Silver-Gold Producer Plans Big Mexico Expansion
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) is expanding the La Guitarra mine in Mexico to over 1,200 tpd. Read how strong silver and gold prices, along with analyst support, add momentum to the plan.
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) announced a detailed two-stage expansion plan for its La Guitarra silver-gold mine complex in Mexico's Temascaltepec mining district. The company aims to boost nameplate processing capacity by more than 100% from the current 500 tonnes per day (tpd) to a range of 1,200 tpd to 1,500 tpd by the third quarter of 2027 .
The first phase of the expansion, scheduled for completion by the second quarter of 2026, would raise processing capacity by 50% to a range of 750 tpd to 800 tpd. This stage includes construction of a paste fill and thickener plant, installation of a fourth ball mill and second cone crusher, and enhancements to the conveyor circuit. According to the company, sourcing and procurement for key equipment is underway, with deliveries anticipated by November 2025.
The second phase targets further capacity increases and includes the construction of a fully permitted dry stack tailings storage facility (TSF) with 5.8 million tonnes of storage capacity. Additional infrastructure includes a second crushing circuit and replacement of an existing ball mill to support higher throughput levels. Both crushing circuit additions are being designed to produce finer material, which may allow for improved recoveries starting in Q2 2026.
Sierra Madre reported that it has adequate capital to fund these expansions from its treasury and cash flow. In July 2025, the company closed a CA$19.5 million private placement to support ongoing development at La Guitarra.
"With commercial production achieved at La Guitarra only nine months ago, we are excited to be planning our next two major milestones," said CEO Alex Langer in the company's news release. "These two staged expansions would allow us to more than double throughputs from current levels."
COO and Executive Chairman Greg Liller added that no additional permitting is required for the expansions. "We expect to complete this expansion on-time and on-budget with a combination of contractors and in-house personnel," he stated.
In the second quarter of 2025, Sierra Madre reported revenue of US$5.4 million and a gross profit of US$1.3 million, driven by production of 66,011 ounces of silver and 1,048 ounces of gold. Commercial production at La Guitarra began in January 2025 following a restart ahead of schedule and under budget.
Precious Metals Market Shows Structural Strength
While silver investment interest has surged globally, Australia has seen a particularly sharp rise. A September 4 article from Stockhead stated that Australia became the world's fourth-largest physical silver market, surpassing both China and Canada. The Metals Focus report, commissioned by the Silver Institute, attributed this growth to superannuation investment and favorable tax policies. The article noted that "silver's relative popularity compared to gold among Australian retail investors is among the highest in the world."
According to Kitco News on September 5, Sameer Samana, head of Global Equities and Real Assets at Wells Fargo Investment Institute, stated that "gold and silver should outperform even a hot equity market in a lower-rates environment." He attributed this to the U.S. Federal Reserve's shifting focus away from inflation toward the labor market, a move that has increased pressure on bondholders and created a favorable backdrop for precious metals. Samana emphasized gold's role as a diversification tool, noting that "gold seems to be the easiest alternative, because it does well in uncertain times." He also pointed to institutional motivations, such as "diversification away from the dollar," particularly in response to changing geopolitical and fiscal strategies.
Also on September 5, Alasdair Macleod of GoldMoney highlighted broader macroeconomic forces driving demand for gold and silver. He wrote that the metals were "front-running major changes in the relationship between G7 currencies," referencing the potential formation of a non-dollar trading bloc and what he described as a developing G7 bond crisis. Macleod reported that silver reached US$40.77 and characterized the price movement as a "return to normal bull market conditions," driven by increased futures activity on the Comex exchange. He also noted that a declining trend in physical metal availability, particularly at central bank vaults, could support sustained tightness in the physical silver market.
Reuters reported on September 8 that gold surged past US$3,600 per ounce for the first time, supported by soft U.S. labor data and growing expectations of a Federal Reserve rate cut. Spot silver also gained, reaching US$41.29 per ounce, its highest level since September 2011. The article cited strong central bank buying, lower bond yields, and a weakening U.S. dollar as factors supporting the bullish move. According to the report, gold prices had already climbed 37% year-to-date, following a 27% gain in 2024.
