Wheaton Precious Metals Corp. [WPM-TSX; LSE, NYSE American] has entered into a binding arrangement with Generation Mining Ltd. [GENM-TSX; GENMF-OTCQB] for a precious metal purchase agreement (PMPA) in respect to the Marathon project located 10 km north of Marathon, Ontario. Generation, operator, has a 51% interest with Sibanye-Stillwater [SBSW-NYSE American] owning 49%.
“The Marathon Project provides Wheaton with accretive, near-term growth that further diversifies our existing portfolio and preserves our focus on precious metals,” said Randy Smallwood, Wheaton’s President and CEO. “Wheaton is proud to support Gen Mining in the responsible development of the Marathon Project, recently projected to have one of the lowest operational carbon footprints of any mine in the world, once producing. 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 Marathon PMPA, Wheaton will purchase 100% of the payable gold production until 150 thousand ounces (koz) have been delivered, thereafter dropping to 67% of payable gold production for the life of the mine and 22% of the payable platinum production until 120 koz have been delivered, thereafter dropping to 15% for the life of mine.
Wheaton will pay Gen Mining a total upfront cash consideration of C$240 million, C$40 million of which will be paid on an early deposit basis prior to construction to be used for development of the Marathon Project, with the remainder payable in four staged installments during construction, subject to various customary conditions being satisfied and pre-determined completion tests.
Wheaton will make ongoing payments for the gold and platinum ounces delivered equal to 18% of the spot prices (Production Payment) until the value of gold and platinum delivered less the Production Payment is equal to the upfront consideration of C$240 million, at which point the Production Payment will increase to 22% of the spot prices.
Gen Mining and certain of its subsidiaries, including the owner of the Marathon Project, will provide Wheaton with corporate guarantees and other security over their assets.
Completion of the Marathon PMPA is subject to the closing of Gen Mining’s acquisition of the remaining 16.5% interest in the Marathon Project from Sibanye Stillwater Limited, as announced by Gen Mining on December 8, 2021.
The first advance of the early deposit under the Marathon PMPA is expected to occur early in 2022, subject to the completion of certain corporate matters and customary conditions.
The Marathon Project is forecast to be high-margin palladium mine with a 13-year mine life. Attributable production once the mine and mill are fully ramped up is forecast to average over 16 koz of gold and 14 koz of platinum per year for the first five years of production, and approximately 15 koz of gold and 11 koz of platinum per year for the first ten full years.
Gen Mining anticipates construction activities to begin in 2022, with production commencing in 2024. Significant exploration potential exists within Gen Mining’s strategic land package which covers over 220 km2.
Subsequent to the closing of this acquisition, the Marathon Project will add to Wheaton’s estimated Proven and Probable gold reserves by 0.26 Moz and platinum by 0.17 Moz, Measured and Indicated gold resources by 0.18 Moz and platinum by 0.10 Moz, and Inferred gold resources by 0.04 Moz and platinum by 0.02 Moz.