MAG Silver Corp. (TSX:MAG)(NYSE MKT:MVG)(NYSE Amex:MVG) ("MAG" or
the "Company") announces the Company's audited consolidated
financial results for the year ended December 31, 2012. For
complete details of the annual financial statements and related
Management's Discussion and Analysis, please see the Company's
filings on SEDAR (www.sedar.com) or on EDGAR (www.sec.gov). All
amounts herein are reported in United States dollars unless
otherwise specified.
2012 FINANCIAL PERFORMANCE
At December 31, 2012, the Company had working capital of
$40,492,095 (December 31, 2011: $25,779,667), including cash on
hand of $40,621,158 (December 31, 2011: $26,217,409). The primary
use of cash during the year ended December 31, 2012 was for
exploration and evaluation expenditures in Mexico totaling
$11,981,221 (December 31, 2011: $9,014,714). The Company also
advanced to Minera Juanicipio, S.A. de C.V. ("Minera Juanicipio")
and expended on its own account a further $4,577,611 (December 31,
2011: $2,583,367) for work conducted on the Juanicipio
property.
The Company's net loss amounted to $12,109,761 (or $0.22 per
share) for the year ended December 31, 2012 as compared to
$8,250,743 (or $0.15 per share) in 2011. The increased net loss in
2012 is due to increased exploration and evaluation cost
write-downs (Esperanza - $2,468,379 and a claim under the Lagartos
properties - $896,099, compared to $531,515 in 2011 for the San
Ramone property) and costs incurred in 2012 dealing and negotiating
with a dissident group of MAG shareholders. The 2011 comparable
loss was also reduced by the receipt of a $1.86 million arbitration
award recognized as income in the prior year.
Shareholders may receive, upon request and free of charge, a
hard copy of the Audited Financial Statements. The Company's 40-F
has also been filed with the United States Securities and Exchange
Commission.
Juanicipio Project
An updated Preliminary Economic Assessment for the Juanicipio
Project, commissioned by Minera Juanicipio and carried out by AMC
Mining Consultants (Canada) Ltd. (the "AMC Study") was announced on
June 14, 2012 and filed on SEDAR on July 16, 2012 (see press
release dated June 14, 2012). With the completion of the AMC Study,
MAG and Fresnillo Plc ("Fresnillo") now have a framework on which
the Minera Juanicipio Technical Committee can build upon for the
continued advancement of the project. On August 15, 2012, the
Company announced that Minera Juanicipio had approved an 18 month
mine permitting and underground development budget of $25 million.
The majority of this budget has been rolled over into 2013 and the
early part of 2014 because of development permitting delays
resulting from the Mexican government changeover late in 2012. The
budgeted program covers mine permitting, surface preparation and
the commencement of the first 2,500 metres of underground decline
development.
A hydrogeology (water management) study has been commenced. A
geotechnical study has been completed with the assistance of
Penoles' (a related party of Fresnillo) Geotechnical &
Construction Group, which has included a visit to the nearby
Fresnillo Saucito operation in order to analyze rock quality in
anticipation of stope preparation and development at Juanicipio. As
well, a division of Penoles (CIDT) has been contracted to run the
recommended metallurgical tests, with almost 254 kilograms of ore
bearing material collected systematically along the deposit for
metallurgical studies to be carried out. Originally expected in the
first quarter of 2013, the operator Fresnillo now reports that it
expects the underground decline ground breaking to commence in the
second quarter of 2013. Five different contractors from North and
South America have been asked to tender for the decline
construction and a decision is pending.
Currently, there are a total of 11 drills operating on the
property in various work categories from exploration to water
studies with two more coming in for infill drilling at
Valdecanas.
Cinco de Mayo
The Company incurred exploration and evaluation costs in 2012 of
$8,329,879 (2011: $6,271,072) at Cinco de Mayo and drilled
approximately 33,067 metres (2011: 25,716 metres). Overall, the
2012 drilling demonstrated that mineralization is continuous from
the Jose Manto through the Bridge Zone to Cinco Ridge, which is now
collectively referred to as the "Upper Manto." In mid-June 2012,
exploration hole CM12-431 drilled deep beneath the overlap zone
between the Bridge Zone and the Jose Manto, cut four significant
sulphide intervals within a 300 metre wide skarn and marble zone
(see press release dated July 18, 2012). The largest and deepest
interval was 61 metres of high-grade massive sulphides that lies
behind (to the southwest of) the structures that host the Upper
Manto mineralization. This is an entirely new mineralization zone
named the "Pegaso Zone" which shows all of the hallmarks of being a
near-source part of the Carbonate Replacement Deposit system that
MAG has been systematically seeking at Cinco de Mayo.
