MAG Silver Corp. (MAG:TSX; MAG:NYSE American) reported fourth-quarter (Q4) earnings per share (EPS) of CA$0.15, slightly beating BMO Capital Markets analyst Kevin O'Halloran's estimate of CA$0.11 and the consensus estimate of CA$0.13, O'Halloran reported in a March 19 research note.
The company's Q4 operating cash flow of CA$84 million also exceeded O'Halloran's CA$56 million estimate.
Financial Results and Projections
In 2023, the Juanicipio joint venture generated free cash flow (FCF) of CA$60.8 million, with CA$62.0 million coming in Q4 as the operation transitioned to positive FCF throughout the year.
"Juanicipio returned CA$18.8M (interest and principal) to MAG in Q4, following CA$11.3M of repayments to MAG in Q3," stated O'Halloran. "At year-end, MAG had a cash balance of CA$68M, with CA$42.9M at the JV level (44% attributable to MAG)."
Recent Business Developments
In the report, O'Halloran commented that MAG Silver plans to release an updated technical report for the Juanicipio project by the end of March, which will provide more visibility on costs and grade profiles, offering more detailed 2024 guidance.
The company's pre-reported Q4 attributable production was 2.0 million ounces of silver and 4,700 ounces of gold from total Juanicipio production of 4.5 million ounces of silver and 10,600 ounces of gold.
In 2023, Juanicipio's throughput was 1.27 million tonnes, while total production reached 16.8 million ounces of silver, 36,700 ounces of gold, 28.4 million pounds of lead, and 44.8 million pounds of zinc.
Valuation
In his research note, Kevin O'Halloran maintained an Outperform rating on MAG Silver, with a price target of CA$24.00, representing a potential total return of 93% based on the March 18 closing price of CA$12.44.
The company's strong financial performance, positive exploration results, and the anticipated updated technical report for the Juanicipio project are expected to drive future growth and value for shareholders.
"In addition to the updated Juanicipio technical report expected by the end of this month, we will also be watching for ongoing exploration results from MAG's Deer Trail and Larder exploration properties, where drilling in 2024 will follow up on positive results achieved at both projects in 2023," O'Halloran wrote.
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Disclosures for BMO Capital Markets, Mag Silver Corp., March 19, 2024
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