'Drilling Update Reminds of Resource Upside at Juanicipio,' Analyst Says

Results of MAG Silver's 2020 drill program at its Mexico joint venture project Juanicipio are interpreted in a National Bank of Canada report.

In an Aug. 5 research note, National Bank of Canada analyst Don DeMarco discussed the results of MAG Silver Corp.'s (MAG:TSX; MAG:NYSE American) 2020 drill program at its Juanicipio joint venture property.

DeMarco reiterated that the campaign encompassed 110 holes, 33 surface and 77 underground, in two primary locations plus in some additional zones. Definition drilling was done in the Valdeca??as Bonanza zone, and infill and expansion drilling was conducted in the Valdeca??as Deep zone.

"Overall, we ascribe a neutral bias, noting potential for resource expansion is tangible," DeMarco wrote.

As for the Bonanza zone, from which ore is planned to be mined initially at Juanicipio, 55 holes were drilled there. Intercept grades were high, 655 grams per ton silver equivalent (655 g/t Ag eq) on average, and generally consistent with the resource grade of 789 g/t Ag eq. Highlight hole MIC-6 showed 3.3 g/t gold and 1,356 g/t silver, or 1,599 Ag eq, over 5.2 meters (5.2m).

"Results confirm and add confidence in the high-grade silver resource within the upper parts of the Valdeca??as Bonanza zone," DeMarco wrote.

In the Valdeca??as Deep zone, 21 holes were drilled, seven of them from surface. Average grade shown in the intercepts was 565 Ag eq, and it, too, was mostly in line with the zone's resource grade of 601 Ag eq. Highlight hole-D1-6-1 returned 1,046 g/t Ag eq over 18.1m.

"Results confirm, expand, and allow improved modeling of the continuous wide mineralization of the Valdeca??as Deep zone," wrote DeMarco.

Regarding the additional zones drilled, results indicate they "bode well for mining flexibility in later years of the mine life, including expansion and improved modeling of the Anticipada vein," DeMarco noted. For instance, the hanging wall veins returned an average grade of 489.3 g/t Ag eq over 3.1m; the Venadas family veins, 472.4 g/t Ag eq over 0.8m; and the footwall veins, 306.2 g/t Ag eq over 1.6m.

The National Bank of Canada has an Outperform rating and a CA$31 per share target price on MAG Silver, the stock of which is currently trading at about CA$24.47 per share.

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