• Juanicipio

JUANICIPIO PROJECT
Municipio Fresnillo Zacatecas, Mexico

MAG is an advanced stage development and exploration company focused on the acquisition, exploration and development of high-grade, high-margin, district-scale projects located in the Americas. MAG’s principal asset is a 44% interest in the Juanicipio project (the “Juanicipio Project”) located in Zacatecas state, Mexico, with Fresnillo plc (“Fresnillo”), the project operator, owning the remaining 56%. MAG also has the right to earn a 100% interest in the Deer Trail Carbonate Replacement-Porphyry Project in central Utah, USA.

Juanicipio Project

MAG owns 44% of Minera Juanicipio S.A. de C.V. (“Minera Juanicipio”), a company incorporated under the laws of Mexico, which owns the high-grade silver Juanicipio Project located in the Fresnillo District, Zacatecas State, Mexico. Fresnillo is the project operator and holds the remaining 56% of Minera Juanicipio. As shareholders of Minera Juanicipio, Fresnillo and MAG jointly approved project mine development on April 11, 2019, and project construction commenced immediately thereafter. A 4,000 tonnes per day (“tpd”) processing facility is nearing completion and is currently in the pre-commissioning stage, while mineralized development material from the underground mine is being processed at a nearby processing plant at a targeted average nominal rate of 16,000 tonnes per month.

The mineralization on the Juanicipio Project consists of high-grade silver-gold-lead-zinc epithermal vein deposits.  The principal vein, the Valdecañas Vein, has dilatant zones (bulges) at its east and west extremes and several en echelon vein splays and cross-veins – the term “Valdecañas Vein” is used to refer to this combined vein system.  In addition, exploration continues both on the Valdecañas Vein system and on other prospective targets within the Juanicipio mining concession (see Section 4 Juanicipio Project below for a detailed current project update).

Development and exploration of the Juanicipio Project are both being carried out by the project operator, Fresnillo, with MAG participating in all Minera Juanicipio board and technical committee meetings as well as ad-hoc meetings when required.  Construction and commissioning of the processing plant is under the guidance of an Engineering, Procurement and Construction Management (“EPCM”) contract entered into with an affiliate of Fresnillo. MAG’s share of project costs is funded primarily by cash calls through its 44% interest in Minera Juanicipio and, to a lesser extent, incurred directly by MAG to cover expenses related to its own commissioned technical studies and analyses, as well as direct project oversight. Minera Juanicipio is governed by a shareholders’ agreement and corporate by-laws, pursuant to which each shareholder is to provide funding pro-rata to its ownership interest, and if either party does not fund pro-rata, their ownership interest will be diluted in accordance with the shareholders’ agreement.

In 2017, MAG commissioned AMC Mining Consultants (Canada) Ltd.  to prepare a Resource Estimate and Preliminary Economic Assessment for the Juanicipio Project (collectively, the “2017 PEA”), which was completed according to the NI 43-101 Standards of Disclosure for Mineral Projects and announced by the Company on November 7, 2017 (see Press Release of said date), with the MAG Silver Juanicipio NI 43-101 Technical Report (Amended and Restated) filed on SEDAR and on EDGAR on January 19, 2018. 

The 2017 PEA incorporates major overall project upgrades over prior assessments, highlighted by the delineation and provision for mining of greatly expanded Indicated and Inferred Mineral Resources discovered in the Deep Zone, as defined in the 2017 PEA. The independent estimates of the Mineral Resources of the Juanicipio Project in the 2017 PEA were compiled using exploration data available up to December 31, 2016 and do not include the results of drilling programs undertaken since then (2017-2021) designed to further expand and infill the Deep Zone and define the upper limits of the Bonanza Zone (see Exploration – Juanicipio Project below).  The volume of the base metal-rich Deep Zone Mineral Resources identified in the 2017 PEA contributed to a significant expansion of project scope and enhancements to most aspects of the mine design. Truck haulage, shaft hoisting, and underground conveying, along with underground crushing of the mineralized rock are all projected to be utilized for delivering the mineralized material to the surface processing plant. As envisioned in the 2017 PEA, the process plant has a planned production rate of 4,000 tpd, and will include a semi-autogenous grinding (“SAG”)/ball mill comminution circuit followed first by a gravity concentrator and then sequential selective flotation to produce a silver-rich lead concentrate, a zinc concentrate and a gold-rich pyrite concentrate. The plant and the associated tailings storage facilities are being built on open and flat Minera Juanicipio owned land just north of the conveyor ramp portal.

