H.C. Wainwright & Co. research analyst Heiko F. Ihle, CFA, advised in an August 9 research note that on August 5, 2021, MAG Silver Corp. (MAG:TSX; MAG:NYSE American) reported that it had successfully completed its FY/20 drill program.
The drill program at MAG Silver's Juanicipio joint venture (JV) project included 39,700 meters of drilling. Ihle noted that 33 of the 110 holes drilled started from surface and 77 others were drilled specifically to further delineate the underground resource.
Analyst Ihle stated that the primary objective of the 2020 program was to infill and expand the Valdecañas Deep Zone and to further define the Valdecañas Bonanza Zone.
The report stated that MAG is presently continuing with its FY/21 drill program and has deployed five drill rigs that are actively operating at surface in coordination with ongoing underground definition drilling.
H.C. Wainwright's report stated that in FY/20, confidence in the high-grade Bonanza Zone Deposit's potential was bolstered by results from hole MIC-6 that returned 8.60 m of 1,356 g/t Ag and 3.3 g/t Au.
In addition, 21 holes were drilled from surface in areas located within the Deep Zone as part of MAG's FY/20 infill and expansion drilling efforts. The report highlighted that "the polymetallic and high-grade gold characteristics of this zone as hole D1-6-1 returned 18.1 m of 3.9 g/t Au, 198 g/t Ag, 14.2% Pb plus Zn, and 0.4% Cu." H.C. Wainwright believes that this hole signifies the western dilatant zone's high-grade potential and mineralization continuity.
Drilling targeted at the Valdecañas vein resulted substantial coincidental intercepts within the Anticipada vein which as a result has been shown opportunity for meaningful growth. MAG Silver's Anticipada intercepts returned 0.3 m of 0.6 g/t Au, 112 g/t Ag, 9.3% Pb plus Zn and 0.1% Cu.
Ihle explained that H.C. Wainwright's discounted cash flow (DCF) model uses a 7.0% discount rate to arrive at a value for MAG Silver's Juanicipio JV project. The firm said that the rate is a little bit lower than typical discount rates tied to Mexican assets throughout its coverage universe, but it believes that the rate is justified given MAG's high-grade ore resource, profitable JV agreement structure, and large production potential.
H.C. Wainwright reiterated its "Buy" rating for MAG Silver Corp. with a target price of US$22.50/share. The company's shares trade under the symbol MAG on the NYSE-American Stock Exchange and closed for trading at US$19.13/share on August 13, 2021.
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Disclosures from H.C. Wainwright & Co., MAG Silver, Aug. 9, 2021
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Heiko F. Ihle, CFA, Tyler Bisset and Marcus Giannini, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of MAG Silver Corp (including, without limitation, any option, right, warrant, future, long or short position).
As of July 31, 2021 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of MAG Silver Corp.
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from MAG Silver Corp for investment banking services within 12 months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in MAG Silver Corp as of the date of this research report.
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