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VANCOUVER, BRITISH
COLUMBIA--(Marketwire - Nov. 16, 2009) - MAG Silver Corp. (TSX:MAG)(NYSE
Amex:MVG) ("MAG" or the "Company") announces the
Company's unaudited financial results for the nine month period ended
September 30, 2009. For complete details of the Third 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 September 30, 2009 remained strong at
$30.5 million. All amounts herein are reported in Canadian dollars
unless otherwise specified.
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 remaining 56% of Minera Juanicipio is
owned by Fresnillo plc ("Fresnillo"), a U.K. domiciled
subsidiary company listed 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, MAG has advanced approximately US $9.3 million to Minera
Juanicipio. The engineering budget contemplated 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 study, prepared by Wardrop Engineering, demonstrated robust
project returns and were published in a news release by the Company on
September 14, 2009. The Wardrop study recommends that the Juanicipio
project proceed to a prefeasibility study.
In December
of 2008, 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, Minera Juanicipio.
Fresnillo's status as an insider 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 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
did not exist. Within two working days of this order, Fresnillo
withdrew its hostile bid, obviating their need to comply with the OSC
order.
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 original 2009
budgeted exploration program for its own properties during the first 6
months of 2009. During the nine month period ended September 30, 2009,
the Company incurred $1,537,943 in property acquisition costs (2008:
$964,556). Exploration expenditures for the same period on MAG's 100%
owned properties amounted to $13,169,566 (2008: $9,828,389). Results of
the program were favourable for the Lagartos SE, Cinco de Mayo and
Salemex projects.
At Cinco de Mayo an extensive, near surface molybdenum and gold deposit
has been discovered and work continues to expand and delineate that discovery.
The significance of this discovery, called the Pozo Seco Moly (gold)
Zone, is two-fold: 1) the very high-grade moly (three times the average
grade of most moly producers) encountered over bulk mineable widths
just below surface suggests the possibility of a standalone moly
operation; 2) perhaps more important is that the presence of high-grade
molybdenum may indicate proximity to the intrusive centre of Cinco's
silver-lead-zinc mineralization. The Company continues to actively
explore at Cinco de Mayo. Further details of the exploration results at
Cinco de Mayo may be found in our "Management's Discussion and
Analysis" dated September 30, 2009.
During the nine month period ended September 30, 2009, work included
drilling on the Valdecanas and Juanicipio veins as well as on the
Encino target. Returns from the Valdecanas drilling generally confirmed
the depth and nature of the bonanza zone, with drilling in the top of
the zone returning some insignificant results and near the bottom high
gold and base metal values, consistent with the bonanza zone model.
Drilling results from the Juanicipio Vein, located 1,000 metres south
of Valdecanas, indicate that the top-out of the interpreted Bonanza
Zone is about 100-150 metres deeper than at Valdecanas and future
targets are being redesigned to test the heart of the bonanza zone at
greater depth. The Encino drilling during the quarter proved difficult
operationally and results could not confirm it as a separate opposite
dipping vein; another possible interpretation has the Encino target
being a faulted off-set of the Valdecanas Vein, and that hypothesis is
currently being drill tested.
To September 30, 2009, Fresnillo has completed 15,135 metres of
drilling on the Juanicipio property. This represents 72% of the proposed
drilling for the year, with both drilling and expenditures consistent
with that expected to the end of September 2009. Details provided on
drilling reports 7,786 metres on the Valdecanas Vein to September 30th,
with the balance being on the Juanicipio Vein (4,564 metres reported
only to August 30th) and on the Encino Structure (2,771 metres reported
only to August 30th). Details of actual drilling metre splits for
Juanicipio and Encino for the month of September remain outstanding.
Drilling has begun on "other vein/structural" targets, with
several hundred metres completed to September 30, 2009.
For the nine month period ended September 30, 2009 the Company's 44%
share of joint venture expenditures amounted to $1,145,627. The joint
venture continues to execute the 2009 program, on time and on budget.
Presently there are 5 drills in operation.
The Minera Juanicipio joint venture company held a regularly scheduled
quarterly Technical Committee meeting during the quarter to review
progress on the 2009 program and discuss future work and direction. The
Technical Committee was assigned the task to review several options
that would move more of the inferred resource at Valdecanas to an
indicated resource necessary for the preparation of a pre-feasibility study.
Once the program design has been agreed upon by the Technical Committee
it will be presented to the Board of Directors of Minera Juanicipio for
approval. MAG will continue to fund its 44% share of any approved joint
venture expenditures. Both the Technical Committee and the Minera
Juanicipio board are scheduled to meet again during the fourth quarter.
Assay results have been received during the quarter for four recent
holes. Three of these holes were drilled as part of the planned 2009
infill drilling program designed to define the Valdecanas Vein on one
hundred metre centres as well as define the limits of the Bonanza Zone.
The remaining hole was an exploration hole drilled on the Juanicipio
Vein. Further details of these bore holes and assay results may be
found in the Company's "Management Discussion and Analysis"
dated September 30, 2009.
As a result of Fresnillo's intended hostile bid, MAG was exposed to
substantial professional and administrative costs, particularly for
take-over defence and the protracted proceedings 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 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 ICC
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 nine month
period ended September 30, 2009.
Accounts receivable at September 30, 2009 totaled $2,453,618 while
accounts payable and accrued liabilities amounted to $1,174,859.
Accounts receivable were comprised primarily of value added taxes
repayable to the Company in Mexico. Accounts payable were due mainly
for administration costs in Canada and Mexico and drilling programs
conducted on the Company's Mexican projects other than the Juanicipio
property. The Company spent $13,169,566 on the exploration of these
projects during the period as compared to $9,828,389 for the same
period in 2008. From the total, an amount of $12,416,078 related to
drilling on five of the projects where the Company holds rights to
acquire up to a 100% interest; Lagartos SE - $2,967,907; Sierra de
Ramirez - $1,635,337; Salemex - $1,000,557; Nuevo Mundo - $427,907; and
$6,384,370 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 nine months ended September 30, 2009 amounted
to $10,830,777 or $0.22 per share as compared to $4,262,146 or $0.08
per share for the same period last year. The loss for the nine months
ended September 30, 2009 includes the write off of mineral property
acquisition costs and deferred exploration costs in the amount of
$3,687,927 ($1,221,019 for the same period in 2008) and a non-cash
charge for stock compensation expense of $1,260,945 ($2,445,736 for the
same period in 2008). General overhead and administration costs for the
period amounted to $6,138,184 ($2,246,234 for the same period in 2008).
This included increased legal costs at $2,656,871 million ($239,110 in
2008), AGM and proxy solicitation costs of $219,854 ($96,960 in 2008)
and $596,082 for shareholder relations expense (2008: $229,617) 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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