MAG Silver Corp.

Unaudited Condensed Interim Consolidated Financial Statements

(expressed in thousands of US dollars)

For the three and nine months ended September 30, 2023

Dated: November 10, 2023

A copy of this report will be provided to any shareholder who requests it.

VANCOUVER OFFICE

Suite 770

800 W. Pender Street

Vancouver, BC V6C 2V6

604 630 1399 phone

866 630 1399 toll free

604 681 0894 fax

TSX: MAG

NYSE American : MAG

info@magsilver.com

MAG SILVER CORP.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
For the three and nine months ended September 30, 2023 and 2022
(In thousands of US dollars, except for shares and per share amounts - Unaudited)

		For the three months ended						For the nine months ended
		September 30,			September 30,			September 30,			September 30,
		2023			2022			2023			2022
	Note	$			$			$			$

Income from equity accounted investment in Juanicipio	6		13,692			11,781			44,030			37,890
General and administrative expenses	4		(4,094	)		(3,003	)		(10,599	)		(8,555	)
General exploration and business development			(468	)		(20	)		(610	)		(111	)
Exploration and evaluation assets written down	7		-			-			-			(10,471	)
Operating income			9,130			8,758			32,821			18,753

Interest income			663			216			1,868			335
Other income	9		269			-			629			-
Foreign exchange loss			(192	)		(199	)		(204	)		(403	)
Income before income tax			9,870			8,775			35,114			18,685

Deferred income tax expense			(1,008	)		(548	)		(2,149	)		(216	)
Net income			8,862			8,227			32,965			18,469

Other comprehensive income (loss)
Items that will not be reclassified subsequently to profit or loss:
Unrealized loss on equity securities			(2	)		(1	)		(4	)		(60	)
Deferred tax benefit			-			-			-			7
Other comprehensive loss			(2	)		(1	)		(4	)		(53	)

Total comprehensive income			8,860			8,226			32,961			18,416


Basic earnings per share			0.09			0.08			0.32			0.19
Diluted earnings per share			0.09			0.08			0.32			0.19


Weighted average shares outstanding	8
Basic			102,945,350			98,732,615			102,329,945			98,266,916
Diluted			103,501,006			99,329,230			102,934,823			98,952,729

See accompanying notes to the condensed interim consolidated financial statements

MAG SILVER CORP.
Condensed Interim Consolidated Statements of Financial Position
As at September 30, 2023
(In thousands of US dollars, unless otherwise stated - Unaudited)

	Note	September 30, 2023		December 31, 2022
		$		$

Assets
Current assets
Cash		58,519		29,955
Accounts receivable	5	1,014		708
Prepaid expenses		1,335		1,232
		60,868		31,895
Non-current assets
Investments		7		11
Investment in Juanicipio	6	392,629		338,316
Exploration and evaluation assets	3,7	48,119		37,259
Property and equipment		312		348
		441,067		375,934
Total assets		501,935		407,829

Liabilities
Current liabilities
Trade and other payables		3,286		2,542
Current portion of lease obligation		137		121
Flow-through share premium liability	9	2,357		-
		5,780		2,663
Non-current liabilities
Lease obligation		31		140
Deferred income taxes		5,070		2,921
Provision for reclamation		484		409
Total liabilities		11,365		6,133

Equity
Share capital	8	614,038		559,933
Equity reserve		20,598		18,790
Accumulated other comprehensive income		780		784
Deficit		(144,846	)	(177,811	)
Total equity		490,570		401,696
Total liabilities and equity		501,935		407,829

Commitments and contingencies	15

Subsequent events	16

See accompanying notes to the condensed interim consolidated financial statements

MAG SILVER CORP.

Condensed Interim Consolidated Statements of Cash Flows

For the three and nine months ended September 30, 2023 and 2022

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

		For the three months ended,						For the nine months ended,
		September 30,			September 30,			September 30,			September 30,
		2023			2022			2023			2022
	Note	$			$			$			$

OPERATING ACTIVITIES
Net income			8,862			8,227			32,965			18,469
Items not involving cash:
Amortization of flow-through premium liability	9		(269	)		-			(629	)		-
Depreciation and amortization			133			34			201			102
Deferred income tax expense			1,008			548			2,149			216
Exploration and evaluation assets written down			-			-			-			10,471
Income from equity accounted Investment in Juanicipio	6		(13,692	)		(11,781	)		(44,030	)		(37,890	)
Share-based payment expense	8		822			1,113			2,597			2,318
Unrealized foreign exchange loss			129			97			102			313

Movements in non-cash working capital
Accounts receivable			281			(212	)		229			(317	)
Prepaid expenses			642			546			(104	)		(963	)
Trade and other payables			783			166			288			(675	)
Net cash used in operating activities			(1,301	)		(1,262	)		(6,232	)		(7,956	)

INVESTING ACTIVITIES
Exploration and evaluation expenditures	7		(3,811	)		(3,554	)		(10,053	)		(7,394	)
Acquisition of Gatling Exploration, net of cash acquired	3		-			-			-			(2,653	)
Investment in Juanicipio	6		(53	)		(171	)		(25,376	)		(489	)
Receipt of principal and interest on loans to Juanicipio	6		11,295			86			14,589			215
Proceeds from disposition of equity securities			-			-			-			1,111
Purchase of equipment			(19	)		(22	)		(19	)		(35	)
Net cash from (used in) investing activities			7,412			(3,661	)		(20,859	)		(9,245	)

FINANCING ACTIVITIES
Issuance of common shares upon exercise of stock options	8		-			-			225			32
Issuance of common shares, net of share issue costs	8		136			-			39,541			-
Issuance of flow-through shares, net of share issue costs	8		-			-			16,208			-
Payment of lease obligation (principal)			(33	)		(28	)		(94	)		(81	)
Net cash from (used in) financing activities			103			(28	)		55,880			(49	)

Effect of exchange rate changes on cash			(359	)		(197	)		(225	)		9

Increase (decrease) in cash during the period			5,855			(5,148	)		28,564			(17,241	)
Cash, beginning of period			52,664			44,655			29,955			56,748
Cash, end of period			58,519			39,507			58,519			39,507

See accompanying notes to the condensed interim consolidated financial statements

MAG SILVER CORP.
Condensed Interim Consolidated Statements of Changes in Equity
For the nine months ended September 30, 2023 and 2022
(In thousands of US dollars, except shares - Unaudited)

										Accumulated
		Common shares								other
		without par value					Equity			comprehensive						Total
		Shares		Amount			Reserve			income			Deficit			equity
	Note			$			$			$			$			$
Balance, January 1, 2022			97,809,441		543,927			18,215			1,798			(196,419	)		367,521

