Minerals exploration company Generation Mining has struck an agreement to potentially earn up to 80% in Sibanye-Stillwater’s Marathon platinum group metals (PGMs) deposit in northern Ontario.
Gen Mining has signed a letter of intent (LoI) with Sibanye to earn an initial 51% interest in the property, which comprises 44 mining leases and 82 contiguous claims.
The LoI gives Gen Mining until mid-June to complete its confirmatory due diligence review, negotiate a definitive agreement, raise the required funds and complete the earn-in of an initial 51% interest in the property.
“It’s one of the few large undeveloped palladium deposits in North America. Our team likes the potential near-term development of this project along with the potentially considerable exploration upside,” Gen Mining CEO Jamie Levy commented in a media statement.
The property was developed from 1985 to 2010 by various companies and was eventually owned by Marathon PGM Corporation, which Stillwater Mining acquired for $118-million in 2010. In 2017, the property fell into the hands of Sibanye when it bought Stillwater for $2.2-billion.
Gen Mining paid Sibanye C$100 000 when it signed the LoI. It now has to raise at least C$8-million through a financing via the sale of shares or other securities, pay Sibanye-Stillwater an additional C$2.9-million and issue the company with C$3-million worth of shares, to gain a controlling share in the deposit.
Gen Mining could earn an additional 29% within four years by spending C$10-million, leaving Sibanye with a 20% interest in the property.
Should Gen Mining complete a definitive feasibility study (DFS) and make a positive commercial production decision, Sibanye will have 90 days to increase its ownership from 20% to a total 51% by agreeing to fund 31% of the total capital costs as estimated in the DFS. Thereafter, Sibanye and Gen Mining will contribute the remaining funds on a 51:49 basis.