MAG Silver Corp. (TSX:MAG) (NYSE American: MAG) announces the Company’s unaudited financial results for the three and six months ended June 30, 2022. 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, 2022, 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.
OPERATIONAL – Juanicipio owned 44% by MAG Silver
LIQUIDITY AND CAPITAL RESOURCES
“As we look forward to the final tie-in to the electrical grid at Juanicipio, Q2 continued the trend of strong operational performance with record toll milling through the Saucito and Fresnillo operations and robust cash generation. The project operator Fresnillo reports final tie-in to the power grid is expected in the coming weeks and target ramp-up to 85-90% of nameplate capacity by year end remains within reach,” said George Paspalas, MAG’s President and CEO. “Juanicipio has over 100,000 tonnes of material stockpiled and continues to advance underground development which positions the operations team well to deliver concentrates produced from the Juanicipio facility in the second half of this year.”
JUANICIPIO PROJECT UPDATE
Underground Mine Production
In Q2 2022, a total of 154,069 tonnes of mineralized development and stope material were processed through the Fresnillo plants, realizing commercial and operational de-risking opportunities for the Juanicipio Project. The resulting payable metals sold and processing details on a 100% basis for Q2 2022 are summarized in Table 1 below. The sales and treatment charges for tonnes processed in the quarter were recorded on a provisional basis and will be adjusted in the third quarter of 2022 based on final assay and pricing adjustments in accordance with the offtake agreements.
Table 1: Q2 2022 Mineralized Material Processed at Fresnillo’s Processing Plants (100% basis)
|Three Months Ended June 30, 2022 (154,069 tonnes processed)|
|Payable Metals||Quantity||Average Per Unit
|Silver||2,207,626 ounces||21.32 per oz||47,070||10,991|
|Gold||5,119 ounces||1,834 per oz||9,388||1,320|
|Lead||1,016 tonnes||0.95 per lb.||2,135||290|
|Zinc||1,599 tonnes||1.76 per lb.||6,199||619|
|Treatment and refining charges (“TCRCs”) and other processing costs||(9,568||)||(1,964||)|
|Mining and transportation costs||(12,717||)||(2,373||)|
|Depreciation and amortization||(5,245) (1)||–|
(1) The underground mine is now in stopes with mineralized and development material being processed through Fresnillo’s plants and refined and sold, and effectively readied for its intended use.
The average silver head grade for the mineralized development and initial stope material processed in Q2 2022 was 567 g/t.
Processing Plant Construction & Outlook
The Juanicipio project team delivered the 4,000 tpd processing plant for commissioning in the fourth quarter of 2021. However, according to the operator Fresnillo and as previously reported, the state-owned electrical company (Comision Federal de Electricidad “CFE”), notified Fresnillo late in December 2021 that the regulatory approval to complete the tie-in to the national power grid could not yet be granted and that the Juanicipio plant commissioning timeline was therefore extended by approximately six months. As reported by the operator Fresnillo, commencement of electrical commissioning of the Juanicipio processing plant is expected to occur in the coming weeks. It is expected that the plant will ramp up to 85-90% of the nameplate 4,000 tpd capacity by the end of 2022.
Should there be additional funding requirements related to further commissioning delays or to additional sustaining capital that is being brought forward in excess of the cash flow generated prior to attaining commercial production, there may still be further cash calls required from Fresnillo and MAG.
FINANCIAL RESULTS – THREE MONTHS ENDED JUNE 30, 2022
As at June 30, 2022, MAG had working capital of $47,673 (March 31, 2022: $53,278) including cash of $44,655 (March 31, 2022: $52,248) and no long-term debt. As well, as at June 30, 2022, Juanicipio had working capital of $23,769 including cash of $37,504 (MAG’s attributable share is 44%).
The Company’s net income for three months ended June 30, 2022 amounted to $7,562 (June 30, 2021: $3,305 net income) or $0.08/share (June 30, 2021: $0.03/share). MAG recorded a 44% income from equity accounted investment in Juanicipio of $12,347 (June 30, 2021: $4,820) which included MAG’s 44% share of net income from the sale of pre-production development and stope material as well as loan interest earned on mining assets brought into use (see Table 2 below).
Table 2: MAG’s share of income from its equity accounted Investment in Juanicipio
|3 Months ended
June 30, 2022
|3 months ended
June 30, 2021
|Gross profit from processing mineralized material
(see Underground Mine Production – Juanicipio Project above)
|Extraordinary mining duty||(109||)||–|
|Foreign exchange and other||23||1,199|
|Income before tax||$||35,800||$||9,795|
|Income tax expense (including deferred income tax)||(8,439||)||1,160|
|Income for the period (100% basis)||$||27,361||$||10,955|
|MAG’s 44% share of income from equity accounted investment
Loan interest on mining assets – MAG’s 44% share
|MAG’s 44% equity income||$||12,347||$||4,820|
Qualified Person: All scientific or technical information in this press release including assay results referred to, and Mineral Resource estimates, if applicable, is based upon information prepared by or under the supervision of, or has been approved by Dr. Peter Megaw, Ph.D., C.P.G., a Certified Professional Geologist who is a “Qualified Person” for purposes of National Instrument 43-101, Standards of Disclosure for Mineral Projects (“National Instrument 43-101” or “NI 43-101”). Dr. Megaw is not independent as he is an officer and a paid consultant of MAG.
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 with Fresnillo Plc (56%), the operator. The project is located in the Fresnillo Silver Trend in Mexico, the world’s premier silver mining camp, where the operator is currently developing an underground mine and constructing a 4,000 tonnes per day processing plant. Underground mine production of mineralized development material commenced in Q3 2020, and an expanded exploration program is in place targeting multiple highly prospective targets at Juanicipio. MAG is also executing a multi-phase exploration program at the Deer Trail 100% earn-in project in Utah and has recently acquired the Larder Lake project located in the historically prolific Abitibi region of Canada.
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We acknowledge the [financial] support of the Government of Canada.