Sierra Madre hits 720 tpd at La Guitarra and lines up 60,000 metres of drilling across two projects

Sierra Madre Gold and Silver has lifted throughput at its La Guitarra mine complex in Mexico to 720 tonnes per day (tpd — the amount of ore the processing plant handles daily), president and CEO Alex Langer told The KE Report. The level, announced on September 28, is up about 40% from the 500 tpd that was the mill's previous nameplate capacity (its rated design capacity), and it is the headline result of Phase 1 of a two-phase plant expansion. From here, management is targeting 900 tpd, then 1,200, and — in Langer's words — hopefully closer to 1,500 tpd by this time next year.

## How the plant got to 720 tpd

Two Phase 1 changes did the heavy lifting. A new crusher has run fully since January. The bigger item is a new ball mill (the rotating drum that grinds crushed ore to a fine powder before the silver and gold are recovered). Sierra Madre bought one rated for about 900 tpd — larger than originally planned — and it is now installed. Langer says the oversize purchase cost more up front but pulls the crushing-capacity increase forward by roughly eight months, because the same mill can serve the Phase 2 expansion too. The mill building's footprint has roughly doubled to fit it.

## Feeding the mill: three mines and a development catch-up

Feed now comes from three producing mines: Guitarra, Coloso, and Nazareno. To reach new, higher-grade areas at Nazareno and Coloso, the company completed more than four kilometres of underground development (the tunnels and ramps dug to access ore), brought on two additional contractors, and lifted the count of working faces from about 16 to about 24 in a couple of months. Langer is candid that only about half the material mined over the past two years came from the defined resource — much of it was lower-grade development rock dug while catching up. With the new areas opening, he says grades are now starting to rise.

## The cost trajectory management expects

Elevated costs have been the knock on recent quarters. Langer attributes the excess to catch-up spending: about $10 of costs tied to the extra development work and another $4–$6 from rental equipment, partly offset by roughly $9 million (US) of equipment purchased over the past year, which is rolling the rental bill off. Because the company overstaffed ahead of the ramp, he expects manpower costs to hold roughly flat as throughput climbs, with energy and reagent costs rising instead. His guidance: about a $5 drop in costs per quarter over the next four or five quarters, though he cautioned the declines will not be linear.

## Runway before any exploration success

Langer puts the current resource at about 47 million ounces of silver across all confidence categories. At 1,400–1,500 tpd, he says production would theoretically run near 2.5 million ounces of silver equivalent per year (silver equivalent is a combined measure that expresses gold output in silver terms) — which he describes as a very long mine life before any new drilling adds to the inventory.

## The Phase 2 building blocks

The gating item is the permitted dry stack tailings facility (tailings are processed waste rock; a dry stack stores it as drier, stackable material rather than in a wet pond). Work has started: the access road is in, a contractor and a new operations manager are hired, and Langer calls completing the facility the key step toward 1,400–1,500 tpd. Backup generators that start within about 10 minutes of a grid outage should end the rainy-season interruptions that cost the mine time in past years. A new thickener (which separates water from ground ore ahead of disposal or paste backfill — refilling mined-out voids with a tailings paste) is in test mode, with a second likely to follow.

## The balance sheet

A large financing in July of last year funded the expansion and drilling, Langer says, and a bigger raise accompanied the Del Toro acquisition. As of last quarter the company held about $25 million in working capital, and he says cash flow is positive.

## 30,000 metres over the East District

Langer describes exploration as the reason the company bought La Guitarra three and a half years ago. The permitted, roughly 30,000-metre program is expected to start by the end of the month, with three drill pads already built. A specially built large-diameter rig will drill holes up to a kilometre long horizontally, using wide-diameter (Q-size) equipment so the holes can push through old mine openings that could trap a narrower drill string. Up to 40 veins have been modeled at surface, and follow-up would come from surface diamond rigs plus the company's own underground rig — including inside El Rincon, a past producer the company has partially dewatered that historically ran about 6.5 grams per tonne gold and 850 grams per tonne silver as a head grade (the grade of ore fed to the mill) for 30 years.

The East District holds roughly two dozen larger historic mines and some 600 smaller artisanal workings. The largest, Mina de Agua, reportedly employed over 10,000 workers before flooding shut it down in 1910, and these mines last operated in 1937 — so, per Langer, roughly 90 years without modern drilling. He adds that mineralization on the Guitarra side extends at least 200 metres in elevation and has not been drilled below that. His summary claim: the district could prove to be the largest undeveloped silver district in Mexico, with historic veins running from 70 centimetres to 6 metres wide.

## Del Toro: the second leg

The Del Toro acquisition from First Majestic — announced in December, closed at the end of June 2026 — adds a past-producing, fully permitted complex with three mines and a 3,000 tpd plant, larger than La Guitarra's, on about 4,000 hectares. Mapping is nearly complete, old core is being logged, drill targets are being built, and airborne magnetics and geophysics surveys are planned. The 30,000-metre program slated for next summer could start as early as this spring if work continues to go well, Langer says. He is explicit that Del Toro needs more resources before it can add production.

## What to watch

Langer frames the goal as building a mid-tier silver producer: cash-flow positive today, throughput climbing, about 60,000 metres of drilling across two projects, and costs guided lower quarter by quarter. The checkpoints he identifies are Q3 results, throughput milestones, dry stack completion, and the first East District intercepts. One disclosure worth noting: KE Report co-host Shad stated he is a Sierra Madre shareholder at the time of recording and may buy or sell shares at any time.