Sierra Madre raises $10.3 million, trading set to resume

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Trading in Sierra Madre Gold and Silver Ltd. [SM-TSXV, SMDRF-OTCQB] shares is expected to resume on Monday (June 5, 2023) after the company closed the second tranche of a private placement financing that raised $10.3 million.

The offering was conducted in conjunction with the company’s acquisition of all the issued and outstanding shares La Guitarra compania Minera SA de CV, an indirect unit of First Majestic Silver Corp. [FR-TSX, AG-NYSE, FMV-Frankfurt] that holds a 100% interest in the La Guitarra property.

In consideration for the acquisition, Sierra Madre issued 69 million common shares priced at 65 cents per share. A net smelter return royalty was also granted on closing.

The second tranche consists of 1.3 million common shares at 65 cents per share, for gross proceeds of $845,000, and 5.12 subscription receipts priced at 65 cents each for gross proceeds of $3.33 million, bringing the total gross proceeds to $4.17 million. Together with the first tranche, the private placement raised $10.3 million.

Each subscription receipt shall, without the payment of any additional consideration, automatically convert into one common share upon the earlier of either the holder receiving written notice from the company or by September 15, 2023.

The company will use the net proceeds of the offering for development of the La Guitarra property, advancement of engineering studies and general working capital purposes.

Sierra Madre shares are currently priced at 74 cents and trade in a 52-week range of trade in a 52-week range of 75 cents and 39 cents.

La Guitarra is a high-grade, past producing underground mine with an on-site process facility that operated until August,2018.  The project is currently on care and maintenance, and available for a prompt restart. The property is located in the Temascaltepec mining district, in the southeast end of the Mexican silver belt, 130 kilometres southeast of Mexico City.

Sierra Madre Gold and Silver is a mineral exploration company with a focus on the exploration and development of the Tepic and La Tigra properties in in the State of Nayarit, Mexico. Sierra previously said its key objective is to advance exploration at the Tepic and La Tigra properties to determine whether they contain commercially exploitable deposits of precious or base metals.

The La Tigra project consists of seven mining concessions covering 357 hectares, including historical high-grade mines in the Districto Minero Del Tigre.

According to Mexican government documents, gold and silver was mined by local gold panners prior to 1900. The property contains a mine that was exploited by an incline shaft on two levels. Production ceased during the Mexican Revolution of 1910 to 1920. However, 13,110 tonnes of material, grading 10 g/t gold and 358 g/t was processed after 1927.

The 2,600-hectare Tepic project hosts low-sulphidation gold and silver mineralization with an existing historic resource.

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