Based on the 2017 PEA, MAG views the Juanicipio Project as a robust, high-grade, high-margin underground silver project exhibiting low development risks. While the results of the 2017 PEA are promising, by definition, a Preliminary Economic Assessment is preliminary in nature and includes Inferred Mineral Resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves.  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no certainty that Mineral Resources will ever become Mineral Reserves.  There can therefore be no certainty that the results in the 2017 PEA will be realized. In addition, the 2017 PEA was commissioned independently by MAG, and not by Minera Juanicipio.  Fresnillo is the project operator and the actual development plan and timeline may be materially different from the scope, design and results envisaged in the 2017 PEA (see Juanicipio Project and Risks and Uncertainties below).

OPERATIONAL

  • Positive progress was achieved during the quarter ended September 30, 2021 (“Q3 2021”) on the construction of the 4,000 tpd Juanicipio processing plant and civil works, and the focus now turns to transitioning from construction to commissioning activities.
  • Pre-commissioning has commenced for key process systems as the process plant approaches mechanical completion. 
  • As reported by the operator Fresnillo, the Juanicipio plant is expected to come in on budget and is expected to be commissioned by year end, subject to timely connection to the power grid.
  • A regularly updated photo gallery of construction progress at Juanicipio is available at https://magsilver.com/projects/photo-gallery/#photo-gallery.
  • Batch processing of mineralized material from development headings continues through the nearby Fresnillo plant at a targeted two days per month of continuous processing for a nominal expected rate of 16,000 tonnes per month (19,042 tonnes per month was averaged during Q3 2021). 
  • For the three months ended September 30, 2021, on a 100% basis:
    • 57,127 tonnes of mineralized material were batch processed through the Fresnillo plant, with 619,791 payable silver ounces, 993 payable gold ounces, 232 tonnes of lead and 312 tonnes of zinc produced and sold;
    • Average silver head grade was 418 grams per tonne (“g/t”) in the development material processed; and
    • Pre-commercial production sales totaled $14,684 for the quarter (net of treatment and processing costs), less $3,477 in mining and transportation costs, netting $11,207 in gross profit by Minera Juanicipio in the quarter
  • For the nine months ended September 30, 2021, on a 100% basis:
    • 137,957 tonnes of mineralized material were batch processed through the Fresnillo plant, with 1,455,497 payable silver ounces, 2,334 payable gold ounces, 502 tonnes of lead and 719 tonnes of zinc produced and sold;
    • Average silver head grade was 410 g/t in the development material processed; and
    • Pre-commercial production sales of $36,025 (net of treatment and processing costs) less $7,736 in mining and transportation costs, netting $28,289 year to date gross profit in Minera Juanicipio. 
  • Since commencing batch processing of Juanicipio mineralized material from development headings in August of 2020, a total of 209,816 tonnes of mineralized development material have been processed through the nearby Fresnillo plant:
    • contributing cash-flow to offset some of the initial project capital; and
    • de-risking Juanicipio’s metallurgical performance, which is expected to significantly speed up project ramp-up.
  • Juanicipio initial project capital is estimated at $440,000 (100% basis) as of January 1, 2018, less approximately $350,738 in development expenditures incurred from then to September 30, 2021, leaving approximately $89,262 of remaining initial capital on a 100% basis (MAG’s 44% estimated at $39,275) as at September 30, 2021. The cash required will be reduced by:
    • Existing cash held in Minera Juanicipio as at September 30, 2021 ($34,180 on a 100% basis); and,
    • Expected cashflow generated from mineralized development material being processed through the Fresnillo plant up until the Juanicipio plant is commissioned.
  • A further 33,663 tonnes of mineralized development material with a silver head grade of 550 g/t were processed in October 2021 thought the Fresnillo plant.

