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Top quarterly results and the “hottest” raw materials!

If silver is indeed the “little man’s gold”, then the silver rush has only just begun, according to the latest statements from the trader Ophira. But copper will also rise sharply!

“Our bars from one gram to 100 grams are more in demand than ever!”

Alexander Filkorn, managing director of the trading house Ophira

According to Alexander Filkorn, customers would buy silver packages as a hedging instrument, since small denominations of one to ten grams are easier to deal with in the event of a currency crash than with small gold bars. You could use it to shop anywhere

“And the dealer, baker, butcher or farmer doesn’t have to go out to exchange the metal.”

This is somehow also reflected in the financial blogger Kris Knutson, who wrote on the website ‘The Motley Fool’ that the price of silver could rise significantly this year. Because silver has been used as a means of payment for thousands of years.

But copper should also move further into the investor focus! After all, copper in particular benefits from an economic recovery. Demand is dominated by infrastructure programs, while supply remains under pressure due to the corona-related production losses in Chile, the most important production country. No one can reliably predict how long the Chilean production stoppages will last. However, current estimates suggest that due to the Covid standstill, up to 400,000 tons of production could be missing from the country, which pulls 5.8 million tons from the ground every year.

Mines in neighboring Peru also remained closed for weeks, which is why the output will also drop by a good third, which is why buyers cannot evade and are thus more or less forced to accept higher prices!

Because the supply deficit has been widening considerably since April! While a manageable 3,000 tons were missing in March, the deficit in April was already 86,000 tons. And market experts determine that this is a real scarcity from the fact that the copper market is in ‘backwardation’. This means that the forward rate is below the expected spot rate at the due date or expiry of the forward month, which in principle represents a reverse market. This means that copper for immediate delivery is more expensive than futures contracts for the first time in twelve months.

An exciting starting position from which companies such as Filo Mining and MAG Silver should benefit disproportionately. Because these two companies are currently at groundbreaking points and are setting the course for a very promising future!

Filo Mining presents operational and financial highlights of the second quarter of 2020

In the second quarter of 2020, the Canadian gold explorer Filo Mining Corp. (ISIN: CA31730E1016 / TSXV: FIL) fully committed to the delineation and resource expansion of its Chile-based Filo del Sol project and raised $ 41.7 million through the issuance of 22,538,235 common shares to explore it further.

Here you can find the press release.

Accordingly, the company’s most important operational highlight in the second quarter was the receipt and analysis of the full assay results from the 2019/2020 diamond drilling program at Filo del Sol. These confirmed the existence of substantial copper-gold-silver mineralization which remains open to the north and south of the mineral resource and thus offers significant potential for resource expansion.

Source: Filo Mining

Jamie Beck, President and CEO of Filo Mining assumes a potential that will easily triple the size of the known deposit and also made it clear:

“The company continues to benefit from tremendous support from our shareholders, and with the recently completed financing of approximately $ 40 million, we look forward to going back to the property and building on that success.”

With the financing closed on July 30, 2020, the company is now well positioned to conduct an extensive follow-up drilling campaign with a focus on further defining and expanding the deposit. The Company’s plans include approximately 8,000 to 12,000 meters of diamond core drilling that will allow further evaluation of the grade, size and extent of the copper-gold-silver deposit beneath and adjacent to the current mineral resource.

This successor program, which is currently still being planned, is to be completed between November 2020 and April 2021. With their current strategies, Canadians are confident that they will be able to conduct the field program safely and effectively.

Filo Mining posted a net loss of $ 1.3 million for the three months ended June 30, 2020, primarily composed of $ 1.9 million in exploration and project survey costs and $ 0.8 million in general and project costs Administrative costs. These losses were partially offset by a gain of approximately $ 1.8 million from internal securities transfers.

In the same period last year, the net loss was still at 5.3 million CAD, which consisted primarily of 4.3 million CAD in exploration and project investigation costs and 0.9 million CAD in general and administrative expenses.

Source: Filo Mining

As of June 30, 2020, the company reportedly had cash and cash equivalents of a good $ 1.5 million and net working capital of approximately $ 0.4 million, compared to cash and cash equivalents of approximately $ 13.8 million and net working capital from $ 12.7 million as of December 31, 2019. The decline in cash and cash equivalents and net working capital for the company is primarily due to cash used in operations.

Source: Filo Mining

In June 2020, the company replaced the agreement with Zebra Holdings and Investments S.a.r.l. to replace a $ 5 million unsecured credit facility with an equivalent one. In consideration for the July 2020 Facility, Zebra will receive 480 common shares each month for every $ 50,000 outstanding, prorated for the number of days they are outstanding. The July 2020 Facility matures on July 12, 2021 and no interest is payable in cash during its term. As of June 30, 2020, the company had drawn a total of $ 800,000.

Conclusion:

Filo Mining, the company in which the Lundin billionaire family holds a 36% stake via the Lundin Trust, has repeatedly made a name for itself with very good drilling results in the course of past drilling programs. In addition to the results already mentioned above, we spontaneously think of the 73 m with 2.04% copper equivalent, which is composed of 1.19% copper and 1.06 g / t gold. In order to bring this promising and promising project into position, a larger round of financing was carried out in order to raise the real value of the property! This means that you can expect a steady flow of messages shortly, which, depending on the drill hit, can cause the share price to rise sharply at any time!

