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Transcript of MAG: TSX / NYSE A MAGSILVER - MAG Silver Corp - · PDF fileMAG : TSX / NYSE A MAG Silver...
April 2018
Corporate Presentation
MAG: TSX / NYSE A
MAGSILVER.COM
MAG : TSX / NYSE A
Cautionary / Forward Looking Statements
2
MAG Silver Corp. is a Canadian issuer. This presentation is prepared by MAG Silver Corp (“MAG – TSX / MAG – NYSE: A”) management and MAG is solely responsible for content and format.
Peter Megaw, C.P.Geo, MAG’s Chief Exploration Officer is a non-independent Qualified Person and has reviewed this presentation and its content derived from industry information and 43-101 reports and news releases with specific underlying Qualified Persons as set out in the releases and reports. Industry Information has been compiled from publicly available sources and may not be complete, up to date or reliable. Neither the TSX nor the New York Stock Exchange American has reviewed or accepted responsibility for the accuracy or adequacy of this presentation, which has been prepared by management.
This presentation contains forward-looking statements within the meaning of Canadian and U.S. securities laws. Such forward looking statements aresubject to risks and uncertainties which could cause actual results to differ materially from estimated results. Such risks and uncertainties include, but arenot limited to: the Company’s ability to raise capital to fund development and exploration, changes in general economic conditions or financial markets,changes in metal prices, general cost increases, litigation, legislative, environmental and other judicial, regulatory, political and competitive developmentsin Mexico or Canada, technological and operational difficulties or inability to obtain permits encountered in connection with the Company’s explorationactivities, community and labor relations matters and changes in foreign exchange rates, all of which are described in more detail in the Company’s filingswith the Canadian securities regulators at www.sedar.com and the US. Securities and Exchange Commission at www.sec.gov/edgar.com There is nocertainty that any forward looking statement will come to pass and investors should not place undue reliance upon forward-looking statements. MAG doesnot assume any obligation to update forward looking information, other than as required by applicable law.
Cautionary note to investors concerning estimates of Indicated and Inferred mineral resources. This document uses the terms "Indicated MineralResources” and “Inferred Mineral Resources". MAG advises investors that although these terms are recognized and required by Canadian regulations(under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize theseterms. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. Inaddition, "Inferred Mineral Resources" have a great amount of uncertainty as to their existence. It cannot be assumed that all or any part of an InferredMineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources are considered toospeculative geologically to have the economic considerations applied to them to enable them to be categorized as mineral reserves and, accordingly,Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for a “Preliminary EconomicAssessment” as defined under Canadian National Instrument 43-101.Investors are cautioned not to assume that part or all of an Inferred Mineral Resourceexists, or is economically or legally mineable. Please see additional information on SEDAR and on EDGAR.
This presentation is for information purposes only and is not a solicitation. Please contact the Company for complete information and consult a registered investment representative / advisor prior to making any investment decision.
Note to U.S. Investors: Investors are urged to consider closely the disclosure in our Form 40F, File # 001-33574, available at our office: Suite 770-800 West Pender, Vancouver BC, Canada, V6C 2V6 or from the SEC: 1(800)-SEC-0330. The Company may access safe harbor rules.
Investors are urged to consider closely the disclosures in MAG Silver's annual and quarterly reports and other public filings, accessible through the Internet at www.sedar.com and www.sec.gov/edgar/searchedgar/companysearch.html
“AISC” means All-in sustaining costs. The projected AISC was calculated by the authors of the 2017 PEA at a cost of $5.02/Ag by summing life of mineoffsite and operating costs, taxes, duties and royalties and sustaining capital, all net of by-product revenues, and dividing the resulting total by the totalpayable ounces of silver projected to be produced over the life of mine. AISC is not a recognized measure under IFRS and this projected financialmeasure may not be comparable to AISC metrics presented by other silver producers.
