MAG Silver Corp. (TSX:MAG) (NYSE American: MAG) announces the Company’s unaudited consolidated financial results for the three months ended June 30, 2024. For details of the unaudited condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2024 and management’s discussion and analysis for the three and six months ended June 30, 2024, please see the Company’s filings on the System for Electronic Document Analysis and Retrieval Plus (“SEDAR+”) at (www.sedarplus.ca) or on the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) at (www.sec.gov).
All amounts herein are reported in $000s of United States dollars unless otherwise specified (C$ refers to thousands of Canadian dollars).
KEY HIGHLIGHTS FOR Q2 2024 (on a 100% basis unless otherwise noted)
CORPORATE
EXPLORATION
________________________
1 Adjusted EBITDA, cash cost per ounce, all-in sustaining cost per ounce and free cash flow are non-IFRS measures, please see below “Non-IFRS Measures” section and section 12 of the Q2 2024 MD&A for a detailed reconciliation of these measures to the Q2 2024 Financial Statements.
2 Equivalent silver head grade and equivalent silver production have been calculated using the following price assumptions to translate gold, lead and zinc to “equivalent” silver head grade and “equivalent” silver production: $23/oz silver, $1,950/oz gold, $0.95/lb lead and $1.15/lb zinc.
3 Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc.
4 Information contained in or otherwise accessible through the Company’s website, including the 2023 sustainability report and 2023 ESG Data Table, do not form part of this MD&A and are not incorporated into this MD&A by reference.
JUANICIPIO RESULTS
All results of Juanicipio in this section are on a 100% basis, unless otherwise noted.
Operating Performance
The following table and subsequent discussion provide a summary of the operating performance of Juanicipio for the three months ended June 30, 2024 and 2023, unless otherwise noted.
Key mine performance data of Juanicipio (100% basis) | Three months ended | |||
June 30, | June 30, | |||
2024 | 2023 | |||
Metres developed (m) | 3,520 | 3,434 | ||
Material mined (t) | 349,460 | 259,438 | ||
Material processed (t) | 336,592 | 377,718 | ||
Silver head grade (g/t) | 498 | 498 | ||
Gold head grade (g/t) | 1.20 | 1.25 | ||
Lead head grade (%) | 1.56 | % | 1.05 | % |
Zinc head grade (%) | 2.99 | % | 1.92 | % |
Equivalent silver head grade (g/t)(1) | 746 | 708 | ||
Silver ounces sold (koz) | 4,272 | 4,877 | ||
Gold ounces sold (koz) | 7.20 | 9.54 | ||
Lead pounds sold (klb) | 9,224 | 6,760 | ||
Zinc pounds sold (klb) | 15,237 | 10,103 | ||
Equivalent silver ounces sold (koz)(2) | 5,817 | 6,390 | ||
(1) Equivalent silver head grades have been calculated using the following price assumptions to translate gold, lead and zinc to “equivalent” silver head grade in 2024: $23/oz silver, $1,950/oz gold, $0.95/lb lead and $1.15/lb zinc (2023: $21.85/oz silver, $1,775/oz gold, $0.915/lb lead and $1.30/lb zinc).
(2) Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc (three months ended June 30, 2023 realized prices: $23.69/oz silver, $1,957.47/oz gold, $0.94/lb lead and $1.07/lb zinc).
During the three months ended June 30, 2024, a total of 349,460 tonnes of ore were mined. This represents an increase of 35% over Q2 2023. Increases in mined tonnages at Juanicipio have been driven by the operational ramp-up of the mine towards steady mining and milling targets.
During the three months ended June 30, 2024, a total of 336,592 tonnes of ore were processed through the Juanicipio plant; no ore was processed at the nearby Fresnillo and Saucito processing plants (100% owned by Fresnillo). The 11% decrease over Q2 2023 was mainly attributable to Juanicipio capitalizing on available milling capacity at the nearby Fresnillo and Saucito plants (100% owned by Fresnillo) while undergoing operational ramp-up and processing facility commissioning in the first half of 2023.
The silver head grade and equivalent silver head grade for the ore processed in the three months ended June 30, 2024 was 498 g/t and 746 g/t, respectively (three months ended June 30, 2023: 498 g/t and 708 g/t, respectively). Head grades in Q2 2024 were slightly higher than Q2 2023 (5% on a silver equivalent basis, with silver head grade being consistent), due to low-grade commissioning stockpiles being processed through the Juanicipio plant in the first half of 2023. Silver metallurgical recovery during the three months ending June 30, 2024 was 92% (three months ending June 30, 2023: 87%) reflecting the commencement of commercial pyrite production during Q2 2024 delivering incremental silver and gold recovery as well as ongoing optimizations in the processing plant.
The following table provides a summary of the total cash costs and all-in sustaining costs of Juanicipio for the three months ended June 30, 2024, and 2023.
