Source: Kevin O'Halloran
November 15, 2023 (Investorideas.com Newswire) This payment follows the Mexican silver mining operation transitioning to sole use of its own new processing plant and reaching nameplate production capacity, noted a BMO Capital Markets report.
MAG Silver Corp. (MAG:TSX; MAG:NYSE American) received its first monies from the Juanicipio silver mining project joint venture, US$11.3 million (US$11.3M) in loan principal repayment and interest, reported BMO Capital Markets analyst Kevin O'Halloran in a November 10 research note.
"We expect cash distributions from Juanicipio to the joint venture partners to accelerate in the coming quarters," O'Halloran wrote.
MAG ended Q3/23 with US$58.5M in cash. The joint venture, of which the Canadian silver company owns 44%, had US$23.4M in cash.
Notable Return, Outperform Rating
MAG's current price is about CA$13.66 per share, and BMO's target price on the company is CA$23.50 per share. As such, the projected return for investors is attractive, at 72%.
BMO continues to rate MAG Outperform.
EPS Lower Than Expected
MAG's earnings per share in Q3/23 was CA$0.09, which fell short of BMO and the consensus estimate of CA$0.16/share, reported O'Halloran. He attributed the miss to the timing of sales and accounting differences now that Juanicipio is in commercial production.
As for the gap between the EPS and BMO's estimate, the analyst indicated it was due mostly to BMO underestimating depreciation on the Juanicipio processing facility. Whereas BMO forecasted depreciation would be CA$11M, it actually was much higher, at CA$21.6M.
Operation Costs Declining
O'Halloran also pointed out that production costs overall have improved since the Juanicipio operation moved solely to using its own processing facility and achieved nameplate capacity in September. Specifically, cash costs in Q3/23 were about CA$9.40 per ounce ($9.40/oz), lower than CA$11.12/oz in the previous quarter.
On a byproduct basis, in Q3/23, Juanicipio achieved a CA$4.68/oz cash cost and a CA$9.19/oz all-in sustaining cost.
On the Horizon
Investors can expect a few potential catalysts for MAG in the near term. One, as mentioned, is the first cash flows from the Juanicipio joint venture.
Another is an updated resource and technical report on the Juanicipio project, due out in Q1/24. Third, further exploration results are expected from MAG on an ongoing basis.
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