Gregory K. Liller, Executive Chairman and Chief Operating Officer commented, “We are very pleased with the progress at La Guitarra since the March 2023 closing of the acquisition from First Majestic Silver. Work towards a new resource estimate in accordance with NI 43-101 is underway, concurrent with evaluating historic cost data that would feed into a Mine Restart Study. On the ground, we are focused on preparing the mine, plant, and equipment for a prompt restart.”

The Company’s objectives are to complete a new resource estimate by year-end, followed up by a Mine Restart Study, which would include a cost study, mine plan, and a reserve estimate.  Underground and plant rehabilitation, as well as a rebuild and refurbishment program of mine and plant equipment have also begun.

The Company anticipates that, given adequate funding and assuming project execution tracks internal projections, restart of production at La Guitarra could be feasible within 20-22 months. The following programs are underway:

New Resource Estimation in Accordance with NI 43-101

The La Guitarra database consists of 1,408 drill holes totaling 236,000 metres of drilling; containing over 86,300 assays and 12,668 channel and mine samples. Raise and stope sample data, along with the actual production results are also being compiled to assure confidence in grade and width projections for the in-situ veins.

The electronic database also contains 3-D surveying data with corresponding imaging of the underground workings and stopes at the La Guitarra, Coloso and Nazareno mines.  Underground 3-D laser surveying is currently underway to augment and check the existing survey data. Surface surveying of historic drill hole collars is ongoing as part of the database audit. 

The resource estimation will consist of computer-generated block models of the larger deposits and polygonal block estimations on long sections, the latter being typical of mines operating in narrow vein type mineralization with distinct ore shoots.

Sierra Madre expects to complete this resource estimate by the end of 2023.

Underground Bulk Mineable Targets

A 2010 feasibility study defined three areas at La Guitarra which could potentially be mined via open pits.  A detailed summary of this report is contained in “NI 43-101 Technical Report, La Guitarra Silver Mine, Temascaltepec, Estado de Mexico, Mexico”, Nov. 2022, available on the Sierra Madre website as well as under the Company’s SEDAR+ issuer profile.  A full copy of the historical 2010 feasibility study is on SEDAR+, under the Silvermex Resources issuer profile.

The three open pit deposits contained historic reserves of 6.8 million tonnes grading 0.75 g/t gold and 81 g/t silver at a combined strip ratio of 8:1, waste to ore. The geologic model used to generate the estimate was built from mineralized zone wireframed solids and an economic pit shell was used to generate the open pit estimates. The approach and methods used in the calculation of the historic estimate are reasonable for the period in time the estimates were compiled. The historic estimate cannot be verified by a Qualified Person and is historic in nature, the Company is not treating this historic estimate as a current mineral resource or reserve, and it should not be relied upon.

Sierra Madre has determined that permitting for underground operations has a shorter time frame when compared to open pit mining and underground mining costs will compare favourably to those associated with an 8:1 open pit strip ratio. Previous operators have effectively used underground long-hole bulk tonnage mining at La Guitarra. 

Drill hole and mine samples in the three open pit areas have been reviewed to identify areas of mineralization which might possess the proper geometry and grade continuity needed to use long-hole drilling equipment. Priority was given to areas where minimal additional underground development would be required. Thus far two potential areas have been identified, Los Angles and La Cruz shown in the long section in Figure 1 above, with several additional areas in the evaluation stage.

Cost Data for a Mine Restart Study

Detailed daily, monthly, and annual historic production data is being reviewed and compiled. This includes detailed labor costs for mining and process plant operations, material and reagent usage, and consumption. These records also contain information on manpower, productivity, and equipment usage 

related to both tonnages produced and meters of advancement.

All this data, when adjusted for inflation and current costs, will be used to produce a Mine Restart Study with a mine plan and a new reserve estimation prior to a decision on the restart.

Plant and Mine Rehabilitation; Equipment Rebuild and Refurbishment

Company staff and consultants have reviewed the underground mine and plant equipment to determine operational status. Maintenance and repair staff have been hired, all of which previously worked at the mine and are familiar with the equipment.

The Company has five scoop trams, used to load and haul ore, in inventory, two of which are currently operational.  Two dual arm jumbo drills for use in blasting production drives and haulage ways are also on-site. A rebuild/repair work program has begun on this equipment. The Company’s Mining Department, composed of personnel who operated the mine for First Majestic, believes this equipment has the capacity to support a 500 tonne per day operation when fully operational.

