Generation Mining has released the results of a feasibility study for its Marathon open-pit palladium and copper project in northwestern Ontario.

Results from the study, prepared by G Mining Services, showed an after-tax net present value of $1.07 billion with a six per cent discount rate, assuming prices of US$1,725 per ounce of palladium and US$3.20 per pound of copper for the project and an internal rate of return of 29.7 per cent.

The study also showed that at spot prices of US$2,395 per ounce of palladium and US$3.99 per pound of copper, the project’s net value present would double to $2.02 billion and the internal rate of return would rise to 47 per cent.

“This study confirms that the Marathon Palladium and Copper project is a substantial mining project that is expected to provide a very robust return on investment,” Generation Mining president and CEO Jamie Levy said.

Palladium is a precious metal used in catalytic converters to convert toxic greenhouse gases in car exhaust into less-harmful carbon dioxide, water vapour and nitrogen. According to Levy, the metal is forecasted to be in a supply deficit for the foreseeable future as Europe, China and other regions continue to roll out tougher emissions standards.

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The project, located in Marathon, Ontario, has a measured and indicated resource of 4.19 million ounces of palladium and 1.1 billion pounds of copper from 245 million tonnes graded at 0.53 per cent and 0.20 per cent, respectively across three deposits. Mining production is expected to cap out at 40 million tonnes of per year, or 110,000 tonnes per day.

During the first three years after commercial production, the mine is estimated to generate 588,000 ounces of palladium and 122-million pounds of copper from about 270,000 tonnes of copper and palladium concentrate shipped, earning $979 million of free cash flow.

The Marathon project is a joint venture between Generation Mining, which owns an 80 per cent stake in it, and Sibanye Stillwater. The mine, which is expected to have a 13-year mine life, will have higher palladium grade targets during the first half of its life in order to achieve a quick payback recovery from the initial capital costs of $665 million in just over two years.

The average operating cost of the project is $687 a palladium-equivalent ounce and the all-in sustaining cost will be US$809 per ounce of palladium. The life of mine sustaining capital cost of the project is expected to equal $423 million.

“With the consensus outlook for palladium and copper strong for the next decade, this is a project whose time has come,” Generation Mining executive chairman Kerry Knoll said. “With little new platinum-group metals (PGM) mine capacity being scheduled to come on stream over the next few years, Gen Mining plans to advance the environmental approval process, detailed engineering and mine financing during the remainder of 2021.”

If permitting and financing arrangements progress as planned, the construction phase of the mine is expected to begin by 2022 and last for 18-months, while commercial production is set to start by 2024.