Good afternoon, and thank you, everybody, for taking the time to listen to our presentation. My name is Jorge. I'm a director of Sierra Madre Gold and Silver, and I'm here doing the presentation on behalf of our CEO, Alex Langer. We have a producing silver mine in Mexico, which is part of a very significant gold and silver district in Mexico. To give you some of the highlights of why you should take a look at our company, we put the mining production on time and on budget this year. You know, what a perfect timing to go into production with silver prices the way they are now. We are just about to conclude our first year of production, and we've been producing between 150,000 oz and 190,000 oz of silver per quarter, started in the last quarter of 2024.
A big achievement for a company to have been able to put the mine into production and have kept on target with our production targets. Another significant development this year is we welcomed an incredible roster of investors this summer, including Eric Sprott, Fidelity out of the U.S., and a number of institutional investors out of Europe, North America, and other parts of the world. What we are doing with that money is we are going to work on a plan to triple production over the next two years, as well as drilling and exploration of what is truly an incredible district in Mexico. To tell a little bit about management, I mentioned Alex Langer, our CEO, and then another important person, Greg Liller, who is our Chairman and our COO.
He's somebody who has put eight mines into production in his career, including six mines in Mexico, and including he is the person who put La Guitarra into production the first time around between 2006 and 2009. La Guitarra eventually was sold to First Majestic, and First Majestic in 2019 put it under current maintenance, given similar prices at the time. We had an opportunity as management to buy that mine from them in 2023. We have a board that has substantial Mexico and capital markets expertise that includes myself. I am the former CEO of Reina Silver, which we sold to Torex Gold a couple of months ago. Alejandro Caraveo is the country manager of the company, as well as the director. Alejandro has been by the side of Greg Liller, also participated in six mines into production.
He was also an integral part, as well as myself, Alex Langer, and Greg Liller. We were all part of the initial group that put Sierra Madre Gold and Silver together, but also a number of other successful companies that have been taken out by mid-tiers and majors. I'd like to talk to you a little bit about our project. You know, we have truly one of the great gold and silver districts in Mexico. We were lucky of not only having La Guitarra. La Guitarra sits at the center of the project. That's the mine that is in production. We have a historic district that was one of the most important silver and gold producing districts historically. We have something like nine historic mines. At the moment, we're producing from La Guitarra.
This year, we opened Coloso and Nazareno, which are close by, and we're now bringing ore from those two projects. You know, Coloso and Nazareno have higher grade than La Guitarra, so that's been very beneficial for our production. We at the moment have a production facility that has a capacity of 500 tons per day. As I mentioned to you, I'll talk to you about how we're going to expand that production. We have a resource of 50 million oz of silver. You know, we produced this resource last year, obviously at, you know, using a case base for silver of $25. You know, we're close to double that. Over the next couple of years, we'll be looking at increasing that resource. You know, part of what we're doing this year is 25,000 meters of drilling.
I'll speak a little bit more about that as well. As I mentioned in my introduction, one of the great achievements of the company over the last year was to deliver the restart of the mine on budget and on time. You know, just completing our first year of production. We had a fantastic second quarter. Keep in mind, this is before silver prices went crazy, but we made in Q2, $5 million in revenue and something like $1.2 million in net profit. You can do the math of what, you know, an additional, on average, $12-$15 of silver will do to our margins. One thing that you definitely want to look at is, you know, keep tracking our quarter reports so that you can see how we are developing. Now, this is the most important part of the presentation.
This is the plan that we have to triple production over the next 24 months. With the use of proceeds from the financing we did in August, we're fully financed to bring our production over the next 12 months. We're going to increase our capacity from 500 t/d to 800 t/d . Then between 2026 and towards the end of 2027, the idea is to bring the production from 800 t/d all the way to 1,500 t/d . On a best-case scenario, our target is to be able to produce 3 million oz of silver. We're going to be looking at production costs below $22 per oz. If you do the math, silver staying at $50 per oz, you know, the margin there will be, you know, close to $30 per oz. It is really something incredible and transformational for our company.
As I mentioned, we're fully funded for our expansion plan. It's a very simple expansion plan. We're basically adding a crusher and ball mill and then optimizing our production. We will triple our capacity from current 500 t/d to 1,500 t/d . I mentioned to you, you know, we inherited from First Majestic a true district. We have, you know, several kilometers of mineralized veins, historic drilling of almost 250,000 meters of drilling. You know, we're going to be going back to some of the historic districts. One target in particular that we're very excited about here is El Rincón. This is a mine that has never been drilled in modern times. When it was in production, it was producing silver on average at 800 grams per ton silver with 6.5 g per ton gold. We're going to be drilling that next year.