Stock options exercised			100,678		1,399			(362	)		-			-			1,037
Stock options exercised cashless			24,247		432			(432	)		-			-			-
Restricted and performance share units converted			98,012		1,147			(1,147	)		-			-			-
Deferred share units converted			86,295		871			(871	)		-			-			-
Shares issued on acquisition of Gatling Exploration			774,643		11,212			-			-			-			11,212
Shares issued in settlement of Gatling Exploration
liability			63,492		945			85			-			-			1,030
Share-based payment			-		-			3,302			-			-			3,302
Transfer of gain on disposal of equity securities
at FVOCI to deficit, net of tax			-		-			-			(964	)		964			-

Other comprehensive income loss			-		-			-			(50	)		-			(50	)
Net income			-		-			-			-			17,644			17,644
Balance, December 31, 2022			98,956,808		559,933			18,790			784			(177,811	)		401,696

Stock options exercised	8		21,346		292			(67	)		-			-			225
Restricted and performance share units converted	8		96,009		994			(994	)		-			-			-
Issued for cash, net of flow-through share
premium liability	8		3,874,450		56,761			-			-			-			56,761
Share issue costs	8		.		(3,942	)		-			-			-			(3,942	)
Share-based payment	8		-		-			2,869			-			-			2,869

Other comprehensive loss			-		-			-			(4	)		-			(4	)
Net income			-		-			-			-			32,965			32,965
Balance, September 30, 2023			102,948,613		614,038			20,598			780			(144,846	)		490,570


Balance, January 1, 2022			97,809,441		543,927			18,215			1,798			(196,419	)		367,521

Stock options exercised			3,125		39			(7	)		-			-			32
Stock options exercised cashless			16,702		165			(165	)		-			-			-
Restricted and performance share units converted			78,895		778			(778	)		-			-			-
Deferred share units converted			25,000		218			(218	)		-			-			-
Shares issued on acquisition of Gatling Exploration			774,643		11,212			-			-			-			11,212
Shares issued in settlement of Gatling Exploration
liability			63,492		945			85			-			-			1,030
Share-based payment			-		-			2,354			-			-			2,354
Transfer of gain on disposal of equity securities
at FVOCI to deficit, net of tax			-		-			-			(964	)		964			-

Other comprehensive loss			-		-			-			(53	)		-			(53	)
Net income			-		-			-			-			18,469			18,469
Balance, September 30, 2022			98,771,298		557,284			19,486			781			(176,986	)		400,565

See accompanying notes to the condensed interim consolidated financial statements

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

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 6 “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:

2600 – 595 Burrard Street

Vancouver, British Columbia,

Canada V7X 1L3

Head office and principal place of business:

770 – 800 West Pender Street

Vancouver, British Columbia,

Canada V6C 2V6

MATERIAL ACCOUNTING POLICY INFORMATION

(a)

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, 2022.

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, 2022.

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 November 9, 2023.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

(b)

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 audited consolidated financial statements for the year ended December 31, 2022, except as noted herein.

Declaration of commercial production at Juanicipio

The Juanicipio mine and related mining infrastructure achieved commercial production on January 1, 2022. Following a successful commissioning period, the Juanicipio processing facility had been operating at approximately 85% of its nameplate of 4,000 tpd with silver recovery consistently above 88%. With all major construction activities completed and the Juanicipio mine, processing facility and other vital systems all operating in line with, or rapidly approaching design capacity (Juanicipio demonstrating its ability to sustain ongoing production levels), commercial production at the Juanicipio processing facility was declared effective June 1, 2023.

With the declaration of commercial production, Juanicipio began depreciating all assets related to processing and associated facilities. In addition, the Company commenced depreciating exploration expenditures at Juanicipio that were capitalized in accordance with the Company’s accounting policies as well as project oversight expenditures incurred by MAG (Note 6).

ACQUISITION OF GATLING EXPLORATION INC.

On March 11, 2022, the Company entered into a Definitive Arrangement Agreement with Gatling Exploration Inc. (“Gatling”) to acquire all of the issued and outstanding common shares of Gatling with the issuance of common shares of the Company and the advancement of a Canadian dollar (“C$”) $3 million convertible note receivable. On May 20, 2022, the Company completed the acquisition of Gatling by way of a court-approved plan of arrangement under the BCABC (the “Transaction”), pursuant to which Gatling became a wholly-owned subsidiary of the Company and the Company thereby acquired a 100% interest in the Larder Project (the “Larder Project”). Under the terms of the Transaction, each former Gatling shareholder received 0.0170627 of a common share of the Company in exchange for each share of Gatling held immediately prior to the Transaction. Holders of options and warrants to acquire common shares of Gatling received replacement options and warrants, respectively, entitling the holders thereof to acquire common shares of the Company, based on, and subject to, the terms of such options and warrants of Gatling, as adjusted by the plan of arrangement.

MAG issued a total of 774,643 common shares to the shareholders of Gatling in connection with the Transaction. The Company also issued 43,675 replacement stock options and 53,508 replacement warrants (Note 8). A portion of the liabilities of Gatling related to change of control payments to Gatling executive management was settled by the issuance of 63,492 common shares of the Company.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

The Company has determined that the Transaction did not meet the definition of business combination under IFRS 3, Business Combinations and accordingly, has been accounted for as an asset acquisition.

The purchase price allocation requires management to estimate the relative fair value of identifiable assets acquired and liabilities assumed.

The following tables summarize the fair value of the consideration given and the relative fair values of identified assets and liabilities recognized as a result of the Transaction.

