FY20 Drill Results Boost Confidence in Silver Miner's JV Asset

H.C. Wainwright & Co. reiterated its "Buy" recommendation for MAG Silver Corp. based upon the success of the company's FY/20 drill program that used infill and expansion drilling to greatly define surface and underground mineralization.

H.C. Wainwright & Co. research analyst Heiko F. Ihle, CFA, advised in an August 9 research note that on August 5, 2021, MAG Silver Corp. (MAG:TSX; MAG:NYSE American) reported that it had successfully completed its FY/20 drill program.

The drill program at MAG Silver's Juanicipio joint venture (JV) project included 39,700 meters of drilling. Ihle noted that 33 of the 110 holes drilled started from surface and 77 others were drilled specifically to further delineate the underground resource.

Analyst Ihle stated that the primary objective of the 2020 program was to infill and expand the Valdeca??as Deep Zone and to further define the Valdeca??as Bonanza Zone.

The report stated that MAG is presently continuing with its FY/21 drill program and has deployed five drill rigs that are actively operating at surface in coordination with ongoing underground definition drilling.

H.C. Wainwright's report stated that in FY/20, confidence in the high-grade Bonanza Zone Deposit's potential was bolstered by results from hole MIC-6 that returned 8.60 m of 1,356 g/t Ag and 3.3 g/t Au.

In addition, 21 holes were drilled from surface in areas located within the Deep Zone as part of MAG's FY/20 infill and expansion drilling efforts. The report highlighted that "the polymetallic and high-grade gold characteristics of this zone as hole D1-6-1 returned 18.1 m of 3.9 g/t Au, 198 g/t Ag, 14.2% Pb plus Zn, and 0.4% Cu." H.C. Wainwright believes that this hole signifies the western dilatant zone's high-grade potential and mineralization continuity.

Drilling targeted at the Valdeca??as vein resulted substantial coincidental intercepts within the Anticipada vein which as a result has been shown opportunity for meaningful growth. MAG Silver's Anticipada intercepts returned 0.3 m of 0.6 g/t Au, 112 g/t Ag, 9.3% Pb plus Zn and 0.1% Cu.

Ihle explained that H.C. Wainwright's discounted cash flow (DCF) model uses a 7.0% discount rate to arrive at a value for MAG Silver's Juanicipio JV project. The firm said that the rate is a little bit lower than typical discount rates tied to Mexican assets throughout its coverage universe, but it believes that the rate is justified given MAG's high-grade ore resource, profitable JV agreement structure, and large production potential.

H.C. Wainwright reiterated its "Buy" rating for MAG Silver Corp. with a target price of US$22.50/share. The company's shares trade under the symbol MAG on the NYSE-American Stock Exchange and closed for trading at US$19.13/share on August 13, 2021.

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