MAG Silver Corp. (TSX / NYSE American: MAG) (“MAG”
or the
“Company”) announces the Company’s audited
consolidated financial results for the year ended December 31,
2020. For details of the audited consolidated financial statements,
Management's Discussion and Analysis, Annual Information Form and
Annual Report on Form 40-F for the year ended December 31, 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 – DECEMBER 31, 2020 AND
SUBSEQUENT TO YEAR END
OPERATIONAL
-
Processing of mineralized material from development headings
through the nearby Fresnillo plant was a new initiative at
Juanicipio implemented in August 2020.
-
During the period from August through December 2020, on a 100%
basis:
- 71,859 tonnes of
mineralized material with a head grade of 328 grams per tonne
(“g/t”) were processed through the Fresnillo plant, with 616,341
payable silver ounces, 1,029 payable gold ounces, 163 tonnes of
lead and 224 tonnes of zinc produced and sold.
- Significantly faster ramp-up
expected than previously guided due to the de-risking of
Juanicipio’s metallurgical performance by virtue of batch
processing the mineralized material through the Fresnillo
plant.
-
Pre-commercial production sales of $15,335 (net of treatment and
processing costs) on a 100% basis less $3,873 in mining and
transportation costs, netting $11,462 that was recorded as gross
profit by the Juanicipio Joint Venture for the period August
through December 2020.
-
Construction of the 4,000 tonne per day (“tpd”) Juanicipio plant
continues to advance, with the plant foundations completed, and
with fabrication for the plant in process. SAG and ball mills,
flotation cells, all associated vessels, thickeners and ancillary
process equipment are now secured on site. The lead and zinc
flotation cell lines have been installed and are now being
connected to the hydraulic circuit.
-
Underground development at Juanicipio now exceeds 35 km (22 miles)
with preparation of the first production stope concluded during the
third quarter of 2020.
-
Juanicipio capex is estimated at $440,000 (100% basis) as of
January 1, 2018, less approximately $228,000 in development
expenditures incurred from then to December 31, 2020 leaving
approximately $212,000 of remaining initial capital on a 100% basis
(MAG’s 44% estimated at $93,280) as at December 31, 2020. The cash
required will be reduced by:
- Existing cash held in Minera
Juanicipio as at December 31, 2020 ($51,503 on a 100% basis);
and,
- Expected cashflow generated from
mineralized material being processed through the Fresnillo plant up
until the Juanicipio plant commences commissioning in Q4-2021.
-
As reported by the operator Fresnillo, the Juanicipio plant is now
expected to commence commissioning in Q4-2021, reaching 40 to 50%
of its 4,000 tpd nameplate capacity by the end of 2021 and reaching
90 to 95% of its nameplate capacity in 2022.
-
A further 24,680 tonnes with a silver head grade of 498 g/t (52%
higher head grade than material processed in 2020) were processed
in January and February 2021.
-
Mineralized material from development will continue to be batch
processed on commercial terms at a targeted rate of 16,000 tonnes
per month at the nearby Fresnillo plant until the Juanicipio plant
is commissioned.
EXPLORATION
-
Assays from a 33,864 metre, 28-hole 2019 exploration program were
released March 3, 2020 (see Press Release of same date), with the
following highlights:
- Confirmed and expanded the
continuous wide, high-grade mineralization in the Valdecañas Deep
Zone;
- Confirmed and expanded the wide,
high-grade zones in the Anticipada Vein;
- Confirmed and expanded the Venadas
vein to the south with strong silver and gold grades; and
- Discovered the new
northeast-trending Valentina and Venadas II veins through drilling
and development.
- After temporary COVID-19
restrictions established by the Mexican Government were lifted late
in the second quarter, drilling resumed in the third quarter and
the full Juanicipio 2020 exploration program was completed as
planned in 2020 (all assays pending).