EXPLORATION

  • The 2021 Juanicipio exploration program in process is budgeted at $6,000 on a 100% basis, and has been 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).
  • Five drill rigs are presently on surface running concurrently with continued underground definition and geotechnical drilling.
  • Results of the Juanicipio 2020 exploration program were reported in the quarter (see Press Release dated August 5, 2021), and the program successfully:
    • Confirms, and allows modeling with greater detail and confidence of the high-grade silver resource within the upper parts of the Valdecañas Bonanza Zone (as defined in the 2017 PEA) where the first several years of mining is expected to occur;
    • Confirms, expands, and allows improved modeling of the continuous wide mineralization of the Valdecañas Deep Zone (as defined in the 2017 PEA); and
    • Confirms, expands, and allows improved modeling of the ever-growing Anticipada Vein.

UNDERGROUND MINE PRODUCTION – Juanicipio Project

As of August 2020, mineralized development material from the Juanicipio Project is being batch processed, refined and sold on commercial terms at a targeted rate of 16,000 tonnes per month at the nearby Fresnillo plant twelve km away. The resulting concentrates are treated in Torreón, Coahuila, Mexico.  This preproduction toll processing of Juanicipio mineralized development material is expected to continue until the Juanicipio plant is commissioned (see Processing Plant Construction and Commissioning below).  The actual amount of material processed on a monthly basis fluctuates due to the variability of mineralization encountered in the development headings from month to month.

In the three and nine months ended September 30, 2021, 57,127 and 137,957 tonnes of mineralized development material respectively, were processed through the Fresnillo plant, realizing commercial and operational de-risking opportunities for the Juanicipio Project.  The resulting payable metals sold and processing details on a 100% basis are summarized in Table 1 (three months ended September 30, 2021) and in Table 2 (nine months ended September 30, 2021) below. The sales and treatment charges for tonnes processed in Q3 2021 were recorded on a provisional basis and will be adjusted in Q4 2021 based on final assay and pricing adjustments in accordance with the offtake contracts.

Table 1: Q3 2021 Development Material Processed at Fresnillo’s Processing Plant (100% basis)

Three Months Ended September 30, 2021 (57,127 tonnes processed)

Q3 2020
$ Amount
(2)

Payable Metals

Quantity

Average Per Unit (1)

$Amount

Silver

619,791 ounces

$23.14 per oz

$14,344

$9,537

Gold

993 ounces

$1,772.71 per oz

1,761

1,065

Lead

232 tonnes

$1.04 per lb

 529

   221

Zinc

312 tonnes

$1.38 per lb

 947

  355

Treatment and refining charges (“TCRCs”) and other processing costs

(2,897)

(1,653)

Net Sales

14,684

9,525

Mining and transportation costs

(3,477)

  (1,531)

Gross Profit

$11,207

$7,994

(1)  Ounces (“oz”) for silver and gold and, pounds (“lb”) for lead and zinc.
(2)   Processing of Juanicipio mineralized development material at the Fresnillo plant commenced in August of 2020, with no prior processing.

Table 2: YTD 2021 Development Material Processed at Fresnillo’s Processing Plant (100% basis)

Nine Months Ended September 30, 2021 (137,957 tonnes processed)

Yth 2020 $Amount (2)

Payable Metals

Quantity

Average Per Unit (1)

$Amount

Silver

1,455,497 ounces

$25.07

$36,492

$9,537

Gold

2,334 ounces

$1,787.39

 4,171

1,065

Lead

502 tonnes

$0.98

   1,087

  221

Zinc

719 tonnes

$1.33

 2,120

 355

TCRCs and other processing costs

(6,699)

(1,653)

Provisional sales adjustment related to 2020 sales (3)

(1,146)

-

Net Sales

36,025

9,525

Mining and transportation costs

(7,736)

(1,531)

Gross Profit

$28,289

$7,994

(1)  Ounces (“oz”) for silver and gold and, pounds (“lb”) for lead and zinc.
(2)  Processing of Juanicipio mineralized development material at the Fresnillo plant commenced in August of 2020, with no prior processing.
(3)  Provisional sales for 2020 were finalized in Q1 2021 resulting in negative adjustment to net sales revenue of $1,146.

