MAG Silver : 2024 Q1 Financial Statements

MAG SILVER CORP.

Unaudited Condensed Interim Consolidated Financial Statements (expressed in thousands of US dollars)

For the three months ended March 31, 2024

Dated: May 13, 2024

VANCOUVER OFFICE		TSX: MAG
Suite 770	604 630 1399 phone	NYSE American : MAG
800 W. Pender Street	866 630 1399 toll free	[e-mail]
Vancouver, BC V6C 2V6	604 681 0894 fax

MAG SILVER CORP.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
For the three months ended March 31, 2024 and 2023
(In thousands of US dollars, except for shares and per share amounts - Unaudited)
		For the three months ended
		March 31, 2024	March 31, 2023
	Note	$	$
Income from equity accounted investment in Juanicipio	5	19,244	7,919
General and administrative expenses	3	(4,109)	(3,272)
General exploration and business development		(357)	(102)
Operating income		14,778	4,545
Interest income		827	564
Other income	8	537	127
Foreign exchange loss		(163)	(180)
Income before income tax		15,979	5,056
Deferred income tax expense		(1,084)	(343)
Net income		14,895	4,713
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Unrealized loss on equity securities		(2)	(1)
Total comprehensive income		14,893	4,712
Basic earnings per share		0.14	0.05
Diluted earnings per share		0.14	0.05
Weighted average number of shares outstanding	7
Basic		102,979,176	101,117,919
Diluted		103,111,227	101,319,086

See accompanying notes to the condensed interim consolidated financial statements

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MAG SILVER CORP.
Condensed Interim Consolidated Statements of Financial Position
As at March 31, 2024 and December 31, 2023
(In thousands of US dollars, unless otherwise stated - Unaudited)
	Note	March 31, 2024
		$
Assets
Current assets
Cash		74,683
Accounts receivable	4	1,032
Prepaid expenses		2,450
		78,165
Non-current assets
Investment in Juanicipio	5	397,012
Exploration and evaluation assets	6	61,820
Deferred financing fees	9	823
Property and equipment		279
Investments		6
		459,940
Total assets		538,105
Liabilities
Current liabilities
Trade and other payables		3,785
Lease obligation		115
Flow-through share premium liability	8	1,432
		5,332
Non-current liabilities
Deferred income taxes		9,582
Provision for reclamation		484
Total liabilities		15,398
Equity
Share capital		614,480
Equity reserve		21,705
Accumulated other comprehensive income		779
Deficit		(114,257)
Total equity		522,707
Total liabilities and equity		538,105

December 31, 2023 $

68,707 1,559 1,787 72,053

394,622 52,637 909 301 8 448,477 520,530

2,668 154 1,969 4,791

8,498 484 13,773

614,364 20,764 781 (129,152) 506,757 520,530

See accompanying notes to the condensed interim consolidated financial statements

3

MAG SILVER CORP.

Condensed Interim Consolidated Statements of Cash Flows For the three months ended March 31, 2024 and 2023

(In thousands of US dollars, unless otherwise stated - Unaudited)

		For the three months ended
		March 31,	March 31,
		2024	2023
	Note	$	$
OPERATING ACTIVITIES
Net income		14,895	4,713
Items not involving cash:
Amortization of flow-through premium liability	8	(537)	(127)
Depreciation and amortization	3	145	10
Deferred income tax expense		1,084	343
Amortization of deferred financing fees	9	86	-
Income from equity accounted investment in Juanicipio	5	(19,244)	(7,919)
Share-based compensation expense	3,7	966	763
Unrealized foreign exchange loss (gain)		(52)	175
Movements in non-cash working capital
Accounts receivable		(206)	(205)
Prepaid expenses		(663)	(728)
Trade and other payables		836	(131)
Net cash used in operating activities		(2,690)	(3,106)
INVESTMENT ACTIVITIES
Exploration and evaluation expenditures	6	(5,054)	(2,979)
Acquisition of Goldstake property	6	(3,752)	-
Investment in Juanicipio	5	-	(25,159)
Receipt of principal on loans to Juanicpio	5	14,975	-
Receipt of interest on loans to Juanicipio	5	2,484	149
Net cash from / (used in) investing activities		8,653	(27,989)
FINANCING ACTIVITIES
Issuance of common shares upon exercise of stock options	7	-	225
Issuance of common shares, net of share issue costs	7	-	39,472
Issuance of flow-through shares, net of share issue costs	7	-	16,208
Payment of lease obligation (principal)		(39)	(30)
Net cash (used in) / from financing activities		(39)	55,875
Effect of exchange rate changes on cash		52	(122)
Increase in cash during the period		5,976	24,658
Cash, beginning of period		68,707	29,955
Cash, end of period		74,683	54,613

See accompanying notes to the condensed interim consolidated financial statements

