Silver-Gold Company Uncovers Major Gains in Mexico

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Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) reported revenues of US$5.4 million and gross profit of US$1.3 million for the quarter ended June 30, 2025. The results marked the company's second quarter of commercial production at the La Guitarra silver-gold mine complex in Mexico.

During the quarter, Sierra Madre sold 65,683 ounces of silver and 1,096 ounces of gold, totaling 173,562 silver equivalent ounces. Net revenues rose 10.7% from the previous quarter, supported by higher average realized prices per ounce. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 37.5% to US$1.46 million compared to Q1 2025.

Operating costs were impacted by early seasonal rains in Mexico that caused power outages and affected production volumes, as well as wage increases and currency fluctuations. All-in sustaining costs averaged US$30.10 per silver equivalent ounce, compared to US$28.98 in the prior quarter. Sierra Madre is evaluating power generation options and hopes to have power redundancies available for the start of the next rainy season in Q2 2026. 

Following quarter-end, Sierra Madre closed a CA$19.5 million private placement to support equipment purchases, plant upgrades, a plant expansion to increase capacity up from the current 500 t/d run rate, and an expanded exploration program, which will include +20,000m of drilling at the East District concessions.  

Chief Executive Officer Alex Langer stated in the news release, "The second quarter generated revenues of US$5.4 million and a gross profit of US$1.3 million, with both numbers showing growth over Q1 2025, despite Q2 2025 production being impacted by an earlier-than-usual onset of seasonal heavy rains."

Gold and Silver Sector Trends

CaptainEwave, in an August 17 technical analysis, applied Elliott Wave theory to the silver and gold markets. The report indicated that silver was "moving higher in wave 3," with a projection for wave iii at 48.05 and a longer-term projection for wave 3 at 86.50. For gold, the analysis suggested that wave -iv- was either continuing in a triangle pattern or had completed, with both scenarios pointing toward "a very sharp thrust higher in wave -v-." The commentary emphasized that both metals remained within significant upward wave structures in long-term cycle counts.

Stewart Thomson of Gold321, writing on August 19, observed that gold reached US$3,500 in late April before trading sideways for about four months. He noted that "gold stocks generally keep making higher highs even while gold trades sideways," adding that senior gold producers had been in "upside action" since late 2023. He described the current setup as "one of the most spectacular base pattern breakouts in the history of markets," highlighting strong institutional buying activity alongside muted retail sentiment.

Also on August 19, PauloMacro reflected on the long-term cycles in commodities, drawing comparisons between uranium and silver. He recalled the broad commodity rally of the 2000s, stating that "everything in commodities was rallying back then, few people had experience in the space, I was on my first real commodity cycle, and bull markets have a knack for making geniuses out of everyone." His comments reinforced the cyclical nature of precious metals markets, where periods of weakness are often followed by renewed strength.

On August 20, Matthew Piepenburg added perspective by linking gold's role to broader fiscal conditions. He noted that the United States' elevated debt-to-GDP ratio had limited policy options, leading to discussions around a potential gold revaluation. He stated that "the very fact that the US is considering such a gold revaluation…is a constructive admission that gold has more trust, merit, confidence and strength than a debased USD and unloved UST." His remarks underscored gold's enduring importance as a store of value during times of financial strain.

According to an August 22 FXEmpire report, gold traded under pressure as the US dollar strengthened following Federal Reserve minutes that emphasized ongoing inflation risks, reducing expectations for aggressive policy easing. Analysts noted this limited gold's ability to build momentum, with futures markets pricing in a roughly 75% probability of a quarter-point rate cut next month, down from full pricing a week earlier. In contrast, silver recorded modest gains, supported by safe-haven demand amid geopolitical uncertainty and political tensions in the United States. The report highlighted that silver's dual role as both a safe-haven and industrial metal has helped sustain demand despite dollar strength, while market attention remains focused on Federal Reserve Chair Jerome Powell's upcoming Jackson Hole speech, expected to provide direction on balancing inflation risks with labor market signals.

Third-Party Expert Analysis

On June 30, O'Donnell further strengthened his positive outlook following a site visit to Sierra Madre's La Guitarra project in Mexico. In his research note, he wrote that "management now has robust visibility on a development plan that we believe can deliver consistency of grade and therefore stable margins." VSA Capital subsequently raised its target price on Sierra Madre from CA$1.30 to CA$1.40, reaffirming a Buy rating. The analyst highlighted that with current metal prices, La Guitarra could generate cash flows of at least US$15 million annually once higher-grade zones are in full production by the end of 2025. He pointed to the transition from using lower-grade backfill material to mining fresh ore from La Guitarra, Nazareno, and Coloso as a key driver for stronger profits. 

