MAG Silver Corp. (TSX:MAG) (NYSE American:MAG)
(“MAG” or the
“Company”)
announces the Company’s audited consolidated financial results for
the year ended December 31, 2017. For details of the
consolidated financial statements, Management's Discussion and
Analysis, Annual Information Form and Annual Report on Form 40-F
for the year ended December 31, 2017, 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.
2017 HIGHLIGHTS
- New expanded Juanicipio Resource Estimate and robust 2017 PEA
announced November 7, 2017 with Base Case (1) highlights (100%
basis) as follows:
- Low life of mine (“LOM”) AISC of $5.02/ounce (“oz”) of silver
over an initial 19 years of mine-life;
- Process plant ramp up to a throughput rate of 1.4 million
tonnes/year (4,000 tpd);
- LOM payable production of 183 million oz of silver, and on a
silver equivalent basis 352 million oz(1);
- Base case pre-tax IRR 64.5%; after tax IRR 44.5%;
- Base case pre-tax Net Present Value (“NPV”) at a 5% discount
rate of $1.86 billion; after tax NPV of $1.14 billion;
- Initial capital costs on 100 % basis as of January 1, 2018 of
$360 million (“M”) (MAG’s 44% $158.4 M);
- Accelerated early silver flow gives less than a 2-year payback
from plant startup.
(1) Base Case metal prices of $17.90/oz for
silver; $1250/oz for gold; $0.95/pound (“lb”) for lead and $1.00/lb
for zinc. Projected Silver Equivalent calculated using the Base
Case metal recoveries and Base Case metal prices.
- Underground development intensified with additional contractors
brought in to increase underground development rate.
- Permitting based on an upgraded mine design submitted in 2017
and received subsequent to the year end according to the operator,
Fresnillo.
- Independent feasibility study by AMC expected to be completed
in the second quarter of 2018, as required for a production
decision under the Minera Juanicipio Shareholders’
Agreement.
- Formal Minera Juanicipio and respective Joint Venture partner
Board approvals expected upon completion of the feasibility
study.
- 20,000 metre exploration drill program in process to test new
targets and to upgrade Inferred Mineral Resources in the Deep Zone
to Indicated Mineral Resources (assays pending).
- Directional drilling being utilized to infill and expand the
Deep Zone.
- Closed a non-brokered private placement offering for gross
proceeds of $48,158
- Company is well funded (cash and cash equivalents totaling
$160,395 as at December 31, 2017).
George Paspalas, President and CEO, commented,
“We saw the 2017 PEA strongly validate the enhanced project scope,
size and economics of the Juanicipio project. We look forward
now to completing the feasibility study which will trigger the
production decision and set us on the path forward with our partner
Fresnillo. As we progress through 2018, the strategy to
commence exploration on some of the greenfield targets on the Joint
Venture ground should materialize”.
Juanicipio Project Update
At site, the underground development continues
at increased development rates, with emphasis on the ramp twinning
and on three internal ramps at depth designed to provide zone
access within the mine. Fresnillo, as operator, advised that
permits submitted in 2017 based on the upgraded 4,000 tpd design
were granted in the first quarter of 2018.
Exploration drilling continues under the 20,000
metre program approved in 2017, with currently five drill rigs on
site, four drilling from surface and one from underground (all
assays pending).
An independent feasibility study to be prepared
by AMC, was commissioned by Minera Juanicipio in the second half of
2017, and is expected to be completed by the second quarter of
2018. This study is required by the Minera Juanicipio
Shareholders’ Agreement in order to make a formal production
decision. Unlike the 2017 PEA, the feasibility study (by regulatory
definition) cannot include Inferred Mineral Resources in the mine
plan and is based on more detailed engineering which may result in
changes in project’s scope. As a result, the feasibility
study will model significantly fewer tonnes mined resulting in a
shorter mine life than envisioned in the 2017 PEA, and the study is
expected to contain an incremental increase in the estimated
initial capital cost. With these and other possible scope
changes stemming from the exclusion of Inferred Mineral Resources,
the project’s modeled economics are expected to decrease as
compared to those in the 2017 PEA. Upon completion of the
feasibility study, Minera Juanicipio is expected to present the
study to both its Board and the respective Joint Venture partner
Boards for formal development approval. Although there is no
certainty a production decision will be made, Fresnillo has
publicly advised that it expects Minera Juanicipio to be in
production by the first half of 2020, which is consistent with the
timeline to production in the 2017 PEA.
