“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, including the former Crean Hill mine, is located 37 km east of the company’s advanced-stage Shakespeare project. Crean Hill was mined during three separate periods from 1906 to 2002, producing a total of 20.3 million tonnes of ore grading 1.3% nickel, 1.1% copper, 1.6 g/t platinum-palladium-gold. In 2018, subsequent to the mine closing, Loncan entered into an agreement with then-owner Vale Canada regarding the transfer and development of the Denison project.
The project hosts multiple, well-defined PGM-rich zones that were explored after the operations were suspended. Recent drilling highlights include 1.69% nickel, 2.28% copper and 2.37 g/t platinum-palladium-gold over 8.23 metres in the 99 Shaft zone, and 1.87% nickel, 0.95% copper and 3.14 g/t platinum, palladium and gold over 6.16 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, also hosts a past-producing nickel-copper-PGM 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 g/t platinum, 0.35 g/t palladium and 0.19 g/t gold), permits for both the construction of a 4,500 t/d mill and recommencement of open pit mining, and a surrounding 180 km² 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 has proposed to undertake a private placement of approximately 74 million subscription receipts of the company at a price of C$0.27 each, raising aggregate gross proceeds of up C$20 million.