MAG Silver Corp. (MAG:TSX; MAG:NYSE American) reported Q1/24 production results from its joint venture (JV) mine in Juanicipio that met the expectations of ROTH Capital Markets, analyst Joe Reagor reported in an April 24 company update.
"Production rates are normalizing, and recovery rates are improving," Reagor wrote.
Target, rating the same
ROTH maintained its $14 per share target price on the Canadian silver producer, now trading at about $12.13 per share, noted Reagor. The return to target from here implies a 15% return for investors.
Reagor reported that ROTH recently made several changes to its model on MAG, but they did not affect the firm's existing target price. These revisions included updates of Q1/24 production and average metal prices and adjustments to ROTH's gold and silver price forecasts.
MAG, based in British Columbia, remains a Buy.
Numbers at a glance
Reagor provided Juanicipio's Q1/24 production numbers for each of the various metals and compared them to ROTH's estimates.
Overall, during the year's first quarter, the JV produced 4,400,000 ounces (4.4 Moz) of silver versus ROTH's 3.9 Moz estimate and 9,927 ounces of gold compared to ROTH's expected 13,000 ounces. Production of lead was 8,700,000 pounds (8.7 Mlb), below ROTH's 9.1 Mlb forecast, and zinc came in at 14.7 Mlb, above ROTH's 14.6 Mlb projection.
These numbers did not impact ROTH's Q1/24 earnings per share estimate on MAG, Reagor pointed out, because the "higher silver and zinc production offset lower gold and lead production."
Also of note, according to the analyst, mill recovery rates were better in Q1/24 than in Q4/23.
Potential catalyst
Reagor purported that throughout the rest of 2024 investors will be watching the cash flow moving from Juanicipio to MAG Silver as it could result in a catalyst for the miner later this year.
"If MAG can demonstrate consistent cash flow from the JV then the company could look to pay dividends or institute share buybacks," wrote the analyst.
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