"We are extremely pleased with the outcome of this study, which validates our view of value and leverage for San Francisco when we acquired the mine earlier this year," President and CEO Arturo Bonillas said in the release. "This marks an important milestone for Magna as it provides us with a base case operating plan from which we can drive ongoing optimization, growth, and near-term value creation."
According to the study, the base case operating scenario for San Francisco would yield an $80 million after-tax net present value (NPV), using a gold price of $1,450 per ounce ($1,450/oz) and a 5% discount rate. The NPV at the same discount would jump up 189% to $231 million with a $1,950/oz spot gold price.
The prefeasibility report outlines a 16,875 ton per day heap-leach operation that capitalizes on existing processing infrastructure. Over the estimated mine of life eight years, Magna Gold would source ore mostly from the open pits and supplement it with a small amount from underground.
The total amount of ore the company would mine and process over that period would be 47.6 million tons with an average grade of 0.5 grams per ton containing 758,000 ounces (758 Koz) of gold. Average annual gold production would be 69,000 ounces.
As for costs, the company noted that no significant capital investment would be needed to resume operations and achieve this production level due to the infrastructure already in place. The all-in sustaining cash cost is an estimated $1,204/oz gold.
The Toronto-based explorer now intends to carry out this plan for San Francisco and create further value where possible.
"Magna's overall goal is to establish an operation capable of producing around 100,000 ounces per year for 10 years, providing for an approximate 45% increase from production levels outlined in the prefeasibility study," the release noted.
"We see tremendous potential to expand the mineral resource, locally and regionally, and also to increase production scale. In addition to successfully executing the PFS operating plan, our focus will now be on creating additional value through the advancement of a number of identified opportunities," Bonillas stated.
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