Generation Mining clinches $240M stream with Wheaton for Marathon construction

Two weeks after it announced it would be upping its interest in the Marathon palladium-copper project in northern Ontario to 100%, Generation Mining (TSX: GENM) has landed a $240 million streaming deal with Wheaton Precious Metals (TSX:WPM). 

The streaming deal for gold and platinum will see Generation receive $40 million early next year, with the rest paid in four instalments during construction, subject to certain milestones. Closing of the financing agreement is subject to Generation finalizing its 100% ownership in the project. Earlier this month, the company announced it would acquire Sibanye-Stillwater’s (JSE: SSW) 16.5% interest by issuing 21.8 million common shares. When the transaction is completed, the South Africa-based precious metals miner will hold 19.1% of Generation’s shares. 

“Entering into this agreement with the world’s largest precious metals streaming company validates the potential economics of the Marathon project and is a significant milestone for the company and our shareholders,” said Jamie Levy, Generation Mining’s president and CEO in a news release. “This stream represents a key cornerstone financing commitment for the ultimate project financing package. Working closely with our financial advisors, Endeavour Financial, we will now focus on sourcing the remaining key financial components of the project financing including project debt, offtake agreements and equipment financing.” 

Under the agreement, Wheaton will buy 100% of payable gold production until it receives 150,000 oz., after which it will buy 67% of gold production for the remainder of the mine life. It will also buy 22% of platinum production, dropping to 15% after the first 120,000 oz. have been delivered. It will pay 18% of spot price for the metals until payments equal the upfront $240-million outlay. After that, Wheaton will pay 22% of spot prices.

Wheaton also recently acquired New Gold’s (TSX: NGD) stream on Artemis Gold’s Blackwater project in B.C. 

Marathon feasibility

A March 2021 feasibility study outlined a 13-year open pit mine at Marathon that would cost $665 million to build. The project’s after-tax net present value (at a 6% discount rate) is estimated at $1.1 billion with a 29.7% internal rate of return and a 2.3-year payback period.

Life-of-mine payable metals are estimated at 1.9 million palladium oz., 467 million copper lb., 537,000 oz. of platinum, 151,000 oz. of gold and 2.8 million oz. of silver. Proven and probable reserves total 117.7 million tonnes grading 0.619 gram palladium per tonne, 0.205% copper, 0.067 gram gold per tonne and 0.2 gram platinum per tonne.

Marathon is in the midst of a joint federal-provincial environmental impact assessment review. Virtual public hearings on the development are scheduled to start Feb. 15 over a 30-day period. Once complete, the Joint Review Panel will have three months to complete a report, based on which the federal and provincial ministers of environment will make a joint decision on whether the project should proceed. 

Generation Mining notes that Marathon would have a very low operational carbon footprint. An independent report by consultants Skarn Associates estimated the mine would have the second lowest operating footprint in Canada among copper producers, generating 1.5 tonnes of CO₂ equivalent per tonne of copper equivalent produced.