Magna Mining CEO on a Landmark Q2 in the Sudbury Basin

0:16Jason Jessup: All right, everybody, welcome back to Mining Stock Daily and good morning. We're kicking off our corporate updates today with the Sudbury Basin and Magna Mining. They trade on the TSX now with the symbol NICU and on the OTCQX with MGMNF. The company did publish their Q2 operating and financial results last night, and we're able to digest them and kind of come away with them with a great quarter. Things are really starting to move in the direction the company wants them to. Happy to welcome in CEO Jason Jessup for this update. Jason, congratulations on really what I personally think is a defining quarter for the new Magnum Mining and everything in production there at McCready.

1:06Jason Jessup: So congratulations. Well, thank you very much, Trevor. And it has been, it's an exciting quarter. It's great to announce these financial results. And I think it is, it's a real sort of turning point and shows that the McCready West mine is on track. Yeah, absolutely. And I think the defining data here, people to back up what I'm saying here, is you swung from almost$20 million in the red in Q1 to positive$5 million in Q2. How much of that is structural versus perhaps a copper price tailwind? And is it representative of really what a steady state McCready West looks like? so there's a couple factors you know first of all we had a tremendous production quarter setting a record at over 98 000 short tons um you know mined and shipped off to the mill um you know produced four and a half million copper equivalent payable pounds so it was a a great quarter um you know our grade was really good um you know sort of in the midpoint of our guidance.

2:19So that had a big, big impact on it. Obviously, you know, we are watching costs. We're trying to manage costs as we continue to invest in our operations and projects. One other factor that played into it is we did have some payments that should have came to us in March that came to us in April, which helped Q2 as far as that free cash flow number. But it was overall, you know, our best quarter for sure. Um, and you know, metal price has pulled back a little bit over Q1. So we did fight a little bit of that tailwind, um, with some slightly lower price, especially on precious metals. And, uh, but yeah, overall by far our best quarter to date.

3:03Jason Jessup: Okay. Your cost trajectory is also positive per ton costs have now dropped three straight quarters, uh, now sub $200, uh, you know, uh, per ton, is that a floor or do you still see room, see room to push lower as, as, as everything continues to mature? Well, definitely. I think as we bring new operations, um, you know, online and we find new efficiencies and ways to share some of those costs, I think our operating costs can get lower. Now there are a portion of our costs that are fixed in that our milling, we do not benefit necessarily from any economies of scale. We sort of have fixed milling price per ton, fixed trucking price per ton.

3:52So we don't have a lot of advantages as we increase production on those. So there isn't, I say, a tremendous amount per ton of cost reductions, but I think there will be some. Okay.

4:05Jason Jessup: Let's talk about Levesque. That restart decision is somewhat imminent, although there is a PEA still in the works here that will be needed to really make that decision to green light that restart. You noted that that 2950 drift is getting pretty dang close to the R2 footwall zone where we've seen tremendous results with the exploration drill rig there. In fact, that could really open up Levesque. Is there a hurdle rate or other gating factors beyond the economics that you need to reach to really bring home that PEA? You know, I think that as far as the PEA, and I've said this many times and I'll keep reminding listeners, the PEA will be based on the resource that we released last fall for Levesque mine will not include the R2.

5:01But right now, I would have to say we are the most excited about R2 over any other part of Levesque. It is tremendous upside and potential. And, you know, once we have the PEA out, I would expect that we'll continue to advance Levesque. And at that point, we'll be able to, you know, make a formal decision either, you know, immediately after or sometime after that PEA comes out in September. As far as that 2950 drift and what it will provide us for R2, as well as other exploration, I think it is extremely exciting. It not only gets us within 300 meters or less from the R2 zone to drill more horizontal holes.

5:50So very good angles, closer holes, be able to get much more definition, which is really what that zone needs. we have 14 holes we've announced i think we've drilled maybe 17 or 18 holes into it now we need a lot more holes before we can come out with a resource so that drift will be very key but not only just for definition drilling defining and expanding on r2 but also testing other very exciting footwall targets that drift which really spans between our morrison deposit which was the original big FNX Discovery that operated up until 2019 and our R2. There's about almost 600 meters in between those two zones that really did not have good platforms to drill.

6:38Even from surface, it was very challenging because of some of the mined out workings up above. So it is a area that has very, very few holes in it. We've drilled a few holes now from different places in the mine, done some geophysics, definitely have developed some targets and some EM anomalies. And this drift will allow us to test those as well. So it is an exciting drift. And, you know, I think the best part from a mining perspective is once we've done this definition drilling in R2, we can just extend that drift, touch the R2 mineralization, start sealing on it potentially as early as Q1 of next year.

7:18and start generating what I think will be some very high-grade mineralization that we can ship off to Valais and also better define the resource or define the deposit so we can have a resource estimate potentially by the end of 2027. So very exciting area. Glad to see the drift going well. It's a real highlight anytime I go underground at Lavac is seeing that drift advancing and now we're going to get diamond drills in there. It'll be really exciting over the next month or two.

7:49Jason Jessup: Jason, is this PEA going to be, you mentioned September release. Is this going to be one of those Beaver Creek specials again for Magna Mining? I mean, you did it a couple of years ago with the KJHM announcement. Is this kind of what you got up your sleeve timing wise? Wow. I can't give away all of my tricks, but it could be coming out at a very opportune time for some marketing conferences and we will just see. All right. All right. Very good. All right. I'll leave it at that. I do want to go back, and there was a few things from the Q2 numbers that we actually had some further up questions. And really, one of them was about the silver production coming out of McCready.

