MAG Silver Corp. is a Canadian development and exploration company focused on becoming a top-tier silver dominant precious metals company by exploring and advancing high-grade, district scale projects in the Americas. Its principal focus and asset is the Juanicipio Project (44%), being developed with Fresnillo plc (“Fresnillo”) (56%), the operator. The project is located in the Fresnillo Silver Trend in Mexico, the world's premier silver mining camp, where the operator is currently developing an underground mine and constructing a 4,000 tonnes per day (“tpd”) processing plant. Underground mine production of mineralized development material commenced in Q3 2020. The mine was brought into commercial production in January 2022 and the plant is expected to commence electrical commissioning in the coming weeks. An expanded exploration program is in place at Juanicipio targeting multiple highly prospective targets. MAG is also executing a multi-phase exploration program at the Deer Trail 100% earn-in Project in Utah and has recently commenced exploration drilling at the Larder Project located in the historically prolific Abitibi region of Canada.

HISTORY AND BACKGROUND

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%. On December 27, 2021, for various business reasons, the Company and Fresnillo incorporated Equipos Chaparral, S.A. de C.V. (“Equipos Chaparral”) in the same ownership proportions as Minera Juanicipio for the purpose of holding the Juanicipio plant and mining equipment to be leased to Minera Juanicipio. As MAG has a 44% interest in each of Minera Juanicipio and Equipos Chaparral, the two are collectively referred to herein as “Juanicipio”.

Since August of 2020, mineralized development material and more recently stope material from the underground mine is being processed at Fresnillo’s nearby processing plants. This processing was originally targeted at an average nominal rate of 16,000 tonnes per month but has since increased to an average of 48,000 tonnes per month in the three months ended March 31, 2022, an average of 51,000 tonnes per month in the three months ended June 30, 2022 and 60,000 tonnes per month for the three months ended September 30, 2022. This processing at the Fresnillo plants is expected to continue until the Juanicipio plant is fully commissioned (see ‘Underground Mine Production– Juanicipio Project’ below).

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 ‘Juanicipio Project’ below for a detailed current project update).

Development and production from, and exploration of the Juanicipio Project are all being carried out by the project operator, Fresnillo, with MAG being represented in all Juanicipio board, technical committee and ad-hoc meetings. Construction and commissioning of the processing plant is under the guidance of an Engineering, Procurement and Construction Management contract entered into with an affiliate of Fresnillo. MAG’s share of project costs is currently being funded by cash flow from underground mine production, by cash calls through its 44% interest in 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. 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.

Total Juanicipio Project expenditures incurred and capitalized by Juanicipio (on a 100% basis) for Q3 2022 amounted to approximately $36,063 (nine months ended September 30, 2022: $115,237). Of the total expenditures, $27,013 (nine months ended September 30, 2022: $92,279) are development expenditures, $2,047 are exploration expenditures (nine months ended September 30, 2022: $5,668), $5,728 are sustaining capital expenditures (nine months ended September 30, 2022: $13,329) and the remaining $1,275 is capitalized shareholder loan interest (nine months ended September 30, 2022: $3,961). Gross profit (sales less cost of sales including depreciation and amortization) from processing Juanicipio mineralized development and stope material at the Fresnillo plants for the three and nine months ended September 30, 2022 totaled $25,212 and $108,695, respectively (three and nine months ended September 30, 2021: $11,207 and $28,289, respectively) on a 100% basis (see ‘Underground Mine Production – Juanicipio Project’ below).

UNDERGROUND MINE PRODUCTION:

Mineralized material from the Juanicipio Project is being campaign processed at the nearby Saucito and Fresnillo plants (both 100% owned by Fresnillo), with metals being refined and sold on commercial terms under long term off-take agreements. During the quarter ended September 30, 2022, approximately 70% of the total tonnage processed was through the Saucito plant. The Saucito plant flowsheet better resembles that of the Juanicipio flowsheet and will provide further valuable metallurgical benefits as production commences at Juanicipio. The resulting concentrates are treated in Torreón, Coahuila, Mexico.

In the three months ended September 30, 2022, a total of 180,808 tonnes of mineralized development and stope material were processed through the Fresnillo plants. The resulting payable metals sold and processing details are summarized in the following table. The sales and treatment charges for tonnes processed in Q3 2022 were recorded on a provisional basis and will be adjusted in Q4 2022 based on final assay and pricing adjustments in accordance with the offtake contracts.

MAG’s Board of Directors has established governance guidelines and committees to manage and assist in carrying out many of its responsibilities. MAG’s committee charters define the roles and responsibilities of the committees within the governance framework of MAG. Each member of the Audit Committee, Compensation Committee, Governance and Nomination Committee, Health, Safety, Environment and Community Committee meets the independence requirements established by the (NYSE) New York Stock Exchange American and the (TSX) Toronto Stock Exchange. Our standards are shown in our Code of Business Conduct and Ethics.

We are one of the world's leading multi-asset alternative investment firm with approximately $649 billion in assets under management that creates lasting impact for our investors, teams, businesses and the communities in which we live. Founded in 1999, we pioneered a consulting-based approach to the asset management investing, partnering closely with management teams to offer the insights that challenge conventional thinking, build great businesses and improve operations. Over time, we have organically expanded this approach across asset classes to build one of the strongest alternative asset platforms in the world.

Today, our teams strive to create value through private equity, public equity, fixed income, credit, venture capital and real estate investments across multiple sectors, industries, and geographies. We believe that our people and the shared values we've espoused since our founding remain the core of our competitive advantage. This has empowered us to deliver an enduring impact to a diverse group of investors including pensions, endowments, foundations and individuals.