A Silver Stock With a 47 Million Ounce Surprise

Plus the latest on the gold juniors

Top silver stock, Sierra Madre Gold and Silver (SM.V), delivered the news we were hoping for today, and in spades. 

It has dramatically increased the mineral resource estimate at its primary property, La Guitarra, taking it from 17 million ounces to 47.4 million ounces in total (measured and indicated).¹

This is a big development for Sierra Madre. It has come in quicker than expected and better than expected.

With a study of its tailings with a view to mining those as well announced last week, Sierra Madre is on a positive path towards production next year.

It is hard to find comparables because there are few Mexican silver plays in a similar position. Vizla Silver (VZLA.V), for example, has around 220 million ounces - it’s huge - but it is at least 5 years from production and still has to get permitting. Its market cap is C$289 million. Sierra Madre’s is C$50m, and it will be producing next year. (And at higher rates than previously anticipated due to the increased resource). There is also potential to increase the resource when it drills out the eastern part of the property.

At time of writing the stock is up 10% on the news. Management is buying. In a bull market this news would be enough to double the stock. That gives you an idea just how crappy things are in junior mining.

The next piece of the jigsaw to demonstrate to a doubting market how it will raise the money it needs next year. As you can see from our interview, CEO Alex Langer has this in hand.

You can read my write ups of the company here and here, and watch my interview with the CEO here.

Turning now to the gold miners