When it comes to mining opportunities, all rests on the cycles of the economy. Just because a commodity or sector is up or down at the moment does not mean that it will never return. Where mining is concerned, lead times are the deciding factor even after a strike may have been found. An investor that feels a company may have a strike on its hands, and is willing to take a careful look at timing, is one that may profit.
MAG Silver Corp., a minerals exploration and development company, works to find and exploit mineral deposits primarily within the Mexican silver mining districts. Although silver is the primary metal of interest for the company, recent discoveries have lead to additional opportunities.
Currently, the company controls 44% of a project referred to as the Juanicipio property and 100% of a project known as Cinco de Mayo. As it turns out, recent exploration efforts have found the Cinco de Mayo property to be quite prolific if initial testing proves to hold true. Large seams of Molybdenum and gold (along with silver, lead and zinc)have been found at the site. At present, this would generally lead to a timeline that could prove to be very profitable as the world economy returns from current conditions. Given that results are preliminary, it is noted that initial step out drilling indicates significant gold per/ton and geologic conditions within the region that indicate the foundation of mineralization for the area is significant as the origin of all deposits within it. Rough measurements indicate a seem 1,800 meters in length, 300 meters in width and approximately 50 meters in depth. Strict Canadian testing methods are the basis of testing criterion.
Although there have been certain unexpected expenses related to a hostile takeover bid in 2008 (which was withdrawn), the company has been very careful with its cash burn rate. It currently has $C24 million in working capital available and has allocated $C15 million for 2010 exploration and development. A large majority of this allocation is intended for the “stand alone” property at Cinco de Mayo with the rest intended for administrative costs, taxes and fees.
Overall, the company does appear to be paying fairly close attention to its cash burn rate and is working to shift funds that were used in its hostile takeover defense to more productive uses at its Juanicipio project. Additionally, the company’s recent offering of $C35 million should aide in development going forward along with what does appear to be a solid timeline. MAG Silver Corp. looks to have its timing right for the moment. Economic conditions are a bit uncertain but, for the most part, appear to be in line as the gold and silver markets continue to swing.
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