Total shares issued on close:			774,643

			$
MAG share price - C$			18.54
USD exchange rate			0.7807
MAG share price - US$			14.47

Value of shares on close of Transaction			11,212
Value of convertible note receivable			2,392
Value of replacement options and warrants			85
Transaction costs			350
Value of consideration paid			14,039

Identified assets acquired and liabilities assumed			$

Assets
Cash and cash equivalents			89
Receivables, prepaids and deposits			115
Exploration and evaluation assets			15,187
Total Assets			15,391

Liabilities
Accounts payable and accrued liabilities			1,315
Lease liabilities			37
Total Liabilities			1,352

Net assets acquired			14,039

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

GENERAL AND ADMINISTRATIVE EXPENSES

			For the three months ended				For the nine months ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
	$		$		$		$

Accounting and audit		277		110		606		294
Compensation and consulting fees		1,727		957		3,949		2,980
Depreciation and amortization		133		34		201		102
Filing and transfer agent fees		62		7		342		323
General office expenses		171		51		561		414
Insurance		334		530		1,162		1,483
Juanicipio oversight costs		332		-		332		-
Legal		110		74		344		244
Share-based payment expense (see Note 8)		822		1,113		2,597		2,318
Shareholder relations		87		90		276		284
Travel		39		37		229		113
		4,094		3,003		10,599		8,555

ACCOUNTS RECEIVABLE

	September 30,		December 31,
	2023		2022
	$		$
Receivable from Minera Juanicipio (Notes 6 & 14)		643		323
Value added tax ("IVA" and "GST")		367		382
Other receivables		4		3
		1,014		708

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,” and in reference to the mine, 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.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

Fresnillo is the operator of Juanicipio, and with its affiliates, beneficially owns 9,314,877 common shares of the Company as at September 30, 2023, 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 is detailed as follows:

	Nine months ended			Year ended
	September 30,			December 31,
	2023			2022
	$			$
Balance, beginning of period		338,316			291,084
Juanicipio oversight expenditures incurred 100% by MAG		384			719
Amortization of Juanicipio's oversight expenditures incurred 100% by MAG		(171	)		-
Cash contributions and advances to Juanicipio (see Note 14)		24,992			8,140
Loan repayment from Juanicipio (see Note 14) ⁽²⁾		(8,800	)		-
Total for the period		16,405			8,859
Income from equity accounted Investment in Juanicipio		44,030			40,767
Interest earned, net of recontributions, reclassified to accounts receivable ⁽¹⁾		(6,122	)		(2,394	)
Balance, end of period		392,629			338,316

⁽¹⁾ A portion of the Investment in Juanicipio is in the form of interest bearing shareholder loans. For the nine months ended September 30, 2023, the Company earned interest, net of recontributions, amounting to $6,122 (year ended December 31, 2022: $2,394), which has been reclassified to accounts receivable, and $5,789 of interest payments were received from Juanicipio (December 31, 2022: $3,564).

⁽²⁾ During the three and nine months ended September 30, 2023, a $7,251 loan to Juanicipio was converted into equity (December 31, 2022: nil).

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

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						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2023			2022			2023			2022
		$			$			$			$

Sales		125,046			49,715			311,303			169,855
Cost of sales:
Production cost		43,782			18,127			125,731			46,108
Depreciation and amortization		21,646			6,376			47,001			15,052
Cost of sales		65,428			24,503			172,732			61,160
Gross profit		59,618			25,212			138,571			108,695

Consulting and administrative expenses		(3,458	)		(1,192	)		(9,116	)		(4,100	)
Extraordinary mining and other duties		(1,635	)		(64	)		(3,532	)		(276	)
		54,526			23,956			125,924			104,319

Exchange gains (losses) and other		419			1,953			(2,414	)		1,895
Interest expense		(5,214	)		(369	)		(13,915	)		(1,109	)
Income tax (expense) benefit		(23,824	)		825			(23,441	)		(20,101	)

Net income		25,907			26,365			86,154			85,004

MAG's 44% portion of net income		11,399			11,601			37,908			37,402
Interest on Junicipio loans - MAG's 44%		2,293			180			6,122			488
MAG's 44% equity income		13,692			11,781			44,030			37,890

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

Juanicipio Statements of Financial Position

	September 30,		December 31,
	2023		2022
	$		$
Assets

Current assets
Cash and cash equivalents		23,434		1,102
Value added tax and other receivables		11,759		13,945
Income tax receivable		15,100		-
Concentrate sales receivable		54,994		24,098
Inventories
Stockpiles		6,339		26,020
Metal concentrates		2,891		-
Materials and supplies		17,667		10,081
Prepaids and other assets		6,360		7,756
		138,544		83,002
Non-current assets
Right-of-use assets		1,803		1,336
Mineral interests, plant and equipment		794,275		779,735
Deferred tax assets		8,472		11,259
		804,549		792,330
Total assets		943,094		875,332

Liabilities

Current liabilities
Payables		22,774		34,678
Interest and other payables to shareholders		7,473		13,460
Taxes payable		8,742		36,259
		38,989		84,397
Non-current liabilities
Lease obligation		1,852		1,329
Provisions
Reserves for retirement and pension		54		29
Reclamation and closure		3,519		3,073
Deferred tax liabilities		11,464		22,242
		16,889		26,673
Total liabilities		55,878		111,070

Equity
Shareholders' equity including shareholder advances		887,216		764,262
Total equity		887,216		764,262
Total liabilities and equity		943,094		875,332

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

Juanicipio Statements of Cash Flows

	For the three months ended						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2023			2022			2023			2022
		$			$			$			$
Operating activities
Net income		25,907			26,365			86,154			85,004
Items not involving cash
Depreciation		21,646			6,376			47,001			15,052
Deferred income tax expense and special mining duty		23,824			(825	)		23,441			20,101
Interest incurred on loans		5,214			369			13,915			1,109
Other		1,017			1,421			2,661			2,212
Income tax and special mining duty payments		(21,257	)		(3,233	)		(77,053	)		(7,951	)
Change in other operating working capital		996			(14,574	)		(35,094	)		6,110
Net cash from operating activities		57,346			15,899			61,026			121,638

Investing activities
Capital expenditures including plant, mine development and exploration		(16,953	)		(34,448	)		(62,368	)		(121,367	)
Other		430			194			716			345
Net cash used in investing activities		(16,524	)		(34,254	)		(61,652	)		(121,022	)

Financing activities
Loans and other capital provided by shareholders		-			-			56,800			255
Repayments of loans to shareholders		(20,000	)		-			(20,000	)		-
Interest paid to shareholders		(5,670	)		(86	)		(13,157	)		(557	)
Payment of lease obligations		(174	)		(212	)		(552	)		(645	)
Net cash (used in) from financing activities		(25,843	)		(298	)		23,091			(947	)

Effect of exchange rate changes on cash and cash equivalents		(84	)		(676	)		(133	)		(464	)

Increase (decrease) in cash and cash equivalents during the period		14,895			(19,329	)		22,332			(796	)

Cash and cash equivalents, beginning of period		8,540			37,504			1,102			18,972

Cash and cash equivalents, end of period		23,434			18,176			23,434			18,176

EXPLORATION AND EVALUATION ASSETS

(a)

In 2018, the Company entered into an option agreement with a private group, whereby the Company has the right to earn 100% ownership interest in a company which owns the Deer Trail project in Utah. The Company paid $150 upon signing the agreement, $150 in each of 2020 and 2021, and $200 in December 2022. To earn 100% interest in the property, the Company must make remaining cash payments totaling $1,350 over the next 6 years and fund a cumulative of $30,000 of eligible exploration expenditures by 2028 (as of September 30, 2023, the Company has incurred $24,460 of eligible exploration expenditures on the property). As at September 30, 2023, the Company has also bonded and recorded a $484 reclamation liability for the project. Other than the reclamation liability, the balance of cash payments and exploration commitments are optional at the Company’s discretion. Upon the Company’s 100% earn-in, the vendors will retain a 2% net smelter returns (“NSR”) royalty.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

(b)

During the year ended December 31, 2022, through the acquisition of Gatling the Company acquired 100% of the Larder Project in Ontario (Note 3). As at September 30, 2023, the Company incurred $7,749 spend after acquisition costs, of which $2,396 were drilling costs.