MAG : TSX / NYSE A
Juanicipio JV Decline
3MAG : TSX / NYSE A
MAG : TSX / NYSE A
MAG Silver Discovery & Development
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“High Grade”
High IRR
District Scale
SILVERZINC
LEAD
GOLD
in Mexico
STRONG FINANCIAL POSITION
CashUS$160M*
+NO DEBT
*As of December 31, 2017
SIGNIFICANT EXPLORATION UPSIDE
JUANICIPIO JV(MAG 44%)
BONANZA ZONE145M oz Ag1 @ 550 g/t InD
41M oz Ag1 @ 648 g/t InF
848M lb Zn+Pb1 InD
DEEP ZONE31M oz Ag1 InD, 49M oz Ag InF
790M lb Zn+Pb1 InD
1.73B lb Zn+Pb1 InF
After Tax IRR 44%
19 yr Mine Life @ 4000tpd
Fresnillo Operator
1. Based on 100% of Asset
InD = Indicated Resources
InF = Inferred Resources
See 2017 PEA
MAG : TSX / NYSE A
MAG: TSX / NYSE A
1. December 31, 2017
2. Includes PSU, RSU & DSU’s = 723,932
CAD USD
Market Cap $1.2 Billion $0.9 Billion
Recent $13.50 $10.75
52 wk L/H $11.71 – $21.65 $9.29 – $16.55
Daily AVG Vol 185,271 306,741
I think MAG is one of the best pure
silver stories out there."
– The Gold Report Interview with
John Hathaway, Tocqueville Assets
Total Options2
2.7 M
Issued/Out
85.5 M
Fully Diluted
88.4 M
CASH
US$160M1
NO DEBT
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MAG : TSX / NYSE A
Property Locations – A History of Discovery
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12
3
4
5
67
Cinco de Mayo
MAG Silver/Fresnillo JV
(Minera Juanicipio)
MAG Silver Success
Juanicipio Vein* 2003
Valdecañas Vein* (Bonanza Zone) 2006
Pozo Seco* 2009
Upper Manto* 2011
Pegaso (Cinco) 2012
Valdecañas Deep Zone West* 2015
Valdecañas Deep Zone East* 2016
Anticipada Vein* 2017
1
2
3
4
5
6
7
8
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Fresnillo Silver District – One of a Kind
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THE FRESNILLO SILVER TREND
Over 6.2 Billion oz of Silver
> 10% of world historical production
2017: 38 Moz Ag
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Minera Juanicipio – Premier Silver District
+11 km
~7 km
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+2km
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Valdecañas Vein
Deep Zone, Dilatant Zone, Anticipada Vein
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MAG Resources
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ZoneResource
Category
Tonnes
(Mt)
Ag
(g/t)
Au
(g/t)
Pb
(%)
Zn
(%)
Cu
(%)
Metal Contained in Resource
Ag (Moz)
Au (Koz)
Pb (Mlb)
Zn (Mlb)
Cu (Mlb)
Bonanza
Zone
Indicated 8.2 550 1.9 1.6 3.1 0.1 145 509 294 554 14
Inferred 2.0 648 0.8 1.3 2.8 0.1 41 52 58 123 3
Deep ZoneIndicated 4.7 209 2.4 3.0 4.7 0.2 31 359 304 486 24
Inferred 10.1 151 1.6 2.7 5.1 0.3 49 510 601 1,129 69
Resource
Category
Tonnes
(Mt)
Ag
(g/t)
Au
(g/t)
Pb
(%)
Zn
(%)
Cu
(%)
Metal Contained in Resource
Ag
(Moz)
Au
(Koz)
Pb
(Mlb)
Zn
(Mlb)
Cu
(Mlb)
Indicated 12.8 427 2.1 2.1 3.7 0.1 176 867 598 1041 38
Inferred 12.1 232 1.4 2.5 4.7 0.3 91 562 658 1252 71
Global Resource by Classification
Bonanza and Deep Zone by Classification
As per 2017 PEA
MAG : TSX / NYSE A
Bonanza vs Deep Zones
Bonanza
• >550 g/t Silver
• 4.5% Zinc + Lead
• >1.5 g/t Gold
• 80% Indicated (8 Mt)
• 5 m Average Width
• 1200 m Strike Length
• Open to Northwest?
