Generation Mining Delivers Updated Feasibility Study for Canada’s Next Critical Mineral Mine - the Marathon Palladium-Copper Project After-Tax NPV6% $1.16 Billion, IRR of 26%, Payback 2.3 years
Generation Mining Delivers Updated Feasibility Study for Canada’s Next
Critical Mineral Mine - the Marathon Palladium-Copper Project
After-Tax NPV6% $1.16 Billion, IRR of 26%, Payback 2.3 years
TORONTO--(BUSINESS WIRE)--March 31, 2023--Generation Mining Limited (TSX: GENM;
OTCQB: GENMF) (“Gen Mining” or the “Company”) is pleased to announce positive results on
the updated Feasibility Study (“2023 FS” or the “Feasibility Study”) for the Marathon
Palladium-Copper Project (the “Project”) located near the Town of Marathon in Northwestern
Ontario. The 2023 FS presents an optimized design for the Project with improved clarity on
anticipated capital and operating costs in the current inflationary environment. The 2023 FS
outlines the operation of an open pit mine and process plant over a mine life of 12.5 years and
replaces the Company’s March 2021 Feasibility Study (the “2021 FS”).
All dollar amounts are in Canadian dollars unless otherwise stated. All references to Mlbs are to
millions of pounds and Moz are to millions of ounces and koz are to thousands of ounces.
Highlights:
Robust economics1: An after-tax Net Present Value (“NPV”) at a 6% discount rate of
$1.16 billion and Internal Rate of Return (“IRR”) of 25.8% based on a long-term price of
US$1,800/oz for palladium and US$3.70/lb for copper
Quick payback period on Initial Capital2,3: 2.3 years
Initial Capital: $1,112 million ($898 million net of equipment financing and pre-
commercial production revenue), an increase of 25% from the 2021 FS
Low Operating Costs and attractive AISC: Life of mine (“LOM”) average operating
costs of US$709/PdEq oz and all-in sustaining costs (“AISC”) of US$813/PdEq oz 3 .
Operating costs have increased 14% compared with the 2021 FS.
Increased Mineral Reserve Estimate: an increase of 8.5% in Mineral Reserves
tonnages and a decreased open pit strip ratio
Optimized operation: increased process plant throughput and improved metallurgical
recoveries over LOM
Average annual payable metals: 166 koz palladium, 41 Mlbs copper, 38 koz platinum,
12 koz gold and 248 koz silver
LOM payable metals: 2.1 Moz palladium, 517 Mlbs copper, 485 koz platinum, 158 koz
gold and 3.2 Moz silver
Strong cash flows in first three years of production following commercial
production: $851 million of free cash flow 3 , 580 koz of payable palladium and 132
Mlbs of payable copper
Jobs: Creation of over 800 jobs during construction jobs and over 400 direct permanent
jobs during operations
Jamie Levy, President and CEO of the Company, commented, “This updated Feasibility Study
underscores just how robust the Marathon Project is, even in the current inflationary
environment. This, combined with strong demand for critical minerals, makes the rationale for
the Project becoming Canada’s next critical minerals mine more compelling than ever before.
With the receipt of our Environmental Assessment approvals and our recently announced
indicative offtake term sheets, we are advancing to arrange Project financing and working hard
to obtain the permits necessary to start construction. The Project promises to be a near-term
sustainable, environmentally sensitive, low-cost producer of critical metals that Canada and the
rest of the world desperately need. On a copper equivalent basis, the Marathon Project, once in
production, is expected to be one of the lowest CO2 equivalent intensity mines in the world. The
metals we plan to produce will not only support emissions controls and the transition to a greener
economy in Ontario and Canada, but they will also support job creation and economic prosperity
for local, regional, and national stakeholders, in particular the First Nation community of
Biigtigong Nishnaabeg and the Town of Marathon.”
