First Shipments of Silver and Gold Concentrates Mark Major Milestone

Sierra Madre Gold and Silver Ltd. (SM:TSX.V;  SMDRF:OTCQX) has announced the first shipments of silver and gold concentrates from its wholly-owned Guitarra Mine Complex in Estado de Mexico, Mexico. The company shipped 90.68 dry metric tonnes (DMT) on July 25, 2024, containing approximately 3,000 grams of silver and 30 grams of gold per DMT. An additional 90 DMT is expected to be shipped later this week.

The initial shipment from the Guitarra Mine marks a significant achievement for Sierra Madre. As production increases, the company aims to reach a throughput of 500 tonnes per day (TPD) by the end of the year, producing approximately 350 DMT of silver-gold concentrate per month. Current operations are running at a test mining and processing throughput of 259 TPD, allowing for weekly shipments and corresponding revenues.

"This marks another important milestone for Sierra Madre," stated Alex Langer, Chief Executive Officer, said in a company news release. "With the start of cashflows from concentrate, the company will be receiving revenues on a weekly basis. These revenues should allow us to comfortably expand to commercial production without further capital needs."

Gold and Silver's Positive Momentum

FX Street reported on July 29 that the gold price appreciated due to a tepid U.S. Dollar amid rising hopes of Federal Reserve rate cuts. "A combination of supporting factors assisted the gold price to attract buyers for the second successive day," FX Street wrote. Additionally, "geopolitical risks further lent support to the safe-haven precious metal," which included the Golan Heights attack that raised concerns of an all-out war between Israeli forces and Hezbollah in Lebanon.

"Sierra Madre Gold and Silver Ltd. is ticking all the boxes that are required to reopen the La Guitarra silver-gold mine. And with silver trading firmly above US$30/oz and gold now trading above US$2,400/oz, the timing couldn't be better," Thibaut Lepouttre from Caesars Report noted.

The Daily Gold's Jordan Roy-Byrne, CMT, MFTA, highlighted on July 24 that a macro development was approaching, which, if it occurred, would be very favorable to precious metals in both nominal and real terms.

Roy-Byrne also noted that "the steepening in 2001, 2007, and 2019 was very positive for gold and gold against the stock market." He emphasized that "gold has and should reliably outperform the stock market in such a scenario," and projected that gold "should reach the measured upside target from its cup and handle pattern breakout of US$3000."

On July 26, Reuters reported that gold prices rose 1% as U.S. Treasury yields fell on optimism for a Federal Reserve interest rate cut in September. According to Fawad Razaqzada, market analyst at Forex.com, "Today's mixed-to-weaker U.S. data suggested inflationary pressures and economic activity were waning, paving the way for the Fed to cut rates twice this year."

Reuters also mentioned that "lower rates reduce the opportunity cost of holding non-yielding bullion."

Physical demand for gold in India, the second-largest consumer, received a boost as the country slashed import duties on gold and silver earlier in the week.

Reuters noted that "gold premiums in India jumped to their highest level in a decade this week," and Everett Millman, chief market analyst with Gainesville Coins, added, "any uptick that we see from India or China tends to have an outside effect on overall demand. I think the move to reduce the duty in India can only have a positive effect on demand."

Analyst Insight On Sierra Madre

Dominic Frisby, author of The Flying Frisby, emphasized the importance of Sierra Madre Gold and Silver Ltd.'s recent financial achievement in his July 21 report. "Having secured a US$5 million loan is another step forward and further confirmation that Sierra Madre Gold and Silver Ltd. will soon be producing precious metal. Assuming the company can get to its next target of production with relatively few hitches, then we can hope for the long-awaited revaluation, and you'll see this company north of US$1," Frisby highlighted.

Thibaut Lepouttre from Caesars Report also shared an optimistic perspective on Sierra Madre's advancements in his July 19 write-up. "Sierra Madre Gold and Silver Ltd. is ticking all the boxes that are required to reopen the La Guitarra silver-gold mine. And with silver trading firmly above US$30/oz and gold now trading above US$2,400/oz, the timing couldn't be better," Lepouttre noted.

On July 15, Oliver O'Donnell of VSA Capital underscored the unique investment potential of Sierra Madre. "We believe that Sierra Madre Gold and Silver Ltd. is a highly unusual opportunity where the typical risk-reward for a mine restart is skewed in favor of investors.

The company provides highly attractive near-term exposure to near-term silver production, with the tailwind of the stronger commodity price providing a further ameliorating factor to the risk associated with a restart," O'Donnell remarked.

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 Reuters, President and CEO Alexander Langer owns 1.96% of the company, Executive Chairman and COO Gregory K. Liller owns 1.78%, Director Jorge Ramiro Monroy owns 1.33%, Director Alejandro Caraveo owns 1.16%, Director Kerry Melbourne Spong owns 0.43%, and Director Gregory F. Smith owns 0.16%.

Institutional investors own 12.9% of the company. Commodity Capital A.G. owns 4.4%, Reuters reported.

First Majestic Silver Corp. is a strategic investor and owns 44.9% of the company.

The rest is with retail and high-net-worth investors.

There are 152.69 million shares outstanding and 102.07 million free float traded shares, while the company has a market cap of CA$68.71 million and trades in a 52-week range of CA$0.25 and CA$0.54.

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. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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