The hydrated Mg
2+ ion has two functions, both mediated by its waters of hydration. First (

), one water molecule binds to one of the oxygen atoms of the phosphate group, holding it in the proper orientation for the enzymatic mechanism. Second (

), the environment of the active site lowers the pKa of another water molecule enough that it can lose a proton to the aqueous environment.
The now-negatively charged hydroxyl group (

) removes a proton from the 2' hydroxyl of cytosine 17. This oxygen (

) then starts to form a bond to the phosphorus atom of the phosphate group.
This is the transition state (

). Five oxygen atoms are arranged in a triangular bipyramid around the phosphorus atom. A bond is being formed between the 2' oxygen of cytosine 17 and the phosphorus atom. Simultaneously a bond is being broken between the phosphorus atom and the hydroxyl oxygen of the next nucleotide, adenine 1.1.
Cytosine 17 is left with a 2'-3' cyclic phosphate group (

). The 5' nucleotide (

) recovers a proton from the aqueous environment, completing a hydroxyl group. The reaction products diffuse away from the active site, leaving the ribozyme free to bind its substrate and complete another reaction cycle.