Nouveau Monde Graphite Inc. press release
MAG Silver Reports Second Quarter Financial Results
TSXV - TSX Venture Exchange · Graphite · Canada
VANCOUVER, British Columbia, Aug. 02, 2024 (GLOBE NEWSWIRE) -- MAG Silver Corp. (TSX / NYSE American: MAG) (“MAG”, or the “Company”) announces the Company’s unaudited consolidated financial results for the three months ended June 30, 2024 (“Q2 2024”). For details of the unaudited condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2024 (“Q2 2024 Financial Statements”) and management’s discussion and analysis for the three and six months ended June 30, 2024 (“Q1 2024 MD&A”), please see the Company’s filings on the System for Electronic Document Analysis and Retrieval Plus (“SEDAR+”) at ( www.sedarplus.ca ) or on the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) at ( www.sec.gov ).
All amounts herein are reported in $000s of United States dollars (“US$”) unless otherwise specified (C$ refers to thousands of Canadian dollars).
KEY HIGHLIGHTS FOR Q2 2024 (on a 100% basis unless otherwise noted)
MAG reported net income of $21,614 ($0.21 per share) driven by income from Juanicipio (equity accounted) of $25,123, and adjusted EBITDA 1 of $50,353.
A total of 336,592 tonnes of ore at a silver head grade of 498 grams per tonne (“g/t”) (equivalent silver head grade 2 746 g/t) was processed at Juanicipio.
Juanicipio achieved silver production and equivalent silver production 2 of 5.0 and 7.1 million ounces, respectively.
Juanicipio generated strong operating cash flow of $92,766 and free cash flow 1 of $88,637.
Building on the robust Q1 2024 cost performance, Juanicipio continued to improve with cash cost 1 of $1.15 per silver ounce sold ($8.86 per equivalent silver ounce sold 3 ) and all-in sustaining cost 1 of $4.49 per silver ounce sold ($11.31 per equivalent silver ounce sold 3 ).
With the continued operational outperformance in the first half of 2024, full year guidance has been increased. As reported by Fresnillo plc (“Fresnillo”), Juanicipio’s operator, silver head grade at Juanicipio is expected to be between 420g/t and 460g/t for 2024 (previously 380g/t to 420g/t). Juanicipio is expected to produce between 16.3 million and 17.3 million (previously 14.3 million and 15.8 million) silver ounces yielding between 14.5 million and 15.4 million (previously 13.2 million and 14.6 million) silver ounces sold at all-in sustaining costs 1 of between $8.50 and $9.25 (previously $9.50 and $10.50) per silver ounce sold. Juanicipio returned a total of $29,818 in interest and loan principal repayments to MAG further augmenting MAG’s liquidity position to $97,337 million at the end of the quarter.
CORPORATE
On May 15, 2024, MAG announced that the Toronto Stock Exchange (“TSX”) had accepted the Company’s Notice of Intention to Make a Normal Course Issuer Bid (“NCIB”). Under the NCIB, the Company may purchase for cancellation up to an aggregate of 8,643,374 common shares of the Company (“Common Shares”), representing approximately 10% of the public float (as defined in the rules and policies of the TSX) of the Common Shares as of May 8, 2024.
On May 31, 2024, MAG filed a final short form base shelf prospectus with the securities commissions in all of the provinces and territories of Canada (“Final Shelf Prospectus”) and a corresponding registration statement on Form F-10 with the United States Securities and Exchange Commission under the United States Securities Act of 1933, as amended and the U.S./Canada Multijurisdictional Disclosure System allowing the Company to offer up to $250,000 of common shares, preferred shares, debt securities, subscription receipts, units and warrants or any combination thereof during the 25-month period that the Final Shelf Prospectus remains effective. In order to maintain financial flexibility, and consistent with past practice, the Company has historically maintained a base shelf prospectus, and has no present intention to offer securities pursuant to this Final Shelf Prospectus.