-
Deer Trail Project in Utah was announced in September 2020, a
silver-rich Carbonate Replacement Deposit (“CRD”) target with
potential for a related Copper-Molybdenum Porphyry. Phase I
drilling commenced in November, 2020 and continues in process
(assays and interpretations pending).
COVID-19
-
Mexican Government’s national COVID-19 Order announced in April
2020 resulted in a temporary suspension through May 30, 2020 of
surface exploration and construction work at the Juanicipio Project
and reduced underground operations.
-
Phased Juanicipio Project restart commenced June 1, 2020.
-
Subsequent to the year end, Fresnillo, as operator, reported that
commissioning of the Juanicipio processing plant is now expected to
commence in Q4-2021, a few months later than previously reported as
some infrastructure contracts were delayed due to COVID-19 and
COVID-19-related preventive measures implemented at site.
-
Juanicipio operator, Fresnillo, has implemented a range of safety
measures and monitoring procedures, consistent with the World
Health Organization and Mexican Government COVID-19
directives.
LIQUIDITY AND CAPITAL
RESOURCES
- On April 30, 2020, the Company
closed a non-brokered private placement and issued 4,528,302 common
shares at C$13.25 for gross proceeds of C$60,000,002 ($43,134) to
Mr. Eric Sprott, through 2176423 Ontario Ltd., a corporation
beneficially controlled by him.
-
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.
-
As at December 31, 2020, MAG held cash and cash equivalents of
$94,008 while Minera Juanicipio had cash on hand on a 100% basis of
$51,503.
CORPORATE
-
Company continues to refresh its board, with the appointment of
three new directors since the beginning of 2020:
-
Appointed Selma Lussenburg on February 1, 2020. Ms. Lussenburg is a
business executive, former general counsel, corporate secretary and
current board director with over 35 years of business experience.
She has held various senior level positions encompassing a broad
range of legal, governance, compliance, pension, safety &
security and operational responsibilities.
-
Appointed Susan Mathieu on January 14, 2021. Ms. Mathieu has more
than twenty-five years of international mining experience
encompassing due diligence, exploration, project development,
permitting, construction and operational positions. Her mining
experience covers the full spectrum from mine-site to corporate
leadership roles in governance, environment, sustainability,
community, health and safety, compliance and risk management
programs and strategies.
-
Appointed Tim Baker on March 31, 2021. Mr. Baker has substantial
experience in operating international mines and projects. He was
Executive Vice President and Chief Operating Officer of Kinross
Gold Corporation prior to retiring in 2010. Prior to joining
Kinross, he was with Placer Dome, where he held several key roles
including Executive General Manager of Placer Dome Chile, Executive
General Manager of Placer Dome Tanzania and Senior Vice President
of the copper producing Compañia Minera Zaldivar.
JUANICIPIO PROJECT UPDATE
Underground Mine Production
The first processing of development material
commenced in early August 2020. In total, 71,859 tonnes of
mineralized material that had been previously stockpiled plus
mineralized material from on-going underground development, were
processed from August through December 2020. The average silver
head grade from this development material was 328 g/t. Total
underground mine production and sales, on a 100% basis, was 616,341
payable silver ounces, 1,029 payable gold ounces, 163 tonnes of
lead and 224 tonnes of zinc. Sales, net of processing and treatment
costs totaled $15,335, and further costs incurred (including an
applied mining cost and transportation costs) totaled $3,873 for a
gross profit of $11,462 (see Table 1 below).
Table 1: August – December, 2020
Development Material Processed at Fresnillo’s Processing Plant
(100% basis)
|
Quantity |
Average Per unit |
Amount |
Silver (oz)(per oz) |
616,341 ounces |
$25.00 |
$15,403 |
Gold (oz)(per oz) |
1,029 ounces |
$1,887.00 |
$1,941 |
Lead (tonnes)(per lb) |
163 tonnes |
$0.84 |
$301 |
Zinc (tonnes)(per lb) |
224 tonnes |
$1.17 |
$575 |
Treatment and refining charges (“TCRC”) and other processing
costs |
$(2,885) |
Net Sales Revenue to be received |
$15,335 |
Mining costs and transportation |
$(3,873) |
Gross Profit |
$11,462 |
By bringing forward the start-up of the mine and
processing mineralized material at the Fresnillo plant in advance
of commissioning the Juanicipio plant, 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;
- 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.