Key mine performance data of Juanicipio (100% basis) | Three months ended | |||
June 30, | June 30, | |||
2024 | 2023 | |||
Total cash costs(1) | 4,911 | 35,584 | ||
Cash cost per silver ounce sold ($/oz)(1) | 1.15 | 7.30 | ||
Cash cost per equivalent silver ounce sold ($/oz)(1) | 8.86 | 11.18 | ||
All-in sustaining costs(1) | 19,161 | 48,456 | ||
All-in sustaining cost per silver ounce sold ($/oz)(1) | 4.49 | 9.93 | ||
All-in sustaining cost per equivalent silver ounce sold ($/oz)(1) | 11.31 | 13.19 | ||
(1) Total cash costs, cash cost per ounce, cash cost per equivalent ounce, all-in sustaining costs, all-in sustaining cost per ounce, and all-in sustaining cost per equivalent ounce are non-IFRS measures, please see below “Non-IFRS Measures” section and section 12 of the Q2 2024 MD&A for a detailed reconciliation of these measures to the Q2 2024 Financial Statements. Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc (three months ended June 30, 2023 realized prices: $23.69/oz silver, $1,957.47/oz gold, $0.94/lb lead and $1.07/lb zinc).
Financial Results
The following table presents excerpts of the financial results of Juanicipio for the three months ended June 30, 2024 and 2023.
Three months ended | ||||
June 30, | June 30, | |||
2024 | 2023 | |||
$ | $ | |||
Sales | 167,079 | 134,775 | ||
Cost of sales: | ||||
Production cost | (39,866 | ) | (54,571 | ) |
Depreciation and amortization | (22,455 | ) | (17,400 | ) |
Gross profit | 104,757 | 62,804 | ||
Consulting and administrative expenses | (4,283 | ) | (4,159 | ) |
Extraordinary mining and other duties | (2,773 | ) | (1,377 | ) |
Interest expense | (3,241 | ) | (4,886 | ) |
Exchange gains (losses) and other | 696 | 31 | ||
Net income before tax | 95,156 | 52,413 | ||
Income tax (expense) recovery | (41,299 | ) | (6,349 | ) |
Net income (100% basis) | 53,857 | 46,065 | ||
MAG’s 44% portion of net income | 23,697 | 20,268 | ||
Interest on Juanicipio loans – MAG’s 44% | 1,426 | 2,150 | ||
MAG’s 44% equity income | 25,123 | 22,418 |
Sales increased by $32,304 during the three months ended June 30, 2024, mainly due to 25% higher realized metal prices and $8,217 lower treatment, refining and toll milling costs driven mainly by no toll milling at the Saucito and Fresnillo processing facilities during Q2 2024 vs toll milling in Q2 2023 – as explained in ‘Juanicipio Results – Operating Performance’ section above, offset by 5% lower metal volumes.
Production costs decreased by $14,705 to Juanicipio depleting higher-cost, lower-grade commissioning stockpiles during operational ramp-up and processing facility commissioning in the first half of 2023.
Depreciation increased by $5,056 as the Juanicipio mill achieved commercial production and commenced depreciating the processing facility and associated equipment in June 2023.
Cash operating margin increased from 60% to 76%, mainly due to reduced operating costs as well as positive commodity prices augmented by operational leverage and no processing at the nearby Fresnillo and Saucito processing facilities.
Other expenses decreased by $790 mainly as a result of higher exchange gains ($664) and lower interest expense ($1,645) as Juanicipio reduced its outstanding shareholder loans balance by $173,339 ($156,859 loan repayments and $16,480 converted to equity) over the course of
September 2023 to June 2024, offset by higher extraordinary mining and other duties ($1,396) which were impacted by the commencement of pyrite production during Q2 2024.
Taxes increased by $34,951 mainly due to non-cash deferred tax charges on fixed assets driven by a weakening in the Mexican peso versus the US dollar, as well as higher taxable profits generated during Q2 2024.
Ore Processed at Juanicipio Plant (100% basis)
Three Months Ended June 30, 2024 (336,592 tonnes processed) | Three Months Ended June 30, 2023 Amount $ |
|||||
Metals Sold | Quantity | Average Price $ |
Amount $ |
|||
Silver | 4,271,991 ounces | 30.17 per oz | 128,876 | 115,555 | ||
Gold | 7,195 ounces | 2,380 per oz | 17,124 | 18,668 | ||
Lead | 4,184 tonnes | 0.99 per lb. | 9,151 | 6,367 | ||
Zinc | 6,911 tonnes | 1.33 per lb. | 20,333 | 10,807 | ||
Treatment, refining, and other processing costs (2) | (8,405 | ) | (16,622 | ) | ||
Sales | 167,079 | 134,775 | ||||
Production cost | (39,866 | ) | (54,571 | ) | ||
Depreciation and amortization (1) | (22,455 | ) | (17,400 | ) | ||
Gross Profit | 104,757 | 62,804 |
(1) The underground mine was considered readied for its intended use on January 1, 2022, whereas the Juanicipio processing facility started commissioning and ramp-up activities in January 2023, achieving commercial production status on June 1, 2023.
