See accompanying notes to the condensed interim consolidated financial statements

Condensed Interim Consolidated Statements of (Loss) Income and Comprehensive Loss

(In thousands of US dollars, except for shares and per share amounts - Unaudited)

See accompanying notes to the condensed interim consolidated financial statements

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

MAG Silver Corp. (the “Company” or “MAG”) was incorporated on April 21, 1999 under the Company Act of the Province of British Columbia and its shares were listed on the TSX Venture Exchange on April 21, 2000 and subsequently moved to a TSX listing on October 5, 2007. The Company was also listed on what is now the NYSE American Exchange on July 9, 2007.

The Company is an advanced stage exploration and development company that is focused on the acquisition, exploration and development of high-grade, district-scale projects located primarily in the Americas. The Company’s principal asset is a 44% interest in the Juanicipio joint venture (see Note 6) located in Mexico, which is now in the construction phase heading to production. The Company has not yet determined whether these mineral properties contain any economically recoverable ore reserves. The Company defers all acquisition, exploration and development costs related to the properties on which it is conducting exploration. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the interests, and future profitable production, or alternatively, upon the Company’s ability to dispose of its interests on a profitable basis.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

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 (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). 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, 2018.

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, 2018, except for policies newly adopted as stated below:

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

IFRS 16 Leases. The Company adopted all the requirements of IFRS 16 Leases (“IFRS 16”) as of January 1, 2019. IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model. The Company elected the cumulative catch-up approach resulting in no restatement of prior year comparatives. The Company elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months of less and leases of low-value assets. The lease payments associated with these leases are recognized as an expense in the profit or loss. Note 8 outlines the effect of adopting the IFRS 16 requirements on January 1, 2019 opening balances.

At inception of a contract, the Company assesses whether a contract is, or contains a lease. A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for the period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the contract term and if the Company has the right to direct the use of the asset.

As a lessee, the Company recognizes a right-of-use asset and a lease liability at the commencement date of a lease. Right-of-use assets are initially measured at costs, which is comprised of initial amount of the lease liability adjusted for any lease payment made at or before the commencement date.

Right-of-use assets are subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

A lease liability is initially measured at the present value of the lease payments to be made over the lease term, discounted by the interest rate implicit in the lease or if that rate cannot be readily determined, the Company’s incremental borrowing rate. Lease payments include fixed payments, variable lease payments that depend on an index or a rate, amounts to be paid under residual value guarantees and the exercise price of a purchase option reasonably certain to be exercised by the Company.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a modification, a change in the lease term, a change in the fixed lease payments or change in the assessment to purchase the underlying asset.

The Company presents right-of-use asset in the property and equipment line item on the condensed interim consolidated balance sheets and lease liability in the lease obligation line item on the condensed interim consolidated balance sheets.

IFRIC 23 Uncertainty over Income Tax Treatments, provides guidance on the accounting for current and deferred tax liabilities and assets in which there is uncertainty over income tax treatments. The Company adopted this standard as of January 1, 2019 and it had no material impact on the Company’s consolidated financial statements.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Annual Improvements 2015-2017 Cycle. In December 2017, the IASB issued narrow-scope amendments to IFRS 3- Business Combinations, IFRS 11-Joint Arrangements, IAS 12 – Income Taxes and IAS 23 -Borrowing Costs. The Company adopted these amendments as January 1, 2019 and it had no material impact on the Company’s consolidated financial statements.

These Interim Financial Statements have been prepared on a historical costs 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 8, 2019.

These Interim Financial Statements include the accounts of the Company and its controlled subsidiaries. Control exists when the Company has power over the investee, is exposed or has rights to variable returns from its involvement with the investee, and has the ability to use its power over the investee to affect the amount of the investor’s returns. Subsidiaries are included in the consolidated financial results of the Company from the effective date that control is obtained up to the effective date of disposal or loss of control. The principal wholly-owned subsidiaries as at March 31, 2019 are Minera Los Lagartos, S.A. de C.V., and Minera Pozo Seco S.A. de C.V. All intercompany balances, transactions, revenues and expenses have been eliminated upon consolidation.

These Interim Financial Statements also include the Company’s 44% interest in Minera Juanicipio S.A. de C.V. (Note 6), an associate (Note 2(b)) accounted for using the equity method.

Where necessary, adjustments have been made to the financial statements of the Company’s subsidiaries and associates prior to consolidation, to conform the significant accounting policies used in their preparation to those used by the Company.

The Company conducts a portion of its business through an equity interest in associates. An associate is an entity over which the Company has significant influence, and is neither a subsidiary nor a joint arrangement, and includes the Company’s 44% interest in Minera Juanicipio S.A. de C.V., a Mexican incorporated joint venture company. The Company has significant influence when it has the power to participate in the financial and operating policy decisions of the associate but does not have control or joint control over those policies.

The Company accounts for its investments in associates using the equity method. Under the equity method, the Company’s investment in an associate is initially recognized at cost and subsequently increased or decreased to recognize the Company's share of earnings and losses of the associate and for impairment losses after the initial recognition date. The Company's share of earnings and losses of associates are recognized in profit or loss during the period. Distributions received from an associate are accounted for as a reduction in the carrying amount of the Company’s investment.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

At the end of each reporting period, the Company assesses whether there is any evidence that an investment in associate is impaired. The Company has performed an assessment for impairment indicators of its investment in associate as of March 31, 2019 and noted no impairment indicators. This assessment is generally made with reference to the timing of exploration work, work programs proposed, exploration results achieved, and an assessment of the likely results to be achieved from performance of further exploration by the associate. When there is evidence that an investment in associate is impaired, the carrying amount of such investment is compared to its recoverable amount. If the recoverable amount of an investment in associate is less than its carrying amount, the carrying amount is reduced to its recoverable amount and an impairment loss, being the excess of carrying amount over the recoverable amount, is recognized in the period of impairment. When an impairment loss reverses in a subsequent period, the carrying amount of the investment in associate is increased to the revised estimate of recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had an impairment loss not been previously recognized. A reversal of an impairment loss is recognized in net earnings in the period the reversal occurs.

