MAG Silver Corp. presents a sturdy exploration pipeline, along with its undertaking in Mexico that’s near reaching industrial manufacturing, famous a PI Monetary report.
MAG Silver Corp. (MAG:TSX; MAG:NYSE American) presents traders a twofer, in Juanicipio and in its newly acquired undertaking, Larder Lake within the Abitibi Greenstone Belt, wrote PI Monetary analyst Chris Thompson in a June 22 analysis notice.
“Now’s the time to take a second have a look at MAG, not just for the near-term money circulate that Juanicipio will probably be producing however for the long-term worth provided by a sturdy exploration pipeline,” Thompson added.
The Canadian miner has a lovely valuation at its present ranges, the analyst famous, as a result of delays in Juanicipio getting related to the Mexican electrical grid and weak spot within the silver value. PI Monetary has a goal value on MAG of CA$23.50, and the inventory is buying and selling at round CA$16.11.
Concerning Juanicipio, it’s anticipated that MAG will reward shareholders as soon as industrial manufacturing is reached there this yr, famous Thompson. This could occur after grid hookup is accomplished.
“As soon as that happens, we count on a fast ramp-up to nameplate capability (4,000 tons per day) that can enable the corporate to ship on its promise to turn out to be a money circulate machine,” the analyst added. “We presently count on attributable after-tax money circulate of +$115 million yearly for the subsequent three years alone at $21.50 per ounce silver (spot) or +$120 million at $22.50 per ounce silver (PI’s base case).”
Along with Juanicipio, Thompson famous, “we see MAG having far more to supply with a promising exploration pipeline within the works.” One, which the corporate highlighted on the current PDAC conference, is MAG’s latest addition, Larder Lake.
“Whereas it’s nonetheless early days for Larder Lake, we see MAG being well-positioned to quickly unlock the potential worth provided by probably the greatest gold-finding addresses in Canada,” Thompson commented. Close by prolific mines embody Macassa, Malartic, and, bordering MAG’s property, Kerr-Addison.
MAG got here to personal Larder Lake by means of its acquisition of Gatling Exploration, which closed in late Might.
Positioned “within the coronary heart of elephant nation inside the Abitibi Greenstone Belt” in Ontario, Canada, Larder Lake has a mixed open-pit and underground useful resource of about 1.3 million ounces grading 3.4 grams per ton gold, developed by Gatling.
That useful resource, nevertheless, in line with Thompson, is “patchy.” It stretches over a strike size of about 4 kilometers with deeper shoots the place wildcat holes struck high-grade gold at depths reaching 1,500 meters,” he defined. A lot of the Larder Lake property has not been explored.
“Restricted follow-up work has left low-hanging fruit for a better-funded suitor (MAG) to benefit from,” added Thompson.
PI Monetary has a Purchase ranking on MAG Silver.
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