MAG Silver Corp. (TSX:MAG) (NYSE American: MAG) announces the Company’s unaudited financial results for the three and six months ended June 30, 2021. For details of the unaudited condensed interim consolidated financial statements and Management’s Discussion and Analysis for the three and six months ended June 30, 2021, please see the Company’s filings on SEDAR (www.sedar.com) or on EDGAR (www.sec.gov).
All amounts herein are reported in $000s of United States dollars unless otherwise specified.
HIGHLIGHTS – JUNE 30, 2021 AND EVENTS SUBSEQUENT TO THE QUARTER END
LIQUIDITY AND CAPITAL RESOURCES
JUANICIPIO PROJECT UPDATE
Processing Plant Construction and Commissioning
During Q2 2021, continued progress was achieved on the construction of the Juanicipio processing plant. The SAG and ball mills were installed during the quarter, and mechanical installation of the flotation cells and filters were completed during the Q2 2021. All major mechanical pieces have now been installed. The tailings and concentrate thickeners are nearing completion. Significant progress has occurred on the initial tailings storage facility, and on the fine ore bin and stockpile dust cover. The lead and zinc flotation cell lines have been installed and are now piped in for air, water and froth flow. Underground development to date at Juanicipio is now approximately 40 km (25 miles) with access to the upper portion of the resource now achieved. Underground development priorities include continuing advance of the three internal spiral footwall production ramps designed to access the full strike length of the Valdecañas Vein system. Initial development indicates that the grade and width of the vein are in line with previous drilling-derived estimates.
According to Fresnillo, the operator, the Juanicipio processing plant is expected to come in on budget and as scheduled to commence commissioning in fourth quarter 2021 reaching 40 to 50% of nameplate capacity by the end of 2021 and achieving 90 to 95% of nameplate capacity in 2022.
The estimated project capital cost on a 100% basis, as estimated from January 1, 2018 is $440,000 less approximately $313,400 in development expenditures incurred from then to June 30, 2021 leaving approximately $126,600 of remaining capital cost (MAG’s 44% estimated at $55,704) as at June 30, 2021. This remaining funding requirement will be reduced by both: existing cash held in Minera Juanicipio as at June 30, 2021 ($15,107 on a 100% basis); and, expected cash flows generated from mineralized development material processed at a targeted average nominal rate of 16,000 tonnes per month through the Fresnillo processing plant until the Juanicipio plant is commissioned (see Underground Mine Production below).
A regularly updated photo gallery of construction progress at Juanicipio is available at
Underground Mine Production
As of August of 2020, mineralized material from development is being batch processed, refined and sold on commercial terms at a targeted rate of 16,000 tonnes per month at the nearby Fresnillo plant. The actual amount of material processed on a monthly basis fluctuates due to the variability of mineralization encountered in the development headings from month to month. In the three and six months ended June 30, 2021, 44,435 and 80,830 tonnes of mineralized material respectively, were processed through the Fresnillo plant, realizing commercial and operational de-risking opportunities for the Juanicipio joint venture. The average silver head grade for the development material processed in the three and six months ended June 30, 2021 was 361 grams per tonne (“g/t”) and 405 g/t respectively. The sales and treatment charges for tonnes processed in Q2 2021 were recorded on a provisional basis and will be adjusted in Q3 2021 based on final assay and pricing adjustments in accordance with the offtake contracts. The resulting payable metals sold and processing details on a 100% basis for the 3 months ended June 30, 2021 are summarized in Table 1 below.
Table 1: Development Material Processed at Fresnillo’s Processing Plant (100% basis)
June 30, 2021
|Average Per Unit (1)
June 30, 2021
June 30, 2021
June 30, 2021
3 months &
June 30, 2020(2)
|Silver||404,518 ounces||$27.17 per oz||$10,991||$22,148||–|
|Gold||709 ounces||$1,861.27 per oz||$1,320||$2,410||–|
|Lead||133 tonnes||$0.99 per lb||$290||$557||–|
|Zinc||209 tonnes||$1.34 per lb||$619||$1,174||–|
|Treatment and refining and other processing charges||$(1,964)||$(3,802)||–|
|Provisional sales adjustment related to prior periods (3)||–||$(1,146)|
|Mining and transportation costs||$(2,373)||$(4,259)||–|
|(1)||Ounces for silver and gold; and, pounds for lead and zinc.|
|(2)||Underground mine production of development material commenced in August of 2020, so there are no comparable 2020.|
|(3)||Provisional sales for 2020 were finalized in Q1 2021 resulting in negative adjustment to net sales revenue of $1,146.|
By bringing forward the start-up of the underground mine and processing mineralized development material at the Fresnillo plant in advance of commissioning the Juanicipio plant, MAG and Fresnillo expect to secure several positive outcomes for the Juanicipio Project:
Juanicipio Exploration Update
Despite a temporary COVID-19 exploration halt imposed by the Mexican Government in 2020, the full Juanicipio 2020 drilling program was completed as planned in 2020, although processing of assays was delayed and only released subsequent to the quarter ended June 30, 2021 (see Press Release dated August 5, 2021). A total of 33 surface holes (27,900 m) and 77 underground definition holes (11,800 m) were completed with the primary objectives of: infilling and expanding the Valdecañas Deep Zone (“Deep Zone”) to optimize its planned extraction; and underground definition drilling of the upper high-grade Valdecañas Bonanza Zone (“Bonanza Zone”) where test mining has already begun and the focus for the first several years of mining lies.
