MAG Silver Corp (MAG) 2024 Q3 法說會逐字稿

Hello everyone, and welcome to MAG Silver's Q3 2024 results videocast. Please refer to our financial statements and MD&A posted on our website or filed on SEDAR and EDGAR for further details. So let's take a look at the Q3 results from the Juanicipio mine, which is operated by Fresnillo plc, our 56% partner in the operation, and they are the operator.

All information related to the Juanicipio mine today will be discussed here on a 100% basis. We continue to build on the robust foundation set in the first half of the year, with Q3 production of 4.9 million ounces of silver, and 7.1 million ounces of silver equivalent production.

The processing plant continued to deliver nameplate processing rates per operating day, milling 332,000 tons of ore at an average silver grade of 481 grams per ton, and an average silver recovery of 95.1%, up from 92.4% in Q2.

The recovery improvement this quarter was driven by consistent pyrite and gravimetric concentrate production at Juanicipio, which delivered incremental silver and gold recovery. Strong operations continue to be supported by robust commodity prices.

Gross revenue, including byproducts, totaled $187 million on silver equivalent sales of 6.2 million ounces. Treatment and refining costs for the quarter were around $10.7 million, delivering total sales of $176 million. The cost performance was equally impressive, with the mine delivering negative cash operating costs of $0.12 per silver ounce sold, boosted by strong by-product production and pricing, with all in sustaining costs coming in at $3.29 per silver ounce sold. That is truly an industry leading result.

On an equivalent basis, the mine delivered an equally impressive industry leading result, with cash operating costs of $8.37, and all in sustaining costs of $10.81 per silver equivalent outsold. This performance represents a record for Juanicipio, as it has continued to optimize operations, metal realization rates, 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 78% and a record all in sustaining margin of $120 million in Q3.

Q3 continued to be a strong cash generation quarter for Juanicipio, driven by the delivery of stable operating costs and expanding equivalent production in a supportive commodity price environment. Juanicipio generated cash flow from operations of $110 million for the quarter, with the mine generating $97 million in free cash flow.

From a corporate perspective at MAG Silver, our equity accounted income from the joint venture was $26 million yielding net income of $22 million or $0.22 per share for the quarter. Our adjusted EBITDA was $56 million.

During the quarter, MAG continued to repatriate excess cash from Juanicipio with $23 million in interest and loan payments received. MAG's cash position continued to build, closing the quarter with $113 million and no debt. We also continue to progress our exploration programs during the third quarter.

MAG continues to advance its exploration efforts across two major projects which we own 100%, the Deer Trail Project in Utah and the Ladar project in Ontario. At Deer Trail, MAG is pursuing a potential silver rich carbonate replacement deposit with a drilling program targeting a porphyry hub and manto spokes, areas that could reveal extensive mineralization across the property.

MAG's Phase 3 drilling in late 2023 intercepted alteration and mineralization in line with what is expected on the edges of porphyry systems. While the current Phase 4 drilling follows up on the Carissa discovery zone, with additional drilling planned for summer 2025.

Meanwhile, the Ladar project in Ontario has seen active exploration since its acquisition in 2022, with 29,811 meters drilled to date in 2024. Key targets include the Twist, Swansea, the Long Conglomerate, and Kir Vit zones, where recent geophysical surveys have pinpointed promising anomalies.

And the acquisition of the contiguous Goldstake property in March of this year adds potential high grade zones to MAG's expanding portfolio of targets at Ladar. The latest drilling continues to test structures along the Cadillac Ladar break, a renowned area for high grade orogenic gold systems.

At Juanicipio, the exploration program is moving ahead with promising results. In Q3, 8,248 meters of underground drilling were completed, bringing the year-to-date total to 30,218 meters, mainly focused on infilling key veins within the Valdecañas's vein system.

Initial assays are confirming continuity in grade and thickness across Valdecañas, Ramal 1, Anticipada and the Venadas veins. Surface drilling, which was initiated in April 2024 on the Cañada-Honda structure, has covered 14,314 meters so far, yielding high level mineralization indicators, and importantly a significant down dip extension of the Juanicipio vein.

For those of you who've been with us for a while, you may remember the one the Juanicipio vein was the initial discovery on the property. And this is the first time we've actually been able to go back and drill there. With both programs on track, the year's target is 50,000 meters, with further assays pending to guide ongoing exploration. We continue to work with Fresnillo to unlock the potential of both near mine and regional exploration at Juanicipio.

So now turning to our outlook, Juanicipio achieved solid milling rates, continued improvements in recovery, and exceptional head grades in a very supportive commodity price environment. With the continued operational outperformance, we expect silver head grade at Juanicipio to be at the top end of the increased grade guidance, which is a range between 420 and 460 grams per ton of silver for 2024.

Well, thank you for watching today, and I look forward to our next videocast in March next year when I'll update you on the full year results.