Magna Mining

Magna Mining is a Canadian, producing copper and nickel mining company focused on their assets in the Sudbury Basin of Ontario. Historically, the company’s two flagship assets have been the Shakespeare and Crean Hill projects, both of which are past-producing nickel, copper and PGM mines in the Sudbury area. Magna recently released an updated Preliminary Economic Assessment for the Crean Hill project and completed a surface bulk sample.

In September 2024, the company announced a transformational acquisition, purchasing additional Sudbury mining properties in a multi-asset portfolio from KGHM International. The portfolio includes the producing McCreedy West mine, as well as several development and exploration stage properties. This acquisition positions Magna as an emerging mid-tier producer with immediate cash flow and significant growth potential. The transaction closed on February 28, 2025.

The cornerstone of Magna's portfolio is the McCreedy West Mine, which produced over 317,000 tonnes of ore in 2023 containing copper, nickel, cobalt, platinum, palladium, gold, and silver. In addition to McCreedy West, Magna has acquired the Levack, Podolsky, and Kirkwood projects, all of which are past-producing mines with remaining resources and exploration upside. The company also gained several early-stage exploration properties as part of the transaction.

Magna Mining is listed on the TSX Venture Exchange (TSXV:NICU). The company has a market capitalization of approximately C$300 million based on its share count and recent trading price. With an experienced management team that has deep expertise in the Sudbury Basin, Magna is well-positioned to optimize its newly acquired assets and pursue an aggressive growth strategy.

The acquisition of KGHM's Sudbury assets represents a compelling opportunity for Magna Mining to rapidly scale up its operations and create shareholder value. The deal provides immediate production and cash flow from McCreedy West, which can be used to fund development and exploration activities across the expanded portfolio. Moreover, the acquisition was structured in a way that minimizes upfront capital requirements and equity dilution for Magna shareholders.

Several factors make this an attractive time to be consolidating and developing copper-nickel assets in the Sudbury Basin:

• Strong commodity price outlook: Copper and nickel are both expected to see growing demand and potential supply deficits in the coming years, driven by the global energy transition and electrification trends.
• Tier 1 mining jurisdiction: The Sudbury Basin is a world-class mining district with well-established infrastructure, skilled labor, and supportive regulations.
• Operational synergies: Magna's newly expanded portfolio offers numerous opportunities for synergies in terms of shared infrastructure, equipment, and personnel across the various projects.
• Exploration potential: All of the acquired assets are believed to have considerable remaining potential for new discoveries and resource growth, providing optionality for future expansion.
• Existing offtake agreements: The presence of established offtake arrangements with Vale and Glencore, the two major players in the Sudbury basin, reduces marketing risk and provides a clear pathway to quickly bringing new production online. These offtake agreements remove the need for Magna to develop and build their own processing plant, meaning that re-starting production at Magna’s past producing properties has the potential to be both highly capital efficient and fast.  

By consolidating these assets under one umbrella and applying modern exploration and development techniques, Magna has the potential to unlock significant value that may have been overlooked or underutilized by the previous owners.

Magna Mining is led by a seasoned management team with extensive experience in the Sudbury Basin and a track record of creating value in the mining sector. CEO Jason Jessup brings over 25 years of mining industry experience, including significant time managing operations at McCreedy West and Levack when they were owned by QuadraFNX. This firsthand knowledge of the assets should prove invaluable as Magna works to optimize operations and unlock new value.

The broader management team also boasts relevant experience with the acquired assets. COO Jeff Huffman previously held roles including Mine General Foreman at both McCreedy West and Levack. Senior Vice President David King and Vice President Dr. Mynyr Hoxha both have extensive experience working with these properties during their time at KGHM International (formerly FNX Mining).

The company's board of directors and advisory board further strengthen its leadership, bringing additional technical expertise and capital markets experience. Notable members include Chairman Vern Baker, who previously served as VP Operations at FNX Mining, and advisor Dr. Catharine Farrow, who was formerly COO of KGHM International.

This deep bench of talent with direct experience operating the acquired assets sets Magna apart from many junior mining companies and should help mitigate execution risk as the company scales up its operations.

Magna Mining's growth strategy centers around three key pillars: optimizing current production, restarting past-producing mines, and aggressively exploring for new resources.