Analysts Weigh In as Profitability and Expansion Take Center Stage
On July 17, VSA Capital reiterated its Buy recommendation on Sierra Madre Gold and Silver Ltd., assigning a target price of CA$1.40 per share, which represented 100% upside from the CA$0.70 share price at the time. Analyst Oliver O'Donnell noted that the company's CA$19.5 million private placement, upsized from an original CA$10 million offering, allowed Sierra Madre to accelerate growth plans and exploration across its broader license area. He pointed out that "as a brownfield site which has previously operated at higher run rates, the capex requirement is modest," and stated that the funds would be used for plant upgrades, equipment purchases, and operational efficiency initiatives.
O'Donnell also emphasized the potential of the company's Eastern District, where 59 kilometers of veins have been mapped and historic grades exceeded 600 grams per tonne silver and up to 4 grams per tonne gold. He concluded that "accelerating the ramp up to take advantage of the rise in precious metals prices is a positive decision which we believe will bring forward stronger cash flow generation for only modest capex."
In an August 27 research update, O'Donnell reported that Sierra Madre had delivered its second consecutive quarter of profitability since entering commercial production. In Q2 2025, silver production decreased by 6% while gold production rose 5% quarter-over-quarter, reaching 66,000 ounces of silver and 1,048 ounces of gold. Revenue increased 11% to CA$5.4 million, with total first-half revenue reaching CA$10.4 million. Gross profit for Q2 was CA$1.29 million, while net income came in at CA$0.28 million. Higher costs were attributed to ramp-up activity, expanded staffing, and foreign exchange impacts. Management also noted that power outages early in the rainy season affected production.
Reflecting on shareholder impact, Krauth wrote that "the prospect of a CEO who is 'excited to drive significant capacity expansion' should be music to the ears of Sierra Madre shareholders."Despite those factors, VSA maintained its 2025 production outlook of 356,000 ounces of silver and 4,000 ounces of gold, with EBITDA guidance unchanged at CA$5.9 million. The net income forecast was reduced by 12% to CA$2.7 million due to increased depreciation and amortization. Capital expenditures and long-term earnings assumptions were revised to reflect the company's expansion strategy.
O'Donnell detailed that the expansion would lift capacity to 640 tonnes per day, followed by a second-stage increase to 1,000 tonnes per day over 24 months. VSA forecast annual production of 1.1 million ounces of silver and 10,000 ounces of gold, supporting over CA$22 million in free cash flow. He also highlighted that the funding would support a 20,000-meter exploration drill program in the Eastern District.
Following the financing, Sierra Madre's share price increased by 7.5% to CA$0.86. O'Donnell stated that the company's narrative had shifted from restart execution to growth, enabling greater strategic flexibility and reduced working capital pressure. As a result, VSA raised its EBITDA forecasts for 2026 and 2027 by 21% and 44%, respectively, to CA$23.2 million and CA$32.7 million. The 2025 forecast remained largely unchanged.
He concluded that "Given SM has achieved profitability, has an expansion strategy and new growth catalysts, we believe that a fair target is now towards the top end of the range to capture the growth upside potential and the fair rating of a company beginning to build a track record of profitability." VSA reiterated its Buy rating and CA$1.40 target.
On July 19, Thibaut Lepouttre of Caesars Report remarked on Sierra Madre's fundraising activities and their implications for growth. He stated that the company would use the proceeds from the upsized CA$19.5 million financing to increase capacity at the La Guitarra mine. He also noted that "the recent [upsizing] of the financing (from the initially announced CA$10M) will likely also allow for a substantial drill program."
On August 22, Ted Butler provided further analysis following Sierra Madre's Q2 2025 results. He reported that revenue rose to US$5.4 million and gross profit reached US$1.3 million, up from US$4.8 million and US$1.2 million in Q1. Production climbed to 173,562 silver-equivalent ounces from 165,093 in the prior quarter. He stated that adjusted EBITDA increased 37.5% quarter-over-quarter to US$1.46 million, reflecting improved operational efficiency.
