Good morning, everybody. My name is Alex Langer, and I'm President and CEO of Sierra Madre Gold and Silver. Sierra Madre is probably the newest precious metals producer in Mexico. We recently started production just over a year ago, we started test mining, and we announced full commercial production, which is 500 tons per day at our 100% owned La Guitarra Silver and Gold mine, located in the State of Mexico. We announced on Monday some pretty ambitious expansion plans. We're going to be going from 500 tons per day to 750 tons to 800 tons per day by quarter two of 2026, and then 1,200 tons to 1,500 tons per day by quarter three of 2027. So in the next 24 months, what does that mean?
We'll be going from about a million ounces of silver equivalent production per year all the way up to 2.5 to 3 million ounces in 24 months, so pretty ambitious, but we did raise about CAD 19.5 million six weeks ago, and that capital will be used for expansion and as well as exploration, which I'll get into. Forward-looking statements. I already made a ton. I'll be making a lot more, so please do review this. It's on our website. It's in our presentation at your convenience, so as I mentioned, the La Guitarra Silver and Gold mine, we're located just outside of Mexico City. It's an amazing location, a two and a half hour drive that includes traffic, so it's really, really easy to get to. We're on the grid, so we have cheap power.
There's about 20,000 people that live within the project boundary, so an ample, ample workforce. We're up to about 300 people now, including consultants, employees, as well as union workers. It's been a huge boon for the local economy. There's a bunch of new restaurants and hotels, and the local government has been really, really supportive. It's probably the most impoverished part of the State of Mexico. There's quite a bit of mining here. We're located there and about four kilometers away. Just to the west is Dowa. They have a 4,500 ton per day large lead zinc polymetallic operation as well. So it is a mining area. We also have a lot of water, you know, almost too much water sometimes, but when you're mining, water is always a good thing. So in terms of location, it doesn't get any better. We are quite fortunate.
There's toll roads and everything. And as I mentioned, we did close the CAD 19.5 million financing, which I'll get into in a little bit. Everything we're doing technically is really based around one gentleman. That's Greg Liller. Greg is an exploration geologist. However, he's ran and operated numerous mines. He's actually now had eight projects go into production. You do it once or twice, and you can be lucky to do it eight times. There's probably something special there. He's had some big M&A successes, Gammon Gold, which was sold for $750 million. The other one, Genco. He ran and operated Genco, and Genco ran and operated the La Guitarra mine through 2007 through 2013. So my technical team has a very, very rich history with the mine. We purchased the mine from First Majestic. We paid $35 million U.S. dollars.
They had it on care and maintenance. However, it was in really good shape. So we were able to turn that back on in a short amount of time. It was 11 months from acquisition closing to when we started up again and operating.
One more gentleman I'll quickly touch on, and that's Luis Sáenz. Luis actually stayed on. He ran with La Guitarra all the way through Silvermex and First Majestic, and then he left where he was Director of Exploration and Mining at Frisco, where he had 14 different mines that he was in charge of. So he left Frisco to join us when we acquired La Guitarra. So we have a full team, a Mexican team. Myself, Greg, and the CFO are the only gringos in the company. Greg spends the majority of his time in Mexico. He's been operational there since 1993. So a really tight team.
If you look at our burn rate, it's very, very low, at least in Vancouver. We are cash flow positive, so free cash flowing. So, you know, that's also a positive thing. One person I'll quickly touch on, and that's Alejandro Carrillo. Alejandro is a director, but he's also our country manager. He comes from a really well-known Mexican mining family. He's been active in mining his whole life, but he runs our office in Chihuahua. We do accounting. We do legal. Everything's done in-house. We're not relying on any consultants. We've had great relationships with the local government. Within the last year, we received a paste backfill permit. We received a dry stack tailings permit. We received a 56 drill hole permit.
So as long as you're doing things correctly and you're always in constant communication with the government and everything like that, permits are very easy to get as long as you're doing things correctly. So this is the land package as it stands right now. It's about 25,000 hectares. It is a very large exploration package. It's pretty rare for a junior of our size to have such a whole district, let's say. There's about eight or nine former major mines at site, including some with employees up to 10,000. A lot of those shut down in 1910. The last one was in operation was in 1937. This used to be the most prolific silver and gold district in all of Mexico, the 1600s, 1700s, and 1800s. It was known as the jewel of the Spanish crown for New Spain.
