by Mike Fagan
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Magna Gold Corp. (TSX-V: MGR)(OTC: MGLQF) – currently trading below US$1.00 per share – is a Canadian-based gold-silver company engaged in production, acquisition, exploration, and development operations in Sonora, Mexico.
The company’s flagship asset is the producing San Francisco Gold Mine. Earlier this summer, Magna |
released a Prefeasibility Study on the project outlining a scenario for average annual gold production of 69,000 ounces per year at all-in sustaining costs of US$1,204 per ounce.
Magna president & CEO, Arturo Bonillas (whom you’ll be hearing more from in just a moment), said “So we have about 1.5 million gold ounces in the resource. The resource was run at $1,500 gold for our estimate. Out of that, we have a mine plan for the next 7.5 to 8 years. We are mining 758,000 ounces and we are producing 527,000 ounces over that period of approximately 8 years at a rate, between 2021 and 2028, of close to 70,000 ounces per year.”
Heading into 2021, the primary goal is to continue to build shareholder value by rapidly bringing the mine to full-scale operations via an aggressive yet disciplined program of drilling, mine optimization, and reinvestment all while maintaining a sharp focus on minimizing shareholder dilution.
At the same time, Magna is advancing its other Mexican gold-silver projects (La Pima, San Judas, Mercedes, and Los Muertos) and recently entered into an agreement to acquire the Margarita silver project in Chihuahua, Mexico.
So lots going on and certainly an exciting development stage for Magna.
In addition to gold production at San Francisco – drilling is underway on multiple projects within the same mining district that hosts the company’s flagship operation.
Thus, regional expertise is very much in-play here as the company progresses toward becoming a new mid-tier gold-silver producer in Mexico.
Arturo Bonillas, CEO, boasts forty-plus years in the Mexican mining industry and is the former president of Timmins Gold. And the company’s VP of Exploration, Miguel Soto, also brings four decades of regional expertise to the Magna team.
Our own Gerardo Del Real of Junior Resource Monthly and Junior Resource Trader recently caught up with Mr. Bonillas for a fascinating look at all things Magna. Please enjoy!
You can also click here for our most recent report on Magna Gold.
Yours In Profits,
Mike Fagan
Editor, Resource Stock Digest
Magna Gold (TSX-V: MGR)(OTC: MGLQF) CEO Arturo Bonillas on Building the Next Mid-Tier Gold Producer
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| Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of one of my favorite speculations in the mining and exploration space, Magna Gold (TSX-V: MGR)(OTC: MGLQF), El Señor Arturo Bonillas. Arturo, muy buenas tardes. ¿Como estas? |
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| Arturo Bonillas: Buenas tardes, Gerardo. Great to hear you. |
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| GDR: It's great to hear you. I know you're in Europe. Right, Arturo? |
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| AB: Oh, actually I'm in Mexico, but I'm presenting at the European summit via a website with a London time. |
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| GDR: Well, virtually you're in Europe, you're working off of London time. |
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| GDR: Excellent. Let's get right into it. You provided an update on the mine performance and an operational update for the end of Q3. I would love you to provide the details. There's a lot going on. As I mentioned, exploration, development, you're processing fresh ore, and it looks like you're on track for 2021, a resumption of full mining activities, which is exciting. |
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AB: Yeah, that's right, Gerardo. We are very happy with the progress that we have been making. The first five months since we took control of operations have shown better than expected results and we will summarize it quickly. We've sold 12,408 ounces of gold since May. We have had a cash operating cost of $50.1 million and sales up to $22.4 million with an operating profit of $7.3 million US.
We are happy we have placed most of the operating profits back into the mine. We’ll be investing in much needed maintenance. And we also have put money back into developing the underground mine, which is looking better and better every time. We began pre-stripping both La Chicharra and San Francisco. So we're ramping up quite nicely, according to plan. And we have initiated the next phase of this ramp up, which is a very aggressive drill program, which is aimed at adding reserves to the San Francisco pit. We're not drilling here to explore, we're drilling to add reserves. We have a very aggressive plan and we should have a new mine plan updated early in the year, as I mentioned before. And I think we’re looking very good, Gerardo. |
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| GDR: Arturo that mine plan is going to be very critical for setting the stage in 2021, because as I understand it, you're looking to improve the gold recoveries. You're looking to lower the cash costs, which of course is going to increase the profitability. And you mentioned that you're not looking to explore in regards to La Chicharra and San Francisco, the open pits there, but you are exploring at other properties. So first let's talk about the guidance that we're all hoping for in early 2021. And then we can talk about exploration, which as you know, I'm excited about because you're drilling the high grade silver La Pima target and you also have satellite deposits that it seems like you're contemplating bringing into the production profile. |
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| AB: That's right. So let's get back into separate deposit areas for the San Francisco mine, the producing mine. The target there is to add ounces as soon as possible to the current mine plan and have a new mine plan early in the year for drilling. And I'm talking about infill drilling of the San Francisco pit, Chicharra, and also the underground mines, which is giving us very good surprises in one area. We will have the new business plan for next year, the beginning of next year, and the exploration areas we are drilling on La Pima, the silver targets. I'll give results later when I'm allowed to give them to the public, but it's looking good. We’re also very close now to begin preparations to build a small process facility up at the Mercedes pit, which will generate sufficient cash next year for self exploration. Very, very interested in that. Very, very advanced. We have most of the permits. So we'll have another producer up in the mountains and that shall extend the orebody as we keep drilling. And there are other projects that we will be acquiring in the gold and silver districts. So it's a lot going on. |
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| GDR: With all of this activity, Arturo, what does the balance sheet look like? Because you don't have warrants outstanding. You haven't raised any capital for months on end, and it doesn't look like you need to. |
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| AB: Well, we maintain a stable balance sheet and treasury. We have been relying on the operations of the San Francisco mine, which I said is performing very well. And we'll be putting money back into the mine. The balance sheet is fine, but we will probably need to raise some money later because we have a lot going on – many projects that you will see. It will be unfair to put all the weight on the mine. But no, we're good. We're happy and we will help sustain the operation and there will be self-sustaining or escalation properties also. |
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| GDR: Excellent. And the way I understand it, as of September 30th, you had a consolidated cash position of approximately $11.2 million US, correct? |
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| AB: That's correct. Yeah. That's our cash position at the end of September. And we plan to maintain, if not increase that cash position towards the end of the year. Remember, we are ramping up a San Francisco pit and as we progress, we will have lower operating costs. As we put more ore into the leach pads we will be reducing the cost next year substantially with the introduction of the underground mine, and because that'll lower the cost in the higher grades and also the economies of scale. And we expect to publish a larger mine plan which will also have an effect on our operating costs. So you'll be seeing that over the course of the next few months. |
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| GDR: So to summarize gold, silver, exploration, development, production, and just for fun, you're aggressive on the M&A trail. |
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| AB: You’re correct we continue on the trail. |
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| GDR: Arturo, Thank you so much for the update. It was a necessary one. I'm excited to see things are on schedule or ahead of schedule in many instances. And I can't wait for the next update and results from the high grade La Pima silver target. Thank you so much Arturo. |
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| AB: Thank you. Have a great day. |
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Let's get it!
Gerardo Del Real
Editor, Resource Stock Digest
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Resource Stock Digest, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.
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