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Sierra Madre Gold & Silver – Q1 Operations/Financials/Expansion At La Guitarra and Del Toro Strategy

The KE Report Jun 26, 2026

Summary

Sierra Madre's Q1 2026 adjusted EBITDA reached $2.8 million on higher silver prices, but cash costs of $42.55 per silver-equivalent ounce stay elevated during ramp-up.

Roughly $15 of that cost is temporary: about $10 for catch-up mine development and $5 for rental equipment, both set to fall.

Phase one of the La Guitarra mill expansion lifts throughput to 750-800 tonnes per day, with phase two targeting 1,200-1,500 tpd by Q3 2027.

The Del Toro acquisition from First Majestic closed, adding three mines and a 3,000 tpd plant, with 60,000-80,000 metres of combined drilling planned.

The guest argues high costs partly reflect mining lower-grade, off-resource ore while prices are strong, with better grades returning once full sequencing resumes.

Key points on First Majestic Silver

  • Sierra Madre closed its acquisition of the Del Toro silver complex from First Majestic on June 22, 2026, after a roughly six-month closing period, the guest says.

Key points on Pan American Silver

  • The guest cites Pan American's La Colorada mine, directly beside Del Toro, as one of Mexico's most prolific CRD mines, supporting his case for similar mineralization on Sierra Madre's ground.

Key points on Sierra Madre Gold and Silver Ltd

  • The guest reports Q1 2026 adjusted EBITDA of $2.8 million, up $1.3 million from a year earlier, as high silver prices lifted revenue and sales.
  • Phase one of the La Guitarra mill expansion is close to complete, with the cone crusher finished and the ball mill being installed, lifting throughput from 500 toward 750-800 tonnes per day.
  • Q1 cash costs of just over $42 per silver-equivalent ounce included about $10 of catch-up development and $5 of rental equipment, which the guest expects to come down as development catches up and throughput rises.
  • The company closed the Del Toro acquisition in June 2026, adding a 3,000-tonne-per-day plant, and the guest estimates a restart would take about a year and roughly $10 million, likely starting at 800 tonnes per day.
  • Drilling is set to scale up in the second half of 2026: the announced 20,000-metre La Guitarra campaign is likely to rise to 30,000 metres, with about 30,000 metres to start at Del Toro and a combined 60,000-80,000 metres possible.

Shad Markowitz's takeaways

  • Top takeaway The host, a disclosed Sierra Madre shareholder, frames the company as a growth-oriented producer that could have six producing mines and multiple mills within about two years, and asks why its valuation is not higher.
  • He relays that the question he gets most from listeners is Sierra Madre's high cash costs, and presses the guest on how and when they come down.

Alex Langer's takeaways

  • Top takeaway He argues Q1 2026 results show the plan working, with adjusted EBITDA of $2.8 million up $1.3 million year over year, while the team lines up a two-phase throughput expansion at La Guitarra.
  • He contends the roughly $42 per silver-equivalent-ounce cash cost is temporary: about $10 was catch-up development and $5 was rental equipment, and he expects costs to fall as development catches up and throughput rises.
  • His Del Toro strategy is to explore first, with about 30,000 metres to start, aiming to grow the historic resource of roughly 18 million silver-equivalent ounces toward 25 million before restarting the 3,000-tonne-per-day plant at 800 tonnes per day for about $10 million.
  • He argues Del Toro's polymetallic profile of lead, silver, zinc and copper, including historic intercepts of 2-3% copper, could support three concentrate streams and possibly a copper circuit.
  • On valuation, he argues the shares will re-rate as throughput rises, costs fall and drill results land, calling the combined 60,000-80,000-metre drill program large for a junior of Sierra Madre's size.