Mining Company Strikes Gold in Mexico

Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) has announced the results of six additional drill holes from the Phase 2 drilling program on its Tepic silver-gold project in Nayarit, Mexico.

In the Taunas area, drill hole TDH017 intersected 209 grams per tonne silver (g/t Ag), 1.15 g/t gold (Au), and 296 g/t silver equivalent (AgEq) over 2.50m from a depth of 6.50m to 9.00m, including 111 g/t Ag, 2.06 g/t Au, and 266 g/t AgEq over 0.60m from a depth of 23.80m to 24.40m. Drill hole TDH018 intersected 66 g/t Ag, 0.55 g/t Au, and 108 g/t AgEq over 0.65m at a depth of 24.85m to 25.50m.

In the Veta Tomas area, drill hole TDH019 intersected 84 g/t Ag, 0.24 g/t Au, and 101 g/t AgEq over 4.85m from a depth of 154.50m to 159.35m, including 49 g/t Ag, 0.36 g/t Au, and 76 g/t AgEq over 2.60m from a depth of 161.40m to 164.00m, and 158 g/t Ag, 0.46 g/t Au, and 193 g/t AgEq over 10.05m from a depth of 167.50 to 171.85m.

Despite the recent focus on lithium and battery metals, analysts are bullish on precious metals. Evolution mining executive chairman Jake Klein commented,"I think the gold story is compelling."

This includes 258 g/t Ag, 0.68 g/t Au, and 309 g/t AgEq over 4.35m from a depth of 167.50m to 171.85m, and includes 108 g/t Ag, 0.40 g/t Au, and 138 g/t AgEq over 3.70m at a depth of 173.85m to 177.55m. Drill hole TDH020 intersected 92 g/t Ag, 0.36 g/t Au, and 119 g/t AgEq over 1.00m at a depth of 122.00m to 123.00m.

Drill hole TDH021 intersected 8 g/t Ag, 1.39 g/t Au, and 112 g/t AgEq over 1.15m at a depth of 54.35m to 55.50m. Drill hole TDH022 found 24 g/t Ag, 1.35 g/t Au, and 125 g/t AgEq over 2.30m at a depth of 46.65m to 48.95m.

According to Gregory K. Liller, the executive chairman and COO of Sierra Madre, "The drilling program at Tepic continues to deliver strong drill intercepts. The Veta Tomas vein continues to be extended, and I am especially pleased with the Taunas holes. These are the first two holes on a previously unrecognized target and are located approximately two kilometers northeast of the historic resource area."

A Bull Market for Gold

Despite the recent focus on lithium and battery metals, analysts are bullish on precious metals.

Technical Analyst Clive Maund has called the Sierra Madre "a junior mining stock that looks like it has virtually no downside from here but a lot of upside." 

Evolution mining executive chairman Jake Klein commented, "I think the gold story is compelling. It's a store of value, and as people think about their portfolio, it is an alternative to the U.S. dollar," citing gold's status as a safe haven in times of uncertainty. Gold prices appear to be moving close to the previously record-breaking prices of last April at US$1900 per ounce.

Technical Analyst Clive Maund is also optimistic about gold, though slightly more cautious.

According to Maund, "In more normal times, we would be looking for these readings to moderate more before becoming outright bullish, but there is, of course, nothing to say that, in the right conditions, readings won't become a lot more extreme and fly off the top and bottom of this chart."

'Virtually No Downside'

Technical Analyst Clive Maund has called the Sierra Madre "a junior mining stock that looks like it has virtually no downside from here but a lot of upside." He cites the company's successful completion of a big fundraising effort last May and the acquisition of the La Guitarra gold-silver property in Mexico as incidents that have remade the company's value. 

Maund rated Sierra Madre as a Strong Speculative Buy for investors, saying, "In conclusion, with downside looking very limited or even non-existent, and very considerable upside potential . . . it looks low risk for a stock of this kind."

Ownership and Share Structure

Management and insiders own 5.22% of the company. Alexander Langer owns 2.06% with 2.94 million shares, Jorge Monroy Ramiro owns 1.42% with 2.02 million shares, Alejandro Caraveo owns 1.24% with 1.77 million shares, Kerry Melbourne Spong owns 0.32% with 0.46 million shares, and Gregory F. Smith owns 0.18% with 0.25 million shares.

Institutions own 49.77% of the company. First Majestic Silver Corp. owns 48.40% with 69.06 million shares, and Commodity Capital AG owns 1.37% with 1.95 millions shares.

First Majestic represents a strategic investor.

The company has CA$8 million in the bank, with a monthly burn rate of CA$200k to CA$500k.

There are 142.7 million shares outstanding and 66.19 million free-float traded shares. The company has a market cap of CA$44 million. It trades in the 52-week period between CA$0.37 and CA$0.51.

Important Disclosures:

1. 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. 
2. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
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