A new palladium and copper mine in Ontario, Canada, could be under construction next year, if permitting and financing for the C$665-million project proceed as planned.
Toronto-listed Generation Mining (Gen Mining) on Wednesday announced the results of a feasibility study for the Marathon palladium/copper project, in which precious metals major Sibanye-Stillwater has an interest.
The study yielded an aftertax internal rate of return (IRR) of 30%, a net present value (NPV), using a 6% discount, of C$1.07-billion and a payback of 2.3 years, based on a long-term price of $1 725/oz for palladium and $3.20/lb for copper.
Using spot prices for palladium and copper, the IRR climbs to 47% and the NVP doubles to $2.02-billion.
“With the consensus outlook for palladium and copper strong for the next decade, this is a project whose time has come,” said Gen Mining executive chairperson Kerry Knoll.
Used in catalytic converters to reduce harmful emissions, palladium is forecast be in a supply deficit for the foreseeable future, as Europe, China and other regions continue to roll out tougher emissions standards, forcing automotive manufacturers to put more into each vehicle.
The project, located near the town of Marathon in north-western Ontario, will deliver 1.9-million ounces of palladium, 467-million pounds of copper, 537 000 oz of platinum, 151 000 oz of gold and 2.8-million ounces of silver.
In the first three years following commercial production, Marathon would produce 588 000 oz of palladium and 122-million pounds of copper, from about 270 000 t of copper/palladium concentrate shipped, earning project owners $9 779-million of free cash flow.
The feasibility study calculates an average life-of-mine cash cost of $687 a palladium-equivalent ounce and an all-in sustaining cost of $809 a palladium-equivalent ounce.
The preliminary economic assessment, announced in early 2020, estimated that for an upfront capital cost of C$431-million, the project would have an IRR of 30%, a NPV, using a 5% discount, of C$871-million, and an after-tax payback of 2.5 years.
Gen Mining stated that it would advance the environmental approval process, detailed engineering and mine financing during the remainder of 2021.
Gen Mining owns an 80% interest in the project, with the remainder owned by Sibanye-Stillwater, which has certain back-in rights that allow it to increase its interest in the project to 51%.