By Robb M. Stewart

Generation Mining Ltd. has struck a deal to sell payable gold mined at its Marathon undeveloped platinum group metal mineral deposit in northwestern Ontario to Wheaton Precious Metals Corp., bolstering the potential economics of the project.

On the purchase agreement:

Wheaton will pay an upfront 240 million Canadian dollars (US$186.2 million) in cash, C$40 million of which will be paid on an early deposit basis ahead of construction that will be used for development of the Marathon project, the companies said Wednesday.

Wheaton said it will make ongoing payments for gold and platinum ounces delivered, equal to 18% of the spot prices for the precious metals, until the value of gold and platinum delivered less the production payment is equal to the upfront C$240 million, at which point the production payment will increase to 22% of spot prices.

Under the agreement, the companies said Wheaton will buy 100% of the payable gold output until 150,000 ounces has been delivered. At that point, it will buy 67% of payable gold production for the life of the mine and 22% of the payable platinum output until 120,000 have been delivered, when it falls to 15% for the life of mine, they said.

The Marathon agreement is subject to the closing of Gen Mining's acquisition of the remaining 16.5% interest in the Marathon project from Sibanye Stillwater Ltd. The first advance of the early deposit is expected to occur early in 2022, Wheaton said.

On the Marathon project:

The project is forecast to be high-margin palladium mine with a 13-year mine life, the companies said. Attributable production when the mine and mill are fully ramped up is forecast to average more than 16,000 ounces of gold and 14,000 ounces of platinum a year for the first five years of production, and roughly 15,000 ounces of gold and 11,000 ounces of platinum a year for the first 10 full years.

Gen Mining said it anticipates construction activities to begin in 2022, with production starting in 2024.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

12-22-21 1010ET