Magnum Mining & Exploration (ASX:MGU) has suffered a bumpy start to the week, with its shares diving more than 30% following the release of a Scoping Study for its Buena Vista Iron Project in Nevada, US.
Undertaken by MinRizon Projects, the study outlines the ‘potentially strong financial metrics’ for the project, located 35km south-east of Lovelock, which is expected to be a stand-alone open-pit mine with a conventional crush, grind, and magnetic separation process.
Based on a cut-off grade of 10% iron, the project boasts a resource estimate across three deposits — Section 5, West and East — measuring 232 million tonnes at 18.6% iron. As such, Magnum anticipates the project will produce 1.6 million tonnes of direct reduction iron (DRI) magnetite concentrate per year for an initial mine life of 25 years.
But perhaps it was the somewhat vague set of numbers that failed to excite investors.
Estimated capital costs for the Buena Vista Project range from US$182 million to US$378 million, while operating costs could fall anywhere between US$44 and US$90 per tonne.
The process plant itself is expected to cost US$96 million to US$200 million, with both on-site and off-site infrastructure requirements slated to cost between US$28 million and $58 million.
Although these cost estimates are based on an original Feasibility Study for Buena Vista completed in 2011 — by GR Engineering Services for Nevada Iron Limited, a subsidiary of Richmond Mining — they are thought to be accurate to roughly 35%.
Nevertheless, confidence in the project is likely to improve as Magnum progresses to a Pre-Feasibility Study within the next 12 months and a Feasibility Study thereafter. Each is expected to take a year to complete, and the company is, in the meantime, seeking funding to support these studies.
“Magnum is in negotiations with a number of multinational organisations for project collaboration, models for which include product off-take agreements with prepayment arrangements, equity involvement, and debt financing,” the company said in a statement to the ASX.
“Magnum is in negotiations with a number of multinational organisations for project collaboration”
Magnum signed one such agreement — a memorandum of understanding (MoU) with Mitsubishi — in May 2023 and expects to be able to sign others.
“Magnum currently holds a favourable A$20 million convertible note facility which provides flexibility to allow it to undertake feasibility studies,” the company added.
“Ongoing discussions with international banks and consultants are also exploring financing options in the debt and equity markets to facilitate possible capital raisings.”
Although shares in Magnum had fallen almost 45% by mid-morning on Monday, some of those losses had been regained by afternoon trade, with shares down 31.03% to 4 cents as of 3:30pm AEST.
Write to Oliver Gray at Mining.com.au
Images: Magnum Mining & Exploration