Processing Plant Construction and
Commissioning
Construction of the 4,000 tpd Juanicipio plant
continues to advance, with the plant foundations completed and with
fabrication for the plant in process. SAG and ball mills, flotation
cells, all associated vessels, thickeners and ancillary process
equipment are now secured on site. The lead and zinc flotation cell
lines have been installed and are now being connected to the
hydraulic circuit.
In the first quarter of 2020, Fresnillo and MAG
jointly announced an update to the initial capex required for the
project (see Press Release dated February 24, 2020). The capex or
pre-operative project capital cost on a 100% basis of $395,000 as
estimated from January 1, 2018 (see Press Release dated April 11,
2019) was revised to $440,000 from January 1, 2018, to reflect
additional expenditures incurred by Minera Juanicipio on the
underground development and bringing forward the full construction
costs for the life-of-mine ventilation shafts, as well as some
sustaining capital to facilitate the early underground mine
start.
The initial capital already expended from
January 1, 2018 to December 31, 2020 is approximately $228,000
leaving an estimated $212,000 of remaining initial capital (MAG’s
44% estimated remaining share is $93,280 as at December 31, 2020).
This remaining funding requirement will be reduced by both:
existing cash held in Minera Juanicipio as at December 31, 2020
($51,503 on a 100% basis); and, expected cash flows generated from
mineralized material processed at an average nominal rate of 16,000
tonnes per month through the Fresnillo processing plant until the
Juanicipio plant is commissioned
Subsequent to the year end, Fresnillo, as
operator reported that commissioning of the Juanicipio processing
plant is now expected to commence in Q4-2021, a few months later
than previously reported as some infrastructure contracts were
delayed due to COVID-19 related restrictions and preventive
measures implemented at site. The Juanicipio plant is now expected
to reach 40 to 50% of nameplate capacity by the end of 2021 and
90-95% in 2022. In the 2017 PEA, ramp-up to full production was
originally envisioned over 3 years after commissioning of the
processing plant.
A regularly updated photo gallery of current
construction progress at Juanicipio is available at
https://magsilver.com/projects/photo-gallery/#photo-gallery.
“As we see great progress on the mechanical
installation of the process plant at Juanicipio, the underground
mine continues to provide high grade mineralization for treatment
at the Fresnillo plant whilst underground production stopes are
being configured for higher tonnage later in the year for plant
start up” said George Paspalas, President and CEO. “Exploration
remains a focus at the Joint Venture as well, and we are looking
forward to moving out on the property to test some greenfield
targets in addition to Valdecañas. The Phase 1 drilling at Deer
Trail is continuing and we are excited about what this may reveal
regarding our geological exploration model.”
COVID-19
As noted, according to the operator Fresnillo,
the commissioning timetable was deferred a few months to Q4-2021 as
some infrastructure contracts were delayed due to COVID-19 related
restrictions as well as preventive measures put into place. The
further impact of this pandemic could create or include significant
COVID-19 specific costs, volatility in the prices for silver and
other metals, further restrictions or temporary closures,
additional travel constraints, supply chain disruptions and
workforce interruptions, including loss of life. Depending on the
duration and extent of the impact of COVID-19, this could
materially impact the Company’s financial performance, cash flows
and financial position, and could result in material changes to the
costs and time for the completion of development at Juanicipio. The
total amount that the Company is required to finance in order to
maintain its proportionate ownership in the project may increase
from these and other consequences of the COVID-19 outbreak.