The Company published its 2023 sustainability report on July 18, 2024, underscoring its continued commitment to transparency with its stakeholders while providing a comprehensive overview of the Company’s environmental, social and governance (“ESG”) performance for 2023. A copy of MAG’s 2023 sustainability report and 2023 ESG Data Table are available on the Company’s website at https://magsilver.com/esg/reports/ 4 .
EXPLORATION
Juanicipio: Underground infill drilling at Juanicipio continued in Q2 2024 primarily focussed on upgrading mineralization in areas expected to be mined in the near to mid-term. During Q2 2024, 10,699 metres were drilled from underground. Surface drilling focused on expanding and upgrading the deeper zones and broader regional exploration started in April 2024 and is currently focused on the Cañada-Honda Structure. 4,546 metres have been drilled from surface during Q2 2024. During 2024, Juanicipio plans to drill a total of 50,000 metres, with 33,000 metres from underground and 17,000 metres from surface.
Deer Trail Project, Utah: Drilling moved on to Phase 4 in the last quarter of 2023 and continued through Q2 2024, focussed on lower elevations and aimed at offsetting the Carissa discovery and testing other high-potential targets in the Deer Trail mine area. During Q2 2024, 1,610 metres were drilled with results pending. On July 11, 2024, MAG reported that the Deer Trail Project was being affected by the Silver King Fire in Piute County with a temporary pause of exploration operations with all personnel safe and the Deer Trail site and infrastructure secure. As of July 29, 2024, 82% of the fire has been contained and the Company has resumed exploration operations.
Larder Project, Ontario:
Drilling at Cheminis, Bear and new regional targets, totalled 10,776 metres in Q2 2024. Targets tested include: the down plunge extension of the high-grade “double knuckle” at the Bear East zone; the “Twist” zone in an underexplored area along the Cadillac-Larder Break (“CLB”) where the major structure switches from south dipping to north dipping, which is located between Cheminis and Bear; the extension of the Cheminis south mine sequence down plunge to 900 vertical metres; and regional targets along the second order structure and unconformity.
Cheminis Update: The final two holes of the current Cheminis drilling program totalled 1,455 metres and were designed to delineate the mine sequence down from the 700 metre level to the 900 metre level. Both holes have extended the ore shoots from surface down to 900 metres below surface doubling the depth extent of known mineralization at the Cheminis mine which remains open at depth. Bear Update: Two directional holes totalling 126 metres, extended the Bear East zone down plunge 1,200 metres below surface, intersecting gold mineralization within a mixing zone of strongly altered komatiites-syenites and ultramafics. Bear East remains open in all directions. Twist Update: The Twist target was identified in the geololgical review program of 2023, where the CLB main structure switches from south dipping (Cheminis) to north dipping (Bear). It is interpreted to host a potential dilation zone either in the central part of the fold/fault or along the limbs, similar to the historic Kerr Addison mine 5km east of the Larder Project. In Q2 2024 initial drilling started and 4,830 metres have been drilled testing this target. Assays received to date have identified an alteration zone, that is hosted in multiple rock types including volcanics, mafic tuff, sediments and syenites, which is atypical along the CLB. The alteration consists of pervasive silica-carbonate-sericite and the structures associated with the widespread zones are indicative of a series of brittle shears likely sourced from a larger central dilation zone. Approximately 10 holes in total are planned for this target, with 7 remaining. Regional Targets: The first set of regional targets lie along a 4km second order structure and unconformity and have been identified through Magnetotellurics-Induced Polarization (“MT-IP”) geophysics, surface mapping/sampling and geological importance. Targets include mixed zones of greywackes, trachytes, syenites, conglomerates and volcanics, litho-structural breaks in the MT-IP survey and alteration packages identified on the surface including hydrothermally altered conglomerates and syenites. During Q2 2024, 9 holes were drilled for a total of 4,655 metres with results pending.
