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    MAG   CA55903Q1046

MAG SILVER CORP.

(MAG)
  Report
Delayed Toronto Stock Exchange  -  04:15 2022-09-28 pm EDT
15.85 CAD   +8.41%
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09/13MAG Silver Provides Commissioning Update for Juanicipio Project in Mexico; National Bank Makes Production Estimate
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09/13MAG Silver Provides Commissioning Update for Juanicipio Project in Mexico
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MAG Silver : 2022 Q2 MDA

08/15/2022 | 07:24am EDT

MAG SILVER CORP.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

Dated: August 12, 2022

A copy of this report will be provided to any shareholder who requests it.

VANCOUVER OFFICE

TSX: MAG

Suite 770

604 630 1399 phone

NYSE American: MAG

800 W. Pender Street

866 630 1399 toll free

www.magsilver.com

Vancouver, BC V6C 2V6

604 681 0894 fax

info@magsilver.com

MAG SILVER CORP.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

(expressed in thousands of US dollars except as otherwise noted)

Table of Contents

1.

INTRODUCTION.............................................................................................................

3

2.

DESCRIPTION OF BUSINESS .......................................................................................

3

3.

HIGHLIGHTS - JUNE 30, 2022 & SUBSEQUENT TO THE QUARTER END ...............

4

4.

JUANICIPIO PROJECT ..................................................................................................

7

5.

DEER TRAIL PROJECT ...............................................................................................

15

6.

LARDER PROJECT.......................................................................................................

17

7.

INVESTMENT IN JUANICIPIO ......................................................................................

19

8.

EXPLORATION AND EVALUATION ASSETS..............................................................

20

9.

REVIEW OF FINANCIAL RESULTS..............................................................................

22

10.

FINANCIAL POSITION ..................................................................................................

24

11.

CASH FLOWS ...............................................................................................................

25

12.

SUMMARY OF QUARTERLY RESULTS ......................................................................

27

13.

LIQUIDITY AND CAPITAL RESOURCES .....................................................................

27

14.

CONTRACTUAL OBLIGATIONS ..................................................................................

30

15.

SHARE CAPITAL INFORMATION ................................................................................

31

16.

OTHER ITEMS...............................................................................................................

31

17.

TREND INFORMATION.................................................................................................

32

18.

RISKS AND UNCERTAINTIES ......................................................................................

32

19.

OFF-BALANCE SHEET ARRANGEMENTS..................................................................

35

20.

RELATED PARTY TRANSACTIONS ............................................................................

36

21. CRITICAL ACCOUNTING JUDGMENTS, SIGNIFICANT ESTIMATES AND

ASSUMPTIONS .............................................................................................................

37

22.

CHANGES IN ACCOUNTING STANDARDS.................................................................

39

23.

CONTROLS AND PROCEDURES.................................................................................

39

24.

ADDITIONAL INFORMATION .......................................................................................

40

25.

CAUTIONARY STATEMENTS.......................................................................................

40

2

MAG SILVER CORP.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

(expressed in thousands of US dollars except as otherwise noted)

1. INTRODUCTION

The following Management's Discussion and Analysis ("MD&A") focuses on the financial condition and results of operations of MAG Silver Corp. ("MAG", "MAG Silver" or the "Company") for the three and six months ended June 30, 2022. It is prepared as of August 12, 2022 and should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2022 together with the notes thereto which are available on the Canadian Securities Administrator's System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com, on the U.S. Securities Exchange Commission's ("SEC") website at www.sec.govand on the Company's website at www.magsilver.com.

All dollar amounts referred to in this MD&A are expressed in thousands of United States dollars ("US$") unless otherwise stated, references to C$ refer to Canadian dollars. The functional currency of the parent, its subsidiaries and its investment in Juanicipio, is the US$.

The common shares of the Company trade on the Toronto Stock Exchange and on the NYSE American Stock Exchange both under the ticker symbol MAG. MAG Silver is a reporting issuer in each of the provinces and territories of Canada and is a reporting "foreign issuer" in the United States of America.

Forward-Looking Statements and Risk Factors

This MD&A contains forward-looking statements (as defined herein) and should be read in conjunction with the risk factors described in sections "18. Risks and Uncertainties" and "26. Cautionary Statements" at the end of this MD&A.

Qualified Person

Unless otherwise specifically noted herein, all scientific or technical information in this MD&A, including assay results and Mineral Resource estimates, if applicable, is based upon information prepared by or under the supervision of, or has been approved by Dr. Peter Megaw, Ph.D., C.P.G., a Certified Professional Geologist who is a "Qualified Person" for purposes of National Instrument 43-101,Standards of Disclosure for Mineral Projects ("National Instrument 43-101" or "NI 43-101"). Dr. Megaw is not independent as he is an officer and a paid consultant of MAG Silver (see 'Related Party Transactions' below).

2. DESCRIPTION OF BUSINESS

MAG Silver Corp. is a Canadian development and exploration company focused on becoming a top-tier primary silver mining company by exploring and advancing high-grade, district scale, silver-dominant projects in the Americas. Its principal focus and asset is the Juanicipio Project (44%), being developed with Fresnillo plc ("Fresnillo") (56%), the operator. The project is located in the Fresnillo Silver Trend in Mexico, the world's premier silver mining camp, where the operator is currently developing an underground mine and constructing a 4,000 tonnes per day processing plant. Underground mine production of mineralized development material commenced in Q3 2020. The mine was brought into commercial production in January 2022 and the plant is awaiting

3

MAG SILVER CORP.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

(expressed in thousands of US dollars except as otherwise noted)

final electrical tie-in in the coming weeks. An expanded exploration program is in place at Juanicipio targeting multiple highly prospective targets. MAG is also executing a multi-phase exploration program at the Deer Trail 100% earn-in Project in Utah and has recently acquired the Larder Project located in the historically prolific Abitibi region of Canada.

