MAG Silver (TSX: MAG) announced on Wednesday that the Juanicipio project, a joint venture (44/56) with Mexico’s largest silver producer Fresnillo plc, has reached its first production.
As planned, development material from Juanicipio commenced processing at the Fresnillo beneficiation plant during the quarter ended September 30, 2020.
Fresnillo, acting as project operator, reported that 42,476 tonnes were processed during the quarter, with total production of 394,000 ounces of silver, 610 ounces of gold, 138 tonnes of lead and 174 tonnes of zinc. Of those, 173,400 ounces of silver, 268.4 ounces of gold, 60.7 tonnes of lead and 76.6 tonnes of zinc were attributable to MAG Silver.
Revenue from this production, net of processing and treatment costs, will be used by the joint venture to offset cash requirements of the initial project capital.
“This first production from Juanicipio is a major milestone for the company,” George Paspalas, MAG Silver president and CEO stated in a press release.
“The successful processing of development material not only provides cash flow to offset capex, but further de-risks the project as it heads toward commercial production. We are looking forward to the first production stope coming online in Q4 2020, and our potential to continue to produce cash whilst we complete the process plant construction.”
Fresnillo expects to process an average of 16,000 tonnes per month of mineralized material from the joint venture through its processing facility to mid-2021, at which time the Juanicipio beneficiation plant is scheduled for commissioning.
Development continues on site and the final preparation of the first production stope was concluded during the third quarter. Also during the quarter, progress was achieved on the construction of the Juanicipio processing plant.
MAG Silver’s stock jumped 5.8% on the TSX by 1:30 p.m. EDT following the news. The Vancouver-based precious metals miner has a market capitalization of C$2.3 billion.