In a July 28 research note, Stifel analyst Stephen Soock reported that the new mill being built at MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) Juanicipio joint venture project with Fresnillo should be ready for the planned Q4/21 commissioning.
Also, Soock highlighted that MAG should rerate and will likely begin paying a dividend once commercial production at the new Juanicipio plant gets underway. Currently, the company's stock is trading at about CA$24 per share, and Stifel's target price on it is CA$29 per share.
MAG "demands a higher premium given its 'royalty-like' structure and strong, near-term free cash flow, Soock wrote.
He described the status of development work at the plant. All major equipment is in place. Initial construction of the tailings dam has been resequenced and resized. In progress are construction of the fine ore bin, cladding of the building's exterior and preparation of the stopes for full production.
While all of continues at the project, Soock pointed out, the Juanicipio deposit continues to grow via drilling. The newly discovered mineralized vein network could lead to additional discoveries.
"We believe there are additional economic ore deposits on the joint venture ground, the value of which will be realized in the market as Juanicipio comes into production (end of 2021) and focus shifts to regional exploration," the analyst added.
Soock also reported that during Q2/21, Juanicipio produced a total of 435,000 ounces of silver and 787 ounces of gold from ore processed at the nearby Fresnillo plant. Production fell short of Stifel's estimate because slightly fewer tons were processed. Until the Juanicipio plant is commissioned, ore processing at the project will continue at Fresnillo's plant.
Stifel rates MAG Silver Buy.
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