Magna Mining: Levack’s High-Grade Upside Keeps Growing

0:17Mining Stock Daily: Welcome back to Mining Stock Daily, everybody heading back up to the Sudbury Basin here with Magnum Mining. Beaver Creek seems to be always like, it's a momentous time for you, Jason Jessup, because Beaver Creek really was the time where everything changed for Magda with those KGHM assets. Do you ever come back to this thing and kind of relive, you know, the transformational decision you guys made and then got to announce it here? You know, yes. And I come back here and I still have a little bit of PTSD because we were supposed to announce in 2024 the signing of the definitive of KGHM on the Tuesday and, you know, legal delays and other delays.

1:04And then it was Wednesday and then Thursday we had to halt the stock. And so the conference was almost over and I spent most of it in my condo working on this deal to get it done. So it wasn't my most enjoyable conference. A lot of late nights and not too much socializing. But yeah, it always brings me back to that moment. And it was really pivotal for a company.

1:28Mining Stock Daily: Yeah, I remember the conversation you and I had that morning after it was announced. You know, like it was just, you had a big smile on your face. Paul had a big smile. And you knew you were on a trajectory for incredible, not only growth as a mining company, but incredible shareholder value. And I think you've proven that out. But it's still early days, right? You've still got a long way to go. and you continue to drill more at that Levesque. That's the latest news. The R2 zone, just magnificent grades. Walk us through what we know now with these latest drill results. Yeah, this drill results, you know, it's great to see.

2:06And not just R2, we also released some stuff high up in the deposit in our contact nickel zone off to the west of the main ore by, we call the West Main, an up dip of what was once mined by Inco. It had some great intersections up there, But the hole that we released, the W1 hole from R2, it was really to try and connect the historic number three ore body that Inco had mined to the R2 deposit. And so we drilled sort of the 100 meters in between. Yeah, and intersected some great intersections, including 2.1 meters of some very good copper and nickel and very good precious metals over half an ounce.

2:48So that was fantastic, along with some other intersections that were less than that. But yeah, so now we're expanding, we're infill drilling it, and we're actually handing over the drilling for the R2 to the mine now from the exploration department. And we have another drill set up on our 2950 that is drilling pure exploration holes in that 600-meter gap between the Morrison deposit and R2, and we're pretty excited about that.

3:16Mining Stock Daily: How is that going to change your accessibility to really bust R2 open, really give it more definition with the drill program, staying underground? Yeah, that 2950 drift is huge for us. We've extended it out off of the ramp to the Morrison deposit, about 300 meters. Now we're right in the middle, so 300 meters away from R2. We have one drill set up the face that's doing definition drilling. and what we plan on doing is extending that drift sometime in Q4. We'll finish it, that last 300 meters, and actually intersect the veins and the mineralization in R2. And then next year we'll be able to start sealing on those veins and that'll give us such a great understanding of the continuity and be able to model it better and this will all lead into a future resource.

4:06But as we're sealing in this material, We're really excited to be able to then bring that to surface, and that could get shipped off to the mill and we start getting paid for R2, which is really exciting.

4:17Mining Stock Daily: So it seems like you are increasingly seeing R2 as a lot more of a potential high-value production source rather than just an exploration, high-grade exploration area. It's a great exploration area that we will mine. It's no question about it. Do you push it forward into a mine plan? It will replace. So it's not going to be included in our PEA that we'll be putting out in a few weeks. Okay. Because it's not in resource yet. So we can't put in the PEA. What I can tell you is I fully expect it will displace some material in the PEA and bring it forward because it's going to be much, much higher margin.

4:57So, yeah, we will bring it forward and we'll put in the mine plan, you know, as early as the first half of next year. Okay.

5:03Mining Stock Daily: So you're seeing a couple of weeks for this PEA. Yeah, so Trevor, as you know, I like to put out news around the conference season, and Beaver Creek is one of my favorite times. And we were poised to do that with our PEA on Lavac. But last week, some really good news came out from the federal government on the tax treatment of sustaining capital. And this is going to be great for our industry now that we can expense as opposed to depreciate sustaining capital costs. So we wanted to fully understand that and incorporate that into our study. So it's going to delay it a couple of weeks, but yeah, essentially it's all done.

