MAG Silver Corp. (MAG:TSX; MAG:NYSE American) had its target price raised 7% by ROTH Capital Partners given a Q2/24 production beat at the company's joint venture Juanicipio project in Mexico and revised 2024 head grade guidance, reported Managing Director Joe Reagor in a July 24 research note.
"We are maintaining our Buy rating," Reagor wrote.
ROTH's new target is $15.50 per share, up from $14.50, the analyst noted. As the Canadian miner is trading now at about $13.30 per share, this implies a potential 16.5% return for investors.
Production estimates surpassed
During Q2/24 and compared to ROTH's estimates, the Juanicipio operation produced 5 million ounces (5 Moz) of silver versus 3.8 Moz, 10 million pounds (10 Mlb) of lead versus 9.1 Mlb and 18.9 Mlb of zinc versus 14.6 Mlb, reported Reagor.
"Production was better than expected overall," he commented.
ROTH ascribed the beat to two factors: higher than expected head grades of all three metals. and, to a lesser extent, recoveries of silver and zinc. These differences were enough to more than offset the lower-than-anticipated recovery and head grade of gold. ROTH forecasted gold production to be 13,000 ounces, but it came in at 9,259 ounces.
Increased head grade guidance
In other news, Reagor reported, given the strong grades in H1/24, the Juanicipio joint venture increased its silver grade guidance for the year. The new range is 420–460 grams per ton (420–460 g/t), up from 380–420 g/t.
Revisions to the model
Based on these preliminary production results, ROTH adjusted its model on MAG, Reagor wrote. It changed its long-term recovery rate estimates to more closely align with current mill performance. The investment bank increased its silver and zinc recovery assumptions and lowered its gold recovery expectation.
"This drove an increase in our price target," wrote Reagor.
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