GENM.TO · 2020-01-06 12:00:00

Generation Mining Delivers Robust Independent PEA for Marathon Palladium Project After-Tax IRR of 30%, NPV C$871M, Payback 2.5 years - Base Case

Economic Studies

Generation Mining Delivers Robust Independent

PEA for Marathon Palladium Project

After-Tax IRR of 30%, NPV C$871M, Payback 2.5 years - Base Case

Toronto, Ontario – Jan. 6, 2020 – Generation Mining Limited (CSE:GENM) (“Gen Mining”,

“Generation”, or the “Company”) is pleased to announce results of a positive independent Preliminary

Economic Assessment study (“PEA”) prepared in accordance with National Instrument 43-101 on the

Marathon Palladium and Copper Project (the “Project”) located in Northern Ontario. Generation

acquired a 51% interest in the Project from Sibanye Stillwater in July, 2019, and has an option to earn up

to an 80% interest by spending $10 million within four years (see Gen Mining’s news release dated July

11, 2019). The PEA provides a compelling base case assessment for the development of the Marathon

Palladium Mineral Resource by open pit mining.

Highlights (all dollar amounts in Canadian dollars on a 100% project ownership basis unless otherwise

indicated)

• Th

e Project would produce an average of 194,000 palladium-equivalent ounces per year over a

14-year mine life (including credits for copper, platinum, gold and silver).

• The Project generates an after-tax internal rate or return (IRR) of 30.0% and an after-tax net

present value (NPV)of $871 million at a 5% discount rate at Nov 30/19 two-year trailing average

metal prices (base case).

• The Project generates an after-tax net present value of $1,541 million and an internal rate of

return of 45.8% at a 5% discount rate at recent spot metal prices (final LBMA London price fix

for precious metals; final LME bid price for copper, Dec 31, 2019)

• The Project would generate base case after-tax cashflows of $520 million in years 1-3, resulting

n a 2.5-year payback period.

• Actual palladium production will average 107,000 ounces annually over the mine life, at a Cash

ost Per Ounce of $US504 and an All-In Sustaining Cost (AISC) of $US586 per ounce, net of by-

product credits.

• The PEA used only Measured and Indicated Mineral Resources in the Marathon Deposit in its

calculations, and did not include the Geordie and Sally Deposits which are located on the same

roperty (see News Release dated December 2, 2019). The Marathon Deposit has no outstanding

royalties or financing streams registered against it.

Gen Mining will host a conference call on Jan 7, 2020 at 11:00 am (EST) to discuss these results.

Call-in information is provided at the end of this news release and on our website at

www.Genmining.com.

EA BASE CASE FINANCIAL SUMMARY (all dollar amounts in $Canadian unless

otherwise noted, presented on a 100% ownership basis)

Pre-Tax Net Present Value (5% discount

rate)

$1,184 Million

After-Tax Net Present Value (5%) $871 Million

Pre-Tax Internal Rate of Return 35%

After-Tax Internal Rate of return 30%

After-Tax Payback 2.5 Years

Preproduction Capital $431 Million

Sustaining Capital $277 Million

Life-of-Mine Cash Cost per Oz PdEq* $504 USD

LOM All-In Sustaining Cost per Oz PdEq* $586 USD

Mine Life 14 Years

Throughput Years 1-5: 14,000 tpd,

Year 6-14: 22,000 tpd

Metal Prices

Palladium $1,275/oz USD

Copper $3/lb USD

Platinum $900/oz USD

Gold $1,300/oz USD

Silver $16/oz USD

Exchange Rate $CAD:$USD $1.32

Avg. Net Smelter Return per Mineralized

Tonne Processed (LOM)

$48.39

Net of by-product credits

Jamie Levy, President and CEO of Generation commented, “This study supports at a PEA level of

confidence the Company’s opinion that a low-cost operation is possible at the Marathon Deposit. The

Project has a very robust after-tax IRR of 30% and after-tax Net Present Value approaching $900 million,

with a pay-back of 2.5 years in a mining-friendly jurisdiction. The PEA doesn’t include potential feed

from two additional deposits with NI 43-101 Mineral Resource Estimates located on the property which

will require additional study.”

