MAG Silver Corp. (TSX:MAG) (NYSE American: MAG) announces the Company’s unaudited financial results for the three months ended September 30, 2022. For details of the unaudited condensed interim consolidated financial statements and Management’s Discussion and Analysis for the three months ended September 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 $000s of United States dollars (“US$”) unless otherwise specified.
Operational – Juanicipio owned 44% by MAG
LIQUIDITY AND CAPITAL RESOURCES
“In anticipation of the commencement of milling operations at Juanicipio, Q3 continued the trend of strong operational performance with record milling at the Saucito and Fresnillo operations, delivering over 2.4 million payable silver ounces. This brings our year-to-date payable silver production to over 6.8 million ounces” said George Paspalas, MAG’s President and CEO. “As reported by Fresnillo to us, electrical commissioning is expected in the coming weeks and a target ramp-up to 85-90% of nameplate capacity is envisioned within months of commissioning. Juanicipio is well positioned to take its place as a significant and responsible silver producer whilst we continue to progress our exciting exploration programs at Juanicipio, Deer Trail and Larder.”
JUANICIPIO PROJECT UPDATE
Underground Mine Production
In Q3 2022, a total of 180,808 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 Q3 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 fourth quarter of 2022 based on final assay and pricing adjustments in accordance with the offtake agreements.
Table 1: Q3 2022 Mineralized Material Processed at Fresnillo’s Processing Plants (100% basis)
|Three Months Ended September 30, 2022 (180,808 tonnes processed)||Q3 2021 Amount
|Payable Metals||Quantity||Average Per Unit
|Silver||2,425,256 ounces||18.36 per oz||44,518||14,344|
|Gold||4,901 ounces||1,677 per oz||8,219||1,761|
|Lead||1,347 tonnes||0.87 per lb.||2,578||529|
|Zinc||2,038 tonnes||1.45 per lb.||6,511||947|
|Treatment and refining charges (“TCRCs”) and other processing costs||(12,111||)||(2,897||)|
|Mining and transportation costs||(18,127||)||(3,477||)|
|Depreciation and amortization||(6,376) (1)||–|
(1) The underground mine is now in stopes with mineralized and development material being processed through Fresnillo’s plants and refined and sold. The mine was effectively readied for its intended use on January 1, 2022.
The average silver head grade for the mineralized development and initial stope material processed in Q3 2022 was 513 g/t (Q2 2022 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. As reported more recently 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 within months of commissioning.
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 SEPTEMBER 30, 2022
As at September 30, 2022, MAG had working capital of $42,434 (June 30, 2022: $47,673) including cash of $39,507 (June 30, 2022: $44,655) and no long-term debt. As well, as at September 30, 2022, Juanicipio had working capital of $9,954 including cash of $18,176 (MAG’s attributable share is 44%).
The Company’s net income for three months ended September 30, 2022 amounted to $8,227 (September 30, 2021: $2,280 net loss) or $0.08/share (September 30, 2021: ($0.02)/share). MAG recorded its 44% income from equity accounted investment in Juanicipio of $11,781 (September 30, 2021: $1,457) which included MAG’s 44% share of net income from the sale of mineralised development and stope material as well as loan interest earned on mining assets brought into use (see Table 2 below).
Table 2: MAG’s share of income from its equity accounted Investment in Juanicipio
|3 Months ended September 30, 2022||3 months ended September 30, 2021|
|Gross profit from processing mineralized material (see Underground Mine Production – Juanicipio Project above)||
|Extraordinary mining duty||(64||)||(70||)|
|Foreign exchange and other||1,584||(956||)|
|Income before tax||$ 25,540||$ 9,692|
|Income tax expense (including deferred income tax)||825||(6,379||)|
|Income for the period (100% basis)||$ 26,365||$ 3,312|
|MAG’s 44% share of income from equity accounted investment in Juanicipio
Loan interest on mining assets – MAG’s 44% share
|MAG’s 44% equity income||$ 11,781||$ 1,457|
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. 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 growth-oriented Canadian development and exploration company focused on becoming a top-tier primary silver mining company by exploring and advancing high-grade, district scale, precious metals 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 advancing underground mine development and commissioning 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 multi-phase exploration programs at the Deer Trail 100% earn-in Project in Utah and the recently acquired Larder Project, located in the historically prolific Abitibi region of Canada.
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We acknowledge the [financial] support of the Government of Canada.