Magna Mining (NICU) - Acquisition Adds More Nickel, Copper & PGM's

Magna Mining Corp. is a Canadian exploration and development company focused on the advancement of its nickel, copper and PGM projects in the Sudbury Region of Ontario, Canada. The company was founded in 2016 and has since then built an asset portfolio with a land position of approximately 180 km2. The flagship project of the company, the Shakespeare project, is a past-producing Nickel, Copper and PGM mine located 70 km southwest of Sudbury.

The project has a NI 43-101 compliant mineral resource of 20.34 million tons of mineralisation at 0.55% NiEq in the indicated category and 2.36 million tons of mineralisation at 0.57% NiEq in the inferred category. The project also holds permits for the construction of a 4,500 tpd mill as well as the recommencement of its open pit mining operations.

Magna Mining Corp. on the 16th of August 2022 announced that it had entered into a definitive share purchase agreement for the acquisition of Lonmin Canada Inc. The definitive share purchase agreement includes the Denison project which within it holds the past-producing Crean Hill Nickel, Copper and PGE mine. The Denison project is located 37 km east of the company’s Shakespeare project. The Crean mine was in production for three separate periods between 1906 and 2022 and produced approximately 20.3 million tons of ore at a grade of 1.3% Nickel, 1.1% Copper and a combined palladium, platinum and gold grade of 1.6 g/t.

The Denison project holds significant high-grade exploration and development potential with substantial supporting infrastructure in place.

Management

Jason Jessup is at the helm of Magna Mining Inc. and is the CEO, director and co-founder of the company. Jessup has more than 24 years of experience in the mining industry and has been involved in both management and corporate roles. Jessup led the operations team that brought the Morison deposit into commercial production and has spent the majority of his career in the Sudbury region.

Derrick Weyrauch is the Chief Financial Officer (CFO) and director of the company. Weyrauch has been involved in the mining industry for more than 27 years and has a vast amount of experience in the scaling and restructuring of companies.

Paul Fowler is Senior Vice President and has been involved with publicly listed Canadian mining companies for more than 15 years. He has held investment banking positions as well as equity sales and corporate finance positions with several Canadian banks and brokerages.

David King recently joined the company and holds the position of Senior Vice President of Technical Services. King has more than 25 years of experience in base and precious metal production and exploration. King has experience in developing mines in the Sudbury area that are geologically similar to the company’s recently acquired Crean Hill mine which forms part of the Denison project.

Mynyr Hoxha is the Vice President of Exploration for the company and has been involved in the mining and exploration industry for more than 30 years. He is accredited with the discovery of numerous deposits at the McCreedy West mine and holds a PhD in Structural Geology.

Marshall Hall is the exploration manager of the company and has been involved with exploration initiatives in the Sudbury region for more than 16 years. Hall formed a crucial part of the development of the Shakespeare geological model as well as the compilation of the project’s historic data.

The flagship Shakespeare project

The flagship project of Magna Mining Inc. is the past producing Nickel, Copper and PGM Shakespeare project, which was acquired by the company in 2017. The project is located 70 km southwest of Sudbury and is easily accessible through the nearby Trans Canada highway. The project is located within trucking distance of milling and smelting capacity within Sudbury, which provides it with the opportunity to fast-track the project back into production.

Magna Mining Inc. released a Feasibility Study of the Shakespeare project in March 2022. The study is based on the project’s NI 43-101 compliant mineral resource estimate, which shows open-pit resources of 16.51 million tons of mineralisation at a grade of 0.56% Nickel Equivalent (NiEq). The underground indicated resources of the project hold 3.83 million tons of mineralisation at a grade of 0.53% NiEq and inferred mineral resources of 2.36 million tons at 0.57% NiEq.

The Shakespeare project also holds all major permits required for the construction of a 4,500 tpd mill and the recommencement of open-pit mining.

The Lonmin Canada Acquisition

Magna Mining Inc. on the 16th of August 2022 announced that it had signed a definitive share agreement to acquire 100% of Lonmin Canada Inc. The acquisition includes the Denison project and the Crean Hill mine. The acquisition will consist of Magna Mining Inc. acquiring 100% of the issued and outstanding shares of Lonmin Canada Inc. The aggregate purchase price of the acquisition is CAD$ 16 million and consists of a cash payable section of CAD$ 13 million and a deferred payment of CAD$ 3 million, which may be settled in the form of either cash payment or shares of Magna Mining Inc. within 12 months of the closing of the acquisition.

Jessup explains the acquisition and its significance as follows:

“Since the inception of Magna, we really wanted to create a hub-and-spoke production model. Shakespeare, with past production and the permits to build a mill and a feasibility study that was completed earlier this year, we think is the perfect hub for this hub-and-spoke production model. The Denison project that's owned by Lonmin Canada is a perfect fit for that first spoke, so we're very excited about it. We think there are a lot of synergies with Shakespeare and it is right in line with the strategy that we've had since the inception of the company over 5 years ago.”

