In a May 19 research note, H.C. Wainwright & Co. analyst Heiko Ihle reported MAG Silver Corp.'s (MAG:TSX; MAG:NYSE A) 2021 drilling plans as well as other company news.
Regarding exploration work at Juanicipio, assays are expected sometime during this quarter from the 2020 drill program, comprised of 33 holes over 27,900 meters, Ihle noted.
For this year, 2021, MAG Silver and joint venture (JV) partner Fresnillo budgeted $6 million for exploration at their Mexico project. The campaign calls for stepout and infill drilling of the Valdecañas vein system and drill testing of three main target areas on the property.
As for MAG's Deer Trail project in Utah, Ihle relayed, the company is currently working its phase one drill program there, having completed about 70% of it so far. It also plans to conduct a phase two, based on incoming core and draft lab results.
"We remain optimistic towards the initial phase one exploration results from MAG's Deer Trail 100% earn-in project, as we expect assays to be received shortly after the program's conclusion," Ihle wrote.
The analyst also reported that H.C. Wainwright raised its target price on MAG Silver to CA$22.50 per share from CA$21.50 after updating the financial component of its model on the mining firm. Ihle discussed MAG's Q1/21 financial results in his report but noted they are "largely irrelevant as the site is not producing at commercial levels yet."
During the quarter, he relayed, MAG garnered US$85,000 in revenue from interest earned on cash, cash equivalents and term deposits. However, the firm also incurred a net loss of US$3.7M versus US$0.03M and US$14.9M, respectively, a year earlier.
At the end of Q1/21, the Canadian explorer-developer had US$92.8M in cash and cash equivalents, and it still owes US$73.9M in initial Juanicipio capex, its portion of the remaining US$168M. Ihle pointed out that MAG's "strong liquidity should cover the remaining capital expenditures," helped by revenues generated from pre-commissioning operations at Juanicipio.
Regarding Q1/21 Juanicipio operations and revenue, Ihle relayed, the JV batch processed 36,385 tons of ore at the Fresnillo plant at an average silver head grade of 458 grams per ton. This amount takes the total ore processed since August 2020 to 108,254 tons. Also, the JV sold 431,188 ounces of silver, 631 ounces of gold, 199 tons of zinc and 137 tons of lead, for a gross total of US$10.1M.
These efforts garnered the JV a Q1/21 gross profit of US$8.2M. Also beneficial to the bottom line, during the quarter deferred income tax expenses were much lower, at US$1.6M, compared to a year earlier when they were US$8.7M.
Commissioning of the Juanicipio mill is slated for Q4/21, a major catalyst for MAG Silver.
H.C. Wainwright has a Buy recommendation on the company.
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