The project generates an after-tax net present value of US$80 million using a $1,450/oz gold price and 5% discount rate which increases to $231 million at $1,950/oz following a $3.4 million development cost and total life of mine capital costs of $23.2 million.

Magna is currently processing minerals from the La Chicharra pit, in addition to previously stockpiled material, and plans to initiate underground mining of higher-grade lenses in the south wall of the San Francisco pit and also resume openpit mining in the San Francisco pit. The project would process 47.6 million tonnes grading 0.5 grams per tonne containing 758,000oz.

"We are extremely pleased with the outcome of this study, which validates our view of value and leverage for San Francisco when we acquired the mine earlier this year. This marks an important milestone for Magna as it provides us with a base case operating plan from which we can drive ongoing optimisation, growth, and near-term value creation," said president and CEO Arturo Bonillas.

Magna has identified near-term resource growth and operational expansion opportunities with the potential to extend the San Francisco mine life and further optimise project parameters and economics. It is implementing additional exploration in and around the existing openpits and at depth to increase mineral reserves and resources. It is also completing an extensive metallurgical test programme and evaluating a potential upgrade of the crushing and leaching operation in order to increase capacity and improve metallurgical recoveries.

Magna's overall goal is to establish an operation capable of producing around 100,000oz/y for 10 years.

Shares in Magna Gold are trading at C$1.35, valuing the company at $114 million.