Magna Gold Corp.'s (MGR:TSX.V; MGLQF:OTCQB) quickly growing into a mid-tier producer led to another brokerage adding the company to its coverage universe. M Partners just initiated coverage on Magna, assigning it a Buy rating and a CA$1.70 per share target price, analyst Ben Pirie reported in a Nov. 10 research note. Magna's current share price is about CA$1.05.
"Magna Gold Corp. represents a unique opportunity as it quickly ramps up production to 100,000 ounces per year (100 Koz/year) with plans to grow to 200 Koz/year by 2024," Pirie wrote.
Also compelling about this Canadian gold and silver producer, Pirie noted, is where it is currently trading, at about a 35% discount to peers. Miners producing 100 Koz/year trade at multiples of Magna's current share price. However, this should change soon for this miner, with a rerating, "as management proves its ability to turn around the San Francisco mine and begin to develop its other properties."
As for San Francisco, Magna's cornerstone asset, the miner began production there earlier this year, and it continues. Also there, the company is in the process of a 30,000 meter, infill and expansion drill campaign, ahead of a revised mine plan expected in Q2/22. M Partners forecasts that update will be significant in that it will outline a gold production ramp-up from 70 Koz/year to 100 Koz/year by the end of 2022.
Along with the opportunity for ample growth at San Francisco, Pirie pointed out, Magna has significant exploration potential with its six other properties in Mexico: Margarita, Mercedes, Vetatierra, La Pima, San Judas and Los Muertos.
Along with San Francisco, Mercedes already has a resource. It stands at 41 Koz gold equivalent but could be grown extensively through lots of drilling. The company's other five projects have shown anomalies through sampling and high-grade interceptions via drilling. To fund further exploration on these properties, Magna will use the nondilutive cash flow San Francisco generates.
Margarita is a priority project for Magna, Pirie indicated. The company is currently conducting an infill drill program there and working on a preliminary economic assessment. Magna aims to release the completed document by the 2022 annual conference of the Prospectors & Developers Association of Canada scheduled for early March. This will be the next potential stock-moving event for Magna.
Because the company continues seeking attractive mergers and acquisitions opportunities, any such future transactions will also serve as stock catalysts.
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Disclosures for M Partners, Magna Gold Corp., Nov. 10, 2021
The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Disclosure codes are used in accordance with Policy 3400 of IIROC.
Description of Possible Disclosure Codes
1. M Partners or its affiliates collectively beneficially own 1% or more of any class of equity securities of the company which is the subject of the research report.
2. The analyst or any associate of the analyst responsible for the report or public comment hold shares in the company.
3. M Partners or a director or officer of M Partners or any analyst provided services to the company for remuneration other than normal investment advisory or trade execution services within the preceding 12 months, (may seek compensation for investment banking services from the company herein within the next 3 months).
4. The director, officer, employee or research analyst is an officer, director or employee of the company, or serves in an advisory capacity to the company.
5. The analyst has viewed the material operations of the company. We define material operations as an issuer's corporate head office and its main production facility or a satellite facility that is representative of the company's operations.
6. M Partners provided investment banking services for the company during the 12 months preceding the publication of the research report
7. The analyst preparing the report received compensation based upon M Partners investment banking revenues for this issuer
Research Analysts: The Research Analyst(s) who prepare this report certify that their respective report accurately reflects his/her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. M Partners compensates its research analysts from a variety of sources and research analysts may or may not receive compensation based upon M Partners investment banking revenue.