Now it's time for our next speaker, who will be from Sierra Madre Gold and Silver. There! Hello! So that's Alexander Langer, I take it. Sierra Madre Gold and Silver engages in the acquisition, exploration, and development of mines for the extraction of precious metal and base metal, and main projects in the Tepic mine in Mexico, right?
It's the La Guitarra mine.
The La Guitarra mine.
Yeah, our new one.
You are funded—you're fairly young, I would say, 2017, headquartered in Vancouver, Canada, and major assets in Mexico.
Correct.
I got that correct?
Yeah, you got that right.
Please.
Thank you very much. Good morning, everybody. My name is Alex Langer, and I am President and CEO of Sierra Madre Gold and Silver. Sierra Madre Gold and Silver, it's probably the newest precious metal producer there is. We actually started production on June 25th of this year, and we've been in continuous operation ever since. So it's been quite exciting. It's the La Guitarra mine, as you can see there. It's an underground mine. It's fully permitted. We purchased the mine from First Majestic. We closed that transaction actually just about over a year and a half ago. So it took us 13 months to get into production. It's located in Mexico, actually just two and a half hours outside of Mexico City. Forward-looking statements, I've already made a few.
I will definitely be making a few more, so please feel free to review this on our website at any time. So, as I mentioned, the location of the mine, it is amazing. It's about two and a half hours outside of Mexico City, including traffic. There's power. We're attached to the grid. There's plenty of water. We have an amazing workforce infrastructure. So it's a really great location to have a mine. We're really quite fortunate. There's an ample workforce available to us. There's 20,000 people that actually live within our project boundary. The majority of our workers now actually used to work at the mine when it was shut down in 2018. And when the mine shut down in 2018, it was actually making money. It was just very small, maybe a dollar or two per ounce. Currently, then, in 2018, the silver price was around $13.
Today, obviously, it's much higher. So it was really kind of the push for us to push towards production as quickly as possible. Everything we're doing technically is really around one gentleman named Greg Liller. Greg is an exploration geologist. However, he's ran and operated numerous mines. He's actually had eight projects become mines. If you do it once or twice, maybe you're lucky. But to do it eight times truly is amazing. Greg had some big success, including Gammon Gold. That project was sold for $750 million. He actually then retired. I think that was his second time. And he was invited to a trip in Mexico, and he viewed the La Guitarra mine with a company called Genco. He jumped out of retirement within an hour and became President and CEO of Genco. So he modernized this facility.
He actually ran and operated La Guitarra for five years. So our management team has a rich history, technical history with the mine itself. Greg did over 111,000 meters of drilling at the mine. So we know it inside and out. I truly believe that I don't think First Majestic was looking to sell it to anybody else. So we're quite fortunate to be able to acquire the mine. The other person I'll quickly touch on is Luis Saenz. Luis is also a geologist. However, most recently, he was running Frisco, which is a multinational, multi-billion dollar Mexican conglomerate. He actually had 14 different operations he was in charge of. He left and he's joined us. So, as it stands right now, we have 188 people at site, which is amazing. We have about 80 employees. Every single one of them with stock options.
So they're all kind of shareholders as well, which is great. And the rest of them are union workers. Of the 188 people, 187 of them are Mexican nationals. We're not relying on any consultants. Everything we're doing is in-house. We're not doing contract mining. Again, we're able to control everything, control our costs internally. I myself, quickly, I come from a capital markets background. I'm not technical at all. But I started my career at Canaccord Genuity. I was there until 2009. Canaccord is Canada's largest independent brokerage house. But while I was there, I was able to do the IPOs for Fortuna Silver, as well as Endeavour Silver. So I got very comfortable with Mexico and very comfortable with silver. Most recently, I've founded a few companies and been part of companies, including Millennial Lithium.
We sold that just over two and a half years ago for $490 million, and I'm also President of a company called Li-FT Power, which our CEO, Francis, will be chatting in a little bit. The mine itself, the project is actually 30,000 hectares. It is one of the largest exploration packages in Mexico. It actually costs us about $1 million a year just to hold it. The whole land package itself contains eight former mines. The quick-to-production scenario, which was great, is one of the reasons we did purchase the mine, but in all honesty, it's the exploration potential that really gets us excited, which I'll get into. The mine itself, we announced yesterday that we've now achieved 350 tons per day. We started at 270. We moved up to 300, now 350. We'll hit 400 hopefully in the next month or so.
