Magmatic Resources Ltd (ASX: MAG) is a mineral exploration company based in Australia. The company is currently working on six projects spread across two regions, with the most prosperous mining prospects. Four projects are based out in the East Lachlan province and two in Laverton-Yamarna, WA.
In the East Lachlan province, with major copper-gold mining operations, Magmatic Resources is working on four projects, out of which three are 100% owned (Myall, Moorefield, and Wellington North) and one joint venture project (Parkes) with Japan Oil Gas Metals National Corporation (JOGMEC), a Japanese government resources agency. MAG has eight licenses granted for exploration in the East Lachlan province in central NSW covering an area of over 1,100 km square.
The East Lachlan region has the largest gold-copper reserve and 2nd largest gold reserve in Australia. The region comprises of gold mine Cadia Valley (52 Moz gold and 9.2Mt copper reserve), Northparkes mine (3.7 Mt copper and 4 Moz gold reserve), and Cowal mine (7.8 Moz gold reserve).
In March 2018, MAG acquired a new project from Montezuma Mining Company Ltd. to mine Copper, Nickel, and Cobalt in the Mt Venn region in WA covering 60% of the Mt Venn Igneous Complex. It also acquired the Yamarna Gold project located in the underexplored area of Yamarna greenstone belt.
Today, the company announced the purchase of existing Net Smelter Royalties (“NSRs”) granted to Clancy Exploration Limited (ASX: CLY), another leading mining company in Australia, on MAG’s Myall project, Wellington North project, Parkes East Project and Moorefield project.
The NSRs, which were being paid on a quarterly basis, lied between 2.0 - 2.5% royalty. It was being calculated by deducting allowable charges related to production from the gross revenue of the company’s East Lachlan projects. Since there was no production currently coming from the East Lachlan projects, the existence of the NSRs was restrictive in MAG’s attempts to joint venture or transact the company’s sizable copper-gold porphyry projects to significant miners.
As per the management, the company’s action of buying the NSRs is a great milestone achieved by them as MAG has been conducting many drilling and exploration programs, the huge amounts of NSRs were hanging over them and were amounting to a significant impediment in dealing with their projects. Having removed the significant encumbrance that the NSRs represented, the management is now more confident of getting assisted in a better way for any discussion regarding any of its project.
The Myall, Wellington North, and Parkes projects are located near the large Northparkes and Cadia Valley Copper-Gold porphyry mines. Due to its prime location, size, and exploration potential, the management has always been of the opinion of representing attractive targets for companies seeking world-class orebodies. This is visible from the successful negotiation and the operatorship of Parkes East Joint Venture with the JOGMEC. The ability of the company to attract such a joint venture partner of this size and importance, even before the company getting listed, demonstrated to the Board the potential of the Projects.
Earlier, on 5 December 2018, the company announced the identification of undrilled EM conductors at the Mt Venn Copper Nickel Cobalt project. In October also, the company reported its successful completion of Yamarna tenement acquisition.
The scrip price has been consistently falling since the date of listing, with a dip of almost 87.5% falling from 18.4 cents on 19 May 2018 to 2.2 cents today.
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