(2) Includes toll milling costs from processing mineralized material at the Saucito and Fresnillo plants for Q2 2023.
Sales and treatment charges are recorded on a provisional basis and are adjusted based on final assay and pricing adjustments in accordance with the offtake contracts.
MAG FINANCIAL RESULTS – THREE MONTHS ENDED JUNE 30, 2024
As at June 30, 2024, MAG had working capital of $96,460 (December 31, 2023: $67,262) including cash of $97,337 (December 31, 2023: $68,707) and no long-term debt. As well, as at June 30, 2024, Juanicipio had working capital of $129,111 including cash of $51,422 (MAG’s attributable share is 44%).
The Company’s net income for the three months ended June 30, 2024 amounted to $21,614 (June 30, 2023: $19,390) or $0.21/share (June 30, 2023: $0.19/share). MAG recorded its 44% income from equity accounted investment in Juanicipio of $25,123 (March 31, 2023: $22,419) which included MAG’s 44% share of net income from operations as well as loan interest earned on loans advanced to Juanicipio (see above for a discussion of MAG’s share of income from its equity accounted investment in Juanicipio).
For the three months ended | ||||
June 30, | June 30, | |||
2024 | 2023 | |||
$ | $ | |||
Income from equity accounted investment in Juanicipio | 25,123 | 22,419 | ||
General and administrative expenses | (3,622 | ) | (3,233 | ) |
General exploration and business development | (95 | ) | (40 | ) |
Operating income | 21,406 | 19,146 | ||
Interest income | 928 | 641 | ||
Other income | 650 | 233 | ||
Financing costs | (134 | ) | – | |
Foreign exchange gain (loss) | 60 | 168 | ||
Income before income tax | 22,910 | 20,188 | ||
Deferred income tax expense | (1,296 | ) | (798 | ) |
Net income | 21,614 | 19,390 | ||
NON-IFRS MEASURES
The following table provides a reconciliation of cash cost per silver ounce of Juanicipio to production cost of Juanicipio on a 100% basis (the nearest IFRS measure) as presented in the notes to the Q2 2024 Financial Statements.
Three months ended June 30, | ||||
(in thousands of US$, except per ounce amounts) | 2024 | 2023 | ||
Production cost as reported | 39,866 | 54,571 | ||
Depreciation on inventory movements | 474 | (1,145 | ) | |
Adjusted production cost | 40,340 | 53,426 | ||
Treatment, refining, and other processing costs | 8,405 | 16,622 | ||
By-product revenues(2) | (46,608 | ) | (35,842 | ) |
Extraordinary mining and other duties | 2,773 | 1,377 | ||
Total cash costs(1) | 4,911 | 35,584 | ||
Add back by-product revenues(2) | 46,608 | 35,842 | ||
Total cash costs for equivalent silver(1) | 51,519 | 71,426 | ||
Silver ounces sold | 4,271,991 | 4,877,460 | ||
Equivalent silver ounces sold(3) | 5,816,940 | 6,390,310 | ||
Cash cost per silver ounce sold ($/ounce) | 1.15 | 7.30 | ||
Cash cost per equivalent silver ounce sold ($/ounce) | 8.86 | 11.18 |
(1) As Q3 2023 represented the first full quarter of commercial production, information presented for total cash costs and total cash costs for equivalent silver together with their associated per unit values are not directly comparable.
(2) By-product revenues relate to the sale of other metals namely gold, lead, and zinc.
(3) Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc (three months ended June 30, 2023 realized prices: $23.69/oz silver, $1,957.47/oz gold, $0.94/lb lead and $1.07/lb zinc).
The following table provides a reconciliation of AISC of Juanicipio to production cost and various operating expenses of Juanicipio on a 100% basis (the nearest IFRS measure), as presented in the notes to the Q2 2024 Financial Statements.
