MAG Silver Corp (MAG) 2024 Q2 法說會逐字稿

Hello everyone and welcome to MAG Silver's Q2 2024 results videocast. Please refer to our financial statements and MD&A posted on our website or filed under SEDAR and EDGAR for further details.

Let's take a look at the Q2 results from the Juanicipio mine, which is operated by Fresnillo Plc, our 56% partner in the mine. All information related to the Juanicipio mine is discussed here on a 100% basis.

We continue to build on the robust foundation set in the first quarter with Q2 production of 5 million ounces of silver, which, together with strong gold, lead, and zinc production, delivered 7.1 million ounces of silver equivalent production.

The processing plant continued to perform well, delivering nameplate processing rates per operating day. For the quarter, Juanicipio milled 337,000 tonnes of ore at an average silver grade of 498 grams per tonne, and an average silver recovery of 92.4%.

The recovery improvement this quarter was driven by the commencement of commercial pyrite production at Juanicipio delivering incremental silver and gold recovery. Our strong operational performance was rewarded by a very supportive commodity price environment.

With all metals enjoying strong appreciation during the quarter, silver revenue totaled $129 million during the period, on silver sales of 4.3 million ounces. Total revenue, including byproducts totaled $175 million on silver equivalent sales of 5.8 million ounces. Treatment and refining costs for the quarter were around $8.4 million delivering total sales of $167 million.

Pivoting to operating costs, the mine's cash operating costs were $1.15 per silver ounce sold, with all in sustaining costs of $4.49 per silver ounce sold, an industry leading result. On an equivalent basis, the mine delivered an equally impressive industry leading result with cash operating costs of $8.86, and all in sustaining costs of $11.31 per silver equivalent ounce sold.

This performance represents a record for Juanicipio, as it has continued to optimize operations and focus on cost control. We are very pleased with the cost performance at Juanicipio, and we hope to see further improvements through the remainder of 2024 and into 2025.

The positive pricing environment, together with the positive cost performance, delivered strong margin expansion for the quarter, with Juanicipio generating a cash operating margin of 74% and a record all in sustaining margin of $110 million in Q2.

Q2 continued to be a strong cash generation quarter for Juanicipio, driven by the delivery of stable operating costs and expanding production in a supportive commodity price environment. Juanicipio generated cash flow from operations of $93 million for the quarter, with the mine generating $89 million in free cash flow.

From a corporate perspective at MAG Silver, our equity accounted income from the joint venture was $25 million yielding net income of $22 million or $0.21 per share for the quarter. Our adjusted EBITDA was $50 million. During the quarter, MAG continued to repatriate excess cash from Juanicipio, with $30 million in interest and loan repayments received.

MAG's cash position continued to build and closed the quarter at $97 million with no debt. We continue to progress our exploration programs during the second quarter.

At the Larder project, drilling, targeting the Cheminis, Bear, and new regional targets totaled 10,776 meters in Q2. At Cheminis, drilling extended ore chutes from surface to 900 meters below surface, doubling the depth of known mineralization, and it remains open at depth.

Directional holes at Bear extended the Bear reef zone down plunge to 1,200 meters below surface, and it remains open in all directions. Initial drilling commenced on the twist target, interpreted to host a potential dilation zone similar to the Kerr Addison mine 5 kilometers east of the Larder project.

Assays received to date have identified a widespread gold zone hosted in multiple rock types, which we plan on following up in Q3 with seven additional holes.

At the Deer Trail project in Utah, drilling continued on Phase 4, focused on lower elevations and aimed at offsetting the Carissa discovery. 1,610 meters were drilled at Carissa with final results pending.

Deer Trail continues to confirm the hub and spoke thesis, and we are encouraged by the results as we enter the final stages of the 100% earning into the property. We recently announced the Deer Trail project was impacted by the Silver King fire in Central Utah. I'm pleased to report the fire has been contained and we have recommenced drilling.

Beyond Larder and Deer Trail, underground drilling at Juanicipio continued with 10,699 meters drilled, which was focused on upgrading mineralization for near to mid-term mine planning.

Regional surface drilling focused on the Cañada Honda structure, with 4,546 meters drilled. Now we must not lose sight of the fact that only 5% of the Juanicipio property has been explored. So we continue to work with Fresnillo to unlock the potential of both near mine and regional exploration at Juanicipio.

At MAG, ESG continues to be something we take very seriously, and something we believe we do very well. We're committed to running our operations to the highest international standards.

We recently published our third annual sustainability report, which speaks for itself and underscores our continued commitment to transparency with our stakeholders, while providing a comprehensive overview of the company's ESG commitments, practices, and performance. I encourage you to read our sustainability report. It's available on our website or available from the company on request.

Turning to outlook, the second quarter continued to validate the strength and quality of our operations at Juanicipio. We achieved solid milling rates, improvements in recovery, and exceptional head grades, all in a very supportive commodity price environment.

With the continued operational outperformance in the first half of 2024, guidance has been increased. Silver head grade at Juanicipio is now expected to be between 420 grams and 460 grams per tonne for 2024, which is an increase from our previous silver grade guidance of 380 grams to 420 grams per tonne. As a result of the grade overperformance, Juanicipio is now expected to produce between 16.3 million and 17.3 million ounces of silver, yielding between 14.5 million and 15.4 million payable silver ounces.

And we have reduced our all in sustaining cost guidance from $9.50 to $10.50 down to a range of $8.50 to $9.25 per silver ounce sold. This revised cost guidance is a reflection of the higher production expected in the second half of 2024. Thank you for watching today, and I look forward to our next video cast in November when I'll update you on our third quarter 2024 results.