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Magna Gold Quickly Morphing Into Midtier Gold Producer
Magna Gold (TSX-V: MGR)(OTC: MGLQF) CEO Arturo Bonillas on Attaining Full-Scale Commercial Production at Flagship San Francisco Gold Mine, Sonora, Mexico
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of one of my favorite junior resource companies, Magna Gold, Mr. Arturo Bonillas. Arturo, felicidades y muy buenas tardes! ¿Cómo estás?
Arturo Bonillas: Gerardo, muchísimas gracias! I'm very well, thank you.
Gerardo Del Real: I congratulate you because a couple of years ago, two or three years ago now, we sat down together when Magna Gold was a new company without a flagship asset.
And when we sat down at Beaver Creek, we had a conversation, and you told me then that in two to three years time, you saw yourself in full production… you saw yourself exploring multiple properties… and you saw yourself on the M&A trail with a goal towards a production profile of 200,000 ounces per year and 5 million gold ounces or gold ounce equivalent in reserves.
Here we are, June 29 2021, you just announced full-scale commercial production at the San Francisco Mine on schedule. So congratulations are absolutely in order. You've done everything that you said you were going to do and then some. And I suspect there's a lot left to do. But first things first, congratulations, Arturo!
Arturo Bonillas: Well, thank you very much, Gerardo! I'll never forget that interview at Beaver Creek. And exactly, that's what we said we wanted to do and we are here. So thank you very much.
Gerardo Del Real: Let's talk about the last year, year and a half of getting a lower strip ratio, refurbishing the mine, achieving over 3.5 million man hours without one lost-time incident.
I know it's easy to focus on the numbers and the production profile because that's exciting even if gold never goes up another dollar, right? But I also want to take a second and just congratulate you on the 3.5 million man hours without a lost-time incident.
I think it speaks to the professionalism of the team and the attention to detail. And a lot to celebrate. Walk me through where you're at now as far as the production profile goes moving forward and what guidance looks like the rest of the year.
Arturo Bonillas: Of course, but first, I'd like to tell you that I'm very proud of the team. We did reach a monumental milestone. It took a lot of passion and resourcefulness. And we did this, as I said, with no financing, very little money. So we are very, very proud of the team and very, very happy about where we're at.
So now, as of June, we have reached the point where we have completed the necessary removal of waste to take us to a sustained flow of ore through the process facilities. And to continue with numbers, we’re coming from a strip ratio of 8:1 over the last 12 months to a strip ratio of about 3:1 moving forward and eventually going down to 2.5:1.
And this month, we'll announce the production results a couple of days after month-end that they look according to plan. And we will continue the next two or three months at a run rate of about 6,000 ounces per month. That's Q3. And we plan to exit the year at around 7,000 to 7,500 ounces per month. And that is actually being accomplished; we have a very solid mine plan for what follows.
We are also improving our metallurgical recoveries. And we now are entering a phase of growing the ore reserves at the mine and also a phase of developing exploration properties. So we're very happy about what follows here.
Gerardo Del Real: You mentioned the strip ratio and lowering that strip ratio. For those that are not familiar with strip ratios and how important that is to the bottom line, can you provide just a brief overview of the drastic improvements that you've made in a very short amount of time and how you've been able to get there?
Arturo Bonillas: Yes, strip ratio is a measure of mine performance. Generally, we produce a mine plan with the life of mine strip ratio, which, fundamentally, an 8:1 strip ratio is removing eight tonnes of waste — that's inert material — for every one tonne of ore.
So just imagine the effort we'd have to do to remove eight tonnes for one tonne of ore. We were doing that last year. Now, we have reached a point where we need to remove only three tonnes of waste for every one metric tonne of ore. That has a tremendous effect on cost.
Quickly, during the last year, we had to remove about 650 tonnes for every ounce [of gold] we deposited on the leach pad. That has come down to about 300 tonnes for every ounce of gold we deposit on the leach pad. So there's a big measure of how our costs will be reflected in the rest of the life of the mine.
Gerardo Del Real: You recently, also, back in May, secured C$10 million in funding with a founding and strategic shareholder to really focus on growing the reserve base. How is the exploration aspect of Magna coming along because I know you're always busy on the M&A trail?
I know your network is a deep network in the space, and you're always, always looking for accretive deals. But as far as what's there right now, how are things coming along on the exploration front?
Arturo Bonillas: Extremely well. We prioritize our exploration targets according to what gives to the company more value in the shorter term. The most advanced properties are the ones that we will be beginning with.
Number one is the Margarita Silver Project in the state of Chihuahua. That is a very high-grade underground ore body that we will drill the rest of the year. Not only that, we plan to complete a preliminary economic analysis by Q1 of next year. And that deposit has been already confirmed as far as grades and widths of that underground deposit. And it's only been partially explored. So that's our first priority.
Also very close in the priorities, something that we will do concurrently, is the drilling of a potential satellite open-pit four kilometers north of the San Francisco Mine, which will serve as a feed to the process facilities we have. That one is something that we will do very fast. We had drilled it years ago. And I think that we will be increasing the mineral reserves there.
And then, we have San Judas and La Pima and Los Muertos, which are the other properties that we control. But we have to prioritize and spend our money adequately. And I'm talking about properties outside the San Francisco Mine. The San Francisco Mine itself, we will continue to drill. We are doing a lot of additional geological work, and we’ve found incredible potential there to continue growing at the San Francisco Mine. So that's our strategy on exploration.
Gerardo Del Real: And you still are on the M&A trail. And I know that you can't say much but I know you, Arturo, for years now, and I know that every time you get quiet, it tends to mean that there's a lot going on in the background. But again, just to be clear, the main focus is adding high value ounces to the reserve base, correct?
Arturo Bonillas: That's correct, yes. We have sufficient to create an intermediate gold producer as we are. And we were on sort of a wave there when we spoke in Beaver Creek so we are on the right track. But M&A continues to be very important, especially, we're looking at opportunities that make sense to us at our size and given our strength and the region also.
Gerardo Del Real: Arturo, congratulations to you and the team. Thank you for the time. I know you're busy so I'm going to let you get back to it.
But I'm looking forward to exploration results, and, of course, seeing that production profile continue to trend in the right direction, which is lower strip ratio, more ounces per month. And then, let's see what other surprises you have in store. Thank you so much, Arturo.
Arturo Bonillas: Gerardo, we'll be talking to you again. Thank you.
Gerardo Del Real: Alright, stay safe. Take care, bye now.
Arturo Bonillas: Goodbye.