5:45Mining Stock Daily: Okay, so actually somebody wanted to have me ask you this question regarding what you just described. And I laughed because I said, this is way beyond my wheelhouse. So you have to explain this to us, what this means regarding this tax situation. But how does that help bootstrap the approach here with Levesque? Can you recycle it back or maybe break this down and simplify things, what this all means? Yeah, and this is probably a better question for our CFO than me because it is so new. It was something we just heard about with everyone else in the announcement last week. But essentially what it does is, you know, instead of having a 30 % depreciation of sustaining capital as you continue to invest in the mine and put capital into the mine, as well as the initial capital we're putting in to get us to commercial production.

6:34We can fully expense that as an operating, like similar to an operating expense in the year that it's incurred, which is a direct tax deduction. So as McCready West is generating profits and we have taxable income, we'll be able to use this as a tax deduction. So pay less taxes and keep more cash in the bank. Better cash flow. Absolutely. All right. All right.

6:59Mining Stock Daily: Amazing. We talked about the R2 exploration, and you did mention there's other holes that was published. So maybe let's go back to that. A hole from the West Main that was near surface mineralization. Walk us through West Main because that was 32.9 meters of 2.9 % copper equivalent. Yeah. So largely nickel. that 132 meter hole and unfortunately it was drilled and still in it never did hit the foot wall so it was still in the the right rock type but we could should have extended it so we will be drilling more holes to follow up on that okay but what it looks like is there's an embayment structure there that thickens up quite a bit so most of the historic mining in that part of the mine was in that five to ten meter thick range and then it seems like there's a bit of a deflection here and what they call an embayment where you know the mineralization gets a lot thicker and and more concentrated and so we will follow up on that the great thing about it is this is in an area that's outside of what would have been included in the PEA so additional near surface potentially mineable material we could put into an early mine plan so it could be accessible by the the ramp that we're proposing to develop and, you know, very close to surface.

8:18So early potential for more mining up closer and generate more revenues early in a mine plan. But it won't be included in the PEA. We're still drilling it out.

8:28Mining Stock Daily: Okay. So there's two areas within Levesque, West Main, R2, not going into your PEA. Is it worth taking a pause on this report? So you can include this? Well, we're moving forward. Okay. We're moving forward with spending money and doing work to continue to get new drilling platforms, expand on the R2 and have platforms for new exploration targets that we want to drill, as well as some of this drilling from surface. So there will be lots of drills turning. I'm guessing next year between infill drilling to support future production as well as exploration, there will probably be six drills turning at Lavac.

9:08Most of those will be underground. There may be one surface rig for some of this near surface material. But we're moving forward very quickly, and we have an amazing team. And that's one thing, Trevor, I want to highlight. And, you know, we've pulled together a team that I'm so proud of. We recently hired a director of technical services, a gentleman, an engineer by the name of Jeff Dawson. And, man, this guy is a beauty. He is pulling things together so quickly and has so much mining experience, such a great leader. Couldn't be more happy. But, yeah, just the team in general that we're pulling together.

9:45We're moving things forward, and it's great. And, you know, the PEA gives a snapshot of maybe a base case, but I think the upside is what will deliver.

9:54Mining Stock Daily: What do you need to finally make that restart decision? Do you need to look at what R2 and West Main adds to the economics? You know, I think that we're not making a restart decision yet formally because it hasn't been formally approved by the board. But I think that there's a very high probability that we'll have that declaration shortly after seeing the PEA come out. Okay. All right. We've got$140 million Canadian in the bank, strategic capital from Alpayana. That was a huge announcement a number of weeks ago. You and I chatted about that. But now that you've been able to kind of digest this a little bit, what can Magna do today that you simply couldn't do six months ago?

