Generation Mining is hoping to tap into federal ‘green’ tax credits to help finance the construction of a $1.1 billion palladium and copper mine near the north shore of Lake Superior.
In a webcast this week, company management briefed shareholders on the updated feasibility study for its Marathon open-pit development and explained the path to production.
The study revealed the project pricetag to build and outfit the predominately palladium mine and mill operation has increased by 25 per cent to $1.1 billion.
Chairman Kerry Knoll said this paints a more accurate picture when factoring in inflation with quotes and estimates on equipment purchases and the work to be done on the site, 10 kilometres north of the town of Marathon.
Despite the increase in capital spending, Knoll said it’s very much a “robust” project with a 2.3-year payback on the investment.
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The Toronto company said it’s waiting on three remaining provincial permits in order to start the early phases of a 24-month construction period by this summer or this year’s fourth quarter. The permits are for the mine closure plan, for tree harvesting and for species at risk, the latter being a boreal caribou protection plan.
Last November, two major milestones were cleared. The federal and provincial governments approved the project’s environmental assessment and the company signed a community benefits agreement with Biigitigong Nishnaabeg (Pic River First Nation).
“It’s a busy time,” said Knoll. “We’re going ahead, full bore.”
Full construction could begin early next year with pre-production and mine commissioning tentatively scheduled for mid-2025.
Both the project financing and government permitting have to come together in the next few months to stay on schedule.
Management said based on the positive reaction they’ve received from government officials and from top-tier streaming companies and commercial lenders, there’s little reason to think they won’t stay on track.
“It’s an aggressive timeline,” said Gen Mining president-CEO Jamie Levy, “but we are getting very good support from the federal and provincial governments (in expediting) our permits.
Levy said he was “amazed” at the reception their project has received in Ottawa. Marathon, he said, appears to be a priority project with all key federal and provincial government officials and he expressed confidence that they’ll be no snags or delays in their timelines.
Levy said with all the talk in the business media focussed on critical minerals and “this is the project that the federal and provincial government want to support.”
“This is the only PGM-copper project going through the permitting process in Canada.”
On the financing front, the company has a $240-million gold streaming deal with Wheaton Precious Metals and they are negotiating a $540-million debt financing package with a syndicate of banks.
Levy said they’re waiting for term sheets and mandate letters from some senior lenders and they aim to obtain those in the next month or two to secure money by year’s end.
Some customers have already been lined up.
Glencore recently signed an offtake agreement for half of Marathon’s copper concentrate production. Knoll mentioned during the webcast that they’ve reached “indicative terms” with a company to take the remaining 50 per cent, a confidential deal they will disclose at a later date.
The company also aims to tap into federal clean tech and critical metals tax credits just announced by Ottawa in the recent budget.
Knoll said they’ve had meetings with key members of government, including lunch with federal Natural Resources Minister Jonathan Wilkinson a few months ago. They continue to have discussions with government funders on how programming for critical minerals projects will take shape.
Being able to tap into federal tax rebates would represent “substantial savings” on their construction capital costs, said Levy.
In fielding investor questions during the webcast, company officials wouldn’t discuss if they’ve been in direct talks with electrical vehicle automakers on any offtake agreements.
Chief Operating Officer Drew Anwyll said they haven’t made a decision on selecting a mine construction firm and haven’t finalized any agreements with equipment manufacturers until all the project financing is secured.
In the future, Anwyll said, they will strongly consider an electric mining fleet but for now it will be a conventional open-pit operation.
No exploration work is planned during construction, said Knoll, unless government provides money to encourage critical minerals exploration.
Both Levy and Knoll said there’s enough mineral potential on their 220-square-kilometre property to be mining well beyond 13 years.
The current feasibility study is based on a three-kilometre long pit, down to a depth of 250 metres. But there is further mineralization at depth and running to the north, that has yet to be fully explored.
As well, there are two satellite deposits waiting in the wings and mineralized zones in other spots showing wide intercepts of copper that Levy said offer “fabulous opportunities” to extend the mine life by at least five or six years.
