Tier 1 Silver Producer Exceeds Premium Production Target

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MAG Silver Corp. (MAG:TSX; MAG:NYSE American) reported strong performance from its Juanicipio silver mine in Mexico during the fourth quarter of 2024, including the production of about 4.3 million ounces (Moz) silver, with the full year production of 18.6 Moz exceeding the top end of revised production guidance by 1.3 Moz.

The company also reported Q4 production of 9,041 ounces of gold with full year production of 39,029 ounces.

Juanicipio is a joint venture between operator Fresnillo Plc and MAG, with MAG having 44% interest in the project.

"Delivering silver production of nearly 19 Moz in 2024 is a testament to the quality and resilience of the Juanicipio project and the quality of the team's execution," said President and Chief Executive Officer George Paspalas. "Consistently strong grades and reliable recoveries have laid the foundation for sustained performance and positioned us to continue unlocking value in the years ahead."

Analyst Kevin O'Halloran of BMO Capital Markets wrote in an update research note on Wednesday that Q4's silver production was in line with the firm's 4.23 Moz estimate, and the total for the year exceeded revised guidance in-line with his expectations.

"Juanicipio's 2024 silver production guidance was raised from 14.3-15.8 Moz to 16.3-17.3 Moz in August due to ongoing operational strength throughout the year," wrote O'Halloran, who rated the stock Outperform with a CA$27 per share target price. "Our forecast called for continued strength in Q4 that would result in full-year production of 18.5 Moz, above the upper end of the guidance range; therefore, MAG's 2024 production of 18.6Moz was in line with expectations."

Company 'Focused' on Performance, Optimization, Value Creation

MAG said Juanicipio maintained steady production during Q4 with 333,612 tonnes of ore processed, which was consistent with Q3's 332,290 tonnes. All material processed in 2024 was processed through the Juanicipio plant, the company said.

The silver head grade averaged 417 grams per tonne (g/t) during the quarter, delivering a guidance-beating 2024 head grade of 468 g/t, metrics that "exceeded expectations, reflecting the high quality of the resource," the company noted.

BMO Capital Markets' O'Halloran wrote that the silver grade guidance is above the firm's forecast, "as strong grade performance at Juanicipio is expected to continue."

"Incremental metallurgical improvements implemented in the first half of the year delivered consistently high precious metal recovery rates, which were further supported by ongoing circuit optimization efforts," the release said.

MAG said silver production exceeded the top end of revised guidance by 1.3 Moz, "reinforcing confidence in Juanicipio's long-term potential."

"While guidance reflects expected variability in grades and production rates due to mine sequencing, it underscores the sustainable operation we have built at Juanicipio," Paspalas said. "We remain focused, together with Fresnillo, on delivering consistent performance, optimizing costs, and driving value creation for all our stakeholders."

2025: Strong Grade Performance Expected to Continue

For 2025, silver production at the plant is expected to range between 14.7 Moz and 16.7 Moz, as reported by Fresnillo, the company said.

This guidance is based on a throughput rate of 4,000 tonnes per operating day at head grade ranges of 380 g/t to 430 g/t silver and 1.2 g/t to 1.4 g/t gold.

In the January 29 edition of What is Chen Buying? What is Chen Selling?, Chen Lin mentioned that MAG's Juanicipio partner Fresnillo met its silver guidance and slightly beat its gold guidance for the quarter and will end the year "with cash of US$1.2-1.3 billion!"

"Head grades are anticipated to fluctuate due to the balancing of the three subvertical ramps and the mining of different sections of the orebody," the release said. "Production is expected to be weighted toward the second and third quarters of 2025, reflecting mine sequencing and anticipated grade variability."

MAG said comprehensive cost and production guidance would be released along with operational and financial results at the end of Q1.

BMO Capital Markets' O'Halloran wrote that the silver grade guidance is above the firm's forecast, "as strong grade performance at Juanicipio is expected to continue."

In the January 29 edition of What is Chen Buying? What is Chen Selling?, Chen Lin mentioned that MAG's Juanicipio partner Fresnillo met its silver guidance and slightly beat its gold guidance for the quarter and will end the year "with cash of US$1.2-1.3 billion!"

"Producers are becoming huge free cash flow machines," Chen continued, adding that the MAG report for the quarter was "very upbeat."

The Catalyst: Could Silver Outperform Gold?

According to Sagar Dua writing for FX Street on Tuesday, silver was trading "with caution amid a dismal market sentiment."

"The market sentiment is deeply risk-averse as global technology, power, and data center stocks have faced an intense sell-off as market experts believe that Chinese Deepseek's low-cost Artificial Intelligence (AI) model could challenge the dominance of top chatbots like OpenAI and Meta," Dua wrote. "Technically, the appeal of precious metals increases in a highly risky market environment. However, a significant surge in the U.S. Dollar and bond yields has (restricted) the upside in the Silver price."

Both gold and silver recently hit four-week highs, and gold is expected to have another solid year, but investors should brace for some volatility and temper their upside expectations, Kirill Kirilenko, Senior Analyst at CRU, told Kitco News' Neils Christensen.

He predicted gold prices would average around US$2,580 per ounce in 2025 as markets react to Trump's proposed economic policies. The analyst had more optimism for silver, forecasting an average price of US$31.35 per ounce for the year.

"Silver could slightly outperform gold this year, driven by an increasingly tight fundamental outlook," he said.

Ownership and Share Structure

Institutions own 70% of MAG, and 30% is retail, according to the company.

Top institutional shareholders include Juanicipio operator Fresnillo Plc. with 9%, BlackRock Investment Management (UK) Ltd. with 10.8%, Van Eck Associates Corp. with 9%, First Eagle Investment Management LLC with 6.2%, and Sprott Asset Management LP with 3%, the company said.

MAG Silver has a market cap of US$1.52 billion. It has 103.14 million shares outstanding, according to Reuters. It trades in a 52-week range of US$8.20 and US$18.27.