The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reported period. Significant estimates used in preparation of these financial statements include estimates of the recoverable amount and any impairment of exploration and evaluation assets and of investment in associates, recovery of receivable balances, estimates of fair value of financial instruments where a quoted market price or secondary market for the instrument does not exist, provisions including closure and reclamation, share based payment expense, and income tax provisions. Actual results may differ from those estimated. Further details of the nature of these estimates may be found in the relevant notes to the consolidated statements.

The Company makes certain critical judgments in the process of applying the Company’s accounting policies. The following are those judgments that have the most significant effect on the consolidated financial statements:

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

If the Company determines that it controls an investee entity, it consolidates the investee entity’s financial statements as further described in note 2(a). If the Company determines that it has joint control (a joint venture) or significant influence (an associate) over an investee entity, then it uses the equity method of accounting to account for its investment in that investee entity as further described in note 2(b). If, after careful consideration, it is determined that the Company neither has control, joint control nor significant influence over an investee entity, the Company accounts for the corresponding investment in equity interest as fair value through other comprehensive income investment as further described in note 2(e), and classifies the investment as current or non-current depending on management’s intention with respect to the investment and whether it expects to realize the asset within the next twelve months.

Financial assets are classified as either financial assets at fair value through profit or loss (“FVTPL”), fair value through other comprehensive income (“FVTOCI”) or amortized cost. The Company determines the classification of financial assets at initial recognition.

Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Equity instruments that are held for trading and all equity derivative instruments are classified as FVTPL. Equity derivative instruments such as warrants listed on a recognized exchange are valued at the latest available closing price. Warrants not listed on a recognized exchange, but where a secondary market exists, are valued at independent broker prices (if available) traded within that secondary market. If no secondary market exists, the warrants are valued using the Black Scholes option pricing model. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets held at FVTPL are included in profit or loss in the period in which they arise.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Financial assets carried at FVTOCI are initially recorded at fair value plus transaction costs with all subsequent changes in fair value recognized in other comprehensive income (loss). For investments in equity instruments that are not held for trading, the Company can make an irrevocable election (on an instrument-by-instrument bases) at initial recognition to classify them as FVTOCI. On the disposal of the investment, the cumulative change in fair value remains in other comprehensive income (loss) and is not recycled to profit or loss.

Financial assets are classified at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset’s contractual cash flows are comprised solely of payments of principal and interest. The Company’s accounts receivable are recorded at amortized cost as they meet the required criteria. A provision is recorded based on the expected credit losses for the financial asset and reflects changes in the expected credit losses at each reporting period (see impairment below).

Financial liabilities are initially recorded at fair value and subsequently measured at amortized cost, unless they are required to be measured at FVTPL (such as derivatives) or the Company has elected to measure at FVTPL. The Company’s financial liabilities include trade and other payables which are classified at amortized cost.

IFRS 9 requires an ‘expected credit loss’ model to be applied which requires a loss allowance to be recognized based on expected credit losses. This applies to financial assets measured at amortized cost. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognized.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Cash and cash equivalents include cash on hand, bank deposits, and term deposits with original maturities of three months or less.

With respect to its exploration activities, the Company follows the practice of capitalizing all costs relating to the acquisition, exploration and evaluation of its mining rights and crediting all revenues received against the cost of the related interests. Option payments made by the Company are capitalized until the decision to exercise the option is made. If the option agreement is to exercise a purchase option in an underlying mineral property, the costs are capitalized and accounted for as an exploration and evaluation asset. At such time as commercial production commences, the capitalized costs will be depleted on a units-of-production method based on proven and probable reserves. If a mineable ore body is discovered, exploration and evaluation costs are reclassified to mining properties. If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.

Exploration and evaluation expenditures include acquisition costs of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching and sampling; all costs incurred to obtain permits and other licenses required to conduct such activities, including legal, community, strategic and consulting fees; and activities involved in evaluating the technical feasibility and commercial viability of extracting mineral resources. This includes the costs incurred in determining the most appropriate mining/processing methods and developing feasibility studies. Expenditures incurred prior to the Company obtaining the right to explore are expensed in the period in which they are incurred.

When an exploration project has entered into the advanced exploration phase and sufficient evidence of the probability of the existence of economically recoverable minerals has been obtained, pre-operative expenditures relating to mine preparation works are capitalized to mine development costs. Activities that are typically capitalized include costs incurred to build shafts, drifts, ramps and access corridors to enable ore extraction from underground.

