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 and an inferred resource of 4.11 million tonnes grading 153 g/t AgEq, 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 at an average cost of US$22.40 per silver-equivalent ounce sold.
The company continues to advance its 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 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.
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 at La Guitarra since January 2025 and now mining at 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.
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. Upcoming catalysts include a planned resource calculation and metallurgical testing at the Tepic project, located in Nayarit, Mexico. Historical drilling at Tepic has shown silver-equivalent grades up to 1,106 g/t over 2.55 meters, and the project remains open along strike for expansion.
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 Growth Trajectory and Re-Rating Potential for Sierra Madre
On February 24, Oliver O'Donnell of VSA Capital Markets published a research report emphasizing the operational momentum and upside potential of Sierra Madre Gold and Silver Ltd. following its transition to commercial production at the La Guitarra project. 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.” O'Donnell indicated that these operational milestones positioned Sierra Madre for a potential re-rating and outperformance relative to the broader sector.
The analyst reiterated a Buy rating and set a target price of CA$1.30 per share, representing a 120% upside from the stock’s CA$0.59 trading level at the time. He noted that “positive operating and financial results over the coming months will provide the catalysts to break out [of the recent trading range] to the upside,” particularly amid favorable conditions for both silver and gold.
O'Donnell reviewed the company’s operational achievements, including the start of commercial production at La Guitarra in July 2024 and the ramp-up to industrial-scale throughput by December. In January, Sierra Madre shipped 349.48 dry metric tonnes (dmt) of concentrate and held 45.81 dmt in inventory. According to the report, these gains were the result of “successful debottlenecking of the plant and development improvements underground,” including access to higher-grade zones.
VSA Capital revised its 2025 financial outlook based on recent performance and improved metals pricing, projecting production of 400,000 ounces of silver and 4,700 ounces of gold. These volumes were expected to generate revenue of US$25 million and EBITDA of US$10 million. The firm suggested that Sierra Madre could fund a throughput expansion to 1,000 tonnes per day through internal cash flow if management proceeds with such plans in the next two years.
O'Donnell also commented on the company’s ownership structure, identifying First Majestic Silver Corp. as the largest shareholder with a 44.5%t stake. He concluded that Sierra Madre’s improving grade consistency and stable operations provided a solid foundation to support future 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.
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