joint venture mining project with Fresnillo, Juanicipio, produced more metal than expected in Q3/23 as the ramp-up of the processing plant was being finalized, reported PI Financial analyst Chris Thompson in an October 25 research note.
"Following the announcement of commercial production at the company's 44%-owned Juanicipio mine in Mexico at the end of Q2/23, we are impressed with the delivery of Q3/23 operating results, ahead of our expectations," Thompson wrote.
Rating is Buy
Accordingly, PI maintained its Buy rating and CA$19.15 per share target price on MAG. The Canadian producer's current share price is about CA$14.97.
Based on these two figures, PI's projected return for investors is a compelling 28%.
Thompson reviewed the Q3/23 numbers out of Juanicipio.
Production there during the third quarter was 4,782,000 ounces (4.782 Moz) of silver, higher than PI's estimate of 4.159 Moz of silver. Q3 production represents about 29% of PI's expected full-year 2023 (FY23) production of silver, which is 16.482 Moz, wrote Thompson. Q3 production makes up about 28% of PI's FY23 estimate.
Grades of the precious metals milled Q3/23 were higher than expected. For silver, the grade was 523 grams per ton (523 g/t) versus 450 g/t. For gold, it was 1.32 g/t versus 0.98 g/t.
The total of tons milled missed expectations slightly. This was due to processing being shifted to solely the new Juanicipio plant in August, explained Thompson. Lower throughput, though, was offset in part by the head grades, improved over those in Q2/23.
Thompson pointed out that while the Juanicipio plant achieved a nameplate capacity of 4,000 tons per day in Q3/23, PI expects it to do so for longer periods in Q4/23, in part due to current optimization efforts.
"With reliance on Fresnillo's Fresnillo and Saucito plants now in the rearview mirror, we see the joint venture as well-positioned to deliver Q4/23 at close to nameplate capacity," the analyst wrote.
Also, Thompson noted he expects additional updates on Juanicipio from MAG through year-end 2023.
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- Mag Silver Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures PI Financial, Mag Silver Corp., October 25, 2023
I, Chris Thompson, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or
issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed
in this report. I am the research analyst primarily responsible for preparing this report.
Research Disclosures: PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company.
The affiliates of PI Financial Corp. are PI Financial (US) Corp., PI Financial Services Corp., and PI Capital Corp.
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is amongst other factors determined by
revenue generated directly or indirectly from various departments including Investment Banking. Evaluation is largely on an activity-based system that
includes some of the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research
and investment guidance, and client feedback. Analysts and all other Research staff are not directly compensated for specific Investment Banking
None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without
the prior express written permission of PI Financial Corp.
PI Financial Corp.’s policies and procedures regarding dissemination of research, stock rating and target price changes can be reviewed on our corporate
website at www.pifinancial.com (Research: Research and Conflict Disclosure).
The attached summarizes PI’s analysts review of the material operations of the attached company(s).