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Caesars Report: Generation Mining – A robust bankable feasibility study underpins the value of the project
https://www.caesarsreport.com/…the-value-of-the-project/
Conclusion
As the 60% of the net revenue to be generated at Marathon PGM will come from palladium sales, Generation Mining just HAS to present the project as a palladium project. As Sibanye seem to be bearish on the future supply/demand ratio of palladium, they should walk away. However, Sibanye could also look at the project from the platinum perspective. While adding 45,000 ounces per year of platinum to its existing consolidated output of about 1.1 million ounces of platinum per year will hardly be noticeable, it would be able to benefit from the tightening platinum markets. Additionally, Sibanye also produces about a million ounces of palladium per year, so it could certainly deal with the palladium component as well.
Sibanye has 90 days to decide what it wants to do, and the official Day Zero is the day on which the management committee of the joint venture makes a positive commercial production decision There’s no rush for Sibanye to do anything at all and as Sibanye has proven to be a good partner to Generation Mining we also don’t expect Generation to put pressure on Sibanye. Purely based on the numbers and the size of the project,we expect the South African company to take a back seat to see how Generation Mining deals with the permitting process and the financing structure of the project. Sibanye may also be interested in selling its 20% stake back to Generation Mining as well as it looks like the company is chasing bigger targets these days with the rumored interest in Gold Fields and AngloGold Ashanti (two $10B+ gold producers, which could indicate Sibanye Stillwater wants to reduce the ratio of palladium and platinum in its output mix).
With Drew Anwyll as COO, Generation Mining has started to build a team to move the project forward by itself if it has to. The company can now dig into the financial side of the construction activities. Selling a royalty now would kill any potential M&A deal, but once we get closer to the final permits and once it becomes clear no suitor shows up, we expect selling a stream on the anticipated gold and/or silver production at Marathon PGM could keep the share dilution to a minimum.
The main takeaway for investors here is that Generation Mining delivered a robust feasibility study which greatly derisks the project and which can now use to finalize its permitting process and to figure out the funding structure for the construction of the mine. Fortunately GENM is in an excellent financial shape as the balance sheet is very strong.
Disclosure: The author holds a long position in Generation Mining. Generation Mining is a sponsor of the website.