Management reviews the carrying amount of exploration and evaluation assets for impairment when facts or circumstances suggest that the carrying amount is not recoverable. This review is generally made with reference to the timing of exploration work, work programs proposed, exploration results achieved by the Company and by others in the related area of interest, and an assessment of the likely results to be achieved from performance of further exploration. When the results of this review indicate that indicators of impairment exist, the Company estimates the recoverable amount of the deferred exploration costs and related mining rights by reference to the potential for success of further exploration activity and/or the likely proceeds to be received from sale or assignment of the rights. When the carrying amounts of exploration and evaluation assets are estimated to exceed their recoverable amounts, an impairment loss is recorded in profit or loss. The cash-generating unit for assessing impairment is a geographic region and shall be no larger than the operating segment. If conditions that gave rise to the impairment no longer exist, a reversal of impairment may be recognized in a subsequent period, with the carrying amount of the exploration and evaluation asset increased to the revised estimate of recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had an impairment loss not been previously recognized. A reversal of an impairment loss is recognized in profit or loss in the period the reversal occurs.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Property and equipment are recorded at cost less accumulated amortization and impairment losses if any, and is amortized at the following annual rates:

When parts of an item of equipment have different useful lives, they are accounted for as separate equipment items (major components) and depreciated over their respective useful lives.

Deferred income taxes relate to the expected future tax consequences of unused tax losses and unused tax credits and differences between the carrying amount of statement of financial position items and their corresponding tax values. Deferred tax assets, if any, are recognized only to the extent that, in the opinion of management, it is probable that sufficient future taxable profit will be available to recover the asset. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of substantive enactment.

Provisions are liabilities that are uncertain in timing or amount. The Company records a provision when and only when:

(i) The Company has a present obligation (legal or constructive) as a result of a past event;

(ii) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

Constructive obligations are obligations that derive from the Company’s actions where:

(i) By an established pattern of past practice, published policies or a sufficiently specific current statement, the Company has indicated to other parties that it will accept certain responsibilities; and

(ii) As a result, the Company has created a valid expectation on the part of those other parties that it will discharge those responsibilities.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Provisions are reviewed at the end of each reporting period and adjusted to reflect management’s current best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions are reduced by actual expenditures for which the provision was originally recognized. Where discounting has been used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase (accretion expense) is included in profit or loss for the period.

The Company records a provision for the present value of the estimated closure obligations, including reclamation costs, when the obligation (legal or constructive) is incurred, with a corresponding increase in the carrying value of the related assets. The carrying value is amortized over the life of the mining asset on a units-of-production basis commencing with initial commercialization of the asset. The liability is accreted to the actual liability on settlement through charges each period to profit or loss.

The provision for closure and reclamation is reviewed at the end of each reporting period for changes in estimates and circumstances. There was no provision recorded by the Company for closure and reclamation as at March 31, 2019 or December 31, 2018.

The operating company of the Company’s investment in associate, Minera Juanicipio, S.A. de C.V., recorded a provision for reclamation and remediation costs of $460 and capitalized a corresponding asset as at March 31, 2019 (December 31, 2018: $450) (see Note 6).

The functional currency of the parent, its subsidiaries, and the investment in associate is the United States dollar (“US$”).

Each entity within the Company determines its own functional currency, and the items included in the financial statements of each entity are measured using that functional currency. The functional currency determination involves certain judgments in evaluating the primary economic environment, and the Company reconsiders the functional currencies of each entity if there is a change in the underlying transactions, events and conditions which determine the primary economic environment.

Transactions incurred in currencies other than the Company’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each statement of financial position date, monetary assets and liabilities are translated using the period end foreign exchange rate. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. Non-monetary assets and liabilities that are stated at fair value are translated using the rate on the date that the fair value was determined. All gains and losses on translation of these foreign currency transactions are included in profit or loss.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Basic (loss) income per share is based on the weighted average number of common shares outstanding during the period.

Diluted (loss) income per share is computed using the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares upon the assumed exercise of stock options and warrants, and upon the assumed conversion of deferred share units and units issued under the Company’s share unit plan, to the extent their inclusion is not anti-dilutive. For the three months ended March 31, 2019, the weighted average number of shares outstanding was based on the following:

As at March 31, 2019, the Company had 2,817,280 common share equivalents consisting of common shares issuable upon the exercise of outstanding exercisable stock options, restricted and performance share units, and deferred share units were not included for the purpose of calculating diluted loss per share as their effect would be anti-dilutive.

As at March 31, 2018, stock options totaling 513,295 with an exercise price greater than the average quoted market price of the common shares for the period outstanding were excluded from the computation of diluted income per share during the period. Performance and deferred share units totaling 651,438 were excluded in the computation of diluted income per share due to vesting criteria not being met during the period.

The fair value of equity-settled share-based payment awards are estimated as of the date of the grant and recorded as share-based payment expense in the consolidated statements of loss over their vesting periods, with a corresponding increase in equity. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met. Market price performance conditions are included in the fair value estimate on the grant date with no subsequent adjustment to the actual number of awards that vest. Forfeiture rates are estimated on grant date, and adjusted annually for actual forfeitures in the period. Changes to the estimated number of awards that will eventually vest are accounted for prospectively. Share based payment awards with graded vesting schedules are accounted for as separate grants with different vesting periods and fair values.

The fair value of stock options is estimated using the Black-Scholes-Merton option valuation model. The fair value of restricted and deferred share units, is based on the fair market value of a common share equivalent on the date of grant. The fair value of performance share units awarded with market price conditions is determined using the Monte Carlo pricing model and the fair value of performance share units with non-market performance conditions is based on the fair market value of a common share equivalent on the date of grant.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

The Company has reviewed new accounting pronouncements that have been issued but are not yet effective at March 31, 2019. These include:

IFRS 3 Business Combinations. In October 2018, IASB issued narrow-scope amendments to IFRS 3 Business Combinations to improve the definition of a business. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or an asset acquisition. The amended definition emphasizes that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others. The amendment is effective for acquisitions that occur on or after January 1, 2020 with earlier application permitted. The Company will adopt this amendment on the effective date, and is currently evaluating the impact this standard may have on its consolidated financial statements.

