MAG Silver Corp. (TSX / NYSE American: MAG)
(“MAG”, or the
“Company”) announces the
Company’s unaudited financial results for the three months ended
September 30, 2023. 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, 2023,
please see the Company’s filings on SEDAR+ (www.sedarplus.ca) or on
EDGAR (www.sec.gov).
All amounts herein are reported in $000s
of United States dollars (“US$”) unless otherwise specified (C$
refers to Canadian dollars).
KEY HIGHLIGHTS (on a 100% basis unless
otherwise noted)
- Following a successful
commissioning and ramp-up period, the Juanicipio processing
facility has achieved nameplate capacity during September 2023 with
silver recovery consistently above 88% marking a step change in
performance relative to the comparative quarter and a successful
transition to a fully independent producer.
- A total of 322,249 and 921,990
tonnes of mineralized material were processed across the Juanicipio
and Saucito plants during the three and nine months ended September
30, 2023, respectively. 92% of all material processed in Q3 was
processed through the Juanicipio plant.
- Average head grade for the three
and nine months ended September 30, 2023 was 523 and 474 grams per
tonne (“g/t”), yielding silver production of 4.78 million and 12.29
million ounces, respectively.
- Juanicipio delivered robust cost
performance with cash cost1 of $4.68 per silver ounce sold and
all-in sustaining cost1 of $9.19 per silver ounce sold in Q3.
- Juanicipio generated strong
operating cash flow of $57,346 and free cash flow1 of $40,649 in
Q3.
- At the end of the quarter,
Juanicipio held cash balances of $23,434, representing an increase
of $14,895 over the second quarter, mainly as a result of strong
operating cash flows driven by the mine reaching its intended
production levels.
__________________1 Total cash costs, cash cost per ounce,
all-in sustaining costs, all-in sustaining cost per ounce and free
cash flow are non-IFRS measures, please refer to “Non-IFRS
Measures” section of the Q3 2023 MD&A for a detailed
reconciliation of these measures to the Q3 2023 Financial
Statements.
- Juanicipio returned a total of
$11,295 in interest and loan principal repayments to MAG during
Q3.
- MAG concluded a $40,000 senior
secured revolving Credit Facility with the Bank of Montreal on
October 4, 2023.
- As Juanicipio ramped up its
operations and transitioned to full capacity, there was a
progressive reduction of Juanicipio’s reliance on the nearby
Fresnillo and Saucito plants (100% owned by Fresnillo). Notably, no
feed was supplied to these plants in both August and September.
This transition had a direct impact on total milling and,
consequently, overall production for the quarter. Positively, this
was partially offset by higher grade feed and continued efforts to
optimize the Juanicipio plant as it ramped up to full
capacity.
- Effective June 20, 2023, MAG was
included in the NYSE Arca Gold Miners Index which is tracked by the
VanEck Vectors Gold Miners ETF.
- MAG reported net income of $8,862
($0.09 per share) and Adjusted EBITDA1 of $29,920 for the three
months ended September 30, 2023.
__________________
1 Adjusted EBITDA is a non-IFRS measure, please refer to
“Non-IFRS Measures” section of the Q3 2023 MD&A for a detailed
reconciliation of this measure to the Q3 2023 Financial
Statements.
CORPORATE
- In September the Company published
its second annual Sustainability Report underscoring its commitment
to transparency with its stakeholders while providing a
comprehensive overview of the Company’s environmental, social and
governance (“ESG”) commitments, practices and performance for the
2022 year. The 2022 Sustainability report is supported by the MAG
Silver 2022 ESG Data Table which discloses MAG’s historical ESG
performance data. MAG’s 2022 Sustainability report and ESG Data
Table are available on the Company’s website at
https://magsilver.com/esg/reports/.
EXPLORATION
-
Juanicipio:
- Infill drilling at Juanicipio
continued in Q3 2023, with one rig on surface and one underground
with the goal of upgrading and expanding the Valdecañas Vein system
at depth and further defining areas to be mined in the near to mid
term. During the quarter, 3,349 metres (nine months ended September
30, 2023, 13,273 metres) and 4,874 metres, (nine months ended
September 30, 2023, 15,329 metres) were drilled from surface and
underground respectively. The 2023 surface drilling program was
completed during Q3 with results pending.
