Silver Mine Deal Worth Up to US$60M Closes as New Drilling Campaign Takes Shape

1. Sierra Madre Gold and Silver Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$3,000 and US$6,000.
2. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sierra Madre Gold and Silver Ltd.  and First Majestic Silver Corp.
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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) announced the completion of its previously announced acquisition of First Majestic Del Toro, S.A. de C.V., a wholly owned subsidiary of First Majestic Silver Corp. that holds a 100% interest in the Del Toro Silver Mine in Mexico.

Under the terms of the share purchase agreement dated December 17, 2025, Sierra Madre acquired all of the issued and outstanding shares of the subsidiary in exchange for a cash payment of US$20 million and the issuance of 10.87 million Sierra Madre common shares to First Majestic Silver Corp. (AG:TSX;  AG:NYSE;  FMV:FSE) at a deemed price of $1.30 per share.

In addition, Sierra Madre is required to pay First Majestic US$10 million within 18 months of closing, either in cash or, at Sierra Madre's option, in common shares.

Alex Langer, Sierra Madre's president and chief executive officer, said in a news release, "The acquisition of Del Toro marks an important step for Sierra Madre Gold and Silver as we advance towards mid-tier silver production."

Langer added that Del Toro is "a complementary addition to our Mexico-focused silver portfolio" and stated that the company's focus now turns to resource expansion drilling, with approximately 30,000 meters planned.

The agreement also includes two additional milestone-based payments of US$10 million each. One payment would become due if, within 48 months of closing, Sierra Madre files a National Instrument 43-101 technical report or issues a news release demonstrating mineral resources of at least 100 million ounces silver equivalent at Del Toro. The second would become due if, within 60 months of closing, commercial production of at least 4,000 tonnes per day is achieved at Del Toro for 30 consecutive days. Both payments may be made in cash or, at Sierra Madre's option, in common shares, subject to specified conditions.

Concurrent with the acquisition, Sierra Madre completed its previously announced brokered private placement financing. The company issued a total of 44,231,300 subscription receipts at $1.30 per receipt for aggregate gross proceeds of $57,500,690. The financing was completed in two tranches, with the first closing on January 14, 2026, and the second on January 30, 2026.

Each subscription receipt was automatically converted into one common share immediately prior to the closing of the acquisition. Sierra Madre said the net proceeds were used to fund completion of the acquisition, with the remaining funds intended for exploration and development at Del Toro and for general working capital purposes.

Following the closing, First Majestic beneficially owns or controls 62,433,076 Sierra Madre common shares, representing approximately 24.77% of the company's issued and outstanding common shares on a non-diluted basis.

Gold and Silver Markets Remained Influenced by Demand Trends and Monetary Policy

According to a June 20 market update from Couloir Capital, precious metals ended the week lower after the U.S. Federal Reserve maintained a hawkish stance and signaled that interest rates could remain higher for longer, while also raising the possibility of another rate hike. The firm wrote that these developments pushed "the U.S. dollar and Treasury yields higher, reducing the appeal of non-yielding assets such as gold and silver."

Couloir Capital reported that gold prices fell 1.4% during the week as investors responded to the Federal Reserve's policy outlook. The firm stated that "the U.S. dollar" reached a one-year high while Treasury yields also moved higher, factors that weighed on precious metals. Silver declined 4.5% during the same period as "hawkish Fed signals boosted rate hike expectations, easing U.S.-Iran tensions reduced safe-haven demand, and weak Indian imports outweighed strong Chinese buying."

Also on June 20, Bryan Lutz highlighted commentary from Adam Hamilton of Zeal LLC examining the relationship between precious metals and Federal Reserve policy. Hamilton wrote that gold reacted sharply following the Federal Open Market Committee meeting and changing expectations for interest rates. He quoted Federal Reserve Chair Kevin Warsh as saying, "I think financial markets perform best when they react to incoming data." Hamilton argued that reduced emphasis on forward guidance and interest-rate projections could lessen the market distortions that have historically influenced gold trading. He wrote that gold's price has often been affected by expectations surrounding Federal Reserve actions rather than underlying economic fundamentals, and suggested that a greater focus on economic data could lead to more stable precious metals market behavior.

