VANCOUVER – Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) on Tuesday announced the acquisition of a gold and platinum stream from Generation Mining Ltd.’s [GENM-CSE] Marathon Palladium Project in Ontario.
Marathon hosts the largest platinum group metal mineral resources in North America. It is located about 215 kilometres east of Thunder Bay and eight kilometres north of Marathon, Ont., in northwestern Ontario. The property covers a land package of 220 square kilometres.
A feasibility study has indicated that the project can produce an estimated 245,000 palladium equivalent ounces per year over a 13-year mine life at an all-in-sustaining cost of US$809 per palladium-equivalent ounce. The study envisaged up front capital costs of $665 million.
Construction is expected to begin in 2022, with production likely commencing in 2024.
In a December, 8, 2021, press release, Generation said it has struck a deal to acquire 100% interest in the project by picking up Sibanye Stillwater’s [SBGL-NYSE ADRs] remaining 16.5% interest. Under the deal, Generation will issue to Stillwater 21.7 million common shares at 69 cents a share, leaving Stillwater with a 19.1% stake in Generation.
“The Marathon Project provides Wheaton with accretive, near-term growth that further diversifies our existing portfolio and preserves our focus on previous metals,’’ said Wheaton President and CEO Randy Smallwood. “While Wheaton will be streaming the by-product platinum and gold from the mine, the primary metals the Marathon Project is forecast to produce are palladium and copper, which are crucial for the global transition to a low-carbon economy.’’
Under the agreement, Wheaton will purchase 100% of the payable gold production until 150,000 ounces have been delivered, thereafter dropping to 67% of the payable gold production for the life of the mine and 22% of the payable platinum production until 120,000 ounces have been delivered, thereafter dropping to 15% for the life of the mine.
Wheaton will pay Generation $240 million in cash, of which $40 million will be paid on an early deposit basis prior to construction to be used for development of the project. The remainder will be payable in in four staged installments during construction, subject to various customary conditions being satisfied.
Wheaton will make ongoing payments for the gold and platinum ounces delivered equal to 18% of the spot prices until the value of gold and platinum delivered less the production payment is equal to the upfront consideration of $240 million. At that point, the production payment will increase to 22% of the spot prices.
Completion of the deal is subject to closing of Generation Mining’s acquisition of the remaining 16.5% project interest from Stillwater.
On Tuesday, Generation Mining shares jumped 22% or 16 cents to 89 cents on volume of 2.4million. The shares currently trade in a 52-week range of $1.23 and 57 cents.