“

With the consensus outlook for palladium and copper strong for the next several years,” commented

Executive Chairman Kerry Knoll, “this is a project whose time has come. As governments world-wide

continue to mandate a higher palladium load for environmental reasons in most automobiles and little

new mine capacity being scheduled to come on stream, Generation Mining plans to fast-track a Feasibility

Study and permitting, and expects 2020 to be a pivotal year in the Company’s growth.”

The PEA examined several mining scenarios with varying rates of production and cut-off grades, and

determined that a 14-year project life mining 89.4 million mineralized tonnes provided the best financial

return at Nov 30, 2019 two-year trailing average metal prices. The Project is expected to employ an

average of 312 local workers over the life of the mine.

To maintain preproduction capital costs to a minimum, the PEA recommends starting the project at

14,000 tonnes of process plant feed per day and increasing to 22,000 tonnes per day in the sixth year of

operations. The operation is designed to produce a single copper concentrate containing palladium,

platinum, gold and silver with minimal deleterious elements. One of the reasons for the relatively low

capital costs is that the Marathon Project is located near the established mining town of Marathon,

Ontario, as well as an airport and the CPR main rail line. Both the Trans-Canada Highway #17 and the

new 230 Kilovolt East-West Tie power line cross the property.

The PEA was prepared by P&E Mining Consultants Inc. of Brampton, Ontario, which has been involved

in the Marathon project for the past 13 years and previously prepared the Mineral Resource Estimate for

the Marathon Deposit on behalf of Gen Mining.

PEA TECHNICAL SUMMARY

Mine Life 14 years

Mine Plan Tonnage 89.4 million tonnes

Process Plant Feed Grade

Pd 0.69 g/t

Pt 0.21 g/t

Au 0.07 g/t

Ag 1.5 g/t

Cu 0.22%

PdEq Grade 1.26 g/t

Strip Ratio (Waste:Process Plant Feed) 3.0:1

Operating Cost (tonne) $19.12

PAYABLE METAL RECOVERIES (presented on a 100% ownership basis)

Metal Process Plant

Recovery

On-Site Recovered Metal to

Concentrate

Payable Metal

LOM Palladium 82.90% 1.63 million ozs 1.41 million ozs

LOM Copper 90.00% 401.3 million lbs 340.3 million lbs

LOM Platinum 74.50% 0.45 million ozs 0.32 million ozs

LOM Gold 73.20% 0.16 million ozs 0.12 million ozs

LOM Silver 71.50% 3.12 million ozs 2.01 million ozs

Pit Constrained Mineral Resource Estimate at C$13/tonne NSR Cut-Off (1-7)

Classification

Tonnes

(k)

(g/t)

(%)

(g/t)

PdEq

(g/t)

(koz)

(Mlb)

(koz)

PdEq

(koz)

Measured 103,337 0.64 0.21 0.20 0.07 1.5 1.34 2,123 688 463 239 4,964 4,445

Indicated 75,911 0.46 0.15 0.20 0.06 1.8 1.10 1,115 376 333 151 4,371 2,685

Meas & Ind 179,248 0.56 0.18 0.20 0.07 1.6 1.24 3,238 1,064 796 390 9,335 7,130

Inferred 668 0.37 0.12 0.19 0.05 1.4 0.95 8 3 3 1 31 21

1. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

2. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title,

taxation, socio-political, marketing, or other relevant issues.

3. The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an

Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected

that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource

with continued exploration.

4. The Mineral Resources in this report were estimated using the Canadian Institute of Mining, Metallurgy

and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves , Definitions and Guidelines

prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.

5. The Mineral Resource Estimate was based on US$ metal prices of $1,100/oz Pd, $900/oz Pt, $3/lb Cu,

$1,300/oz Au and $16/oz Ag. The US$:CDN$ exchange rate used was 0.77.

6. The NSR estimates use flotation recoveries of 93% for Cu, 82% for Pd, 80% for Pt, 80% for Au, 75% for

Ag and smelter payables of 96% for Cu, 93% for Pd, 88% for Pt, 90% for Au, 90% for Ag .

7. The pit optimization used a mining cost of C$2 per tonne, combined processing, G&A and off-site

concentrate costs of C$13/tonne and pit slopes of 50o.