The Company’s cash and cash equivalents include cash on hand, bank deposits and term deposits with original maturities of three months or less, as follows:

Term deposits classified as ‘cash equivalents’ are comprised of bank term deposits with a term to maturity of less than three months from date of acquisition and interest only payable if held to maturity.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

During the period ended March 31, 2019, the Company recorded an unrealized loss of $147, net of nil tax, in other comprehensive loss (March 31, 2018: $1,095) on investments in equity securities designated as FVTOCI instruments. The following table summarizes the movements of equity securities:

During the period ended March 31, 2019, the Company recorded an unrealized loss of $18, in the statement of (loss) income, on warrants held and designated as FVTPL (March 31, 2018: $470). The following table summarizes the movements in warrants:

The Company acquired a 100% interest in the Juanicipio property effective July 16, 2003. Pursuant to an agreement effective July 1, 2005 (the “Agreement”) with Industrias Peñoles, S.A. de C.V. (“Peñoles”), the Company granted Peñoles or any of its subsidiaries an option to earn a 56% interest in the Juanicipio Property in Mexico in consideration for Peñoles conducting $5,000 of exploration on the property over four years and Peñoles purchasing $1,000 of common shares of the Company in two tranches for $500 each.

In mid 2007, Peñoles met all of the earn-in requirements of the Agreement. In December 2007, the Company and Peñoles created an operating company named Minera Juanicipio, S.A. de C.V. (“Minera Juanicipio”) for the purpose of holding and operating the Juanicipio Property. In 2008, MAG was notified that Peñoles had transferred its 56% interest of Minera Juanicipio to Fresnillo plc (“Fresnillo”) pursuant to a statutory merger. Minera Juanicipio is held 56% by Fresnillo and 44% by the Company. Fresnillo is the operator of Minera Juanicipio, and with its affiliates, beneficially owns 11.4% of the common shares of the Company as at March 31, 2019, as publicly reported. In December 2007, all mineral rights and surface rights relating to the Juanicipio project held by the Company and Peñoles, respectively, were ceded into Minera Juanicipio. Minera Juanicipio is currently governed by a shareholders agreement. All costs relating to the project and Minera Juanicipio are required to be shared by the Company and Fresnillo pro-rata based on their ownership interests in Minera Juanicipio, and if either party does not fund pro-rata, their ownership interest will be diluted in accordance with the Minera Juanicipio shareholders agreement.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

The Company has recorded its investment in Minera Juanicipio using the equity basis of accounting. The cost of the investment includes the carrying value of the deferred exploration and mineral and surface rights costs incurred by the Company on the Juanicipio Property and contributed to Minera Juanicipio plus the required net cash investment to establish and maintain its 44% interest.

The Company’s investment relating to its interest in the Juanicipio property and Minera Juanicipio is detailed as follows:

Summary of financial information of Minera Juanicipio (on a 100% basis reflecting adjustments made by the Company, including adjustments for differences in accounting policies):

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

Evaluation and exploration expenditures and initial development expenditures, capitalized directly by Minera Juanicipio for the quarter ended March 31, 2019 amounted to $10,093 (March 31, 2018: $8,097).

There are no direct operating expenses or income in Minera Juanicipio, as all mineral, surface rights, and exploration and development expenditures are capitalized.

(a) In 2017, the Company entered into an option earn-in agreement with a private group whereby the Company can earn up to a 100% interest in a prospective land claim package. To earn a 100% interest in the property package, the Company must make combined remaining cash payments of $425 over the second, third, fourth and fifth annual anniversaries of the agreement, and the vendors would retain a 2% net smelter returns royalty (“NSR”). There are no further exploration funding requirements under the agreement as at March 31, 2019.

(b) In late 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 a prospective land claim package. The Company paid $150 upon signing the agreement. To earn 100% interest in the property, the Company must make combined remaining cash payments of $1,850 over the next 10 years, and fund a cumulative of $30,000 of eligible exploration expenditures by the tenth anniversary date of the agreement. Included in these commitments, is a firm commitment of $1,250 of eligible exploration expenditures to be expended by December 21, 2019 ($428 incurred to March 31, 2019), with the balance of both the cash payments and exploration commitments optional at the Company’s discretion. The vendors would retain a 2% NSR.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

To March 31, 2019, the Company has incurred the following exploration and evaluation expenditures on these earn-in projects:

Included in exploration and evaluation assets at March 31, 2019 are trade and payables of $47 (March 31, 2018: $21), a non-cash investing activity.

The Company also holds mineral property concessions to the Cinco de Mayo property in Mexico, upon which a full impairment has been recognized in prior years. As a result, expenditures incurred to maintain these concessions and to potentially restore surface access, are no longer capitalized as exploration and evaluation assets, but rather are expensed as part of ‘mining taxes and other property costs’ on the statement of loss and comprehensive loss.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

On adoption of IFRS 16, the Company recognized a right-of-use asset in relation to an office lease which had previously been classified as ‘operating lease’ under the principles of IAS 17. The right-of-use asset was recognized based on the amount equal to the lease liability, adjusted for accrued lease payments previously recognized. Upon transition to IFRS 16, the Company recognized $92 right-of-use asset and $127 lease obligation. The net of tax difference between right-of-use asset and lease obligation on transition of $34 was recorded as a retained earnings adjustment on January 1, 2019.