The acquisition of Lonmin Canada Inc. is to be funded by a proposed private placement of Magna Mining Inc. The private placement is to consist of approximately 74 million subscription receipts of the company at CAD$ 0.27 each totalling CAD$ 20 million. The remaining funds will be implemented towards exploration initiatives and general administrative expenses. The market Cap of Magna Mining Inc. is approximately CAD$ 25 million, showing the magnitude of the placement’s value. Jessup explains the confidence of the company regarding the large sum to be raised as follows:

“We feel that the price negotiated is a very fair price for the asset that we are acquiring and the company we are acquiring. We've done a lot of due diligence. This deal has taken us over a year, from the start of getting into the data room, looking through the data, doing the work, negotiating a deal and getting a definitive agreement signed. A lot of work has been done on it and we brought in a lot of experts to look at various aspects of technical due diligence. We're quite confident in what we're getting.”

The newly acquired Denison project

The Denison project is located within the Sudbury area and lies 37 km east of the company’s Shakespeare project. The project includes the past-producing Crean Hill mine, which was in operation on three separate occasions from 1906 to 2002. The past production of the Crean Hill mine equates to approximately 20.3 million tons of mineralisation produced at a grade of 1.3% Nickel, 1.1% Copper and 1.6% of platinum, palladium and gold (Pt + Pd +Au).

The property has seen various exploration initiatives conducted on it which led to the discovery of high PGE footwall mineralisation. The exploration initiatives include diamond drilling, detailed mapping, geophysical surveying, mineralogical and metallurgical studies, and geotechnical test work which has significantly advanced the project.

The Denison project is also located approximately 50 km away from the Shakespeare project by road and will be able to extend the project’s life of mine. The project may either serve as feed to the Shakespeare project or operate in the near term through toll milling. Jessup explains that the Sudbury area has two existing mills, which will be ideal should the company decide to commence toll-mining at the Denison project.

“One of the other great things about Sudbury is that there are 2 existing mills here in Sudbury that have the capacity, they are not completely full, and can potentially toll mill high-grade mineralization, high-grade ore from Denison. That is something we will look at.”

The Denison project further holds high-grade exploration potential which according to the company was demonstrated through the 90,000 m of diamond drilling between 2005 and 2017, which intercepted both low sulphide, PGE-rich footwall mineralization and high-grade Ni-Cu contact mineralization.

Future plans

The company plans to publish a mineral resource estimate (MRE) of the Denison project in the near future, which will incorporate the approximate 90,000 m of diamond drilling conducted previously by Lonmin Canada Inc.

Magna mining will also investigate the economic viability of trucking ore from the Denison project to the Shakespeare project to serve as feed, Jessup explains:

“Exploration will always be a very important part of our business, but that being said, we are looking at commissioning, in the next 6 months, another study, probably a pre-feasibility study, to combine both Shakespeare and Denison. That will really demonstrate the potential economics of what those two projects could look like into a combined entity with feed from Denison going into Shakespeare”

The company further plans to conduct a 5,000 m initial drilling program at the Denison project which will test areas for potential early mining and metallurgical work. The results of the drilling are aimed to support future technical studies on the project and will target the shallow footwall mineralisation present.

The closing of the company’s CAD$ 20 million private placement will also allow additional exploration initiatives, Jessup explains the intent of the proceeds from the private placement as follows:

“…it still allows us a decent amount of cash to run over the next year as we work on these studies, do some additional exploration and then start looking at what is the next step, and if it is an advanced exploration program with bulk samples or some early mining, that will be evolved. Over the next 12 months, we believe we'll have the cash in hand with what's in the bank currently, plus closing this private placement, when we close that, that will be able to be funded over the next year.”

Magna Mining Inc. plans to continue and finalise its agreement with Mitsui & Co Ltd. for a possible joint venture at the Shakespeare project. The joint venture will see Mitsui & Co Ltd. acquire a 10% to 12.5% interest in the Shakespeare project, for cash considerations ranging between CAD$ 8 million and CAD$ 10 million. Jessup explains that the Joint venture was only applicable to the Shakespeare project, but the future may see that change to both the Shakespeare and Denison projects.

“The MOU that we announced with Mitsui was actually at the asset level for Shakespeare only. Now we are continuing to discuss how this potentially may impact Mitsui and how they can potentially participate in what that looks like. There's quite a bit of work to do to put some values around it. We're in discussions with them on that. It will take a little bit of time for them to fully understand and for us to come to some kind of agreement or conclusion on that, but they're obviously very excited.”

To find out more, go to the Magna Mining website