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VANCOUVER,
BRITISH COLUMBIA--(Marketwire - May 17, 2010) - MAG Silver Corp.
(TSX:MAG)(NYSE Amex:MVG) ("MAG" or the "Company")
announces the Company's unaudited financial results for the three month
period ended March 31, 2010. For complete details of the First Quarter
Interim Financial Statements and Management's Discussion and Analysis
please see the Company's filings on SEDAR (www.sedar.com) or on
EDGAR (www.sec.gov).
The Company's cash position at March 31, 2010 was $24.2 million. All
amounts herein are reported in Canadian dollars unless otherwise
specified. Subsequent to the end of the period the Company agreed to a
placement of common shares on a bought deal basis at a price of $7.65
per share for gross proceeds of approximately $35.2 million. See
further details below.
The Company achieved a major moly-gold discovery in 2009 at the
Company's 100% owned Cinco de Mayo property and that property has now
attained "stand-alone" importance to the Company. Drilling to
March 31, 2010 clearly demonstrates grade, width and continuity within
the Pozo Seco Prime discovery zone with contiguous holes outlining a
significant tabular body roughly measuring 1,800 metres long, averaging
250 to 300 metres wide and 50 metres thick. See further details below.
The Company's primary asset continues to be its 44% holding in Minera
Juanicipio S.A. de C.V. ("Minera Juanicipio") which in turn
owns and operates the Juanicipio property located in the Fresnillo
District, Zacatecas State, Mexico. The remaining 56% of Minera
Juanicipio is owned by the joint venture operator, London Stock
Exchange listed Fresnillo plc ("Fresnillo").
Accounts receivable at March 31, 2010 totaled $2,061,527 while accounts
payable and accrued liabilities amounted to $2,338,710. Accounts
receivable were comprised primarily of value added taxes repayable to
the Company by the Government of Mexico. Accounts payable were due
mainly for drilling programs conducted on the Company's Mexican
projects other than the Juanicipio property and for professional fees
and overhead expenses. The Company incurred $2,980,706 on the
exploration on its own projects during the period as compared to
$7,259,896 for the same period in 2009. Exploration activity in the
current period was focused on its 100% owned Cinco de Mayo property,
where $2,525,266 in exploration expenditures was incurred and 15,645
metres drilled. Exploration costs for the Company's other projects
(Salemex, Lagartos SE, Batopilas, and Nuevo Mundo) in the quarter
amounted to $455,440.
The Company's loss for the three months ended March 31, 2010 amounted
to $2,167,333 or $0.04 per share as compared to $5,161,757 or $0.10 per
share for the same period last year. There were no mineral property
write-offs in the current quarter (2009: $3,150,255). Included in the
loss for the period was stock compensation expense (a non-cash item)
totaling $1,159,401 (2009: $49,846). Excluding stock compensation
expense and the mineral property write-offs the net loss for current
quarter was $1,007,932 (2009: $1,961,656). In late 2008 and in 2009 MAG
was exposed to substantial professional and administrative costs as a
result of Fresnillo's intended hostile bid announced in late 2008 and
withdrawn in June 2009. As a result, the current loss was lower than
that for the 2009 first quarter. During the quarter legal costs
amounted to $168,990 (2009: $625,473), management and consulting fees
amounted to $249,780 (2009: $499,107), and shareholder relations costs
amounted to $134,716 (2009: $233,077); all decreased in comparison to
the same quarter last year.
Juanicipio Property
As a result of Fresnillo's attempted hostile bid for MAG in late 2008
and into 2009, the Company was exposed to substantial professional and
administrative costs in 2009, particularly for take-over defence 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
(ICC) in Paris in accordance with 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.
At a Minera Juanicipio board meeting in December of 2009, an
exploration budget of US $4.4M (100%) for 2010 was approved including a
carryover of an unspent US$400,000 from the 2009 budget for an
additional 2,000 metres of drilling. On March 16, 2010, an amendment to
the 2010 exploration budget was approved to include a further US$1.5
million (100%) engineering budget for a prefeasibility study.
Notwithstanding MAG's view that in accordance with best industry
practice the current geological understanding of the Valdecanas Vein
justifies commencement of a pre-feasibility study, Fresnillo has
required that commencement of the prefeasibility study be subject to
completion of a resource audit and 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 resource ounces were classified as indicated. A 10 hole
program utilizing 4 drills on the Valdecanas Vein is presently underway
and is targeted for completion by June 2010.