(c)

In 2017, the Company entered into an option earn-in agreement with a private group whereby the Company could earn up to a 100% interest in a land claim package in the Black Hills of South Dakota. Although the geological prospect of the property remained encouraging, growing negative sentiment towards resource extraction in the area, combined with a slow consultation process resulted in significant challenges being encountered in permitting the property for exploration drilling. The Company provided formal notice that it would not be making the final $150 option payment in May 2022 and concurrently wrote-down the property’s full carrying amount of $10,471 during the year ended December 31, 2022.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

During the three and nine months ended September 30, 2023 and year ended December 31, 2022, the Company has incurred the following exploration and evaluation expenditures on these projects:

	Three months ended		Nine months ended		Year ended
	September 30,		September 30,		December 31,
	2023		2023		2022
	$		$		$
Deer Trail
Option and other payments		75		75		210
Total acquisition costs		75		75		210
Geochemical		109		367		422
Camp and site costs		188		577		713
Drilling		1,540		2,963		6,255
Geological consulting		399		915		964
Geophysical		16		63		325
Land taxes and government fees		178		200		232
Legal, community and other consultation costs		54		296		303
Travel		115		142		167
Total for the period		2,674		5,598		9,591
Balance, beginning of period		22,489		19,565		9,974
Total Deer Trail Project cost		25,163		25,163		19,565
Larder Project
Acquisition (Note 3)		-		-		15,187
Option and other payments		-		-		19
Total acquisition costs		-		-		15,206
Geochemical		141		901		112
Camp and site costs		234		408		127
Drilling		599		1,164		1,232
Geological consulting		766		1,400		450
Geophysical		296		872		314
Land taxes and government fees		14		35		19
Legal, community and other consultation costs		141		308		176
Travel		113		174		58
Total for the period		2,304		5,262		17,694
Balance, beginning of period		20,652		17,694		-
Total Larder Project cost		22,956		22,956		17,694

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

Black Hills
Geochemical	-	-	5
Camp and site costs	-	-	1
Geological consulting	-	-	127
Geophysical	-	-	3
Land taxes and government fees	-	-	7
Legal, community and other consultation costs	-	-	46
Travel	-	-	2
Total for the period	-	-	191
Balance, beginning of period		-	10,280
Less: Amounts written off	-	-	(10,471	)
Total Black Hills Project cost	-	-	-
Total Exploration and Evaluation Assets	48,119	48,119	37,259

Included in exploration and evaluation assets at September 30, 2023 were liabilities for trade and other payables of $1,211 (December 31, 2022: $695).

SHARE CAPITAL

(a)

Issued and outstanding

The Company is authorized to issue an unlimited number of common shares without par value.

As at September 30, 2023, there were 102,948,613 common shares outstanding (December 31, 2022: 98,956,808).

	Three months ended
	September 30,		September 30,
	2023		2022
Basic weighted average number of shares outstanding		102,945,350		98,732,615
Effect of dilutive common share equivalents ⁽¹⁾		555,656		596,614
Diluted weighted average number of shares outstanding		103,501,006		99,329,230
Antidilutive securities ⁽¹⁾		1,135,843		830,303

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

	Nine months ended
	September 30,		September 30,
	2023		2022
Basic weighted average number of shares outstanding		102,329,945		98,266,916
Effect of dilutive common share equivalents ⁽¹⁾		604,878		685,813
Diluted weighted average number of shares outstanding		102,934,823		98,952,729
Antidilutive securities ⁽¹⁾		890,926		719,877

⁽¹⁾

For the three and nine months ended September 30, 2023, stock options totaling 752,170 and 515,242 respectively (three and nine months ended September 30, 2022: 551,953 and 451,953 respectively), restricted share units (“RSUs”) totalling 88,212 and 80,223 respectively (three and nine months ended September 30, 2022: 78,715 and 68,289 respectively), and performance share units (“PSUs”) totaling 295,461 and 295,461 respectively (three and nine months ended September 30, 2022: 199,635 and 199,635 respectively), were excluded from the computation of diluted earnings per share due to being out of the money or unvested during the period.

On February 7, 2023, the Company closed a $42,558 bought deal public offering and issued 2,905,000 common shares, at a price of $14.65 per common share.

On February 16, 2023, the Company closed a $17,133 (C$23,024) bought deal private placement and issued 969,450 common shares on a “flow-through” basis” (as defined in the Income Tax Act (Canada)) (the Flow-Through Shares”), at a price of $17.67 (C$23.75) per Flow-Through Share. The premium paid by investors on the flow-through shares was calculated as $3.08 per share. Accordingly, $2,986 was recorded as flow-through liability (Note 9).

The aggregate gross proceeds from the combined bought deal public offering and bought deal private placement amounted to $59,691. The Company paid commissions to underwriters of $3,010 and legal and filing fees totalled an additional $932 yielding net proceeds of $55,749.

During the nine months ended September 30, 2023, 21,346 stock options were exercised (nine months ended September 30, 2022: 3,125) for cash proceeds of $225 (nine months ended September 30, 2022: $32). In addition, during the nine months ended September 30, 2023 no stock options were exercised under the cashless exercise provision of the stock option plan (nine months ended September 30, 2022: 16,702 shares were issued in settlement of 51,588 stock options and the remaining 34,886 were cancelled).

During the nine months ended September 30, 2023, 52,627 PSUs and 43,382 RSUs were converted into common shares (nine months ended September 30, 2022: 73,895 PSUs and 5,000 RSUs).