And then we want to get to 500 tons per day, which is nameplate capacity, which is the capacity of the mine by year-end. So by year-end, we hope to be in full commercial production. And we've been able to achieve our goals kind of every step of the way. At 500 tons per day, the mine was producing about a million, two million and a half ounces of silver equivalent per year. Traditionally, historically, the value was about 70% silver, 30% gold. So it's a true precious metal mine. However, in the month of August, it's actually been about 53% silver, 47% gold, because the gold price has appreciated so much. Hopefully, silver catches up in the near term, which would be great. So we did purchase this mine for $35 million from First Majestic. It was an all-share transaction. They really like the mine.
They really believe in the mine. So they are by far our largest shareholder. And I'll get into that in the cap table in a little bit. First thing we did when we acquired the mine was come up with an updated NI 43-101 resource report. Historically, there were 17 million ounces of silver in all categories. What we were able to do is triple that resource. There's been over 236,000 meters of drilling done at site. In today's value, that's probably cost you $50 million, but more importantly, take you two to three years to be able to do that. So it's a great size resource for the current operation that we do have there. Again, we feel this is just a start. We'll be able to grow this number quite a bit if everything goes well. There we go.
As I mentioned, on June 25th, we had our grand opening ceremony. That's the cake. It was pretty amazing. We had the full community there. There were families. It was a pretty special day. We had the mayor of the city. He's a gentleman on the right. We had the head of the union. We had the head finance minister for the state. A lot of families were there. So everyone has been absolutely thrilled. I've never seen such an enthusiastic workforce for any type of project I've been at. It's pretty special. As I mentioned, 80% of the workers previously at the mine are now working there. There's even father and sons working together. It's pretty magical. So it is a bit of a honeymoon period. So everyone's quite happy, but it's gone well.
When the mine shut down, a lot of workers had to move to other mines in other parts of Mexico. So they would be working for 10 days, and then they'd go home for five days, or they had to move to construction jobs. And construction pays about one-third what mining pays. So everyone is pretty happy, which is great. Now, the plant itself is actually rated a bit more than 500 tons per day. The flotation cells, as well as the filter presses, are actually good for 1,200 tons per day. The crushing circuit's good for about 640. And the grinding circuit is the largest bottleneck at 516 tons per day. So what we would like to do, and we're going to do this out of cash flows, is increase the capacity of the plant. First, we would start with the ball mills.
There's currently three of them right now. We would add a fourth one, a 500-ton-per-day ball mill. And a new 500-ton-per-day ball mill is about $1 million. So really not a lot of money. We'd be able to do that out of cash flows and move that capacity up a little bit. The next step would be to duplicate the crushing circuit. So the crushing circuit is where the big rocks come in. You put it through these grates, crushes them down, and crushes them into small rocks that can eventually be processed. So right now, we can do about 640 tons per day. So what we would like to do is replicate that. So put the exact same machinery right beside it and duplicate that process. So rough budget on that is about $2 million. Realistically, it's probably going to be three.
Mining things always cost more than you expect. For about $4 million USD, we feel we should be able to get capacity up to 1,000 tons per day, maybe 1,200, and eventually up to 1,500 tons per day. Historically, at 500 tons per day, the mine was producing a million and a million and a half ounces of silver per year. But at 1,200 to 1,500, you're going to get close to 3 million ounces of silver equivalent a year. You should be able to get a premium in the market as well. Once you usually hit 2 million ounces of silver, if not 3 million ounces of silver, you do see a marginal benefit within your share price in terms of your valuation compared to your peers in terms of your silver valuation. That's where we want to get to.
It's going to take us a little bit of time. We're going to run at 500 tons per day for 2025, and at today's prices, we should be cash flowing. We don't have a PA. I don't have a feasibility study, but if everything goes well, about $1 million a month, which is great, especially for a company of our size, we'll be able to reinvest that capital and then use that capital to go explore, but at 1,200-1,500 tons per day, you're above that 3 million ounces. Theoretically, your cash costs come down, and then your cash flows even go higher, which would be great, so again. There we go. That's the team there. Give you an idea of what they look like. That's one of the mine portals. Currently, we are doing traditional mining. We started on June 5th.
We were about 15 days of production ready already at surface. So we can start to process that material. We're also doing shrinkage mining, stilt mining, and also processing some backfill material. So backfill material was a material that was mined in the 1990s at this mine. It was super high grade. Historically, the cutoff grade of the mine was eight grams per ton gold equivalent. So really high grade. So this material runs at about 350 grams, much higher than our resource. And we're starting to process that material. We're quite lucky. We have about two years of this material. If we weren't able to underground mine, if there's an issue there, we actually have two years of this material we could just process and generate revenues. So we have six open phases right now. Those are the various areas you're mining. We want to get to 20.
