Magna Mining reports C$251M Crean Hill NPV and approves 2027 construction

Magna Mining Inc. TSENICU OTCMKTSMGMNF FRA8YD reported on Wednesday that its Crean Hill pre-feasibility study estimates C$251.0 million in after-tax net present value at a 7 per cent discount rate. Its board approved construction in 2027 for a 12-year commercial mine plan near Sudbury, Ontario.

Shares fell 2.7 per cent to C$2.16 on the Toronto Stock Exchange at the Oct. 20 close, 4 p.m. EDT, according to Google Finance's TSENICU quote. That quote predates Wednesday's announcement.

The Oct. 21 study puts initial capital at C$127.0 million from Jan. 1, 2027, with spending spread over three years. It calculates net initial funding at C$72.4 million after tax credits and operating cash flow before commercial production.

The base case estimates a 43.4 per cent after-tax internal rate of return, with first ore sales planned for late 2027. Commercial production is scheduled for early 2030.

"The base case delivers an after-tax IRR of 43.4 per cent and a 1.5-year payback period," chief executive Jason Jessup said in the release.

Magna operates the McCreedy West copper, precious metals and nickel mine in Sudbury.

The study footnotes measure payback from the end of the three-year pre-commercial period, while initial capital reflects equipment-financing timing. The Oct. 21 summary separately estimates sustaining capital over the mine's life at C$261.7 million.

Wednesday's funding calculation assumes C$17.2 million in refundable Clean Technology Manufacturing Investment Tax Credits and C$37.4 million in pre-commercial operating cash flow. The net requirement therefore depends on those credits and modeled cash flows being realized.

The Oct. 21 study schedules 11.4 million short tons of probable reserves, with a life-of-mine copper-equivalent head grade of 2.99 per cent. It projects average annual payable copper-equivalent output of 35.5 million pounds at all-in sustaining costs of US$3.55 per pound.

Average annual payable production includes 9.5 million pounds of copper and 7.5 million pounds of nickel. Platinum, palladium and gold together account for 42,000 payable ounces annually during commercial production.

Read more: BHP Group copper output falls 19 per cent in September quarter

The Oct. 21 base case assumes copper at US$5.10 a pound, nickel at US$8.00 a pound and gold at US$3,600 an ounce. Using September 2026 average prices across the metal basket instead increases after-tax net present value to C$406.1 million and the internal rate of return to 65.4 per cent.

The base case excludes the proposed Productivity Mega Deduction because it still requires legislative approval. The release presents its potential tax benefit separately as a sensitivity.

Magna's Sept. 17, 2024 preliminary economic assessment envisaged 13 years of commercial production. The development approach still starts with a new surface ramp before restoring shaft hoisting.

Detailed engineering, installation of grid power and recruitment remain ahead of construction, which is scheduled to begin in 2027.