Magna Mining Inc (TSX-V:NICU) has unveiled what it called a "transformational" acquisition of Lonmin Canada Inc (Loncan), which includes the Denison project and covers the past-producing Crean Hill nickel-copper-platinum group elements (PGE) asset, in a deal worth C$16 million.
In the statement, the company also reported plans for a private placing of up to around 74 million subscription receipts at C$0.27 to raise total gross proceeds of up C$20 million.
"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," said Magna's CEO Jason Jessup.
"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," he added.
READ: Magna Mining commissions second drill rig at Shakespeare Nickel project in Ontario
The Denison property sits 37 kilometres (km) east of Magna's advanced Shakespeare project. The Crean Hill Mine operated during three separate periods, from 1906 to 2002, with past production totaling 20.3 million tonnes (Mt) grading 1.3% nickel, 1.1% copper, 1.6 grams per ton (g/t) platinum, palladium and gold. Before 2018, several zones of low-sulphide, high PGE footwall mineralization were discovered and defined by Loncan.
In all, 91,390 metres (m) of diamond drilling in 279 holes were completed, intersecting both low sulphide, PGE rich footwall mineralization and high grade nickel-copper contact mineralization.
In 2018, subsequent to the mine closing, Loncan struck a deal with Vale Canada Limited (Vale) regarding the transfer and development of the Denison asset.
Denison has potential to provide feed to extend the life of mine at the Shakespeare mine or operate in the near-term through toll milling or a combination of both, highlighted Magna.
The acquisition, subject to customary closing conditions, will be completed following a purchase agreement struck between Magna, Loncan and the current shareholders of Loncan, being Sibanye UK Limited (formerly Lonmin Limited, and a subsidiary of Sibanye Stillwater Limited), Wallbridge Mining Company Ltd and certain other minority shareholders of Loncan.
The total purchase price for the outstanding shares of Loncan is equal to C$16 million, comprised of a closing payment of C$13 million in cash and a deferred payment of C$3 million, payable pro rata to the vendors. The deferred payment is payable on or before the 12-month anniversary of closing.
To fund the cash component of the acquisition, as well as ongoing exploration and development activities at Denison, the company is undertaking a concurrent private placing.
The subscription receipts will be issued pursuant to and governed by a subscription receipt agreement between Magna and Computershare Trust Company of Canada in its capacity as agent for the subscription receipts.
The closing of the private placement is expected to be on or around August 30 this year.
Magna Mining is focused on nickel, copper and PGM projects in the Sudbury Region of Ontario, Canada. The company's flagship asset is the past producing Shakespeare mine which has major permits for the construction of a 4,500-tonne per day open pit mine, processing plant and tailings storage facility and is surrounded by a contiguous 180 sq km prospective land package.
Contact the writer at giles@proactiveinvestors.com