During the nine months ended September 30, 2023, no deferred share units (nine months ended September 30, 2022: 25,000) were converted into common shares.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

During the nine months ended September 30, 2022, the Company issued 774,643 common shares to acquire Gatling (see Note 3). Additionally, 63,492 common shares were issued to Gatling executive management in settlement of change of control liability.

(b)

Stock options

The Company may enter into Incentive Stock Option Agreements with officers, employees, and consultants. On June 26, 2023, the Shareholders re-approved the Company’s rolling Stock Option Plan (the “Plan”). The maximum number of common shares that may be issuable under the Plan is set at 5% of the number of issued and outstanding common shares on a non-diluted basis at any time, provided that the number of common shares issued or issuable under the combined Plan and Share Unit Plan (Note 8(c)) shall not exceed 5% of the issued and outstanding common shares of the Company on a non-diluted basis. Options granted under the Plan have a maximum term of 5 years. As at September 30, 2023, there were 1,208,376 stock options (December 31, 2022: 1,012,794 stock options) outstanding under the Plan.

Stock option grants are recommended for approval to the Board of Directors by the Compensation and Human Resources Committee consisting of three independent members of the Board of Directors. At the time of a stock option grant, the exercise price of each option is set in accordance with the Plan and cannot be lower than the market value of the common shares at the date of grant.

The following table summarizes the Company’s option activity, excluding the Gatling replacement options (Note 3), for the period:

				Weighted average
	Stock options			exercise price
	activity			(C$/option)

Outstanding, January 1, 2022		988,727			16.77
Granted		230,089			18.86
Exercised for cash		(100,678	)		13.79
Exercised cashless		(105,344	)		16.52

Outstanding, December 31, 2022		1,012,794			17.56
Granted		236,928			16.42
Expired		(20,000	)		19.41
Exercised for cash		(21,346	)		14.12

Outstanding, September 30, 2023		1,208,376			17.37

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

During the nine months ended September 30, 2023, 236,928 stock options were granted to employees and consultants (nine months ended September 30, 2022: 220,898) with a weighted average grant date fair value of $1,179 (C$1,596) or $4.97 (C$6.73) per option.

The Company determined the fair value of the options using the Black-Scholes option pricing model with the following weighted average assumptions:

	Nine months ended			Year ended
	September 30,			December 31,
	2023			2022
Risk-free interest rate		3.53	%		2.58	%
Expected volatility		57	%		61	%
Expected dividend yield		nil			nil
Expected life (years)		3			3

The following table summarizes the Company’s stock options, excluding the Gatling replacement options (Note 3), outstanding and exercisable as at September 30, 2023:

Exercise price	Number	Number	Weighted average remaining
(C$/option)	outstanding	exercisable	contractual life (years)
13.46	209,432	209,432	0.53
14.98	246,774	246,774	1.41
16.09	6,021	-	4.50
16.43	230,907	-	4.50
17.02	100,000	33,333	3.64
20.20	113,398	37,794	3.52
21.26	50,000	16,666	3.17
21.29	9,191	3,063	3.52
21.57	192,653	128,434	2.19
23.53	50,000	33,333	2.30
13.46 - 23.53	1,208,376	708,829	2.50

During the nine months ended September 30, 2023, the Company recorded share-based payment expense of $1,078 (nine months ended September 30, 2022: $1,065) relating to stock options vested to employees and consultants in the period of which $104 (nine months ended September 30, 2022: $36) was capitalized to exploration and evaluation assets.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

In 2022, the Company issued 43,675 replacement stock options pursuant to the Gatling acquisition (Note 3) of which 16,629 replacement stock options expired unexercised. The following table summarizes the Gatling replacement options that are outstanding and exercisable as at September 30, 2023:

Exercise price	Number	Number	Weighted average remaining
(C$/option)	outstanding	exercisable	contractual life (years)
21.40	1,706	1,706	0.81
21.68 - 21.93	9,986	9,986	0.87
25.80	4,264	4,264	0.31
26.37 - 26.41	11,090	11,090	0.22
21.40 - 26.41	27,046	27,046	0.51

(c)

Restricted and performance share units

On June 26, 2023, the Shareholders re-approved a share unit plan (the “Share Unit Plan”) for the benefit of the Company’s officers, employees and consultants. The Share Unit Plan provides for the issuance of common shares from treasury, in the form of RSUs and PSUs. The maximum number of common shares that may be issuable under the Share Unit Plan is set at 1.5% of the number of issued and outstanding common shares on a non-diluted basis, provided that the number of common shares issued or issuable under the combined Share Unit Plan and Stock Option Plan (Note 8(b)) shall not exceed 5% of the issued and outstanding common shares on a non-diluted basis. RSUs and PSUs granted under the Share Unit Plan have a term of 5 years unless otherwise specified by the Board, and each unit entitles the participant to receive one common share of the Company subject to vesting criteria, and in the case of PSUs, performance criteria which may also impact the number of PSUs to vest between 0-200%. PSUs for which the performance targets are not achieved during the performance period are automatically forfeited and cancelled.

During the nine months ended September 30, 2023, 56,425 RSUs were granted (nine months ended September 30, 2022: 80,535) under the Company’s Share Unit Plan with 18,800 vesting in 12 months, 18,810 vesting in 24 months and another 18,815 vesting in 36 months. The RSUs had a weighted average grant date fair value of $12.13 per RSU (nine months ended September 30, 2022: $14.67) as determined using the fair market value of the common shares on the date of grant.

During the nine months ended September 30, 2023, 156,861 PSUs were granted (nine months ended September 30, 2022: 79,156) under the Company’s Share Unit Plan with a five-year term. Of the grant, 117,646 PSUs vest upon the achievement of specified performance targets over a three-year performance period. The remainder of the grant, 39,215 PSUs are subject to a market share price performance factor measured over a three-year performance period, resulting in a PSU payout range from 0% (0 PSUs) to 200% (78,430 PSUs). The PSUs had a weighted average grant date fair value of $12.13 per PSU (nine months ended September 30, 2022: $16.15).

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

The three-year performance period for the February 2020 PSU grant ended in February 2023 and resulted in a PSU vesting of 86.3% of target or 72,437 PSUs. Consequently, 11,503 PSUs did not vest and were cancelled.

As at September 30, 2023, there were 323,986 PSUs and 114,102 RSUs issued and outstanding (December 31, 2022: 231,254 and 101,059 respectively) under the Share Unit Plan, of which 28,525 PSUs and 25,215 RSUs had vested (December 31, 2022: 23,400 PSUs and 16,415 RSUs) and are convertible into common shares of the Company. Included in the PSUs at September 30, 2023 are 78,314 PSUs with vesting conditions subject to a market share price performance factor measured over a three-year period, resulting in a PSU target vesting range from 0-50% (19,459 PSUs) to 150-200% (136,805 PSUs).

