Progress and steady results has been the mantra for MAG Silver Corp.'s (MAG:TSX; MAG:NYSE.MKT) "world class silver-gold-lead-zinc" JV Juanicipio project (56% owned by Fresnillo Plc) in Mexico, according to Canaccord Genuity analyst Kevin MacKenzie. In a recent report, Mackenzie looked back at the history of the Juanicipio project, explaining that over the last two to three years the underground exploration has made steady advances leading to the discovery of the high-grade Dilatant Zone. Due to this discovery, "the joint venture is now contemplating expanding the project's designed throughput to 4,000tpd (previously 2,650tpd), as well as sinking an internal shaft to allow for earlier access to wider zones of mineralization at depth," MacKenzie wrote.
Mackenzie pointed out that the updated technical PEA will most likely "capture the impact of the materially larger resource base" and include costing similar to the Saucito Mine owned by Fresnillo Plc (FRES:LSE). Viewing MAG Silver "to be one of the premier investments within the silver developer space," MacKenzie noted that another near-term rerating may be necessary due to "the potential discovery of another high-grade vein." Currently MacKenzie rates MAG Silver as a speculative Buy with a target price of $24 per share. MAG shares are currently trading at around $16.
Rodman & Renshaw analyst Heiko Ihle also has a positive outlook on the Juanicipo project, rating MAG Silver as a Buy and highlighting the "continued exploration success at the project, along with further advancement toward production." In a July 10 research report, Ihle focused on the success the company has had at its Deep Zones "which contained 333 g/t silver, 16.87g/t gold, 4.47% lead, 3.77% zinc and 1.04% copper over 5.2 meters." The results will most likely lead the joint venture partners to "consider sinking an internal shaft to access deeper zones. . .where strong gold grades have also been discovered." Although the cost could mean a 30% increase in capital, Ihle believes the expansion would add value to the project.
Ihle also points out that "underground development activities have recently accelerated, primarily in order to allow for the expected increase in processing capacity at the project. To date, ramp development at the project has exceeded 3,500 meters, and construction of additional ventilation raises continues to progress." The target price of $20.50 "is a reflection of the larger 4,000 tpd scenario in our model, slightly offset by our expectation of increased capital required to build out the facility," concluded Ihle.
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1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Disclosures from Canaccord Genuity, MAG Silver Corp., July 6, 2017
Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.
Required Company-Specific Disclosures (as of date of this publication):
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from MAG Silver Corp. in the next three months.
An analyst has visited the material operations of MAG Silver Corp. Partial payment was received for the related travel costs.
Up-to-date disclosures may be obtained at this website.
Disclosures from Rodman & Renshaw, MAG Silver Corp., Company Update, July 10, 2017
I, Heiko F. Ihle, CFA , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of MAG Silver Corp (including, without limitation, any option, right, warrant, future, long or short position).
As of June 30, 2017 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of MAG Silver Corp.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from MAG Silver Corp for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in MAG Silver Corp as of the date of this research report.