Magna targets late-2027 ore sales at Crean Hill

Magna Mining (TSX: NICU; US-OTC: MGMNF) on Tuesday approved construction to start next year at its past-producing Crean Hill project in Ontario, advancing plans to become a three-mine producer in the Sudbury Basin.

A new prefeasibility study, also released Tuesday, estimates initial capital spending of $127 million (US$90.4 million) for 12 years of commercial production. Formal construction at the project, about 350 km northwest of Toronto, is expected to begin in the first half of next year.

“Crean Hill also benefits from a balanced mix of copper, nickel and precious metals production, providing meaningful exposure to seven payable metals without an overreliance on any single commodity,” CEO Jason Jessup said in a release.

The decision adds another development to Magna’s operating McCreedy West mine and Levack restart earlier this month. Desjardins analyst Bryce Adams Wednesday called the update “slightly positive,” saying board approval reduced risk on the path to production. The study’s valuation broadly matched his model, although initial capital was about a third above his $95-million forecast.

Shares gained almost 1% to $2.18 apiece by mid-Wednesday in Toronto, valuing Magna at about $680 million. Adams rates the stock “buy,” with a speculative risk designation and a $5 price target.

$251M value

The base case values Crean Hill at $251 million after tax, using a 7% discount rate, with an internal rate of return of 43%. The estimated 1.5-year payback starts after the three-year construction and ramp-up period.

Those estimates assume copper at US$5.10 per lb., nickel at US$8 per lb. and gold at US$3,600 per oz., alongside platinum at US$1,500 and palladium at US$1,200 per ounce.

During commercial production, annual payable output would average 9.5 million lb. copper, 7.5 million lb. nickel and nearly 42,000 oz. of platinum, palladium and gold combined, according to the study. Precious metals would provide about 39% of revenue.

2030 commercial output

Crean Hill last operated in 2002. Magna acquired the property in 2022 and the revamped project’s first ore sales are expected in late 2027, ahead of commercial production in early 2030. Magna plans to spread initial capital spending over three years, with $33 million next year, $35 million in 2028 and $59 million in 2029.

The company calculates a net initial funding requirement of $72.4 million after $17.2 million in anticipated refundable tax credits and $37.4 million in projected operating cash flow during the ramp-up.

While the construction bill remains the same, Magna’s lower funding estimate assumes it receives expected tax credits and earns as much as forecast from early ore sales.

The company holds cash and equivalents at about $175 million, calculated from Magna’s June balance plus net proceeds from Alpayana’s $140-million equity investment, which closed Aug. 28. The funds support development across Magna’s portfolio.

Magna plans to sell Crean Hill ore to an existing third-party mill in Sudbury. Miners would initially use a new ramp descending from surface, then restore the former No. 2 shaft to hoist ore as workings deepen.