SUSTAINABILITY REPORTING

MAG is finalizing its inaugural, annual Sustainability Report produced to provide a transparent account of how the Company addressed key material Environment, Social and Governance ("ESG") topics in 2021. The report focuses on MAG Silver's 44% owned Juanicipio Project, which is operated by Fresnillo (56%), the Deer Trail Project (as defined herein) and when applicable information is included regarding MAG's corporate office. The report is expected to be published in the fall of 2022. As a member of the United Nations Global Compact ("UNGC"), the 2021 Sustainability Report will also serve as MAG's annual Communication on Progress for the UNGC.

3. HIGHLIGHTS - JUNE 30, 2022 & SUBSEQUENT TO THE QUARTER END OPERATIONAL (on a 100% basis unless otherwise noted)

  • For the three months ended June 30, 2022:
    • A record 154,069 tonnes of mineralized development and stope material were campaign processed through the Fresnillo and Saucito plants, with 2,207,626 payable silver ounces, 5,119 payable gold ounces, 1,016 payable lead tonnes and 1,599 payable zinc tonnes produced and sold;
    • Average silver head grade for the quarter was 567 grams per tonne ("g/t"); and
    • Pre-commercialproduction sales (net of treatment and processing costs) totaled $55,224 for the quarter, less $17,962 in mining and transportation costs and depreciation and amortization charges, netting $37,262 in gross profit by Juanicipio.
  • For the six months ended June 30, 2022:
    • 299,553 tonnes of mineralized development and stope material were campaign processed through the Fresnillo and Saucito plants, with 4,446,436 payable silver ounces, 10,464 payable gold ounces, 2,082 payable lead tonnes and 3,047 payable zinc tonnes produced and sold;
    • Average silver head grade for the six months was 581 g/t; and
    • Pre-commercialproduction sales (net of treatment and processing costs) totaled $120,140, less $36,657 in mining and transportation costs and depreciation and amortization, netting $83,483 in gross profit by Juanicipio.
  • At the end of the quarter, Juanicipio held cash balances of $37,504 up from $18,261 at the end of Q1.
  • As reported by the operator Fresnillo, commencement of electrical commissioning of the Juanicipio processing plant is expected to occur in the coming weeks.
  • Fresnillo is making available unused processing plant capacity at its nearby Fresnillo and Saucito operations. Campaign processing of mineralized material from development

4

MAG SILVER CORP.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

(expressed in thousands of US dollars except as otherwise noted)

headings and stopes at Juanicipio continues through these nearby facilities and is expected to continue until the Juanicipio plant is commissioned.

  • Campaign processing benefits include the cash flow being used to offset some of the initial and sustaining capital and the de-risking of Juanicipio's metallurgical performance, which is expected to significantly speed up project ramp-up.
  • Approximately 60% of the tonnes in the second quarter 2022 were processed at Fresnillo's Saucito plant, where the flowsheet more closely resembles that of the Juanicipio plant. It is expected these results will provide further valuable metallurgical benefits when milling production commences at Juanicipio.
  • Metal recovery and concentrate grades are in line with expectations from the initial metallurgical test work conducted on Valdecañas.

CORPORATE

  • MAG reported net income of $7,562 or 0.08 per share for the three months ended June 30, 2022.
  • During the quarter, MAG concluded the previously announced acquisition of Gatling
    Exploration Inc. ("Gatling") by way of a court approved plan of arrangement (the "Transaction"). MAG acquired all of the issued and outstanding common shares of Gatling by the issuance of common shares of the Company and in connection with the
    Transaction, provided an advancement of a C$3 million convertible note. Gatling's Larder
    Project lies in the highly prolific Abitibi Gold Province of northern Ontario, with good surrounding infrastructure and already permitted drill pads to test initial targets.

EXPLORATION

  • The Juanicipio 2021 exploration program was completed in Q4 2021 with $6,296 spent on a 100% basis and was focused on continued step-out and infill drilling of the Valdecañas Vein System (including independent targeting of the Venadas Vein family and the Anticipada Vein).
  • Results of the Juanicipio 2021 exploration program (23 surface-baseddrill holes totaling
    29,421 metres ("m")) were reported on May 13, 2022, and highlights include:
    • 21 holes cut the Valdecañas Vein System, with most directed at the Valdecañas Vein Deep Zone plus coincidental intercepts of the Anticipada (13), Pre-Anticipada
      (8) and various other hangingwall and footwall veins;
    • Most intercepts are comparable to previously drilled neighboring holes with no major deviations from grade and thickness expectations; and,
    • Channel sampling of the advancing development headings and test stopes in the Valdecañas Vein Bonanza Zone shows that the grade distribution in the vein is very close to that shown by both surface and underground drilling, which adds substantial confidence in the width and grade continuity indicated by the surface drilling for the balance of the vein.

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

MAG Silver Corp. published this content on 15 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 August 2022 11:22:21 UTC.


© Publicnow 2022
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Sales 2022 51,5 M - -
Net income 2022 39,0 M - -
Net cash 2022 106 M - -
P/E ratio 2022 31,7x
Yield 2022 -
Capitalization 1 143 M 1 143 M -
EV / Sales 2022 20,2x
EV / Sales 2023 7,13x
Nbr of Employees 10
Free-Float 99,0%
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Number of Analysts 12
Last Close Price 11,58 $
Average target price 18,54 $
Spread / Average Target 60,1%
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George N. Paspalas President, CEO & Non-Independent Director
Fausto di Trapani Chief Financial Officer
Peter Derek Barnes Chairman
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Jill Leversage Independent Non-Executive Director
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