In a May 18 research note, Scotiabank analyst Trevor Turnbull provided an update on MAG Silver Corp.'s (MAG:TSX; MAG:NYSE A) Juanicipio and Deer Trail assets.
Regarding Juanicipio, where MAG has a 44% interest and Fresnillo 56%, MAG reported that grades of precious and base metals achieved during Q1/21 were the highest to date. For instance, silver grades increased 40% since 2020, coming in at 458 grams per ton (458 g/t). Gold grades and base metals were also the highest to date and still significantly lower than the resource grade," Turnbull noted.
In terms of finances relative to Juanicipio, Turnbull reported, MAG's share of the "Juanicipio JV pre-commercial production profit was about $3.6 million in Q1."
Total remaining capex for the project is about $168 million; MAG's share is $74 million. Of the overall initial capital budget of $440 million, the joint venture spent $272 million through Q1/21.
"MAG has cash of $93 million, and there is minor, although increasing, revenue coming in from processing about 16,000 tons (16 Kt) per month," Turnbull wrote.
Construction of the 4 Kt per day capacity Juanicipio plant continues; completion of the semi-autogenous grinding and ball mills should be done this quarter, Turnbull indicated. Commissioning is expected in Q4/21, with the joint venture aiming to reach 40–50% of capacity by year-end 2021.
As for MAG's Deer Trail project, Turnbull relayed that drilling there continues. The company already completed 70% of the phase one drill program, for which assays are pending, and intends to wrap it up this quarter. MAG intends to carry out a phase two program, currently in the planning stage.
About the Canadian exploration and development company, Turnbull concluded, "We continue to recommend MAG Silver as a near-term emerging producer with projected all-in sustaining costs of half those of the operating peer group."
Scotiabank has a Sector Outperform rating and a US$28.50 per share target price on MAG, the stock of which is trading now at about US$21.49 per share.
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Disclosures from Scotiabank, MAG Silver Corp., May 18, 2021
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Company Disclosures: Research Analyst Trevor Turnbull visited the Juanicipio project, an underground mine development, on February 5, 2014. The issuer paid for a portion of the travel-related expenses incurred by the Research Analyst to visit the site.
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