New explosive storage areas are being constructed underground in locations that will be more operationally efficient.  Preventative ground stabilization work has been completed in a critical section of the main San Rafael haulage way.

Much of the other equipment needed to resume operations is on site. Stationary air compressors and electrical substations are installed and functional. The current inventory includes approximately 30 jackleg drills and related equipment for use primarily in narrow vein production stopes.

Electrical motors in the flotation processing plant, including 3 of the 4 ball mills, have been power tested and found to be operational. The crushing circuit was recently tested with 3 tonnes of waste rock and functioned as designed. The main operations water storage tank has been drained and repaired. Scaling and rust removal in the flotation cells has begun along with an evaluation of pumps and piping. While some pieces of equipment (long hole drill and haulage trucks) still need to be purchased or leased, the majority of the equipment needed to potentially restart the mine is in place and functional. The Company believes that building on the existing equipment and infrastructure, the La Guitarra mine could be restarted for a significantly lower cost compared to building a new processing plant and developing a new underground mine. All additional capital expenditures needed for the mine and processing plant will be determined when the cost portion of the Mine Restart Study is completed.

New Corporate Video

Sierra Madre has also uploaded a new corporate video, featuring La Guitarra, to its homepage – please visit www.SierraMadreGoldandSilver.com to view.

About Sierra Madre

Sierra Madre Gold & Silver (TSX.V: SM, OTCQX: SMDRF) is a precious metals development and exploration company, focused on evaluating the potential of restarting the La Guitarra Mine in the Temascaltepec mining district, Mexico, and the exploration and development of its Tepic and La Tigra properties in Nayarit, Mexico. The La Guitarra Mine is a permitted, past-producing underground mine which includes a 500 t/d processing facility that operated until mid-2018.

The +2,600 ha Tepic Project hosts low-sulphidation epithermal gold and silver mineralization with an existing historic resource. La Tigra, located 148 km north of Tepic, has been mined historically; Sierra Madre´s maiden 2022 drill program at the site intercepted shallow mineralization.

Sierra Madre´s management has played key roles for managing exploration and development of more than 22Moz gold and 600Moz silver in combined reserves and resources. Sierra Madre´s team of professionals has collectively raised over $1B for mining companies.

Sierra Madre Gold and Silver Best Practice

Sierra Madre is committed to best practice standards for all exploration and sampling activities. The Company´s exploration programs have been conducted following CIM Exploration Best Practice Guidelines which are incorporated by reference in NI 43-101. Analytical quality assurance and quality control procedures include the systematic insertion of blanks, standards and duplicates into the sample strings. Samples are placed in sealed bags and shipped directly to Bureau Veritas Lab located in Durango, Mexico or ALS Chemex in Guadalajara, Mexico for 30 gram gold fire assay, Aqua Regia digestion for silver and multi-element analyses by four acid digestion.

Qualified Person

Mr. Gregory Smith, P. Geo, Director of Sierra Madre, is a Qualified Person as defined by NI 43-101, and has reviewed and approved the technical data and information contained in this news release. Mr. Smith has verified the technical and scientific data disclosed herein.

Cautionary Note

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

This press release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities legislation. The forward-looking statements herein are made as of the date of this press release only, and the Company does not assume any obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise, except as required by applicable law. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budgets", "scheduled", "estimates", "forecasts", "predicts", "projects", "intends", "targets", "aims", "anticipates" or "believes" or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information in this press release includes, but is not limited to, statements with respect to the completion of the Transaction on the terms set out in the definitive agreement (or at all) and the ability of the Company to obtain requisite corporate and regulatory approvals for the Transaction, including but not limited to the approval of the Exchange, Mexican antitrust approval and other governmental approvals as currently anticipated.

In making the forward-looking statements included in this news release, the Company has applied several material assumptions, including that the Company will be able to receive all required regulatory approvals by the timelines currently anticipated (or at all); and that the Company will be able to complete the Transaction on the terms of the definitive agreement. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of the Company to control or predict, that may cause the Company´s actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including, but not limited to, the risk that the Company is not able to complete Transaction on the terms set out in the definitive agreement (or at all) and the risk that the Company is unable to obtain requisite corporate and regulatory approvals, including but not limited to the approval of the TSX Venture Exchange, the Mexican antitrust approval and governmental approval as currently anticipated.

Such forward-looking information represents management´s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.

SOURCE: Sierra Madre Gold and Silver