8:29Jason Jessup: Production went up, but silver revenue was down. And we were kind of getting into the weeds here, but what's the explanation with higher production, lower revenue? Lower silver prices over Q1, for sure. and not only just silver prices, but we have a delay in when we get paid for silver. So what happens every month with our accounting, we ship a certain amount of ore at a certain grade to Valet and then we book what that should be worth at the price at that time. And then every month we have to adjust for changes in the price, the market to market adjustments. So when you have silver at, you know, extremely high prices back in January and February and then slides down to where it is now, there's adjustments to be made.

9:24And those adjustments come right off of what we actually generate. So lower prices and adjustments is the reason. And likewise, when prices go up, there's upward adjustments because what we actually realize and get paid is higher than what we had booked. So we do have that adjustments just the way we get paid, but prices is the biggest factor. Okay.

9:46Jason Jessup: A staff member of ours and also a shareholder of Magna, as I am as well, wanted me to ask you about the rising mill and smelter treatment charges. Those were significantly higher this quarter. Can you explain those? I can in general terms. Some of it's confidential, but basically what we've been working on is some adjustments. with Valet in our contract that we think will have net benefits to Magna on how we get paid. And some of these adjustments were retroactive back into Q1. So when we finally settled them in Q2, there were some additional payments due to Valet, which made our costs for Q2 look higher.

10:37I would expect that those will be normalized over the rest of the year and going forward, I think we'll have a net benefit to Magna.

10:44Jason Jessup: Okay. This is a defining quarter for Magna. And I think now the expectation is we see quarter over quarter improvements, Jason. Obviously, the VAC coming online. Crean Hill, we haven't actually talked about yet in this conversation, but that's well on its way as well. Well, given what you've heard over the last less than 24 hours since this was published, what are the expectations for the remainder of 2026 and what you've heard overnight? Yeah, it's a good question. And I can't speak to it very broadly. It's been a very short period of time since we put out these results. And we have been in contact with some of our bigger shareholders as well as a number of the analysts.

11:32I think that what we've been guiding for is what people are expecting. So we are going to maintain our guidance that we put out in February for the year. So 16 to 18 million payable copper pounds. And at the cost that we had estimated, so sort of 340 to 380 US per copper equivalent pound. And then an all-instating cost of 420 to 470. That is, I think, the expectation. Now, people are still on the fence a little bit on, you know, what will Levesque and Crane Hill bring to the company as far as a production plan and revenues going forward. I think a lot of people are still waiting to see what the PA and the PFS at Crane Hill will bring out, you know, in September, what we'll be able to report from them.

12:26So I do think that there's still a lot of work to do to communicate to investors what our production plan will look like and then growth we'll have. I'll tell you right now, Trevor, internally, we are super excited. And those that have signed NDAs and seen our plans are excited. And I would put Alpayana in that category. And it's one of the reasons why they've invested in us and are going to become a major shareholder. So I think expectations are still a little bit on the fence. I think people are, uh, a little bit still wait and see and the ones that are doing their homework. And I think, uh, um, investing now, you know, I think they have, uh, a good, a good entry point in my opinion.

13:13Jason Jessup: All right. Very love to hear it. And I will say every time you and I have an audio podcast and the questions opens up about the future of Magna, You usually answer that with a huge smile on your face, as you just did, so I'll let people visualize that. The one, I wouldn't call it a big surprise, but it was a surprise that was mentioned here. New CFO, Greg Huffman, our friend Greg Huffman, moving on from SVP of Capital Markets, taking that chief financial officer role. Is this guy even qualified, Jason? I mean, well, the short answer is yes. But, you know, it was a, Scott had communicated to us, you know, when we hired him a couple of years ago that, you know, this would be his last job.

14:06He was, you know, going to help us get things, get through the transition with the KGHM acquisition, which was huge and a lot of work. And, you know, help us get our systems, our ERP and everything in place. but he sort of had a limited timeline to retirement. So we've been discussing that internally at the board level and how we'll replace Scott. We have explored external candidates but I think we have an extremely tight-knit and I'd say team here at Magna. That includes the finance team, you know, capital markets with Greg, you know, Paul Fowler, and I think bring in some more external executives.

14:54Um, I saw it as a little bit of a risk in that, you know, are we going to lose some of our other people or, um, how do we manage this? And, you know, Greg was such a, a great natural fit and he's been working alongside in the background with Scott and, um, our team in finance for a number of months now, um, in anticipation of this announcement and taking over the CFO role in the future. So I'm very confident in Greg and, you know, and I know he's supported by a great finance team here at Magna. So yeah, no issues. And, uh, it's really exciting. And with that, you know, Greg will also continue to be, um, very much, uh, investor facing is the CFO in the future.

15:38So I'm excited by it. I think it's a great fit and, uh, That really compliments the rest of the team.

15:44Jason Jessup: Yeah, I would absolutely agree. And I think it also is representative of the culture that you have created over the last couple years there at Magna. And it starts where you guys are at in the corporate offices there. And it goes all the way down to the face where people are driving the drift. And I've seen it. And so kudos for, you know, making sure that that is always number one reason why you make any decisions, not always just financial. It is culture is also very important to what this company represents externally, but also, you know, for the Sudbury Basin as a whole. So, yeah, I think it was a great decision here.

16:29Jason Jessup: And congratulations to Greg for taking that role on. All right, Jason, you and I will be chatting late next month at the Beaver Creek Precious Metals Summit for sure. Perhaps you and I get one more in before then. We will see, but congratulations on a great Q2 and more to come. I hope you continue to do it with a smile on your face. Yeah, thanks a lot, Trevor. I think we'll have some good news to talk about at the Beaver Creek and maybe sooner. So thanks a lot. Yep. All right, Magna Mining trading on the TSX now with NICU and on the OTCQX with MGMNF. The information presented should not be considered investment advice.

17:13Jason Jessup: Mining Stock Daily Yen's affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.

17:32Thank you.