4

MAG SILVER CORP.
Condensed Interim Consolidated Statements of Changes in Equity
For the three months ended March 31, 2024 and 2023
(In thousands of US dollars, except shares - Unaudited)
		Common shares without
		par value		Accumulated
					other
		Number of		Equity comprehensive
	Notes	Shares	Amount	reserve	income (loss)	Deficit Total equity
		#	$	$	$	$	$
Balance, January 1, 2023		98,956,808	559,933	18,790	784	(177,811)	401,696
Stock options exercised		28,787	397	(90)	-	-	307
Restricted and performance share units converted		112,605	1,215	(1,215)	-	-	-
Shares issued for cash, net of flow-through share premium liability		3,874,450	56,761	-	-	-	56,761
Share issue costs		-	(3,942)	-	-	-	(3,942)
Share-based compensation		-	-	3,279	-	-	3,279
Other comprehensive loss		-	-	-	(3)	-	(3)
Net income		-	-	-	-	48,659	48,659
Balance, December 31, 2023		102,972,650	614,364	20,764	781	(129,152)	506,757
Restricted and performance share units converted	7	6,905	116	(116)	-	-	-
Share-based compensation	7	-	-	1,057	-	-	1,057
Other comprehensive loss		-	-	-	(2)	-	(2)
Net income		-	-	-	-	14,895	14,895
Balance, March 31, 2024		102,979,555	614,480	21,705	779	(114,257)	522,707
Balance, January 1, 2023		98,956,808	559,933	18,790	784	(177,811)	401,696
Stock options exercised		21,346	292	(67)	-	-	225
Shares issued for cash, net of flow-through share premium liability		3,874,450	56,761	-	-	-	56,761
Share issue costs		-	(4,011)	-	-	-	(4,011)
Share-based compensation		-	-	830	-	-	830
Other comprehensive loss		-	-	-	(1)	-	(1)
Net income		-	-	-	-	4,713	4,713
Balance, March 31, 2023		102,852,604	612,975	19,553	783	(173,098)	460,213

See accompanying notes to the condensed interim consolidated financial statements

5

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

1. NATURE OF OPERATIONS

MAG Silver Corp. (the "Company" or "MAG") is a growth-oriented Canadian exploration company focused on advancing high-grade, district scale precious metals projects in the Americas. MAG is the ultimate parent company of its consolidated group, was incorporated on April 21, 1999, and is governed by the Business Corporations Act of the Province of British Columbia ("BCABC"). MAG's shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American, LLC in the United States of America.

The Company's principal asset is a 44% interest in the Juanicipio Mine (Note 5 "Investment in Juanicipio") located in Zacatecas, Mexico, which achieved commercial production at its 4,000 tonnes per day ("tpd") processing facility on June 1, 2023.

Address of registered office of the Company: 3500 - 1133 Melville Street

Vancouver, British Columbia, Canada V6E 4E5

Head office and principal place of business: 770 - 800 West Pender Street Vancouver, British Columbia,

Canada V6C 2V6

2. MATERIAL ACCOUNTING POLICY INFORMATION

1. Statement of compliance
   These condensed interim consolidated financial statements ("Interim Financial Statements") are prepared under International Accounting Standards 34 Interim Financial Reporting ("IAS 34") in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). They do not include all of the information required for full annual IFRS financial statements and therefore should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023.
   The accounting policies applied in the preparation of the Interim Financial Statements are consistent with those applied and disclosed in the Company's audited consolidated financial statements for the year ended December 31, 2023.
   These Interim Financial Statements have been prepared on a historical cost basis except for the revaluation of certain financial instruments, which are stated at their fair value.
   These Interim Financial Statements were authorized for issuance by the Board of Directors of the Company on May 13, 2024.

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MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

1. Significant accounting judgments and estimates
   The Company makes certain significant judgments and estimates in the process of applying the Company's accounting policies. Management believes the judgments and estimates used in these condensed interim consolidated financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows. The areas involving significant judgments and estimates have been set out in Note 5 of the Company's audited consolidated financial statements for the year ended December 31, 2023.

3. GENERAL AND ADMINISTRATIVE EXPENSES
		For the three months ended
		March 31,	March 31,
		2024	2023
		$	$
Accounting and audit	277	128
Compensation and consulting fees	1,174	1,135
Depreciation and amortization	145	10
Filing and transfer agent fees	198	267
Amortization of deferred financing fees	86	-
General office expenses	247	144
Insurance	339	489
Juanicipio oversight costs	266	-
Legal	180	125
Share-based compensation expense (see Note 7)	966	763
Shareholder relations	127	116
Travel	104	95
		4,109	3,272
4. ACCOUNTS RECEIVABLE
		March 31,	December 31,
		2024	2023
		$	$
	Receivable from Minera Juanicipio (Notes 5 & 13)	87	855
	Value added tax ("IVA" and "GST")	930	700
	Other receivables	15	4
		1,032	1,559

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MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

5. INVESTMENT IN JUANICIPIO

Minera Juanicipio was created for the purpose of holding the Juanicipio property, and is held 56% by Fresnillo plc ("Fresnillo") and 44% by the Company. On December 27, 2021, the Company and Fresnillo created Equipos Chaparral in the same ownership proportions. Equipos Chaparral owns the processing facility and mining equipment which is leased to Minera Juanicipio. Minera Juanicipio and Equipos Chaparral are collectively referred to herein as "Juanicipio," or, the "Juanicipio Mine."