Three months ended June 30, | ||||
(in thousands of US$, except per ounce amounts) | 2024 | 2023 | ||
Total cash costs | 4,911 | 35,584 | ||
General and administrative expenses | 4,283 | 4,159 | ||
Exploration | 2,235 | 1,928 | ||
Sustaining capital expenditures | 7,329 | 6,535 | ||
Sustaining lease payments | 349 | 199 | ||
Interest on lease liabilities | (17 | ) | (11 | ) |
Accretion on closure and reclamation costs | 72 | 62 | ||
All-in sustaining costs(1) | 19,161 | 48,456 | ||
Add back by-product revenues(2) | 46,608 | 35,842 | ||
All-in sustaining costs for equivalent silver(1) | 65,768 | 84,298 | ||
Silver ounces sold | 4,271,991 | 4,877,460 | ||
Equivalent silver ounces sold(3) | 5,816,940 | 6,390,310 | ||
All-in sustaining cost per silver ounce sold ($/ounce) | 4.49 | 9.93 | ||
All-in sustaining cost per equivalent silver ounce sold ($/ounce) | 11.31 | 13.19 | ||
Average realized price per silver ounce sold ($/ounce) | 30.17 | 23.69 | ||
All-in sustaining margin ($/ounce) | 25.68 | 13.76 | ||
All-in sustaining margin ($/equivalent ounce) | 18.86 | 10.50 | ||
All-in sustaining margin | 109,715 | 67,099 |
(1) As Q3 2023 represented the first full quarter of commercial production, information presented for all-in sustaining costs, all-in sustaining costs for equivalent silver, and all-in sustaining margin together with their associated per unit values are not directly comparable.
(2) By-product revenues relate to the sale of other metals namely gold, lead, and zinc.
(3) Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc (three months ended June 30, 2023 realized prices: $23.69/oz silver, $1,957.47/oz gold, $0.94/lb lead and $1.07/lb).
For the three months ended June 30, 2024 the Company incurred corporate G&A expenses of $3,473 (three months ended June 30, 2023: $3,175), which exclude depreciation expense.
The Company’s attributable silver ounces sold and equivalent silver ounces sold for the three months ended June 30, 2024 were 1,879,676 and 2,559,454 respectively (three months ended June 30, 2023: 2,146,082 and 2,811,736 respectively), resulting in additional all‐in sustaining cost for the Company of $1.85/oz and $1.36/oz respectively (three months ended June 30, 2023: $1.48/oz and $1.13/oz respectively), in addition to Juanicipio’s all-in-sustaining costs presented in the above table.
The following table provides a reconciliation of EBITDA and Adjusted EBITDA attributable to the Company based on its economic interest in Juanicipio to net income (the nearest IFRS measure) of the Company per the Q2 2024 Financial Statements. All adjustments are shown net of estimated income tax.
Three months ended June 30, | ||||
(in thousands of US$) | 2024 | 2023 | ||
Net income after tax | 21,614 | 19,390 | ||
Add back (deduct): | ||||
Taxes | 1,296 | 798 | ||
Depreciation and depletion | 149 | 58 | ||
Finance costs (income and expenses) | (1,504 | ) | (1,042 | ) |
EBITDA(1) | 21,555 | 19,204 | ||
Add back (deduct): | ||||
Adjustment for non-cash share-based compensation | 1,053 | 1,012 | ||
Share of net earnings related to Juanicipio | (25,123 | ) | (22,419 | ) |
MAG attributable interest in Junicipio Adjusted EBITDA | 52,868 | 32,859 | ||
Adjusted EBITDA(1) | 50,353 | 30,656 | ||
The following table provides a reconciliation of free cash flow of Juanicipio to its cash flow from operating activities on a 100% basis (the nearest IFRS measure), as presented in the notes to the Q2 2024 Financial Statements.
Three months ended June 30, | ||||
(in thousands of US$) | 2024 | 2023 | ||
Cash flow from operating activities | 92,766 | 33,557 | ||
Less: | ||||
Cash flow used in investing activities | (3,780 | ) | (26,125 | ) |
Sustaining lease payments | (349 | ) | (199 | ) |
Juanicipio free cash flow(1) | 88,637 | 7,233 | ||
(1) As Q3 2023 represents the first full quarter of commercial production, comparative information presented for free cash flow of Juanicipio is not directly comparable.
Qualified Persons: All scientific or technical information in this press release including assay results referred to, mineral resource estimates and mineralization, if applicable, is based upon information prepared by or under the supervision of, or has been approved by Gary Methven, P.Eng., Vice President, Technical Services and Lyle Hansen, P.Geo, Geotechnical Director; both are “Qualified Persons” for purposes of National Instrument 43-101, Standards of Disclosure for Mineral Projects.
About MAG Silver Corp.
MAG Silver Corp. is a growth-oriented Canadian mining and exploration company focused on advancing high-grade, district scale precious metals projects in the Americas. MAG is emerging as a top-tier primary silver mining company through its (44%) joint venture interest in the 4,000 tonnes per day Juanicipio Mine, operated by Fresnillo plc (56%). The mine is located in the Fresnillo Silver Trend in Mexico, the world’s premier silver mining camp, where in addition to underground mine production and processing of high-grade mineralised material, an expanded exploration program is in place targeting multiple highly prospective targets. MAG is also executing multi-phase exploration programs at the 100% earn-in Deer Trail Project in Utah and the 100% owned Larder Project, located in the historically prolific Abitibi region of Canada.
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