Joint Venture Partner Paid $17.5 Million in Cash, Boosts MAG Silver Q1/24

Key Takeaway

• MAG Silver reported Q1/24 EPS of US$0.14, with a significant US$17.5 million cash inflow from the Juanicipio JV, boosting its financial outlook.
• Metallic Minerals' La Plata project sees continued support from Newmont, including a CA$6.3 million investment and technical expertise for 2024 expansion.
• Silver X Mining's Q1/24 results show improved revenue and reduced costs, with operating income rising to US$6,000 and cash costs down 15% QOQ.

MAG Silver's Financial Performance

MAG Silver Corp. reported earnings per share (EPS) of US$0.14 for Q1/24, aligning with Roth MKM's estimates. The Canadian mining company's share price was approximately US$12.44 at the time of the report, with a projected return of 17% to the new target price. Roth MKM continues to rate MAG Silver as a Buy. Analyst Reagor noted, "We continue to believe MAG is in the process of receiving a rerating from the market as it generates positive cash flow."

In Q1/24, MAG Silver received US$17.5 million in cash from its Juanicipio joint venture (JV) project in Mexico, which was described as "a significant development." This cash inflow allowed the company to increase its cash balance despite spending US$5.1 million on exploration and US$3.8 million on acquiring the Goldstake property. Reagor commented, "We believe cash distributions are likely to increase in the quarters ahead, allowing MAG to consider paying a dividend by year-end 2024."

The Juanicipio JV generated US$123.7 million in revenue in Q1/24, surpassing Roth's estimate of US$115.8 million. This revenue beat was attributed to higher metal sales revenue, although it was partially offset by increased consulting costs.

Metallic Minerals' Strategic Developments

Metallic Minerals Corp. announced that Newmont will maintain its 9.5% ownership by purchasing 342,750 common shares at CA$0.33 per share. This adjustment accounts for non-cash transactions completed by the company in the last six months. Scott Petsel, President of Metallic Minerals, stated, "We are very pleased with the ongoing collaboration and support from Newmont on the La Plata project."

Exploration at the La Plata copper-silver-gold-platinum group element (Cu-Ag-Au-PGE) project in Colorado was funded by Newmont's initial CA$6.3 million investment. Newmont also provided technical support and expertise through a joint committee, including multiple site visits. Petsel noted, "These contributions are expected to continue in 2024 and may include Newmont providing experienced personnel to the project."

The La Plata project remains open to expansion, with more than 20 new surface targets identified. Petsel highlighted, "Final planning is in progress for the 2024 exploration campaign, which is anticipated to include resource expansion drilling and first drill testing of new priority targets."

Silver X Mining's Q1/24 Results

Silver X Mining Corp. reported notable Q1/24 results, with higher revenue and lower costs. Revenue from its Nueva Recuperada mine in Peru was US$4.8 million, up 10% quarter-over-quarter (QOQ) and 4% year-over-year (YOY). The company produced 298,000 ounces of silver equivalent (Ag eq) and sold 265,000 ounces of Ag eq during the quarter.

Operating income for Q1/24 was US$6,000, a significant improvement from (US$980,000) in Q4/23 and (US$410,000) in Q1/23. Operating cash flow was US$1.1 million, and adjusted EBITDA was US$420,000, up from (US$1.1 million) in the previous quarter and (US$640,000) a year ago.

Silver X successfully reduced costs, with Q1/24 operating costs, including US$1.15 million in amortization, totaling US$4.77 million, down 10% QOQ and 4% YOY. General and administrative (G&A) expenses also decreased by 10% QOQ and 2% YOY. Cash costs averaged US$15.4 per ounce, 15% lower than in Q4/23 and 17% better than in Q1/23. All-in-sustaining cost (AISC) was US$21.36 per ounce, 14% better QOQ and 20% better YOY.

Street Views

• Joe Reagor, Roth MKM (Bullish on MAG Silver Corp.):

  "Earnings per share of US$0.14 was in line with our estimate... We continue to believe MAG is in the process of receiving a rerating from the market as it generates positive cash flow."
  "We believe cash distributions are likely to increase in the quarters ahead, allowing MAG to consider paying a dividend by year-end 2024."