So over the next year in 2025, we do want to hit 500 tons per day on average. But we're also going to be expanding the underground. You never want to fall behind in terms of your production. You never want to fall behind on areas you're going to be working in. You never want to start production high and then come down. The market will absolutely kill you. So we're just going to be steady, and we're going to continue to grow as we can, as we open up new areas, as we mine new fresh mineralized material. There we go. That's what it looks like. It's underground mining. You see the jacklegs. We have a couple of StopeM ates. In essence, blast the ore, bring it down. Goes into the plant. Those are the flotation cells, as you can see there.
That brown kind of blackish water, that's actually the silver, which is pretty cool. So you kind of pull it off the top, goes into concentrators, and gets squeezed out through filter presses, and you get a black sand product. So that's that black sand product in the truck you can see there. The 35-ton-per-day trucks, we send two out a week. And that generates about $3,000-$350,000 a week right now. And we do want to get up to three trucks a week, if not sometimes four trucks per week. So we're right now generating revenue. We signed an offtake agreement with a company called MRI. They're based in Zug. We deliver the material to Manzanillo, which is on the coast in Mexico. It's about an eight-hour drive. And then from there, we get paid within five days. It's been amazing. We truly are fortunate.
There's such a demand for silver and for silver concentrate that we had about 10 different offers for the offtake. MRI actually received the concentrate previously, and they understand the quality of it. So the terms that we had are amazing. We're absolutely thrilled. I had lunch with them last week, and they asked us for more. They just want more material. I assume it's going to Asia because that's where I'm being charged. I think solar panels, obviously, when you think of the silver market and where a lot of the material is going to right now, there's a huge demand in solar panels, and this is where that material is going. We've now processed 27,000 tons, not 20 tons of material, and again, over 350 tons per day on track to hit 500 tons per day by the end of the year. That is the timelines.
We've hit kind of every goal we've achieved so far, including production 11 months early, which was great, and again, we'll hit commercial production for 2024 and have 500 tons per day, hopefully for 2025. Now, this is the land package. This is actually the reason we bought the mine. As much as we love the production, as much as we love the ability to get into cash flows and minimize dilution, so when you're exploring, you're not having to come back to the market, it really is, in our opinion, the largest undeveloped silver district in Mexico. So the whole area is 30,000 hectares. The strike length potential, that's where the mineralization theoretically starts to end, is over 15 km from the West District to the East District and 4 km sideways, so just a huge, huge potential area.
We're currently mining from La Guitarra, as you can see there, kind of in the middle in the West District. The green areas are the current resources. And what's really exciting to us is the East District. So the East District, Minas de Agua and El Rincón, as well as a few other mines, they were in production in the 1600s, 1700s, 1800s. This mine used to be known as the jewel of the Spanish crown for New Spain in the 1600s, 1700s. So a really prolific silver district. Minas de Agua shut down in 1910. It got a little bit too deep. And what happened there is it flooded. Back then, there was no technology to remove the water. And nothing's happened since then. El Rincón shut down in 1930. What happened there is it got a little too deep. And again, the mine flooded.
Nothing's happened in these two mines in the last 100-plus years. For us, it truly is an opportunity. El Rincón used to have a head grade of 6.5 grams gold and 850 grams silver. Exceptional grade. That is the prize that we have there. We've now identified over 60 kilometers of vein material at surface, whether it's breccia or stockwork. We have three field geologists out in the field. Every day, we're taking 200 samples at minimum of geological samples. We have our own labs, so we're able to process everything, getting ready, hopefully, for a drill program kind of this time next year. There are historic resource numbers out there, and they are really, really big. I'm sure you can go online and find them. The potential here, we truly feel, is one of the largest undeveloped silver districts in Mexico.
So quickly on the terms of the acquisition of La Guitarra. It was an all-share transaction. First Majestic didn't want any cash. They really believe in the mine. They like my management team. And that's the name of the game. We had a bit of a budget shortfall, actually, before we went into production. I raised CAD 10 million on the back of the acquisition of La Guitarra of about $3.5 million US dollars. I went out to the market. I was looking at offtake agreements or royalty or equity or debt. And I actually had a debt agreement in place. However, we chatted with First Majestic and kind of gave them the update.
