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VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2009) - MAG Silver Corp. (TSX:MAG)(NYSE Amex:MVG)
("MAG") announces the Company's unaudited financial results
for the six month period ended June 30, 2009. For complete details of
the Second Quarter Interim Financial Statements and Management's
Discussion and Analysis, please see the Company's filings on SEDAR (www.sedar.com) or on EDGAR (http://idea.sec.gov).
The Company's cash position at June 30, 2009 remained strong at $35.4
million. All amounts herein are reported in Canadian dollars unless
otherwise specified. The Company's cash is all invested with the Royal
Bank of Canada
in guaranteed investment certificates or in an interest bearing current
account.
The Company's primary asset is a 44% holding in Minera
Juanicipio S.A. de C.V. ("Minera Juanicipio")
which in turn holds and operates the Juanicipio
property located in the Fresnillo District, Zacatecas State, Mexico. The Company is a
party to a Shareholders Agreement with Penoles
S.A. de C.V. ("Penoles") which
holds the other 56% of Minera Juanicipio through its majority interest in Fresnillo plc; a U.K. domiciled subsidiary
company listed May 9, 2008 by way of an IPO on the London Stock
Exchange.
In January 2009, Fresnillo and MAG approved a
2009 exploration program for the Juanicipio
property based on the recommendation of Minera
Juanicipio's Technical Committee totaling US $4.0 million and an engineering budget
of US $500,000. From its inception in late 2007 to August 14, 2009, the
Company has advanced approximately US $9.3 million to Minera Juanicipio. The
engineering budget provided for the completion of an independent
scoping study on the possible development of the Valdecanas
vein on the Juanicipio property as a stand
alone operation. The results of this work, expected before the end of
September, will be published by the Company promptly upon receipt from Wardrop.
Early in 2009 MAG also approved its own exploration budget of
approximately $17.5 million. Of this amount, $1.9 million was allotted
towards the Company's share of Minera Juanicipio's 2009 exploration budget as described
above. A further $ 2.6 million was budgeted for the Company's share of
possible underground development work at Juanicipio.
The balance of approximately $13.5 million was allocated for ten
MAG-owned properties in Mexico
and general administration and overhead. Planned 2009 expenditures
included the diamond drilling of almost 30,000 metres
of core on five separate properties, air and ground based geophysical
surveys, trenching, road building, mapping, sampling, geological modeling, surface rights acquisitions, taxes and
land payments.
In December of 2008, London Stock Exchange listed Fresnillo
plc announced an intention to bid for all of the outstanding shares of
MAG. Fresnillo, an insider by virtue of its
ownership of 19.8% of MAG, was in the unique position of also being the
majority interest holder in, and the operator of, the joint venture
company Minera Juanicipio.
Fresnillo's status as an insider also
triggered the need for an independent valuation of MAG under Canadian
securities laws. The valuation work, which commenced in early January 2009 was suspended by MAG when Fresnillo
refused to provide information the independent valuator had requested
which was critical to the valuation. In an effort to resolve the
valuation issue, MAG initiated proceedings before the Ontario
Securities Commission ("OSC"). On June 18, 2009, the OSC
ordered Fresnillo to provide to MAG extensive
discovery of documents and email records that were germane to Fresnillo's repeated assertions that certain
documents critical to the completion of an independent valuation report
required under Canadian securities legislation did not exist. Within
two working days of this order, Fresnillo
withdrew its hostile bid, obviating their need to comply.
In response to Fresnillo's intended hostile
bid, MAG chose to accelerate its own 2009 exploration program with the
aim of unlocking additional shareholder value from its own portfolio of
exploration properties. To that end MAG essentially completed its full
2009 budgeted exploration program for its own properties during the
first 6 months of 2009. Although the program has not yet located a
substantial new discovery, a review of the results of the program
indicate that Lagartos SE, Cinco de Mayo and Salemex
projects have been advanced and are worthy of further exploration work
going forward.
As a result of Fresnillo's intended hostile
bid the company was exposed to substantial additional professional and
administrative costs, particularly for take-over defence, as the
aggressive and uncooperative actions of Fresnillo
lead to a long and protracted series of presentations, depositions and
hearings in front of the OSC. Also on the legal side were substantial
and ongoing costs related to the initiation of arbitration proceedings
with the International Chamber of Commerce ("ICC") in Paris as
prescribed by the terms of the Juanicipio
Joint Venture 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
the Juanicipio joint venture and is also
seeking relief in relation to other alleged violations by Fresnillo as operator under the Shareholders
Agreement. At this time the matter is proceeding in accordance with the
timelines established by the ICC.
At the time of writing, arbitration proceedings continue and there will
be associated legal and administrative costs going forward, but it is
expected that these will be significantly smaller than those
experienced in the six month period ended June 30, 2009. At present, management
is also in process of preparing a revised exploration budget for the
Company's 100% owned properties for the balance of 2009. Once
again, the rate of expenditure is expected to be significantly reduced
from the pace set in the first six month period of the year.
Accounts receivable at June 30, 2009 totalled $3,511,195 while accounts
payable and accrued liabilities amounted to $3,165,649. Accounts
receivable were comprised primarily of value added taxes repayable to
the Company in Mexico.
Accounts payable were due mainly for drilling conducted on the
Company's Mexican projects other than the Juanicipio
property. The Company spent $10,883,615 on the exploration of these
projects during the period as compared to $6,151,542 for the same
period in 2008. From the total, an amount of $10,650,799 related to
drilling on five of the projects where the Company holds rights to
acquire up to a 100% interest; Lagartos SE -
$2,485,300; Sierra de Ramirez - $1,627,181; Salemex
- $991,716; Nuevo Mundo - $389,064; and
$5,157,538 for drilling at Cinco de Mayo
alone, where exploration activities continue property wide. The Company
currently has one drill rig turning on Cinco
de Mayo, and one drilling at Lagartos South
East.
The Company's loss for the six months ended June 30, 2009 amounted to
$9,551,030 or $0.19 per share as compared to $3,350,261 or $0.08 per
share for the same period last year. The loss for the six months ended
June 30, 2009 includes the write off mineral property acquisition costs
and deferred exploration costs in the amount of $3,641,571 ($1,221,019
for the same period in 2008). General overhead and administration costs
for the period amounted to $4,834,035 ($1,465,133 for the same period
in 2008). This included increased legal costs at $2,490,158 million
($83,865 in 2008), proxy solicitation costs of $203,859 (nil in 2008)
and $458,238 for shareholder relations expense (2008: $135,324) as well
as additional travel costs resulting from efforts to deal with Fresnillo's intended hostile bid as described
above.
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 partner Fresnillo
plc are delineating a significant new silver vein discovery on the Juanicipio property in Zacatecas State, Mexico.
MAG holds a large scale portfolio of 100% owned projects. MAG is based
in Vancouver, British Columbia, Canada.
Its common shares trade on the TSX under the symbol MAG and on NYSE
Amex under the symbol MVG.
On behalf of the Board of MAG SILVER CORP.
Frank R. 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, 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 U.S. Investors: The U.S. Securities and Exchange
Commission permits U.S. mining companies, in their filings with the
SEC, to disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms in
this press release, such as "Inferred resources," that the
SEC guidelines prohibit U.S.
registered companies from including in their filings with the SEC.
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 American Stock Exchange has
reviewed or accepted responsibility for the accuracy or adequacy of
this news release, which has been prepared by management.
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