Minnova CEO: Positive Feasibility Study Results a Big Milestone

According to Minnova CEO Gorden Glenn (TSXV:MCI), the company is currently exploring potential opportunities following the release of a positive feasibility study on its PL gold mine in Manitoba, Canada.
In the interview below, Glenn discusses the results of the feasibility study, which include a 53-percent IRR, a NPV of over $40 million and a minimum mine life of five years. He also highlights that the past-producing project has both significant expansion and restart potential, and that Minnova is looking into joint venture or merger opportunities as it determines the next steps for the property.
Below is a transcript of our interview with Minnova CEO Gorden Glenn. It has been edited for clarity and brevity.
Investing News Network: Please give our investor audience an overview of Minnova and its flagship property, the PL gold mine in Manitoba, Canada.
Minnova CEO Gorden Glenn: Minnova’s flagship property, the PL gold mine, is a past-producing mine that operated over 30 years ago. Since then, there have been significant changes in the price of gold and in the understanding of both the deposit and its exploration potential.
For the last five years, we have been working diligently to advance the project within a pretty tough market. In that time, we have transitioned the project through three preliminary economic assessments and, this past November, we also released a positive feasibility study to restart production at 50,000 ounces a year for a minimum of five years based on an updated reserve estimate. At the moment, we have development potential to restart the mine as well as exploration potential to grow the resource.
INN: How does Manitoba compare to other mining jurisdictions in the world?
GG: As a whole, Canada has become a go-to jurisdiction for mining. Within that, Manitoba is a mining-friendly jurisdiction and we are fortunate enough to sit on the prolific Flin Flon-Snow Lake greenstone belt with over 100 years of mining history. The province has established mining infrastructure, tradespeople, skilled labor and a comprehensive understanding of the mining industry. We also have strong community support from the local and First Nations communities. From a jurisdictional point of view, we couldn’t ask for anything better.
INN: Please explain the highlights of your recently released positive feasibility study.
GG: We published our feasibility study in November of last year with the goal of further understanding and de-risking the project. The study followed a 8,919-meter infill drilling program that was launched with the intention of upgrading the inferred resource into measured and indicated, and the measured and indicated into proven and probable. The updated resource was then used as the basis for the feasibility study, for which we only used half of the global resource, which amounted to 260,000 ounces now categorized as proven and probable.
The study highlighted strong economics for the project, including an after-tax IRR of 53 percent and a NPV of above $40 million, which we expect to increase as we continue to expand the resource. It also showed a very quick after-tax payback of 1.5 years after the mine is started, and outlined a minimum five-year mine life for a combined underground and open-pit operation with an average grade of 6.5 percent. The feasibility study showed that this is a robust, straightforward and shallow project with a quick startup and a relatively low CAPEX of C$35 million, including contingency. There are significant opportunities to expand the resource and extend the mine life to test new metallurgical processes and optimize existing recovery methods.
This study is a significant milestone for our company, and it has proven to be the basis of a sound value proposition for our shareholders.
INN: What is next for the PL gold mine and how does that fit into Minnova’s long-term goals?
GG: The next step for the project is to review the financing options we have on the table. These include either a merger, a joint venture opportunity or full financing, to name a few. So far, the interest from both potential partners or potential financiers has been positive as they are attracted to the project’s jurisdiction, low CAPEX and return to production potential.
The other opportunity for us is to continue to explore the project. So far, we have worked towards de-risking the mine, and what we want to demonstrate now is the resource’s expansion potential. At this point we will be able to quantify the resource expansion into additional years of mine life, adding to the existing NPV and enhancing the overall economics of the project.
INN: Do you have any other catalysts on the horizon that investors should be excited about?
GG: Yes, particularly with regards to the PL mine. We are are going to start drilling the project and are very confident in our ability to expand the resource. Our exploration activities over the last summer — field work, basic mapping, prospecting on and around the mine — transformed our understanding of the project’s geology by identifying new trends and shear zones with significant gold mineralization of up to 45 g/t gold on the surface. This really highlighted the on-strike extension potential on the mine site.
In addition, we are talking to potential partners for joint venture or M&A opportunities. With M&A, there is a potential for the resource, upcoming production and value proposition associated with the mine to be associated to a larger company.
We are also in discussions with project financing groups with respect to putting in place a debt-like financing package for the complete restart of the mine. We are getting positive feedback from financial sponsors, and we are working through that process. Achieving a positive financing structure for production will enhance shareholder value and is a major positive milestone on the horizon.
We see a lot of potential within the PL mine, and we are certainly excited about that moving forward into the new year.
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