1 Adjusted EBITDA, cash cost per ounce, all-in sustaining cost per ounce and free cash flow are non-IFRS measures, please see below “ _Non-IFRS Measures _” section and section 12 of the Q2 2024 MD&A for a detailed reconciliation of these measures to the Q2 2024 Financial Statements. 2 Equivalent silver head grade and equivalent silver production have been calculated using the following price assumptions to translate gold, lead and zinc to “equivalent” silver head grade and “equivalent” silver production: $23/oz silver, $1,950/oz gold, $0.95/lb lead and $1.15/lb zinc. 3 Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc. 4 Information contained in or otherwise accessible through the Company’s website, including the 2023 sustainability report and 2023 ESG Data Table, do not form part of this MD&A and are not incorporated into this MD&A by reference.
JUANICIPIO RESULTS
All results of Juanicipio in this section are on a 100% basis, unless otherwise noted.
Operating Performance
The following table and subsequent discussion provide a summary of the operating performance of Juanicipio for the three months ended June 30, 2024 and 2023, unless otherwise noted.
| | | | | | | Key mine performance data of Juanicipio (100% basis) | Three months ended | | | | | June 30, | | June 30, | | | | 2024 | | 2023 | | | | | | | | | | Metres developed (m) | 3,520 | | 3,434 | | | | | | | | | Material mined (t) | 349,460 | | 259,438 | | | Material processed (t) | 336,592 | | 377,718 | | | | | | | | | Silver head grade (g/t) | 498 | | 498 | | | Gold head grade (g/t) | 1.20 | | 1.25 | | | Lead head grade (%) | 1.56 | % | 1.05 | % | | Zinc head grade (%) | 2.99 | % | 1.92 | % | | | | | | | | Equivalent silver head grade (g/t) (1) | 746 | | 708 | | | | | | | | | Silver ounces sold (koz) | 4,272 | | 4,877 | | | Gold ounces sold (koz) | 7.20 | | 9.54 | | | Lead pounds sold (klb) | 9,224 | | 6,760 | | | Zinc pounds sold (klb) | 15,237 | | 10,103 | | | | | | | | | Equivalent silver ounces sold (koz) (2) | 5,817 | | 6,390 | | | | | | | |
(1) Equivalent silver head grades have been calculated using the following price assumptions to translate gold, lead and zinc to “equivalent” silver head grade in 2024: $23/oz silver, $1,950/oz gold, $0.95/lb lead and $1.15/lb zinc (2023: $21.85/oz silver, $1,775/oz gold, $0.915/lb lead and $1.30/lb zinc). (2) Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc (three months ended June 30, 2023 realized prices: $23.69/oz silver, $1,957.47/oz gold, $0.94/lb lead and $1.07/lb zinc).
During the three months ended June 30, 2024, a total of 349,460 tonnes of ore were mined. This represents an increase of 35% over Q2 2023. Increases in mined tonnages at Juanicipio have been driven by the operational ramp-up of the mine towards steady mining and milling targets.
During the three months ended June 30, 2024, a total of 336,592 tonnes of ore were processed through the Juanicipio plant; no ore was processed at the nearby Fresnillo and Saucito processing plants (100% owned by Fresnillo). The 11% decrease over Q2 2023 was mainly attributable to Juanicipio capitalizing on available milling capacity at the nearby Fresnillo and Saucito plants (100% owned by Fresnillo) while undergoing operational ramp-up and processing facility commissioning in the first half of 2023.
The silver head grade and equivalent silver head grade for the ore processed in the three months ended June 30, 2024 was 498 g/t and 746 g/t, respectively (three months ended June 30, 2023: 498 g/t and 708 g/t, respectively). Head grades in Q2 2024 were slightly higher than Q2 2023 (5% on a silver equivalent basis, with silver head grade being consistent), due to low-grade commissioning stockpiles being processed through the Juanicipio plant in the first half of 2023. Silver metallurgical recovery during the three months ending June 30, 2024 was 92% (three months ending June 30, 2023: 87%) reflecting the commencement of commercial pyrite production during Q2 2024 delivering incremental silver and gold recovery as well as ongoing optimizations in the processing plant.
