|
VANCOUVER, BRITISH COLUMBIA--(Marketwire -
March 25, 2010) - MAG Silver Corp. (TSX:MAG)(NYSE Amex:MVG)
("MAG") announces the Company's audited financial results for
the year ended December 31, 2009. For complete details of the Annual
Financial Statements for the year ended December 31, 2009 and related
Management's Discussion and Analysis please see the Company's filings
on SEDAR (www.sedar.com)
or on EDGAR (www.sec.gov).
HIGHLIGHTS FOR 2009
- At December 31, 2009, the Company's cash position was $26.8 million.
The Company's cash is invested with the Royal Bank of Canada in
interest bearing current accounts. The Company has no debt.
- During 2009 the Company made a major moly-gold discovery on its 100%
owned Cinco de Mayo property. Cinco de Mayo has "stand-alone"
importance to the Company and the exploration model provides additional
evidence that a very large CRD (skarn) system may lie at depth nearby.
All in all, Cinco de Mayo remains the chief focus of MAG's exploration
efforts on its 100% controlled properties.
- A 2010 budget of US $5.9 million has been approved by the Board of
Directors of Minera Juanicipio (MAG: 44%; FRES: 56%) of which
approximately US $2.6 million represents the Company's 44% share.
Planned work on the Juanicipio project will include a 21,400 metre
drilling program. The budget was amended in March 2010 to provide for
an engineering budget of US$1.5 million required to support a prefeasibility
study as proposed in 2009 by Wardrop Engineering. Commencement of the
prefeasibility study is subject to the completion of a resource audit
update planned for June 2010 whereby at least 50% of the total
contained silver can be categorized as an indicated resource. To the
end of 2009, almost 47% of the total contained ounces were classified
as indicated. A 10 hole program utilizing 4 drills is presently
underway on the property.
- In December 2009, the Company approved its own 2010 exploration budget
for approximately $9.4 million, of which approximately $7.2 million is
earmarked for MAG's wholly owned properties in Mexico, including 30,000
metres of diamond drilling.
- The Company's net loss for the year ended December 31, 2009 was
$13.49 million or $0.27 per share as compared to $5.87 million or $0.12
per share for the year ended December 31, 2008. Main factors creating
the larger 2009 loss were mineral property costs written off, higher
legal fees, lower interest earned for the year and losses on foreign
exchange.
- For the year ended December 31, 2009, the Company incurred $2,156,057
(2008: $1,926,488) in property acquisition costs and $14,389,336 (2008:
$13,336,644) in exploration expenditures on its wholly-owned
properties. The Company also contributed $984,920 (2008: $2,404,671)
for its 44% share of costs associated with Minera Juanicipio and
incurred a further $230,408 (2008: $118,173) directly to its own
account for geological and overview work on the Juanicipio property.
- An updated National Instrument 43-101 compliant resource estimate was
completed in March 2009 by Scott Wilson Roscoe Postle Associates Inc.
(see Press Release dated March 4, 2009) with respect to the Juanicipio
property. The total Indicated Resource for the Valdecanas Vein
(including the Hanging Wall Vein) was estimated at 2.95 million tonnes
of 879 grams per tonne (g/t) silver, 2.22 g/t gold, 2.39% lead and
4.15% zinc. The total Inferred Resource (Valdecanas, Footwall and
Hanging Wall Veins and the Stockwork Zone) was estimated at 7.21
million tonnes of 458 grams g/t silver, 1.54 g/t gold, 1.89% lead and
3.14% zinc. The total contained metals in the Indicated Resource are 83
million ounces of silver, 210,000 ounces of gold, 155 million pounds of
lead and 269 million pounds of zinc. The Inferred Resources contain an
additional 106 million ounces of silver, 356,000 ounces of gold, 301
million pounds of lead and 498 million pounds of zinc. A National
Instrument 43-101 technical report documenting the mineral resource estimate
was filed on SEDAR on April 8, 2009.
- On December 1, 2008, the Company was advised that a subsidiary of its
joint venture partner, Fresnillo plc, intended to make an unsolicited
take-over bid for all of the Company's outstanding common shares not currently
held by Fresnillo and its affiliates at an offer price of US$4.54 cash
per share. Fresnillo, an insider by virtue of its approximately 19.8%
interest in the Company, triggered the requirement for a formal
valuation by an independent valuator under the supervision of an
independent committee of the Company's board of directors. On February
1, 2009, the Company announced that the valuation had been suspended
after the independent committee determined that a proper valuation
could not be completed without critical information in the sole
possession or control of Fresnillo and which Fresnillo had refused or
neglected to provide to MAG or the valuator. On June 18, 2009, in
connection with MAG's formal application to the Ontario Securities
Commission ("OSC") to compel Fresnillo to produce critical
information needed to complete the independent valuation report, the
OSC ordered Fresnillo to provide discovery of documents and email
records. Within two working days of this order, Fresnillo withdrew its
intention to make a hostile bid, obviating the need to comply with the
OSC order.
SELECTED ANNUAL INFORMATION AND FINANCIAL PERFORMANCE
The following table summarizes selected financial data for the
Company's three most recently completed financial years.
