Categories: Precious Metals
Topics: General Precious Metals

Magna Gold (TSX-V: MGR) CEO Arturo Bonillas with an Update on Operations at the San Francisco Mine in Mexico

July 10, 2020

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Magna Gold (TSX-V: MGR)(OTC: MGLQF), Mr. Arturo Bonillas. Arturo, muy buenas dias. Como estas?

Arturo Bonillas: Muy buenas dias. Muy bien. Thank you very much. We are all very happy about the things that are going and developing. We are also very happy to give you an update. I like giving you this update on a monthly basis, so we're ready.

Gerardo Del Real: I appreciate the time and the update, Arturo. The share price obviously has responded well. I am of the opinion that this is just the beginning. Let's start with what's already happened and then we can talk a bit about what's going to happen. 

During the first two months of operations, the San Francisco Mine reported sales of $8.53 million – that's in U.S. dollars – and operating costs of $3.77 million with the margin, of course, of $4.76 million. The company produced 5,087 ounces of gold and you sold 4,977 ounces, at an average cost of $741 per ounce of gold produced and $758 per ounce of gold sold. Can we talk about those numbers, Arturo?

Arturo Bonillas: Yes, those are the correct numbers. All that production came from the residual leaching. We made some improvements on the leaching. The numbers of production were expected to be lower, but we did much higher. We made some quick improvements. We also began processing the low-grade stockpile that we have been announcing. We started that about 10 days ago. That shall be reflected until second part of this month. We refurbished the maintenance to the processing conveyor belts, because they had not been used for a while now. We spent some money there. As I said, we made the important improvements in the leaching and circulating over the leach solutions that are already there, but we're processing the residual leaching.

One important thing, which is a bit technical, but we reduced our crush size significantly on our ore to get additional recoveries from the low-grade stockpile and when the fresh ore is being processed the next month. That is also helping. The numbers you mentioned are correct. We have at the end of June $8.4 million U.S. dollars in the bank, just at the San Francisco mine. That does not include the money we raised in the latest private placement. Things are going well. 

We currently started infill drilling around the pits as we had said. The purpose is to increase our guidance for this year. We're finding other areas of opportunity that are quite interesting. The people and the workers are doing very well. They're all healthy. We have had no cases of COVID. In general, that's how the mine is performing, Gerardo.

Gerardo Del Real: Excellent. Magna ended the month –I'd just to follow up on your comment there about the cash position – I believe the month of June closed with $14.3 million in cash. You mentioned drilling that's ongoing. There's also a pre-feasibility study that's expected by the end of July that's going to include something I'm excited about, which is forward looking guidance, which obviously you have not been able to give to date. Can you speak to that a bit? Is that on track?

Arturo Bonillas: That's on track, yes. We will be providing guidance for the rest of the year in August when we finish the technical report. The technical report is being carried out by Micon Engineering from Canada. They are on time. They are in our data rooms and reviewing the block model and also our costs, et cetera. That's on time. 

We ended with over $14 million in cash, which is nice to have. The money we raised up to now, we have not had the need to use it on the operation. The operations are, as you can see, self-sustainable, sort of bootstrapping and that's our philosophy of working there. We will use the money that we raised for exploration drilling in other areas for the exploration pipeline. We will separate that from the mine performance.

Gerardo Del Real: That's a very, very good overview. Can we talk a bit about the drilling? I want to remind everybody just how exciting the upcoming drilling at La Pima is. Frankly, you have a couple of properties that you're hoping to drill before year end, correct? Including the San Francisco mine and the surrounding pits.

Arturo Bonillas: That's correct, yes. The exploration pipeline that we have already agreed with surface owners that La Pima had mentioned before in our previous interviews of La Pima is a very interesting silver high-grade project that we have. It's an old mine. You see a lot of old workings and underground workings that were done by settlers in the early 1900s. 

We are going to start drilling as soon as we get the permit. Right now we are doing geophysics, but we do have the location of the holes and lots of samplings. As soon as we get the permits from the environmental authorities, we will start doing that. We are hoping to get those permits within this next 6 to 8 weeks. The offices of the environmental authorities continue to be closed, but they shall be opening soon. We have prepared all the documentation.

Also in addition, there's another area we call Veta Tierra. They're going to start drilling that also this year, very soon also, because Veta Tierra it's a target that we didn't complete drilling in the previous years we were there. I think that could become potentially a short-term fit to feed the crushers. Crushers have a lot of capacity.

Before the end of the year, also, we want to see if we can begin drilling the San Judas property, though we announced that it will happen next year. We are doing a lot of exploration work there also. We are determining the drill targets. That's very exciting in addition to the infill drilling that we already began.

Gerardo Del Real: It's a lot to like, Arturo, a lot to look forward to. I've come to know you pretty well, and I can anticipate that if you think you might be drilling multiple projects by year end and producing from multiple projects starting early next year, that you're likely to get that done sooner rather than later. You've done nothing but over-deliver and under-promise. Congratulations to you and your team. Stay healthy, and I look forward to having you back once we can start talking about guidance.

Arturo Bonillas: Absolutely. One milestone that was very important for us during the month of June is that we concluded the lawsuit that the company has with the mining contractor. That was a big accomplishment. That loss, it was reaching $40 million. We're able to resolve that with much less cash, and we're moving forward with same contractor. I know they're very happy, so that that's important to mention.

Gerardo Del Real: Excellent, excellent. Arturo, thank you for your time. Please stay safe and then we'll chat soon again.

Arturo Bonillas: I will thank you very much for the opportunity to tell your audience and the investors what we're doing. Let's keep it going. Let's keep this routine going and again. Thank you very much.

Gerardo Del Real: Well, you're giving me lots to talk about, which is good. Thank you.

Arturo Bonillas: Thank you. Goodbye.