Mine Expansion Targets Up To 3x Throughput as Processing Upgrades and Fleet Additions Advance

Unwrapping The Precious Metals and Mining Markets

Alasdair Macleod wrote on February 17 that derivatives had played a central role in precious metals markets for decades, noting that "derivatives have been used to suppress their prices." He stated that expansion of derivative trading had diverted speculative demand away from physical markets, adding that it "was the basis of the massive expansion of gold trading on the LBMA, and of gold futures under the control of the large U.S. banks."

He also described changes in trading activity over time, writing that in London "44 million ounces were cleared daily in 1998," while more recently "17 million ounces were cleared, but at higher prices, they were valued at US$71 billion." He noted that physical demand trends had shifted, stating that "physical gold is now being drained out of London and New York directly or indirectly by a combination of central bank and wider Asian demand."

Macleod also pointed to broader commodity implications, explaining that "the approaching problems in paper gold contracts will almost certainly be transmitted into higher dollar prices for commodities generally, as paper hedging in the form of derivatives diminishes." He added that "the contraction of outstanding commodity derivatives will not be without accidents," and that banks would face "enormous write-offs" as markets adjusted.

Stewart Thomson wrote on February 17 that seasonal factors continued to influence short-term metals pricing, stating that the Chinese New Year holiday "is typically associated with softness in the fiat price of gold." He also described broader demand dynamics, writing that an emerging "gold bull era" was linked to economic growth in Asia, where "gold-oriented citizens of Asia will buy much more gold than they're already eagerly buying now."

Thomson also commented on mining sector cost structures, noting that "most gold producers sport AISCs in the sub US$2000/oz area, and silver producers are at about US$20." He added that sector performance was tied to broader market trends, stating that "junior mining stocks up trending action should resume" when technical indicators strengthened.

According to a February 18 commentary from Excelsior Prosperity with Shad Marquitz, precious metals markets experienced notable short-term volatility tied to global market conditions, including holiday closures across North America and Asia. The commentary stated that "we saw more selling pressure today," with gold, silver, and mining stocks declining following the holiday period. It also noted that Chinese market closures "took out of the markets many strong buyers of precious metals in the East."

In a related discussion cited in the same commentary, Jordan Rusche described the longer-term market cycle, stating that "we are 10 years into this gold bull market already." He also discussed structural characteristics of mining business models, noting that royalty and streaming companies benefited from mine development activity because "they get access to lots of the upside from the mine and you're typically paying one time upfront for the asset in perpetuity."

Commentary Focused on Del Toro Acquisition and East District Development

Dominic Frisby of The Flying Frisby wrote on December 31 that his "Top Pick silver, Sierra Madre Gold and Silver Ltd., has been great. The company is growing nicely and solidly . . . there is plenty left in the tank as Sierra Madre is expanding in just the right way at just the right time."

On January 15, Ted Butler of The Silver Advisor said it was "great to see Sierra Madre Gold and Silver Ltd., trading near all-time highs of CA$2.34, finally being rewarded for its bold and aggressive growth strategy." He also stated that "we believe there's plenty more share price growth to come in 2026, especially once Del Toro becomes the company's second cash flow-producing mine."

Dominic Frisby wrote on January 18 that "my silver pick Sierra Madre Gold and Silver Ltd. keeps on giving," adding that with silver at US$90, "that US$96 target I've been speaking about for some time now, based on silver's cup-and-handle pattern, looks like it's going to get taken out."

In a research note dated February 2, Oliver O'Donnell of VSA Capital reiterated a Buy rating on Sierra Madre Gold and Silver Ltd. and raised the target price to CA$3.00 per share. The report stated that "the upgrade follows the company's completion of a CA$57.5 million fundraise in conjunction with the conditional acquisition of the Del Toro silver mine."

The VSA note also stated that "Sierra Madre has conditionally acquired the Del Toro Mine in the Chalchihuites District of Zacatecas, Mexico, for total consideration of up to US$60 million." It further said that "the addition of Del Toro diversifies Sierra Madre's asset base and offers the potential to replicate the value creation strategy at La Guitarra."

O'Donnell further wrote that "VSA Capital has significantly upgraded its forecasts," and expected EBITDA "to increase eleven-fold year-over-year to US$62 million in 2026." The analyst also stated that the firm's silver price assumption for 2026 had been increased "to US$95 per ounce from US$56 previously."

In a February 17 commentary from The Silver Advisor, Ted Butler wrote that Sierra Madre "returns with a decisive update on the production expansion at its flagship La Guitarra project." He stated that the company had previously outlined a two-stage expansion plan "initially targeting 50% increases in processing rates to between 750 and 800 tonnes per day by Q2."

Butler also noted that "the growth strategy is well on track, with equipment purchases made, as well as processing plant and tailings handling upgrades underway." He described operational developments, writing that the company "has added a new 3-foot standard head cone crusher that will help propel throughput toward the 750 to 800 tonne per day target," and that "construction of the upgraded crushing circuit began in December, with initial testing already underway."

He further stated that "earthworks for the new 750 to 800 tonne per day thickener foundation are nearly complete," and that "grinding capacity is being addressed through the purchase of a refurbished 11 by 12.5 foot ball mill, rated at a sizable 600 tonnes per day." He added that underground fleet expansion included "acquiring two new scoop trams" along with additional equipment purchases and rebuilds.