Pit Constrained Mineral Resource Estimate Sensitivity at C$25/tonne NSR Cut-Off

Classification

Tonnes

(k)

(g/t)

(%)

(g/t)

PdEq

(g/t)

(koz)

(Mlb)

(koz)

PdEq

(koz)

Measured 70,792 0.82 0.25 0.25 0.09 1.5 1.67 1,864 578 387 194 3,510 3,794

Indicated 45,279 0.60 0.19 0.25 0.07 1.9 1.40 871 272 252 106 2,817 2,032

Meas & Ind 116,071 0.73 0.23 0.25 0.08 1.7 1.56 2,735 850 639 300 6,326 5,826

Inferred 144 0.62 0.16 0.28 0.05 0.9 1.41 3 1 1 0 4 7

The mining plan uses conventional truck/shovel open pit methods employing 221-tonne capacity haulage

trucks and shovels equipped with 29 cubic metre buckets. Three pit areas will be mined over a period of

14 production years and one year of pre-stripping. Mineralized material will be transported by haulage

trucks to a nearby process plant, and waste rock will be stored at a facility located 100 metres east of the

open pits. Mining will be conducted at an initial rate of 24 million total tonnes per annum (Mtpa), and

will reach a peak of 36 Mtpa based on process plant feed and waste rock removal requirements.

The process plant feed is contained within an optimized subset of the Mineral Resource set out in the

table above. Collectively, the three pits contain 89.4 Mt of process plant feed (inclusive of mining dilution

and loss factors) averaging 1.26 g/t PdEq (0.69 g/t Pd, 0.22% Cu, 0.07 g/t Au, 0.21 g/t Pt and 1.52 g/t

Ag). The process plant feed is associated with 270 Mt waste rock resulting in an overall life-of-mine strip

ratio of 3:1. It is notable that all Mineral Resources considered for mining are only within the Measured

and Indicated classifications.

Approximately 25 Mt of process plant feed will be stockpiled and reclaimed from stockpiles over the

mine life. No backfilling of mined-out open pits with either waste rock or tailings is planned, which will

allow potential open pit wall pushbacks and future mining if economic conditions become favourable.

Extensive metallurgical testing was carried out at various reputable laboratories by several past

owners including Stillwater Canada, a subsidiary of Sibayne Stillwater and Gen Mining’s partner in the

project. The test work has indicated process recoveries of platinum group metals (“PGM”) and copper to

be reasonably high and relatively consistent. The most recent tests focused on circuit stability and

maximizing concentrate grade. For the first five years, the Marathon process plant will treat 5Mtpa of

mineralized material by using the following major components and processes:

• crushing and grinding to a moderate grain size;

• froth flotation of a copper rougher concentrate which is reground and re-floated several times for

copper grade improvement;

• regrinding of the copper flotation tails and a PGM rougher flotation concentrate is recovered;

• the PGM concentrate is reground and refloated to improve PGM grade;

• the Cu and PGM concentrates are combined, thickened, filtered and prepared for shipment to a

smelter.

From year 6 onwards, the process plant will treat 8Mtpa after incorporating the following components:

• increased crushing and grinding capacity - second stage crushing and an additional ball mill;

• additional flotation capacity.

The expansion of process plant capacity from 5 Mtpa to 8 Mtpa at year 6 is expected to benefit from the

first five years’ operational experience, providing opportunities for process efficiencies.

Tailings and waste rock management is designed for closure and the elimination of concerns for acid

drainage or metal leaching.

Initial Capital Costs ($C Millions)

Pre-Stripping 15.3

Mining 40.6

Processing Plant 272.8

Tailings Management Facility 14.3

Site Infrastructure 54.0

Contingency 34.1

Total Initial Capital 431.0

Sustaining Capital ($C Millions)

Mining 128.1

Processing Plant 38.3

Tailings Management Facility 67.0

Closure 30.0

Contingency 13.5

Total Sustaining Capital 277.0

LOM Operating Costs ($C per tonne)

