In an August 5 research report, CIBC World Markets Inc. (CIBC) Analyst Cosmos Chiu, CFA commented regarding the 2020 drill results reported by advanced stage silver explorations and development company MAG Silver Corp. (MAG:TSX; MAG:NYSE American) from its Juanicipio JV project, which is located in the historic district of Fresnillo, Mexico.
The analyst noted that MAG Silver owns 44% of the Juanicipio JY project. During its 2020 drill program, it completed 27,900 meters of drilling in 33 surface holes and 11,800 meters of drilling in 77 underground definition holes. The firm's main strategy was to start with definition drilling to improve its understanding of the upper part of the Bonanza Zone. In addition, MAG conducted extensive infill and expansion drilling of the existing defined inferred resource in the Deep Zone.
CIBC stated that the 2020 results returned demonstrate significant increases in drill hole intercept densities and growth of the Deep Zone area of the Valdecañas vein.
The report mentioned that MAG Silver 2021 drill program is currently underway and the company has activated five drill rigs on surface and is continuing with underground definition drilling. MAG's JV investment partner and mine operator Fresnillo Plc (FRES:LSE) has stated that mining operations and mill construction efforts remain on budget and that it anticipates that the new mill be commissioned in Q4/2021 as scheduled.
The analyst highlighted that definition drilling at the Bonanza Zone was successful pointing out that assay results from Hole MIC-6 returned 3.3 g/t Au and 1,356 g/t Ag over a width of 5.2 meters.
CIBC listed that infill and expansion drilling at the Valdecañas vein's Deep Zone produced some key intercepts including Hole D1-6-1, which struck 3.9 g/t Au and 198 g/t Ag, 14.2% Pb plus Zn, and 0.4% Cu over a width of 18.1 m and Hole D5-3-3 which returned 0.9 g/t Au and 357 g/t Ag, 4.7% Pb plus Zn, and 0.2% Cu over a "true width" of 21.0 meters.
The analyst summarized the weighted average results across all four of the veins targeted. CIBC indicated that the Valdecañas vein averaged 331 g/t Ag and 1.6 g/t Au over a width of 4.4 meters, the Hangingwall veins averaged 130 g/t Ag and 1.0 g/t Au over a width of 3.1 m, the Venadas family veins averaged 251 g/t Ag and 2.9 g/t Au over 0.8 meters, and the Footwall veins averaged 61 g/t Ag and 0.6 g/t Au over 1.6 meters.
Analyst Chiu noted that MAG Silver is an emerging silver producer that is well-positioned to benefit from the upward trend in silver prices. MAG Silver owns a 44% interest in the Juanicipio mine in Fresnillo, Mexico. CIBC believes that when the 4,000 tpd Juanicipio mill comes online, it will serve as a key catalyst and improve prospects for the company to grow processing capacity and expand the resource.
The analyst advised that its base case valuation forecasts for MAG Silver were based upon silver prices of $29/oz in 2021, $31/oz in 2022, $30/oz in 2023, and $28/oz thereafter.
CIBC World Markets currently has a "Neutral" rating for MAG Silver Corp. with a 12-to-18-month price target of CA$33.00/share. The company's shares trade under the symbol MAG on the Toronto Stock Exchange and closed for trading on August 25, 2021 at CA$23.23 per share.
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Disclosures from CIBC, MAG Silver Corp., Company Update, August 5, 2021
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Important Disclosure Footnotes for MAG Silver Corp. (MAG.TO)
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