As at March 31, 2019, the Company recorded $528 of right-of-use asset as part of property and equipment:

Minimum lease payments in respect of lease obligation and the effect of discounting are as follows:

For the three months ended March 31, 2019, the Company recognized $13 of interest expense on lease obligation included in ‘General Office Expense’ (March 31, 2018: nil).

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

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

As at March 31, 2019, there were 85,539,476 shares outstanding (March 31, 2018: 85,503,249).

During the year ended December 31 2018, no stock options were exercised for cash and 135,000 stock options were exercised under a less dilutive cashless exercise provision of the plan, whereby 58,191 shares were issued in settlement of the stock options and the remaining 76,809 options were cancelled.

During the year ended December 31, 2018, 2,495 restricted share units were converted into shares.

The Company may enter into Incentive Stock Option Agreements with officers, employees, and consultants. On June 15, 2017, 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 March 31, 2019, there were 1,734,294 stock options outstanding under the Plan and 400,000 inducement options outstanding outside of the Plan.

Stock option grants are recommended for approval to the Board of Directors by the Compensation 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 and in accordance with the Plan, cannot be lower than the market value of the common shares at the date of grant.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

During the quarter ended March 31, 2019, no stock options were granted (March 31, 2018: nil) and no stock options were exercised (March 31, 2018: 75,000 stock options exercised with a weighted average market share price at the date of exercise of C$13.59 , under a less dilutive cashless exercise provision of the plan whereby 21,964 shares were issued in settlement of stock options and the remaining 53,036 options were cancelled)

The following table summarizes the Company’s stock options outstanding and exercisable as at March 31, 2019:

During the quarter ended March 31, 2019, the Company recorded share based payment expense of $87 (March 31, 2018: $227) relating to stock options vested to employees and consultants in the period.

On June 15, 2017, 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 Restricted Share Units (“RSUs”) and Performance Share Units (“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 9(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.

In the quarter ended March 31, 2019, no RSUs and no PSUs were converted and settled in common shares (March 31, 2018: 2,495 RSUs and nil PSUs respectively). As at March 31, 2019, there were 43,343 RSUs and 186,904 PSUs issued and outstanding under the Share Unit Plan, 43,343 RSUs and 29,154 PSUs had vested and are convertible into common shares of the Company. Included in the PSUs at March 31, 2019, are 157,750 PSUs with vesting conditions subject to a market share price performance factor measured over a three-year performance period, resulting in a PSU payout range from 0% or nil PSUs to 200% or 315,500 PSUs. The Company estimates the fair value of the PSUs on grant date using the Monte Carlo simulation model.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

The Company recognized a share-based payment expense of $109 (March 31, 2018: $149) relating to RSUs and PSUs vesting in the period.

On June 15, 2017, 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, in the form of Deferred Share Units (“DSUs”). Directors may also elect to receive all or a portion of their annual retainer and meeting fees 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.

No DSUs were granted during the quarter ended March 31, 2019 (March 31, 2018: nil). A DSU share-based payment expense of $28 was recognized in the period ended March 31, 2019 with respect to Directors who elected to receive all or a portion of their annual retainer and meeting fees in the form of DSUs (March 31, 2018: $28). 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. As at March 31, 2019, there are 452,739 DSUs issued and outstanding under the DSU Plan, all of which have vested.

As at March 31, 2019, there are 2,417,280 common shares issuable under the combined share compensation arrangements referred to above (the Plan, the Share Unit Plan and the DSU Plan) representing 2.83% of the issued and outstanding common shares on a non-diluted basis, and there are 2,715,089 share-based awards available for grant under these combined share compensation arrangements.

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 (comprising of share capital, equity reserve, accumulated other comprehensive income and deficit), net of cash, cash equivalents and term deposits.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

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, 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 and updated budgets are approved by the Board of Directors. The Company does not pay out dividends.

As at March 31, 2019, the Company does not have any long-term debt and is not subject to any externally imposed capital requirements.

The Company currently has sufficient working capital ($128,011 as at March 31, 2019) to maintain all of its properties and currently planned programs for a period in excess of the next year. In management’s opinion, the Company is able to meet its ongoing current obligations as they become due. However, the Company may require additional capital in the future to meet its future project and other related expenditures (see Note 15) as the Company is currently not generating any cash flow from operations. Future liquidity may therefore depend upon the Company’s ability to arrange debt or additional equity financings.

The Company’s operations consist of the acquisition, exploration and development of projects primarily 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.

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.

The Company is in the exploration stage and has not yet commenced commercial production or sales. Therefore, the Company is not exposed to significant trade credit risk and overall the Company’s credit risk has not changed significantly from December 31, 2018.

In order to manage credit and liquidity risk the Company’s policy is to invest only in highly rated investment grade instruments backed by Canadian commercial banks.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

As at March 31, 2019, the Company had a receivable of $66 from the Mexican government for value added tax (Note 4). Management expects the balance to be fully recoverable within the year.

The Company’s maximum exposure to credit risk is the carrying value of its cash and cash equivalents, and accounts receivable, as follows:

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 development plans, and its various optional property and other commitments (see Notes 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.

The Company's overall liquidity risk has not changed significantly from the prior year.

