TORONTO, Sept. 17, 2020 /CNW/ - Magna Gold Corp. (TSXV:
MGR) (OTCQB: MGLQF) ("Magna" or the "Company") is
pleased to announce the results from the Pre-Feasibility Study
("PFS") completed on its 100%-owned San Francisco mine located in Sonora, Mexico ("San Francisco").
Arturo Bonillas, President and
Chief Executive Officer of Magna, stated, "We are extremely pleased
with the outcome of this study, which validates our view of value
and leverage for San Francisco
when we acquired the mine earlier this year. This marks an
important milestone for Magna as it provides us with a base case
operating plan from which we can drive ongoing optimization,
growth, and near-term value creation. We see tremendous potential
to expand the mineral resource, locally and regionally, and also to
increase production scale. In addition to successfully executing
the PFS operating plan, our focus will now be on creating
additional value through the advancement of a number of identified
opportunities."
Pre-Feasibility Study Highlights
The PFS employs a gold price of $1,450 per ounce. All values are shown in
United States dollars unless
otherwise noted. Some figures may not add due to rounding.
- Base case after-tax net present value ("NPV") of
$80M using a $1,450/oz gold price and 5% discount rate.
- Assuming a spot gold price of $1,950 per ounce ("Spot Gold Price"), the project
economics increase to an after-tax NPV of $231M using a 5% discount rate.
- Average annual gold production of 69 kozs per year over 2021
to 2027.
- Average all-in sustaining cash costs of $1,204 per gold ounce.
- No major capital required for resumption of full mining
operations.
The PFS contemplates a 16,875 tpd heap leach operation using
existing processing capacity of 22,000 tpd. Ore placed on the
existing leach pad will be sourced primarily from open pits over an
initial mine life of eight years, supplemented by a small portion
of underground ore. Magna is currently processing minerals from the
La Chicharra pit, in addition to previously stockpiled material,
and plans to initiate underground mining at the higher-grade lenses
in the south wall of the San
Francisco pit and also resume open pit mining in the
San Francisco pit. Over the
current mine life to 2028 outlined in the PFS, a total of 47.6
million tonnes at an average grade of 0.50 g/t containing 758 kozs
gold will be mined and processed. Given the mine, processing plant
and infrastructure are all existing at San Francisco, there are no significant
capital investments required to realize the production outlined in
the PFS.
Full details of the PFS and the current estimates of mineral
reserves and resources can be found in the technical report
entitled "NI 43-101F1 Technical Report Pre-Feasibility Study for
the San Francisco Gold Project, Sonora,
Mexico" dated August 28, 2020.
The technical report was prepared by William J. Lewis, P.Geo., Richard M. Gowans, P.Eng., Nigel Fung, B.Sc.H, B.Eng., P.Eng., Christopher Jacobs, CEng, MIMMM, Ing.
Alan San Martin, MAusIMM(CP) of
Micon International Limited, and Rodrigo
Calles-Montijo, CPG of Servicios Geológicos IMEx, S.C. A
copy of the technical report has been filed under Magna's profile
on SEDAR.
Significant Leverage to Gold Price
Magna has calculated the impact to the NPV of San Francisco at various gold prices ranging
between the price assumed for the PFS and the Spot Gold Price.
Using the Spot Gold Price results in an NPV of $231 million, representing a 189% increase in the
reported NPV in the PFS.
Assumed Gold
Price
|
PFS
($1,450)
|
$1,600
|
$1,800
|
Spot
($1,950)
|
After-Tax
NPV
|
$80M
|
$126M
|
$186M
|
$231M
|
NPV Difference from
PFS Case
|
--
|
+58%
|
+133%
|
+189%
|
Value Enhancement Potential
Magna has identified several near-term resource growth and
operational expansion opportunities that have the potential to
extend the mine life of San
Francisco and further optimize the project parameters and
economics outlined in the PFS.
Magna is currently implementing an aggressive exploration
strategy in and around the existing open pits and at depth to
increase mineral reserves and resources in 2021. Magna's
exploration strategy also extends to various regional targets being
evaluated as potential sources of satellite ore, such as the
Mercedes property and La Vetatierra target, that could leverage
existing equipment and infrastructure to provide incremental
low-cost production in the near-term with minimal capital
expenditures.
In addition, as part of the operational improvement plan that
was implemented shortly after the acquisition of San Francisco, Magna is in the process of
completing an extensive metallurgical test program and evaluating a
potential upgrade of the crushing and leaching operation in order
to increase capacity and improve metallurgical
recoveries.
Magna's overall goal is to establish an operation capable of
producing around 100,000 ounces per year for 10 years, providing
for an approximate 45% increase from production levels outlined in
the PFS.
Summary of Operating Parameters
The table below provides a summary of the PFS inputs and
parameters.
