Sprott takes 11.3% stake in Generation Mining
Generation Mining Ltd. [GENM-CSE; GENMF-OTC] said financier Eric Sprott has taken an 11.30% stake in the company (on a partially diluted basis) after participating in Generation’s $10.7 million bought deal offering.
The bought deal offering and concurrent non brokered private placement consisted of 20.6 million units priced at 52 cents per unit. Each unit consists of one common share and one-half of a common share purchase warrant. Each warrant can be used to acquire one common share at a price per warrant share of 75 cents for a period of 24 months from the date of closing.
Under the bought deal offering, the company issued 91.2 million units at the issue price, a move that raised just over $10 million. Under the non-brokered offering, the company issued 1.35 million units at the issue price, raising another $700,000.
Generation said Eric Sprott, via an Ontario numbered company, acquired 9.6 million bought deal offering units. As a result, Sprott beneficially owns or controls 9.6 million common shares and 4.8 million warrants, representing 7.83% of the issued and outstanding shares of Generation on a non-diluted basis, and 11.3% on a partially-diluted basis, assuming that the warrants are exercised.
Prior to the offering, Sprott did not own any Generation Mining shares. On Friday, the shares fell 3.5% or $0.02 to 55 cents. The shares trade in a 52-week range of 75 cents and 12 cents.
The company said proceeds will be used for exploration and development of the company’s Marathon Palladium Project, which hosts the largest platinum group metal mineral resources in North America, as well as for working capital and general corporate purposes.
More than 85% of palladium production is used in catalytic converters in gasoline-burning automobiles. Palladium is also used in electronics, medicine and jewelry. It is a key component in the production of fuel cells.
Generation acquired a 51% stake in the Marathon Property from Sibanye Stillwater [SBGL-NYSE ADRs] in July, 2019. It can increase its interest to 80% by spending $10 million over a period of four years. More than $3 million of this amount has already been spent.
However, Stillwater has certain back-in rights that can bring its interest in the property back to 51% after Generation Mining has earned an 80% stake.
Located about 215 km east of Thunder Bay and 8 KM north of Marathon, northwestern Ontario, the Marathon property was developed by a number of companies between 1985 and 2010. That was before it was acquired by Sibanye-Stillwater in 2017.
More than 200,000 metres of drilling in over 1,000 holes have been completed to date.
Results of a Preliminary Economic Assessment announced in January, 2020, indicate that the property can produce an average of 194,000 palladium-equivalent ounces per year over a lifespan of 14 years. The estimate includes credits for copper, platinum, gold and silver.
Preproduction capital is estimated at $431 million, plus $277 million for sustaining capital.
The PEA estimates that actual palladium production will average 107,000 ounces annually over the mine life, at an all-in-sustaining cost of US$586/oz, net of by-product credits.
The PEA is based on Measured and Indicated Resources in the Marathon deposit, and did not include the Geordie and Sally deposits, which are located on the same property.
In a December 2, 2019 press release, the company said total Measured and Indicated R
esources on the property stand at 8.7 million palladium equivalent ounces. That includes 7.1 million ounces in the marathon Deposit.
The Marathon Property covers 22,000 hectares or 220 km2.