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Magna Gold (TSX-V: MGR)(OTC: MGLQF) VP Amandip Singh on New High-Grade Silver Discovery at Margarita Project, Chihuaha Mexico
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the VP of Corporate Development for Magna Gold, Mr. Amandip Singh. Amandip, how are you today? It's great to have you back on.
Amandip Singh: Yeah, thanks for having me. Doing great. A lot of excitement around here and always love the opportunity to catch up and keep all the listeners and investors informed of what we've done and where we're going. And yeah, thank you for taking the time.
Gerardo Del Real: No, listen, I interacted privately a few weeks back with Arturo and reached out and obviously some great news today that we can get to, but, yeah, I know that the Magna team is a close team, a very close knit group, and obviously it would behoove us to definitely just ask, right? Us as shareholders and my readers and subscribers that are shareholders and human beings, how everyone's doing after the fatal accident at the San Francisco mine. There are multiple fatalities, obviously a sad, sad, sad time, and condolences to you and everyone on the team and the families of those affected, right?
Amandip Singh: Yeah, absolutely. I mean, we like to think of ourselves as a family first and coworkers second, and yeah, obviously an accident like that... It was an accident, it's tragic and it has effects on morale but we've complied with all the investigations, they came in and gave us the green light to get operations back up and running. So as of the 25th, the mine was back to its full operations.
But I mean, those are operations and there's always a tomorrow for the mine, but yeah, it was tragic and we're all very saddened by the loss of our very close colleagues and the company is... We're offering any sort of support and help that coworkers may need or any support that the family would require. We're there for them and again, certain things are more important to us than just production numbers and we're going to be there for them.
Gerardo Del Real: Agreed, agreed. Again, all the best vibes and all my condolences to everyone at the Magna team and the families and loved ones. Let's pivot a little bit and let's talk some good news, right? Let's try to put a smile on here. You just drilled 12.8 meters of 498 grams per tonne silver within 55.95 meters of 155.86 grams per tonne silver, starting three meters from surface. Mind you, this isn't at the San Francisco mine. This is for a project you're getting zero credit for, the Margarita Silver Project.
I'm going to quote Arturo Bonillas, obviously president and CEO, Arturo Bonillas. This was his quote in the release.
"The drill program at Margarita has been a huge success with every drill hole returning high grade values over significant widths. The drilling has exceeded our expectations and it now appears the system is wider, higher grade and closer to surface than what we thought going into the campaign."
Now, that quote stands out to me because in the bit of time that I've known you and the now lengthy time that I've known Arturo, I know Arturo to be extremely conservative, usually over-delivering, under-promising and doesn't excite easily and especially doesn't excite easily when it comes to exploration, right? He's an engineer. He's great at getting mines to full production, turning things around, maximizing every bit of shareholder value from it. But drilling for him is something that I think is more of a mechanical exercise at times, at least that's how he tends to express it. To hear him this excited, the team's got to be excited about this discovery.
Amandip Singh: Yeah, absolutely and I think one of the things is, as you mentioned, Arturo. He's a mine builder, he's an engineer and I think this drilling just puts him that much closer to his dream of building a new mine in Mexico. Obviously more work is required, but I think the results are painting a very compelling picture towards that coming into fruition. Again, what we're going to do is we're going to have a resource estimate towards the end of the quarter. That's going to lead into a PEA and we hopefully are going to have Arturo in a position to make a construction decision sometime later this year, and then it's off to the races and then this becomes more than just a story of drilling.
But like you mentioned, the Margarita project, it's not something that we're getting any value for. On our end, we acquired this asset from Sable Resources as you know the history of it, and hats off to them. They did a great job with the preliminary exploration work and they gave us a great foundation to move this thing forward. But yeah, there's no value to it, but we wanted to unlock that value and again, with our resource definition program, that's what we strive to do. And I think now, when you look at the valuation and you look at our market cap, one could make the argument that this project alone could support our current market cap and when you look at it relative to our peers that are drilling, this drilling is in line with, if not well ahead of, a lot of the drilling that we're seeing and we're overly excited about it.
And when you mention those intervals that we highlight, I think another key thing to take away from this is we report the silver values as silver values. We're not playing any sort of alchemy games by doing equivalents, because for one, we're not at the point where we can accurately estimate those recoveries, but at the same time, this paints a more real picture of what the precious metal endowment really is there without playing that chemical sort of mystery and magician work, that some people might want to see.