Following the 2021 Feasibility Study, the Company undertook considerable work to optimize
and de-risk the Project, including:
Detailed engineering on the process plant, Tailing Storage Facility (“TSF”), and site
infrastructure designs.
Additional metallurgical test program to optimize the flowsheet and plant design and
improve confidence in metallurgical recoveries. Results allowed the Company to remove
the PGM-Scavenger circuit from the process plant design and lower the process plant
unit-operating costs.
Geotechnical investigations completed in areas of key infrastructure location and
confirmed the locations chosen in the construction design.
Additional diamond drilling of 18,995 m within the Marathon Deposit targeting key areas
within the open pit Mineral Reserves in the first three years of planned production, and
areas within and proximal to the overall Mineral Resources.
Agreement finalized with Hycroft Mining Holding Corporation (“Hycroft”) for the
purchase of an unused, surplus SAG mill and an unused, surplus ball mill4, which
together with ancillary equipment allows the Company to increase throughput by 10% in
the second full year of production.
Community Benefits Agreement (“CBA”) signed and ratified with the Biigtigong
Nishnaabeg (“BN”), on November 12, 2022.
Federal and Provincial Environmental Assessment approvals received on November 30,
2022.
Initiated the process of obtaining various federal and provincial permits and approvals
required to construct and operate the project.
Drew Anwyll, P.Eng, Chief Operating Officer, said, “Our team has been working hard to
develop the Marathon Project and has successfully optimized and improved confidence in the
designs of the process plant, the open pits and the necessary infrastructure for the Project.
Detailed design will advance, and we will continue to de-risk the Project in anticipation of
finalizing the Project financing and receiving approval of the required permits to commence
construction later in 2023.”
Upcoming Webinar:
For more information on the updated Feasibility Study please join Jamie Levy, President, Chief
Executive Officer and Director, Kerry Knoll, Chairman and Director, and Drew Anwyll, Chief
Operating Officer for a live event on Monday, April 3, 2023 at 10 am ET / 7 am PT. An
opportunity to ask questions will follow the presentation. Click here to register:
https://my.6ix.com/n9qfF5Nz
The Feasibility Study was prepared by the Company and G Mining Services Inc. (“GMS”), along
with contributions from Wood Canada Limited, Knight Piésold Ltd., P&E Mining Consultants
Inc. (“P&E”), and JDS Energy and Mining, Inc., and with support from LQ Consulting and
Management Inc. and Haggarty Technical Services. The effective date of the Feasibility Study is
December 31, 2022.
KEY RESULTS AND ASSUMPTIONS IN UPDATED FEASIBILITY STUDY
Key results and assumptions for the updated Feasibility Study are summarized below.
Units 2023 FS 2021 FS
Production Data
Mine Life (operating) years 12.5 12.8
Average Process Plant Throughput tpd 27,700 25,200
Average Process Plant Throughput Mt/ year 10.1 9.2
Average Mining Rate tpd 115,000 110,000
Average Mining Rate Mt/ year 42 40
Total Ore Mined Mt 127 118
Strip Ratio waste:ore 2.63 2.80
Palladium (payable) k oz 2,122 1,905
Copper (payable) M lbs 517 467
Platinum (payable) k oz 485 537
Gold (payable) k oz 158 151
Silver (payable) k oz 3,156 2,823
LOM Palladium Equivalent Payable PdEq. koz 3,613 3,195
Average Annual Palladium – Payable Metal k oz 166 149
Average Annual Copper – Payable Metal M lbs 41 36
Average Annual Platinum – Payable Metal k oz 38 41
Average Annual Gold – Payable Metal k oz 12 12
Average Annual Silver – Payable Metal k oz 248 220
Operating Costs (Average LOM)
Mininga $/t mined 3.25 2.53
Mining $/t milled 11.45 9.23
Processing $/t milled 8.70 9.08
