Magna Mining's Crean Hill Delivers a 43% IRR

0:17Jason Jessup: All right, everybody, welcome back into Mining Stock Daily, kind of going back into regular scheduled programming here and going to catch up here with Magna Mining. We are welcoming back CEO Jason Jessup. One quick note that Magna Mining does trade on the TSX with the ticker symbol NICU and on the OTCQX with MGMNF. Two weeks ago, we had the Levesque restart and this morning, it's the other piece of the puzzle. Korean Hill Pre-Feasibility Study came out and the board has already approved construction starting in 2027, setting up a very busy year for the company. Jason, welcome back to Mining Stock Daily and congratulations on just another catalyst for this company.

1:05Jason Jessup: Walk us through the numbers.

1:07Mining Stock Daily Host: Yeah, thanks a lot, Trevor. It's great to be back and it's a really exciting day for us. This PFS has been a lot of work. It's done, I think it's been done really well and excited to be, yeah, releasing the results today. So it shows that we have 11.4 million tons of probable reserves that equate into a 12-year life of mine, of commercial mine life and a 15-year for the entire project and produces on average 35.5 million copper equivalent payable pounds per year. One of the interesting things that came out of it is how much of the revenues we generated would be coming from precious metals, which was actually until, you know, we got the numbers all together, was a little surprising to me.

1:58Mining Stock Daily Host: But yeah, almost about 38, 39 % of the revenues would be coming from precious metals at our base case pricing. So yeah, great mix of metals, you know, with copper and nickel making up the remainder and yeah, we're excited to have the approval from the board to move forward in 2027. Yeah, base case comes in at an after-tax NPV of$251 million, an IRR of 43%.

2:25Jason Jessup: Payback is a year and a half and obviously you can crunch some numbers here then they provide the data with current spot prices as well. And we have some funding requirements there. Jason, again, it kind of goes back into a little bit of tax incentive here that's new and the, you know, crunching some numbers, kind of walk us through what that initial CapEx and really what the tax incentive is that to help alleviate some of that. Yeah.

2:52Mining Stock Daily Host: So the, uh, the initial CapEx is 127 million Canadian. That includes, uh, almost 18 million of contingency. Um, and it is, you know, offset by the, uh, refundable tax credits, which are the Clean Technology Manufacturing Investment Tax Credit. And that's about$17.2 million. And then, you know, based upon that, the PEA or pre-production revenues be about$37.4 million. So that leaves the net initial funding about$72.4 million. Now, it doesn't take into account the more recent mega productivity deduction that was announced by the Canadian government. And that makes a meaningful difference, but not a huge impact.

3:40Mining Stock Daily Host: It only increases the NPV7 by about a little over 5 million. But in the early years, it does make a pretty meaningful difference in the amount of taxes we're paying. We're in year two of commercial production, we actually get a refund as opposed to paying taxes. So it is quite helpful. And yeah, overall, it's a really magical CapEx spread out over three years. So in the PEA in year one, which would be 2027, spending about 30 million, you know, similar in year two. And then year three is the bigger capital spend. So it is a, yeah, very manageable capex, very straightforward project, ramp access from surface to start, bringing the shaft and hoisting for more later on in the mine life and paying for that with the cash flow out of the operation.

4:29Mining Stock Daily Host: So yeah, we're pretty pleased with the outcome.

4:32Jason Jessup: Yeah. Well, if you add that initial capital for Crean Hill and then add, you know, that little VAC CapEx, you got roughly about$200 million of gross CapEx across both projects in the same window here. So does the up IANA money plus the cash flow from McCready West cover everything or should investors maybe expect some sort of other financing debt or more equity? Yeah.

5:01Mining Stock Daily Host: And I think the, you know, the way we are looking at this and again, starting it in 2027, it won't be starting in January of 2027. It'll be in the first half of 2027 as we continue to do some detailed engineering. but what it does it has a very small amount of spend in in 2027 you know fairly minimal if we start halfway through the year and we planned on year one to spend 30 million and then when we look at Lavac mine which is you know already moving forward we're drilling and blasting or underground hiring people it will start in Q1 and you know by according to our PEA you know we'll be generating some significant cash flows from Levesque in 2028.

