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, 2019. 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, 2019, 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,
2019
- Joint formal Juanicipio Project mine development approval by
Fresnillo and MAG was announced in the second quarter of 2019 (see
Press Release dated April 11, 2019), and an Engineering,
Procurement and Construction Management (“EPCM”) contract finalized
to oversee the mine development.
- During the quarter ended September 30, 2019 further progress
was made in detailed engineering, and subsequent to the quarter end
in October, earthmoving and foundation preparation commenced for
the construction of the 4,000 tonnes per day (“tpd”) beneficiation
plant.
- Mill fabrication is progressing on schedule, and both the SAG
and ball mills are expected to be shipped to site early 2020.
Flotation cells, processing tanks and minor process equipment
pieces are starting to arrive on site. Thickener tanks and drive
and rakes fabrication are well advanced.
- Underground development is ongoing at Juanicipio and has now
reached approximately 23 kilometres of development (or 14.3 miles).
The focus areas for underground development are the three
sub-vertical ramps that descend alongside the mineralization and
the conveyor ramp to surface.
- Construction is on track for late 2020 commissioning according
to the operator Fresnillo.
- Estimated pre-operative initial capital is $395,000 (100%
basis) as of January 1, 2018, less development expenditures
incurred since then to September 30, 2019 of approximately $107,600
(Company therefore estimates approximately $287,400 of remaining
initial capital on a 100% basis as at September 30,
2019).
- MAG is well funded with cash and cash equivalents as at
September 30, 2019 of $94,599 while Minera Juanicipio had working
capital on a 100% basis of $24,486 as at September 30, 2019.
- A 25,000 metre 2019 Juanicipio exploration program was
completed in late October, with all assays pending.
“This year we've launched the final stages of
development of the Juanicipio mine.” said George Paspalas,
President and CEO. “We're opening up more areas underground,
including production cross-cuts through the vein, surface
construction has commenced in earnest and every day sees more mill
components arriving to site.”
JUANICIPIO PROJECT UPDATES
MINE DEVELOPMENT APPROVAL
On April 11, 2019, Fresnillo and MAG as
shareholders of Minera Juanicipio, jointly announced formal
approval of the Juanicipio mine development plan. The partners also
finalized an EPCM agreement as part of the approval process which
defines the specific terms by which Fresnillo will oversee the
continued project development and the construction of the process
plant and associated surface infrastructure. Pre-operative
initial capital is estimated on a 100% basis as $395,000 as of
January 1, 2018, of which over the past 21 months approximately
$107,600 has been expended to September 30, 2019, leaving an
estimated $287,400 of remaining initial capital (MAG’s 44%
remaining share estimated $126,456 as at September 30, 2019).
The Operator Services agreement was also
finalized by the partners in the project approval process which
will become effective on commencement of commercial production. As
well, both lead and zinc off-take agreements have been agreed to by
the partners whereby both concentrates will be treated at market
terms by Met-Mex Peñoles, S.A. De C.V., in Torreón, Mexico.
SURFACE CONSTRUCTION AND SITE
PREPARATION
Upon project approval, construction plans for
the 4,000 tpd processing plant commenced immediately. Basic
engineering is substantially complete and detailed engineering is
well advanced. Development of surface infrastructure facilities
(power lines, access roads, auxiliary buildings, etc.) had already
previously begun and continues. During the quarter ended
September 30, 2019, further progress was made in detailed
engineering, and subsequent to the quarter end in October,
earthmoving and foundation preparation commenced for the
construction of the beneficiation plant.
Orders had already been placed and the
manufacturing of the long lead items for the process plant is well
advanced. Mill fabrication is progressing on schedule, and both the
SAG and ball mills are expected to be shipped to site early 2020.
Flotation cells, processing tanks and minor process equipment
pieces are starting to arrive on site. Thickener tanks and drive
and rakes fabrication are well advanced.
According to the operator, Fresnillo, permitting
for the tailings impoundments should be completed in the fourth
quarter of this year and mill construction is on track for
commissioning by late 2020.
UNDERGROUND DEVELOPMENT
Access to the mine will be via the completed
twin underground declines that now have reached the top of
mineralization in the Valdecañas Vein. From there, the upper
footwall haulage/access drift has been driven the length of the
vein from which three internal spiral footwall production ramps
will extend to depth. Twinning of the original access decline was
required to provide expanded capacity for hauling additional
mineralized rock and waste stemming from the planned increase in
processing capacity to 4,000 tpd. The twin ramps and second
entry portal allow for streamlined underground traffic flow and
increased safety through the mine having a second egress. The three
spiral ramps into the mineralized envelope are designed to provide
access to stopes within the mineralized material and were also
required to facilitate the increase in planned mining rate to 4,000
tpd. The first cross-cuts through the vein have been made
from the easternmost footwall ramp, exposing well-mineralized
vein.