G&Ab $/t milled 2.67 2.48
Transport & Refining Charges $/t milled 4.13 2.80
Royalty $/t milled 0.09 0.04
Total Operating Cost $/t milled 27.04 23.63
LOM Average Operating Costs US$/oz PdEq 709 687
LOM Average AISCc US$/oz PdEq 813 809
Capital Costs
Initial Capital $M 1,112 888
Less:
Pre-commercial production revenue $M ($156) ($171)
Leased equipment, net of lease payments during construction $M ($58) ($53)
Initial Capital (Adjusted) $M 898 665
LOM Sustaining Capital $M 424 423
Closure Costs $M 72 66
Financial Evaluation
Pre-Tax Cash Flow (undiscounted) $M 3,387 3,004
Pre-Tax NPV6% $M 1,798 1,636
Pre-Tax IRR % 31.9 38.6
Payback years 2.0 1.9
Net Cash Flow (undiscounted) $M 2,285 2,060
After-Tax NPV6% $M 1,164 1,068
After-Tax IRR % 25.8 29.7
Payback years 2.3 2.3
Key Assumptionsd
Palladium Price US$/oz $1,800 $1,725
Copper Price US$/lb $3.70 $3.20
Platinum Price US$/oz $1,000 $1,000
Gold Price US$/oz $1,800 $1,400
Silver Price US$/oz $22.50 $20.00
Foreign Exchange (“FX”) C$:US$ 1.35 1.28
Diesel Price $/litre 1.17 0.77
Electricity $/kWhr 0.07 0.08
Notes:
a Including capitalized maintenance parts.
b Includes estimated costs associated with certain commitments to and agreements with Indigenous communities.
c AISC is calculated without the impact of the Precious Metal Purchase Agreement with Wheaton Precious Metals
Corp. (“WPM PMPA”).
d Metal Price Assumptions are based on the lesser of the three-year trailing average and the spot price on December
31, 2022, rounded to nearest interval.
LOM Metal Production Recovered Metal Payable Metal Revenue %a
Palladium 2,266 koz 2,122 koz 58
Copper 548 Mlbs 517 Mlbs 29
Platinum 607 koz 485 koz 7
Gold 204 koz 158 koz 4
Silver 4,529 koz 3,156 koz 1
Notes:
a Excludes the impact of the WPM PMPA on gold and platinum revenues.
Mining
The Company will mine using conventional open pit, truck and shovel operating methods. Three
open pits will be mined over the 12.5-year operating mine life, with an additional two years of
pre-production mining to be undertaken where waste material is being mined for construction
and ore stockpiling ahead of process plant commissioning. The mining equipment fleet is to be
owner-operated and will include outsourcing of certain support activities such as explosives
manufacturing and blasting. Production drilling and mining operations will take place on a 10 m
bench height. The primary loading equipment will consist of 660 tonne hydraulic face shovels
(29 m3 bucket size) and large front-end wheel loader (19 m3 bucket size). The loading fleet is
matched with a fleet of 246 tonne haulage trucks. A fleet of 90 and 45 tonne excavators will be
used to excavate the limited volume of overburden material and will also be allocated to mining
the narrow-thickness ore zones, mainly associated with the W-Horizon in the South Pit, to
mitigate additional dilution.
Peak mining production will be 43 Mt per year (118,000 tonnes per day (“t/d”)). Total material
moved over the LOM is expected to be 460 Mt of which 128 Mt is ore.
The Marathon Deposit is well defined and characterized by ore outcropping on surface, with
wide and moderately dipping mineralized zones.
The open pit operation includes a waste rock dump immediately to the east of the open pits and
an ore stockpile (peak capacity of approximately 10 Mt) to the west of the pits, proximal to the
crusher location.
Processing
The 2023 FS outlines the process plant throughput starting at 9.2 Mt per year (25,200 t/d) and
increasing to 10.1 Mt per year (27,700 t/d) following the completion of the powerline upgrade
scheduled year two of operations. The increase in process plant throughput is possible with the
inclusion of the Hycroft mills in the plant design. The process plant will produce a copper-
palladium concentrate (“Cu-PGM concentrate”).
