Interview with George Sakalidis, Managing Director of Magnetic Resources

Recording date: 20th December 2024

Magnetic Resources (ASX: MAU) has emerged as a significant player in Western Australia's gold sector with a major discovery in the Laverton region, approximately 300km north of Kalgoorlie. The company has delineated nearly 2 million ounces of gold since staking the ground in 2017, achieved through an extensive drilling campaign comprising 170,000 meters across 1,900 holes.

The company's flagship Lady Julie North 4 deposit currently hosts 1.5 million ounces, with a resource upgrade expected in January. Recent drilling results have been particularly impressive, featuring high-grade intercepts including 76m @ 2.5 g/t and 24m @ 5 g/t gold. The deposit has demonstrated considerable depth potential, extending up to a kilometer down dip, supporting plans for both open pit and underground operations.

A feasibility study, due in March, will examine development scenarios targeting initial production of 150,000 ounces per year. The project's economics appear robust, with preliminary studies based on a A$3,200/oz gold price showing an NPV of A$925 million, EBITDA of A$1.4 billion, and an impressive 135% Internal Rate of Return with a 12-month payback period.

The project's strategic location presents significant advantages, sitting just 10-15km from two major processing plants operated by Gold Fields and Genesis. Both facilities are currently operating below capacity, opening potential opportunities for toll treatment arrangements or corporate transactions. The site also benefits from existing infrastructure, including access to a gas pipeline and proximity to established mining roads.

Magnetic Resources, led by Managing Director George Sakalidis, has achieved these results at a remarkably low discovery cost of $9 per ounce. The company is well-funded with A$12 million in the bank, sufficient to complete its feasibility study, and is engaged in discussions with banks regarding project financing.

The project's development path appears to have two potential routes: either advancing to production independently or pursuing a corporate transaction with neighboring producers seeking additional feed for their processing facilities. The company has established a data room and is entertaining potential M&A interest, though management emphasizes they are equally prepared to proceed with development independently.

With its combination of scale, grade, strategic location, and robust economics, Magnetic Resources represents a significant new development in Western Australia's gold sector. The upcoming resource upgrade and feasibility study in early 2025 will be crucial catalysts in determining the project's ultimate development path.

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