Generation Mining (CNSX: GENM) Company Overview
Symbol(s): CNSX: GENM
Industry: Palladium Mining
Generation Mining is a mineral exploration and development company focusing on palladium, copper, zinc and molybdenum projects in Canada. The company owns a majority interest in the largest undeveloped Palladium deposit in North America, the Marathon Project in Northern Ontario. The company also holds three promising exploration projects in British Columbia, Nova Scotia, and the Northwest Territories. The company was listed on Canadian Securities Exchange on May 11, 2018, and started trading at 10 cents.
Generation Mining’ shares closed at 68 cents on January 24. 2020 with a huge gain of 580% in a year and four weeks gain of about 183%. The company had a market cap of $62.2 M with 91.49 million outstanding shares.
Generation Mining Funded By Eric Sprott
Generation Mining, on January 22, 2020, announced C$8 million “Bought Deal” private placement including C$5 million from Eric Sprott. On completion of the offering, Eric Sprott will own approximately 8.84% of the company on a non-diluted basis and approximately 12.70% on a partially diluted basis.
Marathon Palladium Project
Generation Mining’s Marathon Property hosts several PGM-Copper deposits, including The Marathon Deposit which is the largest undeveloped Platinum Group Metal (PGM) Mineral Resource in North America. The Marathon Property covers a land package of approximately 22,000 hectares or 220 square kilometers and covers nearly the entire Coldwell Complex. Marathon Property is located less than 10 kilometers from the mining town of Marathon, Ontario, and is very close to the Trans-Canada Highway as well as the CPR main rail line. The new 230-kilovolt East-West Tie power line from Wawa to Thunder Bay, which is expected to begin construction shortly, will pass through part of the Marathon Property. Generation Mining owns a 51% interest (with an option to earn up to an 80% interest) in the Marathon PGM deposit. The Company is actively exploring extensions to the Marathon Deposit as well as the Geordie and Sally satellite deposits and the Boyer Zone.
According to Generation Mining’s latest corporate presentation, the Marathon Deposit contains 8.6 million ounces of palladium equivalent (PdEq) or 13.82 million ounces of gold equivalent (AuEq) measured and indicated mineral resources, within a 179-million-tonne constraining pit at 1.24 grams per tonne PdEq, calculated at a $13/tonne-net-smelter-royalty (NSR) cut-off. The resources include an estimated 3.24 million ounces (oz) palladium (Pd), 1.06 million oz platinum (Pt) and 796 million pounds copper (Cu). The company’s enterprise value per AuEq ounce is US$2.97 which makes it still very undervalued compared to its peers.
Generation Mining trades at a fraction of its peers’ valuation despite holding the largest Historic MI&I AuEq resource
Preliminary Economic Assessment (PEA) Study
The company announced the results of a positive independent Preliminary Economic Assessment Study on the Marathon Palladium and Copper Project.
Highlights (all dollar amounts in Canadian dollars on a 100% project ownership basis unless otherwise indicated). PEA was done with conservative $1,275/oz USD! 40% cheaper than the current spot price!
- The project would produce an average of 194,000 palladium-equivalent ounces per year over a 14-year mine life (including credits for copper, platinum, gold, and silver).
- The Project generates an after-tax internal rate of return (IRR) of 30.0% and an after-tax net present value (NPV)of $871 million at a 5% discount rate at Nov 30/19 two-year trailing average metal prices (base case).
- The Project generates an after-tax net present value of $1,541 million and an internal rate of return of 45.8% at a 5% discount rate at recent spot metal prices (final LBMA London price fix for precious metals; final LME bid price for copper, Dec 31, 2019)
- The Project would generate base case after-tax cash flows of $520 million in years 1-3, resulting in a 2.5-year payback period.
- Actual palladium production will average 107,000 ounces annually over the mine life, at a Cash Cost Per Ounce of $US504 and an All-in Sustaining Cost (AISC) of $US586 per ounce, net of by-product credits.
- The PEA used only Measured and Indicated Mineral Resources in the Marathon Deposit in its calculations and did not include the Geordie and Sally Deposits which are located on the same property (see News Release dated December 2, 2019). The Marathon Deposit has no outstanding royalties or financing streams registered against it.
Generation Mining Ltd announced its 2019 drill results on December 17th, 2019. The best result from the 2019 drill program on the Sally Keel Zone intersected 1.19 grams per tonne (“g/t”) palladium (“Pd”), 0.68 g/t platinum (“Pt”), 0.48 g/t gold (“Au”) and 0.143 % copper (“Cu”) which equates to a PdEq grade of 2.41 g/t PdEq over an estimated true width of 10 meters (corresponding to a 40-meter drill intercept).
Davidson Molybdenum Deposit
Generation Mining Limited has an option to acquire a 100-per-cent interest in a large molybdenum property located near Smithers, B.C. A resource estimate was undertaken by independent consultants in 2016 for a previous optionee.
Total drilling on the property to date is 72,815 meters in 218 drill holes, dating back to the 1950s. Most of the drill core has been securely stored and is available to Generation. Giroux and Cuttle estimated the following measured and indicated resources (M&I) at a 0.20-per-cent- and 0.28-per-cent-molybdenum-disulphide cut-off:
- 90.08 million tonnes grading 0.286 percent MoS2 and 0.034 percent tungsten trioxide — at a 0.20 percent MoS2 cut-off (340.5 million pounds Mo, 67.53 million pounds WO3);
Alberta Zinc Property
A very large geochemical anomaly was discovered in a joint venture between the Alberta and federal governments near the High Level in northwestern Alberta. The program involved sampling glacial till for kimberlite indicator minerals and was not successful in this regard. However, the program did discover a zinc anomaly covering 4000 square kilometers of numerous samples within the area all but a few contained significant zinc values. Generation Mining has an option to earn a 100% interest in a 50,000 ha property to the east of the anomaly in the area where the source is thought to be. The plan is to conduct more detailed glacial till sampling, possibly followed by geophysics and drilling.
Generation Mining Share Price Chart
Generation Mining (CNSX: GENM) Corporate Presentation2020 01 15 - GENM Corporate Presentation Final
Generation Mining (CNSX: GENM) Valuation by Resources
The company’s resources for Marathon Palladium Project are worth about US$21.5 billion dollars or 13.81 million gold equivalent ounces at recent metals prices. The company’s enterprise value per AuEq ounce is US$2.97 which makes Generation Mining still very undervalued compared to other mining companies.
Palladium Equivalent Resources: 8.6 million ounce
Gold Equivalent Resources: 13.81 million ounce
Market Capitalization: $62.21M
Cash & Cash Equivalents: $10M approximately
Enterprize Value: $52.2M
Enterprize Value Per AuEq Ounce: US$2.97* ($3.78 CAD)
Enterprise Value Per PdEq Ounce: US$4.76* ($6.07 CAD)
*exchange rate of 0.785 USD per CAD was used