Sierra Madre Gold and Silver (SM.V) has confirmed the capacity of the processing plant at the La Guitarra silver-gold mine has now been expanded by in excess of 40% to a capacity of 720 tonnes per day. That’s not just the theoretical capacity, as Sierra Madre also announced it has reached a steady state throughput at that rate.
This marks the completion of the Phase 1 expansion program at La Guitarra, and preparations for Phase 2, which will see an additional expansion to 1,200-1,500 tonnes per day are already well underway as the dry stack tailings facility is currently being expanded as well. We expect to see Sierra Madre complete its Phase 2 expansion before the end of next year, whereafter the average milling capacity will be 2.4-3 times higher than in the past few years.
On the back of the increased milling capacity, Sierra Madre is also accelerating the underground development of the mineralized zones. At the Guitarra mine, in excess of 1.5 kilometers of development has been completed since June, and the current focus is on reaching the Los Angeles bulk tonnage deposit into production. We consider Los Angeles to be a key element in keeping the mill ‘filled’ to avoid losing any economies of scale. Having a bulk tonnage target like Los Angeles should make it easier for Sierra Madre to have access to mineralized material to mitigate the impact of any potential issues elsewhere. Development at Nazareno and Coloso is also going as planned, with 2.6 kilometers of development drives completed since June.
We should also see the average grade increase throughout the current semester, ad the higher grade blocks of development rock will be reached by the end of this month. Processing higher grade material, in combination with higher recovery rates should boost the production, while the all-in sustaining cost per produced ounce of silver(-equivalent) will gradually decrease.
Disclosure: The author has a long position in Sierra Madre. Sierra Madre has been a sponsor of the website in the past 12 months. This post is for educational purposes only; be mindful investing in junior mining stocks is risky and you may lose your entire investment if things go wrong. Please read the disclaimer.
