MAG Silver Corp. (TSX:MAG) (NYSE MKT:MVG) ("MAG" or the "Company")
announces the Company's unaudited financial results for the three
and six months ended June 30, 2013. For complete details of the
second quarter unaudited Condensed Interim Consolidated Financial
Statements and related Management's Discussion and Analysis, please
see the Company's filings on SEDAR (www.sedar.com) or on EDGAR
(www.sec.gov). All amounts herein are reported in United States
dollars unless otherwise specified.
At June 30, 2013, the Company had working capital of
$33,874,230, including cash of $33,402,419. The primary use of cash
during the six months ended June 30, 2013 was for exploration and
evaluation expenditures totaling $2,515,625 (June 30, 2012:
$5,790,815) and the Company also expended on its own account and
through advances to Minera Juanicipio $1,301,947 (June 30, 2012:
$2,378,138) on the Juanicipio property. Subsequent to June 30,
2013, the Company advanced $3.74 million to Minera Juanicipio,
representing its 44% share of an $8.5 million cash call to fund
exploration activities and initial ramp development, through
October 2013. The Company currently has sufficient working capital
to maintain all of its properties and currently planned programs
extending beyond the next 12 months.
The Company's net loss for the three and six months ended June
30, 2013 amounted to $10,220,693 and $11,878,766 respectively (June
30, 2012: $1,803,362 and $2,557,733 respectively). The net loss as
compared to prior periods, increased primarily as a result of the
write-off of non-core assets. Given the prevailing market
conditions and the desire to focus on and preserve cash for its
core projects, management has determined that the some of the
Company's non-core assets should be abandoned, and exploration and
evaluation assets totaling $8,422,283 were written off in the
quarter ended June 30, 2013 (June 30, 2012: Nil). Portions of the
Lagartos Properties, specifically the "Lagartos NW" and "Lagartos
V" claims, totaling $4,065,884 were written off, along with the
100% owned Lorena and Nuevo Mundo claims totaling $2,719,689, and
their respective concessions were not renewed subsequent to the
quarter end. The Mojina option earn in agreement was also
terminated subsequent to the quarter end and its associated
exploration and evaluation costs totaling $1,636,710 were written
off. During the three and six months ended June 30, 2013, the
Company also recorded share based payment expense (a non cash item)
of $1,278,548 and $1,915,148 respectively (June 30, 2012: $496,449
and $872,305 respectively) relating to stock options both granted
and vesting to employees during the period.
Juanicipio Project
Based on a National Instrument 43-101 compliant Updated
Preliminary Economic Assessment entitled "Minera Juanicipio
Property, Zacatecas State, Mexico, Technical Report for Minera
Juanicipio S.A de C.V", authored by AMC Mining Consultants (Canada)
Ltd. (the "AMC Study"), filed on SEDAR on July 16, 2012, Minera
Juanicipio had approved an 18 month mine permitting and underground
development budget of $25.4 million (the "Initial Development
Budget"). This program covers mine permitting, surface preparation
and the commencement of the first 2,500 metres of underground
decline development, as well as 35,000 metres of infill drilling at
75 metre centres along the Valdecanas Vein. To December 31, 2012, a
total of $1.3 million of the Initial Development Budget had been
incurred, with the remaining $24.1 million now designated for 2013
($13.1 million) and the first half of 2014 ($11 million). To July
31, 2013, a total 24,628 metres were drilled in 33 holes and a
further 8,167 metres drilled in nine holes of
geotechnical/metallurgical drilling, resulting in a total of 42
holes and 32,785 metres drilled to July 31, 2013. The results to
date have been as expected showing the typical metal zoning of
Fresnillo-style veins in the district.
The development program is being managed by Fresnillo plc
("Fresnillo") as operators of the Joint Venture, and they had
previously reported that they expected the underground decline
ground breaking to commence late in the second quarter of 2013.
However, due to development permitting delays resulting from the
recent Mexican government changeover, it now expects the
underground decline ground breaking to commence in late August or
early September, 2013. Five different contractors from North and
South America had been asked to tender for the decline
construction, and after review of the proposals, the contract has
been awarded.
