MAG Silver Corp. (TSX and NYSE AMERICAN: MAG)
(“MAG” or the
“Company”) announces the
Company’s unaudited financial results for the three and six months
ended June 30, 2018. For details of the June 30, 2018 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 $000s
of United States dollars (“US$”) unless otherwise
specified.
2018 SECOND QUARTER
HIGHLIGHTS
- Underground development in the first half of 2018 totaled 3,689
metres advanced, and accounts for a quarter of the total
underground development advanced on the project to date.
- Current development focus on:
- advancing three internal spiral footwall ramps at depth to
access the full strike length of the Valdecañas vein system;
- excavating and constructing the underground crushing
chamber;
- advancing the conveyor ramp to the planned mill site (the box
cut for the underground conveyor exit portal is complete and
approximately 200 metres of the underground conveyor ramp is also
complete);
- integrating additional ventilation and other associated
underground infrastructure; and,
- progressing the construction of surface infrastructure
facilities.
- Subsequent to the quarter ended June 30, 2018, the Company
advanced $8,470 to Minera Juanicipio, representing its 44% share of
a $19,250 cash call to fund July, August and September development
and exploration expenditures on the property.
- Detailed engineering continues for the internal shaft and other
mine infrastructure, and mill-site preparation is
underway.
- Draft of the Feasibility Study remains under review by both
partners, with Fresnillo recently reiterating production to
start-up by mid-2020.
- Exploration program underway designed to convert Inferred
Resources in the Deep Zone into Indicated Resources, and to further
trace the Deep Zone laterally and to depth (assays
pending).
- Drilling has commenced on the western extension of the
Juanicipio Vein as part of the exploration program to pursue other
high priority drill targets within the Juanicipio
property.
- MAG is well funded with cash and cash equivalents totaling
$151,404 as at June 30, 2018.
George Paspalas, President and CEO, commented,
“We are pleased to see the continued progress being made developing
the Juanicipio project, whilst we now embark on the formal approval
process. Underground development is well advanced, and the
construction of some of the surface infrastructure is starting to
take shape. It is heartening to see our partner is now in
discussions with suppliers to order long lead time equipment.
I would like to remind people, that as we head to full-on
construction of the project, we still are very motivated to
continue to explore the property, as our current exploration
success is the result of working in a very small area of the
property. There remain many untested prospective targets for the
joint venture to drill, and with 4 rigs turning on surface, we
eagerly await the assay results.”
Juanicipio Project Update
Subsequent to the quarter end on July 3, 2018,
the Company advanced $8,470 to Minera Juanicipio, representing its
44% share of a $19,250 cash call to fund July, August and September
development and exploration expenditures on the Juanicipio
property. The underground development actively continues with
emphasis on: developing the three internal spiral footwall ramps at
depth to access the full extent of the Valdecañas vein system;
excavating and constructing the underground crushing chamber;
advancing the conveyor ramp to the planned mill site (with the box
cut for the underground conveyor exit portal already complete);
and, integrating additional ventilation and other associated
underground infrastructure. As well, according to the operator,
Fresnillo, discussions with suppliers of long-term delivery
equipment and construction contractors have been initiated.
An independent feasibility study is required by
the Minera Juanicipio Shareholders’ Agreement in order to formally
approve the project. AMC was therefore commissioned by Minera
Juanicipio in late 2017 to prepare such a study (the “Feasibility
Study”) and a draft remains under review by both Joint Venture
partners. Upon approval of the Feasibility Study by the Technical
Committee, Minera Juanicipio is expected to present the study to
both its Board and the respective Joint Venture partner Boards for
formal development approval. MAG expects to support the
development of the project, and Fresnillo has publicly advised that
it expects Minera Juanicipio to be in production by mid-2020.
As well, Minera Juanicipio is currently reviewing a draft
Engineering, Procurement, and Construction Management (“EPCM”)
contract which defines the specific terms by which Fresnillo will
oversee the development of the project.
Drilling of the Deep Zone has continued under
the approved 20,000 metre 2017 exploration drill program carried
forward into 2018. The Deep Zone effectively remains open to
depth and laterally along its entire strike length in both
directions to the Joint Venture boundaries. In the three and
six months ended June 30, 2018, approximately 1,973 and 4,108
metres were drilled respectively, with all assays pending. The
drilling is designed with the intention to both convert the
Inferred Resources in the Deep Zone into Indicated Resources, and
to further trace it laterally and to depth.
Meanwhile, drilling has commenced on the western
extension of the Juanicipio Vein as part of the exploration program
to pursue other high priority drill targets within the Juanicipio
property.
Currently, there are five drill rigs on site,
four drilling from surface and one from underground.