During the nine months ended September 30, 2023, the Company recognized a share-based payment expense of $1,142 (nine months ended September 30, 2022: $990) relating to RSUs and PSUs of which $168 (nine months ended September 30, 2022: nil) was capitalized to exploration and evaluation assets.

(d)

Deferred share units

On June 26, 2023, the Shareholders re-approved a Deferred Share Unit Plan (the “DSU Plan”) for the benefit of the Company’s non-executive directors. The DSU Plan provides for the issuance of common shares from treasury, on conversion of Deferred Share Units (“DSUs”) granted. Directors may also elect to receive all or a portion of their annual retainer in the form of DSUs. DSUs may be settled in cash or in common shares issued from treasury, as determined by the Board at the time of the grant. The maximum number of common shares that may be issuable under the DSU Plan is set at 1.0% of the number of issued and outstanding common shares on a non-diluted basis.

During the nine months ended September 30, 2023, 51,849 DSUs were granted under the plan and 5,554 DSUs were granted to directors who elected to receive a portion of their annual retainer in DSUs rather than in cash (nine months ended September 30, 2022: 20,015 and 3,607 respectively). A DSU share-based payment expense of $649 was recorded in the nine months ended September 30, 2023 (nine months ended September 30, 2022: $299). Under the DSU plan, no common shares are to be issued, or cash payments made to, or in respect of a participant in the DSU Plan prior to such eligible participant’s termination date. During the nine months ended September 30, 2023, no DSUs (nine months ended September 30, 2022: 25,000) were converted and settled in common shares. As at September 30, 2023, there are 477,518 DSUs (December 31, 2022: 420,115) issued and outstanding under the DSU Plan, all of which have vested.

As at September 30, 2023, assuming 100% of the PSU’s vest, there are 2,123,982 common shares (December 31, 2022: 1,765,222) issuable under the combined share compensation arrangements referred to above (the Plan, the Share Unit Plan and the DSU Plan) representing 2.06% (December 31, 2022: 1.78%) of the issued and outstanding common shares on a non-diluted basis, and there are 6,176,916 (December 31, 2022: 4,172,186) share-based awards available for grant under these combined share compensation arrangements.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

(e)

Replacement warrants

In 2022, the Company issued 53,508 replacement warrants pursuant to the Gatling acquisition (Note 3), of which as at December 31, 2022, 34,418 replacement warrants had expired unexercised. During the three and nine months ending September 30, 2023, all of the remaining 19,090 replacement warrants expired unexercised.

Flow-Through PRemium Liability

As at September 30, 2023, the Company has a flow-through share premium liability of $2,357 (December 31, 2022: nil) in relation to the flow-through share financing completed on February 16, 2023 (see Note 8(a) for full details of the financings). Flow-through shares are issued at a premium, and in the Company’s case, considering the separate offerings for flow-through shares and standard public offering for common shares both made on January 25, 2023, this premium has been calculated as the difference between the pricing of a flow-through share and that of a common share from the public offering made on the same date. Tax deductions generated by the eligible expenditures are passed through to the shareholders of the flow-through shares once the eligible expenditures are incurred and renounced. Below is a summary of the flow-through financing and the related flow-through share premium liability generated.

	Shares issued		Flow-through		Premium per flow		Flow-through
			share price		through share price		premium liability
			$		$		$
February 2023 Financing		969,450		17.67		3.08		2,986

The following table is a continuity of the flow-through share funding and expenditures along with the corresponding impact on the flow-through share premium liability:

	Flow-through funding and expenditures			Flow-through premium liability
	$			$
Balance at January 1, 2023		-			-
Flow-through funds raised		17,133			2,986
Flow-through eligible expenditures		(3,609	)		(629	)

Balance at September 30, 2023		13,524			2,357

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

10.

Capital risk management

The Company’s objectives in managing its liquidity and capital are to safeguard the Company’s ability to continue as a going concern and to provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of its equity (comprised of share capital, equity reserve, accumulated other comprehensive income and deficit) and lease obligation, net of cash and investments in equity securities as follows:

	September 30,			December 31,
	2023			2022
	$			$
Equity		490,570			401,696
Lease obligation		168			261
Cash		(58,519	)		(29,955	)
Investments		(7	)		(11	)
Total		432,212			371,991

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt and/or acquire or dispose of assets.

In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The annual budgets and any amendments thereto are approved by the Board of Directors. The Company currently does not pay out dividends.

The Company has working capital of $55,088 as at September 30, 2023 (December 31, 2022: $29,232). The Company may require additional capital in the future to meet its future project and other related expenditures (Notes 6 and 7). Future liquidity may depend upon the Company’s ability to arrange debt or additional equity financings.

As at September 30, 2023, the Company does not have any drawn long-term debt and is not subject to any externally imposed capital requirements.

11.

Financial risk management

The Company’s operations consist of the acquisition, exploration and advancement of mineral projects in the Americas. The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks. Where material, these risks are reviewed and monitored by the Board of Directors.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

(a)

Market risk

The Company conducts the majority of its business through its equity interest in its associates, Juanicipio (Note 6). Juanicipio is exposed to commodity price risk, specifically to the prices of silver, gold, and to a lesser extent, lead and zinc. Currently, Juanicipio produces and sells concentrates containing these metals which are each subject to market price fluctuations which will affect its profitability and its ability to generate cash flow. Juanicipio does not hedge any of the commodities produced and does not have any such positions outstanding at September 30, 2023.

(b)

Credit risk

Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Company by those counterparties, less any amounts owed to the counterparty by the Company where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements.

(i)

Trade credit risk

Juanicipio, in which the Company has a 44% interest, has revenue from its operations as described in Note 6. Juanicipio sells and receives payment for its concentrates at market terms, under an offtake agreement with Met-Mex Peñoles, S.A. de C.V. (“Met-Mex”), a related party to Fresnillo. The Company believes Juanicipio is not exposed to significant trade credit risk.

(ii)

Cash

In order to manage credit and liquidity risk, the Company’s practice is to invest only in highly rated investment grade instruments backed by Canadian commercial banks, and in the case of its Mexican and US operations, the Company maintains minimal cash in its US and Mexican subsidiaries.

