Sierra Madre: La Guitarra Turns the Corner as Expansion Accelerates

Trevor Hall (0:19)

Moving right along, welcome back in here to Beaver Creek Precious Metals Summit. Tempting to wrap up the first day here of the 2026 Summit. We are going to head down to Mexico with Sierra Madre Gold and Silver. They trade on the Ventures Exchange with the symbol SM, and on the OTCQX with SMDRF.

It's a long overdue update here with Mr. Alex Langer, CEO of the company. So Alex, good to see you. Welcome back to Colorado. How have the meetings been for a freshly new producer, relatively speaking?

Alex Langer (0:53)

Yeah, thanks for having me, Trevor. Always a pleasure to be here. It's been great. It's been nonstop. I think we got 47 meetings.

We have a buy side analyst, some new institutions, some bigger institutions, lots of shareholders. It's been great. Obviously, these metal prices, everyone's walking around with a smile on their face. Yeah. It's a good thing. But yeah, we've been busy. Yeah, this is probably the busiest one they've ever had. Yeah.

Trevor Hall (1:17)

I was actually, people are asking me about the mood here. I would actually say, people are smiling. It doesn't feel as, at least to me, it doesn't feel as jubilant as it was last year. Last year, it felt very jubilant. I don't necessarily feel that this year. It's almost like we're happy, but it's more like cautious.

Alex Langer (1:35)

If you're a producer, you're pretty happy. Yeah.

Trevor Hall (1:38)

You're smiling. You're smiling. All right. Let's talk about production. Listen, newest development, it's a little bit of a mundane headline, but it's also really important.

You finally got the backup generators running.

Alex Langer (1:52)

Yeah.

Trevor Hall (1:52)

The La Guitarra. How much production have those grid interruptions actually cost you this year?

Alex Langer (1:58)

This year, it was fairly significant. The year before was much worse. But you're looking at from the beginning of the year till now, it was a few hundred hours. So the ability to turn these things on with a little power outage and these things are on within 10 minutes, allow us to continue to push through that. So bring down our costs, for sure.

One thing, we're pretty excited. It took a little bit longer to get them in than I had planned, but they're in, they're operational, and everyone seems pretty happy, except there is a big red button on it. I've heard it's been pushed more than once.

Trevor Hall (2:34)

Well, diesel's not cheap. How much is this kind of cutting into your cost?

Alex Langer (2:39)

Yeah, it's more expensive than the grid. However, diesel in Mexico is subsidized, and it's not, you know, the amount of profit we generate having the mills operational compared to the little bit extra cost in the diesel. It's definitely worth keeping them on.

Trevor Hall (2:54)

So, kind of moving forward this scene, it's finally up and kind of humming. Should investors expect a noticeable improvement to throughput moving forward or operating consistency?

Alex Langer (3:03)

Yeah, no, it's, I think we've kind of turned a corner. We're very excited. If you look at the last quarter release, we hit days up to 672 tons per day. Nameplate is 500, so obviously the expansion is moving forward well. We should have news on that in the next week and a bit, but we had kind of promised full phase one expansion getting up to 7,5800 here by the end of the quarter, and we're pretty much online. So really, really excited for that, and that'll be reflected in the quarters moving forward. Then the next phase expansion starts right away.

We overbuilt the ball mill, which is great.

So it took a little bit longer to get installed, a lot more cement, but it's going to allow us to have full grinding capacity for phase two expansion up to that 1200 ton number, which is on track for quarter three next year. So 12 months away. I'm really excited.

Trevor Hall (3:54)

We'll probably have that phase one expansion conversation next couple of weeks, I'm assuming, when the news does hit. But can you kind of walk us through what needs to happen to reach that milestone?

Alex Langer (4:05)

For phase one or phase two?

Phase one, it's done. So what we did, the big thing was adding an increased grinding capacity.

So that's taking care of the flotation tanks are actually good for about 1500 tons per day. So that was easy. The other big thing was the crushing capacity. So we installed a new cone crusher actually in January. So that's been operational for quite a while. And then also a paste backfill plant, and that's pretty much up and running as well. So we did a bunch of things. We also built a large thickener, which will be for phase two expansion. That is a really big thing there. What we need to do is start construction of a fully permitted 5.7 million ton dry stack tailings facility. So if the canary is complete, and we'll start construction on that tailings appellment in October. So we've picked the contractor. We have a new project manager for that. Once that's operational, that's when we can move into much higher throughput levels. That will get us to 12 to 1500, and that's probably the right number for La Guitarra.