In a May 18 research note, TD Securities analyst Craig Hutchison highlighted MAG Silver Corp.'s (MAG:TSX; MAG:NYSE A) Q1/21 ore grades and sales related to its Juanicipio joint venture (JV) project with partner/operator Fresnillo.
During Q1/21, Hutchison noted, the JV processed 36,400 tons of ore, at a silver grade of 458 grams per ton, at the Fresnillo plant. This grade was 40% higher than the average silver grade in 2020 of 328 grams per ton. For the first month, in April, the JV exceeded its monthly processing target of 16,000 tons, reaching 16,771 tons.
As for the new Juanicipio mill, still under construction, commissioning slated for Q4/21 remains on schedule.
"The timely commissioning of the Juanicipio plant in a strong silver pricing environment should be supportive to the share price," Hutchison wrote.
During Q1/21, he indicated, the JV sold 431,000 ounces of silver, 631 ounces of gold, 199 tons of zinc and 137 tons of lead, yielding a gross profit of US$8.2 million.
In other news regarding Juanicipio, Hutchison reported, the JV spent, through the end of Q1/21, US$272.0 million of the total budgeted initial capex of US$440.0 million. Thus, US$168.0 million remains to be paid, MAG's portion of which is US$73.9 million. The analyst pointed out that three existing sources together can sufficiently fund MAG's portion of the remaining capex: the US$3.1 million in cash held in the JV, MAG's US$92.8 million in cash and cash currently being generated via the Fresnillo milling operation.
In his research report, Hutchison also briefly addressed MAG Silver's Deer Trail project in Utah. He noted that the phase 1 drill program the mining company commenced there in November 2020 is expected to be completed sometime during this quarter, Q2/21. All assays from the drilling done thus far are pending.
TD Securities maintained its Buy rating and CA$29.00 per share target price on MAG, the stock of which is currently trading at about CA$27.27 per share.
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Disclosures from TD Securities, MAG Silver Corp., May 18, 2021
Disclosures for MAG Silver Corp.
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