The following table provides a summary of the total cash costs and all-in sustaining costs (“AISC”) of Juanicipio for the three months ended June 30, 2024, and 2023.
| | | | | | | Key mine performance data of Juanicipio (100% basis) | Three months ended | | | | | June 30, | | June 30, | | | | 2024 | | 2023 | | | | | | | | | | Total cash costs (1) | 4,911 | | 35,584 | | | Cash cost per silver ounce sold ($/oz) (1) | 1.15 | | 7.30 | | | Cash cost per equivalent silver ounce sold ($/oz) (1) | 8.86 | | 11.18 | | | | | | | | | All-in sustaining costs (1) | 19,161 | | 48,456 | | | All-in sustaining cost per silver ounce sold ($/oz) (1) | 4.49 | | 9.93 | | | All-in sustaining cost per equivalent silver ounce sold ($/oz) (1) | 11.31 | | 13.19 | | | | | | | |
(1) Total cash costs, cash cost per ounce, cash cost per equivalent ounce, all-in sustaining costs, all-in sustaining cost per ounce, and all-in sustaining cost per equivalent ounce are non-IFRS measures, please see below “Non-IFRS Measures” section and section 12 of the Q2 2024 MD&A for a detailed reconciliation of these measures to the Q2 2024 Financial Statements. Equivalent silver ounces sold have been calculated using realized prices to translate gold, lead and zinc to “equivalent” silver ounces sold (metal quantity, multiplied by metal price, divided by silver price). Three months ended June 30, 2024 realized prices: $30.17/oz silver, $2,379.85/oz gold, $0.99/lb lead and $1.33/lb zinc (three months ended June 30, 2023 realized prices: $23.69/oz silver, $1,957.47/oz gold, $0.94/lb lead and $1.07/lb zinc).
Financial Results
The following table presents excerpts of the financial results of Juanicipio for the three months ended June 30, 2024 and 2023.
| | | | | | | | Three months ended | | | | | | June 30, | | June 30, | | | | 2024 | | 2023 | | | | $ | | $ | | | Sales | 167,079 | | 134,775 | | | Cost of sales: | | | | | | Production cost | (39,866 | ) | (54,571 | ) | | Depreciation and amortization | (22,455 | ) | (17,400 | ) | | Gross profit | 104,757 | | 62,804 | | | Consulting and administrative expenses | (4,283 | ) | (4,159 | ) | | Extraordinary mining and other duties | (2,773 | ) | (1,377 | ) | | Interest expense | (3,241 | ) | (4,886 | ) | | Exchange gains (losses) and other | 696 | | 31 | | | Net income before tax | 95,156 | | 52,413 | | | Income tax (expense) recovery | (41,299 | ) | (6,349 | ) | | Net income (100% basis) | 53,857 | | 46,065 | | | MAG’s 44% portion of net income | 23,697 | | 20,268 | | | Interest on Juanicipio loans - MAG's 44% | 1,426 | | 2,150 | | | MAG’s 44% equity income | 25,123 | | 22,418 | |
Sales increased by $32,304 during the three months ended June 30, 2024, mainly due to 25% higher realized metal prices and $8,217 lower treatment, refining and toll milling costs driven mainly by no toll milling at the Saucito and Fresnillo processing facilities during Q2 2024 vs toll milling in Q2 2023 – as explained in ‘ _Juanicipio Results – Operating Performance _’ section above, offset by 5% lower metal volumes.
Production costs decreased by $14,705 to Juanicipio depleting higher-cost, lower-grade commissioning stockpiles during operational ramp-up and processing facility commissioning in the first half of 2023.
Depreciation increased by $5,056 as the Juanicipio mill achieved commercial production and commenced depreciating the processing facility and associated equipment in June 2023.
