Magna Mining completes acquisition of former Inco mine with growth plans afoot in the Sudbury camp
Sudbury is historically known for nickel. But there remain hundreds of millions of tonnes of overlooked and valuable mineral commodities left behind by mining activity over the decades.
An upstart mining company with ambitions to be Sudbury’s next producer is seizing on an opportunity to bring a former INCO mine back into production, possibly by the end of next year.
With the recently acquired Denison Project, Jason Jessup, CEO of Magna Mining is taking some pages out of the playbook from his former employer, FNX Mining, which enjoyed phenomenal growth and success in the 2000s in revitalizing some historic Sudbury mine properties.
Magna took a big leap forward this past summer with its acquisition of Lonmin Canada and the decommissioned Crean Hill nickel and copper mine. The former INCO mine, located on the southwest corner of the Sudbury basin, north of Whitefish, closed in 2002 after an 80-year mining history.
Now dubbed the Denison Project, Jessup calls it a “spectacular deposit” with mineralization coming to the surface that could be quickly put into production as a starter pit with relatively low capital costs.
“Potentially, we could be breaking some rock in 2023, toward the end of the year.”
Earlier this month, Magna released an indicated mineral resource estimate for Denison revealing more than 31 million tonnes of nickel, copper, cobalt, platinum, palladium and gold that has both underground and open-pit mining potential.
The estimate is based on a compilation of 90,000 metres of drilling data inherited from Lonmin, plus reams of older exploration work performed by INCO.
“It’s kind of indicative of what we have here in Sudbury,” Jessup said of the rich polymetallic nature of the Sudbury mining camp.
Magna bills itself as a Sudbury-focussed mining and development company.
Jessup and his team, featuring some former FNX managers, understand the mines in the area, the style of mineralization, know what was left behind, and have the know-how to advance them back into production.
The company was a 31-cent stock at the beginning of November but shot up past 45 cents on news of the mineral estimate and is now settling this week around 51 cents.
Jessup and Magna see Denison as the first spoke in a hub-and-spoke model they’re planning, in combination with their proposed Shakespeare open-pit nickel project, 45 kilometres to the west.
Hub-and-spoke is a mining development model to create a super-sized operation with a centrally located processing plant built around a series of mines. It’s a model that’s commonplace in the Sudbury basin with its major mining companies.
“We see ourselves as having at least three mining operations in production in the next five years,” said Jessup, as the acquisition-minded company has eyes on some other promising prospects around Sudbury.
At Shakespeare, north of McKerrow, they hold the permits for a 4,500-tonne-per-day open-pit mine, mill and tailings storage facility. The property was briefly put into production by Ursa Major Minerals, which mined nickel, copper and platinum group metals between 2010 and 2012, until they ran into problems with their toll milling partners.
“If you kind of look back at FNX in 2003 and see where they were in 2005 and 2006, I think we can have a similar trajectory,” said Jessup, who worked general mine foreman positions and led development crews with that company.
FNX’s claim to fame was in mining Sudbury footwall deposits in the 2000s.
Led by executive chairman Terry MacGibbon, the FNX strategy was to acquire non-core assets from the major mining companies. FNX acquired five historic mines from INCO in 2002 and put them into production over the decade.
Based on some insider knowledge, FNX was supremely confident in what it was buying. MacGibbon had been INCO’s vice-president of exploration.
These footwall zones contained copious amounts of nickel, copper platinum, palladium and gold.
But back in the day, INCO was very much the International Nickel Company of Canada, with a single-minded focus on nickel production alone. Mine managers were paid based on pounds of nickel mined.
In the early 1980s, INCO’s exploration group began to realize there was a new style of mineralization with footwall zones.
People like MacGibbon developed a theory that for every typical Sudbury contact deposit, it have be a nearby footwall deposit. Some are big, some are small. Some are high in copper, some are high in precious metals, but there was always some kind of footwall component.
Finding a footwall deposit means having the right ingredients in place, Jessup explained, a good first indicator being the presence of Sudbury breccia, the signature distressed rock that’s the byproduct of the meteorite impact that formed the mineral-rich Sudbury Igneous Complex 1.85 billion years ago.
“When you have a Sudbury breccia, you’re in the right place,” said Jessup. “And when you have quartz diorite with that, well now you have the two main ingredients to make that cake.”
INCO knew these footwall zones existed. There was some drilling in the early 1990s to understand them. Some areas with high-grade copper were developed, but they really wasn’t much incentive to mine anything beyond of nickel, even though there was tremendous value on a per-tonne basis with these other commodities.
“They were really ignored,” said Jessup. “Anything that wasn’t top notch, tier one, 25 metres wide, (INCO) could walk away and go somewhere else where they had that mine. So a lot gets left behind.”
FNX raised the exploration money to successfully test out these theories and go after and mine these minerals.
Today, platinum group metals (PGM) and copper, along with nickel, all fall within the critical minerals basket, highly coveted by the high-tech industry and the electric vehicle makers who are desperately looking to secure domestic and secure global supply chains.
At Crean Hill, Magna sees the same style of footwall mineralization, the potential for low-sulphide, high-grade platinum group metals first spotted in the mine more than 30 years ago by Magna director Gord Morrison, then INCO’s brownfield exploration manager.
When the Magna team was doing its due diligence on Crean Hill, Jessup said they were quite excited and keen to explore those untapped footwalls.
“So we’re going to test it in 2023,” said Jessup.
Drilling on a 2,000-metre program started at Denison last week with the company already reporting massive sulphide mineralization hits. In the new year, Magna expects to drill between 12,000 to 15,000 metres, focussed on expanding the existing mineral resources and testing exploration targets in the footwall, looking for nickel and copper.
Over the next few months, they hope to expand the mineral resource at Denison and produce a preliminary economic assessment in the second quarter of 2023. Magna will also shake out the economics of the combined projects of Shakespeare and Denison with a prefeasibility study.
One outcome, Jessup said, could be a potential bulk sample of low sulphide PGM mineralization that was never mined by INCO. The sample will help them understand the geometry, the best mining method, dilution and metal recoveries.
Within days of closing its acquisition of Lonmin this month, Jessup, geologist Dave King, another former FNXer, and the rest their team were walking around the Crean Hill property, taking it all in.
“When I show you the (nickel and copper) mineralization on surface, it blows me away,” Jessup said. “It’s like, how did they miss it? But they missed it.”
In the bigger picture, he thinks Magna’s timing is perfect in coinciding with the looming global shortage of critical minerals.
“I think Sudbury is in for some boom times. It’s one of the best areas in North America to produce and provide that supply of nickel that the auto and battery manufacturers are going to need.”