Magna Mining to acquire Sudbury nickel-copper-PGE assets in ‘transformational’ deal

Magna Mining (TSXV: NICU) has entered into a definitive share purchase agreement to acquire Lonmin Canada (Loncan), whose assets include the Denison project and the past-producing Crean Hill nickel-copper-PGE (platinum group elements) mine, both located in Ontario’s Sudbury basin.

Magna will pay a total of $16 million for the assets, as per a share purchase agreement between Magna, Loncan and current Loncan shareholders — being Sibanye UK Ltd. (formerly Lonmin Ltd., and a subsidiary of Sibanye Stillwater [NYSE: SBSW]), Wallbridge Mining (TSX: WM) (16.5% ownership) and certain other minority shareholder. The purchase price for the outstanding shares of Loncan includes a closing payment of $13 million in cash and a deferred payment of $3 million.

“We believe that this is, in every sense of the word, a transformational acquisition, and it is a key milestone in our vision to become the next mid-tier nickel producer in Canada,” Magna’s CEO Jason Jessup said in a statement to shareholders.

The Denison project is located 37 km east of the company’s advanced-stage Shakespeare project. It was previously known and operated as the Crean Hill mine, which Inco operated during three separate periods from 1906 to 2002, producing a total of 20.3 million tonnes grading 1.3% nickel, 1.1% copper, 1.6 g/t platinum, palladium and gold. In 2018, subsequent to the mine closing, Loncan entered into an agreement with Vale (NYSE: VALE) — which now owns Inco’s assets — regarding the transfer and development of the Denison project.

The project hosts multiple, well-defined PGE-rich zones that were explored after the operations were suspended. Recent drilling highlights include 1.69% nickel, 2.28% copper and 2.37 grams combined platinum, palladium and gold per tonne over 8.2 metres in the 99 Shaft zone, and 1.87% nickel, 0.95% copper and 3.14 gram combined platinum, palladium and gold over 6.2 metres in the 109 West zone.

“The Crean Hill mine was a significant producer in the Sudbury basin for more than 80 years, and we believe the Denison project has potential to add tremendous value through development of the remaining historical mineral resources and additional exploration on the property. The successful closing of this transaction will be transformative for Magna and has several potential synergies with Magna’s fully permitted, advanced-stage Shakespeare project,” Jessup commented in a news release.

The Shakespeare property, located 70 km south west of Sudbury, Ont., also hosts a past-producing nickel-copper-PGM (platinum group metals) mine. The project currently has an existing NI 43-101 resource (20.3 million tonnes in the indicated category grading 0.33% nickel, 0.36% copper, 0.32 gram platinum per tonne, 0.35 gram palladium and 0.19 gram gold), permits for both the construction of a 4,500-tonne-per-day mill and recommencement of open pit mining, and a surrounding 180-sq.-km land package that is prospective for additional nickel, copper and PGM discoveries.

To fund the purchase of Loncan, as well as exploration and development of the Denison project, Magna is proposing to raise up to $20 million through a private placement of 74 million subscription receipts of the company at a price of 27¢ each.