MAG Silver Corp. (MAG:TSX; MAG:NYSE American) has released Phase 2 drilling results from six holes at its Deer Trail project in Utah and production totals from its Juanicipio property in Mexico.
Hole DT22-09 returned 273.8 meters of sulfide lacing averaging 12 grams per tonne silver (g/t Ag), 0.2% copper (Cu), and 0.3% lead (Pb) in its Carissa zone discovery.
Analyst Stephen Soock with Stifel GMP wrote in a Jan. 17 research note that the results are “encouraging.”
“Today’s aggressive step-outs (1km southwest of Deer Trail Mine Corridor) resulted in the discovery of the Carissa zone,” wrote Soock, who has rated the company a Buy with a CA$27.75 target. “It appears that both (the) Carissa and Deer Trail corridors were fed by separate mineralization channels from the Deer Trail Mountain porphyry to the west. We look forward to further definition drilling at Carissa and to see the results of the two pending results for this zone.”
“We are only at the beginning of the major sea change of future energy,” he wrote in December in a special bulletin to readers of his newsletter, What is Chen Buying? What is Chen Selling?
Between Deer Trail and MAG’s production plant in Mexico, Soock said, “the new year looks to be a good one for the company.”
The Carissa zone is located 1 kilometer to the southwest of the historical Deer Trail mine. The company said new targets are being developed for further drilling. Assays for two other holes are still to come.
Individual sulfide bands in hole DT22-09 graded from 59 to 266 g/t Ag, 0.2% to 5.5% Cu, 0.1% to 1.5% Pb, and 0.1% to 5.2% Zn. Hole DT22-10 returned 11 g/t Ag, 0.2% Cu, 0.12% Pb, and 0.32% Zn.
“Stepping out aggressively into the previously untouched Carissa zone led to the strongest and most extensive mineralization and alteration seen at Deer Trail,” MAG President and Chief Executive Officer George Paspalas said. “This tells us we are on the right track.”
The Catalyst: Silver Going Green
Global silver demand was predicted to reach 1.21 billion ounces in 2022, the Silver Institute said, up 16% from 2021. Industrial demand, including vehicle electrification and other green technologies, is on course to grow to 539 million ounces (Moz).
“Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies, and government commitments to green infrastructure will have industrial demand overcome macro-economic headwinds and weaker consumer electronics demand,” the report said.
Asset manager Chen Lin said solar is already a cheap source of energy, but future improvements will make it even more efficient.
“We are only at the beginning of the major sea change of future energy,” he wrote in December in a special bulletin to readers of his newsletter, What is Chen Buying? What is Chen Selling?
Lights On in Mexico
MAG also continues to explore and develop Juanicipio and the Larder gold project, which it gained with the purchase of Gatling Exploration Inc.
After more than a year’s delay, MAG’s large-scale Juanicipio plant is on the power grid and expected to reach full capacity in Q2 2023. Construction of the plant began in 2019, and it was expected to come online by the end of 2021, but the state electric authority said just before Christmas that year that more equipment needed to be installed on the system.
The company is mining the Valdecañas vein system in the Zacatecas state of Mexico. A preliminary economic assessment (PEA) in 2017 estimated a 19-year mine life with 4,000 tonnes per day.
“The Juanicipio plant remains on track to reach nameplate capacity in the second half of this year,” Soock wrote on Jan. 25.
MAG announced this week that 165,786 tonnes of mineralized material were processed during the last quarter at an average silver head grade of 415 g/t. A total of 646,148 tonnes of material was processed in all of 2022 at an average silver head grade of 520 g/t.
That material produced 1.9 million ounces (Moz) Ag and 5,380 ounces Au in the fourth quarter of 2022 and 9.25 Moz Ag and 22,253 ounces Au for the entire year.
Stoock said while the production was a bit lower than expected, it will pick up as the plant comes online.
“The Juanicipio plant remains on track to reach nameplate capacity in the second half of this year,” Soock wrote on Jan. 25. “We look forward to hearing further details regarding the ramp-up to full capacity in the company's full year fillings. We continue to believe MAG will generate significant cash flow for the foreseeable future.”
Ownership and Share Structure
Streetwise Ownership Overview*
MAG Silver Corp. (MAG:TSX; MAG:NYSE American)
Top shareholders include Juanicipio project operator Fresnillo at 9.96%, BlackRock Asset Management at 8.49%, Sprott Asset Management at 5.25%, First Eagle Investment Management at 5.19%, and mining financier Eric Sprott at 4.63%.
The company is covered by a plethora of analysts, including Soock of Stifel, among others. Newsletter writers Peter Krauth of the Gold Resource Investor, Chen, and Bob Moriarty of 321 Gold. Click "See More Live Data" in the data box above to view them all.
MAG Silver has a market cap of US$2.17 billion and 98.8 million shares outstanding, 97.8 million of them floating. It trades in a 52-week range of US$25.16 to US$13.60.
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