A very, very significant amount of silver and gold has come out of here. Pretty rare, again, for a junior to hold the whole land package. What would happen usually is it would be broken up between four or five junior companies, and each one would explore a separate area. Since it was held by First Majestic for so long, they were able to pay the $1 million plus U.S. and annual taxes just to hold the property. So for us to have the whole thing, we're quite fortunate, and it's really the exploration potential of the mine is why we acquired it. The upside in production is great, but the exploration is really quite exciting. As soon as we acquired the mine, we updated the resource. So as it stands right now, we just have under 50 million ounces of silver equivalent at 500 tons per day.
You know, it's a 40+ mine here, so way, way too long. So it was one of the impetuses for us to increase production. And again, we want to get to 750 tons to 800 tons by quarter two of 2026, and then up to 1,200 tons to 1,500 tons per day by quarter three of 2027. So 24 months, in essence, tripling production. The plant and everything's running really, really well. It's a pretty straightforward process to go up in terms of throughput and production. Flotation cells are actually rated for 1,200 tons to 1,500 tons per day. The biggest bottleneck right now is a crushing and grinding circuit. So what we're going to be doing is we're adding a new cone crusher. We have bids out for that. That should be delivered and operational hopefully by November.
What that's going to allow us to do is do a smaller crush size, increase the capacity within the ball mills at the same time, and we will purchase another ball mill. So we have three ball mills. The capacity there is 500 tons per day. We'll add a much larger one, probably 400 tons or 500 tons per day, so we'll overbuild, and that'll let us get up to that 750 tons to 800 tons in a short six-month time period. Now, the next expansion is going to be a little bit more in depth. What we'll have to do there is build another tailings impoundment. Currently, our tailings space is good until September 2027, and you never want to fall behind that. So what we are building currently right now is a concentrator. That's about a 500-ton per day concentrator.
So it allows us to put some of the backfill underground as well as into the tailings, and then a much larger phase four tailings impoundment, which is fully permitted. It's 5.8 million tons. So that would give us another 10+ years of tailings capacity. So to go from step two to step three up to 1,500 tons per day, we'll add another ball mill. So we'll be up to five ball mills, and then we'll do a secondary cone crushing circuit. This whole amount of work we're talking about in terms of cash isn't very much. It's right around the number of $10 million, and we raised CAD 19.5 million. So we have way more than enough capital to complete everything we want to do, and we're also cash flow positive. So as the price of silver and gold has been creative, it's been great.
We're generating some significant cash flows, and we're expecting that for quarter three, quarter four, all the way for the next 22 months, to be honest, which is great. Here are some of the revenues. Our cash costs were a little bit higher in quarter two. We were $30 all in, and that's because we brought on another mine online called Coloso. Coloso is quite a bit higher grade than La Guitarra. It's about 1.7x higher in silver grade, so it's taking us a little while to get into some of the higher grade areas. However, we're doing this all out of cash flow. We're still catching up on development. We'll be fully caught up, I'm going to say, by the end of the year. So we're expecting a grade increase of about 40% to 50% on the silver side by the end of the year.
So what's great about mining is you just increase your grade. Theoretically, your revenues get higher. So expect to see that coming into quarter four. We're currently having about eight working phases. We're going to get up to 20, and we'll also probably bring on our third mine online called Nazareno sometime later this year. So we're going to have three different production centers all within La Guitarra feeding the main La Guitarra mill, and we're going to need a lot of this feed to fill kind of the large expansion plans that we do have. So district-wide exploration, I kind of touched on this briefly. We're currently mining from the La Guitarra mine. That's on the west district. Material is now coming out of Coloso, and shortly it'll be coming out of Nazareno. But the real reason we purchased the mine is this east district.
This east district is amazing. We've now identified over 60 km of mineralized material at surface. As I mentioned earlier, the largest, most prolific producer of silver in Mexico for many, many years, decades, and it's really never been explored. Greg and his team did a little bit of drilling around Mina de Agua in the late 2000s, but that's about it. So we're really excited. We have about a 25,000 m program that's budgeted for quarter two of next year. We're just working on our drill targets right now. We want to be very, very accurate. There's a lot of tunnels. There's a lot of information. So we're just building out the geological team. We'll get everyone underground over there at surface. We'll start mapping, and then we'll do a 25,000 m drill program, which we're really quite excited about.
