MAG Silver Corp.
(TSX / NYSE
American: MAG) (“MAG” or the
“Company”) announces the Company’s unaudited
financial results for the three and nine months ended September 30,
2020. For details of the unaudited condensed interim consolidated
financial statements and Management's Discussion and Analysis for
the three and nine months ended September 30, 2020, please see the
Company’s filings on SEDAR (www.sedar.com) or on EDGAR
(www.sec.gov).
All amounts herein are reported in $000s
of United States dollars (“US$”) unless otherwise
specified.
HIGHLIGHTS – SEPTEMBER 30, 2020 &
EVENTS SUBSEQUENT TO THE QUARTER END
- Juanicipio operator, Fresnillo, has
implemented a range of safety measures and monitoring procedures,
consistent with the World Health Organization’s and Mexican
Government’s direction, in response to COVID-19, with the overall
expected project development timetable unchanged.
- Juanicipio plant expected to
commence commissioning in mid-2021 and reach 85% of its 4,000
tonnes per day (“tpd”) nameplate capacity by year end 2021.
- Construction of the 4,000 tpd
Juanicipio plant continues to advance, with the plant foundations
completed and curing, and the prefabricated steel elements now
ready for installation.
- Underground development at
Juanicipio is now at 32 km (20 miles) with preparation of the first
production stope concluded during the third quarter of 2020.
- Initial mine production commenced
in early August 2020 with processing of development material on
commercial terms through the nearby Fresnillo plant, and is
expected to continue at a rate of approximately 16,000 tonnes per
month until the Juanicipio plant is commissioned. During the
quarter ended September 30, 2020, on a 100% basis:
- 42,476 tonnes of mineralized
material were processed through Fresnillo’s mill, with 394 thousand
silver ounces, 610 gold ounces, 138 tonnes of lead and 174 tonnes
of zinc produced and sold in the quarter.
- Subsequent to the quarter end, a
further15,400 tonnes were processed in October 2020.
- Provisional sales of $9,525 on a
100% basis less $1,530 in related costs, netting $7,995 that was
credited against project capital in accordance with MAG’s
pre-commercial production accounting policy.
- Estimated initial capital of
$440,000 (on a 100% basis) as of January 1, 2018, will be reduced
by:
- Development expenditures incurred
since then to September 30, 2020 of approximately $197,427 (the
Company therefore estimates approximately $242,573 of remaining
initial capital on a 100% basis as at September 30, 2020);
- Existing cash held in Minera
Juanicipio as at September 30, 2020 ($14,417); and,
- Expected cashflow generated from
material being processed through the Fresnillo plant up until the
Juanicipio plant is commissioned in mid-2021 (a net of $7,995 was
generated in the third quarter of 2020).
- After the temporary COVID-19
restrictions established by the Mexican Government in the previous
quarter were lifted, drilling resumed in the current quarter and
the full Juanicipio 2020 exploration program is expected to be
completed as planned in 2020.
- On June 29, 2020, the Company
established an at-the-market equity program (the “ATM Program”) and
in the quarter ended September 30, 2020 the Company sold and issued
3,092,783 common shares under the ATM Program at an average price
of $16.17 per share, for gross and net proceeds of $50,000 and
$48,625 respectively.
- MAG held cash and cash equivalents
as at September 30, 2020 of $136,045 while Minera Juanicipio had
cash on hand on a 100% basis of $14,417 as at September 30,
2020.
- Subsequent to September 30, 2020,
the Company advanced $40,524 to Minera Juanicipio representing its
44% share of a $92,100 cash call to fund process plant construction
and further underground development on the Juanicipio
property.
- Deer Trail Project in Utah was
announced during the quarter, a silver-rich Carbonate Replacement
Deposit (“CRD”) target, with drilling having commenced in November,
2020.
“We are very pleased with the progress at
Juanicipio. The metallurgical response of the mineralization is
correlating well with our expectations. We will start optimizing
flotation parameters over the next two quarters, which will
significantly de-risk the Juanicipio plant start-up,” said George
Paspalas, President and CEO. “Whilst the early cash flow at
Juanicipio is a welcome boost, we remain eager explorers at both
the Juanicipio JV and Deer Trail.”
JUANICIPIO PROJECT UPDATE
Under the terms of an Engineering, Procurement,
Construction and Management agreement, Fresnillo and its affiliates
are overseeing the construction of the 4,000 tpd process plant and
associated surface and underground infrastructure. In the previous
quarter, surface construction progress at Juanicipio was limited
due to temporary COVID-19 restrictions imposed by the Mexican
Government in response to the virus outbreak. Construction ramped
up again starting June 1, 2020 and into the quarter ended September
30, 2020, and according to Fresnillo, the overall development
timetable currently remains unchanged with the Juanicipio
processing plant expected to be commissioned in mid-2021.
