MAG Silver Corp. (TSX:MAG) (NYSE AMERICAN:MAG)
(“MAG” or the
“Company”)
announces the Company’s unaudited financial results for the three
months ended March 31, 2018. For details of the March 31, 2018
unaudited condensed interim consolidated Financial Statements and
Management's Discussion and Analysis, 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.
2018 FIRST QUARTER
HIGHLIGHTS
- A National Instrument 43-101 Amended and Restated Technical
Report documenting the updated Minera Juanicipio Mineral Resource
and associated preliminary economic assessment (the “2017 PEA”) was
filed on SEDAR in January 2018.
- Base Case (1) highlights (Juanicipio Project 100% basis) as
follows:
- Low 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);
- Payable production of 183 million oz of silver over life of
mine, 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 work on the project has intensified resulting in
the highest development rate to date achieved in the quarter ended
March 31, 2018.
- Advanced draft of an independent feasibility study prepared by
AMC currently under review by both partners and completion expected
in the 2nd quarter of 2018.
- Formal Minera Juanicipio and respective Joint Venture partner
Board approvals expected upon completion of the feasibility
study.
- Exploration drilling now utilizing directional drilling to
infill and expand the Deep Zone (assays pending).
- Company is well funded with cash and cash equivalents totaling
$152,692 as at March 31, 2018.
George Paspalas, President and CEO, commented,
“The Juanicipio Project progresses well, with development rates
increasing significantly last year and continuing into 2018.
With the advanced draft joint venture feasibility study in hand, we
look forward to its finalization and formal project approval.
On the exploration front, the use of directional drilling is
proving to be very beneficial with target accuracy improving at
depth as we infill and expand the Deep Zone, while other
‘greenfield’ exploration targets have been identified, together
with Fresnillo, on the Joint Venture Property.”
Juanicipio Project Update
Underground development continues at increased
development rates, with emphasis on: the ramp twinning; the
continuation of the three internal ramps at depth designed to
provide additional stope access within the mine; the development of
the conveyor to surface ramp; and the excavation of the underground
crusher chamber. Exploration drilling currently continues under the
20,000-metre program approved in 2017, with five drill rigs on
site, four drilling from surface and one from underground (all
assays pending). Directional drilling is now being utilized
to infill and expand the Deep Zone, which remains open to depth and
laterally along its entire strike length to the Joint Venture
boundary in both directions. This specialized equipment
enables drilling a series of precisely aimed and angled deflection
holes off of a single “mother hole” drilled to 800-1,000 metres of
depth. This method of more efficient drilling results in
fewer lost holes, dramatically improves the precision of deep
drilling and provides for significantly improved accuracy in grid
drilling on the 100 x 100 metre pattern required for Indicated
Resource definition.
An independent feasibility study is required by
the Minera Juanicipio Shareholders’ Agreement in order to make a
formal production decision on the project. AMC Mining
Consultants (Canada) Ltd. was therefore commissioned by Minera
Juanicipio in 2017 to prepare the feasibility study and its
completion is expected in the second quarter of 2018. An
advanced draft is currently under review by both partners. By
regulatory definition, a feasibility study cannot include Inferred
Mineral Resources in the mine plan. The feasibility study is
therefore only based on Minera Juanicipio’s Indicated Mineral
Resources and will also include more detailed engineering.
These factors may lead to changes in the project’s scope as
compared to that in the 2017 PEA. Without Inferred Mineral
Resources in the mine plan, the feasibility study will reflect 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, 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 – THREE MONTHS ENDED
MARCH 31, 2018
As at March 31, 2018, the Company had working
capital of $152,864 (March 31, 2017: $133,638) including cash and
cash equivalents of $152,692 (March 31, 2017: $132,422 cash, cash
equivalents 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 quarter ended March
31, 2018, the Company funded advances to Minera Juanicipio, which
combined with MAG's Juanicipio expenditures on its own account,
totaled $5,767 (March 31, 2017: $4,378).
The Company’s net income for the three months
ended March 31, 2018 was $183 or $0.002/share compared to a net
loss of $312 (or $(0.004)/share) in the comparable prior
period. The income in the current quarter is primarily
because of a significant deferred tax recovery of $1,198 (March 31,
2017: $589) related to the impact of foreign exchange on Mexican
tax attributes (resulting from the Peso strengthening against the
$US in period). The deferred tax recovery is a non-cash item
and will only be realized once the Company’s exploration properties
are developed and in production.
In other income and expenses for the quarter
ended March 31, 2018, the Company earned interest income on its
cash and cash equivalents of $682 (March 31, 2017: $362). The
Company also recorded an unrealized loss of $470 (March 31, 2017:
$20) on warrants held and designated as fair value through profit
and loss.
Qualified Person - Unless
otherwise specifically noted herein, all scientific or technical
information in this news release, including assay results and
reserve 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 the
Company (see Related Party Transactions below).
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 |
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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 release includes certain statements that
may be deemed to be “forward-looking statements” within the meaning
of the US Private Securities Litigation Reform Act of 1995 and
applicable Canadian Securities laws. All statements in this
release, other than statements of historical facts are forward
looking statements, including the anticipated time and capital
schedule to production; estimated project economics, including but
not limited to, mill recoveries, payable metals produced,
production rates, payback time, capital and operating and other
costs, IRR and mine plan; expected upside from additional
exploration; expected capital requirements; and other future events
or developments. Forward-looking statements are often, but not
always, identified by the use of words such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "should", "believe" and similar expressions.
These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. Although MAG believes the expectations expressed
in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future
performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include, but are not limited to, changes
in commodities prices; changes in expected mineral
production performance; unexpected increases in capital costs;
exploitation and exploration results; continued availability of
capital and financing; differing results and recommendations in the
Feasibility Study; and general economic, market or business
conditions. In addition, forward-looking statements are
subject to various risks, including but not limited to operational
risk; political risk; currency risk; capital cost inflation risk;
that data is incomplete or inaccurate; the limitations and
assumptions within drilling, engineering and socio-economic studies
relied upon in preparing the PEA; and market risks. The reader
is referred to the Company’s filings with the SEC and Canadian
securities regulators for disclosure regarding these and other risk
factors. There is no certainty that any forward-looking statement
will come to pass and investors should not place undue reliance
upon forward-looking statements. The Company does not undertake to
provide updates to any of the forward-looking statements in this
release, except as required by law.
This news release presents certain financial
performance measures, including all in sustaining costs (AISC),
cash cost and total cash cost that are not recognized measures
under IFRS. This data may not be comparable to data presented by
other silver producers. The Company believes that these generally
accepted industry measures are realistic indicators of operating
performance and are useful in allowing comparisons between periods.
Non-GAAP financial performance measures should be considered
together with other data prepared in accordance with IFRS. This
news release contains non-GAAP financial performance measure
information for a project under development incorporating
information that will vary over time as the project is developed
and mined. It is therefore not practicable to reconcile these
forward-looking non-GAAP financial performance measures.
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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