Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe

TICKERS: MAG

Hub-and-Spoke Geology Validated at Utah Mining Asset
Research Report

View Important Disclosures for this Article
Share on Stocktwits

Source:

New drill results show high grades of polymetallic mineralization in multiple spokes of "a very large system,'" noted a Stifel report.

MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) Deer Trail project in Utah showed instances of extensive, high-grade, polymetallic mineralization at depth on drilling, reported Stephen Soock, Stifel vice president and analyst, in an Aug. 3 research note.

Each of the three reported holes, all drilled within 1 kilometer of the Carissa zone, intersected a different mineralization style: high-grade gold, copper-gold, and silver-lead-zinc.  

"The different mineralization style validates the carbonate replacement deposit (CRD) characteristics and 'hub and spoke' geologic thesis, indicating a long-lived system from a source copper-moly porphyry intrusive center," Soock wrote.

Buy Rated, 56% Return

Stifel values the exploration potential at Deer Trail at US$25 million and has a target price on MAG of CA$23 per share target, noted Soock. Currently, the Canadian miner is trading at about CA$14.70 per share. The gap between these prices implies a 56% return for investors.

MAG remains a Buy.

High Grades Encountered

Soock presented the highlights of the new findings. In one hole, MAG encountered one of the thickest instances of manto-style mineralization (silver-lead-zine) to date at Deer Trail. It was shown to host semi-massive sulfides at 525 meters (525m) downhole.

Deeper in the hole, MAG hit 3m of 156 grams per ton (156 g/t) silver skarn "near the contact of the felsic intrusive found at depth," noted Soock.

Other standout intercepts included:

  • 150 g/t silver, 0.7 g/t gold, and 8.9% lead/zinc over 5m
  • 7.5 g/t gold over 0.65m
  • 2.2 g/t gold and 2.1% copper over 4.2m

Next for Project

To follow up on these and other recent drill results, MAG plans to carry out a third phase of drilling and exploration work at Deer Trail, targeting the source of the manto, skarn, and epithermal mineralization.

"We remain optimistic about the prospects of MAG defining multiple high-grade CRD deposits on the property through their science-based approach to exploration," wrote Soock.

Going forward, exploration and drilling will be a key growth driver for MAG, given that its joint venture mining project in Mexico, Juanicipio, is ramping up toward nameplate capacity.

Possible Dividend To Come

Stifel expects future cash flow from Juanicipio to support "a notable dividend, likely commencing in 2024," Soock noted.

This is based on MAG getting an estimated US$440 million (using today's spot prices) in free cash flow from Juanicipio over the next five years. At the company's current share price, this equates to a 6% average annual free cash flow yield.


Want to be the first to know about interesting Gold, Base Metals and Silver investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. Subscribe

Important Disclosures:

  1. 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.
  2. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

Disclosures for Stifel, MAG Silver Corp., August 3, 2023

I, Stephen Soock, research analyst, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Stephen Soock, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at www.stifel.com/institutional/ ImportandDisclosures.

Within the last 12 months, Stifel or an affiliate has provided investment banking services for 14%, 4%, 7% and 4% of the companies whose shares are rated Buy (includes Speculative Buy), Hold, Sell and Suspended, respectively. Within the last 12 months, Stifel or an affiliate has provided material services for 31%, 36%, 20%, 29% and 14% of the companies whose shares are rated Buy, Speculative Buy, Hold, Sell and Suspended, respectively. The securities of the company or companies mentioned in this report may not be registered in certain states or other jurisdictions and as a result, the securities may not be eligible for sale in some states or jurisdictions.