In the nine months ended September 30, 2020,
further development progress was made on construction of the
flotation plant and other infrastructure. The mill foundations are
completed and curing. Underground development to date at Juanicipio
is now at 32 km (20 miles) with access to the upper portion of the
resource now achieved. Initial development indicates that the grade
and width of the vein are in line with previous drilling-derived
estimates, and preparation of the first production stope was
concluded during the three months ended September 30, 2020. A photo
gallery of current development progress at Juanicipio is available
at https://magsilver.com/projects/photo-gallery/#photo-gallery.
Initial production from the mine commenced
during the third quarter ahead of schedule, with 42,476 tonnes of
development material successfully processed through the Fresnillo
plant in August (21,126 tonnes) and September (21,350 tonnes) of
2020. The Joint Venture produced and sold 394 thousand silver
ounces, 610 gold ounces, 138 tonnes of lead and 174 tonnes of zinc
in the third quarter. Provisional sales (net of treatment charges)
of $9,525 less $1,530 in related mining and transportation costs,
netting $7,995 on a 100% basis, was credited against Juanicipio
capitalized costs in accordance with the Company’s pre-commercial
production accounting policy. The provisional sales and treatment
charges will be adjusted in the fourth quarter based on final assay
and pricing adjustments in accordance with the offtake
contracts.
By bringing forward the start-up of the mine and
by processing mineralized material early, MAG and Fresnillo expect
to secure several positive outcomes for the Juanicipio Project:
- generating cash-flow from
production to offset some of the cash requirements of the initial
project capital (provisional net $7,995 was generated on a 100%
basis in the third quarter of 2020);
- de-risking the flotation process
through a better understanding of the metallurgical characteristics
and response of the Juanicipio mineralization;
- increased certainty around the
geological block model prior to start-up of the processing plant;
and,
- allowing a quicker and more certain
ramp-up to the nameplate 4,000 tonnes per day plant design.
Mineralized material from the mine is expected
to be processed on commercial terms at a rate of 16,000 tonnes per
month at the Fresnillo plant facility (100% owned by Fresnillo)
until the Juanicipio plant is commissioned in mid-2021. Subsequent
to the quarter end, another 15,400 tonnes of material were
processed in October 2020.
The initial capital expenditure requirements for
the Juanicipio Project, as revised and announced by the joint
venture shareholders on February 24, 2020 (see Press Release as of
the same date) is estimated as of January 1, 2018 to be $440,000
(100% basis). This initial capital expenditure estimate does not
take into account the capital expenditures incurred since January
1, 2018 which total approximately $197,427 to September 30, 2020.
MAG therefore estimates the remaining initial capital expenditures
on a 100% basis for the Juanicipio Project to be approximately
$242,573 (MAG’s 44% share being $106,732 as at September 30, 2020)
This funding balance will be reduced by both existing cash held in
Minera Juanicipio as at September 30, 2020 ($14,417 on a 100%
basis), and by expected cash flows generated from mineralized
material sold and processed through the Fresnillo processing plant
at the rate of approximately 16,000 tonnes per month.
On the exploration front, most of the Juanicipio
property remains unexplored with many untested exploration targets
still to be pursued by the joint venture partners. After a
temporary halt in exploration activity in the prior quarter due to
COVID-19 restrictions, drilling on the property resumed in the
third quarter with five rigs currently on site. Drilling is
presently focused on continued step-out and infill drilling of the
Valdecañas Deep Zone. Holes are also being directed at the
Anticipada Vein and NE-trending Venadas Vein family targeting them
independently from the Valdecañas Vein. Despite the temporary
COVID-19 restrictions noted above, the full Juanicipio 2020
drilling program is expected to be completed as planned in
2020.
DEER TRAIL
PROJECT
During the quarter, MAG announced its Deer Trail
earn-in project in Utah, a silver-rich CRD target. With drill roads
completed and drill pads fully permitted, a 6,500-metre Phase I
surface drilling program commenced subsequent to the quarter end in
November 2020.
THE ATM PROGRAM
On September 8, 2020, the Company completed a
$50,000 at-the-market equity program (“the ATM Program”) which was
established on June 29, 2020. From June 30, 2020 to September 8,
2020, the Company sold and issued 3,092,783 common shares under the
ATM Program at an average price of $16.17 per share for gross
proceeds of $50,000. There is no remaining availability under the
ATM Program.
FINANCIAL RESULTS –
THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2020
As at September 30, 2020, MAG had working
capital of $137,814 (September 30, 2019: $94,895) including cash
and cash equivalents of $136,045 (September 30, 2019: $94,599) and
no long-term debt. As well, as at September 30, 2020 Minera
Juanicipio had cash of $14,417 (MAG’s attributable 44% share
$6,343).
