In a Feb. 27 research note, analyst Tara Hassan with Raymond James reported that MAG Silver Corp.'s (MAG:TSX; MAG:NYSE.MKT) Juanicipio project, according to joint venture partner Fresnillo Plc (FRES:LSE), is still on track for initial production in mid-2020, the target date provided in guidance. This is despite the feasibility study delivery date being extended a month, from February to March 2018. The board will get the study for review and approval in April 2018.
The advancement of Juanicipio to this stage is positive for MAG, Hassan concluded: "With the construction decision for Juanicipio expected in the coming months, we believe MAG is well positioned to attract a market rerating as it transitions to production."
Based on the Juanicipio preliminary economic assessment, Raymond James models a mine with an average annual production of 9.3 million ounces of gold, or 19.4 million ounces of gold equivalent, at a capital cost of US$361 million. However, the feasibility study is expected "to consider a smaller mineable resource that is more focused on the silver-rich Bonanza zone which contains the bulk of the Indicated resource," Hassan noted. Further, the budgeted US$305 million capex for Juanicipio is also likely to change in the feasibility study.
Raymond James has an Outperform rating and a CA$21 per share price target on MAG, whose stock is trading today at around CA$13.63 per share.
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Disclosures from Raymond James, MAG Silver Corp., "Fresnillo Confirms Juanicipio Timeline," Feb. 27, 2018
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