The average silver head grade for the mineralized development material processed in the three and nine months ended September 30, 2021 was 418 g/t and 410 g/t (three and nine months ended September 30, 2020 was 348 g/t and 348 g/t) respectively.  

From August 2020 to September 30, 2021, a total of 209,816 tonnes of mineralized development material have been processed at the Fresnillo processing plant.  By bringing forward the start-up of the underground mine and processing mineralized development material at the Fresnillo plant in advance of commissioning the Juanicipio plant, MAG and Fresnillo expect to secure several positive outcomes for the Juanicipio Project:

  • generating cash-flow from production to offset some of the cash requirements of the initial project capital;
  • de-risking the flotation process through a better understanding of the metallurgical characteristics and response of the Juanicipio mineralization;
  • increased certainty around the geological block model prior to start-up of the processing plant; and
  • allowing a faster and more certain ramp-up to the nameplate 4,000 tpd plant design.

PROCESSING PLANT CONSTRUCTION – Juanicipio Project

Construction plans for the 4,000 tpd processing plant commenced immediately after the formal project approval in April 2019.  Development and construction of surface infrastructure facilities (power lines, access roads, auxiliary buildings, etc.) had already begun prior to the formal project approval and are ongoing.  Construction of the Juanicipio processing plant continued to make good progress in the quarter ended September 30, 2021 and is now approaching mechanical completion. Pre-commissioning testing has already begun for key process plant systems, and commissioning is expected by year end (see Outlook – Juanicipio Project below).

A regularly updated photo gallery of construction progress at Juanicipio is available at https://magsilver.com/projects/photo-gallery/#photo-gallery .

UNDERGROUND DEVELOPMENT – Juanicipio Project

Access to the mine is via twin underground declines that extend to the top of mineralization in the Valdecañas Vein.  From the top of mineralization, the upper footwall haulage/access drift has been driven the length of the vein and three internal spiral production ramps are being extended from the drift to depth in the footwall of the mineralized envelope (vein). The three spiral ramps are situated behind the mineralized envelope to provide access to stopes within the vein and allow a planned mining rate of 4,000 tpd.  Initial cross-cuts through the vein have been made from a number of points along the footwall ramps. Most expose well-mineralized vein and this initial development indicates that the grade and width of the mineralization is in line with previous drillcore-based estimates. As discussed above, the mineralized material encountered in these developments is being processed at the nearby Fresnillo processing plant (see Underground Mine Production above).

Once in full production, mineralized material from mining of the vein will be hauled to an underground crushing station (already excavated) and crushed underground.  The crushed mineralized material will be trucked to the flotation plant until the conveyor is completed in 2022. When the conveyor is completed, the crushed mineralized material will be conveyed directly from the underground crushing station to the process plant area via a third ramp to the surface - the underground conveyor ramp.  The conveyor ramp is approaching 85% completion and is being driven both from the surface and from the underground crushing chamber. This ramp will also provide access to the entire Valdecañas underground mining infrastructure and serve as a fresh air entry for the ventilation system. As well, the long-term mine ventilation system is nearing completion. The #1 ventilation shaft has been commissioned and is now ventilating some of the lower areas of the mine. The #2 ventilation shaft has been completed and will be in operation early 2022.

Total underground development to date is approaching 42 km (26 miles), including 2.8 km (1.7 miles) completed in the three months ended September 30, 2021. Underground mine infrastructure is well advanced and development continues to focus on:

  • advancing the three internal spiral footwall ramps to be used to further access the full strike length of the Valdecañas Vein System;
  • making additional cross-cuts through the vein and establishing the initial mining stopes.
  • finalizing construction of the underground crushing system, underground warehouse, fuel storage and pumping station;
  • advancing the underground conveyor ramp to and from the planned surface processing facility from both faces; and
  • integrating additional ventilation and other associated underground infrastructure.

Due to the poor rock quality on the western section of the upper Valdecañas Vein, cut and fill will be the chosen mining method for the higher levels in this section. A trial longhole stope has been in operation for the past six months, and this will be the preferred mining method through the main central section and eastern side of Valdecañas Vein.

