MAG Silver's Massive Gains in Mexico Fuel Record Income, Dividend

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MAG Silver Corp. (MAG:TSX; MAG:NYSE American) released its unaudited consolidated financial results for the quarter ending June 30, at the same time announcing a third dividend for shareholders and highlighting key developments from the quarter.

The largest development of course has been the definitive agreement for Pan American Silver Corp. to acquire the company in a transaction valued about US$2.1 billion.

Under the agreement, approved by shareholders in July, MAG shareholders can choose to receive either US$20.54 in cash per MAG share or US$0.0001 in cash and 0.755 of a Pan American common share per MAG share, or a combination of cash and shares, subject to proration so that the total consideration paid to all MAG shareholders includes US$500,000 in cash with the remainder in Pan American shares.

The Transaction is anticipated to close in the latter half of 2025, pending the fulfillment of customary closing conditions, including approval under Mexican anti-trust laws and the listing of the Pan American common shares to be issued under the Transaction on both the Toronto Stock Exchange and the NYSE.

The company said it incurred costs of US$3,563 related to the Transaction during the three months ending June 30. These costs have been included in general exploration and business development expenses in the condensed interim consolidated statements of income and comprehensive income of the Q2 2025 Financial Statements.

Highlights of the Quarter

MAG reported a record net income of US$33,444 (US$0.32 per share) and an adjusted EBITDA of US$56,442, largely driven by income from the Juanicipio mine in Mexico (equity accounted) amounting to US$42,091 and MAG’s share of Juanicipio's adjusted EBITDA totaling US$63,221.

In April, Juanicipio returned a total of US$61,500 to MAG, consisting of a second dividend payment of US$59,400 and US$2,100 in interest and loan principal repayments, the company said. All outstanding loan balances to Juanicipio have now been fully settled.

MAG made its second dividend payment of US$0.20 per share (comprising a fixed component of US$0.02 per share and an additional cash flow-linked component of US$0.18 per share, representing approximately 30% of the cash received from Juanicipio in April 2025) in May. A total of US$39,316 in dividend payments was distributed to shareholders during the quarter.

On August 8, MAG declared its third dividend of US$0.144 per share (including a fixed component of US$0.02 per share and an additional cash flow-linked component of US$0.124 per share, representing approximately 30% of the US$40,872 free cash flow generated by Juanicipio attributable to MAG during Q2 2025), payable on September 1 to shareholders on record as of August 18.

During the quarter, MAG said 342,515 tonnes of ore with a silver head grade of 417 grams per tonne (equivalent silver head grade of 661 g/t) were processed at Juanicipio. The silver recovery rate at Juanicipio improved to 94.6%, up from 92.4% in Q2 2024, reflecting ongoing optimizations in the processing plant.

Juanicipio achieved silver production and equivalent silver production of 4.3 and 6.6 million ounces (Moz), respectively. The operation generated robust operating cash flow and free cash flow of US$110,639 and US$92,891, respectively. Juanicipio maintained strong cost performance, achieving a record low cash cost of negative US$3.90 per silver ounce sold (US$8.38 per equivalent silver ounce sold) and a record low all-in sustaining cost of US$0.65 per silver ounce sold (US$11.46 per equivalent silver ounce sold).

Analyst: A Positive Quarter

Last month, MAG's price target was raised by 17% by Roth Capital Partners following the acquisition proposal from Pan American, as reported by Joe Reagor, managing director and senior research analyst, in a June 30 research note. He increased the target to US$22 in a July 23 note after the production figures were released.

"The small silver production beat can be attributed to slightly higher than anticipated throughput, while the lead and zinc production beats were driven by higher than anticipated grades," Reagor wrote. "On the other hand, the gold production miss was driven by lower than anticipated grades. Thus, we view production as mixed. We also note our EPS estimate increased slightly, which makes it an overall positive quarter, in our opinion."

Roth's target price on MAG Silver was previously US$21, Reagor noted. At the time of the analyst's report, the Canadian mining company was trading at about US$22.13 per share, slightly higher than ROTH's revised target on it.

The investment bank maintained its Neutral rating on MAG.

Expanding Exploration Efforts

Located along Mexico’s Fresnillo Silver Trend, the Juanicipio site is currently expanding its exploration efforts, targeting several promising areas, with only 10% of the property explored so far. According to Bujon Capital in a May 24 article on Seeking Alpha, "Juanicipio stands out as one of the premier primary silver mines globally, boasting a lengthy economic lifespan, substantial exploration upside, and low operational costs."

In addition to Juanicipio, MAG is advancing two other exploration-stage projects. The Larder project spans 3,370 hectares in Canada’s Abitibi Greenstone Belt, strategically located between the extensive Kirkland Lake/Macassa gold system, which contains over 70 million ounces, and the historically productive Kerr-Addison mine, which produced over 11 million ounces. Drilling at Larder, which began in 2020, has validated significant potential along and adjacent to the primary Cadillac Larder Break. In the previous year, MAG completed drilling totaling 41,000 meters.

The second project, Deer Trail, is a silver-rich site situated in Utah's Piute County. This project holds promise for significant porphyry and carbonate replacement deposits across 7,250 hectares. Geological assessments have identified eight major targets for the forthcoming 2025-2026 drilling campaign, with the fourth phase of drilling currently underway.

The Catalyst: A Revival in Investor Interest?

Silver (XAG/USD) was trading around US$37.87 on Tuesday, stabilizing after recent drops and finding support above US$37.51, reported Arslan Ali for FX Empire on August 12.

The 50-day EMA at US$37.91 and the 100-day EMA at US$37.86 are providing immediate resistance, with a move above US$37.95 needed to aim for targets at US$38.48 and US$38.97, Ali wrote.

On the downside, falling below US$37.51 could open the path to US$37.03 andUS$36.38. The RSI is at 46, indicating neutral momentum, with potential for movement in either direction depending on market catalysts. Traders are closely monitoring upcoming U.S. economic data and overall risk sentiment for guidance, as silver navigates its dual role as both an industrial metal and a safe-haven asset in a volatile market environment.

Silver currently shines as a standout commodity, witnessing a revival in investor interest and strong fundamentals that have propelled its prices to the highest in 14 years, as noted in a Mining.com report dated July 31. With impressive gains of 28% this year following a 21% increase last year, some analysts suggest that this upward trajectory is just the beginning, positioning silver as an attractive investment option, according to the report.

Citigroup has recently upgraded its short-term outlook for silver prices to over US$40 per ounce, citing a tightening supply and rising demand.

Ownership and Share Structure

According to Refinitiv, 15 strategic entities own 3.11% of MAG. The Top strategic shareholder is Industrias Penoles SAB de CV with 2.3%.

Numerous institutional investors hold 54.95%. The Top 3 are Van Eck Associates Corp. with 8.09%, First Eagle Investment Management LLC with 7.53% and Tidal Investments LLC with 2.49%. The rest is in retail.

MAG Silver has 103.46 million outstanding shares and 100.22 million free float traded shares. Its market cap is CA$3.27 billion. Its 52-week range is CA$15.89–31.01 per share.