Cinco de Mayo
In the three and six months ended June 30, 2013, the Company
incurred exploration and evaluation costs of $566,508 and
$1,313,497 respectively (2012: $4,033,817 and $5,990,731
respectively). No drilling has been undertaken in 2013 as the
Company is currently trying to negotiate a renewed surface access
agreement with the local Ejido. The principal focus of work has
been in preparation for these negotiations and has included
meetings with Chihuahua State and Mexican Federal authorities and
Community Public Relations and legal advisors in Mexico. This
process was protracted due to the political transition period as
the new party and Presidency assumed operation of the Mexican
government, coupled with Municipal elections held in July 2013. The
Company maintains the Ejido access issue is a temporary delay and
is working to resolve the issue on a permanent basis with the
Ejido. However, once the surface access permission is renewed and
obtained, the permit approval process may still take up to 3 months
to process. The Company had expected the resumption of drilling on
the property late in 2013, but with protracted political transition
periods (both federally and municipally), it is now expected
drilling will resume in the first half of 2014. The Company has
also initiated preliminary metallurgical testing on assay bulk
rejects in anticipation of a Preliminary Economic Assessment
("PEA") based on the Upper Manto resource.
About MAG Silver Corp. (www.magsilver.com)
MAG is focused on district scale projects located within the
Mexican Silver Belt. Our mission is to become one of the premier
companies in the silver mining industry. MAG is conducting ongoing
exploration of its portfolio of 100% owned properties in Mexico
including a silver, lead and zinc discovery and a moly-gold
discovery at its 100% owned Cinco de Mayo property in Chihuahua
State. MAG and Fresnillo plc are jointly developing the Valdecanas
Vein and delineating the Desprendido and Juanicipio discoveries on
the Juanicipio Joint Venture in Zacatecas State. MAG is based in
Vancouver, British Columbia, Canada. Its common shares trade on the
TSX under the symbol MAG and on the NYSE MKT under the symbol
MVG.
On behalf of the Board of MAG SILVER CORP.
Larry Taddei, Chief Financial Officer
Neither the Toronto Stock Exchange nor the NYSE MKT has reviewed
or accepted responsibility for the accuracy or adequacy of this
press release, which has been prepared by management.
This release includes certain statements that may be deemed to
be "forward-looking statements" within the meaning of the US
Private Securities Litigation Reform Act of 1995. All statements in
this release, other than statements of historical facts are
forward-looking statements, including statements that address
future mineral production, reserve potential, exploration drilling,
exploitation activities and events or developments. Forward-looking
statements are often, but not always, identified by the use of
words such as "seek", "anticipate", "plan", "continue", "estimate",
"expect", "may", "will", "project", "predict", "potential",
"targeting", "intend", "could", "might", "should", "believe" and
similar expressions. These statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking statements. Although MAG believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include, but are not limited to, changes
in commodities prices, changes in mineral production performance,
exploitation and exploration successes, continued availability of
capital and financing, and general economic, market or business
conditions, political risk, currency risk and capital cost
inflation. In addition, forward-looking statements are subject to
various risks, including that data is incomplete and considerable
additional work will be required to complete further evaluation,
including but not limited to drilling, engineering and
socio-economic studies and investment. The reader is referred to
the Company's filings with the SEC and Canadian securities
regulators for disclosure regarding these and other risk factors.
There is no certainty that any forward-looking statement will come
to pass and investors should not place undue reliance upon
forward-looking statements.
Cautionary Note to Investors Concerning Estimates of Indicated
Resources
This press release uses the term "Indicated Resources". MAG
advises investors that although this term is 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 this term.
Investors are cautioned not to assume that any part or all of
mineral deposits in this category will ever be converted into
reserves.
Cautionary Note to Investors Concerning Estimates of Inferred
Resources
This press release uses the term "Inferred Resources". MAG
advises investors that although this term is 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 this term.
Investors are cautioned not to assume that any part or all of the
mineral deposits in this category will ever be converted into
reserves. In addition, "Inferred Resources" have a great amount of
uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, or economic studies except for Preliminary Assessment as
defined under Canadian National Instrument 43-101. Investors are
cautioned not to assume that part or all of an Inferred Resource
exists, or is economically or legally mineable.
Please Note:
Investors are urged to consider closely the disclosures in MAG'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.
Contacts: MAG Silver Corp. Michael J. Curlook VP Investor
Relations and Communications (604) 630-1399 or Toll free: (866)
630-1399 (604) 681-0894 (FAX)info@magsilver.com
www.magsilver.com
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