Additionally, the securities of non-U.S. issuers may not be registered with, nor be subject to the reporting requirements of, the U.S. Securities and Exchange Commission. The information contained herein is not an offer to sell or the solicitation of an offer to buy any security in any state or jurisdiction where such an offer or solicitation would be prohibited. Additional Disclosures Please visit the Research Page at www.stifel.com for the current research disclosures and respective target price methodology applicable to the companies mentioned in this publication that are within the Stifel coverage universe. For a discussion of risks and changes to target price including basis of valuation or methodology please see our stand-alone company reports and notes for all stocks. The information contained herein has been prepared from sources believed to be reliable but is not guaranteed by us and is not a complete summary or statement of all available data, nor is it considered an offer to buy or sell any securities referred to herein.

Opinions expressed are as of the date of this publication and are subject to change without notice. These opinions do not constitute a personal recommendation and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Stifel, or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within. Stifel or any of its affiliates may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis; such transactions may be contrary to recommendations in this report. Past performance should not and cannot be viewed as an indicator of future performance. Unless otherwise noted, the financial instruments mentioned in this report are priced as of market close on the previous trading day and presumed performance is calculated always over the next 12 months.

As a multi-disciplined financial services firm, Stifel regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private transactions. Affiliate Disclosures References to “Stifel” (collectively ”Stifel”) refer to SFC and other associated affiliated subsidiaries including (i) Stifel, Nicolaus & Company, Incorporated (“SNC”); (ii) Keefe, Bruyette & Woods, Incorporated (“KBWI’’), which are both U.S. broker-dealers registered with the United States Securities and Exchange Commission (“SEC”) and members of the Financial Industry National Regulatory Authority (“FINRA”), respectively; (iii) Stifel Nicolaus Canada, Incorporated. (“Stifel Canada”), which is authorised and regulated by the Canadian Investment Regulatory Organization (“CIRO”), and also trades under the names “Stifel GMP” and/or “Stifel FirstEnergy”; (iv) Stifel Nicolaus Europe Limited (“SNEL”), which is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 190412) and is a member of the London Stock Exchange and also trades under the name Keefe, Bruyette & Woods Europe (“KBW Europe”); (v) Stifel Europe Bank AG (“SEBA”), which is regulated by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht; “BaFin”) and is a member of Deutsche Boerse and SIX Swiss Exchange and (vi) Stifel Schweiz AG (“STSA”), which is representative of SEBA in Switzerland and regulated by the Eidgenössische Finanzmarktaufsicht (“FINMA”). SNEL, SEBA and STSA are collectively referred to as Stifel Europe. Registration of non-US

Analysts: Any non-US research analyst employed by Stifel contributing to this report is not registered/qualified as a research analyst with FINRA and is not an associated person of the US broker-dealer and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Global Research Notes: Research analysts contributing content to these reports are subject to different regulatory requirements based on the jurisdiction in which they operate. Clients seeking additional information should contact the Stifel entity through which they conduct business. SEBA & STSA Sponsored research: At SEBA & STSA, analysts may produce issuer paid research ('sponsored research'). This research is produced by analysts in accordance with local regulatory requirements relating to such research. In certain jurisdictions, this issuer paid research may be deemed to be independent research albeit not produced to the same conflicts of interest standards required by all jurisdictions for independent research. Where research has been paid for by an issuer, this will be clearly labelled. Please see our European Policy for Managing Research Conflicts of Interest for additional information.

Country Specific and Jurisdictional Disclosures United States: Research produced and distributed by Stifel Europe is distributed by Stifel Europe to “Major US Institutional Investors” as defined in Rule 15a-6 under the US Securities Exchange Act of 1934, as amended. SNC may also distribute research prepared by Stifel Europe directly to US clients, including US clients that are not Major US Institutional Investors. In these instances, SNC accepts responsibility for the content. Stifel Europe is a non-US broker-dealer and accordingly, any transaction by a US client in the securities discussed in the document must be effected by SNC. US clients wishing to place an order should contact their SNC representative.

 





Want to read more about Gold, Base Metals and Silver investment ideas?
Get Our Streetwise Reports' Resources Report Newsletter Free and be the first to know!

A valid email address is required to subscribe