Magna Mining PEA update hikes return five-fold for Crean Hill nickel project

An updated preliminary economic assessment (PEA) for Magna Mining’s (TSXV: NICU; US-OTC: MGMNF) Crean Hill project near Sudbury, Ont. bumps its internal rate of return more than five times to 129% compared with the initial study last year.

The new PEA, released Tuesday, pegs pre-production cash costs for the nickel-copper-PGE project at $27.7 million, down from $81 million in the initial study, and gives the underground mine a base case post-tax net present value (at an 8% discount) of $194.1 million and a 13-year mine life.

“A low capital approach of establishing a new surface portal will provide quick access to the resource, allowing us to offset capital costs with early revenues,” Jeff Huffman, chief operating officer, said in a release. “The project timeline has been derisked by having environmental permits approved and in-hand, as well as more detailed stope planning and sequence optimization.”

The update comes just over one year after its predecessor and almost six months after Magna inked a toll-milling agreement with Vale (NYSE: VALE). It would send initial production from Crean Hill to Vale’s nearby Clarabelle mill.

Stock uptick

Magna shares gained 2.6% to $1.18 apiece on Tuesday morning in Toronto, valuing the company at $201.1 million. Its shares traded in a 52-range of 37¢ to $1.35.