Magna Gold (TSX-V: MGR) CEO Arturo Bonillas on Busy 2020: Production, Drilling & PFS at San Franciso Mine and Exploration & Drilling at La Pima and San Judas

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Magna Gold (TSX-V: MGR)(OTC: MGLQF), Mr. Arturo Bonillas. Buenas tardes. How are you sir?

Arturo Bonillas: Buenas tardes, Gerardo. I'm doing very well, thank you. How are you?

Gerardo Del Real: I am excellent. Thank you very much for asking. I'm excited to speak with you again because you just had some news a few days ago that was nothing short of impressive. You provided a corporate update that included gold production of 2,349 ounces in May at an operating margin, not cost, of $1,121 per ounce. You also outlined what the plan is moving forward. I would love for you to provide us with a brief overview of the exciting second half of the year that Magna has in store for everyone.

Arturo Bonillas: Of course, Gerardo. Thank you. For the second half of the year, we have various priorities. Number one, we are going to prepare a pre-feasibility study level that will be completed before the end of the year, Q4, which will include an important amount of new drilling inside and around the existing open pits, as well as updated information on new metallurgical work and costs, as well as an optimized mine plan. That will give us the chance to show how the mines will be turning around completely. I expect it to be a very successful story by then. So that's on the mine front. 

We are also moving accelerated in drilling the silver project that came with the package. It's called La Pima.

Gerardo Del Real: You're excited about La Pima. Right, Arturo? Sorry to cut in, but I know that La Pima is a target and a property that the company is very excited about, and I want you to tell us why.

Arturo Bonillas: Well, La Pima is an operation that was open in the early 1900s. We've been inside La Pima. It's an underground mine, high-grade. Out of 500 samples or more, we found a range of between 100 grams and 1 kilograms of silver per metric tonne on the assays.

So we are really very excited about it. It's a 3-kilometer long structure. You can see various old mines along the way. We are ready to go and drill it for the first time. We had it before, but we didn't prioritize it during our Timmins days because we had other priorities then. But now I think it's time to do it.

So yes, I think that we will have very nice surprises there. We're just waiting for the permits. We have already arranged surface agreements. We should get started in about 6 weeks when we get all of the surface permits done. So that's coming.

Gerardo Del Real: Excellent. Arturo, I know you have a lot, before you get to the rest of it, I have to ask you. You mentioned that La Pima is a project that you're familiar with from back in the Timmins days. So, you've had this property and your eye on it obviously for a long, long time.

Arturo Bonillas: Correct. Yes, we've always had it. We've always been tempted to drill it, but again, our priorities were to replace the gold that we were extracting from the San Francisco pit at the time. We have done a lot of geological work and a lot of sampling, both on surface and inside. We've done geophysical work, so we're very well-advanced. It's a drill-ready property.

Gerardo Del Real: Excellent. Thank you for that.

Arturo Bonillas: Also second half of the year, besides the drill programs and La Pima, we are going to advance the San Judas Project. I've said before, San Judas Project is quite exciting. It promises a lot. I hope to find another San Francisco pit there. We will keep doing the work necessary to set the drill targets. We're focusing on 3 of the 7 targets we've identified there, and we're mobilizing already. We have a group of geologists working there. Maybe we will start drilling early next year. Those are the plans for San Judas. 

There's another area not far from the San Francisco pits, about 5 kilometers north of that pit. It's called Veta Tierra. We drilled it in a limited form during our Timmins days and we, I think, discovered something there of good size. However, we stopped the drilling. At the time, I think the price of gold kept dropping so we didn't finish the drill program. We plan to finish that drill program also, and we might have a very good surprise there. We're aiming at having smaller, shorter-term pits to start with, to keep feeding the process plan. So in general, that's most of the things we're going to do.

Finally, we are also working on extracting gold from our Mercedes property up in the Sierra Madre, the one that gave life to this company. We also have some drilling that came out with very good results, though limited, but enough to have a small operation generating cash in less than a year. We're doing metallurgy. It's looking pretty good and we are analyzing that. We actually have a flowsheet already. We're testing it and that could be also a cash generator that helps us in the early couple of years. That's where we're at.

Gerardo Del Real: So drilling La Pima, drilling in and around the San Francisco mine. You plan on, obviously, exploration followed by drilling at San Judas. And you have the pre-feasibility study, which I believe the news release outlined, it would be complete by the end of July. Is that correct, Arturo?

Arturo Bonillas: There's two technical reports. One which will be completed by the end of July that will not include the new information because we still don't have any new drilling. The purpose of that is to be able to provide guidance to the public and investors. We cannot provide guidance yet because we have to update all that information. So that's July, but we have already started working on a pre-feasibility study level, which will include the new drilling that I told you, and new metallurgy, and the optimization work. Basically, the pre-feasibility study shall be ready in Q4. We hope and I think we will add extra ounces to the current mine plan. So that's the difference in those two technical reports.

Gerardo Del Real: I think that's an important catalyst to highlight here. That technical report and the fact that it will allow you to provide formal production and cash cost guidance is going to be critical moving forward because you and I spoke last time, and I explained to everyone that I didn't feel the market was treating you as a producer. A part of that, of course, is that there isn't guidance at this point, and people aren't able to put pencil to paper unless you go back, as I did, and study the guidance by the previous operator and kind of ballpark what that looks like, which is what excited me about the production profile. 

So I can't wait until people can hear it from you. And I'm looking forward, Arturo, to the multiple catalysts that you have for the rest of 2020, and frankly, 2021. It's going to be a busy part of the cycle, I believe.

Arturo Bonillas: Oh, believe me. Yes, we will be into a new category of a company here. We will be probably opening up a new pit, building new mines. It will be great. I'm very excited about the future of the company. Remember, we've always had as our target, 200,000 ounces of gold production per year, 5 million ounces of gold in the ground by 2023. So we are fast tracking it, and we'll get there.

Gerardo Del Real: And on top of that, you're going to add some silver with La Pima. I can't wait. I'm looking forward to it. Arturo, thank you very much for your time today.

Arturo Bonillas: Thank you, Gerardo. Any time. I'll give you updates if it's important.

Gerardo Del Real: I'll let you go because I know you have a lot to get to. Thanks again.

Arturo Bonillas: Thanks, Gerardo. Goodbye.