MAG Silver Corp. (TSX:MAG) (NYSE AMERICAN:MAG)
(
“MAG” or the
“Company”)
announces the Company’s unaudited financial results for the three
and nine months ended September 30, 2017. For details of the
September 30, 2017 unaudited condensed interim consolidated
Financial Statements and Management's Discussion and Analysis,
please see the Company’s filings on SEDAR (www.sedar.com) or on
EDGAR (www.sec.gov).
All amounts herein are reported in
thousands of United States dollars (“US$”) unless
otherwise specified.
2017 THIRD QUARTER
HIGHLIGHTS
- New expanded Juanicipio Resource Estimate and robust 2017
PEA(1) announced subsequent to the quarter end (see press release
November 7, 2017) with Base Case (2) highlights (100% basis) as
follows:
- Process plant ramp up to a throughput rate of 1.4 million
tonnes/year (4,000 tpd(1));
- LOM(1) payable production of 183 million ounces of silver, and
on a silver equivalent basis 352 million ounces(2)
- Low LOM AISC(1) of $5.02/ounce of silver over an initial 19
years of mine-life;
- Base case pre-tax IRR(1) 64.5%; after tax IRR 44.5%;
- Base case pre-tax NPV(1) at a 5% discount rate of $1.86
billion; after tax NPV of $1.14 billion;
- Initial capital costs on 100 % basis as of January 1, 2018 of
$360 M(1) (MAG’s 44% $158.4 M);
- Accelerated early silver flow gives less than a 2-year payback
from plant start-up.
- Intensified underground development is in process to allow for
the planned increase to 4,000 tpd in mining rate and processing
capacity.
- Permitting based on an upgraded mine design has commenced
according to the operator, Fresnillo plc (“Fresnillo”).
- Independent feasibility study by AMC expected to be completed
by early 2018, as required for a production decision under the
Minera Juanicipio Shareholders’ Agreement.
- Formal Minera Juanicipio and respective joint venture partner
board approvals expected upon completion of the feasibility
study.
- 20,000 metre exploration drill program commenced in July,
2017.
- Company is well funded (cash and cash equivalents totaling
$121,638 as at September 30, 2017).
(1) PEA: preliminary economic assessment; tpd:
tonnes per day; LOM: life of mine; AISC: all in sustaining cost;
IRR: internal rate of return; NPV: net present value; M:
million.
By definition a Preliminary Economic Assessment
is preliminary in nature and includes Inferred Mineral Resources
that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to
be categorized as Mineral Reserves. There can therefore be no
certainty that the results in the PEA will be realized. This
new PEA is based on MAG's understanding of how the project is being
developed; however, Fresnillo is the project operator and the
actual development plan and timeline to be set out in an
independent feasibility study may be materially different.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability and there is no certainty that
Mineral Resources will ever become Mineral Reserves.
(2) Base Case metal prices of $17.90/oz for
silver; $1250/oz for gold; $0.95/pound (“lb”) for lead and $1.00/lb
for zinc. Projected Silver Equivalent calculated using the Base
Case metal recoveries and Base Case metal prices.
George Paspalas, President and CEO, commented,
“With the new resource and PEA just announced, we are more excited
than ever about the future, and we continue our focus working with
Fresnillo over the next few months to complete the feasibility
study and drive ahead with a formal production decision. At the
same time, we look forward to ongoing exploration on the property
aimed to further expand the Deep Zone and to test other promising
regional targets on the essentially unexplored joint venture
ground.”
Underground Development – Juanicipio
Property
The decline ramp reached the uppermost reaches
of the main Valdecañas Vein in December 2016 and footwall
development has since commenced. Ramp-related surface
installations, offices and associated infrastructure have been
completed, and construction of additional ventilation raises is
on-going. Midway through 2017, underground development was
intensified to allow for the planned increase in processing
capacity to 4,000 tpd. Additional development contractors
have been engaged by Minera Juanicipio, and a twinning of the
access decline is advancing rapidly with the intent of providing
expanded ore and waste hauling capacity. Fresnillo, as
operator, has also advised that permitting based on the upgraded
4,000 tpd design has commenced and that permits are expected to be
approved prior to year end.
Exploration – Juanicipio
Project
The 2017 PEA introduced a significantly expanded
resource estimate for the base metal-rich Deep Zone (see press
release November 7, 2017). Drilling of the Deep Zone continued
through 2017, and the Deep Zone effectively remains open to depth
and laterally along its entire strike length to the joint venture
boundary in both directions.
Outlook – Juanicipio
Project
An independent feasibility study by AMC has been
commissioned by Minera Juanicipio and is expected to be completed
by early in the first quarter of 2018. The feasibility study will
not include Inferred Mineral Resources in the mine plan, so the
results will be different from the results of the 2017 PEA.
