MAG Silver Corp. (MAG:TSX; MAG:NYSE American) announced its Q2/23 results, reported CIBC analyst Cosmos Chiu in an Aug. 8 research note.
Significant projected gain
CIBC maintained its Neutral rating and CA$21 per share target price on the Canadian producer, trading now at about CA$15.47 per share. These prices imply an attractive potential return for investors, of 30%.
Q2/23 by the numbers
Chiu presented the key figures from MAG's Q2/23.
Production, all from MAG's joint venture project Juanicipio in Mexico, was 4,877,460 ounces (oz) of silver, 9,537 oz gold, 3,066 tons of lead and 4,582 tons of zinc.
Overall, this was lower than its pre-reported figures, of 5,275,000 oz silver, 10,639 oz gold, 3,402 tons of lead and 5,418 tons of zinc, because of provisional pricing adjustments and "payability factors," Chiu wrote.
Average head grade was 498 grams per ton (498 g/t), higher than the 363 g/t average in Q1/23.
At Juanicipio, 377,018 tons of material were processed in Q2/23, versus 222,023 tons in Q1/23.
Quarterly earnings were a beat, driven by lower tax expenses. Earnings per share was $0.19, whereas consensus and CIBC's forecasts were $0.17 and $0.16, respectively.
The Canadian silver company had $52.6 million and no long-term debt at quarter's end.
Progress at Juanicipio
During the quarter, ramp-up at the Juanicipio mill progressed to 85% of its nameplate capacity. It is expected to reach the full 4,000 tons per day in Q3/23.
Focus shifts to Deer Trail
Given Juanicipio is nearly running at full capacity and thus almost completely derisked, "investor attention now turns to MAG's next steps in growing the company to support its valuation," Chiu pointed out.
These efforts include exploration work at the Deer Trail project in Utah, from which MAG recently reported phase two drill results. They indicate Deer Trail has key features of a major carbonate replacement deposit/skarn system, according to MAG's management. Findings included these outstanding intercepts:
- 23.55 meters (23.55m) of 61 g/t silver with lead and zinc
- 33m of 0.6 g/t gold, including 1.5m of 6.1 g/t gold
- 4.25m of 29 g/t silver, 2.2 g/t gold and 2.1% copper
The third phase of drilling Deer Trail is underway.
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