In the three months ending March 31, 2010, Fresnillo, as the operator,
has completed 7,774 metres of drilling on the property. Some of the
recent assay results from the Valdecanas Vein include a deep hole MH
which returned 2.90 metres of 481 grams per tonne (g/t) silver, 0.94
g/t gold, 2.43% lead and 6.01% zinc. For the three month period ended
March 31, 2010 the Company's 44% share of joint venture expenditures
amounted to $496,462. Presently there are a total of six drills in
operation. The Company has given Fresnillo notice that MAG supports a
more rapid development program for the Valdecanas Vein.
Cinco de Mayo
In late 2009 the Company announced the discovery of a new zone of high
grade molybdenum and gold mineralization named "Pozo Seco" in
the western part of the project area. Although still at an early stage
of understanding it is evident that Pozo Seco is developing substantial
size and grade potential. Drilling to March 31, 2010 clearly demonstrates
grade, width and continuity within the Pozo Seco Prime discovery zone
with contiguous holes outlining a very significant tabular body roughly
measuring 1,800 metres long, averaging 250 to 300 metres wide and 50
metres thick. Successful, large, step outs through alluvial cover
indicate that this body remains open in several directions.
Overall, drilling at Cinco de Mayo has encountered strong CRD/skarn
style mineralization and alteration throughout an area roughly 8 by 16
kilometres, with very few drillholes completely lacking mineralization.
Drilling at Cinco de Mayo during the first quarter totalled 15,645
metres. To date, the Company has drilled a cumulative 108,748 metres on
the property, in 227 holes. Drilling at Pozo Seco is continuing with 5
machines: (2 dedicated to in-fill drilling, 1 focused on extending the
moly-gold zone and 2 seeking large-scale replacement and skarn
mineralization).
Exploration and Outlook
The Company approved a 2010 budget of approximately $15 million, of
which approximately $4.5 million has been expended to March 31, 2010.
Of the 2010 budget, $2.9 million is allotted for the Company's 44%
share of Minera Juanicipio's US$4.4 million 2010 exploration budget
plus 44% of a US$1.5 million engineering budget approved March 16,
2010. From MAG's remaining budget of $12.1 million, the remaining
exploration component of $7.1 million is earmarked for nine 100%
MAG-owned properties in Mexico, including $5 million at Cinco de Mayo
and $1.3 million at Lagartos SE. Planned expenditures include the diamond
drilling of almost 27,000 metres of core on these two properties, air
and ground based geophysical surveys, trenching, road building,
mapping, sampling, geological modeling, surface rights acquisitions,
taxes and land payments and overhead costs.
The Company intends to continue with its efforts to affirm its rights
in its joint venture with Fresnillo and to demand performance on the
Juanicipio Project. The Company also intends to grow its independent
project portfolio through successful exploration.
Subsequent to March 31, 2010 the Company announced that it had agreed
to a financing with a syndicate of underwriters on bought deal basis by
way of a short form prospectus, for the placement of 4,603,500 common
shares, including an over allotment provision, at a price of $7.65 per
common share for gross proceeds of approximately $35.2 million. The
offering is expected to close on or about May 18, 2010 and is subject
to Company receiving all necessary regulatory approvals. The net of
proceeds of the offering will be to fund development of Juanicipio and
Cinco de Mayo as well as for working capital.
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 Fresnillo 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: Dr. Peter Megaw, Ph.D., C.P.G., has acted as the
qualified person as defined in National Instrument 43-101 for this
disclosure and supervised the preparation of the technical information
in this release. Dr. Megaw has a Ph.D. in geology and more than 20
years of relevant experience focussed on silver and gold
mineralization, and exploration and drilling in Mexico. He is a
certified Professional Geologist (CPG 10227) by the American Institute
of Professional Geologists and an Arizona registered geologist (ARG
21613). Dr. Megaw is not independent as he is a Director and
Shareholder of MAG and is the vendor of this project, whereby he may
receive additional shares. Dr. Megaw is satisfied that the results are
verified based on an inspection of the core, a review of the sampling
procedures, the credentials of the professionals completing the work
and the visual nature of the silver and base metal sulphides within a
district where he is familiar with the style and continuity of
mineralization.
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 Amex
has reviewed or accepted responsibility for the accuracy or adequacy of
this press release, which has been prepared by management.
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