After announcing an excellent update on the metallurgical front, Generation Mining (GENM.TO) is now moving forward with the second phase of the 2020 metallurgical test work. A pilot plant will process three bulk sample composites from freshly excavated material in the Main Zone, W-Horizon and an old (2012) composite to optimize the design criteria for a full-scale production plant.

More specifically, the Phase 2 program will further focus on the performance of the flotation circuits, defining the optimal grind size and just to validate the recovery results that were published earlier this year in August.

As you may remember, the updated metallurgical test work has boosted the recovery rates of the main metals by a significant percentage.

As you can see in the image above, the recovery rate of the oh-so important palladium increased by 4% while the copper recoveries also increased by 3%. Platinum is less important than the palladium, but recovering 84.2% of the platinum content compared to the 74.5% recovery rate used in the PEA will have a clear positive impact on the recoverable and payable metal value. In a previous update, we estimated the positive impact on the NPV (keeping all other elements equal) to come in around C$100-125M.

Generation Mining is ticking all the boxes towards publishing a definitive feasibility study and given the strong palladium price and higher recovery rates for the main metals we have very little doubt the feasibility study will very likely be even better (higher IRR and NPV) than the PEA. But of course, the proof will be in the pudding and we will have to wait for the publication of the feasibility study (expected in Q1 2021) to know for sure.

The company also released some drill results from the recent drill program where it tried to trace the mineralization towards the west of the planned pit.

Although mineralization was encountered in the holes reported in last week’s release, our main focus will be on the economics of the existing pit. Any additional resource expansion or exploration results that could help to improve the value of the project will make for a nice icing on the cake but the feasibility study on the current resource will obviously be the main priority.

Disclosure: The author has a long position in Generation Mining. Generation Mining is a sponsor of the website.

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