Generation Mining arranges $15 million bought deal

Generation Mining Ltd.’s [CSE-GENM] is raising $15 million from a bought deal financing with proceeds earmarked for the company’s Marathon Palladium Project in Ontario.

Generation said the underwriter has pledged to purchase, on a bought deal basis, 42.8 million units priced at 28 cents per unit and 9.7 million flow-through units priced at 32 cents per unit.

Marathon hosts a large platinum group metal mineral resource. The project is located about 215 kilometres east of Thunder Bay and eight kilometres north of Marathon, in northwestern Ontario. The property covers a land package of 220 square kilometres.

Each unit will consist of one common share and one fifth of a common share purchase warrant. Each flow-through unit will consist of a common share that will qualify as a flow-through share and one fifth of one warrant. Each whole warrant will enable the holder to acquire one common share for 50 cents for 36 months from the closing date of the offering.

The underwriter has been granted an over-allotment option to purchase up to an additional $2.25 million in units at the issue price. That option can be exercised for up to 30 days after the closing date, which is scheduled for November 21, 2023.

On Friday, the shares were down 14.5% or $0.045 to 26.5 cents and trade in a 52-week range of 91 cents and 28 cents.

An updated feasibility study has indicated that the Marathon mine can produce an average of 166,000 ounces of payable palladium and 41 million pounds of copper annually over a 13-year lifespan.  During that period the Marathon Project is expected to produce 2.12 million ounces of palladium, 517 million pounds of copper, 485,000 ounces of platinum, 158,000 ounces of gold and 3.15 million ounces of silver.

The initial capital cost is pegged at $1.1 billion ($898 million net of equipment financing and pre-commercial production revenue). The study also envisages average operating costs of US$709 per palladium equivalent (PdEq) ounce, and an all-in-sustaining cost of US$813 per PdEq ounce.

In the first three years of commercial production, the mine is expected to deliver $851 million in free cash flow. It will create over 800 jobs during construction and over 400 million permanent jobs when the mine is in operation.

According to the study, the company will used conventional open pit, truck and shovel operating methods. Three open pits will be mined over the 12.5-year operating mine life. The study is based on measured and indicated resources in the Marathon, Geordie, and Sally deposits of 230,656 tonnes of grade 0.55 g/t palladium or 4.07 million ounces, 1.06 million pounds of copper, 1.3 million ounces of platinum, 499,000 ounces of gold and 12.4 million ounces of silver.

The company previously said it anticipates finalizing the project financing and receiving approval of all the required permits to begin construction in late 2023.