Labour reform legislation on subcontracting and outsourcing in Mexico was published on April 23, 2021 and came into effect on September 1, 2021 (see Risks and Uncertainties below).  With various restrictions on hiring contractors, Fresnillo, as operator, has indicated a need to internalize a portion of its contractor workforce and perform much of the development work directly rather than outsourcing it to contractors, and hence invest in equipment either not previously in the project scope or not envisaged to be required until later in the mine life, to be utilized in underground operations. As well, certain underground development expenditures related to processing development material and some small items brought forward from project investments planned in the future are considered sustaining capital by Fresnillo.  The costs incurred are expected to reduce future sustaining capital costs and totaled approximately $16,637 on a 100% basis for the quarter ended September 30, 2021. These costs are included in the current Juanicipio development costs but are not considered by the operator as part of the $440,000 initial project capital.

PROJECT CAPITAL (“CAPEX”) – Juanicipio Project

The Juanicipio Project initial capital or pre-operative project capital cost (“capex”) on a 100% basis, as estimated from January 1, 2018, is expected to be $440,000 (see Press Release dated February 24, 2020). The capex already expended from January 1, 2018 to September 30, 2021 is approximately $350,738, leaving an estimated $89,262 of remaining initial capital (MAG’s 44% estimated remaining share is $39,275 as at September 30, 2021).  This remaining funding requirement will be reduced by both: existing cash held in Minera Juanicipio as at September 30, 2021 ($34,180 on a 100% basis); and expected cash flows generated from mineralized Juanicipio development material processed at a targeted average nominal rate of 16,000 tonnes per month through the Fresnillo processing plant until the Juanicipio plant is commissioned (see Underground Mine Production above and Liquidity and Capital Resources below).

OUTLOOK – Juanicipio Project

Construction of the Juanicipio processing plant continues to make good progress, with the focus now on transitioning from construction to commissioning activities. Pre-commissioning testing has already begun for key process plant systems as the plant approaches mechanical completion. No-load testing of the facility with progression to water testing is expected during November.  The plant is expected to be commissioned by year end according to operator Fresnillo, subject to timely connection to the national electricity transmission grid of Mexico. The connection to the grid is the last step prior to feeding lower grade mineralized material through the grinding mills and mineralized material has been conveyed to the fine ore bin in preparation for processing. It has been difficult for the regulators to travel to site for the final connection due to COVID travel restrictions, but these have now been lifted and additional electrical supply protection equipment is being installed as a priority ahead of the tie-in. Fresnillo expects to obtain the authorization to connect to the power grid on schedule, which should allow full load commissioning by year end, but there is no assurance that the connection will be timely (see Risks and Uncertainties below). The project operator, Fresnillo, has indicated that if there is a delay to the commissioning schedule due to the timing of the tie-in, the amount of mineralized material that was schedule to be processed through the commissioning period will be processed at the nearby Fresnillo plant, generating comparable cash flow expected during commissioning.

Fresnillo, as operator, reports that commissioning of the Juanicipio processing plant is expected to come in on budget and the plant is expected to reach 40 to 50% of the nameplate 4,000 tpd capacity by the end of 2021 with ramp up to 90-95% in 2022. In contrast, the 2017 PEA originally envisioned ramp-up to full production over 3 years after commissioning of the processing plant. An Operator Services agreement has been finalized which will become effective upon initiation of commercial production, whereby Fresnillo and its affiliates will continue to operate the mine.

Until the Juanicipio processing plant is commissioned, mineralized development material from Juanicipio is being processed at a targeted rate of 16,000 tonnes per month through the nearby Fresnillo beneficiation plant (100% owned by Fresnillo), with the lead (silver-rich) and zinc concentrates treated at market terms under off-take agreements with Met-Mex Peñoles, S.A. de C.V. in Torreón, Mexico. The actual amount of material processed on a monthly basis fluctuates due to the variability of mineralization encountered in the development headings from month to month. In the three months ended September 30, 2021, 57,127 tonnes of development material were processed (see Underground Mine Production – Juanicipio Project above), or an average of 19,041 tonnes per month. During October 2021, a further 33,663 tonnes of Juanicipio mineralized development material were processed at the Fresnillo plant with a silver head grade of 550 g/t.

According to Fresnillo, the Juanicipio development is expected to create approximately 2,750 jobs during construction and 1,720 jobs once at full production, with potential to scale-up operations in the future beyond 4,000 tpd.

