Precious Metals Miner Extends First Majestic Loan
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) extended a US$5M loan, enabling expansion at its silver-gold Guitarra mine in Mexico amid strong sector momentum. Read more to see how silvers supply crunch and new production gains could boost long-term value.
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) announced an amendment to its US$5 million non-revolving, secured term loan with First Majestic Silver Corp., extending the loan's maturity to May 7, 2027. This amendment adds twelve months to the original loan term without altering other financial terms. The loan bears interest at 15% per annum with monthly interest-only payments. As permitted in the initial agreement, Sierra Madre has deferred the first six months of interest payments - amounting to US$365,000 - which will now be due at maturity. The company retains the flexibility to repay the loan and accrued interest at any time without penalty.
President and CEO Alex Langer commented in the announcement, "We are very pleased about the extension of this Loan and are grateful for First Majestic's ongoing support." Langer noted that the added financial flexibility may support expansion of the plant and mill capacity at the Guitarra silver-gold mine in Mexico's prolific silver belt, as well as accelerate exploration across the district.
The company also granted stock options to employees of La Guitarra Compania Minera, S.A. de C.V. and consultants, enabling the purchase of 950,000 common shares at US$0.69 per share. The five-year options will vest in thirds over twelve months and remain subject to TSX Venture Exchange approval.
The company also granted stock options to employees of La Guitarra Compania Minera, S.A. de C.V. and consultants, enabling the purchase of 950,000 common shares at US$0.69 per share. The five-year options will vest in thirds over twelve months and remain subject to TSX Venture Exchange approval.
Sector Snapshot: Precious Metals Mining
Recent developments in the precious metals sector underscored heightened demand dynamics for both gold and silver, with rising investor interest, structural supply deficits, and retail participation reshaping the landscape. According to a May 21 article by Arihant Bardia in ET Markets, silver remained significantly undervalued relative to gold, despite a prolonged bull run in the latter. Analysts cited structural deficits and growing industrial demand as key drivers behind the metal's appeal. "Despite clear market signals, supply has been slow to respond," the article noted, projecting that 2025 would mark the fifth consecutive year of silver market deficits. With applications spanning solar panels, electric vehicles, and electronics, silver's dual role as a precious and industrial metal positioned it uniquely. The article highlighted, "The industrial demand floor for silver continues to rise - creating a firm foundation for price appreciation."
A few days later, John Rubino wrote on May 26 that while gold had surged more than 70% over 19 months, it had yet to attract full attention from generalist investors. He observed that gold and gold miner ETFs were still "an afterthought for the average investor," suggesting the sector had room for broader engagement. In contrast, retail enthusiasm was already manifesting elsewhere. "Costco customers' eagerness to put multiple ounces of gold on their store credit cards implies the kind of enthusiasm that could easily spread to equity investors," he added, noting record-high bullion prices and tighter gold purchase limits at the retailer.
On May 27, Stewart Thomson emphasized the strength of gold relative to fiat currencies, stating that "gold has surged from about $1800 in October 2023 to $3500," describing the trend as part of a "gargantuan gold bull era rollout." He further pointed to silver's technical momentum, noting that "silver is stronger than gold" in current market behavior. Thomson also argued that miners could benefit significantly, as "most money managers can't invest in bullion, but they can buy the companies that mine it." He characterized the environment for junior miners as exceptionally favorable, writing that they "look set to outperform everything."
Retail demand trends were echoed again in a May 28 report from VBL on Goldfix, which documented tighter purchase limits on gold and silver bars at Costco due to overwhelming consumer demand. The retailer raised its 1-ounce gold bar prices to US$3,279.99, well above the approximately US$2,000 levels seen in late 2023. Gold reached an all-time high in April 2025, and as USA Today noted, "Costco is imposing stricter limits on member purchases of gold bars as demand surges."
VSA Capital Maintains Buy Rating and Sees Strong Upside
In a May 6 research report, VSA Capital reaffirmed its Buy rating on Sierra Madre Gold and Silver and maintained a target price of CA$1.30 per share. Analyst Oliver O'Donnell noted that this represented a 124% potential return based on the company's share price of CA$0.58 at the time of publication.
The report outlined Sierra Madre's progress in optimizing production at its two operating mines in Mexico. O'Donnell wrote that the company had restarted mining at the Coloso mine, located approximately four kilometers northwest of the La Guitarra mill, and integrated it into a revised mine plan. He explained that a metallurgist had been brought on to help balance ore feed between La Guitarra and Coloso.
"This development highlights the nimble, low cost and focused approach that management has taken to restarting La Guitarra, with the benefit of their past experience combined with new insight," O'Donnell stated.
The report also emphasized the long-term operational potential of Coloso, which O'Donnell said could support the La Guitarra mill for at least seven years at 500 tons per day. He pointed to additional upside from further exploration at the Jessica and Joya veins.
Commenting on the company's early financial results, O'Donnell added, "We continue to believe that Sierra Madre is on track to deliver strong profitability in 2025, while the strong silver grade means that the stock is well-positioned to benefit from the catch-up in the silver price following gold's strong rally."
A Well-Positioned Growth Story at La Guitarra
Sierra Madre is in its first year of commercial production at the La Guitarra Mine, having resumed operations on January 1, 2025. According to the company's June 2025 investor presentation, Guitarra delivered Q1 revenues of US$4.8 million, with US$1.2 million in gross profit. Silver equivalent production totaled 165,093 ounces for the quarter, with silver and gold recovery rates nearing 80%.
Development activities have focused on expanding access to higher-grade zones identified in the October 2023 mineral resource estimate, which reported 27.2 million indicated and 20.2 million inferred silver-equivalent ounces. Notably, Coloso - one of the three operational mines within the district - began supplementing feed to the processing plant in April 2025. Coloso grades are reported to be on average 1.7 times higher in silver and 1.2 times higher in gold than Guitarra veins.
Guitarra's 500-tonne-per-day flotation facility is fully permitted and currently operating at capacity. The company has indicated that the plant's crushing and grinding circuits are expandable, and a new 5.8-million-tonne tailings facility is already permitted.
Streetwise Ownership Overview*
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX)
*Share Structureas of 5/1/2025Source: Sierra Madre Gold & SilverLooking ahead, Sierra Madre expects accelerating revenue growth in Q2 and Q3 2025, supported by weekly concentrate shipments and new equipment acquisitions funded by operating cash flow. Meanwhile, a district-scale exploration and development program is underway, covering 59 kilometers of untested structures and over 1,400 historic drill holes, underscoring long-term expansion potential across the Temascaltepec mining district.
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.
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Important Disclosures:
Sierra Madre is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 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.