viewMAG Silver Corp

MAG Silver gets hike in target price from H.C. Wainwright


MAG Silver's (TSE:MAG) (NYSE MKT:MVG) price target was increased by analysts at H.C. Wainwright (HCW), which cited recent construction progress at the company's Juanicipio operations in Mexico.

HCW attended the MAG Silver analyst site visit on February 18, which was attended by nine analysts in total, the broker said.

Analyst Heiko Ihle said the company is hoping to advance its decline by 100 metres a month beginning in March, comparing favourably with 45 metres in October 2014 and 90 metres per month from November 2014 through January 2015.

He also noted that the drift has already reach a vertical depth of 110 metres, and that the site currently hosts 20 workers underground on a given day.

Relations with partner Fresnillo remain solid, the analyst wrote, saying "Fresnillo continued its substantial investment surrounding the town of a similar name, located around Juanicipio. 

"The firm just finished its $240 million investment into its Saucito Mine during 4Q14. This area is located in very close proximity to MAG's asset."

"We continue to believe that a partnership with Fresnillo, who is a large operator and should provide MAG with various economies of scale, to be a positive for further construction of Juanicipio."

MAG's management stood by its guidance for a 2017-2018 production start up at the site, implying a 2017 commercial mining start-up followed by a ramp up that sees 2018 as the first full year of production.

HCW reiterated its buy recommendation on MAG, while increasing its price target to $9.40 from $8.40 previously. The valuation is based on direct cash flow of anticipated operations at Juanicipio, using a long-term silver price of $17.50 per ounce.

The firm increased its net asset value multiple on the asset, it said.

Quick facts: MAG Silver Corp

Price: 23.53 CAD

Market: TSX
Market Cap: $2.23 billion

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