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Silver Miner On Track to Complete 4,000 TPD Plant at Mexico Property in Q4
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Scotiabank stated in a research report that its outlook for MAG Silver Corp. remains positive as the firm is expected to commission a new processing plant at its Juanicipio JV project in Q4/21.

In a July 28 research note, Scotia Capital Inc. (Scotia Bank) Analyst Trevor Turnbull, MBA, MSc, provided an update on recent activities at advanced stage silver development and exploration company MAG Silver Corp. (MAG:TSX; MAG:NYSE American) Juanicipio JV project in Zacatecas, Mexico.             

Turnbull commented in the report that MAG Silver reported on Q2/21 pre-production results at the Juanicipio JV, which is owned 44% by MAG and 56% by Fresnillo Plc (FRES:LSE) and added that the project's ore processing plant is scheduled for commissioning in Q4/21. According to the report, the JV processed a total of around 44,400 tonnes of ore that produced 435 Koz Ag. with sales attributable to MAG of 166 Koz.              

Analyst Turnbull pointed out that MAG Silver continues to be one of Scotiabank's leading picks as it is expected to become a rapidly emerging low-cost silver producer in H1/22. Turnbull noted that as production gears up fully, all-in sustaining costs (AISC) are expected to be only half of the current producer average.

The report listed that at the end of Q2/21 MAG held approximately $65 million in cash on its balance as it enters the final stages of construction at the new 4,000-tonne-per-day plant at Juanicipio. Scotiabank projects that the cash balances will decrease to around $26 million at year-end during plant commissioning. It is anticipated that pre-commercial production in the range of 48,000 tonnes per quarter will help in funding capital outlays.           

Scotiabank advised that it is making an adjustment to MAG Silver's net asset valuation (NAV5%) to US$13.49, up from US$13.35 and stated that pending financial reporting is expected in mid-August. No significant changes were made to its capex forecast or business valuation model. Analyst Turnbull indicated that the updated NAV calculations were the result of changes in its estimates for future silver prices to US$27.25/oz in H2/21, US$32.00/oz in 2022, and US$28.00/oz in 2023. For 2025 and beyond, the firm's models incorporate a long-term silver price of US$20.00/oz.     

Scotiabank currently has a Sector Outperform rating for MAG Silver Corp. with a target price of CA$23.51/share. The company's shares trade on the Toronto Stock Exchange under the symbol MAG and closed for trading at CA$22.65/share on August 17, 2021.       


1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. 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.  
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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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.

Disclosures from Scotia, MAG Silver, July 28, 2021

I, Trevor Turnbull, certify that (1) the views expressed in this report in connection with securities or issuers that I analyze accurately reflect my personal views and (2) no part of my compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by me in this report.

This document has been prepared by Research Analysts employed by The Bank of Nova Scotia and/or its affiliates. The Bank of Nova Scotia, its subsidiaries, branches and affiliates are referred to herein as "Scotiabank." "Scotiabank" together with "Global Banking and Markets" is the marketing name of the global corporate and investment banking and capital markets business of The Bank of Nova Scotia and its affiliates. Scotiabank, Global Banking and Markets produces research reports under a single marketing identity referred to as "globally branded research" under U.S. rules. This research is produced on a single global research platform with one set of rules which meet the most stringent standards set by regulators in the various jurisdictions in which the research reports are produced.

In addition, the Research Analysts who produce the research reports, regardless of location, are subject to one set of policies designed to meet the most stringent rules established by regulators in the various jurisdictions where the research reports are produced. Scotiabank relies on information barriers to control the flow of non-public or proprietary information contained in one or more areas within Scotiabank into other areas, units, groups or affiliates of Scotiabank. In addition, Scotiabank has implemented procedures to prevent research independence being compromised by any interactions they may have with other business areas of The Bank of Nova Scotia. The compensation of the Research Analyst who prepared this document is determined exclusively by Scotiabank Research Management and senior management (not including investment or corporate banking).

Research Analyst compensation is not based on investment or corporate banking revenues; however, compensation may relate to the revenues of Scotiabank as a whole, of which investment banking, corporate banking, sales and trading are a part. Scotiabank Research will initiate, update and cease coverage solely at the discretion of Scotiabank Research Management. Scotiabank Research has independent supervisory oversight and does not report to the corporate or investment banking functions of Scotiabank.

In the normal course of offering investment and banking products and services to clients, Scotiabank may act in several capacities (including issuer, market maker, underwriter, distributor, index sponsor, swap counterparty, and calculation agent) simultaneously with respect to a product, giving rise to potential conflicts of interest. Scotiabank uses controls such as information barriers to manage conflicts should they arise. Scotiabank and its affiliates, officers, directors, and employees may have long or short positions (including hedging and trading positions), trade as principal and buy and sell in instruments or derivatives identified herein; such transactions or positions may be inconsistent with the opinions expressed in this document.

Recipients of this document should expect that Scotiabank will from time to time perform services (including investment banking or capital market services) in connection with the services and activities described in this document and that they may perform services for and engage in transactions with other market participants, including the issuers of certain of the investments underlying the transactions herein.

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