Generation hikes Marathon estimated output

Generation Mining (TSXV: GENM) released an updated feasibility study for its long-delayed Marathon palladium-copper project in northwestern Ontario that boosts estimated output as well as construction costs. Shares rose.

Marathon is now expected to produce 151 million lbs. of copper, 720,000 oz. of palladium and 156,000 oz. of platinum during pre-production and the first three years of commercial operation, Generation Mining said Thursday in a statement.

A previous estimate, released in November, had put the estimated output over the same period at 139 million lbs. of copper, 669,000 oz. of palladium and 143,000 oz. of platinum over the same period.

Some $992 million of capital expenditures will be required to build the mine, Generation Mining said Thursday. That’s up from a November estimate of $961 million.

As one of North America’s few undeveloped palladium projects, Marathon could help address rising demand for that metal as well as copper – since both are essential ingredients in the manufacturing of hybrid and electric vehicles. The project is fully permitted for construction federally and waiting for approval on a last permit from the Ontario government, Generation Mining said.

Generation Mining shares jumped 12% to 18 cents in afternoon trading in Toronto. That gave the company a market capitalization of about $43 million

“The updated feasibility study for the marathon copper-palladium project clearly underscores its potential to be Ontario’s next producing critical mineral mine,” CEO Jamie Levy said in the statement. “The project not only benefits from a strong commodity mix of critical metals but also stands as a strategic Canadian response to growing threats in the global mineral supply chain.”

Marathon’s permitting status “positions us to bring metal to market faster than any other North American copper project not yet in construction,” Levy said.

Election pledges

Toronto-based Generation Mining could emerge as a beneficiary of the current Canadian election. Leaders of Canada’s two main federal parties have both pledged to simplify permitting requirements for major infrastructure and mining projects in the runup to the April 28 vote.

Ottawa will permit major infrastructure and mining projects with provincial and territorial approvals alone, Liberal Party leader Mark Carney said last week. Conservative Party leader Pierre Poilievre, meanwhile, has said he would give federal approval for the contentious Ring of Fire development in northern Ontario within months if he wins the election.

Marathon would create some 800 jobs during construction and over 400 direct permanent jobs during operations, the company said. The property covers a land package of about 220 sq. kilometres.

Based on three-year average metal prices, Marathon has an after-tax net present value of $1.07 billion, an internal rate of return of 28% and a 1.9-year payback period, Generation Mining said.

Over 13 years of mine life, Marathon is expected to produce 42 million lbs. of copper, 168,000 oz. of palladium, 38,000 oz. of platinum, 12,000 oz. of gold and 240,000 oz. of silver on average annually.

“Anticipating the final permit approvals from the provincial government in the near future, the Marathon Project is on track to become the next major shovel-ready critical metal project in Ontario and Canada,” said executive chairman Kerry Knoll.

“The potential backing from provincial and national critical metal funds, combined with support from banks, private equity, institutional investors, and retail shareholders, provides a strong foundation for securing full financing in the near term.”