Mining Company Announces Second Silver Dividend From Mexican Mine

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MAG Silver Corp. (MAG:TSX; MAG:NYSE American) announced its second dividend Thursday, a fixed dividend of US0.02 per share and an additional cashflow-linked dividend of US$0.18 per share for total of US$0.20 per share payable on May 28.

The company announced its inaugural dividend totaling of US$0.18 per share earlier this year. On Thursday, it announced its first quarter financial results and production totals from its 44% joint venture (JV) with Fresnillo Plc for the Juanicipio mine in Mexico.

The new dividend came from about 30% of US$61.5 million in cash MAG the JV, MAG said in a release.

"Returning capital to shareholders in a disciplined and transparent manner is a core pillar of our strategy," President and Chief Executive Officer George Paspalas said. "Today's announcement, combining a fixed dividend with a performance-linked top-up, reflects our strong cashflow from Juanicipio and our commitment to aligning returns with operational results. This structure gives shareholders direct exposure to our success while preserving flexibility to fund growth and sustain future returns."

The company's stock was up more than 4% the afternoon after the announcement.

Analyst Wayne Lam of TD Cowen wrote that he had expected a positive reaction in the market following the financial results.

"MAG declared a total dividend of US$0.20/share payable on May 28, implying a 5.3% annualized dividend yield, the highest in our precious metals universe," wrote Lam on Thursday. He has set a CA$28 per share price target on the stock. "This follows on from the maiden US$0.18/share dividend announced in March."

"Q1 financial results were ahead of consensus driven by lower operating costs at Juanicipio," he wrote.

Company Also Reports Financial Results

The company reported a record net income of US$28.7 million (or US$0.28 per share) and adjusted EBITDA of US$55.8 million, driven by income from Juanicipio (equity accounted) of US$33.9 million and MAG’s attributable interest in Juanicipio adjusted EBITDA of US$59.5 million.

During April 2025, Juanicipio returned a total of US$61.5 to MAG: US$59.4 million as its second dividend, and US$2.1 million in interest and loan principal repayments. All loan balances to Juanicipio have now been fully repaid, MAG said.

The inaugural dividend payment was made to shareholders on April 21 before the company decided on the second one payable on May 28.

A total of 337,017 tonnes of ore at a silver head grade of 430 grams per tonne (g/t) (equivalent silver head grade of 660 g/t) was processed at Juanicipio during the quarter. Record silver recovery of 96%, up from 89% in Q1 2024, was also reported, reflecting the commencement of commercial pyrite and gravimetric concentrate production during Q2 2024 as well as the benefit from ongoing optimizations in the processing plant.

MAG said Juanicipio achieved silver production and equivalent silver production of 4.5 and 6.5 million ounces (Moz), respectively.

Juanicipio generated strong operating cashflow and free cashflow of US$86.4 million and US$77.4 million, respectively.  It also continued to maintain its strong cost performance with an all-in sustaining cost of US$2.04 per silver ounce sold (US$10.64 per equivalent silver ounce sold).

According to the company, the declaration, timing, amount, and payment of any future dividends will be subject to the discretion and approval of the Board of Directors and "no assurances can be made that any future dividends will be declared and/or paid."

'Consistent, Elevated Production'

Scotiabank analysts Ovais Habib and Eric Winmill's take on the news was positive.

"We ascribe a positive bias to this result as Juanicipio continues its focus on cost control and optimization efforts delivering another good quarter of production costs beat relative to ours and consensus expectations," they wrote, rating the stock Sector Outperform with a target price of US$18.50 per share on Thursday. "The Company reiterated its 2025 production and cost guidance with Juanicipio expected to produce 14.7–16.7 Moz Ag yielding 13.1–14.9 Moz payable Ag at an AISC (net of by-products) of US$6.00 - US$8.00/oz."

Also on Thursday, National Bank of Canada Analyst Don DeMarco released an updated research note, maintaining their Outperform rating with a CA$32.75 per share price target.

Juanicipio is "starting to show consistent, elevated production reflective of a world-class mine," DeMarco wrote in an April research flash.

"Our thesis considers production growth at Juanicipio (44%), diversified metal production, a re-rate to producer multiples, exploration upside and M&A appeal tempered by Juanicipio JV terms, which limit profit sharing to once per year," the analyst wrote.

Roth Capital Partners LLC Analyst Joe Reagor said MAG's inaugural dividend is a boost for shareholders.

"We believe this dividend policy could broaden MAG's investor base and thus, we view it as a positive," Reagor wrote.

"[The] inaugural dividend with cash flow-linked feature allows investors [to] get paid with a yield that's among the top for silver names while maintaining upside to silver prices," wrote DeMarco, who maintained an Outperform rating on the stock with a CA$30.50 per share target price.

The Catalyst: Silver's 'Mild Rise'

Silver prices showed modest gains on Thursday, but the metal remained on fragile technical ground, James Hyerczyk reported for FX Empire Thursday.

He said broader market forces — including a stronger dollar, firm Treasury yields, and weakening gold — continue to weigh on the precious metals complex.

"Silver's mild rise contrasts with gold's drop, pointing to a likely unwinding of long gold/short silver spread trades," Hyerczyk wrote. "This realignment suggests diminishing investor appetite across the precious metals space, as sentiment continues to sour."

But the material's industrial utility means there will still be a deficit for silver, which is the best conductor of electricity among the metals.

"Underpinning silver's fundamentals is robust demand from industrial applications," The Silver Institute said in its World Silver Survey 2024 report. "These continued to push higher last year, reaching a new all-time record, fueled by the remarkable rise in solar demand and in spite of stagnation in some other sectors. Sluggish silver supply, owing to the slight decline in global mine production, was another factor contributing to silver's deficit conditions last year."

Mordor Intelligence noted that silver is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.

Ownership and Share Structure

Institutions own 70% of MAG, and 30% is retail, according to the company.

Top institutional shareholders include Juanicipio operator Fresnillo Plc. with 9%, BlackRock Investment Management (UK) Ltd. with 10.8%, Van Eck Associates Corp. with 9%, First Eagle Investment Management LLC with 6.2%, and Sprott Asset Management LP with 3%, the company said.

MAG Silver has a market cap of US$1.56 billion. It has 103.36 million shares outstanding, according to Reuters. It trades in a 52-week range of CA$11.29 and CA$18.27.