Restarted Mine in Mexico Reaches Commercial Rates
Research Report

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. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
3.  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.

Disclosures for VSA Capital, Sierra Madre Gold and Silver Ltd., April 24, 2025

Investment Analyst Certification In my role as a Research Analyst for VSA Capital Limited, I hereby certify that the views about the companies and their securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. Non-Independent Research This is a marketing communication. It is non-independent research as it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Important Disclosures This research report has been prepared by VSA Capital Limited, which is party to an agreement to be paid a fee as corporate finance advisors and arrangers with, or has provided investment banking services to, Sierra Madre, or has been party to such an agreement within the last twelve months, and is solely for, and directed at, persons who are Professional Clients as defined under Annex II of the Markets in Financial Instruments Directive, Directive 2004/39/EC, or as defined in the FCA Handbook. Persons who do not fall within the above category should return this research report to VSA Capital Limited, Park House, 16-18 Finsbury Circus, London EC2M 7EB, immediately. VSA Capital may distribute research in reliance on Rule 15a-6(a)(2) of the Securities and Exchange Act 1934 to persons that are major US Institutional investors, however, transactions in any securities must be effected through a US registered broker-dealer. If you are a US person, you must fulfil the requirements of a major US institutional investor as defined by the Securities Exchange Act 1934 and subsequent guidance from the SEC to receive this research report. Any failure to comply with this restriction may constitute a violation of US law for which VSA Capital Limited does not accept responsibility. The information in this report is not intended to be published or made available to any person in any jurisdiction where to d o so would result in contravention of any applicable laws or regulations. Accordingly, if it is prohibited to make such information available in your jurisdiction or to you (by reason of your nationality, residence or otherwise) it is not directed at you. This research report is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. It is being supplied to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any purpose, without out prior written consent. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities. The information and opinions contained in this research report have been compiled or arrived at by VSA Capital Limited from s ources believed to be reliable and in good faith but no representation or warranty, express or implied, is made as to their accurac y, completeness or correctness. All opinions and estimates contained in the research report constitute the Company's judgments as of the date of the report and are subjec t to change without notice. The information contained in the report is published for the assistance of those persons defined above but it is not to be relied upon as authoritative or taken in substitution for the exercise of the judgment of any reader. The Company accepts no liability whatsoever for any direct or consequential loss arising from any use of the information cont ained herein. The company does not make any representation to any reader of the research report as to the suitability of any investment made in connection with this report and readers must satisfy themselves of the suitability in light of their own understanding, appraisal of risk and rewa rd, objectives, experience and financial and operational resources. The value of any companies or securities referred to in this research report may rise as well as fall and sums recovered may be less than those originally invested. Any references to past performance of any companies or investments referred to in this research report are not indicative of their future performance. The Company and/or its directors and/or employees may have long or short positions in the securities mentioned herein, or in options, futures and other derivative instruments based on these securities or commodities. Not all of the products recommended or discussed in this research report may be regulated by the Financial Services and Marke ts Act 2000, as amended by The Financial Services and Markets Act 2012, and the rules made for the protection of investors by that Act will not apply to them. If you are in any doubt about the investment to which this report relates, you should consult a person authorised and regulated by t he Financial Conduct Authority who specialises in advising on securities of the kind described. The Company does and seeks to do business with the companies covered in its research reports. Thus, investors should be aware that the Company may have a conflict of interest that may affect the objectivity of this report. To view our policy on conflicts of interest and connected companies, please go to: http://www.vsacapital.com/policies/conflict-of-interest-policy. VSA Capital acts as Corporate Adviser/Broker to Sierra Madre and is therefore classed as a connected company. Investors should consider this report as only a single factor in making their investment decision. Definition of Ratings VSA Capital Limited uses the following stock rating system to describe its equity recommendations. Investors should carefully read the definitions of all ratings used in each research report. In addition, since the research report contains more complete inf at n n n ng t ana y t’ v w , investors should carefully read the entire research report and not infer its contents from the rating alone. In any case, ratings (or research) should n t b d d p n a nv t nt adv n nv t ’ decision to buy or sell a stock or investment fund should depend on individual circumstances and other considerations. ap ta t d’ ndat n a d f n d a f w : BUY: The stock is expected to increase by in excess of 10% in absolute terms over the next twelve months. HOLD: The price of the stock is expected to move in a range between -10% and +10% in absolute terms over the next twelve months. SELL: The stock is expected to decrease by in excess of 10% in absolute terms over the next twelve months

