MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) joint venture project in Zacatecas, Mexico performed well in Q2/23, from production to ramp-up, reported PI Financial analyst Chris Thompson in a July 26 research note.
"We are impressed with the delivery of Q2/23 operating results significantly ahead of our conservative expectations," Thompson wrote. "We are also impressed by the advanced speed of ramp-up at Juanicipio."
Stock Offering 29% Return
Thompson noted the current potential return for investors in this British Columbia-based producer is significant, at 29%. This is reflected in the difference between PI's target price on the company, CA$19.15 per share, and the company's current price, about CA$14.82 per share.
MAG is a Buy.
Solid Progress in Quarter
Q2/23 production at MAG and Fresnillo's Juanicipio project was 6,942 ounces of silver equivalent (6.942 Koz Ag eq), reported Thompson. This was 77% higher than PI's projection of 3.926 Koz of Ag eq. The amount also represents about 39% of PI's estimate of MAG's full-year 2023 production of about 18 Koz of Ag eq.
Thompson also highlighted that throughput in Q2/23 reached 85% of the Juanicipio mill's 4,000-tons-per-day nameplate capacity. MAG's target for when Juanicipio will reach 100% has been Q3/23, but PI's has been Q4/23. PI, though, adjusted its expectation to align with MAG's after the producer announced Q2/23 results.
"We now see our estimates as potentially conservative," Thompson wrote.
Ore processing during Q2/23 was done at the Saucito and Fresnillo as well as Juanicipio plants. Looking forward, Thompson indicated, PI expects processing to rise at Juanicipio as it decreases at the other two.
Other Higher Numbers
The grade of silver produced at Juanicipio during Q2/23 also was higher than anticipated, Thompson pointed out. While PI estimated it to be 363 grams per ton (363 g/t), it, in fact, was 498 g/t.
Feed grade was better in Q2/23 than in Q1/23, the analyst reported. This was likely due to less material being processed from lower-grade, commissioning-designated stockpiles.
What To Watch For
In terms of possible MAG stock catalysts in the near term, updates are anticipated from Juanicipio as the ramp-up there continues, wrote Thompson.
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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 PI Financial, MAG Silver Corp., July 26, 2023
Analyst Certification I, Chris Thompson, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. 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. I am the research analyst primarily responsible for preparing this report.
Research Disclosure PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company.
General Disclosure The affiliates of PI Financial Corp. are PI Financial (US) Corp., PI Financial Services Corp., and PI Capital Corp. Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is amongst other factors determined by revenue generated directly or indirectly from various departments including Investment Banking. Evaluation is largely on an activity-based system that includes some of the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance, and client feedback. Analysts and all other Research staff are not directly compensated for specific Investment Banking transactions. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of PI Financial Corp. PI Financial Corp.’s policies and procedures regarding dissemination of research, stock rating and target price changes can be reviewed on our corporate website at www.pifinancial.com (Research: Research and Conflict Disclosure).
