Canadian nickel developer Magna Mining (TSXV: NICU; OTCQB: MGMNF) announced on Wednesday the signing of a definitive offtake agreement with Vale Base Metals for the advanced exploration portion of its Crean Hill project in Ontario.
Located in the Sudbury Basin nickel district, Crean Hill is host to a former producing mine which, under the previous ownership of Vale, was a significant producer of nickel, copper as well as precious metals for over 80 years. During its active years, it produced 20.3 million tonnes of ore grading 1.3% nickel, 1.1% copper and 1.6 g/t platinum-palladium-gold.
As a brownfield site, it is currently subject to an existing closure plan filed by Vale, which has retained surface rights to the property since closing the mine in 2002. Magna acquired the project its takeover of Lonmin Canada, who was responsible for much of the exploration at Crean Hill between 2003 and 2022.
Magna’s chief executive, Jason Jessup, said the offtake agreement is “the culmination of several months of work” with the global miner.
“Additionally, the recent announcement of the filed amended closure plan has Magna on track to have all the permits in place to develop the ramp from surface, which will allow for underground test mining and set up for a future commercial production decision.”
Under the agreement, initial production from Crean Hill would be shipped to Vale’s Clarabelle mill in Sudbury for processing. This includes material from the Main, Intermediate, 9400, 9400 Footwall and 101 Footwall zones. The 109 Footwall zone is excluded from the agreement and is planned to be processed through an alternative mill.
Prior to negotiating the agreement, Magna completed an extensive test program at a third-party metallurgical facility using representative ore samples from the Crean Hill deposit. The results were used to develop recovery predictions at varying ore feed grades and producing a high concentrate grade consistent with the Clarabelle mill flowsheet.
The predicted mill recovery from the test work was calculated at 80.5% nickel, 93.6% copper, and approximately 70% for cobalt, platinum , palladium and gold. These recoveries, according to Magna, were established using its estimates of potentially minable grades for advanced exploration.
The advanced exploration grades used for the negotiation of the agreement were based on the August 2022 NI 43-101 mineral resource estimate, which showed contained metals (indicated category) of over 500 million lb. of nickel, 450 million lb. of copper and 1.7 million oz. of platinum-palladium-gold.
Assay results from more than 19,000 metres of diamond drilling completed at Crean Hill since the resource estimate were excluded. Magna is planning on updating the resource in the second quarter of 2024.
In Wednesday’s news release, the Canadian miner said it is currently exploring several non-equity sources of capital, which may include government funding or byproduct streams, to fund underground advanced exploration at Crean Hill. As of now, it is fully funded for a 25,000-metre exploration drilling program at its Crean Hill and Shakespeare projects.
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