Production at MAG's Silver Corp. (MAG:TSX; MAG:NYSE American) joint venture Juanicipio project with Fresnillo in Q4/23 met the expectations of BMO Capital Markets, analyst Kevin O'Halloran reported in a Jan. 24 research note.
"Throughput continues to ramp up," O'Halloran wrote.
Attractive return on investment
Based on the quarterly production results, BMO reiterated its CA$24 per share target price on the Canadian explorer-developer, now at about CA$12.54 per share, noted O'Halloran.
The difference between these two prices implies a potential return for investors of 91%.
MAG remains rated Outperform.
Gold numbers a beat
O'Halloran reviewed Juanicipio's Q4/23 operational performance, noting silver production and grades were lower than gold's.
The analyst indicated that the Q4/23 gold production beat offset the Q4/23 silver production miss. Specifically, silver production was 4,500,000 ounces (4.5 Moz), below BMO's 4.7 Moz estimate. Gold production was 10,600 ounces (10.6 Koz), above BMO's 9.9 Koz forecast.
In full-year 2023 (FY23) Juanicipio produced 16.8 Moz of silver, 36.7 Koz of gold, 28,400,000 pounds (28.4 Mlb) of lead and 44.8 Mlb of zinc.
Regarding grades, noted O'Halloran, the Q4/23 silver grade exceeded BMO's projection, coming in at 467 grams per ton (467 g/t) compared to 450 g/t. However, the Q4/23 silver grade was lower than that of Q3/23, 523 g/t.
The Q4/23 gold grade also surpassed BMO's expectation, coming in at 1.37 g/t versus 1.2 g/t.
As for throughput, it was up quarter over quarter in Q4/23, at 347,000 tons (347 Kt) compared to 322 Kt but less than BMO's 360 Kt estimate, O'Halloran reported.
What to watch for
O'Halloran ended his report by reminding investors that "an updated technical report is planned to be released by Q1/24E that will include updated operating costs and grade profiles for Juanicipio."
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