MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) Q4/23 production results slightly missed ROTH Capital Markets' forecasts, but other factors made up for it, analyst Joe Reagor reported in a Jan. 24 research note.
"While Q4/23 production was somewhat below our estimates, this was more than offset by our higher precious metal price forecasts," Reagor wrote.
Significant return potential
The Canadian miner's stock is now about CA$9.28 per share, yet a higher price is imminent, noted Reagor.
"MAG is poised for a rerating as the Juanicipio joint venture begins to distribute cash in the coming quarters," he added. Juanicipio is MAG's mining project in Zacatecas, Mexico with partner Fresnillo.
Given the production numbers, ROTH reiterated its CA$19 per share target price and Buy rating on MAG.
The implied return for investors now is 105%.
Production keeps growing
Reagor provided MAG's Q4/24 production numbers and ROTH's estimates for comparison.
Total production was 4,500,000 ounces (4.5 Moz) of silver versus ROTH's forecast 5.2 Moz), 10.6 Moz of gold versus 12.6 Moz, 9,200,000 pounds (9.2 Mlb) of lead versus 9.7 Mlb and 15.1 Mlb of zinc versus 16.5 Mlb.
The miss, the analyst wrote, was due to grades and recovery rates coming in slightly lower than expected.
"However," he added, "we note throughput was above expectations and production continues to grow, which we view as positive."
Price deck increased
ROTH expects the gold and silver price to rise if and when the U.S. Federal Reserve lowers real interest rates "and shifts to a stable interest rate policy," noted Reagor. Given the Fed has signaled it will likely make its first rate cut this year, ROTH increased its precious metals price forecasts for 2024.
It now forecasts a 2024 gold price of US$2,075 per ounce (US$2,075/oz), up from US$1,856/oz and a 2024 silver price of US$25.19/oz, up from US$23.13/oz.
ROTH also boosted its long-term gold price to US$1,950/oz from US$1,900/oz.
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