Butler highlighted progress at the Coloso mine, which is now contributing higher-grade material. July output reached 576 tonnes, and Butler observed that "future tonnes should come with fatter margins, as development work continues to unlock additional stopes." He suggested this would support smoother production and stronger per-ounce economics.
He also referenced the CA$19.5 million capital raise and First Majestic's 38% equity stake, noting that the company planned to apply the funds to new equipment, mine upgrades, and a plant expansion beyond the current 500-tonne-per-day capacity. Butler further pointed to the planned 20,000-meter drill campaign in the East District as a potential growth lever.
Despite minor share price fluctuations tied to silver prices, Butler concluded that Sierra Madre's rapid advance from acquisition to commercial production in just two years supported a continued positive outlook.
On September 8, Peter Krauth of Gold Resource Investor noted that Sierra Madre's announcement of a two-stage expansion plan at La Guitarra came just nine months after entering commercial production. He reported that the first stage would increase capacity by more than 50% to between 750 and 800 tonnes per day by the second quarter of 2026. According to Krauth, this stage would involve the construction of a paste fill and thickener plant, installation of a fourth ball mill and a second cone crusher, and upgrades to the conveyor circuit. He added that equipment sourcing was already underway, with key deliveries expected by November 2025.
Krauth wrote that Sierra Madre intended to use the downtime during installation to complete maintenance work, citing the tailings pumping circuit replacement carried out earlier in the year as a similar example. Looking ahead, he stated that the second phase of the expansion would aim to raise throughput to between 1,200 and 1,500 tonnes per day by the third quarter of 2027. This phase includes a fully permitted dry stack tailings facility with a capacity of 5.8 million tonnes, a second crushing circuit, and a replacement ball mill.
He noted that the company planned to crush ore more finely, from three-eighths of an inch to a quarter inch, to improve grinding and increase recoveries. Krauth added that the expansion would be funded internally through treasury and operating cash flow, following the CA$19.5 million private placement closed in July.
Reflecting on shareholder impact, Krauth wrote that "the prospect of a CEO who is 'excited to drive significant capacity expansion' should be music to the ears of Sierra Madre shareholders," particularly as silver prices had reached 14-year highs. He reported that shares rose 6% on the day of the announcement and stated that he would be maintaining a full weighting in the stock, citing the company's ability to deliver and its potential to unlock additional ounces at a mine that once produced between 1 million and 1.5 million silver-equivalent ounces annually.
Expansion Plans and Exploration Drive Next Chapter
As outlined in its September 2025 Investor Presentation, Sierra Madre's ongoing operational developments are anchored by a three-pronged strategy that includes commercial production at La Guitarra, district-scale exploration, and optimization of mining methods.
The company's East District drill campaign is targeting for more than 20,000 meters of drilling to explore more than 25 kilometers of mapped metasediment-hosted veins and 13 kilometers of volcanic-hosted structures. Historical production grades in the area ranged from 384 to 850 grams per tonne (g/t) silver and up to 6.5 g/t gold.
In the West District, which hosts the Guitarra, Coloso, and Nazareno underground mines, Sierra Madre has delineated more than 15 kilometers of mineralized veins and breccias. Coloso, currently being ramped up to 150 tpd, is projected to contribute to increased production grades into the second half of 2025.
Streetwise Ownership Overview*
Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX)
*Share Structureas of 9/9/2025Source: Sierra Madre Gold & SilverThe company is also considering bulk mining options for previously defined open pit deposits using underground methods, as part of its evaluation of long-term mine planning.
With a permitted 500 tpd facility already in operation and a roadmap to significantly higher throughput, Sierra Madre continues to position the La Guitarra complex as a scalable silver-gold producer within Mexico's prolific Silver Belt.
Ownership and Share Structure
Sierra Madre provided a breakdown of the company's ownership and share structure, where management and founders own approximately 21.4% 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 24.3% of the company. Commodity Capital A.G. owns 4.4%, Refinitiv reported. Strategic investors hold 37.7%. The rest is retail.
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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$4,000 and US$5,000. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madre Gold and Silver.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.