Sierra Madre Gold and Silver Ltd. (OTCQX: SMDRF, TSXV: SM) recently kicked off its summer with the completion of the first phase of a broader fundraising push. This latest move adds extra fuel to the company’s drive to ramp up operations at its Guitarra mine in Mexico and to deepen exploration, all with the overarching aim of making the most of its two key properties.
The company closed on 25,358,000 units at a price of approximately $0.53 (CAD$0.70) each, raising gross proceeds of roughly $13.35 million (CAD $17,750,600). Each unit includes one common share and half of a common share purchase warrant. Each full warrant allows the holder to purchase an additional common share at about $0.64 (CAD$0.85) within the next 12 months. This arrangement gives investors a chance to increase their stake if the company’s progress aligns with their expectations.
Leading the transaction was Beacon Securities Limited, joined by Canaccord Genuity Corp. Sierra Madre paid these agents a cash commission close to $880,000 (CAD$1,171,933) along with 1,674,190 compensation options. These options give agents the right to buy shares at the original offering price of $0.53 (CAD$0.70) within a year. An extra corporate finance fee of about $20,000 USD (CAD$26,500) and 38,010 more compensation options on the same terms were also part of the agent compensation.
Interestingly, some of Sierra Madre’s own directors and officers bought 686,000 units, contributing about $36,000 (CAD$480,200). Since this is a related party transaction, the company employed exemptions from formal shareholder approvals, as the amount did not cross 25% of its market capitalization. The details were finalized only at closing, so no prior material change report was filed.
The capital raised will be dedicated to expanding the capacity of the Guitarra mine’s processing facility and financing a thorough exploration program, especially targeting the East District drilling prospects. Funds will also support working capital and general corporate activities. The Guitarra mine, which restarted commercial production in January, had been on hold since mid-2018.
This private placement was structured according to Canadian regulatory exemptions, allowing Canadian investors outside Quebec to avoid hold periods on their new shares. The offering also extended to U.S. and other international investors under applicable exemptions while remaining unregistered under U.S. securities laws to comply with cross-border regulations.
Sierra Madre’s focus remains on its Mexican projects. Besides Guitarra, its Tepic property in Nayarit covers over 2,600 hectares and contains historic gold and silver resources in a low-sulphidation epithermal setting. The leadership team has a well-established track record, having collectively raised over a billion dollars for mining development, which adds confidence to their plans for this new infusion of capital.
As it pushes ahead with exploration and production, Sierra Madre aims to leverage its strengthened financial position to create value for shareholders in the coming quarters.
