MAG Silver Corp (MAG) 2025 Q2 法說會逐字稿

Hello and welcome to MAG Silver's Q2 2025 results videocast. I'm George Paspalas, President and CEO.

Before we get into the cracking Q2 results, I want to address something of far greater importance. In early July, we experienced a tragic incident at Juanicipio operation. A contractor lost their life on site. On behalf of everyone at MAG, I extend our heartfelt condolences to their family, friends, and colleagues. This is an unimaginable loss, and we are supporting those affected in every way we can.

At MAG, safety is not just a talking point, it's a non-negotiable. No production number or cost metric matters more than making sure every person goes home safely at the end of their shift. We will continue doing the hard work needed to make that a reality, every day.

Now, let's turn to the highlights of our second quarter. All numbers are on a 100% basis unless otherwise stated.

Starting with Juanicipio, where MAG holds a 44% interest alongside Fresnillo, the operator, we saw robust production and outstanding cost performance, delivering expanded and record setting margins. We process 343,000 tons of ore at an average silver head grade of 417 grams per ton. That translated into production of 4.3 million ounces of silver and 6.6 million ounces of silver equivalent.

Silver recovery was 94.6%, a notable improvement over last year. These gains reflect continued plant optimizations and the value added by commercial pyrite and gravity concentrate production.

Q2 sales came in at $186 million with gross profit of $129 million. That strong margin was supported by higher metal prices and lower treatment charges, as well as continued improvements in operating efficiency. Treatment and refining charges was $6.9 million down more than $1.5 million from Q2 2024, reflecting more favorable commercial terms negotiated this year.

Production costs decreased by $3 million mainly as a result of more efficient mining operations across the full strike length of the deposit. These contributed to a higher cash operating margin of 80%, up from 76% last year. Cost performance was again outstanding with Juanicipio continuing to deliver industry leading costs.

Cash costs of negative $3.90 per silver ounce sold, and $8.38 per equivalent silver ounce sold. All in sustaining cash costs of just $0.65 per ounce, and $11.46 per equivalent silver ounce sold. These are record low cash costs, driven by strong by-product credits, reduced operating costs in favorable concentrate commercial terms.

All in sustaining margins remained rock solid. Q2 delivering an all-in sustaining margin of $129 million a record performance. Free cash flow was equally strong in Q2, with Juanicipio delivering $93 million in free cash.

At the corporate level, MAG recorded net income of $33.4 million or $0.32 per share, and adjusted EBITDA of $56 million driven by our 44% share of Juanicipio. In keeping with our capital return framework, we declared our third quarterly dividend $14.04 per share, including a $0.02 per share fixed component and a $12.04 per share cash flow link component. The cash flow link component reflects 30% of the free cash flow generated by Juanicipio attributable to MAG during the quarter, consistent with our disciplined payout approach. That's a total of $14.04 per share payable September 1 to shareholders of record as of August 18.

On the exploration front, progress continued across the portfolio. At Juanicipio, we drilled over 15,000 meters across underground and surface programs. We're targeting near mine extensions, infill drilling, and new structures like the Magdalena mine and the deep scan south of the conveyor ramp.

At Deer Trail, we completed airborne magnetic and radiometric surveys, as well as a 9 kilometer seismic line. These geophysical tools will sharpen our targeting for high grade carbonate replacement deposits and scan mineralization. At Larder, phase one drilling kicked off at the Italian zone, with 5,200 meters completed. Early results are encouraging, validating both our structural model and the acquisition thesis.

Guidance remains unchanged. Silver production of 14.7 to 16.7 million ounces, all in sustaining costs of $6 to $8 per ounce. Total capital spend of $70 million to $80 million. $22 million to $28 million in expansion capital focused on the underground conveyor scheduled for commissioning in late 2026.

Our results at the end of June positioned us extremely well to deliver into the top end of our guidance. We will also drill 50,500 meters this year across underground and surface programs to continue expanding the resource base at Juanicipio.

On the strategic front, our shareholders approved the proposed acquisition of MAG by Pan American Silver in July. The transaction is now progressing through regulatory review, including clearance on the Mexican anti-trust laws and is expected to close in the second half of this year. Both companies remain focused on preserving Juanicipio's momentum, advancing our exploration programs, and delivering value through to close and beyond.

To our team, partners, and stakeholders, thank you. This quarter was defined by both strength and sorrow. We delivered record margins and excellent financials, but we also carry the weight of a tragic loss. We look forward to keeping you updated.

Until then, stay safe and thank you for your continued support.