Mineralized material from throughout the vein
will be crushed underground and the crushed material conveyed
directly from the underground crushing station (already excavated)
to the process plant area via a third ramp which is being driven
both from the surface and from the crushing chamber. This
ramp will also provide access to the entire Valdecañas underground
mining infrastructure and serve as a fresh air entry for the
ventilation system.
With total underground development having now
reached approximately 23 kilometres to date, an additional
contractor has been appointed to further accelerate development
rates. Concurrent with the ongoing underground development,
detailed engineering continues for the internal shaft, other mine
infrastructure, and the final process plant configuration.
A photo gallery of current progress on the
Juanicipio development is available at
http://www.magsilver.com/s/PhotoGallery.asp
The Juanicipio development is expected to create
approximately 2,750 jobs during construction and 1,720 jobs once at
full production, with potential to scale-up operations in the
future beyond 4,000 tpd.
EXPLORATION
Exploration drilling continued in the quarter
ended September 30, 2019. To date in 2019, 29 drill holes
have been completed, 21 being infill holes and 8 exploration holes
as part of a 25,000 metre 2019 exploration program which was
completed subsequent to the September 30, 2019 quarter end (all
assays pending). The 2019 drilling has primarily been
directed at infilling the few remaining gaps in the Indicated
Resources in the Bonanza Zone, converting Inferred Resources
included in the Deep Zone into Indicated Resources, and further
tracing the Deep Zone laterally and to depth. Five holes were
also directed at the recently discovered Venadas Vein, and
additional prospective targets are expected to be drilled in
2020.
Assays from 48 previously completed holes
(46,060 metres) were reported in the first quarter of 2019 (see
Press Release dated March 4, 2019).
FINANCIAL RESULTS – THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2019
As at September 30, 2019, the Company had
working capital of $94,895 (September 30, 2018: $141,865) including
cash and cash equivalents of $94,599 (September 30, 2018:
$141,776). Other than an office lease obligation under IFRS
16, the Company currently has no debt and believes it has
sufficient working capital to maintain all of its properties and
currently planned programs well into next year (2020). The
Company makes capital contributions through cash advances to Minera
Juanicipio as ‘cash called’ by operator Fresnillo, based on
approved joint venture budgets. In the three and nine months ended
September 30, 2019, the Company funded advances to Minera
Juanicipio, which combined with MAG’s Juanicipio expenditures on
its own account, totaled $17,915 and $33,371 respectively
(September 30, 2018: $8,542 and $14,387 respectively).
The Company’s net loss for the three and nine
months ended September 30, 2019 amounted to $2,005 and $3,408
respectively (September 30, 2018: $597 net income and $1,973 net
loss respectively) or $(0.02)/share and $(0.04)/share respectively
(September 30, 2018: $0.01/share and $(0.02)/share
respectively).
Share based payment expense, a non-cash item,
recorded in the three and nine months ended September 30, 2019
amounted to $507 and $2,015 respectively (September 30, 2018: $406
and $1,217 respectively), and is determined based on the fair value
of equity incentives granted and vesting in the period. In the
three and nine months ended September 30, 2019, the Company earned
interest income on its cash and cash equivalents of $589 and $2,215
respectively (September 30, 2018: $812 and $2,277 respectively).
The Company also recorded its 44% equity loss pick up of $266 and
equity income pick up of $496 respectively for the three and nine
months ended September 30, 2019 (September 30, 2018: $665 equity
income pick up and $75 equity loss pick up respectively) from
Minera Juanicipio related primarily to exchange rate changes and
deferred taxes.
About MAG Silver Corp.
(www.magsilver.com)
MAG Silver Corp. (MAG: TSX / NYSE A) 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 Joint Venture partnership with Fresnillo
Plc (56%). Juanicipio is located in the Fresnillo Silver Trend in
Mexico, the world's premier silver mining camp and we are currently
developing the surface and underground infrastructure on the
property to support a 4,000 tonnes per day mining operation, with
the operational expertise of our JV partner, Fresnillo plc. As
well, we have an aggressive exploration program in place targeting
multiple highly prospective targets across the property.
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 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
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