At McCreedy West, the company plans to focus on increasing the quality of tonnes mined and improving overall margins. This will involve investing in capital development and exploration to access higher-grade zones and potentially increase overall throughput over a 24-month period. The existing resource base of over 9.3 million tonnes in the Indicated category provides a solid foundation for near-term production growth.

For the past-producing mines like Levack and Podolsky, Magna intends to take a staged approach to potential restarts. At Levack, the company will evaluate near-surface, high-grade nickel and copper zones for a potential ramp-access operation. This could provide an efficient path to bringing additional production online while using cash flow to fund further exploration and development of deeper resources.

Exploration will be a key focus across the entire portfolio. All of the acquired assets are believed to have significant remaining potential for new discoveries and resource growth. At McCreedy West, recent drilling has intersected high-grade intercepts that demonstrate the potential for resource expansion. The company will likely pursue an aggressive drilling program to better define and expand the resource base across its properties.

Magna also sees potential for operational synergies between its newly acquired assets and its existing Crean Hill and Shakespeare projects. This could include shared use of equipment, workforce, and potential future processing facilities.

Longer-term, the company aspires to grow into a meaningful mid-tier producer with multiple operating assets in the Sudbury Basin. The diverse nature of its new portfolio, ranging from producing mines to early-stage exploration targets, provides a pipeline of potential growth projects to pursue in the coming years.

Magna Mining has structured the acquisition of KGHM's Sudbury assets in a way that minimizes upfront cash requirements and equity dilution. The total consideration includes C$5.3 million in cash and C$2 million in Magna shares which will be priced at the closing of the transaction. An additional C$2 million in cash is to be paid by December 31, 2026. The company is also assuming C$9.9 million in reclamation liabilities.

To fund the transaction, Magna is negotiating a C$10 million three-year term loan facility and a C$10 million letter of credit facility with Fédération des caisses Desjardins du Québec. This debt financing, combined with existing cash reserves, should be sufficient to close the deal without requiring an equity raise.

The acquisition includes contingent payments of up to C$24 million based on future milestones related to the development of certain assets. While this creates some future financial obligations, the future payments are largely dependent on the declaration of future commercial production at the mines which are not currently in production. This structure therefore also aligns the purchase price with the future success of the assets, reducing upfront risk for Magna.

Magna Mining recently announced an equity financing for the sale of 18,095,200 common shares at C$1.05 per share for proceeds of C$19 million. The offering also has an over-allotment option to sell an additional 2,714,280 shares at the offering price for additional gross proceeds of C$2.85 million. Upon closing of the financing, the company will have 194,364,218 basic shares outstanding and a market cap of C$224 million based on a recent share price of C$1.15 / sh.

The immediate cash flow from McCreedy West should help support Magna's working capital needs and fund some near-term exploration and development activities. However, the company will likely require additional capital in the future to fully realize the potential of its expanded asset base, particularly if it pursues aggressive development plans at multiple properties simultaneously.

Magna Mining's acquisition of KGHM's Sudbury assets represents a transformational opportunity for the company to rapidly scale up its operations and establish itself as a significant player in one of Canada's premier mining districts. The deal provides immediate production and cash flow, a pipeline of development projects, and extensive exploration potential, all within a geologically prospective and politically stable jurisdiction.

The company's experienced management team, with deep expertise in the Sudbury Basin and direct familiarity with the acquired assets, is well-positioned to execute on an ambitious growth strategy. By optimizing current operations, strategically restarting past-producing mines, and aggressively exploring for new resources, Magna has the potential to create substantial shareholder value in the coming years.

While there are certainly risks to consider, including operational challenges, commodity price volatility, and potential future capital requirements, Magna appears to have a solid foundation and multiple levers for growth. The structure of the acquisition, which minimizes upfront costs and aligns additional payments with project success, helps to mitigate some of the near-term financial risks.

For investors seeking exposure to copper and nickel – metals that are expected to play a crucial role in the global energy transition – Magna Mining offers an intriguing opportunity. The company provides the potential for near-term production growth coupled with longer-term exploration upside, all within the context of a well-established mining district.

As with any junior mining investment, thorough due diligence is essential, and investors should carefully consider their risk tolerance. However, for those bullish on the long-term outlook for base metals and willing to accept the inherent volatility of the mining sector, Magna Mining presents a compelling investment case as it embarks on this new chapter of growth.