FINANCIAL RESULTS – YEAR ENDED DECEMBER
31, 2017
As at December 31, 2017, the Company had working
capital of $159,906 (December 31, 2016: $139,141) including cash
and cash equivalents of $160,395 (December 31, 2016: $138,347 cash
and term deposits). The Company currently has no debt and
believes it has sufficient working capital to maintain all of its
properties and currently planned programs for a period in excess of
the next year. The Company makes cash advances to Minera
Juanicipio as 'cash called' by the operator, Fresnillo, based on
approved joint venture budgets. In the year ended December 31,
2017, the Company funded advances to Minera Juanicipio, which
combined with MAG's Juanicipio expenditures on its own account,
totaled $19,435 (December 31, 2016: $7,363).
The Company’s net loss for the year ended
December 31, 2017 decreased to $6,497 (December 31, 2016: $55,846)
or $0.08/share (December 31, 2016: $0.71/share) primarily because
there were no exploration and evaluation impairments this
year. In the comparative 2016, the Company recognized
impairments on its Cinco de Mayo and Guigui projects totaling
$53,893.
Management compensation and consulting fees of
$2,521 for the year ended December 31, 2017 were comparable to the
prior year (December 31, 2016: $2,397) as corporate staffing levels
remained constant. Likewise, share based payment expense (a
non-cash item) based on fair values of equity incentive grants
(stock options, performance share units (“PSUs”), and deferred
share units (“DSUs”)) also remained constant and amounted to $2,268
in the year (December 31, 2016: $2,263). In the year ended
December 31, 2017, the Company granted 285,522 stock options
(December 31, 2016: 227,773), 88,665 PSUs, (December 31, 2016:
69,085), and 66,325 DSUs (December 31, 2016: 63,287) under the
Company’s equity compensation plans. An additional 13,109
DSUs (December 31, 2016: 9,477) were granted to directors who
elected to receive their retainer and meeting fees for the period
in DSUs rather than in cash.
In other income for the year ended December 31,
2017, the Company earned interest income on its cash and cash
equivalents of $1,755 (December 31, 2016: $1,115).
Shareholders may receive, upon request and free
of charge, a hard copy of the Company's Audited Financial
Statements. The Company's 40-F has also been filed with the United
States Securities and Exchange Commission.
ADVANCE NOTICE POLICY
MAG also announces the approval by its board of
directors of certain housekeeping amendments to its advance notice
policy (the "Policy") first adopted on August 23, 2012 and amended
effective March 23, 2018 which Policy, among other things, includes
a provision that requires advance notice to the Company in
circumstances where nominations of persons for election to the
board of directors are made by shareholders of the Company other
than pursuant to: (i) a "proposal" made in accordance with Division
7 of the Business Corporations Act (British Columbia) (the "Act");
or (ii) a requisition of the shareholders made in accordance with
section 167 of the Act. The amendments are designed to ensure that
the Policy is aligned with recent governance recommendations with
respect to best practices.
The full text of the Policy is available via
SEDAR at www.sedar.com or upon request by contacting the Secretary
of the Company at 604-630-1399 or by email at
jharris@magsilver.com.
About MAG Silver Corp.
(www.magsilver.com) MAG
Silver Corp. is a Canadian exploration and development 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. Our principal focus and asset is the
Juanicipio Property (44%), being developed in partnership with
Fresnillo Plc (56%) and is located in the Fresnillo Silver District
in Mexico, the world’s premier silver mining camp. We are
presently developing the underground infrastructure on the
property, under the operational expertise of our joint venture
partner, Fresnillo plc, to support an expected 4,000 tonnes per day
mining operation. As well, we have an expanded exploration
program in place investigating other highly prospective targets
across the property. In addition, we continue to work on
regaining surface access to our 100% owned Cinco de Mayo property
in Mexico while we seek other high grade, district scale
opportunities.
On behalf of the Board ofMAG SILVER
CORP.
"Larry Taddei"
Chief Financial Officer
For further information on behalf of MAG Silver Corp.