The process plant flowsheet includes a conventional comminution circuit consisting of a SAG
mill, followed by a ball mill (an “SAB” circuit). With the added capacity of the Hycroft mills,
the pebble crusher (included in the 2021 FS) is no longer required. The flotation portion of the
process plant includes rougher flotation, concentrate regrind and three stages of cleaning.
The process plant metallurgical recovery (at the average head grade) is estimated at an average
of 88.0% palladium, 93.5% copper, 75.3% platinum, 71.5% gold and 66.4% silver. The phase 3
metallurgical test program demonstrated the PGM-Scavenger circuit outlined in the 2021 FS is
no longer required.
The flotation circuit design was revised to replace the Direct Flotation Reactors previously
included in the 2021 FS with conventional open tank cells for the roughers followed by
Woodgrove Staged Flotation Reactors™ for the cleaning circuit. Concentrate thickening,
concentrate filtering, tailings thickening, water management and a TSF complete the flowsheet.
Site Infrastructure
The existing regional infrastructure in the area of the Project is well established and will allow
for the efficient logistics associated with Project execution and operations, including the
movement of the Cu-PGM concentrate to a third-party off-site smelter.
All site infrastructure facilities, including the roads and access, process plant buildings,
workshops, warehouse, administrative buildings, water treatment plants, explosives plant,
communication systems, power and power transmission line required for the Project during
construction and operation have been considered in the Project design. Off-site infrastructure
(including transload concentrate facility, assay lab and accommodation units) required to support
the operation have also been included.
The TSF design includes downstream constructed embankments using run-of-mine waste rockfill
with embankments founded directly on bedrock. The majority of the TSF area consists of
exposed bedrock with a thin intermittent layer of sand and gravel. The upstream face of the
embankments includes an HDPE Geomembrane to minimize seepage. The construction
methodology includes bulk material placement with the mining fleet. Associated with the TSF
are separate water management facilities which will ensure the protection of the environment.
Between 2007 and 2022, there have been 10 geotechnical site investigation (“SI”) programs
completed. The SI programs have focused on TSF foundation conditions and location of key site
infrastructure, including the most recent drilling which focused on the process plant site, crusher,
mine rock storage area and water management structures foundations. The recent and historical
SI programs along with the 2021 detailed LiDAR™ topography and imagery survey have resulted
in a good understanding of the geotechnical conditions for the Project.
Capital and Operating Cost Summary
The Initial Capital cost considers a construction timeframe of approximately 24 months followed
by commissioning and ramp-up to commercial production5 over a period of approximately six
months. During the pre-commercial production, the costs and revenue associated with operations
will be capitalized and are included in the capital costs.
Construction Indirect costs and General and Owner’s costs are related to the expenses other than
direct equipment purchases and direct construction costs.
Sustaining Capital items include future equipment purchases and replacements for the mining
fleet and other site support equipment, the progressive build of the TSF over the LOM, and on
and off-site infrastructure development to support the growth and contribute to operational
improvements following initial construction.
The current capital cost estimate for the initial construction and the sustaining capital required
during the LOM are shown in the table below. As noted above, this estimate represents a 25%
($224 million) increase to the initial construction capex reported in the 2021 FS. Within this
increased capital cost, approximately 19% ($43 million) is due to scope changes, 71% ($160
million) is due to cost escalation and 10% ($22 million) with increased contingency.
Capital Costsa Initial ($M) Sustaining ($M) Total ($M)
Mining and Surface Equipment 117 130 247
Process Plant 345 3 348
Infrastructure 72 94 166
TSF, Water Management and Earthworks 95 198 293
General and Owner’s Costs 31 - 31
Construction Indirects 197 - 197
Pre-production, Start-up and Commissioning 159 - 159
Contingencyb 97 - 97
Sub-Total 1,112 424 1,537
Equipment Financing adjustment (58) - (58)
Pre-Production Revenue (156) - (156)
Total Capital (adjusted) 898 424 1,322
Notes:
a Sums in the table may not total due to rounding.
b Contingency included at project sub-category basis and totals approximately 9.5%.