Cash operating margin increased from 60% to 76%, mainly due to reduced operating costs as well as positive commodity prices augmented by operational leverage and no processing at the nearby Fresnillo and Saucito processing facilities.
Other expenses decreased by $790 mainly as a result of higher exchange gains ($664) and lower interest expense ($1,645) as Juanicipio reduced its outstanding shareholder loans balance by $173,339 ($156,859 loan repayments and $16,480 converted to equity) over the course of September 2023 to June 2024, offset by higher extraordinary mining and other duties ($1,396) which were impacted by the commencement of pyrite production during Q2 2024.
Taxes increased by $34,951 mainly due to non-cash deferred tax charges on fixed assets driven by a weakening in the Mexican peso versus the US dollar, as well as higher taxable profits generated during Q2 2024.
Ore Processed at Juanicipio Plant (100% basis)
| Three Months Ended June 30, 2024 (336,592 tonnes processed) | Three Months Ended June 30, 2023 Amount $ | | | | | | | Metals Sold | Quantity | Average Price $ | Amount $ | | | | | Silver | 4,271,991 ounces | 30.17 per oz | 128,876 | | 115,555 | | | Gold | 7,195 ounces | 2,380 per oz | 17,124 | | 18,668 | | | Lead | 4,184 tonnes | 0.99 per lb. | 9,151 | | 6,367 | | | Zinc | 6,911 tonnes | 1.33 per lb. | 20,333 | | 10,807 | | | Treatment, refining, and other processing costs ( 2 ) | (8,405 | ) | (16,622 | ) | | | | Sales | 167,079 | | 134,775 | | | | | Production cost | (39,866 | ) | (54,571 | ) | | | | Depreciation and amortization ( 1 ) | (22,455 | ) | (17,400 | ) | | | | Gross Profit | 104,757 | | 62,804 | | | |
(1) The underground mine was considered readied for its intended use on January 1, 2022, whereas the Juanicipio processing facility started commissioning and ramp-up activities in January 2023, achieving commercial production status on June 1, 2023. (2) Includes toll milling costs from processing mineralized material at the Saucito and Fresnillo plants for Q2 2023.
Sales and treatment charges are recorded on a provisional basis and are adjusted based on final assay and pricing adjustments in accordance with the offtake contracts.
MAG FINANCIAL RESULTS – THREE MONTHS ENDED JUNE 30, 2024
As at June 30, 2024, MAG had working capital of $96,460 (December 31, 2023: $67,262) including cash of $97,337 (December 31, 2023: $68,707) and no long-term debt. As well, as at June 30, 2024, Juanicipio had working capital of $129,111 including cash of $51,422 (MAG’s attributable share is 44%).
The Company’s net income for the three months ended June 30, 2024 amounted to $21,614 (June 30, 2023: $19,390) or $0.21/share (June 30, 2023: $0.19/share). MAG recorded its 44% income from equity accounted investment in Juanicipio of $25,123 (March 31, 2023: $22,419) which included MAG’s 44% share of net income from operations as well as loan interest earned on loans advanced to Juanicipio (see above for a discussion of MAG’s share of income from its equity accounted investment in Juanicipio).
| | For the three months ended | | | | | | June 30, | | June 30, | | | | 2024 | | 2023 | | | | $ | | $ | | | | | | | | | Income from equity accounted investment in Juanicipio | 25,123 | | 22,419 | | | General and administrative expenses | (3,622 | ) | (3,233 | ) | | General exploration and business development | (95 | ) | (40 | ) | | Operating income | 21,406 | | 19,146 | | | | | | | | | Interest income | 928 | | 641 | | | Other income | 650 | | 233 | | | Financing costs | (134 | ) | - | | | Foreign exchange gain (loss) | 60 | | 168 | | | Income before income tax | 22,910 | | 20,188 | | | | | | | | | Deferred income tax expense | (1,296 | ) | (798 | ) | | | | | | | | Net income | 21,614 | | 19,390 | | | | | | | |