Interview with Jamie Levy, President & CEO of Generation Mining Ltd
Our previous interview: [ Ссылка ]
Recording date: 13th September 2023
Generation Mining is on the cusp of transitioning its Marathon palladium-copper project in Ontario, Canada from development to construction. With major milestones upcoming over the next 6-12 months, Generation Mining represents an appealing investment opportunity with near-term re-rating potential.
The Marathon deposit contains a global-scale palladium resource, with reserves of over 7 million ounces palladium and 1.1 million ounces platinum. At full production, it is expected to produce 120,000 oz palladium and 30 million lbs copper per year over a 13-year mine life.
Importantly, Marathon is projected to be a low-cost producer, with all-in sustaining costs of just $814/oz palladium equivalent. This provides resilience even if palladium prices retreat from current levels near $1,300/oz.
Generation Mining has made great strides to de-risk execution risk and minimize capital requirements. $640 million of project financing is already in place, including a palladium stream and debt facility. The company has also completed extensive geotechnical drilling and engineering work.
With these accomplishments, Marathon is on a clear fast-track to production. Major catalysts over the next 6-12 months include:
- Finalizing remaining permits
- Securing additional funding
- Awarding the lead construction contract
- Starting early infrastructure construction works
- Making a full construction decision
- Achieving these milestones would significantly upgrade Marathon's investment case. The start of on-site construction activities in particular would be a major re-rating event.
The company estimates it needs another $200-300 million to fully fund construction. While challenging markets have delayed the raising of this equity financing, the funding gap is manageable given Marathon's scale.
Marathon's robust economics indicate the potential for strong upside at the current share price around CAD$0.80. At base case assumptions, the after-tax NPV is $1.07 billion. The IRR is an impressive 30%.
Further, these economics are based on a palladium price of just US$1,725/oz – nearly $500/oz below the current spot price. There is substantial leverage to any strengthening of palladium prices back towards 2022 highs above $3,000/oz.
Beyond the flagship Marathon project, Generation Mining's property package covers a massive 80-km mineralized palladium-copper belt. This points to potential for mine life extensions or future discoveries that could further improve value.
With construction in sight, Generation Mining offers investors an intriguing opportunity to position for substantial near-term growth. The experienced management team is strongly aligned with shareholders to rapidly advance Marathon and realize its full potential.
For investors seeking leveraged palladium exposure combined with near-term value catalysts, Generation Mining ticks all the boxes. The current valuation continues to provide an attractive discount ahead of pivotal project milestones expected over the coming months.
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