Sierra Madre Silver and Gold Ltd.'s (SM:TSX.V; SMDRF:OTCQX) net revenue, gross profit and EBITDA during the third quarter all were higher than in Q2/25, noted a VSA Capital report.
Sierra Madre Gold and Silver Ltd.'s (SM:TSX.V; SMDRF:OTCQX) earnings momentum continued through Q3/25, reported VSA Capital Analyst Oliver O'Donnell in a Nov. 17 research note. VSA raised its target price on the Canadian explorer-developer by 24% to reflect higher gold and silver prices.
"Given increased grades, output and pricing, Q4/25 is expected to be stronger still," O'Donnell wrote.
VSA Capital's new target price on Sierra Madre is CA$1.75 per share (CA$1.75/share), previously CA$1.40, noted O'Donnell. At the time of the analyst's report, the junior miner was trading at about CA$1.10/share. From that price, the return to target is 59%.
Sierra Madre remains a Buy.
O'Donnell presented Sierra Madre's Q3/25 financial results, highlighting that net revenue, gross profit, and EBITDA all improved quarter over quarter (QOQ).
Net revenue was US$5.52 million (US$5.52M), up 3% QOQ. This was driven by substantially higher average realized silver and gold prices, up 16% QOQ on a silver equivalent basis to US$38.66 per ounce (US$38.66/oz). Year-to-date (YTD) net revenue is US$15.7M.
The company's Q3/25 gross profit grew 32% QOQ to US$1.7M. YTD, it is US$4.2M.
EBITDA was also higher in Q3/25, by 27% QOQ, to US$1.86M, for a YTD total of US$4.4M.
Operationally, during Q3/25, Sierra Madre produced 67,800 ounces (67.8 Koz) of silver, up 3% QOQ, and 967 ounces of gold, down 8% QOQ, at its La Guitarra mine in Mexico. The total silver and gold ounces the company sold during the quarter amounted to roughly what was produced.
Total tonnage processed during Q3/25 dropped 7% QOQ to 38,400 tonnes (38.4 Kt), due to ongoing downtime and power outages during the rainy season. Some improvement in grades partly offset this lower throughput. Sierra Madre's plant improvements, to be effected in 2026, should prevent similar disruption in the next rainy season, wrote O'Donnell.
QOQ in Q3/25, silver recoveries were marginally higher at 76.96%. Gold recoveries were lower at 75.55%.
Cost of goods sold in Q3/25 was US$3.8M. This was 7% lower QOQ, but with fewer ounces on a silver equivalent basis, unit costs rose 6% to US$24.85/oz. Noncash expenses and sales, general and administrative expense increased during Q3/25, thereby reducing net income to US$68,000.
Sierra Madre ended Q3/25 with US$11.6M in cash after a US$14.3M (CA$19.5M) capital raise that closed during the quarter.
"The company is therefore strongly positioned, with working capital pressures from being in the early stages of production eased and growth plans fully funded," O'Donnell wrote.
The analyst relayed the recent revisions VSA Capital made to its model on Sierra Madre. VSA increased its long-term throughput assumption at La Guitarra to 1,200 tons per day (1.2 Ktpd) from 1 Ktpd, given Sierra Madre's revised guidance announced after the capital raise.
VSA decreased its silver production forecast for full-year 2025 (FY25) to about 300 Koz from 356 Koz to adjust for its prior overestimation, even though higher precious metals prices during the quarter largely offset the difference. VSA left its gold production projection unchanged.
VSA raised its gold and silver price assumptions to reflect their strong performance during Q3/25. For FY26, its new silver price is US$56/oz, up from US$35 previously, and its new gold price is US$4,250/oz, up from US$3,750 before. VSA believes that silver does not look expensive yet and that the metal has further to run, O'Donnell noted. Until silver leads gold, the silver equities, Sierra Madre in particular, remain highly attractive.