EXPLORATION – Juanicipio Project

Most of the Juanicipio property remains unexplored with many untested targets still to be pursued within the property concession.  Drilling in recent years has been primarily designed to both convert the Inferred Mineral Resources included in the Deep Zone into Indicated Mineral Resources, and to further trace the Deep Zone laterally and to depth.

2021 Exploration Program

The 2021 approved Juanicipio exploration program is currently in progress and is budgeted at $6,000 ($4,200 actual YTD 2021) on a 100% basis, and has been 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). Drilling of the Valdecañas Vein System began in January 2021 with four drill rigs, and a fifth drill rig added mid-year (all assays pending). The five drill rigs on surface are running concurrently with continued underground definition drilling. Three of the drill rigs remain dedicated to Devico directional drilling. Permit applications for drilling other exploration targets on the property have been submitted or are in the process of being generated pending surface access arrangements. Meanwhile, detailed mapping and sampling of these targets is underway. All aspects of the exploration work continue to be done under strict COVID-19 protocols. 

2020 Exploration Program

 Assays were released for the Juanicipio 2020 drill program in the Q3 2021 (see Press Release dated August 5, 2021).  A total of 33 surface holes (27,900 m) and 77 underground definition holes (11,800 m) were completed with the primary objectives of: infilling and expanding the Valdecañas Deep Zone (“Deep Zone”) to optimize its planned extraction; and underground definition drilling of the upper high-grade Valdecañas Bonanza Zone (“Bonanza Zone”) where test mining has already begun and the focus for the first several years of mining lies.   Many of the holes directed at the Valdecañas Vein coincidentally also cut one or more of the hangingwall Anticipada and Pre-Anticipada veins and footwall veins. Fourteen of these cut the Anticipada Vein. Owing to drillhole geometries, the Pre-Anticipada Vein was not intercepted on its east side where it appears to improve in grade and thickness.  In addition to the above, 17 holes intercepted the NE-trending Venadas Vein family.  Only three exploration holes were drilled outside the Valdecañas Vein System during the year: two directed at the long-suspected North Vein and a deep test of the Juanicipio Vein. 

Brief summaries of results are below, with a complete set of tables by vein of the 2020 drilling results available at: https://magsilver.com/site/assets/files/5810/nr-mar3-2020-table1-sdadds.pdf along with a new 3D video displaying the entire Valdecañas Vein System, available at:
https://magsilver.com/site/assets/files/5810/SSMovieHQ2_3-Mar3-2019-sdsawe.mp4 .

The 2020 drill program successfully:

  • Confirms, and allows modeling with greater detail and confidence of the high-grade silver resource within the upper parts of the Valdecañas Bonanza Zone where the first several years of mining will occur;
  • Confirms, expands, and allows improved modeling of the continuous wide mineralization of the Valdecañas Deep Zone; and,
  • Confirms, expands, and allows improved modeling of the ever-growing Anticipada Vein. 

Valdecañas Vein Bonanza Zone:  The first major focus of 2020 was a 77-hole underground definition drilling program targeting the uppermost part of the very high-grade Bonanza Zone where mining will occur for the next few years. The top of this zone was known to be irregular, and its upper limits not well defined, so tightly spaced drilling was undertaken from underground drill stations between 50 and 200m from the vein. All intercepts show the high silver and gold grades with very low base metals, typical of the top of the Valdecañas Vein. The underground drilling results in this program help define in detail the upper limits of the mineralization and continuity of grade and thickness within the vein. Additionally, the significant boost to the geochemical database for the Bonanza Zone allows more detailed grade distribution analysis and the added geotechnical data provide crucial information on ground conditions. Stope design based on the results is underway.  

Valdecañas Vein Deep Zone: The second major focus of the 2020 program was continued infill and expansion drilling of the Deep Zone, with 21 holes (14 infill and 7 expansion) drilled from surface.  All but one infill hole cut significant grade over width. Hole D1-6-1 reinforces the width and grade of the western dilatant zone.  Hole D5-3-3, at 21m true width, was the highlight on the east side. The weakest hole (P34) went into the narrow “waist” between the two dilatant zones about 24m from a previous weak intercept. Seven holes were drilled outside the known mineralized envelope and extend it laterally and to depth on both ends of the vein.  Two holes were drilled very deep on the Valdecañas Vein and cut 187 and 279 meters respectively of zinc mineralized skarn surrounding the vein.  These are by far the greatest mineralized skarn thicknesses drilled to date in the district and provide additional definition of the ore-fluid upwelling zone that appears to have fed the entire Valdecañas Vein System.