DEER TRAIL PROJECT UPDATE
With drill roads completed and drill pads fully
permitted, the 6,500-metre Phase I surface drilling program
commenced in November 2020 and is currently in process,
approximately 50% complete with all assays pending. The Phase I
drilling priorities include: determining the depth to the thick
section of high-potential limestone host formations known
regionally to lie just below the comparatively unfavorable host
rocks of the Deer Trail mine; tracing the known steeply-dipping
feeder structures to depth into these limestones; and, locating
massive sulfide mineralization controlled by the above.
Qualified Person: Dr. Peter
Megaw, Ph.D., C.P.G., has acted as the Qualified Person as defined
in National Instrument 43-101 for this disclosure and supervised
the preparation of the technical information in this release. Dr.
Megaw has a Ph.D. in geology and more than 38 years of relevant
experience focused on ore deposit exploration worldwide. He is a
Certified Professional Geologist (CPG 10227) by the American
Institute of Professional Geologists and an Arizona Registered
Geologist (ARG 21613). Dr. Megaw is not independent as he is Chief
Exploration Officer and a Shareholder of MAG.
FINANCIAL RESULTS – YEAR ENDED DECEMBER
31, 2020
As at December 31, 2020, the Company had working
capital of $94,513 (December 31, 2019: $71,858) including cash and
cash equivalents of $94,008 (December 31, 2019: $72,360) and no
long-term debt. The Company makes cash advances to Minera
Juanicipio as ‘cash called’ by the operator Fresnillo, based on
approved joint venture budgets. In the year ended December 31,
2020, the Company funded advances to Minera Juanicipio, which
combined with MAG’s Juanicipio expenditures on its own account,
totaled $64,280 (December 31, 2019: $53,545).
The Company’s net loss for year the ended
December 31, 2020 amounted to $7,097 (December 31, 2019: $4,426 net
loss) or $(0.08)/share (December 31, 2019: $(0.05)/share). MAG
recorded a 44% equity income pick-up of $2,214 (December 31, 2019:
$1,886) from Minera Juanicipio which included MAG’s 44% share of
net income from the sale of pre-production development material
(see Table 2 below). Share based payment expense,
a non-cash item, recorded in the year ended December 31, 2020
amounted to $3,122 (December 31, 2019: $2,572), and is determined
based on the fair value of equity incentives granted and vesting in
the year.
Table 2: MAG’s equity pick-up from
Minera Juanicipio
|
December 31,2020 |
December 31,2019 |
Gross Profit from processing development
material (see Underground Mine Production –
Juanicipio Project above) |
$11,462 |
Nil |
Administrative and selling expenses |
$(315) |
Nil |
Interest and foreign exchange loss |
$(623) |
$946 |
Net Income before tax |
$10,524 |
$946 |
Income tax (expense) benefit (including deferred income
tax) |
$(5,492) |
$3,337 |
Net Income for the year (100% basis) |
$ 5,032 |
$4,283 |
MAG’s 44% equity pick-up |
$ 2,214 |
$1,884 |
Shareholders may receive, upon request and free
of charge, a hard copy of the Company’s Audited Financial
Statements. The Company’s 40-F has also been filed with the United
States Securities and Exchange Commission.
About MAG Silver Corp.
(www.magsilver.com)
MAG Silver Corp. (MAG: TSX / NYSE A) is a
Canadian 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 partnership with
Fresnillo Plc (56%), the Operator. Juanicipio is located in the
Fresnillo Silver Trend in Mexico, the world's premier silver mining
camp, and the Joint Venture is currently developing an underground
mine and constructing a 4,000 tonnes per day processing plant which
is expected to commence commissioning in Q4-2021. Underground mine
production of development material commenced in Q3-2020. As well,
MAG has an expanded exploration program in place, targeting
multiple highly prospective targets both at the Juanicipio Joint
Venture and at the Deer Trail 100% earn-in project in Utah.
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, 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 Company’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
For further information on behalf of MAG Silver Corp.
Contact Michael J. Curlook, VP Investor Relations and Communications
Phone: (604) 630-1399
Toll Free: (866) 630-1399
Website: www.magsilver.com
Email: info@magsilver.com
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