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Deep
• >150 g/t Silver
• 7.5% Zinc + Lead
• >1.5 g/t Gold
• 70% Inferred (10 Mt)
• >10 m Average Width
• >1600 m Strike Length
• Open to East and Depth
MAG : TSX / NYSE A
Description Juanicipio 2012 Juanicipio 2017
CAPEX $302M (100%) / $132M (44%) $360M (100%) / $159M (44%)
IRR (after tax) 43% 44%
AISC1 N/A2 $5.02 Ag /oz
Life of Mine 15 yr+ 19 yr (initially)
Throughput 2,650 tpd 4,000 tpd
Off site costs $39/t $41/t
On Site Operating Cost $67/t $59/t
Silver Price $23.39 $17.90
Valdecañas: Development Metrics3
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1“AISC” means All-in sustaining costs. The projected AISC was calculated by the authors of the 2017 PEA at a cost of $5.02/Ag by summing life of mine offsite and operating costs,
taxes, duties and royalties and sustaining capital, all net of by-product revenues, and dividing the resulting total by the total payable ounces of silver projected to be produced over
the life of mine. AISC is not a recognized measure under IFRS and this projected financial measure may not be comparable to AISC metrics presented by other silver producers.2
not calculated in 2012 UPEA3 calculations based on 100% of asset
As per 2017 PEA
MAG : TSX / NYSE A
2016 2017 2018 2019 2020
Juanicipio Development Timetable
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Total Capex $US 360M (MAG 44% = $US 159M)*
Mill Procurement
& Construction
Initial Decline Completed 3,500m+
Pro
du
cti
on
H
1 2020
Ventilation Development
Vent Fan Operating *Source: PEA 2017
Twin Decline
UG Access Ramp, Stope Development
UG Infrastructure in progress
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Decline Twinning Progress
450m
Initial Decline Completed!
2nd Decline in progress
Valdecañas Vein
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Portal (2,324 m elev.)
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Mineral Processing
Metallurgical test work carried out between 2008 and 2015 on composites
from 67 drillholes through the Valdecañas vein system.
Process plant consists of a comminution circuit followed by sequential
flotation of a silver-rich lead concentrate, a zinc concentrate and a
gold-rich pyrite concentrate.
Three year ramp up to steady-state throughput rate of 1.4Mtpa is assumed.
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Silver Gold Lead Zinc
Mill recovery 95% 82% 93% 90%
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Surface Infrastructure
Two-lane 6.5km long sealed road for site access.
Power supplied from local grid to main substation.
Water from external sources, supplemented with
dewatering from underground workings.
Several locations under consideration for tailing facility.
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MAG : TSX / NYSE A
On-Site Operating Costs
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Area Cost ($/t mill feed)
Mining 34.95
Processing 20.37
G & A 3.35
Total: 58.67
Metal Treatment Charges Cost ($/t mill feed)
Silver refining 4% of Ag price 5.44
Gold refining $5/ounce of Au payable 0.16
Lead TCs $235(1)/dry metric tonne of concentrate 9.37
Zinc TCs $235(1)/dry metric tonne of concentrate 13.85
Transportation $115(2)/wet metric tonne of concentrate 12.50
Total: 41.32
Off-Site Operating CostsLead, Zinc and Pyrite concentrates
(1) Although current spot TCs for lead and zinc concentrates are approximately $50-$60/dry metric tonne (“dmt”),rates above ($235/dmt) reflect projected long term sustainable rates.(2) Assumes that both the lead and zinc concentrates will be treated in Asia, and assumes a moisture content of 10%See 2017 PEA.