---------------------------------------------------------------------------- Year ended Dec. Year ended Dec. Year ended Dec. 31, 2009 31, 2008 31, 2007 ---------------------------------------------------------------------------- Revenues(1) $298,506 $1,964,680 $915,604 ---------------------------------------------------------------------------- Net Loss ($13,490,210) ($5,872,889) ($8,149,258) ---------------------------------------------------------------------------- Net Loss per Share ($0.27) ($0.12) ($0.19) ---------------------------------------------------------------------------- Total Assets $82,653,538 $95,147,510 $85,061,932 ---------------------------------------------------------------------------- Long Term Debt Nil Nil Nil ---------------------------------------------------------------------------- Dividends Nil Nil Nil ---------------------------------------------------------------------------- (1) The Company's only source of revenue during the years ending December 31, 2007 to 2009 was interest revenue from GIC's and current accounts held by the Company. The amount of interest revenue earned correlates directly to the amount of cash on hand during the year referenced and prevailing interest rates.
The
Company reports a net loss of $13,490,210 ($0.27 per share) for the
year ended December 31, 2009 as compared to $5,872,889 ($0.12 per
share) in 2008. The 2009 loss includes mineral property write-offs of
$3,718,518 (2008: $1,221,019) and a non-cash charge for stock
compensation expense of $1,804,465 (2008: $2,539,011). The Company's
defensive efforts against Fresnillo's intended hostile bid for the
Company in 2009 increased several cost areas, including higher legal
costs of $3,048,507 (2008: $884,000), AGM and proxy solicitation costs
of $219,854 (2008: $96,960), travel costs of $287,045 (2008: $235,144),
office and telephone communication costs of $733,112 (2008: $506,332)
and shareholder relations expense of $714,809 (2008: $404,776).
Management and consulting fees increased to $1,984,515 (2008:
$1,528,630) due to the hiring of additional employees, increased
salaries, bonuses paid and an increase in board and committee meetings in
2009 resulting in higher non-executive directors fees. Due to the
devaluation in the Mexican peso during 2009, the Company also recorded
a loss on foreign exchange in the amount of $619,805 as opposed to a
gain of $96,596 in 2008.
As a result of Fresnillo's intended hostile bid announced in late 2008,
MAG was exposed to substantial professional and administrative costs in
2009, particularly for take-over defense and the protracted proceedings
in front of the OSC. The Company has also experienced substantial and
ongoing costs related to the initiation of arbitration proceedings with
the International Chamber of Commerce in Paris as prescribed by the
terms of the Minera Juanicipio Shareholders Agreement. The Company is
seeking a ruling as to whether or not Fresnillo may acquire control of
the Company on a hostile basis in breach of the standstill provisions
contained in the Shareholders Agreement governing Minera Juanicipio and
is also seeking relief in relation to other alleged violations by
Fresnillo as operator under the Shareholders Agreement. The arbitration
proceeding with Fresnillo is ongoing and there will be associated legal
and administrative costs going forward. The costs associated with this
proceeding are expected to be significantly lower than the legal and
administrative costs experienced in the 2009 fiscal year.
The Company has sufficient working capital to meet its foreseeable
needs over the coming year and has no debt. The company currently has a
$9.4 million exploration and development budget for its portfolio of
projects for the current year. This program is on track and on budget.
The budget includes continued exploration at its most advanced project,
the Juanicipio Joint Venture, and further drilling at its wholly-owned
projects.
Accounts receivable at December 31, 2009 totalled $2.0 million, being
comprised mainly of $45,239 and $1,493,337 million in value added taxes
repayable to the Company in Canada and in Mexico respectively as well
as $494,942 repayable from Fresnillo plc (which amount was received
after year end). Accounts payable of $1.08 million were due primarily
for exploration costs, legal, audit other overhead costs. The Company
spent $14.39 million on the exploration of its projects outside of the
Juanicipio Joint Venture during the year as compared to $13.34 million
in 2008. Property acquisition costs in 2009 totalled $2.16 million
versus $1.93 million in 2008.
During the year the Company raised cash proceeds of $381,027 by the
issuance of 161,003 shares on the exercise of options. Subsequent to
year end, a further 571,473 options were exercised for cash proceeds of
$878,911. The Company had no purchase warrants outstanding at year end
and has none outstanding at present.
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 and its joint venture partner Fresnillo
plc are delineating a significant new silver vein discovery on the
Juanicipio property in Zacatecas State, Mexico. MAG is based in
Vancouver, British Columbia, Canada. Its common shares trade on the TSX
under the symbol MAG and on the NYSE.A under the symbol MVG.
On behalf of the Board of MAG SILVER CORP.
Frank Hallam, Chief Financial Officer
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.
Qualified Person
The updated mineral resources for the Juanicipio Joint Venture
disclosed in the discussion above have been estimated by Dr. William Roscoe,
P.Eng and Mr. David Ross, P.Geo., both employees of Scott Wilson RPA
and independent of MAG. By virtue of their education and relevant
experience Dr. Roscoe and Mr. Ross are "Qualified Persons"
for the purpose of National Instrument 43-101. The mineral resources
have been classified in accordance with CIM Definition Standards for
Mineral Resources and Mineral Reserves (December 2005). Dr. Roscoe,
P.Eng., and Mr. Ross, P.Geo. have read and approved the contents of
this news release as it pertains to the March 2009 mineral resource
estimate by Scott Wilson Roscoe Postle Associates Inc. A National
Instrument 43-101 technical report documenting the mineral resource
estimate will be filed on SEDAR before April 10, 2009.
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.
Neither the Toronto Stock Exchange nor the New York Stock Exchange
Alternext US LLC has reviewed or accepted responsibility for the
accuracy or adequacy of this press release, which has been prepared by
management.
|