The Company’s net loss for the three and nine
months ended September 30, 2020 amounted to $3,607 and $17,208
respectively or $(0.04)/share and $(0.19)/share respectively
(September 30, 2019: $2,005 and $3,408 or $(0.02)/share and
$(0.04)/share, respectively).
The Company recorded a deferred income tax
benefit of $1,229 for the three months ended September 30, 2020 and
a deferred income tax expense of $4,949 for the nine months ended
September 30, 2020 (September 30, 2019: $595 and $27 deferred
income tax expense, respectively). The deferred expense for the
nine months ended September 30, 2020 was driven primarily by the
non-cash devaluation of certain tax assets denominated in Mexican
Pesos, as the Mexican Peso devalued significantly against the US
dollar in the first six months of the year (from 18.87 Pesos/US$ on
December 31, 2019 to 22.36 on September 30, 2020).
Share-based payment expense (a non-cash item)
recorded in the three and nine months ended September 30, 2020
amounted to $554 and $2,262 respectively (September 30, 2019: $507
and $2,015 respectively) and is determined based on the fair value
of equity incentives granted and vesting in the period.
The Company recorded a 44% equity loss pick-up
of $3,392 and $6,890 respectively in the three and nine months
ended September 30, 2020 from Minera Juanicipio (September 30,
2019: $266 equity loss pick-up and $496 equity income pick-up
respectively). The equity loss pick-up from Minera Juanicipio
relates to the Company’s 44% share of a foreign exchange loss and a
deferred income tax expense, which was partially offset by interest
income earned within Minera Juanicipio.
Qualified Person:
All scientific or technical information in this
press release, including assay results and Mineral Resource
estimates, if applicable, is based upon information prepared by or
under the supervision of, or has been approved by Dr. Peter Megaw,
Ph.D., C.P.G., a Certified Professional Geologist who is a
“Qualified Person” for purposes of National Instrument 43-101,
Standards of Disclosure for Mineral Projects (“National Instrument
43-101” or “NI 43-101”). Dr. Megaw is not independent as he is an
officer and a paid consultant of MAG Silver.
About MAG Silver Corp.
MAG Silver Corp. is a Canadian advanced stage
development and exploration company focused on becoming a top-tier
primary silver mining company by exploring and advancing
high-grade, district scale, silver-dominant projects in the
Americas. Its principal focus and asset is the Juanicipio Project
(44%) being developed in a joint venture with Fresnillo (56%). The
Juanicipio Project is located in the Fresnillo Silver Trend in
Mexico, the world's premier silver mining camp. The Juanicipio
Joint Venture is currently constructing and developing the surface
and underground infrastructure on the property to support a 4,000
tonnes per day mining operation, with the operational expertise of
Fresnillo, the project operator. As well, an exploration program is
in place at Juanicipio on multiple highly prospective targets.
For further information on behalf of MAG Silver Corp. Contact
Michael J. Curlook, VP Investor Relations and
Communications |
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Phone:Toll Free: |
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(604) 630-1399(866) 630-1399 |
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Website:Email: |
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www.magsilver.cominfo@magsilver.com |
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Neither the Toronto Stock Exchange nor the NYSE American has
reviewed or accepted responsibility for the accuracy or adequacy of
this press release, which has been prepared by management.
This release includes certain statements that
may be deemed to be “forward-looking statements” within the meaning
of the US Private Securities Litigation Reform Act of 1995. All
statements in this release, other than statements of historical
facts are forward looking statements, including statements that
address future mineral production, reserve potential,
exploration drilling, exploitation activities and events or
developments. Forward-looking statements are often, but not always,
identified by the use of words such as "seek", "anticipate",
"plan", "continue", "estimate", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"should", "believe" and similar expressions. These statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking statements.
Although MAG believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in the
forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements
include, but are not limited to, changes in
commodities prices, changes in mineral
production performance, exploitation and exploration
successes, continued availability of capital and financing, and
general economic, market or business conditions; the use of the net
proceeds from the private placement is subject to change; political
risk, currency risk and capital cost inflation. In addition,
forward-looking statements are subject to various risks, including
that data is incomplete and considerable additional work will be
required to complete further evaluation, including but not limited
to drilling, engineering and socio-economic studies and
investment. The reader is referred to the MAG Silver’s filings
with the SEC and Canadian securities regulators for disclosure
regarding these and other risk factors. There is no certainty that
any forward-looking statement will come to pass and investors
should not place undue reliance upon forward-looking
statements.
Please Note: Investors are urged to consider
closely the disclosures in MAG's annual and
quarterly reports and other public filings, accessible through
the Internet at www.sedar.com and www.sec.gov
LEI: 254900LGL904N7F3EL14
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