Juanicipio is governed by a shareholders' agreement and by corporate by-laws. All costs relating to Juanicipio are required to be shared by the Company and Fresnillo pro-rata based on their ownership interests in Juanicipio, and if either party does not fund pro-rata, their ownership interest will be diluted in accordance with the shareholders' agreement and by-laws.

Fresnillo is the operator of Juanicipio, and with its affiliates, beneficially owns 9,314,877 common shares of the Company as at March 31, 2024, as publicly reported by Fresnillo.

The Company has recorded its Investment in Juanicipio using the equity method of accounting. The recorded value of the investment includes the carrying value of the deferred exploration, mineral and surface rights, Juanicipio costs incurred by the Company, the required net cash investments to establish and maintain its 44% interest in Juanicipio, and the Company's 44% share of income (loss) from Juanicipio.

Changes during the period of the Company's investment relating to its interest in Juanicipio are detailed as follows:

				March 31,	December 31,
				2024	2023
				$	$
Balance, beginning of period				394,622	338,316
Juanicipio oversight expenditures incurred 100% by MAG	-	384
Amortization of Juanicipio's oversight expenditures incurred 100% by MAG	(129)	(305)
Cash contributions and advances to Juanicipio	(3)		-	24,992
Loan repayments from Juanicipio	(2)			(14,975)	(25,714)
Total for the period				(15,104)	(642)
Income from equity accounted Investment in Juanicipio	19,244	65,099
Interest earned, reclassified to accounts receivable	(1)	(1,751)	(8,150)
Balance, end of period				397,012	394,622

1. A portion of the Investment in Juanicipio is in the form of interest bearing shareholder loans. For the three months ended March 31, 2024, the Company earned interest amounting to $1,751 (year ended December 31, 2023: $8,150) while $2,484 of interest payments were received from Juanicipio (year ended December 31, 2023: $7,639).

8

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

1. During the three months ended March 31, 2024, no loans to Juanicipio were converted into equity (December 31, 2023: $7,251). As at March 31, 2024, the Company has advanced $79,438 as shareholder loans to Juanicipio (December 31, 2023: $94,414).
2. During the three months ended March 31, 2024 no cash contributions and advances were made to Juanicipio (December 31, 2023: 24,992 cash contributions and advances, with $22,726 in the form of loans and $2,276 in the form of equity).

A summary of financial information of Juanicipio (on a 100% basis reflecting adjustments made by the Company, including adjustments for differences in accounting policies) is as follows:

Juanicipio Statements of Income
	For the three months ended
	March 31,	March 31,
	2024	2023
	$	$
Sales	123,689	51,482
Cost of sales:
Production cost	(36,787)	(27,378)
Depreciation and amortization	(22,038)	(7,955)
Cost of sales	(58,825)	(35,333)
Gross profit	64,864	16,149
Consulting and administrative expenses	(4,189)	(1,499)
Extraordinary mining and other duties	(1,392)	(520)
	59,283	14,131
Exchange losses and other	(1,297)	(2,864)
Interest expense	(3,979)	(3,816)
Income tax (expense) recovery	(14,249)	6,731
Net income	39,758	14,182
MAG's 44% portion of net income	17,494	6,240
Interest on Juanicipio loans - MAG's 44%	1,751	1,679
MAG's 44% equity income	19,244	7,919

9

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Expressed in thousands of US dollars unless otherwise stated - Unaudited)

Juanicipio Statements of Financial Position

	March 31,	December 31,
	2024	2023
	$	$
Assets
Current assets
Cash and cash equivalents	30,991	42,913
Value added tax and other receivables	2,214	3,162
Income tax receivable	10,324	3,758
Concentrate sales receivable	60,009	56,532
Inventories
Stockpiles	2,250	2,417
Metal concentrates	4,373	2,361
Materials and supplies	18,684	18,414
Prepaids and other assets	3,256	5,501
	132,101	135,058
Non-current assets
Right-of-use assets	1,413	1,590
Mineral interests, plant and equipment	782,691	794,512
Deferred tax assets	16,433	24,336
	800,537	820,438
Total assets	932,638	955,496
Liabilities
Current liabilities
Payables	14,206	22,167
Interest and other payables to shareholders	5,577	12,160
Taxes payable	5,230	14,395
	25,013	48,722
Non-current liabilities
Lease obligation	1,523	1,597
Provisions
Reserves for retirement and pension	115	112
Reclamation and closure	3,678	3,605
Deferred tax liabilities	4,566	9,439
	9,882	14,753
Total liabilities	34,895	63,475
Equity
Shareholders' equity including shareholder advances	897,743	892,021
Total equity	897,743	892,021
Total liabilities and equity	932,638	955,496

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