I think we're going to be getting some pretty significant results and hopefully some major discoveries in the relatively near term. Zooming in on the east district, it gives you a little bit more color of what we're going to be looking for. One mine, El Rincón. El Rincón shut down in 1937, but if you look at the grades, these are the head grades. Six and a half grams gold, and it's actually 860 grams silver. So some of the highest grades I've ever seen. These were for the last 20 years of production at 100 tons per day. So you can imagine if we're able to process some material at site, bring that over on a daily basis, it would really increase our grades, increase profitability. So that's where we're going to be focusing a lot of our exploration plans. It's also fully permitted.
So First Majestic permitted this area for mining. We have the MIA. We could start processing that material tomorrow. There's no restrictions on how much we can process as well. Mina de Agua is also another major mine that had over 10,000 employees. That mine shut down because they got a little bit too deep and it flooded. So not just a clever name, but back then there really wasn't technology to dewater the mine that there is today. So we'll be doing a lot of work against those vein systems as well. I'm really quite excited. We have a large piece of land that First Majestic purchased, about 80 hectares. It's going to be our base for exploration activities. It's also a spot for a possible much larger mill down the road.
First Majestic actually designed a 3,000-ton per day facility within this area to process some of the material that they were expecting to find. Exploration potential is quite a bit. It's kind of a, as my chairman says, two companies in one. You get the upside with production profile and then some pretty significant exploration potential. There's been a number of historic resources done in this district ranging from 50 to over 200 million ounces of silver. And those are non-compliant NI 43-101, but those were done in the 1990s. That's the significance that we have. This is the potential that we're going for, and this is why we acquired La Guitarra. Quickly on the share structure. As I mentioned, we just raised $19.5 million. It really came from one lead investor, and that was Franklin Templeton. Franklin has $1.6 trillion under management.
It came from both a European and U.S. fund. They really like the expansion plans we have at La Guitarra, but they're really focused on the exploration as well. So they came in as a huge lead order. We announced a CAD 10 million financing. The order book was over CAD 30 million by the next morning, and we ended up taking CAD 19.5 million.
So we brought in Eric Sprott. Commodity Capital has been one of our biggest supporters. They maintained their 8%, and then management and founders, we took about another CAD 2 million. So I myself have invested over CAD 2 million into the company. As you can see here, management and founders own 21%, which I think is pretty rare for a company at this stage. It's been great. Yeah, we have really strong shareholders. We're starting to build some volumes. We traded 1 million shares in the last few days.
We haven't really done any marketing. You know, some videos here and there, but we're starting to get a bit of a catch of wind, and I think that's a lot to do with the price of silver and the price of gold. And now the expansion plans that we do have and we made those concrete. Yeah, things have gone really, really well. So with that, yeah, lots of news coming. We'll be announcing when the new ball mill and the new cone crusher arrives. We're getting a bunch of new equipment as well. That's one thing that's quite important is when we started this operation, it was on a shoestring. So we had a full rental fleet. It was costing us about $4 an ounce all in to rent this equipment, and now we're purchasing all new equipment.
That's going to drop our all-in sustaining cost by $4 right off the top. We've had two new scoop trams arrive, two new haulage trucks arrive, and we have two more haulage trucks on the way. Converting from the rental fleet to the proper mining fleet was a really big step in really lowering our cost. Yeah, I'm really happy with the team. It's been a short period, but I think we've done a really good job. Any questions? I'm around. If not, I'm in room 107 all day. Like, I'm not leaving. If you're bored and you want to come say hi, please do. Feel free to bring me lunch. Yeah, I'll be there all day. Thanks, everybody.
Thank you. Thank you very much. Do we have a question? We have time for one question. Sure. Just wait for the, Nick, wait for the mic please.
Can you tell us where the source of the ore is going to come from in your expansion from 500 tons to 1,700 tons? Where is that all coming from?
Yeah, it's coming from the current resource. So let me go back here. It's going to be coming from the La Guitarra Mine, currently where we're mining, and then Coloso Mine, and then Nazareno. And when we get up to 1,500 tons per day, there is another resource. It's non-compliant, but it's 30 million ounces in Los Angeles, off-book again. The reason being is that it's difficult to permit an open pit in Mexico. However, we're going to be able to get that from underground. It's quite high grade. It runs about 180 grams, but the widths are about 30 meters.
So we're going to do very, very long slope mining on that part. You know, one blast would feed that mill for three months. So that's where we're going to be getting the material from. So we're quite confident we'll be able to feed it. And that's, you know, probably the maximum size for this operation is 1,500 tons per day, just because of the amount of equipment you got to move and the earth moving and the roads and all that. But it's a good number. And with that number, as I mentioned earlier, should be about 2.5-3 million ounces. Thank you.
Great. Thank you very much.