-
Deer Trail Project, Utah:
-
Results from the 12,157 metres in surface-based Phase 2 drilling on
the Deer Trail Carbonate Replacement Deposit (“CRD”) project were
reported on January 17 and August 3, 2023 (see News Releases under
the Company’s SEDAR+ profile at www.sedarplus.ca)
-
On May 29, 2023 MAG started a Phase 3 drilling program focused on
up to three porphyry “hub” targets thought to be the source of the
manto, skarn and epithermal mineralization and extensive alteration
throughout the project area including that at Deer Trail and
Carissa. During Q3 2023, 1,994 metres were drilled at high
elevation with results pending. An early onset of winter snowfall
impacted the commencement of the third porphyry “hub” target which
will be drilled next season and drilling has shifted to offset the
Carissa discovery and test other high-potential targets.
-
Larder Project, Ontario:
- After completing the 2023 initial
drilling campaign, the geological team embarked on a comprehensive
property-wide data re-evaluation which included review of all
historic drilling, selective relogging, re-assaying all available
pulps with 4-acid digestion, additional geophysics, field mapping
and sampling. These datasets were used to build a unified project
model which will be systematically reinterpreted with additional
information from future drill programs. Multiple well-defined
high-priority drill targets are currently being tested by multiple
rigs which are expected be turning over the next eighteen
months.
- On July 12, 2023 drilling resumed
at the Larder Project to test additional targets by the end of the
year on the Cheminis and Bear areas. During Q3 2023 4,594 metres
were drilled at Cheminis. A minimum of 17,000 metres of drilling is
planned.
JUANICIPIO RESULTS
All results of Juanicipio in this section are on
a 100% basis, unless otherwise noted.
Operating Performance
The following tables and subsequent discussion provide a summary of the operating
performance of Juanicipio for the three months
ended September 30, 2023 and 2022, unless otherwise noted.
|
|
Key mine performance data of Juanicipio (100%
basis) |
Three months ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
|
|
|
Metres developed (m) |
4,105 |
|
3,276 |
|
|
|
|
Material mined (t) |
313,139 |
|
225,385 |
|
Material processed (t) |
322,249 |
|
180,808 |
|
|
|
|
Silver head grade (g/t) |
523 |
|
513 |
|
Gold head grade (g/t) |
1.32 |
|
1.22 |
|
Lead head grade (%) |
1.33 |
% |
0.93 |
% |
Zinc head grade (%) |
2.25 |
% |
1.81 |
% |
|
|
|
Silver payable ounces (koz) |
4,289 |
|
2,425 |
|
Gold payable ounces (koz) |
7.76 |
|
4.90 |
|
Lead payable pounds (klb) |
7,690 |
|
2,969 |
|
Zinc payable pounds (klb) |
9,595 |
|
4,494 |
|
|
During the three months ended September
30, 2023 a total of 313,139 tonnes of mineralized material were
mined. This represents an increase of 39% over Q3 2022. Increase in
mined tonnages at Juanicipio has been driven by the operational
ramp up of the milling facility.
The average silver head grade for the
mineralized material processed in the three months ended September
30, 2023 was 523 g/t (three months ended September 30, 2022: 513
g/t).
During the three months ended September 30, 2023
a total of 322,249 tonnes of mineralized material were processed
through the Juanicipio and Saucito plants. This represents an
increase of 78% over Q3 2022. The increase in milled tonnage has
been driven by the Juanicipio mill commissioning and operational
ramp up. As reported by the operator, Fresnillo, the Juanicipio
processing facility has achieved nameplate capacity of 4,000 tpd
during September 2023 with silver recovery consistently above 88%.
During Q3 2023, 92% of all material was processed through the
Juanicipio processing facility.