They were gracious enough to give us amazing terms on a small short-term loan, two years at 15%, six-month payment holiday. I have plenty of time to pay that back. We'll do that out of cash flows. Yeah, we're quite fortunate. They've never done a deal like this before. Being our largest shareholder, it gave us quite a bit of comfort. Yeah, they've been really, really big supporters kind of all the way through. Our second project is Tepic. I'll just quickly touch on it. It's in the state of Nayarit, which is quite close to Puerto Vallarta. We've done a bit of drilling there. We've had 47 drill holes. The plan here is to do an updated NI 43-101 resource report in quarter one of 2025, so add a bit more value to the company.
But having said that, the potential at La Guitarra is massive. 90% of our focus is on La Guitarra. I'll get through. So some of the drill results we did. Again, we're getting some great grades, as you can see there. But honestly, the focus is on La Guitarra. So quickly on the share structure, always really important to take a look. Our market cap has gone up a little bit here as we announced that we hit 350 tons per day yesterday.
But shares outstanding, CAD 152 million. We don't have any warrants in the company. Those options, as I mentioned, every single employee, all 80 of them in Mexico, have options as well. So fully diluted, CAD 165 million. And we have about CAD 3 million on hand. I also have another CAD 2 million in VAT receivables. That's tax US that should be coming back over the next year.
We should be generating cash flow positivity here as well. We have a couple of analysts covering us, Beacon Securities. They have a target of CAD 0.75, but that hasn't been updated since we started production. And then VSA out of London, they just came out with a report about three weeks ago with a CAD 1.30 target. So again, something that's a bit more realistic. Shareholder structure, First Majestic is by far the largest shareholder. They own about 44%. Management and founders and insiders, we're still at just under 25%. So a company at this stage to have that much insider ownership is fairly rare. I've invested CAD 1.6 million Canadian myself to date into the company. I'm the third largest shareholder. Greg is the fourth largest shareholder. He's invested about CAD 1.2 million. And then the rest is kind of retail and high net worth.
So we do have a small float. It's maybe 40-45 million shares outstanding. Our volumes are picking up a little bit as obviously things progress. Yeah, and that's about it. So over the next little while, we do have some exciting stuff. We'll move towards commercial production and then hopefully generate those cash flows to start exploring the rest of La Guitarra.
Thank you. Very interesting. I will start with asking anyone in Mexico. Obviously, you have the state on your side, as you showed here on a slide. People are getting reemployed, and they seem to be working on the same goal. Is there any threat from the new president? Because as I understand, the new president seemed to be very positive towards the metals and mining industry, as it were.
Yeah, so obviously there were discussions. And whenever there's uncertainty in countries, it kind of overclouds the whole sector, especially within a country. The previous regime had discussed not allowing open pits coming into Mexico, new open pits. But I don't think they could ever shut down a mine. Like it's 17% of the Mexican economy. The amount of employment is incredible. But you are correct in terms of the new government, the new president she's coming in. It's actually been quite positive. So we'll see what happens. I'm cautiously optimistic that moving forward, things will continue the way they are, if not improve in Mexico, which is great. So yeah, we're fairly happy. But again, we're permitted, we're underground, we should be fine.
Yeah, but worst case scenario is that it will be an ongoing business. So the only thing here could be positive.
You got it.
I'm just curious here, since you've been one of the major shareholders, so maybe you can answer this. You're very focused here on your presentation on production from La Guitarra. So shall we consider Sierra Madre on its path to a production company, or is the end game being taken out by a bigger player?
Yeah, that's a good question. You know, at this point, I want to achieve a lot of the goals first. I want to get up to 1,000 tons per day, if not 1,200-1,500. And then I want to go explore. I want to make sure we have a really big inventory of ounces and resources and reserves. I think that's important. And then at the same time, if somebody wants cash flow and a nice mine operating. And what I love about public companies is it's a democracy. So every share gets a vote. And there's southern interests. And of course, we take a look at that. But if not, I truly feel there's an opportunity to build a mid-tier solar company. There's a lot of other really great projects in Mexico. They might be family-owned.
They might be having trouble getting permitted right now. They might not have a lot of love just because of the market and what's happening in Mexico. So if there's an opportunity to grow through really a creative acquisition, 100%, I would look at that. So I'm not angling myself anywhere. I have the right team for production, and I have the right team to expand as well.
So if the price is right, then you will be ready to have a discussion. If not, you're pretty happy with how things stand.
Oh, absolutely. Like with the cash flow numbers, maybe we don't buy anything. And if the long mine life pays a dividend, I'd be thrilled. That would be great. And I'm sure some of the other shareholders would as well. So it gives us optionality, especially if we're able to keep our costs down.
So we will watch this space. Thank you very much.
Thank you very much.
Thank you so much.
Thank you.