June 7, 2022 (Investorideas.com Newswire) This Canadian junior’s processing plant is on observe to open mid-year in Mexico. The mine feeding it’s already producing and beating analysts’ estimates.
Canadian junior MAG Silver Corp. (MAG:TSX; MAG:NYSE American) is on observe to open its 4,000 tonnes per day processing plant at its large-scale Juanicipio property in Mexico this summer season and is anticipated to have it 85-90% on-line by the beginning of 2023.
In the meantime, the operator of the undertaking, Fresnillo Plc., is processing hundreds from the mine. MAG’s production results for the primary quarter of 2022 have crushed analysts’ estimates and lots of are sustaining their Purchase scores on the inventory, together with PI Monetary, ROTH Capital Companions, Stifel GMP, and H.C. Wainwright & Co.
“Manufacturing of two.4 million ounces of silver (100% foundation) was above our estimate of two.0 million ounces, whereas gold manufacturing of 5,837 ounces was barely beneath our 6,100-ounce estimate,” wrote ROTH analyst Joe Reagor. “We’re reiterating our $26.00 value goal. We’re additionally reiterating our Purchase ranking as we consider MAG is poised for a major rerating because it grows manufacturing over the following 12 months.”
MAG President and Chief Govt Officer George Paspalas instructed Streetwise Stories that the quantities recovered and their grades have exceeded expectations.
“The top grade coming from improvement faces and the 2 stopping areas underground is a really constructive affirmation of the grade we’re going to see as soon as we’re absolutely operational on our plant,” Paspalas mentioned.
The corporate is mining the Bonanza zone of the Valdecañas vein within the Zacatecas state of Mexico. A preliminary financial evaluation (PEA) in 2017 estimated a 19-year mine lifetime of 4,000 tonnes per day.
The district is characterised by veins that look like fed by an ore fluid upwelling zone. Valdecañas is considered one of two such zones recognized within the development.
MAG owns 44% curiosity within the undertaking, and Fresnillo owns the remaining 56%. The mine generated practically 252,000 tonnes of mineralized materials final yr, together with 3.2 million ounces of silver and 6,577 ounces of gold, MAG mentioned.
First Quarter Seen as Inflection Level
Development of the Juanicipio plant began in 2019. It was anticipated to return on-line by the tip of 2021, however on the finish of the yr the state-owned electrical utility Comisión Federal de Electricidad mentioned it might not instantly approve the plant’s connection to {the electrical} grid due to the necessity to set up additional tools on the system.
“If the anticipated improve in recoveries is realized as soon as the Juanicipio mill is commissioned, continued outperformance of the mine might assist to offset the prices related to delayed commissioning,” analyst Chris Thompson wrote for PI Monetary.
The corporate accomplished a CA$46 million fairness financing final November, however “with spectacular silver grades and better mill throughput, the undertaking has been in a position to self-fund in 2022 and never required any extra capital injections,” analyst Ryan Thompson wrote for BMO Capital Markets.
With the Juanicipio plant anticipated to return on-line quickly, at the very least one analyst, Don DeMarco of Nationwide Financial institution of Canada Monetary Markets, maintained an Outperform ranking with a CA$28.25 goal on the inventory.
“Given the robust efficiency, we see Q1/22 as an inflection level and are constructive on the share value at this degree,” he wrote.
Paspalas mentioned he believes MAG’s inventory is buying and selling at a reduction to silver producers, whereas the corporate has been producing for nearly two years by the Fresnillo vegetation.
“I’m anticipating we are going to rerate to extra of a producer valuation as soon as the electrical energy is linked and we’re ramping up our personal plant,” he mentioned. “Get in now earlier than that occurs.”
MAG Silver has a market cap of CA$1.85 billion and 98.75 million shares excellent. It trades in a 52-week vary of CA$29.28 to CA$15.75.
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