In an Aug. 5 research note, PI Financial analyst Chris Thompson reported MAG Silver Corp. (MAG:TSX; MAG:NYSE American) just announced 2020 infill and expansion drill results from Juanicipio that "confirm the significant resource expansion potential."
The analyst added, "Many of the reported intervals improve significantly upon these grades, which, combined with the increased drilling density achieved by the program, provides additional confidence for value accretion beyond our modeled assumptions."
Thompson presented and interpreted the findings from the Valdecañas vein's Bonanza and Deep zones, the two areas comprising PI Financial's modeled operating scenario, as well as its hanging wall.
As for the Bonanza zone, where precommercial mining is taking place, infill drilling results showed "impressive grades over significant widths," Thompson noted, which are higher than what PI Financial modeled for the zone.
For instance, grades in one highlight intercept, 3.1 meters (3.1m) long, were 3,584 grams per tonne (3,584 g/t) silver, 5.7 g/t gold, 1.1% lead/zinc, or combined, 4,027 g/t Ag eq. In another, 5.2m long, they were 1,356 g/t silver, 3.3 g/t gold, 0.4% lead/zinc, amounting to 1,605 g/t Ag eq. Drilling in Bonanza also better defined the Valdecañas vein's upper limits.
Regarding the Deep zone, Thompson wrote, the results indicate the resource there can be expanded materially at depth. They also "support our thesis of the Deep zone enabling increased mining rates, offsetting modeled precious metals grade declines later in the mine life." The grades in these new results indicate PI Financial can extend its modeled Deep zone mine life and boost the grade from its current 4.5 years and 467 g/t Ag eq, respectively.
One notable high-grade intercept from the Deep zone is 21m of 357 g/t silver, 0.9 g/t gold and 4.7% lead/zinc, or 566 g/t Ag eq. This includes 6.1m of 1,023 g/t silver, 1.6 g/t gold and 3.9% lead/zinc, or together, 1,251 g/t Ag eq.
Veins in the hanging wall of the Valdecañas vein, an area beyond the current mine plan, returned some promising intercepts. For example, the Anticipada vein showed 0.9m of 13.9 g/t gold, and the Pre-Anticipada vein demonstrated 0.7m of 10.5 g/t gold. These results provide "optionality for future growth," Thompson wrote.
PI Financial has a Buy rating and a CA$29.50 per share target price on MAG silver, the stock of which is currently at about CA$24.38 per share.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from PI Financial Corp., MAG Silver, Aug. 5, 2021
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