Gold-Silver Miner Begins High-Grade Mexico Push
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has kicked off underground mining at its high-grade Coloso mine at the Guitarra silver-gold project in Mexico, months ahead of schedule. Read more about the ramp-up timeline, grade comparisons, and how Coloso fits into the broader Guitarra Complex strategy.
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has announced the start of underground mining at the Coloso silver-gold mine, part of its producing Guitarra Complex in the State of Mexico. Located just 4 kilometers from the company's 500-tonne-per-day processing facility, the Coloso mine benefits from over 12 kilometers of underground workings developed by First Majestic Silver between 2014 and 2018.
Underground mining at Coloso has commenced seven months ahead of schedule and without significant pre-production costs. Initial operations have started at 50 tonnes per day and are expected to ramp up to 150 tonnes per day by year-end. This will partially replace current mill feed from the Guitarra mine, with the plant continuing at its full 500-tonne-per-day throughput.
Greg Liller, Sierra Madre's Chief Operating Officer, noted in the press release, "This marks another milestone event in the restart of the Guitarra Mine Complex. The Coloso estimated resource grades are on average 1.7 times higher in silver and 1.2 times higher in gold compared to the Guitarra veins." Liller added that a newly hired Process Plant Superintendent with flotation experience will oversee metallurgical testing to optimize the blend of Coloso and Guitarra materials for maximum economic efficiency.
The Coloso deposit's 2023 resource estimate includes 432,000 indicated tonnes averaging 221 g/t silver and 1.61 g/t gold, compared to Guitarra's 1,649,000 tonnes grading 123 g/t silver and 1.25 g/t gold. The broader La Guitarra Complex holds a 2023 indicated resource of 3.84 million tonnes grading 220.2 g/t AgEq (146 g/t Ag and 0.96 g/t Au) and an inferred resource of 4.11 million tonnes grading 153 g/t AgEq (113 g/t Ag and 0.52 g/t Au), as prepared by independent qualified persons from TechSer Mining Consultants Ltd.
Coloso's restart follows Sierra Madre's resumption of commercial production at the Guitarra mine on January 1, 2025. During 2024's test mining phase, silver recoveries averaged 79% and gold recoveries 84%, with 1,292.5 dry metric tonnes of concentrate shipped; cost of sales averaged US$22.40 per silver-equivalent ounce sold for the six-month period ended December 31, 2024.
The company continues to plan a district-scale exploration program at La Guitarra, where over 1,400 historical drill holes and 59 kilometers of mapped mineralized structures provide significant upside. The Guitarra plant, which includes a permitted new 5.8-million-tonne tailings facility, is currently operating at full capacity and remains expandable.
Precious Metals Mining and Market Dynamics
On April 23, FX Empire reported that silver continued to test the US$33 resistance level, highlighting its ongoing strength relative to gold. Christopher Lewis wrote that "the silver market . . . turned around to bounce a bit and test the US$33 level," and explained that its industrial demand may have contributed to this divergence. He added that a break above this level on a daily close could open the door to a potential move toward US$35, a zone that had served as major resistance in the past.
In an article published April 26, Technical Analyst Clive Maund described silver as being under "relentless short attack" and likened the market to a "pressure cooker." He noted the "exponential growth in the total short positions in silver over the past 6 months" and suggested this imbalance could result in a rapid shift in sentiment. Maund observed that the silver-to-gold ratio remained low, which he interpreted as "a clear indication of lack of retail or speculative interest in the sector," supporting the view that silver remained in the early stages of a bull market.
In a follow-up report dated April 29, O'Donnell reiterated his Buy rating and maintained a CA$1.30 target price on Sierra Madre.On April 28, FX Street reported that gold prices hovered above the US$3,265-3,260 support zone amid waning safe-haven demand linked to US-China trade optimism. Haresh Menghani stated that "a fall in China's gold consumption in the first quarter of 2025 and a modest US Dollar uptick further contribute to driving flows away from the commodity." However, geopolitical uncertainties and expectations of Federal Reserve rate cuts were seen as factors limiting further downside. The China Gold Association reported a 5.96% year-over-year drop in the country's gold consumption in Q1 2025, driven largely by a 26.85% decline in jewelry demand.
In a Substack article dated April 29, Shad Marquitz of Excelsior Prosperity emphasized the appeal of "growth-oriented junior gold producers," noting the increased M&A activity within the sector. He cited the emergence of multi-asset operators and the integration of higher-grade assets as key industry drivers. Marquitz explained that many producers were transitioning from single-project entities to diversified operators with "excellent development projects and compelling exploration upside," reflecting a broader trend across the junior mining landscape.
Building Toward Scale: Why Sierra Madre Is One to Watch
Sierra Madre's latest developments position the company to enhance both production scale and resource upside within a historically productive mining district. With commercial operations underway - now mining at both Guitarra and Coloso - Sierra Madre has transitioned from development to revenue generation. In 2024, the company generated US$6.5 million in revenue with a gross profit of US$1.36 million from its Test Mining program.
According to its April 2025 corporate presentation, Sierra Madre anticipates weekly concentrate deliveries at Guitarra and plans to release its first full quarter of commercial production results in May 2025. With support from major shareholder First Majestic Silver, which holds a 44.5% interest, and a CA$3.5 million working capital position as of April 2025, Sierra Madre appears well-funded to pursue further growth. The company's low-risk restart strategy, district-wide exploration footprint, and blend of higher-grade feedstock from Coloso may support continued operational improvements and resource expansion across its portfolio.
Analyst Highlights Positive Trajectory For Sierra Madre
Third-party analysis of Sierra Madre Gold and Silver Ltd. provided a consistently positive outlook, particularly from VSA Capital Markets. In a research report dated April 24, analyst Oliver O'Donnell stated that Sierra Madre had successfully completed a critical de-risking event by achieving consistent commercial operations at its La Guitarra project in Mexico. "Narrowing to effectively break even in only the second quarter of operations is an impressive achievement, in our view," he wrote. He added that progress at the plant included reaching commercial rates across crushing, grinding, and flotation, while further capacity beyond 500 tonnes per day remained available.
O'Donnell also reviewed the company's financial results from 2024, noting Sierra Madre generated US$6.5 million in revenue, closely aligned with VSA's estimate of US$6.8 million. The company achieved a gross profit of US$1.4 million for the year, with US$1.1 million of that coming in Q4 alone. Revenue in Q4 reached US$3.9 million, representing a 55 percent increase over Q3. During the same period, Sierra Madre sold 59,000 ounces of silver and 897 ounces of gold, reflecting quarter-over-quarter increases of 21 percent and 66 percent, respectively.
According to O'Donnell, Sierra Madre's ramp-up was managed efficiently, keeping capital expenditures at approximately US$1.7 million by leasing equipment and maintaining working capital throughout the transition. The company ended 2024 with US$3.5 million in working capital, including cash, and strengthened its position in early 2025 through concentrate sales, including 349 dry metric tonnes shipped in January a 10 percent increase over November 2024 sales.
Streetwise Ownership Overview*
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX)
*Share Structureas of 5/1/2025Source: Sierra Madre Gold & SilverIn a follow-up report dated April 29, O'Donnell reiterated his Buy rating and maintained a CA$1.30 target price on Sierra Madre shares, representing a potential upside of 128 percent from the CA$0.57 level at the time. He 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 also projected EBITDA of US$9.5 million for 2025, adding, "We expect strong earnings performance in 2025, translating to further share price gains." O'Donnell emphasized that continued progress, along with rising metal prices, positioned Sierra Madre to deliver improving financial results and support further growth.
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 Gold and Silver Ltd. 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 independent contractor. 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.