(iii)

Mexican value added tax

As at September 30, 2023, the Company had a net receivable of $3 (Note 5) for value added tax. As at September 30, 2023, Juanicipio, in which the Company has a 44% interest, had a receivable of $11,456 from the Mexican government for value added tax (Note 6) (MAG’s attributable portion $5,041). Management expects the balances to be fully recoverable by both entities.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

The Company’s maximum exposure to credit risk is the carrying value of its cash, accounts receivable and loans receivable from Juanicipio which is classified as an Investment in Juanicipio in the condensed interim consolidated statements of financial position, as follows:

	September 30,		December 31,
	2023		2022
	$		$
Cash		58,519		29,955
Accounts receivable (Note 5)		1,014		708
Juanicipio loans (Notes 6 & 14) ⁽¹⁾		111,328		104,653
		170,861		135,316

⁽¹⁾ The expected credit losses take into account future information of the credit worthiness of Juanicipio and are not considered significant.

(c)

Liquidity risk

The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements, its exploration and mineral projects advancement plans, and its various optional property and other commitments (Notes 6, 7 and 15). The annual budget is approved by the Board of Directors. The Company ensures that there are sufficient cash balances to meet its short-term business requirements.

On October 4, 2023 the Company executed definitive documentation for a $40,000 senior secured revolving credit facility with the Bank of Montreal (see Note 16 “Subsequent Events”).

The Company's overall liquidity risk has not changed significantly from December 31, 2022. Future liquidity may therefore depend upon the Company’s ability to repatriate capital from Juanicipio, arrange debt or additional equity financing.

(d)

Currency risk

The Company is exposed to the financial risks related to the fluctuation of foreign exchange rates, both in the Mexican peso and C$, relative to the US$. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

Exposure to currency risk

As at September 30, 2023, the Company is exposed to currency risk through the following assets and liabilities denominated in currencies other than the functional currency of the applicable entity:

	Mexican peso			Canadian dollar
(in US$ equivalent)	$			$

Cash		69			7,823
Accounts receivable		107			365
Investments		-			7
Accounts payable		(189	)		(3,063	)
Lease obligations		-			(169	)
Net (liabilities) assets exposure		(13	)		4,963

Mexican peso relative to the US$

Although the majority of operating expenses in Mexico are both determined and denominated in US$, an appreciation in the Mexican peso relative to the US$ will slightly increase the Company’s cost of operations in Mexico (reported in US$) related to those operating costs denominated and determined in Mexican pesos. Alternatively, a depreciation in the Mexican peso relative to the US$ will decrease the Company’s cost of operations in Mexico (reported in US$) related to those operating costs denominated and determined in Mexican pesos.

An appreciation/depreciation in the Mexican peso against the US$ will also result in a gain/loss before tax and deferred tax to the extent that the Company holds net monetary assets (liabilities) in pesos. Specifically, the Company's foreign currency exposure is comprised of peso denominated cash, prepaids and value added taxes receivable, net of trade and other payables. The carrying amount of the Company’s net peso denominated monetary liabilities at September 30, 2023 is 245 thousand pesos (September 30, 2022: 1.8 million pesos). A 10% appreciation or depreciation in the peso against the US$ would have an immaterial effect on the Company’s income (loss) before tax.

Mexican peso relative to the US$ - Investment in Juanicipio

The Company conducts the majority of its business through its equity interest in its associates (Note 6). The Company accounts for this investment using the equity method and recognizes the Company's 44% share of earnings and losses of Juanicipio. Juanicipio also has a US$ functional currency and is exposed to the same currency risks noted above for the Company.

An appreciation/depreciation in the Mexican peso against the US$ will also result in a gain/loss before tax and deferred taxes (Note 6) in Juanicipio to the extent that it holds net monetary assets (liabilities) in pesos, comprised of peso denominated cash, value added taxes receivable, net of trade and other payables. The carrying amount of Juanicipio’s net peso denominated monetary liabilities at September 30, 2023 is 220.6 million pesos (September 30, 2022: 287.6 million). A 10% appreciation in the peso against the US$ would result in a loss before tax at September 30, 2023 of $1,391 (September 30, 2022: $1,583) in Juanicipio, of which the Company would record its 44% share being $612 loss from equity investment in Juanicipio (September 30, 2022: $696 loss), while a 10% depreciation in the peso relative to the US$ would result in an equivalent gain.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

C$ relative to the US$

The Company is exposed to gains and losses from fluctuations in the C$ relative to the US$.

As general and administrative overheads in Canada are predominantly denominated in C$, an appreciation in the C$ relative to the US$ will increase the Company’s overhead costs as reported in US$. Alternatively, a depreciation in the C$ relative to the US$ will decrease the Company’s overhead costs as reported in US$.

An appreciation/depreciation in the C$ against the US$ will result in a gain/loss to the extent that MAG, the parent entity, and the Larder Project holds net monetary assets (liabilities) in C$. The carrying amount of the Company’s net Canadian denominated monetary assets at September 30, 2023 is C$6.7 million (September 30, 2022: C$153 thousand). A 10% appreciation or depreciation in the C$ against the US$ would have a $506 effect on the Company’s income (loss) before tax.

(e)

Interest rate risk

The Company’s interest income earned on cash is exposed to interest rate risk. A decrease in interest rates would result in lower relative interest income and an increase in interest rates would result in higher relative interest income.

12.

FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES

The Company’s financial instruments include cash, accounts receivable, investments, and trade and other payables. The carrying values of cash, accounts receivable, and trade and other payables reported in the consolidated statement of financial position approximate their respective fair values due to the relatively short-term nature of these instruments.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value as described below:

Level 1:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

Level 2:

Observable inputs other than quoted prices in Level 1 such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3:

Unobservable inputs which are supported by little or no market activity.

The Company’s financial assets or liabilities as measured in accordance with the fair value hierarchy described above are:

As at September 30, 2023	Level 1		Level 2		Level 3		Total
	$		$		$		$
Investments⁽¹⁾		7		-		-		7


As at December 31, 2022	Level 1		Level 2		Level 3		Total
		$		$		$		$
Investments⁽¹⁾		11		-		-		11

⁽¹⁾ The fair value of equity securities quoted in active markets, is determined based on a market approach reflecting the closing price of each particular security as at the statement of financial position date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security, and therefore equity securities are classified within Level 1 of the fair value hierarchy.

There were no transfers between levels 1, 2 and 3 during the nine months ended September 30, 2023 or during the year ended December 31, 2022.

13.

SEGMENTED INFORMATION

The Company operates in one operating segment, being the exploration and advancement of mineral projects in North America. The Company’s principal asset, its 44% ownership in the Juanicipio Mine, is located in Mexico, and the Company also has other exploration properties in North America. The Company’s executive and head office is located in Canada.

