Generation Mining (TSX: GENM)(OTC: GENMF) – currently trading just below C$0.60 per share – has now announced the completion of its 80% earn-in from industry giant Sibanye-Stillwater (NYSE: SBSW) on the Marathon Palladium-Copper Project — Ontario, Canada.
It did so by completing a preliminary economic assessment (PEA) and by spending an additional $10 million on the project, marking an important milestone for the company. Going forward, future project expenditures will be allocated on a pro-rata basis with 80% funded by Gen Mining and 20% funded by Sibanye.
Jamie Levy, president and CEO of Gen Mining, stated:
"This is a major milestone in the development of the Marathon Palladium-Copper Project. In the 16 months since we acquired the property, the Company's management team has delivered, on time and on budget, on all major initiatives in the development of this project, which included completing a Preliminary Economic Assessment, commencing the Environmental Assessment approval process, and initiating a Feasibility Study. Our next major milestones will be the release of our Feasibility Study in Q1, 2021 and continuing the environmental approval process."
If you’ve been following our ongoing coverage of Generation Mining – you already know that the Marathon Deposit is considered the largest undeveloped PGM (Platinum Group Metals) mineral resource in all of North America.
Already, this polymetallic deposit is estimated to host:
3.8 million ounces of palladium
1 billion pounds of copper
1.24 million ounces of platinum
~500,000 ounces of gold
And, if you’ve been paying attention to metals prices… you’re likely as ecstatic as we are to see both palladium and copper surging higher.
And that means… it's a very good time to be advancing a project such as Marathon in a Tier-1 jurisdiction such as Ontario, Canada.
The market is beginning to take heed and there’s still plenty of upside to be had.
Our own Gerardo Del Real of Junior Resource Monthly sat down with Gen Mining’s executive chairman, Kerry Knoll, for a first-hand look at the project, the earn-in, the metals, and the “Big-Guns” they're bringing in to take Marathon to the next development stage.
Look for the release of a definitive Feasibility Study on the Marathon Project in Q1 2021.
Generation Mining (TSX: GENM)(OTC: GENMF) Executive Chairman, Kerry Knoll, on Completion of 80% Earn-In and What’s Next On-Tap
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the executive chairman and director of Generation Mining — Mr. Kerry Knoll. Kerry, we were joking off-air that it's a great time to have a lot of copper and a lot of palladium. How are you?
Kerry Knoll: Real good, thanks! Yeah, I know it is a good time because all of the stuff that we've predicted about the metals is actually happening — and that doesn't always happen.
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Gerardo Del Real: It does not always happen. You had some pretty significant news. The company has been extremely busy in 2020. It's done very well for shareholders. Despite that, I continue to believe it's one of the better speculations in the space.
Today, you announced that Generation had earned into 80% of the Marathon Project. Can you go over the details there? And, congratulations are in order, obviously.
Kerry Knoll: Yeah, thanks. A lot of people wondered how we got this project so cheaply in the first place because we only paid $6 million for the initial 51% – and then we had to spend $10 million to bring that up to 80%. I think people are surprised that we were able to do it so quickly — especially that the money we’ve spent has been really well-spent.
One of the things I'm most proud of at this company is how we set out a series of milestones back when we acquired this project – and we only acquired it in July of 2019 – and we've made all of those milestones and we expect to continue to make the milestones we've set for ourselves.
And those include, first of all, redoing a resource on the project; then doing a PEA, which was done last January. Starting the feasibility study; restarting the permitting process. And the government of Canada and Ontario together have appointed the panel that's going to review our environmental permits. So that panel is now sitting – and they've gotten to work already.
So everything’s been happening that we predicted.
Gerardo Del Real: Let's go over the resource real quick because I think, again, I mentioned that I think it's one of the better speculations out there. I think it flies under the radar of a lot of people.
You have nearly 4 million ounces of palladium. You have 1.2 million ounces of platinum; almost half a million ounces of gold; over a billion pounds of copper — and economics that just scream takeout target to me. And the exploration upside remains fantastic.
You had some news a couple of weeks back, I believe a month back, where you intersected some new mineralization. Can you speak a bit to the potential economics and what makes the project so appealing?
You don't get involved in very many projects… you don't impress easy… as people like to say. What attracted you to the project? And then let's talk about what next steps are.
Kerry Knoll: Well, I have a checklist that's got 26 items on it. And so when I decide that it's time to buy a new project, and I usually only, as you mentioned, take on one at a time because to do it right — you’ve got to be focused.
So, the first thing I do is I look at the metals and I decide, well… What metal do I want to be in? And this was in 2018 when we started looking for palladium, and we looked at lithium, and we looked at vanadium and cobalt and copper.
The only one I don't really look at is gold, and the only reason for that is because it's so, so competitive. And the other one is… I don't feel comfortable predicting where gold is going whereas a lot of these other metals you can look… I mean, I was right on molybdenum in 2004, famously. I was right on lithium in 2009. I was right on nickel in 2014. I was right on zinc in 2016.
