I've Never Seen a Gold Miner Like This One

Finding an economic deposit that eventually becomes a mine is a long shot by any metric and can take decades from exploration to production.

Yet in less than a year since going public, Magna Gold (TSX-V: MGR) (OTCQB: MGLQF) CEO Arturo Bonillas and his team now sit in the enviable position of owning a mine that I believe will likely produce approximately 25k gold ounces this year, over 50k gold ounces next year, and at least 75k gold ounces (from the San Francisco mine) a year for the rest of the decade.

I caught up with Arturo recently to talk to him about the exciting developments at Magna. Read on for the transcript.

Also, keep your eyes peeled. There are a lot of great opportunities in the market these days.

To your wealth,


Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader

Gerardo Del Real: This is Gerardo Del Real with the Outsider Club. Joining me today is the CEO of Magna Gold (TSX-V: MGR)(OTC: MGLQF). Mr. Arturo Bonillas. Arturo, muy buenos dias. Como estas?

Arturo Bonillas: Muy buenos dias, Gerardo. It's always a pleasure to talk to you and your audience. Thank you very much for the opportunity.

Gerardo Del Real: Thank you for taking the time, Arturo. I have to start by congratulating you. You finalized and you closed the acquisition of the San Francisco Mine, a project that you put into production back in the day. So first off, congratulations on your, frankly, immediate graduation into becoming a producer. Right?

Arturo Bonillas: Thank you very much, Gerardo. It was a team effort and everyone had really worked very, very well just getting here. We are very happy working, also very motivated.

Gerardo Del Real: The stock has responded very positively to the acquisition. The acquisition, I believe, is one of the best deals for us shareholders in the junior space in recent memory. However, I've had a lot of readers and subscribers asking me with the recent run-up in the share price, is there still an opportunity? 

I want to try to provide some context on that opportunity today because I don't believe you're being priced as a producer. Let's go over the share structure really quick. You have, I believe, approximately 84.5 million shares outstanding and 85.6 million fully diluted. Is that accurate, Arturo?

Arturo Bonillas: That is correct. Those are the precise numbers, Gerardo.

Gerardo Del Real: Excellent. Your share price today is trading right around the $0.68 level. So you still have a market cap of sub-$60 million Canadian. That hasn't gone unnoticed. You just closed a financing that caught the attention of Eric Sprott, amongst others. I believe that the market is not completely understanding what the opportunity is. 

Can we talk about what the remainder of the year looks like for Magna Gold, just specific to San Francisco? Then we can talk about some of Magna's goals moving forward.

Arturo Bonillas: Yes, I agree with you. We have not had time to spread the word and tell what we are doing and going to do. So I will try to cover all those points today with you. Yes, two months ago, our market cap was around $10 million Canadian. So now we're six times that and very sustainable. It's not a promotional deal here. We do have the backup to be there. So yes, we are now a new company. 

We have evolved from being an exploration company to a gold producer and explorer and developer, and soon a builder of mines. We got there through M&A. We really were a startup with experience and by becoming now the growing gold producer in Mexico in record time. We acquired the San Francisco mine, which contains 1.4 million ounces of gold in the ground. That is information from the latest 43-101 report, which was published on July 1, 2018. Most of that gold there, that 43-101 and those ounces were estimated at a gold price of $1,350 an ounce. So, the gold is still there. 

With the acquisition also of the San Francisco mine came an amazing exploration package of gold and high-grade silver. It is a package of 41,000 hectares of mining concessions. They're all adjacent to each other. Do you know what's most important here, Gerardo? It's that with the package came an amazing group of people. We acquired human capital, which is really being added to the shareholders of Magna and the company. We're very, very happy for that.

What follows now, that's very important because people have to know what's next and then go by quarters. We are now at Q3. So in the short term, we began preparing an initial prefeasibility study, the PFS, to put out guidance in this quarter, Q3. We need to put out guidance. We have a very interesting mine production plan, but we have to have it certified by an independent engineering firm. And we're doing that. 

In Q3, we're also continuing leaching the residual ore on the leach pads. We're projecting to bring in 15,000 ounces from the residual leaching this year at a very low cost. That's information that was published by Alio Gold in their guidance for this year. I want to tell you that our first month of operations we did very, very well with that. We had an excellent month and we shall be putting out numbers later when we announce our quarter-end.

So we continued with the residual leaching in Q3 and the rest of the year. Also on Q3, we will restart mining, crushing, and processing of fresh ore. We have a plan and we will be allowed to do that as soon as we put out the technical report that was produced for the acquisition of the mine. So there's various reports. One is a report that we should put out in about two weeks, and that didn't change anything. We needed to create that to get approval from the change and then we start producing. 

Now, as I said, we'll restart mining in Q3. Also in Q3, we will infill drill the existing pits. We have two open pits, the San Francisco pit, and the other one that's called La Chicharra pit. The objective is to add ounces in the very, very short term. So that means that we shall be updating our prefeasibility study in Q4 with the new drilling and those new ounces that we will be for sure adding to the current pits.

Gerardo Del Real: Excellent.

Arturo Bonillas: That's very important. And also on Q3, we are preparing to drill one of the targets that came with the package. It's not part of the San Francisco pit. These are silver targets located about 30 kilometers northeast of the San Francisco mine. That is very exciting. It's called La Pima. We already submitted the request for permitting, and we are negotiating with surface owners, which shall be easy. So we should be getting interesting news from the drill program. So that is what are we doing immediately.

Gerardo Del Real: That's a lot of news, Arturo. I want to summarize really briefly. So you're producing from the residual leach. You got 12 months of residual leach production. Is that correct?

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