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

As at March 31, 2019, 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:

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

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 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 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 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, prepayments and value added taxes receivable, net of trade and other payables. The carrying amount of the Company’s net peso denominated monetary assets at March 31, 2019 is 1,347 pesos (March 31, 2018: 2,130 net peso monetary liabilities). A 10% appreciation in the peso against the US$ would result in a gain at March 31, 2019 of $7 (March 31, 2018: $12 loss), while a 10% depreciation in the peso relative to the US$ would result in an equivalent loss.

The Company also conducts a portion of its business through its equity interest in its associate, Minera Juanicipio (see Note 6). The Company accounts for this investment using the equity method, and recognizes the Company's 44% share of earnings and losses of Minera Juanicipio. Minera 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 to the extent that Minera Juanicipio 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 Minera Juanicipio’s net peso denominated monetary assets at March 31, 2019 is 113,061 pesos (March 31, 2018: 88,112 pesos). A 10% appreciation in the peso against the US$ would result in a gain at March 31, 2019 of $526 (March 31, 2018: $437) in Minera Juanicipio, of which the Company would record 44% or $231 equity pick-up (March 31, 2018: $192), while a 10% depreciation in the peso relative to the US$ would result in an equivalent loss.

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 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, holds net monetary assets (liabilities) in C$. The carrying amount of the Company’s net Canadian denominated monetary assets at March 31, 2019 is C$1,531 (March 31, 2018: C$2,929). A 10% appreciation in the C$ against the US$ would result in gain at March 31, 2019 of $115 (March 31, 2018: $227) while a 10% depreciation in the C$ relative to the US$ would result in an equivalent loss.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

The Company’s interest revenue earned on cash and cash equivalents 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.

The Company’s financial instruments include cash and cash equivalents, accounts receivable, investments, trade and other payables and lease liability. The carrying values of cash and cash equivalents, accounts receivable, trade and other payables and lease liability 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:

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

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

⁽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. The fair values of equity securities and warrants that are not quoted in active markets are valued based on quoted prices of similar instruments in active markets or using valuation techniques where all inputs are directly or indirectly observable from market data and are classified within Level 2 of the fair value hierarchy.

There were no transfers between levels 1, 2 and 3 during the quarter ended March 31, 2019 or during the year ended December 31, 2018.

The Company operates primarily in one operating segment, being the exploration and development of mineral properties in Mexico. The majority of the Company’s long-term assets are located there and the Company’s executive and head office is located in Canada.

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 of the Juanicipio Project.

During the period, the Company incurred expenses with Cascabel and IMDEX as follows:

All transactions are incurred in the normal course of business, and are negotiated on terms between the parties which are believed to represent fair market value 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 March 31, 2019 is $142 related to these services (March 31, 2018: $147).

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

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

The Company holds various mineral property claims in Mexico upon which full impairments have been recognized. The Company is obligated to a 2.5% NSR royalty on the Cinco de Mayo property payable to the principals of Cascabel under the terms of an option agreement dated February 26, 2004, whereby the Company acquired a 100% interest in the property from Cascabel, and under the terms of assignment agreements entered into by Cascabel with its principals.

The immediate parent and ultimate controlling party of the consolidated group is MAG Silver Corp. (incorporated in British Columbia, Canada).

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

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

Minera Juanicipio, S.A. de C.V. (“Minera Juanicipio”), created for the purpose of holding and operating the Juanicipio Property, is held 56% by Fresnillo plc (“Fresnillo”) and 44% by the Company through Minera Los Lagartos, S.A. de C.V. Fresnillo is the operator of Minera Juanicipio, and with its affiliates, beneficially owns 11.4% of the common shares of the Company as at March 31, 2019, as publicly reported. Minera Juanicipio is currently governed by a shareholders agreement. All costs relating to the project and Minera Juanicipio are required to be shared by the Company and Fresnillo pro-rata based on their ownership interests in Minera Juanicipio (see Note 6).

During the period, compensation of key management personnel (including directors) was as follows:

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 and the Chief Financial Officer.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

The following table discloses the contractual obligations of the Company and its subsidiaries as at March 31, 2019 for committed exploration work and committed other obligations.

The Company also has optional commitments for property option payments and exploration expenditures as outlined above in 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 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 of 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.

MAG SILVER CORP.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Expressed in thousands of US dollars unless otherwise stated)

The $319 deferred tax benefit recognized for the quarter ended March 31, 2019 (March 31, 2018: $1,198) is related to the reversal of the deferred tax liability that was set up at December 31, 2018 in relation to temporary differences between the book and tax based of its Mexican non-monetary assets. The tax base of these non-monetary assets is determined in a different currency (Mexican Peso) than the functional currency (US$), and changes in the exchange rate can give rise to temporary differences that result in deferred tax liability in accordance with IAS 12 Income Taxes. With the strengthening of the Mexican Pesos against the US$ from 19.67 Pesos/US$ on December 31, 2018 to 19.38 on March 31, 2019, a portion of the previously recognized deferred tax liability was reversed in the current period. The deferred tax expenses and the corresponding deferred income tax liabilities are non-cash items and will only be recognized once the Company’s exploration properties are developed and in production.

(i) The Company and its joint venture partner, Fresnillo plc, jointly announced that the Juanicipio mine development plan was formally approved by both shareholders, with processing plant construction to commence immediately and production expected H2-2020;

(ii) The Company advanced $10,780 to Minera Juanicipio, representing its 44% share of a $24,500 cash call to fund the commencement of process plant construction and further underground development on the Juanicipio property.