O'Donnell wrote that Sierra Madre's Q4/25 is expected to be more robust than Q3/25 due to consistent throughput and a greater contribution from higher-grade zones at Coloso and Nazareno. As such, for FY25, VSA expects total revenue of US$23.4M, EBITDA of US$5.4M, and net income of US$1.9M. FY25 capex is expected to be about US$6M.
Next year, the explorer-developer intends to start an expansion and optimization program at La Guitarra, aiming to expand capacity to 750-800 tons per day in Q2/26, then to 1.2-1.5 Ktpd by 2027. Additionally, new plant equipment, like a secondary cone crusher, is to be installed to boost metal recoveries. These future changes, along with expected higher grades, should support further growth. VSA Capital forecasts FY26 production of 660 Koz of silver and 5.6 Koz of gold.
Assuming US$55/oz silver through next year, for Sierra Madre, VSA estimates US$56M of revenue and a US$34M EBITDA for FY26.
"With precious metals prices rising and Sierra Madre capitalizing on this through an accelerated expansion plan, our forecasts suggest a strong outlook for earnings growth, which we believe will underpin further share price strength," wrote O'Donnell.
The analyst reported that Sierra Madre released more details about its proposed drill program in the Eastern District of the broader La Guitarra property, known for high-grade outcroppings and historical workings. The area, though, has been tested only lightly by previous modern operators. Those efforts cover only 15% of the 60 kilometers (60 km) of veins mapped thus far in six vein systems, management estimates.
Grades from historical production and drilling are "exceptional," noted O'Donnell, though they have small resource footprints. Silver grades average 250-600 g/t Ag, and the gold credit averages between 3 and 4 g/t for some areas, suggesting an 800-1,000 g/t silver equivalent grade is possible.
The Canadian explorer-developer intends to conduct detailed mapping and drill targeting of the Eastern District over the next nine months while it completes the permitting process required for drilling. Subsequently, the plan is to drill 20-25 km over about 12-18 months.
"Drilling, likely in 2026, is likely to reveal new high-grade zones of mineralization, offering the potential to expand and extend the life of the operation," the analyst wrote.
Major shareholders of Sierra Madre are First Majestic Silver Corp. (AG:TSX; AG:NYSE; FMV:FSE) with 27.7%, Commodity Capital with 3.6% and Sierra Madre Chief Executive Officer and President Alex Langer with 2.2%.
Sierra Madre has 186 million shares outstanding. Its market cap is CA$204.6M. Its 52-week range is CA$0.43-1.57/share.
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Important Disclosures:
Sierra Madre Gold and Silver is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$3,000 and US$6,000. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madre Gold and Silver and First Majestic Silver Corp.Doresa Banning 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.
Disclosures for VSA Capital, Sierra Madre Gold and Silver, November 17, 2025
Disclaimer Investment Analyst Certification In my role as a Research Analyst for VSA Capital Limited, I hereby certify that the views about the companies and their securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. Non-Independent Research This is a marketing communication. It is non-independent research as it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Important Disclosures This research report has been prepared by VSA Capital Limited, which is party to an agreement to be paid a fee as corporate finance advisors and arrangers with, or has provided investment banking services to, Sierra Madre, or has been party to such an agreement within the last twelve months, and is solely for, and directed at, persons who are Professional Clients as defined under Annex II of the Markets in Financia l Instruments Directive, Directive 2004/39/EC, or as defined in the FCA Handbook. Persons who do not fall within the above category should return this research report to VSA Capital Limited, 42 New Broad Street, London EC2M 1JD, immediately. VSA Capital may distribute research in reliance on Rule 15a-6(a)(2) of the Securities and Exchange Act 1934 to persons that are major US Institutional investors, however, transactions in any securities must be effected through a US registered broker-dealer. If you are a US person, you must fulfil the requirements of a major US institutional investor as defined by the Securities Exchange Act 1934 and subsequent guidance from the SEC to receive this research report. Any failure to comply with this restriction may constitute a violation of US law for which VSA Capital Limited does not accept responsibility. The information in this report is not intended to be published or made available to any person in any jurisdiction where to d o so would result in contravention of any applicable laws or regulations. Accordingly, if it is prohibited to make such information available in your jurisdiction or to you (by reason of your nationality, residence or otherwise) it is not directed at you. This research report is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. It is being supplied to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any purpose, without out prior written consent. