MAG Silver Corp. (MAG:TSX; MAG:NYSE American) remains on track to commission the newly constructed plant at Juanicipio, its joint venture project with Fresnillo, by the end of 2021, Cormark analyst Richard Gray reported in an Oct. 28 research note.
He added that "the transition to the Juanicipio plant commissioning in Q4/21 is the next major milestone that could drive the multiple higher."
Where the project stands now, Gray noted, is in the precommissioning stage, with testing being done of processing systems. Mechanical completion is nearly done. After that, Juanicipio will be connected to the Mexican power grid. Then no-load testing, water testing and full-load commissioning will take place.
By year-end 2021, the Juanicipio plant should reach 40–50% of its 4,000 tons per day nameplate capacity, according to the joint venture partners.
They expect to reach 90–95% capacity in 2022.
"We expect this to be achievable as Fresnillo/MAG have been batch processing ore over the past 14 months, which should materially derisk the metallurgy and allow for a rapid ramp-up," Gray wrote.
The analyst also reported MAG's Q3/21 operational numbers, all from Juanicipio. The quantity of ore batch processed (at the nearby Fresnillo plant) exceeded Cormark's forecast, 57,127 tons versus 44,000 tons, respectively. It also exceeded guidance of 48,000 tons and the Q2/21 and Q1/21 amounts.
Q3/21 production at Juanicipio, on a 100% basis, was 667,532 ounces (667,532 oz) of silver and 1,107 oz of gold, higher than Cormark's 498,000 oz of silver and 800 oz of gold estimates.
Cormark has a Market Perform rating and a CA$24.75 per share target price on MAG Silver. The mining company's current share price is about CA$24.70, "reasonably priced" in Cormark's view, Gray wrote.
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