipped and 45.81t in inventory at month-end. Provisional weighted average grade of the concentrate shipments was 2,429g/t silver and 32.124g/t gold. As we have an offtake agreement with Swiss-based MRI Trading, we ship the silver-gold concentrate from the Guitarra Mine Complex and receive revenues on a weekly basis. Just in Q3 2024, we were able to achieve over US$2.5M in revenues from test mining (started in July 2024) as we were ramping up to 500t/d.
While we are very pleased about the January numbers, we also view them as an initial indicator of the future performance from La Guitarra. In January, +50% of the material we processed was outside of the current resource and we are expecting these performance metrics to improve – specifically on the grade – as we move towards the known higher-grade zones later in Q1 or into Q2 of this year.
Taking a step back, our team has a deep knowledge of this operation. Our COO Greg Liller, our Director of Exploration and Development, Luis Saenz, and other members of the Sierra Madre team operated the La Guitarra mine under prior ownership between 2006 and 2009. As Greg – who has been involved in the start-up of five mines – has indicated, this has been the smoothest one yet, and he is very pleased with the operation.
With this successful mine restart behind us, we are looking forward to sharing more about the financial metrics from operating at our current steady state rate of 500t/d. Interim financials for Q1 2025 – reflecting our first full quarter of commercial production – are expected in May 2025. We believe this could be a re-rating opportunity for the stock as investors will get greater clarity on production, profitability, and cash costs.
With La Guitarra being Mexico’s newest producer, how do you see its role evolving in the future? What are your ultimate goals?
We view our current 500t/d throughput as a starter rate as we look at expansion options. These are all at the drawing board level – ideas we are considering through internal studies (for now).
At the mines, we are looking at what would be involved in getting the Coloso mine – higher grade than Guitarra – up and running. Based on our resource estimate announced 1 November 2023, the Coloso mine grades are at 221g/t silver and 1.61g/t gold vs. 123g/t silver and 1.25g/t gold at Guitarra.
On the plant side, we are operating at a rate of 500t/d currently. The bottleneck right now is on the ball mill side with a 500t/d bottleneck there. Our crushing capacity is at 640t/d, while the flotation circuit and filter press can accommodate up to 1,200t/d. While we have three operating mills, we actually have a fourth working mill on site as well. This mill does need replacement, so we are looking at the option of over-building a mill with a 400t/d to 500t/d capacity as we initially target an initial upping of the run rate to 640t/d.
From there, we could increase crushing capacities to the 750t/d and then 1,000t/d levels. We actually see room for up to 1,500t/d of process capacity in the West District where the existing mines and infrastructure are located.
Taking a 10,000-foot view of the site, we see high potential at the underexplored East District portion of La Guitarra where the last drilling was in the early 1900s. This area could potentially provide additional feed to the existing plant.
We are also open to further acquisitions to build out our production base.
Can you provide an update on the financial performance and the future financials of Sierra Madre, particularly considering the recent production milestones?
We’re excited to share these with investors but, due to regulations, are unable to share detailed financial performance metrics at this time. Investors can expect to see our year-end financials (showing revenues from test mining) in mid-April 2025.
As mentioned earlier, our Q1 financials – expected late May 2025 – will show the details of financial performance from operating at 500t/d.
As our team was familiar with La Guitarra from previously working at the site, we skipped formal engineering studies. The Q1 financials release will provide investors with a first direct look at the financial results that the mine is capable of achieving in this precious metals price environment.
Operating in Mexico comes with its unique set of challenges and opportunities. How has the local political and regulatory environment impacted your operations?
In our view, the latest election results – the June 2024 election of Claudia Sheinbaum as Mexico’s president who took office in October 2024 – has been a positive for the country’s mining industry. Since her inauguration, we’ve seen a major project receive approval for an amendment to its existing environmental impact assessment (Alamos Gold’s Puerto Del Aire project). GoGold also expects to receive a decision on its permit application for Los Ricos South by the end of March 2025.
We are proud to be operating in Mexico, which, in our view, is the place to be for silver mining. It is the number one silver-producing country in the world. In 2024, Mexico mines generated an estimated 6.3Mkg of silver, far outpacing China, the second-largest silver producer which generated 3.3Mkg (data from the USGS).
Overall, we’ve specifically chosen locations in Mexico where mining is widely accepted and a key part of the local economies. Our experience has been that communities are welcoming our operations and we are able to access skilled labour, parts, and materials easily. We look forward to continuing to invest in the country and local communities.
2024 was a booming year for gold. Do you see this continuing throughout 2025? What do you see happening to the precious metals markets moving forward?
Gold – and silver – have experienced a great run over the past year, with both metals up over 40% in the past 12 months. We definitely see positive momentum continuing for both metals. Generalist investor interest in precious metals is only starting to emerge, both on the retail and institutional side. In terms of fundamentals, inflation appears to be resurfacing while signs of stress in the economy are apparent. Both of these are supportive for precious metals as well.
Looking at precious metals equities in particular, this is where we see the greatest opportunity. Decades-low valuations (especially in the junior space), paired with a positive outlook for precious metals lead us to be bullish on the space.