Contact Michael J. Curlook, VP Investor
Relations and Communications |
Website:Phone:Toll free: |
www.magsilver.com (604) 630-1399 (866) 630-1399 |
Email:Fax: |
info@magsilver.com (604) 681-0894 |
Neither the Toronto Stock Exchange nor the NYSE
American have reviewed or accepted responsibility for the accuracy
or adequacy of this press release, which has been prepared by
management.
This News Release contains "forward-looking
information" and "forward looking statements" within the meaning of
applicable Canadian and United States securities legislation.
Statements contained herein that are not based on historical or
current fact, including without limitation statements containing
the words “anticipates,” “believes,” “may,” “continues,”
“estimates,” “expects,” and “will” and words of similar import,
constitute “forward-looking statements” within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking information may include, but is not limited to,
expectations with respect to the filing of final base shelf
prospectus and shelf registration statement on form F-10 or with
respect to any future offerings by the Company; and information
contained the preliminary base shelf prospectus relating to, among
other things, the future price of silver, gold, lead and zinc, the
estimation of mineral resources, preliminary economic estimates
relating to the Juanicipio Project, estimates of the time and
amount of future silver, gold, lead and zinc production for
specific operations, estimated future exploration and development
expenditures and other expenses for specific operations, permitting
timelines, the Company’s expectations regarding impairments of
mineral properties, the Company’s expectations regarding its
negotiations with the Ejido to obtain surface access to the Cinco
de Mayo Property; the anticipated timing of a formal “production
decision” at Minera Juanicipio; the Company’s expectations
regarding the sufficiency of its capital resources and requirements
for additional capital, litigation risks, currency fluctuations,
environmental risks and reclamation cost, and changes to
governmental laws and regulations. Any statements that express or
involve discussions with respect to predictions, beliefs, plans,
projections, objectives, assumptions or future events of
performance (often but not always using words or phrases such as
“anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”,
“strategy”, “goals”, “objectives”, “project”, “potential” or
variations thereof or stating that certain actions, events, or
results “may”, “could”, “would”, “might” or “will” be taken, occur,
or be achieved, or the negative of any of these terms and similar
expressions), as they relate to the Company or management, are
intended to identify forward-looking statements and
information. Such statements reflect the Company’s current
views with respect to future events and are subject to certain
known and unknown risks, uncertainties and assumptions.
Many factors could cause actual results,
performance or achievements to be materially different from any
future results, performance or achievements that may be expressed
or implied by such forward-looking statements and information,
including, among others, the ability of the Company to successfully
close a financing pursuant to the base shelf prospectus or shelf
registration statement and those risks identified in MAG's
preliminary base shelf prospectus dated December 28, 2017 filed on
SEDAR at www.sedar.com . Forward-looking information is based on
the expectations and opinions of MAG's management on the date the
statements are made. The assumptions used in the preparation of
such statements, although considered reasonable at the time of
preparation, may prove to be imprecise. We do not assume any
obligation to update forward-looking information, whether as a
result of new information, future events or otherwise, other than
as required by applicable law. For the reasons set forth above,
prospective investors should not place undue reliance on
forward-looking information. Neither the TSX nor the NYSE American
has approved or disapproved of the information contained
herein.
Cautionary Note to Investors Concerning
Estimates of Indicated Resources
This press release uses the term "Indicated
Resources". MAG advises investors that although this term is
recognized and required by Canadian regulations (under National
Instrument 43-101 - Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize this
term. Investors are cautioned not to assume that any part or all of
mineral deposits in this category will ever be converted into
reserves.
Cautionary Note to Investors Concerning
Estimates of Inferred Resources
This press release uses the term "Inferred
Resources". MAG advises investors that although this term is
recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize this
term. Investors are cautioned not to assume that any part or all of
the mineral deposits in this category will ever be converted into
reserves. In addition, "Inferred Resources" have a great amount of
uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, or economic studies except for Preliminary Assessment as
defined under Canadian National Instrument 43-101. Investors are
cautioned not to assume that part or all of an Inferred Resource
exists, or is economically or legally mineable.
Please Note:Investors are urged
to consider closely the disclosures in MAG's annual and quarterly
reports and other public filings, accessible through the Internet
at www.sedar.com
and www.sec.gov/edgar/searchedgar/companysearch.html.
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