	Note	March 31, 2019			December 31, 2018

ASSETS

CURRENT
Cash and cash equivalents	3	$	128,607		$	130,180
Accounts receivable	4		267			372
Prepaid expenses			555			327
TOTAL CURRENT ASSETS			129,429			130,879
INVESTMENTS	5		1,616			1,781
INVESTMENT IN ASSOCIATE	6		81,582			81,214
EXPLORATION AND EVALUATION ASSETS	7		4,002			3,648
PROPERTY AND EQUIPMENT	8		573			35
TOTAL ASSETS		$	217,202		$	217,557

LIABILITIES

CURRENT
Trade and other payables		$	1,351		$	1,563
Current portion of lease obligation	8		67			-
			1,418			1,563
NON-CURRENT
Lease obligation	8		508			-
Deferred income taxes			1,794			2,113
TOTAL LIABILITIES			3,720			3,676

EQUITY

Share capital	9		392,916			392,916
Equity reserve			18,920			18,696
Accumulated other comprehensive loss			(828	)		(681	)
Deficit			(197,526	)		(197,050	)
TOTAL EQUITY			213,482			213,881
TOTAL LIABILITIES AND EQUITY		$	217,202		$	217,557

COMMITMENTS AND CONTINGENCIES	6,7,15

SUBSEQUENT EVENT	17

		For the three months ended
		March 31
	Note	2019			2018
EXPENSES
Accounting and audit		$	58		$	68
Amortization			27			4
Filing and transfer agent fees			214			234
Foreign exchange loss			46			30
General office expenses			170			198
Legal			86			108
Management compensation and consulting fees			576			474
Mining taxes and other property costs			296			369
Share based payment expense	9b,c,d		224			404
Shareholder relations			104			140
Travel			68			81
			1,869			2,110
INTEREST INCOME			844			682
CHANGE IN FAIR VALUE OF WARRANTS	5		(18	)		(470	)
EQUITY PICK UP FROM ASSOCIATE	6		282			883
LOSS FOR THE PERIOD BEFORE INCOME TAX		$	(761	)	$	(1,015	)

DEFERRED INCOME TAX BENEFIT	16		319			1,198
(LOSS) INCOME FOR THE PERIOD		$	(442	)	$	183

OTHER COMPREHENSIVE LOSS
Items that will not be reclassified subsequently to profit or loss:
UNREALIZED LOSS ON EQUITY SECURITIES,
NET OF TAXES	5		(147	)		(1,095	)
			(147	)		(1,095	)

TOTAL COMPREHENSIVE LOSS		$	(589	)	$	(912	)

BASIC AND DILUTED (LOSS) INCOME PER SHARE		$	(0.01	)	$	0.00

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	2m
BASIC			85,539,476			85,490,587
DILUTED			85,539,476			86,307,001

											Unrealized			Accumulated
		Common shares							Currency		gain (loss)			other
		without par value				Equity			translation		on equity			comprehensive						Total
	Note	Shares		Amount		Reserve			adjustment		securities			income (loss)			Deficit			equity
Balance, January 1, 2018			85,478,790	$	392,554	$	17,719		$	784	$	430		$	1,214		$	(191,248	)	$	220,239
Stock options exercised cashless	9a,b		58,191		342		(342	)		-		-			-			-			-
Restricted and performance share units converted	9a,c		2,495		20		(20	)		-		-			-			-			-
Share based payment	9b,c,d		-		-		1,339			-		-			-			-			1,339

Unrealized loss on equity securities	5		-		-		-			-		(1,895	)		(1,895	)		-			(1,895	)
Net loss			-		-		-			-		-			-			(5,802	)		(5,802	)
Total Comprehensive Loss			-		-		-			-		(1,895	)		(1,895	)		(5,802	)		(7,697	)

Balance, December 31, 2018			85,539,476	$	392,916	$	18,696		$	784	$	(1,465	)	$	(681	)	$	(197,050	)	$	213,881
IFRS 16 transition adjustment on January 1, 2019	8		-		-		-			-		-			-			(34	)		(34	)
Share based payment	9b,c,d		-		-		224			-		-			-			-			224

Unrealized loss on equity securities	5		-		-		-			-		(147	)		(147	)		-			(147	)
Net loss			-		-		-			-		-			-			(442	)		(442	)
Total Comprehensive Loss			-		-		-			-		(147	)		(147	)		(442	)		(589	)

Balance, March 31, 2019			85,539,476	$	392,916	$	18,920		$	784	$	(1,612	)	$	(828	)	$	(197,526	)	$	213,482


Three months ended, March 31, 2018
Balance, January 1, 2018			85,478,790	$	392,554	$	17,719		$	784	$	430		$	1,214		$	(191,248	)	$	220,239
Stock options exercised cashless	9a,b		21,964		225		(225	)		-		-			-			-			-
Restricted and performance share units converted	9a,c		2,495		20		(20	)		-		-			-			-			-
Share based payment	9b,c,d		-		-		404			-		-			-			-			404

Unrealized loss on equity securities	5		-		-		-			-		(1,095	)		(1,095	)		-			(1,095	)
Net income			-		-		-			-		-			-			183			183
Total Comprehensive Loss			-		-		-			-		(1,095	)		(1,095	)		183			(912	)
Balance, March 31, 2018			85,503,249	$	392,799	$	17,878		$	784	$	(665	)	$	119		$	(191,065	)	$	219,731