So, we looked… I had never seen as good of fundamentals on a metal as I saw on palladium in 2018. It had been in deficit for 6 years. In other words, the world was consuming more than it was using. And the deficit was made up from a big stockpile held by the Russian government and a few smaller stockpiles. And we just knew by the numbers that those stockpiles had to be running out.
You had a metal that is required by law to be in every gasoline-powered car in the world that's sold. So it's not like, if gold goes up, people might stop buying jewelry. They're not going to stop buying cars for the sake of a few hundred bucks. So just the fundamentals looked great and, of course, at that time, we weren't thinking $2,000. We were thinking $1,500.
But then, the market continued to get tighter and tighter. And the Chinese keep upping their game on how much palladium goes into each car, and that has resulted in the price we have today.
Gerardo Del Real: Excellent. I mentioned that the shares have performed relatively well. Still a lot of upside there. What can shareholders expect, Kerry, here over the next several months? Obviously, Q1 of 2021 is a big quarter for the company. Can you walk us through what the next several months look like?
Kerry Knoll: Well, the big item on our horizon, of course, is the definitive feasibility study that will be coming out in… we're expecting it to come out in February. And that is the culmination of the nose to the grindstone work this year that will have been a year in the making.
There's been three feasibility studies done on this project in the past, which made it really a lot easier to do this one because we were able to use those as templates and then change things as we saw fit.
We’ve brought in the best firms.
We've got G Mining who built the big Fruta del Norte Gold Mine for Lundin Gold. And they built the big Malartic Mine for Osisko. And they did the Detour Lake expansion. These guys are experts in big open pits. So we brought them in; they’re the kind of the lead. Ausenco is doing our plants for us. They've been involved in many, many feasibility studies these last couple of years. Knight Piésold is doing our tailings. Those are the big three.
But we're bringing in the top tier firms. So these numbers are going to be real. They say… There's one level of firm that you bring in if you're trying to sell a project and another one that you bring in if you’re planning to build it — and we're planning to build it!
I mean… that doesn't mean we won't get taken out along the way. But we wanted to have realistic numbers on what it's going to cost. And it is going to cost more than we estimated in the PEA, or that our consultant estimated in the PEA, that was done last January. But the main reason for that is that we're building a bigger mine than we planned in the PEA.
Substantially bigger mine.
So we'll have more detail coming out on that hopefully in later-December or early in January on what the actual size will be. But it'll be substantially bigger. So we are going bigger, and we have led onto that in our PowerPoint. So that's one thing.
And then of course, when the feasibility study comes out, and I think when people see the numbers there ... it's pretty simple math. I mean, if you look at our grade, which is almost a gram and a quarter palladium equivalent – and then you look at the price of palladium – it's probably equivalent to about a gram and a half of gold with an open pit with a low strip ratio.
And that's a mine.
There are lots of mines running lower grades than that. So it should be pretty obvious to people, and I think the market is waking up to it. Obviously, our share price has been moving along well the last few months.
Gerardo Del Real: Still a lot of opportunity, Kerry. I mean, if I look at the PEA – using $1,275 palladium and $3 copper – which, of course, we're at $3.48 today and $2,250 respectively… you have an internal rate of return — I think it's 30%.
It's an after-tax net present value of C$871 million. And again, we're a long ways from $1,275 palladium and $3 copper.
Kerry Knoll: Yeah, I know. The numbers have really lined up in our favor. The rule of thumb in mining is that you should have an internal rate of return of about 20% if you're going to build a mine.
That's good use of money.
So 30% is great, and, of course, in today's numbers — it's probably north of 60%. We haven't actually done the numbers, so I shouldn't quote that… but it's in that range.
Gerardo Del Real: There's a lot to like. It's an exciting time in the space. I won't ask for crystal ball predictions on copper, but I know you're bullish as I am about 2021. Is there anything else you'd like to add to that, Kerry?
Kerry Knoll: Well, I will just say quickly about copper – and it's clear if you do the math – all these countries are starting to say that they're going to phase out gasoline and carbon fuels. Therefore, there is not enough copper.
There is not enough copper in the world to do that. So they're either going to have to not do it – or they're going to have to build a lot more copper mines. So I see the price of copper going up and that being the spur to build these other copper mines.
Gerardo Del Real: Well, there you go. I got you to give us a prediction anyhow. Thank you so much, Kerry. I appreciate it!
Kerry Knoll: Alright, thanks!
Mike Fagan has mining in his blood. As a teenager he staked countless gold and silver properties in Nevada alongside his dad, Brian Fagan, who created the Prospect Generator model that’s still widely used today in the resource space. One of those staking projects was put into production by a major Canadian mining company — a truly rare and profitable experience. That background uniquely qualifies him as a mining stock speculator. One of the most well-known names in the business, Mike is now putting that experience to use for the benefit of Resource Stock Digest and Hard Asset Digest readers.