On October 3, 2012, MAG announced that Roscoe Postle Associates
Inc. had completed the first independent mineral resource estimate
for the Upper Manto zone. Inferred Mineral Resources are estimated
to be 12.45 million tonnes at 132 g/t (3.9 opt) silver, 0.24 g/t
gold, 2.86% lead, and 6.47% zinc (9.33% lead plus zinc) (see press
release dated October 3, 2012).
In the fourth quarter of 2012, the Company was in the process of
renewing ordinary course surface access permissions with the Ejido
Benito Juarez (the "Ejido") as the final component in the
application for its Soil Use Change Permits. However, on November
17, 2012 at what the Company believes was an illegally constituted
meeting, the Ejido voted to expel MAG from its Cinco de Mayo
property. Several Ejido members challenged the meeting on the
grounds that proper notice was not given, key signatures required
to properly call the meeting were fraudulent, and that the vote
taken at the meeting was fraught with irregularities. A court
hearing was held on February 6, 2013 in Chihuahua where the
ejiditarios calling for the meeting to be declared illegal
presented their evidence. The opponents who had organized the
illegal meeting failed to appear in court on time and their
testimony was dismissed by the judge. The judge ordered the Ejido
administration to provide original documents for the meeting, which
to date they have failed to provide. It is expected to take the
judge one to two months to write his decision on the legality of
the meeting once he has settled the original documents
questions.
MAG remains highly confident that the meeting and the illegal
resolutions will be nullified, at which time, the Company will ask
government officials to oversee a new assembly meeting of the Ejido
to ensure that the necessary procedural and governance rules are
respected and the vote is properly conducted. Although there is no
certainty that a new vote would produce a favourable outcome for
the Company, MAG believes that the opposition group and its
supporters do not represent the will of the majority of the 421
voting members of the Ejido. Further exploration and drilling at
Cinco de Mayo will resume only upon obtaining a Soil Use Change
Permit, drill permits and a surface access agreement with the
Ejido. MAG believes that it has the support of a majority of the
members of the Ejido and that the requisite authorizations to
complete its submission for the Soil use Change Permit will be
obtained in due course, and that access will be negotiated and
resolved on a permanent basis with the Ejido.
PERSONNEL CHANGES
Effective March 15, 2013, Mr. Gordon Neal, VP of Corporate
Development, resigned from the Company for personal reasons. Mr.
Neal joined MAG in 2005, and has been an integral part of the
Company's growth and success. The Company would like to thank Mr.
Neal for his significant contribution over the years and for his
dedicated years of service, and wishes him continued success in his
future endeavours. Mr. Neal has agreed to be available to the
Company on a consulting basis through a transitional period.
Effective March 4, 2013, the Company appointed Mr. Michael Curlook
as Vice President, Investor Relations and Communications. Mr.
Curlook recently held the position of Head of Investor Relations
and Communications for Great Basin Gold Ltd and was previously
Manager of Investor Relations for Farallon Mining/Hunter Dickinson
Inc. As an incentive to join MAG, Mr. Curlook was granted 100,000
inducement stock options with a term of 5 years and an exercise
price of C$9.61, vesting 1/3 immediately, 1/3 after 12 months and
1/3 after 24 months. The Inducement Award Agreement for these stock
options parallels the terms and conditions of the Company's Stock
Option Plan.
The Company also announces, that Mr. Michael Petrina, VP of
Operations has tendered his resignation effective mid-April, to
accept a new position based in Ontario. Mr. Petrina has been
instrumental in overseeing the AMC Study for Minera Juanicipio, and
has agreed to be available to the Company as a consultant during a
transitional period. The Company thanks Mr. Petrina for his efforts
and contributions, and wishes him well in his future
endeavours.
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 is conducting ongoing
exploration of its portfolio of 100% owned properties in Mexico
including a silver, lead and zinc discovery and a moly-gold
discovery at its 100% owned Cinco de Mayo property in Chihuahua
State. MAG and Fresnillo plc are jointly developing the Valdecanas
Vein and delineating the Desprendido and Juanicipio discoveries on
the Juanicipio Joint Venture in Zacatecas State. MAG is based in
Vancouver, British Columbia, Canada. Its common shares trade on the
TSX under the symbol MAG and on the NYSE MKT under the symbol
MVG.
On behalf of the Board of
MAG SILVER CORP.
Larry Taddei, 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.
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 NYSE-Amex has
reviewed or accepted responsibility for the accuracy or adequacy of
this press release, which has been prepared by management.
Contacts: MAG Silver Corp. Michael J. Curlook VP Investor
Relations and Communications (604) 630-1399 or Toll free: (866)
630-1399 (604) 681-0894 (FAX)info@magsilver.com
www.magsilver.com
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