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Magna Mining (TSXV: NICU) has signed an offtake agreement with Vale‘s (NYSE: VALE) base metals unit for the advanced exploration portion of its Crean Hill project in Ontario.
Located in the Sudbury Basin nickel district, Crean Hill hosts a past producing mine that was a significant producer under former owner Vale for over 80 years.
The project has a 2022 resource that will be updated in the second quarter of this year, the company said, adding that it needs to develop a ramp to access the deposit for mine testing and to make a production decision.
Magna recently filed an amended closure plan for the project and says it’s on track to have all permits needed to build the ramp.
Under the definitive offtake deal with Vale, 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, Footwall and 101 Footwall zones. The 109 Footwall zone is excluded from the agreement and is planned to be processed through an alternative mill.
Offtake terms weren’t released.
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 produced 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 mineable grades for advanced exploration.
Magna 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 both at Crean Hill and its Shakespeare project.
The advanced exploration grades used for the offtake negotiation were based on the August 2022 estimate, which showed 16.8 million open pittable indicated tonnes grading 1.08% nickel-equivalent and 14.5 million underground indicated tonnes grading 2.07% nickel equivalent. Contained metals were calculated at 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.
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 during its takeover of Lonmin Canada, who was responsible for much of the exploration at Crean Hill between 2003-2022.
During its active years, it produced 20.3 million tonnes of ore grading 1.3% nickel, 1.1% copper and 1.6 grams combined platinum-palladium-gold per tonne.