		For the three months ended
		March 31
	Note	2019			2018

OPERATING ACTIVITIES
(Loss) Income for the period		$	(442	)	$	183
Items not involving cash:
Amortization			27			4
Change in fair value of warrants	5		18			470
Deferred income tax benefit	16		(319	)		(1,198	)
Equity pick up from associate	6		(282	)		(883	)
Share based payment expense	9b,c,d		224			404
Unrealized foreign exchange loss			50			17

Changes in operating assets and liabilities
Accounts receivable			105			(470	)
Prepaid expenses			(229	)		(270	)
Trade and other payables			(251	)		104
Net cash used in operating activities			(1,099	)		(1,639	)

INVESTING ACTIVITIES
Exploration and evaluation expenditures	7		(320	)		(280	)
Investment in associate	6		(81	)		(5,767	)
Purchase of equipment			(13	)		-
Net cash used in investing activities			(414	)		(6,047	)

FINANCING ACTIVITIES
Payment of lease obligation	8		(22	)		-
Net cash used in financing activities			(22	)		-

EFFECTS OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS			(38	)		(17	)

DECREASE IN CASH AND CASH EQUIVALENTS			(1,573	)		(7,703	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			130,180			160,395
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	128,607		$	152,692

Financial instrument		Classification
Cash and cash equivalents		FVTPL
Equity securities		FVTOCI
Equity derivative securities (warrants)		FVTPL
Accounts receivable		Amortized cost
Trade and other payables		Amortized cost
Lease obligations		Amortized cost

	Computer equipment		30% declining balance
	Office equipment		30% declining balance
	Right-of-Use assets		straight-line over the earlier of the end of the lease term or useful life of the asset

	March 31,		March 31,
	2019		2018
Basic weighted average number of shares outstanding		85,539,476		85,490,587
Effect of dilutive common share equivalents		-		816,414
		85,539,476		86,307,001

	Interest		March 31,		December 31,
	Rate		2019		2018
Cash at bank and on hand		0 - 2.53%	$	18,607	$	55,180
Term deposit (less than 90 days)		2.65 - 2.75%		110,000		75,000
Cash and cash equivalents			$	128,607	$	130,180

	Three months ended		Year ended
	March 31, 2019		December 31, 2018
Exploration and evaluation assets:
Acquisition costs of mineral and surface rights	$	-	$	150
Geochemical		15		125
Camp and site costs		10		58
Geological consulting		264		1,086
Geophysical		2		93
Land taxes and government fees		5		445
Legal, community and other consultation costs		31		109
Travel		27		149
Total for the period		354		2,215
Balance, beginning of period		3,648		1,433
Balance, end of period	$	4,002	$	3,648

	Right-of-Use Asset
Net book value as at December 31, 2018	$	-
IFRS 16 transition adjustment on January 1, 2019		93
Additions		458
Depreciation		(23	)
Net book value, March 31, 2019	$	528

	March 31,
	2019
Undiscounted minimum lease payments
Less than one year	$	138
Two to three years		281
Four to five years		293
Thereafter		114
		826
Effect of discounting		(251	)
Present value of minimum lease payments - total lease obligation		575
Less: current portion		(67	)
Long-term lease obligation	$	508

			Weighted					Weighted
	Period ended		average		Year ended			average
	March 31,		exercise price		December 31,			exercise price
	2019		(C$/option)		2018			(C$/option)

Outstanding, beginning of period		2,134,294	$	9.59		2,269,294		$	9.50
Exercised cashless		-		-		(135,000	)		7.94

Outstanding, end of period		2,134,294	$	9.59		2,134,294		$	9.59

	Exercise price	Number		Number		Weighted average remaining
	($C/option)	outstanding		exercisable		contractual life (years)
⁽¹⁾	5.35		400,000		400,000		0.07
	5.86		380,000		380,000		0.07
	9.16		21,666		21,666		1.45
	9.28		368,333		368,333		1.68
	10.02		187,500		187,500		1.23
	10.04		263,500		263,500		0.25
	13.91		285,522		95,174		3.68
	17.55		227,773		151,849		2.68
	C$5.35 - C$17.55		2,134,294		1,868,022		1.25

(in US$ equivalent)	Mexican peso			Canadian dollar

Cash	$	91		$	357
Accounts receivable		66			50
Prepaid		5			-
Investments		-			1,616
Accounts payable		(92	)		(302	)
Lease obligation		-			(576	)
Net assets exposure	$	70		$	1,145

	Three months ended March 31, 2019
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	128,607	$	-	$	-	$	128,607
Investments (Note 5)⁽¹⁾		1,595		21		-		1,616
	$	130,202	$	21	$	-	$	130,223

	Year ended December 31, 2018
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	130,180	$	-	$	-	$	130,180
Investments (Note 5)⁽¹⁾		1,742		39		-		1,781
	$	131,922	$	39	$	-	$	131,961

	Country of	Principal	MAG's effective interest
Name	Incorporation	Project	2019 (%)			2018(%)
Minera Los Lagartos, S.A. de C.V.	Mexico	Juanicipio		100	%		100	%
Minera Pozo Seco S.A. de C.V.	Mexico	Cinco de Mayo		100	%		100	%

			Less than 1 year		1-3 Years		3-5 Years		More than 5 years
	Total		2019		2020-2021		2022-2023		2024 & over

Committed exploration expenditures	$	822	$	822	$	-	$	-	$	-

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

Other commitments		182		44		138		-		-
Total Obligations and Commitments	$	1,004	$	866	$	138	$	-	$	-