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities. The information and opinions contained in this research report have been compiled or arrived at by VSA Capital Limited from s ources believed to be reliable and in good faith but no representation or warranty, express or implied, is made as to their accurac y, completeness or correctness. All opinions and estimates contained in the research report constitute the Company's judgments as of the date of the report and are subjec t to change without notice. The information contained in the report is published for the assistance of those persons defined above but it is not to be relied upon as authoritative or taken in substitution for the exercise of the judgment of any reader. The Company accepts no liability whatsoever for any direct or consequential loss arising from any use of the information cont ained herein. The company does not make any representation to any reader of the research report as to the suitability of any investment made in connection with this report and readers must satisfy themselves of the suitability in light of their own understanding, appraisal of risk and rewa rd, objectives, experience and financial and operational resources. The value of any companies or securities referred to in this research report may rise as well as fall and sums recovered may be less than those originally invested. Any references to past performance of any companies or investments referred to in this research report are not indicative of their future performance. The Company and/or its directors and/or employees may have long or short positions in the securities mentioned herein, or in options, futures and other derivative instruments based on these securities or commodities. Not all of the products recommended or discussed in this research report may be regulated by the Financial Services and Marke ts Act 2000, as amended by The Financial Services and Markets Act 2012, and the rules made for the protection of investors by that Act will not apply to them. If you are in any doubt about the investment to which this report relates, you should consult a person authorised and regulated by t he Financial Conduct Authority who specialises in advising on securities of the kind described. The Company does and seeks to do business with the companies covered in its research reports. Thus, investors should be aware that the Company may have a conflict of interest that may affect the objectivity of this report. To view our policy on conflicts of interest and connected companies, please go to: http://www.vsacapital.com/policies/conflict-of-interest-policy. VSA Capital acts as Corporate Adviser/Broker to Sierra Madre and is therefore classed as a connected company. Investors should consider this report as only a single factor in making their investment decision. Definition of Ratings VSA Capital Limited uses the following stock rating system to describe its equity recommendations. Investors should carefully read the definitions of all ratings used in each research report. In addition, since the research report contains more complete information concerning the analyst's views, investors should carefully read the entire research report and not infer its contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock or investment fund should depend on individual circumstances and other considerations. VSA Capital Limited's recommendations are defined as follows: BUY: The stock is expected to increase by in excess of 10% in absolute terms over the next twelve months. HOLD: The price of the stock is expected to move in a range between -10% and +10% in absolute terms over the next twelve months. SELL: The stock is expected to decrease by in excess of 10% in absolute terms over the next twelve months. In addition, on occasion, if the stock has the potential to increase by in excess of 10%, but on qualitative grounds rather than quantitative, a SPECULATIVE BUY may be used.
Distribution of VSA Capital Limited's Equities Recommendations VSA Capital Limited must disclose in each research report the percentage of all securities rated by the member to which the m ember would assign a "BUY", "HOLD, or "SELL" rating, and also the proportion of relevant investments in each category issued by the issuers to which the firm supplied investment banking services during the previous twelve months. The said ratings are updated on a quarterly basis. Equities breakdown: 17/11/25 BUY SPEC BUY HOLD SELL Overall equities coverage 88% 13% 0% 0% Companies to which VSA has supplied investment banking services 100% 100% n/a n/a
Valuation basis Our valuation of SM is based on an EV/Resource multiple derived from a group of silver peers. Risks to that valuation Commodity prices, political risk, macro risk, execution risk, financing risk. This recommendation was first published 10 July 2023.