Magna Mining Powers the Green Revolution of Nickel and Copper Demand with Near-Term Production Growth

• Magna Mining is a producing copper company with a portfolio of development projects in the Sudbury Basin, Canada.
• Magna recently raised $32 million, allowing it to accelerate development of its key assets.
• The McCreedy West mine is currently producing with plans to increase grade and production. Magna is investing $5 million in sustaining capital at McCreedy West in 2025.
• The Levack mine, a former high-grade copper producer, is being explored with the goal of restarting production by 2026. Historic resources show grades of 4% Cu, 1% Ni.
• Magna has a pipeline of 5 permitted projects in Sudbury. The long-term plan is to sequentially restart mines, reinvesting cashflow to achieve organic growth.

The Growing Demand for Nickel and Copper

Nickel and copper are two of the most important industrial metals, essential for a wide range of applications across industries. Nickel is a key component in stainless steel production, while copper is crucial for electrical wiring, plumbing, and increasingly, green energy infrastructure. As global economies continue to grow and urbanize, the demand for these base metals is expected to surge in the coming years.

One of the most significant drivers of nickel and copper demand is the rapid growth of the electric vehicle (EV) industry. EVs require significantly more copper than traditional internal combustion vehicles, with a typical electric car using around 183 lbs of copper, roughly four times more than a gas-powered car. The batteries that power EVs also heavily rely on nickel. As governments worldwide push for clean energy and transportation, the EV market share is projected to skyrocket, translating into massive new demand for nickel and copper.

Jason Jessup, CEO of Magna Mining, emphasizes the opportunity:

"Sudbury has a lot of great nickel deposits but it also has some great copper deposits. Extremely exciting."

As a mining jurisdiction, Sudbury offers access to both these critical metals.

Challenges in Meeting Supply

While the demand picture for nickel and copper is robust, there are growing concerns about the ability of global producers to meet this demand. Developing new mines is an increasingly difficult undertaking, with declining ore grades, rising costs, and heightened ESG scrutiny making it harder than ever to bring new supply online.

Many of the world's largest copper and nickel mines are aging, with reserves steadily depleting. New mega-projects often face significant political risk, with resource nationalism on the rise in many developing countries. Even in established mining jurisdictions like Canada and Australia, permitting timelines have lengthened due to environmental regulations and community relations challenges.

This supply-side pressure is expected to intensify the projected supply deficits for both nickel and copper. Analysts forecast that the copper market could face a shortfall of up to 10 million tonnes by 2030 if no new mines are built. The nickel market is also expected to tip into a deficit in the coming years as demand from the stainless steel and battery sectors outpaces supply growth.

Interview with CEO Jason Jessup

Benefiting from Higher Prices

The tightening supply and demand fundamentals for nickel and copper bode well for prices. Copper recently hit an all-time high of over $10,000 per tonne in early 2022, while nickel spiked above $100,000 per tonne, driven by a short squeeze. While prices have since moderated, they remain well above historical averages, with the consensus view that they will need to go higher to incentivize new supply.

Higher prices are a boon for producers, translating directly into improved margins and cashflows. However, to fully benefit, companies need to have exposure to spot prices rather than being locked into long-term offtake agreements. Miners that can demonstrate a clear path to growing low-cost production are best positioned to capitalize.

According to Jessup, even at current prices, margins are attractive for Magna's mines:

"There's great margins in the copper ores and that's where we're going to focus and we're going to make money and we're going to reinvest that money and and keep building out our projects."

Importance of Jurisdiction

With rising geopolitical tensions, the location of nickel and copper production is becoming increasingly important. Automakers and other major consumers are looking to secure supplies from stable, mining-friendly jurisdictions to de-risk their supply chains. This is driving a shift toward projects in countries like Canada, Australia and the United States.

The Sudbury Basin, where Magna Mining operates, is a world-class mining camp with a long history of nickel and copper production. With well-established infrastructure, a skilled labor force, and clear permitting processes, it stands out as a top jurisdiction for new mine development. Sudbury's deposits are also known for their polymetallic nature, with many orebodies containing both nickel and copper as well as precious metals by-products like platinum and palladium.

