Magna Mining Shares Soar on $9.3 Million Sudbury Asset Acquisition
Magna Mining Inc. (TSXV: NICU) has made a major move to solidify its presence in the Sudbury Basin, one of Canada’s most prolific mining districts. The company entered into a definitive share purchase agreement to acquire a portfolio of base metals assets from a subsidiary of KGHM International Ltd.
This acquisition includes the producing McCreedy West copper mine, alongside the past-producing Levack, Podolsky, and Kirkwood mines. Additionally, Magna gains control over key exploration assets, including Falconbridge Footwall, Northwest Foy, North Range, and Rand.
The deal is structured as a share purchase transaction through which Magna will acquire all outstanding shares of Project Nikolas Company Inc., a subsidiary of KGHM’s FNX Mining Inc. The agreed purchase price consists of: $5.3 million in cash upon closing, $2.0 million in Magna common shares issued at closing, a deferred $2.0 million cash payment due on December 31, 2026, and contingent payments of up to $24 million, based on future milestones.
Magna is also negotiating a term loan facility of $10 million and a Letter of Credit facility of another $10 million from Fédération des caisses Desjardins du Québec to fund the purchase.
“The intent is to finance the purchase using debt facilities, which will reduce our dependency on raising external equity. This fits with our approach of growing Magna in a capital-efficient manner,” said Paul Fowler, Senior Vice President at Magna.
Assets in the Acquisition
The portfolio Magna is acquiring contains a mix of producing and past-producing mines, along with several high-potential exploration properties.
- McCreedy West Mine: The mine is currently operational and produced 317,660 tonnes of ore in 2023, at grades of 1.59% copper, 0.23% nickel, 0.01% cobalt, 1.03 grams per tonne (g/t) platinum, 1.34 g/t palladium, 0.41 g/t gold, and 14.05 g/t silver. McCreedy West has a rich history, having produced over 6.3 million tonnes of ore since its re-opening in 2003. The site includes three key production areas and holds significant resource potential.
- Levack Mine: This mine has been on care and maintenance since 2019. However, its underground infrastructure remains intact, with shaft access down to the 2,650-foot level and ramp access extending to 5,400 feet. Levack is considered a prime candidate for a potential restart, especially given the promising near-surface nickel and copper zones.
- Podolsky Mine: This mine has been dormant since 2013 but also presents considerable potential for a restart, particularly in its copper-rich North Zone and the nickel-focused Ramp Deposit.
- Kirkwood Mine and Exploration Properties: While the Kirkwood mine is also inactive, the exploration properties included in the deal, such as Falconbridge Footwall, Northwest Foy, North Range, and Rand, add significant long-term upside for Magna. These areas, located within the highly mineralized Sudbury Igneous Complex (SIC), are believed to harbor substantial untapped resources.
CEO Jason Jessup stated that this “acquisition will make Magna a copper and nickel mining company with an extensive portfolio in one of Canada’s most important mining districts.”
Jessup further noted the untapped potential of the assets, particularly those that had not received adequate capital investment under previous ownership.
“These mines have enormous resource potential, but they have been undercapitalized for years. By reinvesting profits from McCreedy West, we plan to accelerate exploration and development, aiming to bring more assets online in the next few years,” he added.
Following the news, the company saw its stock price soar more than 34% today.
The company has publicly stated its goal of operating at least three producing mines within the next three to five years. The acquisition of McCreedy West and the other properties marks a significant step toward achieving this target.
The McCreedy West and Levack mines have a long history of production dating back to their initial development by Inco Ltd. in the 1970s. Between 1970 and 1998, McCreedy West produced approximately 15.8 million tonnes of ore, grading 1.7% copper and 1.4% nickel, along with platinum group elements (PGE) such as platinum, palladium, and gold.
FNX Mining Inc., which acquired the property in 2002, reopened the mine in 2003. Since then, McCreedy West has contributed another 6.3 million tonnes of ore, with notable production from both its nickel and copper zones.
Levack, meanwhile, remains a key potential asset. Its proximity to McCreedy West, coupled with existing underground infrastructure, makes it a strategic part of Magna’s future production plans. The two mines are connected underground via a haulage drift, which offers operational efficiencies if Levack is restarted.
Magna plans to leverage the synergies between its existing projects and the newly acquired assets. Their Crean Hill project, another key property in the Sudbury Basin, is expected to benefit from the acquisition of McCreedy West and Levack.
“We see a lot of synergies between McCreedy West and our Crean Hill Project,” Jessup remarked. “Combining these assets creates a clear pathway to establishing Magna as a leading producer of critical minerals.”
The acquisition comes at a crucial time for the global mining industry. Copper and nickel are essential components in the transition to renewable energy, particularly in the production of electric vehicles (EVs) and batteries.
The transaction is expected to close by late 2024 or early 2025, pending regulatory approvals and due diligence.
Magna Mining last traded at $0.83 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
