Tier 1 Silver Producer Releases Annual Sustainability Report

Source: Streetwise Reports 07/24/2024

Tier 1 Silver producer MAG Silver Corp. (MAG:TSX; MAG:NYSE American) publishes its third annual Sustainability Report. Find out why silver is in demand for the energy transition.

Tier 1 Silver producer MAG Silver Corp. (MAG:TSX; MAG:NYSE American) has published its third annual Sustainability Report, providing a comprehensive view of the company’s environmental, social, and governance commitments and performance for 20023.

Highlights included development of its Climate Action Management Plan, including a Climate Action Statement, and 110,000 hours dedicated to safety training and zero significant environmental incidents at any of its projects.

“The development of MAG Silver’s Climate Action Management Plan (“CAMP”) is our most significant climate change achievement during 2023,” said Chief Sustainability Officer Jim Mallory. “We are focusing our efforts in the areas of energy, water, and community relations at the Deer Trail and Larder projects as a starting point for this journey and to further develop our own awareness.”

MAG is an emerging silver producer with its Tier 1 Juanicipio mine in Mexico, which achieved nameplate production of 4,000 tonnes per day (tpd) in Q3 of 2023. It holds a 44% interest in the project, which is operated by Fresnillo Plc.

“2023 was a year where the company truly felt a significant shift,” President and Chief Executive Officer George Paspalas noted, “a year in which we achieved commercial production status, we expanded our ongoing sustainability journey, while continuing our exploration discovery potential, including resource expansion at Juanicipio.”

During 2023, Juanicipio processed 1.3 million tonnes of mineralized material at the Fresnillo, Saucito, and Juanicipio plants, yielding production of 16.8 million ounces silver (Moz Ag), 36,732 ounces gold (Au), 28.4 million pounds lead (Pb) and 44.8 million pounds zinc (Zn), the company said.

The company also noted that a positive social license had been measured at the Deer Trail Project in Utah, and 38% of its board directors are female, surpassing the 30% target established by its Diversity, Equity, and Inclusion Policy.

Reflection of Company’s Performance

In the 67-page report, MAG said its sustainability strategy “at its core” is “a reflection of how the company addresses its material topics and performance,” including increasing public disclosure of health, safety, and environmental performance data; updating policies and charters to include elements of climate risk; developing and enhancing management systems and programs; and seeking new ways to engage with internal and external stakeholders.

The company developed CAMP in 2023 to help proactively address the risks posed by climate change while ensuring the long-term sustainability of its operations.

“The CAMP focuses our efforts on three critical areas: water conservation and management, energy, and GHG (greenhouse gas) emissions, and community engagement and Indigenous relations,” the report noted.

CAMP consists of a climate action statement outlining MAG’s dedication to responsible environmental stewardship and climate resilience and a climate action roadmap describing how the company will manage climate change matters, including the systems, strategies, and programs required to respond to climate-related risks and opportunities.

Renewable Energy, Protecting Water Sources

Part of that strategy is renewable energy, in 2023 the company said “99.98% of Scope 2 energy (from other sources) used by Juanicipio was from renewable energy sources.”

The company said it would also “continue to explore ways in which we can reduce and/or avoid emissions associated with our exploration projects.”

The report also noted that MAG “appreciates that mining and exploration activities can impact surface and groundwater resources in the areas we work.”

“We prioritize the responsible use of water by reducing our consumption as much as practicable while maximizing recycling/reuse options wherever possible,” the report said. “We also strive to protect water resources, recognizing that pollution prevention is a critical element in our approach towards ensuring responsible water stewardship.”

In addition, the report said, “There were no reportable spills and no significant environmental incidents, and Juanicipio has a zero fine or citation record. Neither our Deer Trail nor Larder projects had any significant spills, incidents, or sanctions during 2023.”

Other highlights include the injury frequency rate at Juanicipio decreasing for the fourth consecutive year, more than 108,000 hours of health and safety training (compared to more than 60,000 hours in 2022), its “Social Management System” for guiding the company’s social performance (including collaboration with Indigenous peoples), educational programs, and transparent governance policies with whistleblower protection, anti-corruption measures, and security and cyber security.

The Catalyst: A Global Need

Global demand for the white metal is growing and experts say the pressure to find more will only increase. It’s the most conductive element in nature and important to the green energy transition for coating electrical contacts in computers, phones, cars, and appliances. It’s also an important element in solar technology.

Silver spot prices rose to a new all-time high of US$32.43 per ounce on May 20 and have continued to be volatile. The price was US$29.17 on Monday, after the market plunged during the course of last week, FX Empire reported.

“Silver is shaky at the best of times, and therefore, you need to be cautious,” Christopher Lewis wrote for the site on July 19.

“The next couple of days, and therefore the next weekly candlestick, is going to be crucial and could determine where the trend goes or whether it just completely implodes,” Lewis continued. “I’d be very cautious, and I would be hesitant to put a bunch of money into this market right now as silver, although still technically bullish, has certainly seen a lot of negativity this week.”

Asset manager Chen Lin of What is Chen Buying? What is Chen Selling? has noted that the Chinese language itself reflects the significance of the metal: the term for “bank” directly translates to “silver trading depot.”

Because of the metal’s safe-haven characteristics, the weaking U.S. dollar, and the persistent need for industrial applications, Chen said silver in 2024 has “emerged as one of the top-performing commodities, surging by more than 30% and outpacing even gold.”

“Industry experts suggest that this silver rally is just the beginning, citing minimal technical resistance between the US$30/oz and US$50/oz price levels,” Chen wrote on June 19. “Based on these observations, I anticipate that silver will surpass the US$50/oz threshold during this cycle and subsequently stabilize within the US$30-US$50/oz range for the foreseeable future.” [OWNERSHIP_CHART-536]

According to the Silver Institute’s World Silver Survey, global demand for silver “massively exceeded” supply last year, a deficit that is expected to extend into a fourth consecutive year in 2024.

Mordor Intelligence noted that the white metal is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.

“An increase in the demand for new technological products is expected to help the market expand in the future,” Mordor analysts wrote. According to a U.S. Geological Survey report, “27% of the silver produced in the United States was being utilized in electrical and electronic applications.”

Ownership and Share Structure

Institutions own 70% of MAG, and 30% is retail, according to the company.

Top institutional shareholders include Juanicipio operator Fresnillo Plc. with 9%, BlackRock Investment Management (UK) Ltd. with 10.8%, Van Eck Associates Corp. with 9%, First Eagle Investment Management LLC with 6.2%, and Sprott Asset Management LP with 3%, the company said.

MAG Silver has a market cap of US$1.35 billion. It has 103.14 million shares outstanding, according to Reuters. It trades in a 52-week range of US$14.30 and US$8.20.

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Important Disclosures:

1. MAG Silver Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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( Companies Mentioned: MAG:TSX; MAG:NYSE American, )