Generation Mining (TSX:GENM) has secured US$340 million ($476.13 million) in final funding to complete construction financing for its Marathon Copper-Palladium Project in Northwestern Ontario, Canada.
The final funding includes anchor investments of approximately US$140 million from Canada Growth Fund and US$50 million from Canada Infrastructure Bank. Combined with previously announced senior debt, subordinated debt, and metal streaming arrangements, the company has arranged a fully financed construction package of approximately US$1.3 billion ($1.8 billion).
The financing comprises a US$200 million bought deal equity raising at US$0.64 per share, a US$40 million private placement with Canada Growth Fund at the same price, and US$100 million in convertible notes. The company also secured an offtake agreement with Glencore (LSE:GLEN) for concentrate production.
Generation Mining expects to make a final investment decision following completion of all financings and plans to begin early works construction in the December quarter.
CEO Jamie Levy says: “With financing now complete, we are thrilled to … move the Marathon Project towards production as Canada’s next major producer of copper and palladium.”
The bought deal financing will issue 312.5 million shares through BMO Capital Markets. Canada Growth Fund will subscribe for 62.5 million shares in the private placement and receive board nomination, registration, and pre-emptive rights subject to specified ownership thresholds.
The convertible notes carry a 9% annual interest rate and convert at a 40% premium to the equity pricing, with an 11-year term or seven years after senior debt repayment. Generation Mining can force conversion after three years if shares trade above 130% of the conversion price for 20 days in a 30-day period.
Under the Glencore offtake agreement, the trader will purchase 100% of concentrate production in the first two years after commercial production and approximately 50% thereafter, over a minimum 14-year term starting September 2028.
The concentrate will support domestic processing at Glencore Canada’s Horne smelter in Rouyn-Noranda, Québec.
The package includes a US$185 million cost overrun facility and US$78 million in surety bonds and letters of credit, adding to a US$119 million contingency built into capital costs.
The Marathon Project Feasibility Study estimated a net present value of US$1.07 billion and a 28% internal rate of return based on three-year trailing metal prices. Over 13 years, the mine is expected to produce 2.16 million ounces (Moz) of palladium, 532 million pounds of copper, 488,000 ounces of platinum, 160,000 ounces of gold, and 3.05Moz of silver.
The bought deal is expected to close on 21 September, while convertible note completion requires shareholder approval in the December quarter. All financings remain subject to regulatory approvals and definitive documentation.
Generation Mining is focused on advancing the Marathon Copper-Palladium Project in Northwestern Ontario, Canada.
Write to Paula Fabe at Mining.com.au
Images: Generation Mining
