MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) Q1/25 financial results were remarkable for several reasons, reported Kevin O'Halloran, BMO Capital Markets analyst, in a May 8 research note.
21% Return Implied
Upon the metals producer's release of its first quarter results, BMO maintained its $27 per share target price on the Canadian company, noted the analyst. Given its current share price of about $22.23, the target represents a potential return for investors of 21%.
MAG Silver remains rated Outperform.
Revenue Up, Costs Down
In discussing MAG Silver's Q1/25 financial results, O'Halloran pointed out the earnings per share (EPS), costs, cash flow and (prereported) production, all favorable.
EPS was $0.28, ahead of BMO's $0.18 estimate and consensus' $0.25 forecast. This beat resulted from two positive key differences between the results and BMO's projections, on a 100% basis. One was higher revenue, of $175 million ($175M) versus BMO's $159M expectation. The second was production costs, which came in lower, at $33.7M versus $41.8M.
Other costs during the first quarter also were below expectations and below the previous quarter's. The cash cost was $8.50 per ounce ($8.50/oz) of silver equivalent (Ag eq), compared to BMO's $9.68/oz and Q4/24's $15/oz. The all-in sustaining cost was $10.64/oz versus BMO's $13.34/oz and Q4/24's $8.80/oz.
Second Dividend Announced
Cash flow in Q1/25 from operations at Juanicipio, MAG's joint venture project in Mexico with Fresnillo Plc, was noteworthy, according to O'Halloran. At $86.4M on a 100% basis, the amount was more than double BMO's $36M projection, due to lower-than-expected tax payments during the quarter.
Free cash flow (FCF) during Q1/25 was $77M, 44% of which was attributable to MAG. This was consistent with FCF in Q4/24 of $78M.
As for MAG's cash balance at Q1/25's end, or March 31, 2025, it was $156M, reported O'Halloran. This led to the mining company declaring its second dividend payment, this one $0.20. At the share price MAG closed at on May 7, this dividend amount equates to about a 5% yield on an annualized basis.
Juanicipio Outperforms
MAG already had reported Q1/25 silver production, which was 4,500,000 ounces (4.5 Moz), more than BMO's 3.5 Moz estimate, O'Halloran reiterated. This quantity equated to 28% of production guidance for 2025 of 14.7–16.7 Moz. The analyst attributed the production beat to Juanicipio's ongoing operational strength, resulting from higher-than-forecasted grades and record recoveries.
"Recall that in 2024, the mine exceeded its production guidance even after revising guidance higher midyear," added O'Halloran.
What to Watch For
Upcoming events that could move the needle for MAG, O'Halloran noted, include exploration results on an ongoing basis and further cash flow from the Juanicipio JV.
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