This study is required by the Minera Juanicipio Shareholders’
Agreement in order to make a formal production decision. Upon its
completion, Minera Juanicipio is expected to present the study to
both its board and the respective joint venture partner board for
formal development approval. Fresnillo has advised that with
the anticipated changes in design scope, Juanicipio will now be in
production by the first half of 2020, which is consistent with the
timeline to production in the 2017 PEA.
On the exploration front, a 20,000-metre 2017
exploration drill program commenced in July to test various targets
within the Juanicipio property boundaries and to continue drilling
the Deep Zone. Dr. Peter Megaw, the Company’s Chief Exploration
Officer, and the MAG exploration team have been involved with
Fresnillo in selecting drill targets for this program. There
are currently four drill rigs on site, three drilling from surface
and one from underground.
FINANCIAL RESULTS – THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2017
As at September 30, 2017, the Company had
working capital of $124,883 (September 30, 2016: $140,903)
including cash and cash equivalents of $121,638 (September 30,
2016: $140,436 cash and term deposits). The Company currently
has no debt and believes it has sufficient working capital to
maintain all of its properties and currently planned programs for a
period in excess of the next year. The Company makes cash
advances to Minera Juanicipio as ‘cash called’ by the operator,
Fresnillo, based on approved joint venture budgets. In the
three and nine months ended September 30, 2017, the Company funded
advances to Minera Juanicipio, which combined with MAG’s Juanicipio
expenditures on its own account, totaled $1,690 and $12,534
respectively (September 30, 2016: $2,122 and $7,275
respectively).
The Company's net loss for the three and nine
months ended September 30, 2017 was $786 and $2,420 respectively
(September 30, 2016: $1,985 and $5,509 respectively) or $0.01/share
and $0.03/share respectively (September 30, 2016: $0.02/share and
$0.07/share respectively).
Share based payment expense (a non-cash item)
incurred in the three and nine months ended September 30, 2017
amounted to $337 and $1,874 respectively (September 30, 2016: $224
and $1,996 respectively) and estimates the fair value of share
based payment transactions. Although the Company granted no stock
options, RSUs or PSUs in the periods ended September 30, 2017
(September 30, 2016: nil), share based payment expense was recorded
on those equity instruments vesting in the period. In the
nine months ended September 30, 2017, share based payment expense
was also recorded on 66,325 DSUs (September 30, 2016: 63,287)
granted under the Company’s DSU plan and an additional 5,940 DSUs
(September 30, 2016: 7,086) granted to directors who elected to
receive their retainer and meeting fees for the periods in DSUs
rather than in cash.
The Company recorded a deferred tax recovery of
$589 for the nine months ended September 30, 2017 (September 30,
2016: $1,294 deferred tax expense) related to the reversal of the
deferred tax liability that was set up at December 31, 2016 in
relation to temporary differences between the book and tax base of
its Mexican non-monetary assets.
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 35 years of relevant
experience focussed on silver and gold exploration in Mexico. 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 and is a vendor of
projects, other than Juanicipio, whereby he may receive royalties.
Dr. Megaw is satisfied that the results are verified based on an
inspection of the core, a review of the sampling procedures, the
credentials of the professionals completing the work and the visual
nature of the silver and base metal sulphides within a district
where he is familiar with the style and continuity of
mineralization.
About MAG Silver Corp.
(www.magsilver.com)
MAG Silver Corp. is a Canadian exploration and
development 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. Our principal
focus and asset is the Juanicipio Property (44%), being developed
in partnership with Fresnillo Plc (56%) and is located in the
Fresnillo Silver District in Mexico, the world’s premier silver
mining camp. We are presently developing the underground
infrastructure on the property, with the operational expertise of
our joint venture partner, Fresnillo plc, to support an expected
4,000 tonnes per day mining operation. As well, we have an
expanded exploration program in place investigating other highly
prospective targets across the property. In addition, we
continue to work on regaining surface access to our 100% owned
Cinco de Mayo property in Mexico while we seek other high grade,
district scale opportunities.
On behalf of the Board ofMAG SILVER
CORP.
"Larry Taddei"
Chief Financial Officer
For further information on behalf of MAG Silver Corp.
Contact Michael J. Curlook, VP Investor
Relations and Communications |
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Website:Phone:Toll free: |
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www.magsilver.com(604) 630-1399(866) 630-1399 |
Email:
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info@magsilver.com(604) 681-0894 |
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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, 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.
This news release presents certain financial
performance measures, including all in sustaining costs (AISC),
cash cost and total cash cost that are not recognized measures
under IFRS. This data may not be comparable to data presented by
other silver producers. The Company believes that these generally
accepted industry measures are realistic indicators of operating
performance and are useful in allowing comparisons between periods.
Non-GAAP financial performance measures should be considered
together with other data prepared in accordance with IFRS. This
news release contains non-GAAP financial performance measure
information for a project under development incorporating
information that will vary over time as the project is developed
and mined. It is therefore not practicable to reconcile these
forward-looking non-GAAP financial performance measures.
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/edgar/searchedgar/companysearch.html