You know, you can imagine if we can, even if we have, you know, the excitement of production, but we also have the excitement of potential discovery. Keep in mind, anything we discover there, we can easily monetize by bringing it into our existing production. This is some of the activities that we're doing now in terms of, you know, extensive mapping and understanding the system. You know, we did it in the western side of the district. We had a very successful restart of the Coloso and Nazareno mines, which are now feeding the main mine. The exploration next year will continue to focus here, as well as looking at opportunities on the eastern part of the district, where the El Rincón mine that I was just explaining to you is located. I think I've basically covered this slide.
In addition to the La Guitarra project, we have a second project in another part of Mexico called Tepic. Equally exciting, this was the original project that the company went public with. We already have a resource of about 10 million oz of silver. However, we have 15 km of strike that have never been drilled. We have opportunities to, at some point, you know, once we start having significant cash flows, we have the opportunity to take this into increasing the resource and into production as well. It's, you know, we drilled it in 2021 and had some amazing drill results, including almost 3 meters of above 800 g per ton silver. Just to finish off, you know, the reason why you should look at our company is we're still undervalued. You know, we're below CAD 200 million.
If you, as I said, if we achieve our expansion plan and are producing 3 million oz of silver, you can do the math on what the numbers of that are just on free cash flow. We have an incredible number of organic opportunities to expand our resource dramatically with existing data that we have from the project. And we have the excitement of potential high-grade discoveries in our district. You know, great time for you guys to take a look at our company. We have an incredible, incredible roster of institutional investors. Management has been a significant investor from day one, and we're still, management and founders are still owning 21% of the company, which is, you know, very rare for a company that has raised as much money as we have so far.
We have coverage from Beacon Securities and VSA, whom you can contact directly if you want to receive their research. That is basically the main messages I wanted to convey. Do we have questions or?
We got three minutes.
We have three minutes if anybody has any questions. Yes, please, Miguel.
I suppose with this very tight structure, you have limited cash free flow.
That is correct.
Manuel, can you maybe just repeat the question?
Manuel's question was given we have a tight structure, we have limited float, and that is the case. You know, we do have, you know, more than 60% of the shares within, you know, institutional investors and long-term investors, including management. Our CEO, Alex Langer, has done a great job bringing investors who have a long-term view. Most of our financings have been going into hands of long-term investors.
Whatever is in retail has just been obviously from the daily trading.
The second question, you mentioned the Tepic project, the second one. Is there any permits pending?
There are no permits pending in La Guitarra, which is our main project. We are fully permitted for underground. We do have an opportunity to, within La Guitarra, we have 30 million oz of open pit silver that we are looking into both into permitting, as well as the possibility of, with higher silver prices, to mine from underground, for which we are already permitted. La Guitarra is fully permitted. Tepic, we would have to go through permits. I would not pay too much attention to Tepic right now. Our main focus is La Guitarra for the next foreseeable future. You know, like the Tepic project is something, you know, for down the line.
At the moment, our main focus is in La Guitarra. Yes, please.
Do you expect more selling by First Majestic? If so, do you arrange for those trades?
Yeah, this is a good question. First Majestic did sell 9.5% of their stake last week, and it is something that we arranged. We received an inquiry from an investor who asked us not to disclose who they are, but it is an investor that we are happy to arrange. It was done in one trade. We see it as a positive outcome because, you know, it is an investor that, let's say, is focused on larger cap companies. I think as many institutional investors, you are seeing that they are finally looking to companies of our size, and it is a potential source of future capital as the company grows.
First Majestic has not sold a single share on the market. They've been incredibly supportive. They gave us the money as a loan with very beneficial terms to put the money into production. They're very supportive. As of right now, we do not foresee any future sale. If that does happen, of course, they've been very good in terms of allowing us to, you know, in this particular case, we were able to arrange for a significant buyer. One last question.
Other?
Maybe just one more comment. Not exactly sure if that's the reason why our market cap was a little bit soft over the last few trading days. If you have a view on the company and you like the company, I just wanted to point out it is a good entry point.
We are the cheapest we've been over the last few weeks with no substantial change.
Fantastic. Perfect. Thank you so much.
Thank you very much.
We appreciate that.