MAG : TSX / NYSE A
Financial Summary and Price Sensitivity
Discount Rate (5%) Base Case Apples to Apples
Metal Prices: 2012 Metal Prices (1)
Silver ($/oz) 14.50 17.90 19.50 23.00 23.39
Gold ($/oz) 1,000 1,250 1,300 1,450 1,257
Lead ($/lb) 0.75 0.95 0.95 1.15 0.95
Zinc ($/lb) 0.75 1.00 1.05 1.20 0.91
Copper ($/lb) N/A – Copper excluded for purposes of PEA (2)
Economics: 2017(3) 2012 (4)
Pre-Tax NPV (M) $1,080 $1,860 $2,104 $2,776 $2,427 $1,762
After-Tax NPV (M) $635 $1,138 $1,295 $1,729 $1,503 $1,233
Pre-Tax IRR 45% 64% 71% 86% 83% 54%
After-Tax IRR 30% 44% 49% 61% 58% 43%
Undiscounted life of mine (“LOM”)
after tax cash flow(M)$1,170 $1,995 $2,243 $2,945 $2,542 $2,162
Cash cost $/oz Ag (net of credits) (5) (0.35) (3.94) (4.45) (6.90) (3.11) (0.03)
Total Cash cost $/oz Ag(6) 3.50 2.39 2.63 2.29 4.89 N/A(1)
AISC $/oz Ag(7) 6.13 5.02 5.25 4.92 7.51 N/A(1)
Payback (Years) From Plant Start up 2.6 1.8 1.6 1.2 1.2 2.1
1) Based on metal prices used in the previous 2012 Juanicipio PEA, this column has been provided in order to demonstrate the economic effect on the project given the expanded resource and enhanced project scope – and compares PEA economics. Corporate tax rate in 2012 used was 28% (with no special mining duty or gold/silver royalties).
2) Although the resource for the Deep Zone includes copper (see below), no copper circuit has been included in the PEA as no metallurgical testing and recovery assessment has yet been completed on copper.
3) See 2017 PEA
4) See Press Release June 14, 2012. Total Cash cost and AISC per oz. of silver were not calculated for the 2012 report.
5) Cash costs include all operating costs, smelter, refining and transportation charges, net of by-product (gold, lead and zinc) revenues.
6) Total cash costs include cash costs and all corporate taxes, special mining duties, and precious metals royalties.
7) “AISC” means All-in sustaining costs. The projected AISC was calculated by the authors of the 2017 PEA at a cost of $5.02/Ag by summing life of mine offsite and operating costs, taxes, duties and royalties and sustaining capital, all net of by-product revenues, and dividing the resulting total by the total payable ounces of silver projected to be produced over the life of mine. AISC is not a recognized measure under IFRS and this projected financial measure may not be comparable to AISC metrics presented by other silver producers.
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MAG : TSX / NYSE A
Recap - Features of the PEA - all in $US.
Strong positive impact of new PEA on remarkable economics of the Bonanza Zone.
Low cost structure. All-In Sustaining Costs (AISC)1 of $5.02 per ounce of silver.
Project throughput has been increased to 4,000tpd from 2,650tpd.
In addition:
- Reformulated ramp system to facilitate higher mining and waste removal rates
- Underground crushing and UG conveying to plant site
- Internal shaft (winze) to access Deep Zone sooner
- Plant relocated to large, open, flat area
Longer mine life – now initially 19 years.
Compelling economics
- Pre tax: NPV5% $1.86 billion, Internal Rate of Return 64.5%
- After tax: NPV5% $1.14 billion, Internal Rate of Return 44.5%
Robust - @ $8/oz Ag, $0.75 Zn – project has a 15% after tax IRR.
And, as we have demonstrated for years…
High potential for finding additional ounces through exploration.
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1“AISC” means All-in sustaining costs. The projected AISC was calculated by the authors of the 2017 PEA at a cost of $5.02/Ag by summing life of mine offsite and operating costs, taxes,
duties and royalties and sustaining capital, all net of by-product revenues, and dividing the resulting total by the total payable ounces of silver projected to be produced over the life of mine.
AISC is not a recognized measure under IFRS and this projected financial measure may not be comparable to AISC metrics presented by other silver producers.