14.

RELATED PARTY TRANSACTIONS

The Company does not have offices or direct personnel in Mexico, but rather is party to a Field Services Agreement, whereby it has contracted administrative and exploration services in Mexico with Minera Cascabel, S.A. de C.V. (“Cascabel”) and IMDEX Inc. (“IMDEX”). Dr. Peter Megaw, the Company’s Chief Exploration Officer, is a principal of both IMDEX and Cascabel, and is remunerated by the Company through fees to IMDEX. In addition to corporate executive responsibilities with MAG, Dr. Megaw is responsible for the planning, execution and assessment of the Company’s exploration programs, and he and his team developed the geologic concepts and directed the acquisition and discovery of the Juanicipio property.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

During the three and nine months ended September 30, 2023 and 2022, the Company incurred expenses with Cascabel and IMDEX as follows:

	Three months ended				Nine months ended
	Sept 30,		June 30,		Sept 30,		Sept 30,
	2023		2022		2023		2022
		$		$		$		$

Fees related to Dr. Megaw:
Exploration and marketing services		53		105		190		237
Travel and expenses		5		15		34		30
Other fees to Cascabel and IMDEX:
Administration for Mexican subsidiaries		11		13		38		40
Field exploration services		40		38		118		126
Share-based payments (non-cash)		121		115		356		325
		230		286		737		758

All transactions are incurred in the normal course of business and are negotiated on arm’s length terms between the parties for all services rendered. A portion of the expenditures are incurred on the Company’s behalf and are charged to the Company on a “cost + 10%” basis. The services provided do not include drilling and assay work which are contracted out independently from Cascabel and IMDEX. Included in trade and other payables at September 30, 2023 is $57 related to these services (December 31, 2022: $104).

Any amounts due to related parties arising from the above transactions are unsecured, non-interest bearing and are due upon receipt of invoices.

The details of the Company’s significant subsidiary and controlling ownership interests are as follows:

Name	Country of	Principal	MAG's effective interest
	Incorporation	Asset	2023(%)			2022(%)

Minera Los Lagartos, S.A. de C.V.	Mexico	Juanicipio (44%)		100	%		100	%

Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.

As at September 30, 2023, Fresnillo and the Company have advanced $253,027 as shareholder loans (MAG’s 44% share $111,328) to Juanicipio, bearing interest at 1 and 6 months SOFR + 2%. From January 2022, with the mine being brought into commercial production, a portion of the interest incurred by Juanicipio was expensed whereas the remainder, pertaining to the processing facility, continued to be capitalized. Capitalized interest net of recontributions in 2022 of $1,336 was applied to MAG’s Investment in Juanicipio account reducing its balance as an eliminating related party entry. From January 2023, with the commencement of commissioning of the processing facility at Juanicipio, all of the interest is expensed. Interest recorded by Juanicipio for the nine months ended September 30, 2023 totalling $6,122 (year ended December 31, 2022: $1,058) has therefore been included in MAG’s income from equity investment in Juanicipio.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

During the three and nine months ended September 30, 2023 and 2022, compensation of key management personnel (including directors) was as follows:

			Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
	$		$		$		$
Salaries and other short term employee benefits		376		389		1,581		1,217
Severance paid to a former executive		-		-		-		382
Share-based payments (non-cash) (Note 8)		605		571		1,963		1,174
		981		960		3,544		2,773

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and consists of its directors, the Chief Executive Officer, the Chief Financial Officer and the Chief Sustainability Officer.

15.

COMMITMENTS AND CONTINGENCIES

The following table discloses the contractual obligations of the Company and its subsidiaries as at September 30, 2023 for committed exploration work and committed other obligations.

	Total		Less than 1 year		1-3 Years		3-5 Years		More than 5 years
	$		$		$		$		$

Minera Juanicipio ^(1)&(2)		-		-		-		-		-

Consulting contract commitments		471		294		177		-		-
Total Obligations and Commitments ⁽³⁾		471		294		177		-		-

⁽¹⁾

Although the Company makes cash advances to Juanicipio as cash is called by the operator Fresnillo (based on approved budgets), they are not contractual obligations. The Company intends, however, to continue to fund its share of cash calls and avoid dilution of its ownership interest in Juanicipio.

⁽²⁾

According to the operator, Fresnillo, contractual commitments including project development and for continuing operations and purchase orders issued for project capital, sustaining capital, and continuing operations total $17,833 (December 31, 2022: $47,809), with respect to Juanicipio on a 100% basis as at September 30, 2023.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

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

⁽³⁾

The Company also has discretionary commitments for property option payments and exploration expenditures as outlined above in Note 7 Exploration and Evaluation Assets. There is no obligation to make any of those payments or to conduct any work on its optioned properties. As the Company advances them, it evaluates exploration results and determines at its own discretion which option payments to make and which additional exploration work to undertake in order to comply with the funding requirements.

The concessions associated with the Larder Project are all in good standing with various underlying obligations or royalties ranging from nil-2% NSRs associated with various mineral claims, and various payments upon a production announcement.

The Company is obligated to a 2.5% NSR royalty on the Cinco de Mayo property.

The Company could be subject to various investigations, claims and legal and tax proceedings covering matters that arise in the ordinary course of business activities. Each of these matters would be subject to various uncertainties and it is possible that some matters may be resolved unfavourably to the Company. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company is not aware of any such claims or investigations, and as such has not recorded any related provisions and does not expect such matters to result in a material impact on the results of operations, cash flows and financial position.

16.

SUBSEQUENT EVENTS

On October 4, 2023 the Company executed definitive documentation for a $40,000 senior secured revolving credit facility with the Bank of Montreal. There is a provision for an accordion feature whereby, upon request, the facility may be increased to $75,000 any time prior to the maturity date, at the discretion of the lender. The credit facility will bear interest on a sliding scale of SOFR or the lenders Base Rate on US Dollar commercial loans plus an applicable margin on a sliding scale of between 200 and 400 basis points based on the Company’s leverage ratio. Commitment fees on the undrawn portion of the facility are calculated on a similar sliding scale of between 50 and 75 basis points. The term of the facility is 34 months, maturing on August 4, 2026. All debts, liabilities and obligations under the facility are guaranteed by the Company's material subsidiaries and secured by assets of the Company including the pledge of a material subsidiary. The facility includes a number of customary covenants (liquidity, leverage, tangible net worth) and conditions including limitations on acquisitions and investments (excluding exploration and capital expenditures) funded using cash with no limitations when equity is used as a funding source.