MAG Silver Corp. (MAG:TSX; MAG:NYSE American) had its target price raised 7% by ROTH MKM 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 US$15.50 per share, up from US$14.50, the analyst noted. As the Canadian miner was trading at the time of the report at about US$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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Important Disclosures:
- 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 contractor.
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Disclosures for Roth MKM, Mag Silver Corp., July 24, 2024
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures: ROTH makes a market in shares of MAG Silver Corp. and as such, buys and sells from customers on a principal basis. A Research Analyst and/or a member of the Analyst's household own(s) debt or equity securities of MAG Silver Corp..
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2024. Member: FINRA/SIPC.
