MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) Q1/25 financials "topped the Street" and reflected "standout cost performance," reported Don DeMarco, National Bank of Canada analyst, in a May 8 research note.
49% Uplift, Outperform Rating
National Bank of Canada maintained its CA$32.75 per share target price on MAG Silver, now trading at about CA$21.98 per share. The target implies a potential return for investors of 49%.
The mining firm remains rated Outperform.
"Our thesis considers production growth at Juanicipio (44%), diversified metal production, a rerate to producer multiples, exploration upside, and mergers and acquisitions appeal tempered by Juanicipio joint venture (JV) terms, which limit profit sharing to once per year," DeMarco wrote. Juanicipio is MAG's JV project in Mexico.
Cash Flow and Balance
The analyst presented the highlights of MAG's Q1/25 financial results. As for earnings per share, adjusted, it came in at US$0.28, ahead of consensus' US$0.25 estimate but below National Bank's US$0.30 projection.
MAG's cash flow per share was (US$0.02) slightly better than National Bank's (US$0.03) forecast.
The silver producer's Q1/25 cash flow and cash balance were down quarter over quarter (QOQ). The company had US$156.5 million (US$156.5M) in cash and cash equivalents as of March 30, 2025, a drop from US$162.3M in Q4/24. Free cash flow during Q1/25 totaled (US$6.7M), significantly lower than US$48.8M in the previous quarter.
As for the Juanicipio JV, in Q1/25, its cash balance was up but its free cash flow was down QOQ. At quarter's end, the JV had US$130.6M in cash and cash equivalents, up from US$53.2M in Q4/24. Its free cash flow was US$77.4M, lower than US$78.9M in Q4/24.
Lower Operational Costs
MAG's Q1/25 performance was driven by cost tailwinds, DeMarco highlighted. This quarter, costs, on a per ounce of silver basis and net of byproducts, were lower than in Q4/24 and were below National Bank's estimates.
Specifically, the total cash cost in Q1/25 was US$8.50 per ounce of silver equivalent (US$8.50/oz Ag eq), lower than US$8.80 in Q4/24 and lower than National Bank's US$12.82 estimate.
Similarly, the all-in sustaining cost was down QOQ and below National Bank's forecast. AISC was US$10.64/oz Ag eq. These figures compare to National Bank's US$18.07 and Q4/24's US$15.
In other developments during Q1/25, DeMarco reported, MAG declared a US$0.20 dividend, payable on May 28. Its previous and inaugural dividend was US$0.18.
"[The] dividend represents an annualized yield of about 5.2%, among top yields for silver names, from a long-life asset with exploration upside in Juanicipio," wrote DeMarco.
Recent and Planned Drilling
Drilling was done at Juanicipio and Deer Trail in Q1/25, reported DeMarco. At Juanicipio, 6,992 meters (6,992m) were drilled in areas to be mined soon, such as the Valdecañas, Anticipada, Ramal 1, Ramal 2 and Venadas veins. Drill results remain pending. At Deer Trail in Utah, reverse circulation drilling was carried out of six pilot holes over 1,783m.
Exploration plans for MAG's three projects this year include passive ambient noise tomography three-dimensional seismic, airborne radiometric and magnetic surveys to hone drill targeting at Deer Trail, about 25 kilometers of drilling of the Instant Pond zone at Larder in Ontario beginning this quarter and regional surface drilling at Juanicipio, also starting in Q2/25.
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