Mineralized Material Processed at
Juanicipio and Saucito Plants (100% basis)
Three Months Ended September 30, 2023 (322,249 tonnes
processed) |
Q3 2022Amount$ |
|
Payable Metals |
Quantity |
Average Price$ |
Amount$ |
|
|
Silver |
4,288,747 ounces |
23.51 per oz |
100,841 |
|
44,518 |
|
Gold |
7,761 ounces |
1,911.99 per oz |
14,839 |
|
8,219 |
|
Lead |
3,448 tonnes |
1.00 per lb. |
7,571 |
|
2,578 |
|
Zinc |
4,352 tonnes |
1.15 per lb. |
11,005 |
|
6,511 |
|
Treatment, refining, and other processing costs |
(9,211 |
) |
(12,111 |
) |
Net Revenue |
125,046 |
|
49,715 |
|
Production cost |
(43,782 |
) |
(18,127 |
) |
Depreciation and amortization (1) |
(21,646 |
) |
(6,376 |
) |
Gross Profit |
59,618 |
|
25,212 |
|
(1) The underground mine was considered readied
for its intended use on January 1, 2022, whereas the Juanicipio
processing facility started commissioning and ramp-up activities in
January 2023, achieving commercial production status on June 1,
2023.
Sales and treatment charges are recorded on a
provisional basis and are adjusted based on final assay and pricing
adjustments in accordance with the offtake contracts.
The following table provides a summary of the total
cash costs1 and all-in sustaining costs1 (“AISC”) of Juanicipio for
the three months ended September 30, 2023, and 2022.
Key mine performance data of Juanicipio (100%
basis) |
Three months ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
|
|
|
Total operating cash costs (1) |
18,432 |
|
13,987 |
|
Operating cash cost per silver ounce sold ($/oz) |
4.30 |
|
5.77 |
|
|
|
|
Total cash costs (1) |
20,067 |
|
14,050 |
|
Cash cost per silver ounce sold ($/oz) |
4.68 |
|
5.79 |
|
|
|
|
All-in sustaining costs (1) |
39,411 |
|
23,281 |
|
All-in sustaining cost per silver ounce sold ($/oz) |
9.19 |
|
9.60 |
|
_______________________
1 Total operating cash costs, operating cash cost per
ounce, total cash costs, cash cost per ounce, all-in sustaining
costs, and all-in sustaining cost per ounce are non-IFRS measures,
please refer to “Non-IFRS Measures” section of the Q3 2023 MD&A
for a detailed reconciliation of these measures to the Q3 2023
Financial Statements.
Financial Results
The following table presents excerpts of the financial results of Juanicipio
for the three months ended September 30, 2023 and 2022 (MAG’s share
of income from its equity accounted Investment in
Juanicipio).
|
|
|
Three months ended |
|
|
September 30, |
|
September 30, |
|
|
2023 |
|
2022 |
|
|
$ |
|
$ |
|
Sales |
125,046 |
|
49,715 |
|
Cost of sales: |
|
|
Production cost |
(43,782 |
) |
(18,127 |
) |
Depreciation and amortization |
(21,646 |
) |
(6,376 |
) |
Gross profit |
59,618 |
|
25,212 |
|
Consulting and administrative expenses |
(3,458 |
) |
(1,192 |
) |
Extraordinary mining and other duties |
(1,635 |
) |
(64 |
) |
Interest expenses |
(5,214 |
) |
(369 |
) |
Exchange gains (losses) and other |
420 |
|
1,953 |
|
Net income before tax |
49,731 |
|
25,540 |
|
Income tax (expense) benefit |
(23,824 |
) |
825 |
|
Net income (100% basis) |
25,907 |
|
26,365 |
|
MAG’s 44% portion of net income |
11,399 |
|
11,601 |
|
Interest on Juanicipio loans - MAG's 44% |
2,293 |
|
180 |
|
MAG’s 44% equity income |
13,692 |
|
11,781 |
|
Sales increased by $75,331 during the three
months ended September 30, 2023, mainly due to 76% higher metal
volumes and 28% higher realized metal prices.
Offsetting higher sales was higher depreciation
($15,270) as Juanicipio achieved commercial production and
commenced depreciating the processing facility and associated
equipment, and higher production cost ($25,654) which was driven by
higher sales and operational ramp up in mining and processing,
including $7,700 in inventory movements.
