MAG Silver Corp. (MAG:TSX; MAG:NYSE American) achieved an earnings beat in Q1/25 primarily due to lower-than-estimated costs, reported Scotiabank Analyst Ovais Habib in a May 8 research note.
"We ascribe a positive bias to this result as Juanicipio continues its focus on cost control and optimization efforts, delivering another good quarter of production costs beat relative to ours and consensus' expectations," Habib wrote. Juanicipio is a joint venture (JV) project owned by MAG (44%) and operator Fresnillo Plc (FNLPF:OTCMKTS; FRES:LSE) (56%).
21% Return Implied
Scotiabank has an US$18.50 target price on the Canadian producer, trading at the time of the report at about US$15.23 per share. The price difference implies a potential gain for investors of 21%.
MAG remains rated Sector Outperform
Improved Costs Drive EPS Beat
Habib reviewed the highlights of MAG's Q1/25 financial results. Earnings per share of US$0.28 was a beat for the quarter, versus Scotiabank's US$0.25 estimate, and consensus' US$0.26 forecast.
"The beat on Q1 earnings was mainly due to lower-than-expected production costs and depreciation," Habib explained.
Total cash costs, net of byproducts, also were better than expected, at (US$0.91) per ounce [(US$0.91)/oz] of silver. This was 60% better than Scotiabank's US$0.57/oz estimate. Likewise, the all-in sustaining cost (AISC) of US$2.04/oz was lower than Scotiabank's US$7.39/oz estimate, by 72%.
MAG reiterated 2025 production and cost guidance for Juanicipio. The project is expected to produce 14,700,000–16,700,000 ounces (14.7–16.7 Moz) of silver, yielding 13.1–14.9 Moz of payable silver at an AISC of US$6–8/oz (net of byproducts).
Cash at a Glance
As reported by Habib, MAG generated US$34.1 million (US$34.1M) in cash flow during Q1/25. At quarter's end, the miner had US$156.4M in cash, down from US$162M in Q4/24.
During Q1/25, the company declared its second dividend, this one US$0.20 per share, and payable on May 28.
As for the Juanicipio JV, it generated a total of US$77.4M in free cash flow in Q1/25. The JV ended the quarter with US$131M, up from US$53M in Q4/24. MAG did not receive cash from the JV, likely, Habib purported, because working capital was lower than US$120M.
Exploration at Juanicipio
Exploration work continues at Juanicipio, Habib reported. In Q1/25, 6,692 meters were drilled there from underground, results of which are pending.
Regional surface drilling is slated to start at the project this quarter.
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- MAG Silver Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contrator.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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Disclosures for Scotiabank, MAG Silver Corp., May 8, 2025
Company Disclosures (see legend below)* MAG Silver Corp. VS0818 We, Ovais Habib and Eric Winmill, certify that (1) the views expressed in this report in connection with securities or issuers that we analyze accurately reflect our personal views and (2) no part of our compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by us in this report. Analysts employed by non-U.S. affiliates are not registered/qualified as research analysts with FINRA in the U.S. unless otherwise noted within this report. These analysts may not be associated persons of Scotia Capital (USA) Inc. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. This document has been prepared by Research Analysts employed by The Bank of Nova Scotia and/or its affiliates. The Bank of Nova Scotia, its subsidiaries, branches and affiliates are referred to herein as "Scotiabank." "Scotiabank" together with "Global Banking and Markets" is the marketing name of the global corporate and investment banking and capital markets business of The Bank of Nova Scotia and its affiliates. Scotiabank, Global Banking and Markets produces research reports under a single marketing identity referred to as "globally branded research" under U.S. rules. This research is produced on a single global research platform with one set of rules which meet the most stringent standards set by regulators in the various jurisdictions in which the research reports are produced. In addition, the Research Analysts who produce the research reports, regardless of location, are subject to one set of policies designed to meet the most stringent rules established by regulators in the various jurisdictions where the research reports are produced. Scotiabank relies on information barriers to control the flow of non-public or proprietary information contained in one or more areas within Scotiabank into other areas, units, groups or affiliates of Scotiabank. In addition, Scotiabank has implemented procedures to prevent research independence being compromised by any interactions they may have with other business areas of The Bank of Nova Scotia. The compensation of the Research Analyst who prepared this document is determined exclusively by Scotiabank Research Management and senior management (not including investment or corporate banking). Research Analyst compensation is not based on investment or corporate banking revenues; however, compensation may relate to the revenues of Scotiabank as a whole, of which investment banking, corporate banking, sales and trading are a part. Scotiabank Research will initiate, update and cease coverage solely at the discretion of Scotiabank Research Management. Scotiabank Research has independent supervisory oversight and does not report to the corporate or investment banking functions of Scotiabank. For Scotiabank, Global Banking and Markets Research Analyst Standards and Disclosure Policies, please visit www.gbm.scotiabank.com/ disclosures. For additional questions, please contact Scotiabank, Global Banking and Markets Research, 4 King St W, 12th Flr, Toronto, Ontario, M5H 1A1. Time of dissemination: May 8, 2025, 08:47 ET. Time of production: May 8, 2025, 08:44 ET. Note: Time of dissemination is defined as the time at which the document was disseminated to clients. Time of production is defined as the time at which the Supervisory Analyst approved the document. *Legend VS0818 Research Analyst Ovais Habib visited the Juanicipio mine, an operating mine, in Zacatecas, Mexico, on November 21-23, 2023. Partial payment was received from the issuer for the travel-related expenses incurred by the Research Analyst to visit this site.
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