production totals from the fourth quarter and 2023 for its new Juanicipio mill in Mexico, which reached nameplate status during Q3.has announced
Juanicipio processed 346,766 tonnes of mineralized material during the final quarter, up from 322,249 the quarter before, and produced 4.5 million silver (Ag) ounces and more than 10,000 ounces of gold (Au).
The average silver head grade for Q4 was 467 grams per tonne (g/t), "marginally lower" than the previous quarter but offset by higher gold and base metal grades.
"This continues to demonstrate the high-grade nature of the Juanicipio deposit," the company said in a release.
"Q4 represents the fourth successive quarter of operational advancements, and step changes in performance at Juanicipio with a continuous and consistent uptrend in quarterly mining and milling rates," said President and Chief Executive Officer George Paspalas. "Our focus remains on ongoing optimization as we continue to execute our strategy of delivering low-cost silver production, generating robust attributable free cash flow and diligent exploration to expand the metal inventory of this very prospective property."
The Catalyst: Year-End Results Expected in March
Analyst Chris Thompson of PI Financial wrote in an updated research note Wednesday that he is "eagerly" awaiting the release of the company's year-end financial results and guidance, expected in March, "which will provide us with a good read on the JV's ability to lower unit costs (on a $/tonne basis), a necessity, we believe, to catalyze a re-rating."
Thompson doubled down and rated the stock Buy with a CA$17.50 per share target price.
"We remain impressed by Juanicipio's operating performance, which has delivered two consecutive quarters of beating/meeting our Ag Eq (silver equivalent) production expectations," Thompson wrote. "Also, we note that higher than anticipated head grades across all metals (Ag, Au, Pb [lead] and Zn [zinc]) are comparable with our head grade expectations for this year."
Chris Thompson of PI Financial doubled down and rated the stock Buy with a CA$17.50 per share target price.
Joe Reagor of Roth Capital Partners wrote that "production was somewhat below our expectations, but this was more than offset by our revised price forecasts. As such, we are reiterating our Buy rating and (US)$19.00 price target."
Roth continues to believe the Fed will cut interest rates by midyear but noted that precious metal prices started 2024 higher than anticipated.
"As such, we increased our 2024 gold price forecast from US$1,856 per ounce to US$2,075 per ounce and our silver price forecast from US$23.13 per ounce to US$25.19 per ounce," Reagor wrote. " Additionally, we increased our long-term gold price forecast from US$1,900 to US$1,950 per ounce."
The analyst reiterated his rating of Buy for the stock with a US$19 per share price target.
"We also believe MAG is poised for a rerating as the Juanicipio JV begins to distribute cash in the coming quarters," Reagor wrote.
Consistent Processing Growth
Juanicipio processed a total of 1,268,756 tonnes of mineralized material in 2023, exceeding expectations and achieving nameplate status during Q3, MAG noted among the highlights of the full year.
The "consistent processing growth quarter-on-quarter (reflects) the commitment to scaling up operations," the company said in its release.
The mine produced 16.8 million ounces (Moz) Ag and 36,732 gold ounces in 2023. The average silver head grade for the year was 472 g/t, "demonstrating the notable consistency of the Juanicipio deposit and solidifying its position as one of the highest-grade silver mines in the world," the company said.
Analyst Kevin O'Halloran with BMO Capital Markets was among several industry analysts who went to visit the plant in Mexico last year. He rates the stock Outperform with a CA$24 per share price target.
"After reaching nameplate production in Q3, the focus at Juanicipio has turned to optimization, which was underway during our site visit in November," he wrote Wednesday.
Big Year for Silver?
MAG is mining the Bonanza zone of the Valdecañas vein system in the Zacatecas state of Mexico. A preliminary economic assessment (PEA) in 2017 estimated a 19-year mine life.
Silver is the most conductive element in nature. It is used to coat electrical contacts in computers, phones, cars, and appliances. It's also an important element in solar and fuel cell technology.
According to the Silver Institute's World Silver Survey 2023, there was a 237.7 Moz deficit between supply and demand for the precious metal in 2022. The institute noted that the deficit was likely repeated in 2023.
Streetwise Ownership Overview*
Investinghaven.com has identified silver as the strongest precious metal going into 2024-2026.
"In one of those years, silver will be touching US$50," the site noted. "We are convinced that silver will exceed US$50before the end of 2026."
Ownership and Share Structure
Institutions own 70% of MAG, and 30% is retail, according to the company.
Top institutional shareholders include Juanicipio project operator Fresnillo Plc. with 9.1%, BlackRock Asset Management at 9.9%, ETF Managers Group LLC at 5.3%, Sprott Asset Management at 5.1%, and First Eagle Investment Management at 5.6%, the company said.
MAG Silver has a market cap of US$958.97 million. It has 102.9 million shares outstanding, according to TSX Infosuite. It trades in a 52-week range of US$15.86 and US$8.87.
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- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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