Anticipada: Fourteen Valdecañas-directed holes coincidentally cut and nicely infill the parallel hangingwall Anticipada Vein.  At 10.3 m true width, Hole D5-3-1 is one of the widest holes through Anticipada to date.  Several of the holes cut high gold grades and most cut significant base metals, including high copper. 

Venadas “North-East Trending” Vein Family: The combined surface and underground drilling program made 17 intercepts of members of the northeast-trending “Venadas Vein Family”. Most of the intercepts show significant silver and gold grades with very low base metals indicating a very high level of exposure analogous to the top of the Bonanza Zone of Valdecañas. 

Other Targets: Three exploration holes were drilled outside of the Valdecañas Vein System during 2020. One (101P) cut modest mineralization deep and to the west on the Juanicipio Vein, demonstrating continuity of mineralization in the structure. Two holes (P33 and P33-2) targeted the long-suspected North Vein some 400m to the north of the footwall of the Valdecañas Vein. These holes are very close to each other and both cut around 2.5m of barren “high-level looking” quartz vein at a similar elevation to the irregular top-out of the Valdecañas Vein. Deeper drilling to test this vein at elevations similar to the Bonanza Zone of the Valdecañas Vein is planned for in the 2021 Exploration Program.

Quality Assurance and Control: The samples (half core) are shipped directly in security-sealed bags to ALS-Chemex Laboratories preparation facility in Guadalajara, Jalisco, Mexico (Certification ISO 9001). Samples shipped also include intermittent standards and blanks. Pulp samples are subsequently shipped to ALS-Chemex Laboratories in North Vancouver, British Columbia, Canada for analysis. Two extra pulp samples are also prepared and are analyzed (in progress) by SGS Laboratories (Certification ISO 9001) and Inspectorate Laboratories (Certification ISO 9001) (or another recognized lab).  The remaining half core is placed back into the core boxes and is stored on site with the rest of the drill hole core in a secured core storage facility. The bulk reject is subsequently sent to the Center for Investigation and Technical Development (“CIDT”) of Peñoles in Torreon, Coahuila State, Mexico for metallurgical testing where a fourth assay for each sample is analyzed and a calculated head grade is received on the basis of a concentrate balance. The CIDT also does a full microscopic, XRF and XRD mineralogical analysis.

COVID-19 – Juanicipio Project

The Juanicipio Project operator, Fresnillo, continues to closely monitor the spread of the virus and has implemented a range of safety measures in accordance with the World Health Organization and Mexican Government guidelines. These include stringent monitoring & hygiene, temperature screening and social distancing. Testing and contact tracing have been used to identify potential cases and prevent the spread of the virus. Fresnillo maintains an open dialogue with government officials at both the Federal and local level.

As previously reported, in Q1 2021 Fresnillo as operator announced that the commissioning timetable for the Juanicipio processing plant was deferred a few months to Q4 2021 as some infrastructure contracts were delayed due to COVID-19 related restrictions as well as preventive measures implemented at site.  Further impacts of this pandemic could create or include significant COVID-19 specific costs, volatility in the prices for silver and other metals, further restrictions or temporary closures, additional travel restraints, supply chain disruptions and workforce interruptions, including loss of life. Depending on the duration and extent of the impact of COVID-19, this could materially impact the Company’s financial performance, cash flows and financial position, and could result in material changes to the costs and time for the completion of development at Juanicipio.  The total amount that the Company is required to finance in order to maintain its proportionate ownership in the project may increase from these and other consequences of the COVID-19 outbreak.  See ‘Virus outbreaks may create instability in world markets and may affect the Company’s Business’ in ‘Risk and Uncertainties’ below.

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Story of Juanicipio

It all began with gas station…

Story of Juanicipio

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Juanicipio

3D Video

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