Other expenses increased by $10,218 mainly as a
result of higher extraordinary mining and other duties ($1,571) in
relation to higher precious metal revenues from the sale of
concentrates, higher consulting and administrative expenses
($2,266) as an operator services agreement became effective upon
initiation of commercial production whereby Fresnillo and its
affiliates continue to operate the mine (the “Operator Services
Agreement”), and higher interest incurred on shareholder loans
($4,845) which were completely expensed during Q3 2023, whereas
being only partly expensed with the rest capitalised to
construction in progress in Q3 2022.
Taxes increased by $24,648 impacted by deferred
tax charges associated with fixed assets as well as higher taxable
profits generated during the period.
MAG FINANCIAL RESULTS – THREE MONTHS
ENDED SEPTEMBER 30, 2023
As at September 30, 2023, MAG had working
capital of $55,088 (December 31, 2022: $29,232) including cash of
$58,519 (December 31, 2022: $29,955) and no long-term debt. As
well, as at September 30, 2023, Juanicipio had working capital of
$99,556 including cash of $23,434 (MAG’s attributable share is
44%).
The Company’s net income for the three months
ended September 30, 2023 amounted to $8,862 (September 30, 2022:
$8,227) or $0.09/share (September 30, 2022: $0.08/share). MAG
recorded its 44% income from equity accounted investment in
Juanicipio of $13,692 (September 30, 2022: $11,781) which included
MAG’s 44% share of net income from operations as well as loan
interest earned on loans advanced to Juanicipio (see above for
MAG’s share of income from its equity accounted Investment in
Juanicipio).
|
|
|
|
|
|
|
For the three months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
Income from equity accounted investment in Juanicipio |
|
13,692 |
|
|
11,781 |
|
General and administrative expenses |
|
(4,094 |
) |
|
(3,003 |
) |
General exploration and business development |
|
(468 |
) |
|
(20 |
) |
Exploration and evaluation assets written down |
|
- |
|
|
- |
|
Operating income |
|
9,130 |
|
|
8,758 |
|
|
|
|
|
|
Interest income |
|
663 |
|
|
216 |
|
Other income |
|
269 |
|
|
- |
|
Foreign exchange loss |
|
(192 |
) |
|
(199 |
) |
Income before income tax |
|
9,870 |
|
|
8,775 |
|
|
|
|
|
|
Deferred income tax expense |
|
(1,008 |
) |
|
(548 |
) |
Net income |
|
8,862 |
|
|
8,227 |
|
|
|
|
|
|
Qualified Person: All
scientific or technical information in this press release including
assay results referred to, 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.
About MAG Silver Corp.
(www.magsilver.com)
MAG Silver Corp. is a growth-oriented Canadian
exploration company focused on advancing high-grade, district scale
precious metals projects in the Americas. MAG is emerging as a
top-tier primary silver mining company through its (44%) joint
venture interest in the 4,000 tonnes per day Juanicipio Mine,
operated by Fresnillo plc (56%). The mine is located in the
Fresnillo Silver Trend in Mexico, the world's premier silver mining
camp, where in addition to underground mine production and
processing of high-grade mineralised material, an expanded
exploration program is in place targeting multiple highly
prospective targets. MAG is also executing multi-phase exploration
programs at the Deer Trail 100% earn-in Project in Utah and the
100% owned Larder Project, located in the historically prolific
Abitibi region of Canada.
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.