Mining
|
Total Ore Tonnes
Mined
|
47.6 Mt
|
Average Diluted Ore
Grade
|
0.50 g/t
|
Total Contained Gold
Ounces
|
758 kozs
|
Mine Life (2021
Onwards)
|
8 years
|
Processing
|
La Chicharra Gold
Recovery
|
73%
|
San Francisco Gold
Recovery
|
66%
|
Average Gold
Production (2021 – 2027)
|
69
kozs
|
Total Life of Mine
Gold Production
|
527
kozs
|
Cash Operating
Costs ($/t Ore) and Capital Expenditures
|
Mining
Costs
|
$7.43
|
Processing
Costs
|
$4.45
|
General and
Administrative Costs
|
$0.58
|
Selling
Costs
|
$0.03
|
Cash Operating
Costs
|
$12.49
|
Royalties and Mining
Tax
|
$0.34
|
Total Cash
Cost
|
$12.83
|
Cash Costs per
Ounce
|
$1,160/oz
|
All-In Sustaining
Costs per Ounce
|
$1,204/oz
|
Capital
Costs
|
Total Development
Capital Costs
|
$3.4M
|
Total Sustaining
Capital Costs
|
$19.8M
|
Total Life of Mine
Capital Costs
|
$23.2M
|
Mineral Reserves and Resources
Mineral reserves as of August 8,
2020 are summarized in the table below and have been
estimated using a gold price of $1,350 per ounce.
Category
|
Tonnes
(kt)
|
Gold Grade
(g/t)
|
Contained Gold
(kozs)
|
Proven
Reserves
|
21,058
|
0.511
|
346
|
Probable
Reserves
|
25,789
|
0.490
|
406
|
Total
Reserves
|
46,847
|
0.499
|
752
|
Low Grade
Stockpile
|
782
|
0.256
|
6
|
Total Reserves
(incl. Stockpile)
|
47,629
|
0.495
|
758
|
Mineral resources as of August 8,
2020 are summarized in the table below and have been
estimated using a gold price of $1,500 per ounce.
Category
|
Tonnes
(kt)
|
Gold Grade
(g/t)
|
Contained Gold
(kozs)
|
Measured
Resources
|
34,675
|
0.462
|
515
|
Indicated
Resources
|
65,025
|
0.437
|
914
|
Measured
&Indicated Resources
|
99,700
|
0.446
|
1,430
|
Inferred
Resources
|
11,374
|
0.467
|
171
|
Note: Inclusive of
mineral reserves
|
Mineral resources are not mineral reserves and do not have
demonstrated economic viability.
Qualified Person
James Baughman (P. Geo.),
Consulting Geologist and a Qualified Person as defined by National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects, has approved the scientific and technical information
in this news release. Mr. Baughman is independent of Magna.
About Magna Gold Corp.
Magna Gold Corp. is a Canadian gold company engaged in
operations, development, exploration and acquisitions in
Mexico. Magna's primary asset is
the San Francisco gold mine in
Sonora, Mexico and exploration
stage projects include San Judas,
La Pima and Mercedes.
The Company's shares trade on the TSXV under the trading symbol
"MGR" and OTCQB under the trading symbol "MGLQF". Magna takes
social license seriously and employ local community members and
services in its operations.
For more information, please visit www.magnagoldcorp.com or
contact Francisco Arturo Bonillas
Zepeda, the Chief Executive Officer, Corporate Secretary and
a Director of the Company.
This news release includes certain "forward-looking statements"
which are not comprised of historical facts. Forward-looking
statements include estimates and statements that describe the
Company's future plans, objectives or goals, including words to the
effect that the Company or management expects a stated condition or
result to occur. Forward-looking statements may be identified by
such terms as "believes", "anticipates", "expects", "estimates",
"may", "could", "would", "will", or "plan". Since forward-looking
statements are based on assumptions and address future events and
conditions, by their very nature they involve inherent risks and
uncertainties. Although these statements are based on information
currently available to the Company, the Company provides no
assurance that actual results will meet management's expectations.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information.
Forward looking information in this news release includes, but is
not limited to, information about timing of the technical studies
and the results of pilot projects and operations, the Company's
objectives, goals or future plans, exploration results, potential
mineralization, the estimation of mineral reserves and resources,
exploration and mine development plans, timing of the commencement
of operations and estimates of market conditions. Factors that
could cause actual results to differ materially from such
forward-looking information include, but are not limited to,
failure to identify mineral resources, failure to convert estimated
mineral resources to reserves, the inability to complete a
feasibility study which recommends a production decision, the
preliminary nature of metallurgical test results, delays in
obtaining or failures to obtain required governmental,
environmental or other project approvals, political risks,
inability to fulfill the duty to accommodate First Nations and
other indigenous peoples, uncertainties relating to the
availability and costs of financing needed in the future, changes
in equity markets, inflation, changes in exchange rates,
fluctuations in commodity prices, delays in the development of
projects, capital and operating costs varying significantly from
estimates and the other risks involved in the mineral exploration
and development industry, and those risks set out in the Company's
public documents filed on SEDAR. Although the Company believes that
the assumptions and factors used in preparing the forward-looking
information in this news release are reasonable, undue reliance
should not be placed on such information, which only applies as of
the date of this news release, and no assurance can be given that
such events will occur in the disclosed time frames or at all. The
Company disclaims any intention or obligation to update or revise
any forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by
law.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Magna Gold Corp.