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Silver Mine Produces While Plant Waits for Power

Source: Streetwise Reports   08/02/2022

MAG Silver Corp.’s Juanicipio project continues to deliver silver as the company waits for local officials…

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This article was originally published by The Gold Report

Source: Streetwise Reports   08/02/2022

MAG Silver Corp.’s Juanicipio project continues to deliver silver as the company waits for local officials to give the go-ahead to power up its own plant.

MAG Silver Corp.‘s (MAG:TSX; MAG:NYSE American) Juanicipio project in Mexico continues to produce as the company waits for its processing plant to get hooked up to the local power grid.

Production totaled 2.4 million ounces (2.4 Moz) of silver and 5,609 ounces of gold during the second quarter, above ROTH Capital Partners’ estimate of 2 Moz. The material continues to be processed by plants owned by the project’s operator, Fresnillo Plc.

“MAG stated that significant progress had been made by the utility company in preparation of the tie-in,” ROTH analyst Joe Reagor wrote on July 27. “As a result, MAG anticipates connecting the mill to the electrical grid in ‘the coming weeks.’ We believe completing the mill tie-in should serve as a significant positive catalyst for the company.”

MAG Silver

Reagor reiterated ROTH’s Buy rating for the stock with a target of $26. Out of 12 analysts following MAG, nine rate it a Buy, and three rate it a hold.

The mine produced 154,000 tonnes of mineralized material at an average head grade of 567 silver grams per tonne during the quarter. Reagor said the production of 5,609 ounces of gold was “somewhat below” ROTH’s 6,100-ounce estimate for the quarter.

“However, we are encouraged by the continued increase in throughput during the quarter,” Reagor wrote.

 

‘Turning Point’ for MAG

 

Production from the Juanicipio plant will open many possibilities for MAG, according to asset manager Chen Lin, who follows the company.

“This could be the turning point in MAG history, as they will be enjoying great cash flow while continuing exploring many projects,” Chen wrote.

Construction of the Juanicipio plant began in 2019. It was expected to come online by the end of 2021, but the local electric authority said just before Christmas that more equipment needed to be installed on the system.

“The rest of the process plant has been fully commissioned and awaits the energizing of the mills,” MAG President and Chief Executive Officer George Paspalas said. “Target ramp-up to 85-90% of nameplate capacity by year-end remains within reach.”

“MAG’s ‘exploration mindset’ has resulted in the discovery of a new mineralized vein set, which could drive additional discoveries as the model is applied more widely.” 

—Stifel GMP analyst Stephen Soock

Fresnillo has been processing loads from Juanicipio’s mine. MAG owns 44% interest in the project, and Fresnillo owns the remaining 56%. The mine generated nearly 252,000 tonnes of mineralized material last year, including 3.2 Moz silver and 6,577 ounces of gold, MAG said.

Revenue from the materials will sustain capital cash requirements, the company said. At the end of the quarter, Juanicipio had $37 million in cash.

The company is mining the Bonanza zone of the Valdecañas vein in the Zacatecas state of Mexico, a district characterized by veins that appear to be fed by an ore fluid upwelling zone. Valdecañas is one of two such zones known in the trend.

A preliminary economic assessment (PEA) in 2017 estimated a 19-year life of 4,000 tonnes per day for the mine.

Deposit Will Continue to Grow, Analyst Says

 

Stifel GMP analyst Stephen Soock maintained his Buy rating for MAG as well with a CA$29.75 target. Soock said he expects the Juanicipio deposit to continue to grow as it is drilled.

“MAG’s ‘exploration mindset’ has resulted in the discovery of a new mineralized vein set, which could drive additional discoveries as the model is applied more widely,” Soock wrote. “We believe there are additional economic ore deposits on the JV ground, the value of which will be realized in the market after Juanicipio reaches commercial production in the second half of 2022 and focus shifts to regional exploration.”

The company completed a CA$46 million equity financing last November, but “with impressive silver grades and higher mill throughput, the project has been able to self-fund in 2022 and not required any additional capital injections,” analyst Ryan Thompson wrote for BMO Capital Markets.

MAG has a market cap of $1.76 billion with 98.72 million shares outstanding. It trades in a 52-week range of $26.94 and $13.60.

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Disclosures

1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: MAG Silver Corp. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of MAG Silver Corp., a company mentioned in this article.

( Companies Mentioned: MAG:TSX; MAG:NYSE American,
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