Top-Tier Silver Co. Sees Steady Production From Mexico Plant

1. 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.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
3. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

MAG Silver Corp. (MAG:TSX; MAG:NYSE American) announced that its Juanicipio silver plant in Mexico maintained steady production for the quarter ending September 30.

The Tier 1 silver producer said the plant processed 332,290 tonnes of ore, marking the third-consecutive quarter that 100% of the ore went through the new plant.

Silver head grade for the plant averaged 481 grams per tonne (g/t) during the quarter, contributing to a year-to-date average of 485 g/t, which "continues to outperform

expectations and underscores the high-grade nature of the Juanicipio deposit," the company said in a release.

"The third quarter continued to validate the strength and quality of the operations at Juanicipio," said President and Chief Executive Officer George Paspalas. "We are delighted to report another quarter of exceptional production results from Juanicipio. Strong production numbers, coupled with consistent operational improvements, validate the quality of this world-class asset, and we are excited about the growth and long-term success that lies ahead."

Juanicipio is a joint venture (JV) with Fresnillo Plc., which owns 56%. MAG owns 44%.

Analysts Increase Target Prices

In an updated research note on Thursday, Analyst Kevin O'Halloran of BMO Capital Markets noted that the Q3 silver grade of 481 g/t was also above BMO's 445 g/t estimate and 2024's 420-460 g/t guidance range.

"Juanicipio's Q3 silver production of 4.87 Moz (million ounces) exceeded our 4.09 Moz forecast by 20% on higher-than-expected silver grades," wrote O'Halloran, who rated the stock Outperform. "Gold production of 10.8 koz (thousand ounces) was also above our 9.3 koz forecast due to higher grades."

The throughput of 332 kt (thousand tonnes) was in line with the firm's 330 kt estimate and metal recoveries continued to improve quarter-over-quarter, O'Halloran said.

The "nine-month silver production of 14.3 Moz represents 85% of the midpoint of 2024's 16.3-17.3 Moz guidance range, which the company revised higher in August, and we expect will be exceeded," the analyst noted.

"With ongoing operational strength at Juanicipio, we increase our target price to (CA)$26," O'Halloran wrote.

"With ongoing operational strength at Juanicipio, we increase our target price to (CA)$26," O'Halloran wrote.

MAG said in its release that with "continued operational outperformance, silver grades are expected to be at the top end of revised guidance (420 g/t to 460 g/t) for 2024, reinforcing confidence in Juanicipio’s long-term potential."

The company said comprehensive financial and operational results are expected to be released on November 8, 2024.

While Analyst Joe Reagor of Roth MKM downgraded the stock from Buy to Neutral because its shares have "achieved our price target," the firm did raise that target price from US$17 per share to US$17.50.

"We continue to believe that Juanicipio is a world-class asset," Reagor wrote in an updated note on Thursday.

"We believe continued grade outperformance could ultimately result in a revised mine plan, which could, in turn, provide upside to our current estimates. However, we don't anticipate a mine plan update in the immediate future," Reagor continued.

The Catalyst: Energy Transition Needs Conductive Metal

In addition to its status as a precious metal, silver is the most conductive element in nature and is important to the green energy transition for coating electrical contacts in computers, phones, cars, and appliances. It is also an important element in solar technology.

The white metal advanced as much as 1.7% on Monday to its highest price since 2012 before backing off. It was US$33.85 on Thursday at the time of writing.

Some have predicted higher prices and bullish forecasts. JP Morgan, for example, has said that silver prices will average US$36 per ounce by next year.

According to the Silver Institute's World Silver Survey, global demand for silver "massively exceeded" supply last year, a deficit that is expected to extend into a fourth consecutive year in 2024.

Mordor Intelligence noted that the white metal is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.

"An increase in the demand for new technological products is expected to help the market expand in the future," Mordor analysts wrote. According to a U.S. Geological Survey report, "27% of the silver produced in the United States was being utilized in electrical and electronic applications."

Christopher Lewis wrote for FX Empire on Thursday that "this all points to higher pricing. And I do think that it is probably only a matter of time before we reach the $35 level.

Ownership and Share Structure

Institutions own 70% of MAG, and 30% is retail, according to the company.

Top institutional shareholders include Juanicipio operator Fresnillo Plc. with 9%, BlackRock Investment Management (UK) Ltd. with 10.8%, Van Eck Associates Corp. with 9%, First Eagle Investment Management LLC with 6.2%, and Sprott Asset Management LP with 3%, the company said.

MAG Silver has a market cap of US$1.84 billion. It has 103.14 million shares outstanding, according to Reuters. It trades in a 52-week range of US$8.20 and US$18.01.