MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) Q1/25 financial results were ahead of consensus and notable for lower-than-expected operating costs, reported TD Cowen Analyst Wayne Lam in a May 8 research note.
As a result, Lam wrote, "We expect a positive reaction from MAG shares."
32% Return Potential
TD Cowen maintained its CA$28 per share target price on the Canadian silver company, trading now at about CA$21.13 per share. The price difference implies a possible return of 32%.
MAG Silver remains a Buy.
To Pay Second Dividend
Lam reported that MAG's second declared dividend, to be paid on May 28, is US$0.20 per share. The dividend implies a 5.3% annualized dividend yield, the highest in our precious metals universe, noted the analyst. The first dividend, announced in March, was US$0.18 per share.
At quarter's end, MAG had a strong balance sheet with US$156 million (US$156M) in cash, down from US$162M in Q4/24, and no debt.
Costs Surprisingly Low
MAG's Q1/25 earnings per share was US$0.27 versus TD Cowen and consensus' estimate of US$0.25 per share due to lower costs for labor, contractors and materials and due to robust production, noted Lam.
Lower operating costs "continued to showcase impressive margins" from MAG's joint venture project, Juanicipio, in Mexico. Specifically, in Q1/25, the cash cost was (US$0.91) per ounce of silver [(US$0.91/oz of Ag], and the all-in sustaining cost was US$2.04/oz of Ag. Both were at the lower end of cost guidance, (US$1)–1/oz and US$6–8/oz, respectively.
Exploration During Quarter
Lam noted the drilling that was done at MAG's projects during Q1/25. At Deer Trail in Utah, 1,783 meters (1,783m) of reverse circulation drilling was completed.
At Juanicipio, 6,992m of infill drilling was carried out. Drill testing was done of the areas to be mined in the near to medium term, of deep skarn targets and of new veins to the south.
Another 50,500m of drilling is planned for the joint venture project this year, to start with regional surface drilling in Q2/25.
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