Operating Costs and AISC (LOM) $ M US$/oz PdEq
Mining 1,432 300
Process Plant 1,087 228
General & Administration 334 70
Concentrate Transport Costs 230 48
Treatment & Refining Charges 286 60
Royalties 12 2
Total Operating Cost 3,381 709
Closure & Reclamation 72 15
Sustaining Capital 424 89
All-in Sustaining Cost (AISC) 3,878 813
Economic Analysis
The economic analysis is carried out in real terms (i.e., without inflation factors) in Q4 2022
Canadian Dollars without any project financing but inclusive of the WPM PMPA, and
anticipated financing of mobile equipment and closure bonding.
To provide a better understanding of the economic impact of the WPM PMPA to the overall
economics of the Project, the economic analysis is shown below including the economic impact
of the WPM PMPA (as required under the National Instrument 43-101 Standards of Disclosure
for Mineral Projects (“NI 43-101”) and excluding the economic impact of the WPM PMPA.
The economic analysis does not take into account any potential economic benefits which the
Marathon Project may qualify for under the new 30% investment tax credit on machinery and
equipment acquired to extract and process critical minerals which was announced by the
Government of Canada in its March 28, 2023 Federal Budget.
ECONOMIC ANALYSIS UNITS INCLUDING WPM
PMPA
EXCLUDING WPM PMPA
Pre-tax Undiscounted Cash Flow $M 3,387 3,780
Pre-tax NPV (6%) $M 1,798 1,979
Pre-tax IRR % 31.9 29.8
Pre-tax Payback years 2.0 2.3
After-tax Undiscounted Cash Flow $M 2,285 2,562
After-tax NPV (6%) $M 1,164 1,285
After-tax IRR % 25.8 24.2
After-tax Payback years 2.3 2.5
Sensitivities
The Project has significant leverage to palladium and copper prices. The after-tax valuation
sensitivities for the key metrics are shown below.
Palladium Price US$/oz 1,400 1,600 1,700 1,800 1,900 2,000 2,200
NPV6% ($M) 696 930 1,047 1,164 1,282 1,400 1,634
Payback (yrs) 3.3 2.9 2.5 2.3 2.2 2.0 1.9
IRR (%) 18.5 22.3 24.0 25.8 27.5 29.1 32.3
Copper Price US$/lb 2.50 3.00 3.50 3.70 3.90 4.50 5.00
NPV6% ($M) 836 972 1,109 1,164 1,219 1,386 1,522
Payback (yrs) 3.0 2.6 2.4 2.3 2.2 2.0 1.9
IRR (%) 21.1 23.1 25.0 25.8 26.5 28.7 30.4
After-Tax Results OPEX Sensitivity
+30% +15% 0% -15% -30%
NPV 6% ($M) 1,031 1,085 1,164 1,274 1,411
Payback (yrs) 2.7 2.5 2.3 2.1 2.0
IRR (%) 23.4 24.4 25.8 27.4 29.2
After-Tax Results CAPEX Sensitivity
+30% +15% 0% -15% -30%
NPV 6% ($M) 932 1,048 1,164 1,281 1,397
Payback (yrs) 3.3 3.0 2.3 1.9 1.3
IRR (%) 18.4 21.6 25.8 31.6 40.1
Discount Rate Sensitivity
(%)
NPV (After-Tax)
($M)
Foreign Exchange Rate
C$:US$
NPV (After-Tax) ($M)
0 2,285 1.25 928
5 1,303 1.30 1,046
6 1,164 1.35 1,164
8 925 1.40 1,284
10 731 1.45 1,403