Alongside the First Law of Mining NRs, there are other things you never want to see in a NR from a mining company. The word “challenging” anywhere, the over-use of effusive adjectives is another, and also high on the list is any sentence beginning with The H Word. Here’s Fresnillo (FRES.L) and MAG Silver (MAG) today:
However, the ‘Comisión Federal de Electricidad’ (“CFE”), the state-owned electrical company, has just notified Fresnillo, the Juanicipio Project operator, that approval to complete the tie-in to the national power grid cannot yet be granted and the mill commissioning timeline will therefore be extended by approximately six months.
There really are a thousand ways to be screwed over in this sector: Just over a month ago, MAG was a U$21 stock and riding nicely into the expected 2022 re-rate. Suddenly silver takes a small turn South, the company runs an oversubbed placement priced at U$17.15 to raise U$46m and then this snippet of wonder comes along. And though your humble scribe is not long MAG, nor a cynical or suspicious person at all at all at all oh no, the fact this hurts MAG more than FRES and the fact that Fresnillo/Peñoles rules the mining scene in Mexico and the fact that FRES has always coveted the 44% of Juanicipio it doesn’t own shouldn’t be lost on anybody at this stage. We’d all laugh heartily if FRES tried another “take under”, would we not?