Gerardo Del Real: Listen, some companies do it, some companies don't. I think we all know the groups that tend to go that route. Kudos to Magna for not going that route, and also kudos for being very transparent about the true width, right? And so it's encouraging to me to see that the higher grade zones maintain an average true width of approximately four and a half meters. This isn't a centimeter type vein, a one meter wide vein. We're talking an average width of four and a half meters. And again, to provide a bit more context for those that don't want to read through the release, these 22 holes, there's 43 in all. These are results from the first 22. Every single one intersected the main mineralized Margarita system with mineralization beginning at or near surface. It doesn't get much better than that, especially considering where the project is, right?
Amandip Singh: Absolutely. Absolutely. And I think you nailed a real solid point there. Having that surface expression, when we go on and do our economic studies, it gives us a bit of optionality on extraction methodologies and it allows us to do these trade off studies and come up with obviously the best path forward to maximize the value of this project. And we've been very fortunate. Oftentimes you're not lucky enough to have mineralization so close to surface and so potentially amenable to easy extraction.
Gerardo Del Real: And again, look, I read the headline, right? 12.8 meters of 498 grams per tonne silver. But look, let me read some of these other numbers. You have intercepts here of 25.5 meters of 156.6 grams per tonne silver. You have an intercept 21.5 meters of 91 grams per tonne silver. You have a five meter intercept of 301.03 grams per tonne silver. I could go on. I encourage everybody to click on the release and go through the results. 2.85 meters of 801.33 grams per tonne silver. So again, the widths, the grades, the near surface expression, all lead me to believe that this is going to be a fun 2022 year.
And privately I've said that I've always thought that the silver project should be spun out into a company called Magna Silver. We'll see if that ends up playing out before year end, but I absolutely agree with you that just based on this project alone, you can make a pretty compelling case that this project now deserves that kind of market cap that Magna has and oh yeah, by the way, you have 3 million gold ounces and you're producing... What's the guidance this year? Are we still at 75,000?
Amandip Singh: So we are 65 to 75,000 is what we're guiding for this year.
Gerardo Del Real: And all in sustaining cost? Give me a ball park.
Amandip Singh: Well, we've estimated cash costs at $1,250 to $1,350 this year and I guess we'll guide for ASIC sometime down the road, but we like to look at operating cash flow at first. When we look at our asset base, I think the cash costs for us are really important to just ensure that the asset supports its own operations and I think the cash costs paint that picture very clearly, especially in today's gold price environment.
Gerardo Del Real: You're looking to publish a maiden resource on Margarita toward the end of the first quarter. There's not a lot of first quarter left. Is that still the target?
Amandip Singh: Absolutely. So we are working tirelessly towards that. Actually just had a call today with our resource team and again, they're working hard, coming along and as we've done so far in the history of Magna, we tend to deliver on schedule, on budget and I don't anticipate this being any different.
Gerardo Del Real: Well, if you're going to have a maiden resource expected by the end of the month, then I would assume that the other pending 21 drill holes will probably be in imminently?
Amandip Singh: Yep, absolutely. So a lot of the drill results that we've gotten, we do have a lot of these results back, but they were preliminary in nature, which basically means that the certificates have not been signed, sealed, and delivered. However, we have a sense of those and I think that portion to go from a preliminary result to the certificate, it's not that much of a stretch.
Gerardo Del Real: Well, it sounds like I'll be having you or Arturo back on here soon. I want to thank you so much for the time. I got to ask you before you leave, walk me through and paint a picture briefly of what the rest of the year is going to look like for Magna Gold and shareholders.
Amandip Singh: So I think, again, we're always focused on the San Francisco asset. We are doing an infill campaign there. We should be publishing a revised and optimized mine plan sometime later in the year. Obviously drill results are going to continue from the Margarita project and I think the real value drivers are going to be that maiden resource estimate and then shortly thereafter, we will be publishing a PEA and again, the PEA for us, like I said, people don't even know that this is an asset that we own. That will deliver a tangible number that we can all point at and build real value for our shareholders.
Gerardo Del Real: Looking forward to it. Thank you so much for your time, looking forward to having you back on.
Amandip Singh: Awesome, buddy. Thank you so much.
Gerardo Del Real: All right, Amandip, you take care now.
Amandip Singh: Yep. Bye.