O'Donnell also underscored the exploration potential at La Guitarra and Coloso;, Coloso silver and gold grades are 1.7 and 1.2 times higher, respectively, than those at the main Guitarra vein system. He noted that "mining at these recently drilled structures already highlights a number of factors that support the investment case: the potential to expand the resource footprint at La Guitarra, the short timelines to undertake development work and bring new opportunities into production, and management's past intimate knowledge of the mineralized structures." VSA Capital's financial model projected Sierra Madre's EBITDA at about US$6 million in 2025, increasing to US$19 million in 2026 due to greater throughput and higher grades. The analyst also observed that Sierra Madre's stock was up 54.2% year-to-date at the time of the report, supported by investor confidence and favorable silver market conditions. 

Ted Butler, Senior Analyst at  The Gold Advisor concluded that despite minor share price weakness linked to silver prices, Sierra Madre's rapid progress from acquisition to commercial production in just two years supported his positive view on the company. 

On July 17, VSA Capital maintained a Buy recommendation on Sierra Madre Gold and Silver Ltd. with a target price of CA$1.40 per share, representing 100% upside from the CA$0.70 share price at the time of publication.

According to analyst Oliver O'Donnell, the company's heavily oversubscribed CA$19.5 million placement, launched at CA$10 million, provided the resources to accelerate growth plans and exploration across the broader license area. He noted that "as a brownfield site which has previously operated at higher run rates, the capex requirement is modest," adding that the raise would fund plant upgrades, equipment purchases, and operational expense optimization. 

O'Donnell also emphasized exploration potential in the Eastern District, where 59 kilometers of veins have been mapped with grades historically exceeding 600 grams per tonne silver and gold grades of up to 4 grams per tonne. VSA Capital 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 a July 19 quote from Thibaut Lepouttre of the Caesars Report said, "Sierra Madre Gold and Silver Ltd. will use the proceeds from this financing to increase the capacity of the La Guitarra mine. The recent [upsizing] of the financing (from the initially announced CA$10M) will likely also allow for a substantial drill program." 

Ted Butler, Senior Analyst at  The Gold Advisor, provided additional commentary on August 22, following Sierra Madre Gold and Silver Ltd.'s second quarter results. He noted that the company generated US$5.4 million in revenue and US$1.3 million in gross profit from La Guitarra in Q2, which represented a clear step up from Q1 revenues of US$4.8 million and gross profit of US$1.2 million. He pointed out that production increased to 173,562 silver-equivalent ounces in Q2, compared to 165,093 ounces in the prior quarter, despite challenges posed by early seasonal rains that temporarily disrupted operations. 

According to Butler, adjusted EBITDA rose 37.5% quarter over quarter to US$1.46 million, reflecting improved efficiency. He emphasized that Sierra Madre's management was ramping up production at the Coloso mine, which carries higher silver and gold grades than La Guitarra, and observed that July output had already reached 576 tonnes. Butler highlighted that "future tonnes should come with fatter margins, as development work continues to unlock additional stopes," which he said would support smoother production and stronger per-ounce economics. 

He also pointed to the company's strengthened financial position, citing the CA$19.5 million private placement completed after quarter-end and First Majestic's 38% ownership stake. Butler explained that these funds were earmarked for new equipment, mine upgrades, and planning a plant expansion beyond the current 500-tonne-per-day capacity. He added that Sierra Madre was preparing a 20,000-meter drill program in the East District, a historically mined area with significant exploration upside. Butler concluded that, despite minor share price weakness linked to silver prices, Sierra Madre's rapid progress from acquisition to commercial production in just two years supported his positive view on the company. 

Operational Progress and Exploration Plans

Sierra Madre continues to advance its operations at La Guitarra, which resumed commercial production in January 2025. The site includes a 500-tonne-per-day processing plant and multiple underground mines, with the Coloso mine now supplementing feed at grades averaging higher silver and gold content than the main Guitarra vein system.  

Development work is ongoing to increase mining faces at Coloso, where July output showed improved production. The company is also preparing for a plant expansion beyond the current 500-tonne-per-day run rate and planning a drill program of more than 20,000 meters in the East District concessions.

Sierra Madre's corporate presentation highlights a strengthened balance sheet and a shareholder base that includes First Majestic Silver with a 37.7% stake, along with institutional investors and management ownership. As of March 31, 2025, the company reported current assets of US$4.3 million, which increased to US$5.9 million by the end of Q2.

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 44.9%. The rest is retail.