MAG : TSX / NYSE A
Juanicipio Joint Venture – Summary
HIGHEST GRADE DEVELOPING
SILVER ASSET
FINANCIALMINIMAL RISK
GEOPOLITICALMINIMAL RISK
DEVELOPMENTMINIMAL RISK
SIGNIFICANT
EXPLORATION UPSIDE
INFRASTRUCTUREHISTORICAL
GREAT
METALLURGY
PROPERTY ACCESS MINIMAL RISK
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MAG : TSX / NYSE A
Valdecañas VeinDeep Zone, Dilatant Zone & Anticipada vein
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MAG : TSX / NYSE A
Valdecañas – Metal Grade Distributions
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Silver
Lead
Gold
Zinc
Copper
MAG : TSX / NYSE A
NE-SW Structural Influence on Valdecañas
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Gold
Vein
Thickness
MAG : TSX / NYSE A
Valdecañas Vein: Ore Fluid Upwelling Zone?
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SKARN
2000m
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Regional Targets: Extensions of known trends
~7 km
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FRS 2015 AR: Huizache Vein Inferred Resource
750KT @ 2.9 Au; 494 Ag; 0.06% Pb; 0.13% Zn+11 km
+2 km
MAG : TSX / NYSE A 26
Minera Juanicipio – Work Area within Claim
MAG : TSX / NYSE A
Nearby Targets: Extensions of known trends
~7 km
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+2km
FRS 2015 AR: Huizache Vein Inferred Resource
750KT @ 2.9 Au; 494 Ag; 0.06% Pb; 0.13% Zn
+11 km
MAG : TSX / NYSE A
Regional Targets: Identified Structures
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7km
16km
MAG : TSX / NYSE A
Juanicipio Project – Take away points
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DEVELOPMENT
Bonanza Zone
>550 g/t Silver
AISC1 $5.02 Ag/oz
4,000 tpd
19 yr Mine Life
H1 2020
EVOLUTION
Deep Zone
>7.5% Zn + Pb
>150 g/t Silver
Copper Credit
4,000 tpd
Year 6 Production
EXPLORATION
Deep Zone extensions
NW Structures
NE Structures
Cesantoni
20,000m drill program
1“AISC” means All-in sustaining costs. The projected AISC was calculated by the authors of the 2017 PEA at a cost of $5.02/Ag by summing life of mine offsite
and operating costs, taxes, duties and royalties and sustaining capital, all net of by-product revenues, and dividing the resulting total by the total payable ounces
of silver projected to be produced over the life of mine. AISC is not a recognized measure under IFRS and this projected financial measure may not be
comparable to AISC metrics presented by other silver producers.
MAG : TSX / NYSE A
Canaccord Genuity
• Kevin MacKenzie C$21.00
Raymond James
• Tara Hassan C$21.00
National Bank Financial
• Shane Nagle C$19.00
Analyst Coverage & Targets
Average Target Price: ~C$23.61
ROTH Capital Markets
• Joe Reagor C$28.31
Cormark Securities
• Tyron Breytenbach C$26.00
Scotia Capital
• Trevor Turnbull C$25.74
Macquarie Capital Markets
• Michael Gray C$25.50
PI Financial
• Phil Ker C$24.85
H.C. Wainwright
• Heiko Ihle C$24.45
BMO Capital
• Ryan Thompson C$23.00
TD Securities
• Daniel Earle C$22.00
Euro Pacific
• Bhakti Pavani C$21.74
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MAG : TSX / NYSE A
Major Shareholders – Holding > 1.0M Shares
31
BlackRock Investment Mgmt 16.0%
Fresnillo PLC 11.4%
Tocqueville Asset 9.0%
Van Eck Associates 5.4%
Colonial First State 4.8%
Equinox / Mason Hill 3.3%
Vanguard/ PM&M 3.2%
First Eagle 2.8%
1832 Asset Mgmt 1.6%
Gabelli/Gamco 1.6%
RBC Global Asset Mgmt 1.2%
Franklin Advisors 1.2%
Global X Mgmt 1.2%
Addenda 1.1%
Ninepoint Partners 1.1%
Institutions <1% shares 22%
Total Institutions 88%
Retail & Float 11%
88%
MAG : TSX / NYSE A
MAG: TSX / NYSE A
MAGSILVER.COM