Mining Cost per tonne mined material

(waste and mineralized material

2.34

Mining Cost per tonne plant feed 9.23

Processing Cost per tonne plant feed 8.92

G & A per tonne plant feed 0.97

Total Cost per tonne plant feed 19.12

ECONOMIC SENSITIVITIES (presented on a 100% ownership basis)

US$/oz Pd 700 900 1,100 1,275 1,500 1,700 1,900

NPV (5% discount

after-tax C$M)

255 469 684 871 1,112 1,326 1,540

IRR % 13.4 19.6 25.3 30.0 35.8 40.8 45.7

Payback (years) 6.4 4.0 2.9 2.5 2.1 1.8 1.6

NPV at 5% Discount Rate Sensitivity After-Tax (C$M)

% -20 -10 0 +10 +20

OPEX 973 922 871 820 769

CAPEX 1,048 960 871 782 694

IRR Sensitivity After-Tax (%)

% -20 -10 0 +10 +20

OPEX 38.1 33.7 30.0 26.9 24.3

CAPEX 33.9 32.0 30.0 27.9 25.8

Discount Rate Sensitivity After-Tax (C$M)

0% 1,427

5% 871

6% 790

8% 648

10% 531

The Project site is within the Robinson-Superior Treaty, which confers certain rights to aboriginal peoples

in the area. Generation recognizes the traditional rights of Indigenous people and acknowledges the

exercising of Treaty rights to preserve their cultural identity and customs. As such, upon acquisition of

the Marathon Project, Generation has continued to regularly meet with communities to get feedback and

incorporate the feedback into the Company’s decision-making process. Generation is striving to ensure

these partnerships have mutually beneficial outcome and to maintain strong and long-lasting

relationships. Generation and its’ predecessors have been engaged in consultation and negotiations with a

number of Aboriginal communities with respect to the Project since 2004.

About the Marathon Palladium Project

The Marathon Deposit is the largest undeveloped platinum group metal Mineral Resource in North

America. The Marathon Property covers a land package of approximately 22,000 hectares or 220 square

kilometres. Gen Mining acquired a 51% interest in the Marathon Property from Sibanye Stillwater on July

10, 2019 and can increas e its interest to 80 % by spending $10 million over a period of four years. More

than $3 million of this has already been spent. Sibanye Stillwater has certain back-in rights that can bring

its interest in the Property back to 51% after such time as Gen Mining has earned its 80% interest (see the

Company's press release of July 11, 2019, for more details).

Qualified Persons

Rod Thomas, P.Geo., Company Vice -President, Exploration and a Director , and Eugene Puritch, P.Eng.

FEC, CET President of P&E Mining Consultants Inc., ha ve reviewed and approved the scientific and

technical information contained in this news release. Messrs. Thomas and Puritch are Qualified Persons

Technical Report

An NI 43-101 Technical Report to support this PEA press release will be filed on SEDAR within 45 days.

Conference Call

An audio conference call will be held with members of Generation Mining management and

representatives from P&E on Tuesday, January 7 at 11 a.m. EST. Participants toll-free dial-in number

(U.S. and Canada) is 1-833-753-7228. International callers can dial 769-208-9284. The conference ID

number is 9977613. There will be a short presentation followed by a question period.

For further information please contact:

Jamie Levy

President and Chief Executive

Officer

(416) 640-2934

(416) 567-2440

[email protected]

Forward-Looking Information

This news release includes certain information that may be deemed “forward-looking information” under

applicable securities laws. All statements in this release, other than statements of historical facts, that

address acquisition of the Property and future work thereon, Mineral Resource and Reserve potential,

exploration activities and events or developments that the Company expects is forward- looking

information. Although the Company believes the expectations expressed in such statements are based on

reasonable assumptions, such statements are not guarantees of future performance and actual results or

developments may differ materially from those in the statements. There are certain factors that could

cause actual results to differ materially from those in the forward- looking information. These include the

results of the Company’s due diligence investigations, market prices, exploration successes, continued

availability of capital and financing, and general economic, market or business conditions.

Investors are cautioned that any such statements are not guarantees of future performance and actual

results or developments may differ materially from those projected in the forward-looking information.

For more information on the Company, investors are encouraged to review the Company’s public filings

at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-

looking information, whether as a result of new information, future events or otherwise, other than as

required by law.

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