5:45Mining Stock Daily Host: So that's kind of the balance. Obviously, we're still going through, you know, our 2027 budget at the board level for approvals. But yeah, I think it's very manageable. And, you know, we'll be generating, based on our assumptions in the PEA, some good cash out of Levesque in 2028 and 2029, which will, you know, bolster our treasury. And we're in a strong position, as you said. We had about$36 million, almost$40 million at the end of June. And then we raised$140 million since then. So in a strong position currently, and then, you know, we're going to stage things so that, yeah, we manage our cash in treasury.

6:30Mining Stock Daily Host: My plan is not to go out and raise more money for this project.

6:34Jason Jessup: Okay. Okay. At September prices, that NPV rises to about just over$400 million. Payback falls to under a year. That's mostly from the copper and precious metals, as you had stated. You found that big surprise in the precious metals to the upside, obviously. But on copper, why use$5.10 copper in the base case when spots around$6.50? We're in an interesting environment here in the copper space. But what was the discussion like on that sensitive table of what established that base case at$5.10?

7:09Mining Stock Daily Host: Yeah, it was a number of factors and it was a discussion that we had looking at other studies that had come out over the last six months. looking at what analysts are, you know, on the sort of average consensus pricing is. That's how we landed on that 510. We wanted to keep it consistent with both Levesque and Crean Hill. So yeah, a lot of looking at sort of what others are doing and we thought that was a reasonable conservative type number to use. Okay.

7:42Jason Jessup: And I'm going to ask you again the nickel question. A couple of weeks ago, I asked you about nickel potentially being the dark horse for Levesque. Uh, but Crean Hill, uh, that is a huge, nickel is a big driver in the economics there. Uh, obviously, uh, not to forget the precious metals and the copper factor there, but, um, is Crean Hill really a nickel project anymore? Or are we moving away from that?

8:10Mining Stock Daily Host: Well, it's a, uh, it's almost a third, a third, a third between nickel, copper and precious metals, which would be platinum, palladium, and gold. So we look at it again, we try to compare it with our other projects in copper equivalent. It has, I think, good exposure to all three of those commodity groups. But we've run numbers and people can build their own models and run their own numbers too. But there is a tremendous amount of torque to the price of nickel. If we see a run again, which we've seen historically in the past, where you can get nickel can really take off and be up in the$10 or$12 range again, that would be huge on this project.

8:57Mining Stock Daily Host: It'd be similar to copper going to$8 or$9, huge torque to the project. So we're really, you know, paying attention to what's going on in nickel. And there was some news out today about, you know, some potential reductions in production at Indonesia. All those kind of factors could play well. But, you know, the great thing about this project, we're not reliant on one commodity only. So, yeah, and copper's high right now and nickel's low. The project still works. and with, uh, you know, precious metals, well, who knows where it will be going over the next few years, but we really benefit from that.

9:35Mining Stock Daily Host: So I liked that idea of not having an over-reliance on any individual metal. Um, I think that's one of the things that makes this project really unique. Okay.

9:44Jason Jessup: Uh, Levesque gets to commercial production in 18 months. Korean takes three years and then And you start, you know, really measuring the payback after that. So about year three, what are in your mind, what are the risks, the schedule risks over the next 36 months here, Jason? What could potentially be a huge headwind for, for that timeline?

10:10Mining Stock Daily Host: Well, you know, the thing that we're really focused on at the moment is Lavac. So Lavac is an important part of our strategy and our plan going forward. um you know obviously we're in mining and there's all kinds of risks from you know cost inflation to uh you know availability of equipment and human resources we think we mitigate a lot of those risks just being in Sudbury um there's a lot of benefits to to being located where we are um but really you know where it's an execution story from for the next few years for sure um That's what really we have to focus on doing is executing, managing our capital wisely and making sure that, you know, we get the results that we need.

10:55Mining Stock Daily Host: Now, some things at Lavac are going to change. And one of those things that we're working on right now is our R2 zone. You know, it is a very high grade copper precious metal zone. We've got, you know, 17 drill holes we released and more drill holes into it now that we'll be getting results out and be sharing. But it is a zone that we will be getting into in 2027 that's not included in the PEA. And we'll probably, you know, take some priority over some other areas that are lower NSR rock. So it's really interesting. um our plan will change a little bit with pa but it's really about execution and making sure that you know we get levac cash flowing in 2028 is there a potential or do you see anything to be

11:43Jason Jessup: optimistic about you maybe see a r2 type opportunity in the new footwall targets at crean hill that you've been recently targeting yeah there's definitely a lot of excitement