Certain information contained in this release,
including any information relating to MAG’s future oriented
financial information, are “forward-looking information” and
“forward-looking statements” within the meaning of applicable
Canadian and United States securities legislation (collectively
herein referred as “forward-looking statements”), including the
“safe harbour” provisions of provincial securities legislation, the
U.S. Private Securities Litigation Reform Act of 1995, Section 21E
of the U.S. Securities Exchange Act of 1934, as amended and Section
27A of the U.S. Securities Act. Such forward-looking statements
include, but are not limited to:
- statements that address achieving
the nameplate 4,000 tpd milling rate at Juanicipio;
- statements that address our
expectations regarding exploration and drilling;
- statements regarding production
expectations and nameplate;
- statements regarding the additional
information from future drill programs;
- estimated future exploration and
development operations and corresponding expenditures and other
expenses for specific operations;
- the expected capital, sustaining
capital and working capital requirements at Juanicipio, including
the potential for additional cash calls;
- expected upside from additional
exploration;
- expected results from Deer Trail
Project Phase 3 drilling;
- expected capital requirements and
sources of funding; and
- other future events or
developments.
When used in this release, any statements that
express or involve discussions with respect to predictions,
beliefs, plans, projections, objectives, assumptions or future
events of performance (often but not always using words or phrases
such as “anticipate”, “believe”, “estimate”, “expect”, “intend”,
“plan”, “strategy”, “goals”, “objectives”, “project”, “potential”
or variations thereof or stating that certain actions, events, or
results “may”, “could”, “would”, “might” or “will” be taken, occur
or be achieved, or the negative of any of these terms and similar
expressions), as they relate to the Company or management, are
intended to identify forward-looking statements. Such statements
reflect the Company’s current views with respect to future events
and are subject to certain known and unknown risks, uncertainties
and assumptions.
Forward-looking statements are necessarily based
upon estimates and assumptions, which are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company’s control and
many of which, regarding future business decisions, are subject to
change. Assumptions underlying the Company’s expectations regarding
forward-looking statements contained in this release include, among
others: MAG’s ability to carry on its various exploration and
development activities including project development timelines, the
timely receipt of required approvals and permits, the price of the
minerals produced, the costs of operating, exploration and
development expenditures, the impact on operations of the Mexican
tax regime, MAG’s ability to obtain adequate financing, outbreaks
or threat of an outbreak of a virus or other contagions or epidemic
disease will be adequately responded to locally, nationally,
regionally and internationally.
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. These
forward-looking statements involve known and unknown risks,
uncertainties and many factors could cause actual results,
performance or achievements to be materially different from any
future results, performance or achievements that may be expressed
or implied by such forward-looking statements including amongst
others: commodities prices; changes in expected
mineral production performance; unexpected increases in
capital costs or cost overruns; exploitation and exploration
results; continued availability of capital and financing; general
economic, market or business conditions; risks relating to the
Company’s business operations; risks relating to the financing of
the Company’s business operations; risks related to the Company’s
ability to comply with restrictive covenants and maintain financial
covenants pursuant to the terms of the Credit Facility; the
expected use of the Credit Facility; risks relating to the
development of Juanicipio and the minority interest investment in
the same; risks relating to the Company’s property titles; risks
related to receipt of required regulatory approvals; pandemic
risks; supply chain constraints and general costs escalation in the
current inflationary environment heightened by the invasion of
Ukraine by Russia and the events relating to the Israel-Hamas war;
risks relating to the Company’s financial and other instruments;
operational risk; environmental risk; political risk; currency
risk; market risk; capital cost inflation risk; risk relating to
construction delays; the risk that data is incomplete or
inaccurate; the risks relating to the limitations and assumptions
within drilling, engineering and socio-economic studies relied upon
in preparing economic assessments and estimates, including the 2017
PEA; as well as those risks more particularly described under the
heading “Risk Factors” in the Company’s Annual Information Form
dated March 27, 2023 available under the Company’s profile on
SEDAR+ at www.sedarplus.ca.
Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
herein. This list is not exhaustive of the factors that may affect
any of the Company’s forward-looking statements. The Company’s
forward-looking statements are based on the beliefs, expectations
and opinions of management on the date the statements are made and,
other than as required by applicable securities laws, the Company
does not assume any obligation to update forward-looking statements
if circumstances or management’s beliefs, expectations or opinions
should change. For the reasons set forth above, investors should
not attribute undue certainty to or place undue reliance on
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, Vice President, Investor Relations and Communications
Phone: (604) 630-1399
Website: www.magsilver.com
Toll Free: (866) 630-1399
Email: info@magsilver.com
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