Positioned to Capitalize

For investors, one of the key considerations in gaining exposure to the nickel and copper opportunity is finding companies with high-quality assets in the right jurisdictions as well as a management team with a track record of creating value. Producers and near-producers with a clear path to growth tend to outperform earlier stage explorers.

Magna Mining exemplifies many of these attributes. With one mine already in production and a portfolio of past-producing mines that can be rapidly restarted, Magna offers exposure to near-term cashflow as well as organic growth. Management has deep experience in the Sudbury Basin and has demonstrated an ability to raise capital and execute on its plans. CEO Jessup explains Magna's strategy:

The great thing about it is, you know, all these mines - McCreedy West has 45 years of operating history and still 9 million tons, Levack... has produced over 60 million tons, Podolsky mine is actually one that has still has a a significant historic resource somewhere in 7-8 million tons but is probably one of the most underexplored properties. By continually drilling, we'll expand resources, replace reserves year-over-year, and I believe these assets combined can have multi-decades of mine life. We want to really build a significant producer."

This focus on building a sustainable, long-life business stands out in a sector where many companies are solely focused on exploration or single-asset development. By taking a portfolio approach and leveraging existing infrastructure, Magna can unlock value and achieve a re-rate as it transitions from a junior miner into an established mid-tier producer.

Conclusion

The growing demand for nickel and copper, driven by clean energy trends and rising global living standards, is set to create compelling opportunities for miners that can deliver new supply. However, the industry faces considerable challenges, from declining grades to heightened geopolitical risk. In this environment, companies like Magna Mining that have high-quality, North American assets and a disciplined management team stand out as attractive investment vehicles to gain exposure to the base metals supercycle.

Magna's unique portfolio approach, focused on maximizing margins and reinvesting in organic growth, creates the potential for a significant re-rating as it achieves its goal of becoming a multi-asset, sustainable producer in the world's best mining jurisdiction.

The Investment Thesis for Magna Mining

• Magna offers investors exceptional exposure to rising nickel and copper prices through its unique portfolio of assets in the world-class Sudbury Basin.
• The McCreedy West mine is already in production, generating cashflow that can be reinvested into organic growth.
• Magna is actively exploring the Lak mine, a past-producing asset with a history of mining high-grade copper (10%+ Cu grades). There is potential to rapidly restart production by 2026.
• Magna has a deep pipeline of projects that can feed longer-term growth, including the permitted Crean Hill, Podolsky and Shakespeare projects.
• Magna is led by a proven management team with a track record of exploration and operational success in the Sudbury Basin, significantly de-risking project execution.
• With over $30 million recently raised, Magna is well-funded to deliver on its growth plans, limiting near-term dilution risk for investors.

Macro Thematic Analysis

The global shift towards electrification and decarbonization is creating unprecedented demand for critical minerals like nickel and copper. As governments worldwide set ambitious targets for reducing carbon emissions, the need for these metals which are essential in clean energy technologies is set to skyrocket.

Electric vehicles are a key driver, with EV sales expected to surge from 3 million units in 2020 to 66 million by 2040. Charging infrastructure, renewable energy, and energy storage will further fuel copper demand, which is projected to grow by nearly 50% by 2040 in a net-zero emissions scenario. Nickel demand is also poised to surge, driven by its use in lithium-ion batteries. The nickel market could face a supply shortfall of 2 million tonnes by 2040 in a high EV penetration scenario.

Against this backdrop of robust demand, there are growing concerns about the ability to scale up supply. New mines are getting harder to find and permit, while existing operations face declining ore grades and rising costs. Many of the world's most promising copper and nickel projects are in high-risk jurisdictions vulnerable to resource nationalism or permitting challenges. Even in established mining camps, community relations and environmental, social and governance (ESG) factors are making it more challenging to bring new supply online rapidly.

As Magna Mining CEO Jason Jessup said,

"This isn't about now we're a producer, we're done. This is about building into something that's significant."

The supply-demand imbalance is expected to keep upward pressure on nickel and copper prices, creating opportunities for producers to generate significant cashflows. However, with rising mining sector costs, only those companies with high-grade, low-cost operations will be able to capitalize fully. For investors, a selective approach focused on quality assets, proven management teams, and mining-friendly jurisdictions will be key to generating outsized returns in the coming metals supercycle.