A June 22 article from the Editorial Team at Junior Stocks examined silver demand from both industrial and military applications. The authors wrote that "military applications of silver have historically been substantial," citing its use in communications equipment, radar systems, weapons technologies, and medical applications. The article also discussed silver's role in electronics, healthcare, and renewable energy, noting that "silver is essential in photovoltaic cells" used in solar power generation.

The article further reported that the United States relied heavily on imported silver supplies and explored the interaction between military and industrial consumption. According to the authors, silver's combination of electrical conductivity, corrosion resistance, reflectivity, and antimicrobial properties continued to support its use across a broad range of applications. The publication stated that growing attention on both military and industrial demand had increased discussion surrounding silver supply availability and overall market dynamics.

Expansion Plans and Higher Grades Featured in Analyst Update

In a May 19 research note from VSA Capital, analyst Oliver O'Donnell discussed Sierra Madre Gold & Silver's first-quarter financial results and operational progress. O'Donnell wrote that the company had reported "strong Q1 2026 financials largely due to higher silver and gold prices," with net revenue of US$10.1 million, up 22% quarter over quarter and 109% year over year.

According to O'Donnell, adjusted EBITDA reached US$2.8 million during the quarter, which he described as "47% of the full year 2025 total." He noted that increased mining costs were "significantly explained by a spend on the expansion (non-capitalized spend such as headcount) and additional contractors as well as inflationary pressure."

The report stated that phase one of the company's expansion to 750-800 tonnes per day remained "on track to complete in Q2." O'Donnell also wrote that "Coloso and Nazareno are expected to contribute higher grades through the balance of 2026," adding that this was "a significant contributor to the forecast earnings uplift."

Discussing operational performance, O'Donnell noted that recovery rates had been affected by development work but wrote that "Recovery rates are expected to improve as development advances into higher-grade in-resource areas at both mines." He further stated that "Production over the balance of the year is expected to increase" as a result of plant expansion, higher grades, and optimized recoveries.

Addressing costs, O'Donnell wrote that the company had incurred expenses associated with workforce expansion, mine ramp-up activities, and contractor spending. He stated that "the cost base for higher production is somewhat in place and we expect unit costs to fall through the year."

VSA Capital maintained a BUY recommendation on the company and adjusted its target price to CA$2.70 per share. O'Donnell wrote, "Quarterly EBITDA of US$2.8m and operating cashflow of US$3.5m is a significant achievement." He added, "With rising capacity, expected higher grades and a strong pricing outlook, we anticipate US$53m in EBITDA for 2026, highlighting the significant impact of the low-cost expansion and the company's gearing to pricing." He concluded, "We reiterate our BUY Recommendation and adjust our target

Del Toro Work Program and Restart Activities

Sierra Madre stated that approximately 30,000 meters of drilling are planned at Del Toro. According to the company's June 2026 corporate presentation, the drill program is part of an exploration budget of approximately US$12 million over a 24- to 30-month period and includes 30,000 meters of diamond drilling, 20,400 assays, four geologists, 10 helpers, and a 20% contingency. The company is targeting a new resource report within 18 months of the acquisition and has identified multiple exploration targets across the property. 

The Del Toro property includes three underground mines and a 3,000-tonne-per-day flotation processing circuit. The site contains more than 60 kilometers of underground development and was operated by First Majestic between 2013 and 2019 before being placed on care and maintenance. The operation also includes a dry stack tailings facility and supporting infrastructure such as workshops, an analytical laboratory, power infrastructure, water management systems, offices, and storage facilities. 

The company's presentation outlines a mine restart plan following the expansion of its La Guitarra operation. Sierra Madre has budgeted approximately US$10 million over one year for restart activities, including mining equipment, plant upgrades, laboratory work, and contingency costs. The company has indicated an initial restart target of 800 tonnes per day, with a stated objective of later increasing throughput to 1,600 tonnes per day.

Ownership & Share Information¹

Sierra Madre Gold and Silver Ltd. has a market cap of CA$440.73 million, with 252.1 million shares outstanding. The company's 52-week range is CA$0.66-CA$3.25.

The company is currently working on updating its ownership breakdown.