10:41Mining Stock Daily: And what maybe gets done more aggressively over the last quarter of this year that you couldn't have done? Creed Hill. Yeah? Really. That investment gives us the ability to move ahead with Creed Hill simultaneous with restarting Levesque Mine. And, you know, we have been working on getting detailed engineering done, and, you know, we've made a lot of advancements on that and getting power to site, getting, you know, dewatering and water treatment system in place. All that's been moving ahead. But what this is really going to allow us to do is to move forward with the development, the portal, the ramp, you know, the surface infrastructure so we can move this mine cranial towards commercial production.

11:25And again, our PFS will come out sort of mid-October. And, you know, I think we'll be in a position that we can evaluate that and move things forward. That's what it gives us the ability to do.

11:36Mining Stock Daily: So you got McCready West generating cash flow, Levesque advancing, obviously. Crean Hill obviously advancing almost in parallel basically with it. Are we at a point, an inflection point here, Jason, where Magnus should be valued as a real Sudbury mining platform rather than maybe a developer? Absolutely, we need to be. I think people are just starting to really appreciate the growth profile we have and the ability in a great jurisdiction like Sudbury, where people have been mining for 140 years, and major mining companies have really been built in Sudbury. We have such a great opportunity here.

12:18And within a couple of years, I think once our PA and PFS are out, People really recognize the kind of cash flows we can generate. And, you know, that can be reinvested into Podolsky, into our Shakespeare project, which is a great project, especially at these prices, and other acquisitions in Sudbury. And, you know, we're still very aggressively working on, you know, synergistic acquisitions of non-core assets in Sudbury that have, you know, that would be a great fit with Magna. maybe don't fit with their current owners or their, you know, non-core and very low priority. So, yeah, I think that, you know, based on the feedback and the people we've been talking to that are now starting to follow our story, I think that's a real turning point for us.

13:02Mining Stock Daily: Do these technical reports just absolutely need to put the stamp down on the economics? And the reason I say that is because we just did an interview and update with Meridian Mining. They just announced their definitive feasibility studies. It's bonkers. The returns are bonkers, really good. But the stock market, you know, the market is rewarding them. So as long as if it's really good economics, we're in a time where the market will reward that specifically for developers. So what do you think the market expectation would be if you look at both Crean Hill and the VAC? And you've seen some peers put out really good economic numbers.

13:43Mining Stock Daily: What needs to be delivered for maybe a potential, another re-rate for this company? Yeah, you know, that's a great question because sometimes it's hard to judge what the market actually expects and, you know, what you can deliver. But what I think needs to be delivered is people need to recognize that these studies are out. There's many multiples of cash flow and multiples of NPV over pre-production CAPEX, which really torques your IRR. And these are projects that aren't, you know, at a point where we need final permitting and we need to put together a financing package and they're going to take years before you're going to see a return.

14:32These are projects that can move very quickly because of our business model, just selling ore to one of the mills in Sudbury. So, you know, I think that, you know, we're setting ourselves up for success. How the market reacts, you know, I would expect that, you know, the market will look at this in a positive way. way. But I think as far as big catalysts, I think people have to understand all the things such as exploration discovery, which I'm really excited about, such as bolt-on synergistic acquisitions, acquiring deposits that really are next door on our boundary that we can access through existing infrastructure, which extend mine life and grow production profiles.

15:14Those are the kind of things that I think really move the needle and definitely things we're working on.

15:19Mining Stock Daily: Okay. What do you got up for your sleeve for a Beaver Creek special next year, Jason?

15:27There's lots that can be coming, but yeah, that's probably not a fair, that's probably not

15:32Mining Stock Daily: a fair question, but you know, you do cut, you do come up here to Beaver Creek and typically like there's big news. I mean, like you said, you, you enjoy Beaver Creek big news, you know, so. Yeah, we'll definitely be a different company this time next year. You know, I'm not going to speculate on what our market cap and what we'll be projecting for 2028 cash flows, but I think we'll be viewed as a much different company. And yeah, I'm excited to tell the story. Yeah, absolutely. Well, I'll be here helping you tell it. All right. That is your update from Magnum Mining, trading on the TSX with the symbol NICU.

16:10Mining Stock Daily: Jason Jessup here. Have a great rest of your week, Jason. best of luck and talk to you again soon. Thanks, Trevor.