11:57Mining Stock Daily Host: with our exploration team. We did quite a bit of drilling in 2023, 2024 out at Crean Hill, learned a lot about the geology. And then when we acquired those properties from KGHM, McCready, Levac, Podolsky, we really turned our exploration focus to Levac. And I think rightfully so. We were successful in discovering the R2 zone not long after acquiring that property. So it was the right move. And we've been focusing on understanding that and drilling it since then. Now that we are turning back to Crean Hill again, and we've had some time to kind of reflect on what we've known, design, I think, the proper exploration program now that we have, you know, more information and thought into it.

12:42Mining Stock Daily Host: We're really excited about it. You know, the target there will be a little bit different. It won't be these sort of, you know, 0.5 to 2.5 meter wide veins. the type of footwell mineralization you typically see in these south range sudbury deposits is is bulkier so it would be a very high grade copper nickel and precious metal zone but thicker more compacted where it could be one to five million tons but with widths five to 15 meters wide. So that's kind of what we're looking for right now. That's the target. And yeah, I'm glad to see drills turning again at Korean Hill. Okay.

13:28Jason Jessup: In the news release this morning, you did mention third-party mills for Korean Hill, but you didn't mention a specific name. Is Koreans offtake still being negotiated?

13:41Mining Stock Daily Host: It is. You know, most likely it's, you know, we're already dealing with valet so we're in discussions but it is not finalized yet. Okay and you're dealing with valet because of their mining rights at depth? We're dealing with valet because they are the ones that sold the property so there is they do have some rights at first offer on a life of mine or selling agreement so we do have an agreement in place for the first 340 ,000 tons that we had negotiated back in 2024 and announced back then. So now that we have the pre-feasibility study and we can talk about reserves and grades, we're negotiating that life of mine, which we hope to have wrapped up by the end of the year.

14:27Mining Stock Daily Host: Okay.

14:29Jason Jessup: Jason, two huge reports published basically back to back, big decisions made by the board. It's really shaping up not only 2027, but the rest of 2026, but well after 2027, 18 months year runway for the VAC and then another three years for Crean Hills. So, you know, this is, this was huge. I just kind of curious, is this a relief to get these things out and have the board back your decision to, to really move these things ahead? Not that, you know, people were expecting anything different, but, you know, is it just kind of a relief to get these things out and start moving forward?

15:08Mining Stock Daily Host: Yeah, it definitely is. It's a relief. I'm glad to see them out in the public. We get asked so many questions about, you know, our production profile and potential cash flows going forward. At least now there's some studies to support that. So that's great. And, you know, it allows our team now and our engineering team and our senior management team that have been working on these studies, you know, to focus on other, I would say more important things like what we're doing at our sites right now. So, yeah, it's great to have them done and out there in the public. Yeah.

15:41Jason Jessup: Yeah. Let's talk about potential re-rate for this. You mentioned, you know, having both studies out there, potentially could be a catalyst. The market's real shaky right now. I don't think anybody listening, that's going to be at any surprise to hear that. But what do you feel like the market's still missing with your stock? Is it execution risk, any sort of funding issues or something else?

16:06Mining Stock Daily Host: Yeah, I don't know. I think with this just coming out, we haven't really talked, in any great detail to any investors yet. And I think being able to put it all together, that people really understand to let the analysts get their models updated and get that out. I think that's what will result in us ultimately getting a re-rating. But again, that could take a few weeks. It could take a few months. And in the markets, what they're going to do, it is a bit of a poor sentiment right now in the markets. we're definitely along with you know all of our peers kind of facing that so hopefully we'll see some some better sentiments some more buying from the the generalists and you know that'll help everything including I think people just looking at our company again that maybe aren't right now

16:56Jason Jessup: okay well Jason congratulations once again good to connect with you and we'll be sure to get this out as quickly as possible so shareholders and people paying attention can listen into your your comments look forward to the next conversation i don't know any big piece of news yet to drop

17:12Mining Stock Daily Host: here that we need to be anticipating we'll be talking again for sure that's all i can say now it's uh yeah it's great talking to you and we will have more news coming out as things progress all right thank you so much everybody that's your update for magnum mining

17:26Jason Jessup: we've got more coming here on the channel so do stay tuned the information presented should not be considered investment advice 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.