MAG Silver – Rated Speculative Buy

MAG's Cinco de Mayo project is based in northern Chihuahua Sate, Mexico.

This week MAG Silver released the maiden resource estimate for its 100% owned Cinco de Mayo project in Mexico. It indicated contained resources of 52.7 million ounces of silver, 785 million pounds of lead and 1.8 billion pounds of zinc.

In response to the news, Canaccord Genuity analyst Nicholas Campbell, who called the results “robust”, wrote that Cinco de Mayo “demonstrates the potential to develop the project into a significant high-grade underground silver-zinc-lead mine.”

Campbell raised his price target on MAG Silver (Stock Profile – TSX:MAG & NYSE MKT:MVG) by $1 to $18 and maintained a Speculative Buy rating on the company.

Also this week, Resource Opportunities analyst Lawrence Roulston stated the recent preliminary economic assessment for MAG’s flagship project Juanacipio showed “very attractive returns” based on a stand-alone operation.

Roulston thinks the “enormous value” MAG has created at Cinco de Mayo and other exploration projects is being completely overshadowed by Juanacipio. He predicts the company may elect to spin out some of its properties. In Roulston’s opinion, MAG is “clearly a case where the sum of the parts would be greater than the present value.”

On September 5th, 2012 MAG Silver closed a private placement offering for gross proceeds of approximately $33.1-million. The company has earmarked the money to finance its share of the recently announced permitting and underground development program for Juanicipio and to advance the Cinco de Mayo project.

Shares of MAG Silver are currently trading at $12.21 on the TSX Exchange – up two pennies on the day.

Disclosure: at publication date MAG Silver is a client of MiningFeeds.

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