Magna up 38.5% on Sudbury mining assets deal with KGHM
Magna Mining Inc. [NICU-TSXV, MGMNF-OTCQB, BYD-FSE] shares soared 38.5% Thursday after the company said it has struck a deal with a subsidiary of KGHM international Ltd. to acquire a portfolio of base metal assets in the Sudbury Basin in Ontario.
The KGHM Group has geographically-diversified mining assets in Poland, the United States, Chile and Canada.
Magna said it will acquire the producing McCreedy West Copper mine, the past-producing Levack mine, the Podolsky mine, and Kirkwood mine as well as the Falconbridge Footwall (81.41%), Northwest Foy (81.41%), North Range and Rand exploration assets.
“Upon closing of this acquisition, Magna will immediately become a copper and nickel mining company with an extensive portfolio of development and exploration assets in the premier critical mining district in Canada,’’ said Magna CEO Jason Jessup.
“We are not only acquiring a producing mine,’’ he said. “Along with the mine properties there is a dedicated team of management, technical, administrative and safety professionals, miners and maintenance personnel. This acquisition creates a clear pathway to realizing our stated goal of having three or more producing mines within three to five years.’’
Magna Mining shares jumped on the news, rising 38.5% or 32 cents to $1.15. The shares previously traded in a 52-week range of 93 cents and 37 cents.
Magna is an exploration and development company with a focus on nickel, copper and PGM projects in the Sudbury region. The company’s flagship assets are the past-producing Shakespeare and Crean Hill mines. The Shakespeare Mine is a feasibility-stage project with major permits for the construction of a 4,500 tonnes-per-day open pit mine, processing plant and tailings storage facility. It is surrounded by a contiguous 180 square-kilometre prospective land package.
Crean Hill is a past-producing nickel, copper and PGM mine.
Under the agreement with KGHM, Magna is paying $5.3 million in cash and delivering $2.0 million common shares on closing. It has also committed to make a deferred payment of $2.0 million cash by December 31, 2026, plus future contingent payments of up to $24 million upon satisfaction of future milestones.
Magna said it is negotiating a commitment letter for a $10 million three-year term loan facility, and a $10 million letter of credit facility with a subsidiary of Desjardins Group.
McCreedy West was initially developed and mined by Inco Ltd between 1970 and 1998, producing approximately 15.8 million tons of ore, grading 1.7% copper, 1.4% nickel and 1.5 g/t platinum plus palladium, plus gold. In 2002, the property was acquired by FNX Mining Co and was reopened in 2003. It is currently operated by KGHM.
McCreedy West and Levack area adjacent properties, located on the north range of the Sudbury Igneous Complex and host both contact nickel-copper mineralization, as well as high-grade copper-PGE footwall deposits. The McCreedy West Mine operates via ramp access from surface, and the Levack Mine primary access is via the Main Shaft. The two mines are connected underground on the 1600 level.