Silver Stock’s Q4 Earnings Beat Estimate – MAG Silver (AMEX:MAG)

Source: Kevin O’Halloran 03/20/2024

Mag Silver’s fourth-quarter earnings per share beat the estimates of BMO Capital Markets analyst Kevin O’Halloran, according to a March 19 research note.

MAG Silver Corp. (AMEX:MAG) reported fourth-quarter (Q4) earnings per share (EPS) of CA$0.15, slightly beating BMO Capital Markets analyst Kevin O’Halloran’s estimate of CA$0.11 and the consensus estimate of CA$0.13, O’Halloran reported in a March 19 research note.

The company’s Q4 operating cash flow of CA$84 million also exceeded O’Halloran’s CA$56 million estimate.

Financial Results and Projections

In 2023, the Juanicipio joint venture generated free cash flow (FCF) of CA$60.8 million, with CA$62.0 million coming in Q4 as the operation transitioned to positive FCF throughout the year.

“Juanicipio returned CA$18.8M (interest and principal) to MAG in Q4, following CA$11.3M of repayments to MAG in Q3” stated O’Halloran. “At year-end, MAG had a cash balance of CA$68M, with CA$42.9M at the JV level (44% attributable to MAG).”

Recent Business Developments

In the report, O’Halloran commented that MAG Silver plans to release an updated technical report for the Juanicipio project by the end of March, which will provide more visibility on costs and grade profiles, offering more detailed 2024 guidance.

The company’s pre-reported Q4 attributable production was 2.0 million ounces of silver and 4,700 ounces of gold from total Juanicipio production of 4.5 million ounces of silver and 10,600 ounces of gold.

In 2023, Juanicipio’s throughput was 1.27 million tonnes, while total production reached 16.8 million ounces of silver, 36,700 ounces of gold, 28.4 million pounds of lead, and 44.8 million pounds of zinc.

Valuation

In his research note, Kevin O’Halloran maintained an Outperform rating on MAG Silver, with a price target of CA$24.00, representing a potential total return of 93% based on the March 18 closing price of CA$12.44.

The company’s strong financial performance, positive exploration results, and the anticipated updated technical report for the Juanicipio project are expected to drive future growth and value for shareholders.

“In addition to the updated Juanicipio technical report expected by the end of this month, we will also be watching for ongoing exploration results from MAG’s Deer Trail and Larder exploration properties, where drilling in 2024 will follow up on positive results achieved at both projects in 2023” O’Halloran wrote.

Important Disclosures:

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Disclosures for BMO Capital Markets, Mag Silver Corp., March 19, 2024

Analyst’s Certification I, Kevin O’Halloran, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to MAG Silver within the past 12 months. Disclosure 2: BMO Capital Markets has provided investment banking services for remuneration with respect to MAG Silver within the past 12 months. Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to MAG Silver within the past 12 months. Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from MAG Silver within the past 12 months. Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from MAG Silver. Disclosure 6A: MAG Silver is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services Disclosure 6C: MAG Silver is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services. Disclosure 16: A research analyst has extensively viewed the material operations of MAG Silver. Disclosure 17: MAG Silver has provided at its expense some or all of the itinerant travel for the research analyst related to facilitating a material site visit.

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