Magna Gold: A Growing Gold Producer in MexicoBy Alejandro Ehrenberg | Wed, 09/23/2020 - 14:20
Q: What is the history behind Magna Gold Corp and the San Francisco mine?
A: We created Magna Gold Corp two years ago. It is a Mexican company with Canadian capital: the top leadership and workforce are Mexican. We began trading on the TSXV on June 2019. At the time. we were an exploration company with a project in the Sierra Madre Occidental near Alamos Gold’s Mulatos mine and Agnico Eagle’s La India mine. The zone is called the Sierra Madre Gold Belt and hosts some of Mexico’s most important operations. Back then, our slogan was “an experienced startup.” It was a new company, with a highly experienced management team in all phases of mining projects in Mexico.
We now operate, produce and explore in Mexico. In 2019, our market cap on the TSXV was about US$12 million. At present, we are nearing US$100 million. To achieve this, we acquired the Mexican subsidiary of a Canadian company called Alio Gold Corp, which used to be Timmins Gold Corp. In fact, part of the management team at Magna Gold Corp founded Timmins Gold Corp in 2005 and acquired the San Francisco mine. The mine was abandoned and Timmins Gold Corp brought it into production in 2010. The processing plant had a capacity of 22,000 tons per day. Timmins Gold Corp graduated from the TSXV to the TSX, and it began listing on the NYSE. The company extracted about 1 million oz of gold and produced 850,000.
Magna Gold Corp started a new operation and production results have been strong. We are undertaking an optimization plan for San Francisco to increase reserves in the short term. As of August 28, 2020, the Company released an updated prefeasibility technical report that shows a geological resource of 1.43 million oz of gold and an eight-year production plan that mines almost 760,000oz and produces 530,000oz of gold over that period. The report shows an after tax net present value of US$230 million at a 5 percent discount rate. Magna continues carrying out an aggressive drill program and optimization studies to increase mine life and reduce costs. Our goal for 2023 is to be producing 200,000 gold oz per annum with several mines in operation. Our goal is to have gold and silver reserves totaling 5 million oz.
Q: What are the main problems that Magna Gold Corp inherited from San Francisco’s former owners and how are you solving them?
A: There were three main issues. First, large tonnage deviations. Second, low metallurgical recoveries. Third, operational disarray. Regarding the first issue, there were attempts to process low grade ROM material with zero recovery. There were deviations in the tonnage to be extracted and hauled. In their laudable intention to optimize the mine, they did not plan correctly in the very short term. The long-term planning was reasonable, but open pit mining is about making a series of precise short-term moves. Events started to pile on each other and became obstacles. The need to find available ore began to exert pressure on the management team, who decided to focus on areas with exposed mineral outside of the original plan, neglecting other important areas. The time came when they ran out of minerals to extract and therefore stopped producing. We have resolved all those issues by new planning and executing with the right people.
Q: What are Magna Gold Corp’s exploration plans?
A: The San Francisco purchase agreement included a concession package of around 41,000ha. The concessions contain high grade silver in addition to gold. It is a priority for us to employ focused exploration to expand our geological and mineable resource. We are currently carrying out infill and expansion drilling in and around our two operating open pits and expect to add at least 250,000oz by year’s end.
Magna Gold Corp is a mineral exploration company focused on acquiring, exploring and developing quality precious metals properties in Mexico. It has highly experienced mining professionals with a proven track record of developing properties in Mexico, from discovery to production.