MAG Silver – in seven-mile boots on the way to production! Contract processing already ensures cash flow!

Even if from the beginning of April to the end of May the Canadian silver producer about to start producing MAG Silver Corp. (ISIN: CA55903Q1046 / TSX-V: MAG) with its joint venture partner Fresnillo Plc. On his top project ‘Juanicipio’ because of the pandemic, part of the team was able to continue a lot of work and thus come closer to the goal of becoming a producer.

You can find the press release here.

Thus, the second quarter of 2020 was largely characterized by financial measures, planning work and underground work, whereby this difficult time was used efficiently and sensibly.

Ramps, tunnels and ore accesses have now reached a total length of more than 27 km. The local veins were encountered at the ore accesses, the extent of which corresponded exactly to expectations. Mineralized material from the subsurface development has been dumped for a year so that it can now be processed on the plant by its joint venture partner Fresnillo.

At the beginning of August, the first 8,858 tons of ore-bearing material began to be sent through the mill, which provides MAG Silver with a monthly capacity of up to 16,000 tons. This applies until mid-2021, as the order picking of the new MAG Silver production facility should be completed by then.

In the course of the third quarter, higher-quality material will begin to be extracted from the ore accesses and a stockpile will be created, which will then also be processed on the Fresnillo plant. This, of course, has enormous advantages. Not only does it generate cash flow, it also increases your understanding of metallurgical tests and machine settings for your own system! A value that should not be underestimated for MAG Silver!

Of the projected total project costs, after the investments made since 2018, only USD 267,305,000 remains open. The share of MAG Silver from the JV ratio (44%) has thus been reduced to USD 117,614,000 as of June 30, 2020. The interim production at Fresnillo (‘Toll-Milling’) of his mine will make a significant contribution to reducing the financial requirements.

Since it has been possible to fully work on the mine again since June 1, 2020, significant progress can be reported here as well. While the foundation work is about to be completed, another team has already started to erect the clarifier. In addition, the missing materials for the system are on the way to the site.

It is now going on at full throttle again with the construction of his silver mine, which is looking for its equal! It is also very good news that the partners have agreed that nothing has changed in the schedule up to the start of production.

MAG is also back in the fast lane in exploration. Five drilling rigs are on the area to further record the potential on the license area, because the geologists can still see an enormous number of places that have never been explored. In this context you have to know that only 5% of the property has been extensively explored!

The financial development in the past quarter is also developing splendidly! The financing round initiated in the 1st quarter with Eric Sprott of his company for 60 million CAD (4,528,302 shares at 13.25 CAD each) was successfully concluded.

In addition, on June 29th, MAG Silver started a USD 50 million financing program specifically for the USA, where shares are to be sold at market price via the NYSE or other distribution channels. A time frame until June 2022 has been set for this. But by August 10, 2020, MAG Silver has already sold 2,305,463 shares from this program at an average price of USD 16.16 and grossed USD 37,264 million. A really great start, from which one can assume that the financing round does not need to run for two years, but will close much earlier.

As of June 30, 2020, MAG Silver had approximately $ 87.68 million in working capital with no long-term debt. At the end of June, the operating subsidiary Minera Juanicipio had a good USD 35.34 million in its cash register, of which around USD 15.55 million are attributable to MAG Silver’s 44% share. In the past six months, MAG has already brought the proud sum of almost USD 23.46 million into the subsidiary Minera Juanicipio.

The net loss for the past quarter was just under $ 1.3 million, or $ 0.01 per share. In contrast, there is a continued income tax credit of approximately $ 2.51 million. This includes currency losses of certain Mexican values, which resulted from the significant devaluation against the USD.

George Paspalas, Member of the Management Board at MAG Silver, is pleased that we can work fully again, even if the greatest importance is attached to hygiene and the necessary distances between the workers. The construction of the flotation plant is already running at 100% level. According to his message to the shareholders, material from ‘Juanicipio’ can be processed on Fresnillo two days a week. He sees the 8,800 tons processed in August as the first test, but also as the start of a further milestone in the company’s history, as it generates money for the JV cash register for the first time.

Conclusion:

Like all other companies, MAG Silver did not have an easy quarter due to Covid-19, but it was mastered more than brilliantly! Still sticking to the scheduled mine start after such adversity is an absolutely outstanding achievement and proves the unrestricted competence of this team!

The construction of the mill, which has now started again, as well as the processing of the material on the Fresnillo mine, which is already making money, impressively proves what this team is capable of! We are therefore very optimistic about the start of production, especially since you already have data from the ‘Toll Milling’ material that you can transfer to your processing plant, which will immediately lead to a better yield. In addition, MAG Silver investors still have a bit of takeover fantasy in their depot, as we cannot rule out that Fresnillo will not completely incorporate these TOP producers. But then at a significantly higher rate.

Best wishes

your

Jörg Schulte

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