"Construction and exploration drilling continue at the Juanicipio Project. We are fortunate that all the major process equipment has been delivered to site. Corporately, we are making appropriate changes to the way we are conducting business to ensure continuity whilst considering the health and well-being of our people and business partners," MAG President and CE George Paspalas said in the release, referring to the COVID-19 pandemic.
The Canadian silver company highlighted that production from Juanicipio's underground mine is now slated to begin in mid-2020, ahead of schedule, and mined material will be processed, to start, at the nearby Fresnillo plant until the Juanicipio plant is ready.
With the accelerated start date, commissioning at Juanicipio is now anticipated in mid-2021 and reaching 85% of its 4,000 tons per day nameplate capacity expected in Q4/21, the company stated. Accordingly, project owner Minera Juanicipio and operator Fresnillo finalized an operator services agreement that is to take effect at the onset of commercial production. Further, Minera Juanicipio entered into offtake agreements with Met-Mex Peñoles for lead and zinc concentrates to be treated in Torreón, Mexico at market terms.
MAG and Fresnillo decided in Q2/19 to proceed with developing Juanicipio, and since then, work has been done such that underground development there is now more than 26 kilometers, or 16.2 miles, long. For construction of the plant, detailed engineering is almost finished, and earthmoving and foundation preparation are far along.
As for exploration efforts at Juanicipio, infill and other drilling, currently with four rigs, is continuing this year. "With the recent northeast trending discoveries, other much larger northeast structures with intense surface alteration are known farther afield within the Juanicipio project and are now priority exploration targets that have not previously been drilled," the release noted.
Exploration that was done at Juanicipio in 2019 included 28 holes and covered 33,864 meters. Drilling confirmed and expanded the continuous, high-grade and wide mineralization in the Valdecañas Deep zone; the wide, high-grade zones in the Anticipada vein; and the Venadas vein to the south. Also, two new northeast-trending veins, Valentina and Venadas II, were discovered.
Although MAG Silver ended 2019 with no debt, $72.36 million in cash and cash equivalents, and $71.858 million of working capital, the company said it needs to raise additional capital "in the future in order to meet its full share of initial capital required to develop the Juanicipio Project. MAG does not generate operating cash flow at this time to fund such obligations, and accordingly, future liquidity will depend upon its ability to arrange debt or additional equity financings. The company is currently evaluating several proposals."
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