MAG Silver Corp. (MAG:TSX; MAG:NYSE American) announced assay results from the final three holes of phase 2 drilling at its Deer Trail project in Utah.
Each of the holes intersected a different style of mineralization, validating a "hub and spoke" geological thesis for the carbonate replacement deposit (CRD) site.
"We see distinctly different mineralization styles of separate zones as hallmark indicators of a significant, long-lived, multi-phase CRD mineralized system," wrote PI Financial analyst Chris Thompson in an Aug. 3 research note. "We view Hole DT22-13 as particularly notable with elevated Cu (copper) grades pointing toward a Cu-rich intrusive porphyry center which awaits testing."
Thompson continues to rate MAG a Buy with a CA$19.15 per share target price.
Hole DT22-13 targeted a magnetic anomaly intersecting structurally controlled copper-gold zones in altered carbonate dominant host rocks, Thompson noted. Highlights from the hole included 29 grams per tonne silver (g/t Ag), 2.2 g/t Au, and 2.1% Cu over a width of 4.25 meters starting at 1,060.6 meters downhole.
PI Financial analyst Chris Thompson continues to rate MAG a Buy with a CA$19.15 per share target price.
Hole DT22-11, drilled as an offset of the Carissa Zone, intercepted the thickest manto-style mineralization drilled at the site to date. Assays returned gold grades of up to 3.1 g/t over about 1 meter, copper grades of 0.79% over 5 meters, and lead (Pb) and zinc (Zn) grades of 10.30% and 12.02% respectively over 0.95 meters. A 3-meter zone of silver-mineralized skarn up to grade of 156 g/t was also intercepted at depth.
DT22-12 was sunk about 800 meters north of Carissa and intersected four high-grade gold zones, the company said. The best was 6.1 g/t Au over 1.5 meters.
Thompson noted that with the company's Junanicipio plant in Mexico achieving commercial production and close to nameplate status, "we see MAG's ownership in Juanicipio funding exploration at Deer Trail and elsewhere. We are impressed by MAG's approach to exploration and continue (to) see significant future exploration upside potential unlocked by MAG's systematic exploration approach."
The Catalyst: A 'Large, Multistage Mineral System'
The company has started phase 3 drilling of up to three holes targeting porphyry hub targets at the 7,250-hectare project, which is on the Tushar strand of the Wasatch-Tushar fault, the major 100-kilometer-wide zone separating the Great Basin from the Colorado Plateau.
MAG said the holes from phase 2 support a thesis that Deer Trail has a "large, multistage mineral system."
"Significant mineralization continues south of the Cottonwood Creek fault, expanding known mineralization to a 3-kilometer- by 1.5-kilometer area that remains open in all directions," the company said in a release.
"Today’s drill results show that there is high grade in multiple spokes of what is a clearly very large system," wrote Stephen Soock of Stifel.
Analyst Stephen Soock of Stifel agreed with the company's characterization of the system's size.
"Today’s drill results show that there is high grade in multiple spokes of what is a clearly very large system — this is reassuring after seeing long intersections of lower grades in the last set of drill assays released," wrote Soock, who maintained his Buy rating on the stock with a CA$23 per share target price.
The three holes from phase 2 intersected different styles of mineralization, including high-grade gold, copper-gold, and silver-lead-zinc with 1 kilometer of the Carissa Zone.
"Carissa and the Deer Trail Corridor (near the old mine) drilled in early 2023 represent two different mineralized 'spokes' fed by separate mineralization channels from the source Deer Trail Mountain Porphyry to the west," Soock wrote. "MAG has continued to conduct exploration drilling at Deer Trail to estimate the overall size of the system."
Juanicipio Beats Predictions
MAG recently announced second-quarter production numbers for the new Juanicipio processing plant in Mexico that surpassed the expectations of several analysts.
The company delivered nearly 7 million ounces (Moz) silver equivalent (Ag eq), ahead of Thompson's prediction of about 4 Moz Ag eq. The silver grade milled was also higher than expected at 498 grams per tonnne (g/t) vs. 363 g/t, he noted.
Throughput during the quarter brought the plant to 85% of its design capacity.
"With MAG's 44% owned Juanicipio plant now rapidly advancing towards achieving the 4,000 (tonnes per day) nameplate capacity, exploration and drilling activities at its 100%-owned properties will be a driver for further growth," Soock noted.
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Silver is not just a precious metal used in jewelry. As the best metal for conducting electricity, it is used to coat electrical contacts and is an important element in solar technology. Almost all computers, phones, cars, and appliances contain silver.
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MAG Silver Corp. (MAG:TSX; MAG:NYSE American)
The World Silver Survey 2023, published by the Silver Institute, said there was a 237.7 Moz deficit between supply and demand for the precious metal in 2022. This deficit is likely to be repeated in 2023, the institute said.
"This environment is positive for safe-haven assets like silver (and gold)," the report said. "Similarly positive is the market deficit that silver will remain in this year."
Ownership and Share Structure
Institutions own 70% of MAG, and 30% is retail, according to the company.
Top institutional shareholders include Juanicipio project operator Fresnillo Plc. with 9.1%, BlackRock Asset Management at 9.9%, ETF Managers Group LLC at 5.3%, Sprott Asset Management at 5.1%, and First Eagle Investment Management at 5.6%, the company said.
MAG Silver has a market cap of US$1.58 billion. It has 102.9 million shares outstanding, according to TSX Infosuite. It trades in a 52-week range of US$22.96 and US$13.93.
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- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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