Lagartos Project
On June 22, 2018, the Company sold its non-core,
Lagartos concessions in the Zacatecas Silver District to Defiance
Silver Corp (“Defiance”) for consideration of 5,000,000 shares of
Defiance. The Defiance shares were valued at $1,202 upon
closing, and the transaction resulted in a consolidation of their
holdings in the Zacatecas silver district, while providing MAG with
approximately a 5% equity position in Defiance. Dr. Peter
Megaw, MAG’s Chief Exploration Officer commented, "With the
Zacatecas Silver District consolidating, MAG was approached by a
number of companies looking to acquire its holdings in the
camp. MAG chose to partner with Defiance because of our
long-held interest in the exploration potential of the Veta Grande
Vein."
FINANCIAL RESULTS – THREE AND SIX MONTHS
ENDED JUNE 30, 2018
As at June 30, 2018, the Company had working
capital of $151,765 (June 30, 2017: $126,809) including cash and
cash equivalents of $151,404 (June 30, 2017: $125,011). 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 six months ended June 30, 2018, the
Company funded advances to Minera Juanicipio, which combined with
MAG's Juanicipio expenditures on its own account, totaled $78 and
$5,845 respectively (June 30, 2017: $6,466 and $10,844
respectively).
The Company’s net loss for the three and six
months ended June 30, 2018 was $2,753 and $2,570 respectively (June
30, 2017: $1,322 and $1,634 respectively) or $0.03/share and
$0.03/share respectively (June 30, 2017: $0.02/share and
$0.02/share respectively).
The loss for the period includes an equity loss
pick-up from its investment in Minera Juanicipio of $1,623 and $740
in the three and six months ended June 30, 2018, respectively (June
30, 2017: $(404) and $(976) equity income pick-up, respectively)
and a deferred tax expense of $1,300 and $102 in the respective
periods (June 30, 2017: nil and $(589) deferred tax recovery,
respectively). The equity loss pick-up for the six months
ended June 30, 2018 is primarily the result of providing for some
expiring tax losses within Minera Juanicipio, and the deferred tax
expense and a portion of the equity loss pick-up relate to the
impact of foreign exchange fluctuations ($US vs Peso) on Mexican
tax attributes. As well, as noted above, during the quarter
the Company sold its non-core Lagartos concessions in the Zacatecas
Silver District to Defiance, which resulted in a net gain of $1,151
after transaction costs.
Qualified Person - Unless
otherwise specifically noted herein, all scientific or technical
information in this news release, including assay results and
reserve 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 the
Company.
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, under 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 |
Website:Phone:Toll free: |
www.magsilver.com(604) 630-1399(866) 630-1399 |
Email: Fax: |
info@magsilver.com(604) 681-0894 |
Neither the Toronto Stock Exchange nor the NYSE
American have 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 and
applicable Canadian Securities laws. All statements in this
release, other than statements of historical facts are forward
looking statements, including the anticipated time and capital
schedule to production; expectations on the approval of the
development of the project; estimated project economics, including
but not limited to, mill recoveries, payable metals produced,
production rates, payback time, capital and operating and other
costs, IRR and mine plan; expected upside from additional
exploration; expected capital requirements and adequacy of current
working capital for the next year; and other future 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 expected mineral
production performance; unexpected increases in capital costs;
exploitation and exploration results; continued availability of
capital and financing; differing results and recommendations in the
Feasibility Study; and general economic, market or business
conditions. In addition, forward-looking statements are
subject to various risks, including but not limited to operational
risk; political risk; currency risk; capital cost inflation risk;
that data is incomplete or inaccurate; the limitations and
assumptions within drilling, engineering and socio-economic studies
relied upon in preparing the PEA; and market risks. 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. The Company does not undertake to
provide updates to any of the forward-looking statements in this
release, except as required by law.
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.
Cautionary Note to Investors Concerning
Estimates of Indicated Resources
This press release uses the term "Indicated
Resources". MAG advises investors that although this term is
recognized and required by Canadian regulations (under National
Instrument 43-101 - Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize this
term. Investors are cautioned not to assume that any part or all of
mineral deposits in this category will ever be converted into
reserves.
Cautionary Note to Investors Concerning
Estimates of Inferred Resources
This press release uses the term "Inferred
Resources". MAG advises investors that although this term is
recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize this
term. Investors are cautioned not to assume that any part or all of
the mineral deposits in this category will ever be converted into
reserves. In addition, "Inferred Resources" have a great amount of
uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, or economic studies except for Preliminary Assessment as
defined under Canadian National Instrument 43-101. Investors are
cautioned not to assume that part or all of an Inferred Resource
exists, or is economically or legally mineable.
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.
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