In addition, on occasion, if the stock has the potential to increase by in excess of 10%, but on qualitative grounds rather t han quantitative, a SPECULATIVE BUY may be used. Distribution of VSA Capital Limited’s Equities Recommendations VSA Capital Limited must disclose in each research report the percentage of all securities rated by the member to which the m ember would assign a “B Y”, “ , “ ” at ng, and a t p p t n f vant nv t nt n a at g y d by t issuers to which the firm supplied investment banking services during the previous twelve months. The said ratings are updated on a quarterly basis.

Sierra Madre Gold and Silver Ltd.'s (SM:TSX.V; SMDRF:OTCQX) latest financial and operating data show that management successfully navigated the test mining and ramp-up phase at its La Guitarra project in Mexico, confirming a key derisking event, reported Oliver O'Donnell, natural resources analyst at VSA Capital, in an April 24 research note.

"Narrowing to effectively break even in only the second quarter of operations is an impressive achievement, in our view," O'Donnell wrote.

128% Return Potential

Sierra Madre's share price at the time of the report was about CA$0.57 per share, noted O'Donnell.

"In recent months, the stock price has remained within a broad trading range with the market awaiting updates on the ramp-up, and although yet to break out to reflect the acceleration in precious metal price gains, is building a steady uptrend," the analyst added.

VSA Capital's target price on the Canadian silver producer is CA$1.30 per share, implying a potential return for investors of 128%.

Sierra Madre remains a Buy.

The stock's 52-week range is CA$0.37–0.65 per share. There are 153.9 million shares outstanding. Major shareholders are First Majestic Silver Corp. (AG:TSX; AG:NYSE; FMV:FSE) with 44.9%, Commodity Capital with 4.4% and Sierra Madre Chief Executive Officer and President Alex Langer with 2.7%.

2024 Financial Recap

O'Donnell reviewed the company's results for 2024, in which test mining at La Guitarra began midyear. Sierra Madre generated US$6.5 million (US$6.5M), in line with VSA Capital's US$6.8M estimate, from sales of 230,000 ounces of silver equivalent (230 Koz of Ag eq). Gross profit for the year was US$1.4M, with Q4/24 responsible for US$1.1M of the total.

Also during this quarter, revenue was US$3.9M, 55% higher than that of Q3/24. During the period the company sold 59 Koz of silver and 897 ounces of gold, reflecting 21% and 66% quarter-over-quarter increases, respectively.

Sierra Madre posted a net loss of US$38,000 (US$38K) for Q4/24 and a net loss of US$4.1M for 2024. Capex spent was about US$1.7M, mostly for new equipment, but the company kept this expense low by leasing.

Having managed working capital through the hardest ramp-up phase successfully, noted O'Donnell, Sierra Madre ended 2024 with US$45K in cash. The company held inventory into 2025 and sold it soon after, thereby strengthening its cash position. January sales were 349 dry metric tons of concentrate, a 10% increase over November 2024 sales.

Significant Development Progress

O'Donnell reported what Sierra Madre achieved at La Guitarra in terms of development. The company refurbished the plant and shortly after year-end, achieved commercial production. Now, crushing, grinding and flotation all are being done at commercial rates. Still, some further capacity, beyond 500 tons per day, remains.

Additionally, Sierra Madre made significant progress on mine planning and other development work, according to management, which, noted O'Donnell, "is key to demonstrating the ability to deliver consistent and predictable production at the commercial run rate."

2025 Outlook Positive

Sierra Madre's Q1/25 results, due out in May, should show additional progress, O'Donnell wrote.

"We expect the combination of consistent commercial production and higher prices to take the company into profit," O'Donnell wrote, noting VSA Capital's EBITDA forecast for Sierra Madre for this year is US$9.5M. "We expect strong earnings performance in 2025, translating to further share price gains."