Sierra Madre Gold and Silver: Interview at La Guitarra & Insight into the Acquisition of Del Toro

Sierra Matra Gold and Silver – Lagatara Mine Update & Del Toro Acquisition

Key Concepts:

• Lagatara Mine: Sierra Matra’s primary operating gold and silver mine in Mexico, currently undergoing expansion.
• Commercial Production: Began January 1st of the current year.
• Tonnes Per Day (TPD): A key metric for mine output, currently at 500 TPD with expansion plans to 750-800 TPD (Q2 next year) and 12,500 TPD (Q3 2027).
• Concentrate: The processed ore containing concentrated precious metals, shipped for final refining.
• Grade: The concentration of precious metals in the ore (grams per tonne).
• East District (Lagatara Complex): Area containing historical mines like Mina Aua and El Renon, targeted for exploration.
• Del Toro Silver Mine: Recently acquired mine from First Majestic Silver, a 3,000 TPD operation.
• Subreceipt Financing: A type of financing where investors receive a receipt for their investment until certain conditions are met (like acquisition completion).
• Resource Report: A detailed assessment of the quantity and quality of mineral resources.

1. Current Operations at Lagatara Mine

Sierra Matra Gold and Silver’s Lagatara mine, located 120 kilometers from Mexico City, began commercial production on January 1st of the current year. Current production is at 500 tonnes of ore per day (TPD). The company is actively expanding capacity, aiming for 750-800 TPD by Quarter 2 of next year and ultimately reaching 12,500 TPD by Quarter 3 of 2027. This expansion is driven by strong gold and silver prices, currently at $4,200+ per ounce for gold and over $60 per ounce for silver. Approximately two to three concentrate trucks are shipped weekly to a facility in Manzano for processing and payment. The most recent shipment represented the largest value to date due to current metal prices. The current metal split is roughly 50% gold and 50% silver, a shift from the historical 60% silver / 40% gold ratio due to gold’s stronger price appreciation.

2. Ore Sources & Mining Centers

Currently, ore is sourced from three mining centers: Lagatara (located 100 meters from the mill), Colosso, and Nazareno. Colosso and Nazareno are both higher grade than Lagatara, with Colosso yielding approximately 1.7 times more silver and 1.2 times more gold. Blending ore from these sources is increasing overall grades. Sierra Matra holds unlimited permits for all three mines and believes these resources are sufficient to support expansion plans up to 1500 TPD.

3. Expansion Plans – Phase 1

The first phase of expansion involves three key components:

• New Cone Crusher: Currently being installed and expected to be operational by the end of February.
• Large Ball Mill: Sourced and en route, with a capacity of 750 TPD, providing significant operational flexibility.
• Paste Backfill Plant & Concentrator: Equipment is being moved and components are being manufactured in Tuluca, with completion targeted for Quarter 2 of 2026.

4. Exploration Potential – East District

The company is focusing on exploration in the East District of the Lagatara complex, historically a highly productive silver and gold region. This district contains approximately 12 former mines, including Mina Aua and El Renon. Mina Aua, which ceased operations in 1910, once employed 10,000 workers. El Renon, which closed in 1934, had exceptionally high grades of 6 grams of gold and 860 grams of silver per tonne – six times higher than current Lagatara production. An initial exploration program is planned for Quarter 2 of next year, involving mapping and sampling of underground portals.

5. Financing & Capital Allocation

Sierra Matra raised $19.5 million Canadian in July, which will fund both the plant expansion and a 20-25,000 meter drilling program in the East District. The company is currently self-funded through cash flow and does not utilize hedging strategies, preferring full exposure to potential price increases in gold and silver. Alex Langanger, CEO, stated, "I really like the leverage for silver and gold. I still fully believe in a much higher silver gold price and as long as I manage my cost, I don't feel I need to leverage or hedge."

6. Del Toro Silver Mine Acquisition

On December 17th, Sierra Matra announced the acquisition of the Del Toro silver mine from First Majestic Silver for up to $60 million US. The deal structure includes:

• $30 million US upfront
• $10 million US due in 18 months
• Two contingency payments in years four and five.

Del Toro is a 3,000 TPD mine that was last operational in 2020. First Majestic Silver, now Sierra Matra’s largest shareholder, recognized the company’s success at Lagatara and believes in the management team. The acquisition aligns with Sierra Matra’s strategy of acquiring production-ready assets with exploration upside.

7. Del Toro – Exploration & Future Plans

Following the acquisition, Sierra Matra plans to initiate a 30-50,000 meter drilling program at Del Toro over the next 18 months, aiming to develop a resource report and potentially restart operations. The mine possesses a high-quality mill and significant exploration potential.

8. Financing for Del Toro Acquisition

To fund the Del Toro acquisition, Sierra Matra has secured a $50 million US subreceipt financing. Completion of the acquisition requires Mexican antitrust approval, shareholder approval, exchange approval, and the closing of the financing, expected within three to four months.

9. Cost Management & Future Outlook

A key focus for Sierra Matra is reducing operating costs. Alex Langanger emphasized, "fear is you know obviously the price of metal…So what we're working on very important is bringing our cost down." The company believes that reducing costs will provide resilience against potential fluctuations in metal prices.

Conclusion:

Sierra Matra Gold and Silver is demonstrating strong progress at the Lagatara mine, with ongoing expansion plans and promising exploration potential in the East District. The recent acquisition of the Del Toro silver mine represents a significant growth opportunity, adding a substantial production asset and further exploration prospects. The company’s commitment to cost management and its bullish outlook on gold and silver position it for continued success. The company is actively expanding production, exploring new resources, and securing financing to support its ambitious growth strategy, making it a noteworthy company for investors to watch.