In a January 26 research note, M Partners Research advised that Magna Gold Corp. (MGR:TSX.V; MGLQF:OTCQB), announced production results from its San Francisco gold mining operation in Sonora, Mexico.
The report from M Partners stated that in Q4/21, Magna Gold produced a total of 15.5 Koz Au, which was significantly higher than M Partners' estimates for 10.2 Koz Au. Similarly, for FY/21 Magna succeeded in producing 56.1 Koz Au, which M Partners said beat its previous estimates of 40.8 Koz Au.
The analyst advised that Magna Gold has been successful in aggressively turning around the operations at the San Francisco mine and that M Partners expects this superior performance to continue in 2022.
The report pointed out that Magna has increased its FY/22 production guidance to between 65-75 Koz Au, which M Partners noted is also well above its prior forecasts for 60 Koz Au.
Magna reported that its cash costs in Q4/21 were $1,123/oz. M Partners stated that the amount exceeded its estimates for $894/oz, but that it expects that the costs will decrease closer to its projections for $1,084/oz.
It is anticipated that Magna Gold will continue to optimize its operations at the San Francisco property. The analyst mentioned that a resource update and perhaps a bold and ambitious updated mine plan is expected in Q2/22.
M Partners stated that the updated mine plan will call for increasing annual production to around 100 Koz Au and reaching as high as 200 Koz Au per year by 2024. These gains in production are predicated on the company's ability to extend the life of the mine and achieve a sizeable resource update.
The company is presently conducting a 30,000m drill program at the San Francisco mine, The focus of the program is centered around both infill and expansion drilling to convert and upgrade the Inferred resource to Measured and Indicated.
The analyst explained that MGR provided an operational update for its Margarita Silver project. Phase one of exploration drilling has been completed at the property and resource definition is expected to be finished in mid-February. The Company reported that initial results look very promising and that it will release assay results when a complete set is available.
M Partners commented that, "MGR remains on track to release the maiden resource estimate followed closely by the Preliminary Economic Assessment (PEA) by the end of Q1/22."
The report from M Partners listed that there several significant near-term catalysts that could impact the company during 2022. These include the PEA for the Margarita Silver project expected in Q1/22 and the San Francisco Mine resource update & mine plan, which is estimated to be ready in Q2/22. In addition, the company will continue to receive additional assay results from ongoing drilling operations. All these factors combined bode well for potential M&A opportunities.
Magna Gold Corp. is producer of silver and other precious metals. The firm is based in Canada and is primarily engaged in acquiring, exploring, developing and operating mining assets in Mexico. The company's San Francisco gold property is in Sonora, Mexico.
M Partners advised that Magna Gold's San Francisco mine has a net asset value (NAV) of $156M or $1.71/share.
When combined with the ownership interest in the Margarita Silver, Mercedes and MGR's other assets the total value of all the company's assets is estimated at $184M or $2.02/share. After adjusting for a 0.70x project NAV, other adjustments and currency conversion, M Partners Research arrived at its target price of CA$1.70/share.
M Partners Research stated it is maintaining its "Buy" rating and 12-month target price of CA$1.70/share for Magna Gold Corp.
Magna Gold Corp. shares trade on the TSX Venture Exchange under the symbol "MGR" and last closed for trading at CA$0.70 on Thursday, January 27, 2022. The company's shares also trade under the ticker symbol "MGLQF" on the OTCQB market.
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Disclosures for M Partners, Magna Gold Corp., Jan. 26, 2022
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.
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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).
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7. The analyst preparing the report received compensation based upon M Partners investment banking revenues for this issuer
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