Generation Mining (GENM.TO) has now completed the streaming agreement with Wheaton Precious Metals (WPM, WPM.TO) whereby the latter will make a total cash payment of C$240M in return for a stream on 100% of the gold production and 22% of the platinum production. Wheaton will be required to make ongoing payments of 18% (increasing to 22%) of the spot price for those two metals.
As part of the agreement, Wheaton has now wired a first deposit of C$20M to Generation Mining with a second deposit of C$20M expected before the end of the third quarter. This will put Generation Mining in a very comfortable position to continue the permitting process of the Marathon PGM project in Ontario. As you may remember, this project will produce a total of 1.9 million ounces of palladium and 467 million pounds of copper as its main metals. And as 78% of the 537,000 ounces of platinum that are expected to be recovered and sold remain unencumbered, Marathon PGM also provides exposure to the platinum price.
The C$240M will also go a long way to finance the C$665M initial capex (the feasibility study was published in Q1 2021) and the unencumbered platinum and silver production may offer additional financing possibilities by selling an additional stream on those metals. That could help Generation to keep the potential share dilution limited.
Disclosure: The author as a long position in Generation Mining. Generation is a sponsor of the website. Please read our disclaimer.
