Silver-Gold Mine Hits 672 Tpd as Production Expansion Nears Completion

Important Disclosures:

1. Sierra Madre Gold and Silver Ltd. is a billboard sponsor of Streetwise Reports. The company pays a monthly sponsorship fee of US$3,000–US$6,000 for banner advertising and an enhanced company profile page. Streetwise Reports’ editorial content is fully independent and is not influenced by sponsorship.
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.
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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) is approaching the completion of the first phase of its production expansion at the La Guitarra silver-gold mine complex in Mexico, putting the company's planned increase in processing capacity and the operating results that follow among its near-term catalysts.

The company is targeting completion of Phase I before the end of the third quarter of 2026. The program is designed to increase La Guitarra's nameplate processing capacity from 500 tonnes per day (tpd) to between 750 and 800 tpd. Sierra Madre's September corporate presentation described the first-stage expansion as "nearing completion" and said increased production and lower costs were expected beginning in Q3 2026.

The expansion represents the first part of a two-stage plan announced in September 2025. Phase I includes a new paste fill and thickener plant, a fourth ball mill, a second cone crusher, and increased material-handling capacity in the conveyor circuit. A second expansion is planned to raise processing capacity to between 1,200 and 1,500 tpd by Q3 2027.

Progress toward the Phase I target was already evident ahead of final commissioning. In its August 27 second-quarter update, Sierra Madre reported that modifications to the existing mill circuit and the installation of larger-capacity pumps had increased daily throughput to as much as 672 tpd, approximately 34% above the previous 500 tpd level.

The company also reported that foundation work for the ball mill, support equipment, and building enclosure had been completed and an overhead crane installed. A used ball mill purchased in December 2025 had been refurbished to a rated milling capacity of 900 tpd. Meanwhile, a crusher brought into full operation in April, together with modifications to the primary crusher, was expected by the company to allow the crushing circuit to exceed the 750-to-800-tpd Phase I objective.

Sierra Madre's September presentation said the cone crusher was installed and operating, the ball mill installation was advancing with key site infrastructure completed, and thickener commissioning was underway. The company expects the expansion to be funded from treasury and cash flow and said no additional permits are required for the planned expansions.

The next operating results should provide additional information on how the work translates into production, throughput, and costs. Sierra Madre reported 41,567 tonnes milled and sales of 123,483 silver-equivalent ounces during Q2 2026, compared with 41,699 tonnes and 128,827 AgEq ounces in Q1. Cash cost per AgEq ounce produced was US$49.28 in Q2, compared with US$42.55 in Q1.

The company said first-half costs reflected the ramp-up at the Coloso and Nazareno mines, lower recoveries from blended feed, wages, power outages, royalties and taxes, foreign exchange, and inflation. Sierra Madre expects head grades to improve as development advances and a larger proportion of fresh, in-resource material from Coloso and Nazareno reaches the plant.

Another recent development addressed one of the operational issues affecting La Guitarra. On September 10, Sierra Madre reported that two 1,500-kilowatt diesel generators had been installed, tested, and were fully functional. The company said grid interruptions had caused 278 hours of production downtime between January and August 2026, equivalent to more than 11 days of lost production. A separate 1,250-kW generator for the Coloso and Nazareno operations was also being installed, according to the September presentation.

Precious Metals Hold Strong Annual Gains Despite Rate Pressure

Gold traded at US$4,329.63 per ounce on September 22, down 0.31% for the day and 6.94% over the previous month, while remaining 15.01% higher year over year, according to Trading Economics. The market data provider said gold had fallen toward US$4,300 as comments from Federal Reserve officials strengthened expectations for additional U.S. interest rate increases. Despite the short-term pressure, Trading Economics said gold had remained supported by "continued central bank buying, geopolitical uncertainty and concerns over fiscal sustainability and currency debasement."

Dominic Frisby of The Flying Frisby included Sierra Madre among his ten largest gold-mining positions in a September 17 report. 

Writing on September 21, The Motley Fool's David Jagielski noted that gold had been trading around US$4,300 per ounce after having exceeded US$5,000 earlier in the year.

He identified economic and geopolitical uncertainty as factors that had supported interest in the precious metal, writing that "political and geopolitical uncertainty, combined with high stock valuations," had contributed to investor interest in safe-haven assets. Jagielski also noted that rising interest rates had historically presented a headwind for gold and wrote that "rising interest rates alone might not lead to higher gold prices."

Silver also remained substantially higher on an annual basis. Trading Economics reported on September 22 that silver traded at US$65.60 per ounce, down 0.61% for the day and 4.82% over the preceding month, but up 48.99% year over year. According to Trading Economics, silver had remained under pressure from expectations for further U.S. interest rate increases.

The source described silver as having both investment and industrial applications, with extensive use in "electronics, solar panels, and medical technologies," and noted that its pricing had been influenced by both industrial demand and investor sentiment. Trading Economics also identified Mexico as the world's largest silver-producing country.

Multiple Catalysts Follow Phase I

Completion and commissioning of Phase I are not the only upcoming catalysts at La Guitarra. Sierra Madre plans a second-stage expansion targeting processing capacity of 1,200 to 1,500 tpd by Q3 2027. That program includes a second crushing circuit, replacement of a smaller-capacity ball mill, and construction of a permitted 5.8-million-tonne dry-stack tailings storage facility. The company said the planned crushing additions would produce a finer product, which it expects to improve recoveries.

Exploration provides another potential source of news. Sierra Madre has received Mexican environmental approval for 22 drill pads in La Guitarra's East District, where it is preparing the first phase of a fully budgeted 30,000-meter drilling program. The program will use a three-dimensional structural model developed from surface mapping, accessible historic workings, and historical data to test mapped vein systems. The company's September presentation lists East District drilling as beginning in Q4 2026.

Beyond La Guitarra, Sierra Madre completed its acquisition of the Del Toro silver mine from First Majestic Silver in June 2026. The company's current plans call for a US$12 million exploration program over approximately 24 to 30 months, including 30,000 meters of diamond drilling, with a new resource report targeted for early 2028.

Sierra Madre's presentation also outlines a potential Del Toro restart program with a US$10 million budget and an initial targeted run rate of 800 tpd, with the company aiming to later increase that rate to 1,600 tpd. The current timeline identifies mid-2028 for production, although Sierra Madre said the restart could potentially be accelerated depending on silver prices.

For the immediate term, however, La Guitarra remains the closest catalyst. With Phase I targeted for completion by the end of September, throughput already reaching as much as 672 tpd, and backup power now operating, upcoming production and financial results should provide the first look at how those changes are translating into operating performance.

Ownership and Share Information¹

Sierra Madre Gold and Silver Ltd. has a market cap of CA$384.04 million, with 261.25 million shares outstanding. The company's 52-week range is CA$1-CA$3.25.

Institutions own 41.4% of shares, while strategic investors, including First Majestic Silver Corp. (AG:TSX; AG:NYSE; FMV:FSE), own 24.7%. Management and founders own 19.2%, and the remaining shares are held by retail.