A complete set of tables by vein of the 2020 drilling results is available at:
along with a new 3D video displaying the entire Valdecañas Vein System, available at:
The 2020 drilling program successfully:
DEER TRAIL PROJECT UPDATE
A Phase I surface-based core drilling program was completed during Q2 2021. Assays and interpretations are expected to be released during Q3 2021. A follow-up Phase II drill program was planned as interpretation of the incoming core and draft lab results were incorporated into the district geological model. Phase II drilling commenced subsequent to the quarter end in July 2021 and is planned for 5,000 metres over 5 holes.
Qualified Person: Dr. Peter Megaw, Ph.D., C.P.G., has acted as the Qualified Person as defined in National Instrument 43-101 for this disclosure and supervised the preparation of the technical information in this release. Dr. Megaw has a Ph.D. in geology and more than 38 years of relevant experience focused on ore deposit exploration worldwide. He is a Certified Professional Geologist (CPG 10227) by the American Institute of Professional Geologists and an Arizona Registered Geologist (ARG 21613). Dr. Megaw is not independent as he is Chief Exploration Officer and a Shareholder of MAG.
FINANCIAL RESULTS – THREE AND SIX MONTHS ENDED JUNE 30, 2021
As at June 30, 2021, the Company had working capital of $68,374 (December 31, 2020: $94,513) including cash of $66,342 (December 31, 2020: $94,008) and no long-term debt. As well, as at June 30, 2021, Minera Juanicipio had cash of $15,107 (MAG’s attributable 44% share of $6,647). The Company makes cash advances to Minera Juanicipio as ‘cash called’ by the operator Fresnillo, based on approved joint venture budgets. In the three and six months ended June 30, 2021, the Company funded advances to Minera Juanicipio, which combined with MAG’s Juanicipio expenditures on its own account, totaled $23,809 and $23,910 respectively (June 30, 2020: $23,284 and $23,456 respectively). Subsequent to June 30, 2021, the Company advanced an additional $15,884 to Minera Juanicipio representing its 44% share of a $36,100 cash call to fund process plant construction and further underground development of the Juanicipio property.
The Company’s net income for three months ended June 30, 2021 amounted to $3,305 and net loss for the six months ended June 30, 2021 amounted to $357 or $0.03/share and $(0.00)/share respectively (June 30, 2020: $1,297 net income and $13,601 net loss respectively or $0.01/share or $(0.15)/share respectively). The Company recorded its 44% share of income from its equity investment in Juanicipio of $4,820 and $5,452 respectively for the three and six months ended June 30, 2021 (June 30, 2020: $1,189 income and $3,498 loss, respectively) which included MAG’s 44% share of net income from the sale of pre-production development material (see Table 2 below). Share based payment expense (a non-cash item) recorded in the three months and six months ended June 30, 2021 amounted to $1,485 and $2,678 respectively (June 30, 2020: $1,230 and $1,708 respectively).
Table 2: MAG’s 44% share of income from its equity investment in Juanicipio
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
|Gross Profit from processing development material
(see Underground Mine Production – Juanicipio Project above)
|$8,883||Nil (1)||$17,082||Nil (1)|
|Foreign exchange and other||$1,199||$317||$124||$(3,558||)|
|Net income (loss) before tax||$9,795||$317||$16,551||$(3,558||)|
|Income tax benefit (expense) (including deferred income tax)||$1,160||$2,384||$(4,160||)||$(4,392||)|
|Net income (loss) for the period (100% basis)||$10,955||$2,701||$ 12,391||$(7,950||)|
|MAG’s 44% income (loss) – equity investment in Juanicipio||$4,820||$1,189||$5,452||$(3,498||)|
About MAG Silver Corp.
MAG Silver Corp. is a Canadian development and exploration company focused on becoming a top-tier primary silver mining company by exploring and advancing high-grade, district scale, silver-dominant projects in the Americas. Its principal focus and asset is the Juanicipio Project (44%), being developed in a Joint Venture partnership with Fresnillo Plc (56%), the Operator. Juanicipio is located in the Fresnillo Silver Trend in Mexico, the world’s premier silver mining camp, and the Joint Venture is currently developing an underground mine and constructing a 4,000 tonnes per day processing plant which is expected to commence commissioning in Q4-2021. Underground mine production of development material commenced in Q3-2020, and an expanded exploration program is in place targeting multiple highly prospective targets both at Juanicipio by the Joint Venture and by MAG at the Deer Trail 100% earn-in project in Utah.
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