Generation rises on Marathon copper build permit

Generation Mining (TSX: GENM) shares rose Thursday morning after the company’s receipt of the final construction permit for its Marathon copper-palladium project in northwestern Ontario.

The industrial sewage works permit, part of the environmental compliance approval, relates to the management and discharge of water in the project’s construction stage, Generation said. The company had already received its federal construction permits. Located just north of the namesake town, Marathon is 300 km east of Thunder Bay.

Once in operation, Marathon will be one of North America’s few palladium mines and could help meet rising demand for that metal as well as copper – both essential ingredients in the manufacturing of hybrid and electric vehicles.

“The completion of construction permitting was one of our key objectives for this year,” Generation President and CEO Jamie Levy said in a release. ”Securing construction financing is now the final milestone to be able to move the Marathon project forward.”

Feasibility tailwinds

The permit milestone comes almost two months after the company released an updated feasibility study for Marathon that lifted estimated output while also raising construction costs over the initial study from last November. The update boosted forecast copper production about 9% to 151 million lb., palladium output by 8% to 720,000 oz. and platinum by 9% to 156,000 oz. in the pre-production and first three years of commercial operations.

Construction costs grew 3.2% to C$992 million in the update.

Generation shares gained 13% to C$0.26 apiece on Thursday morning in Toronto, for a market capitalization of C$62.8 million.

Billion-dollar value

The Marathon project has an after-tax net present value of C$1.07 billion, an internal rate of return of 28% and a 1.9-year payback period based on three-year average metal prices, according to the study.

Over 13 years of mine life, the mine is expected to produce 42 million lb. of copper, 168,000 oz. of palladium, 38,000 oz. of platinum, 12,000 oz. of gold and 240,000 oz. of silver on average annually.