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Currently, palladium prices continue an upward momentum and look to soar above the in-and-around USD$2,300 per ounce mark.
Generation Mining Ltd. (
TSX.GENM,
GENMF,
Forum) is an early-stage, junior explorer currently developing the Marathon Palladium project in Northwestern Ontario. After the release of a very robust PEA in January 2020, the Company has begun a feasibility study which is expected to be completed in early 2021. Marathon is the largest undeveloped palladium project in North America. Most palladium demand is for autocatalysts in cars, which scrub toxic emissions from exhaust and therefore make our air much cleaner.
NOTE: Generation Mining’s Feasibility Study for the Marathon Palladium and Copper Project has been announced since this interview was recorded. For details, click here.
Stockhouse Media’s Dave Jackson was joined by Generation Mining’s Executive Chairman Kerry Knoll – an entrepreneur and businessperson who founded Wheaton River Minerals Ltd., Blue Pearl Mining Ltd., Kit Resources Ltd. and Central Sun Mining, Inc. and who has been at the helm of nine different companies. In his past career Mr. Knoll was Chairman at RB Energy Inc., and Non-Executive Chairman for Canada Lithium Corp. (a subsidiary of RB Energy, Inc.), President of Stonegate Minerals Ltd., Chairman & President of Wheaton River Minerals Ltd., Director at Stonegate Agricom Ltd., Chairman & President at Blue Pearl Mining Ltd., Chairman of Pine Point Mining Ltd. and Chairman & President at Central Sun Mining, Inc.
In this lively and informative vodcast. Mr. Knoll discusses a variety of timely and newsworthy topics about the company including updates on the company’s the Marathon Project, how palladium is playing a key role in the New Green revolution, and investors updates from Generation Mining.
TRANSCRIPT BELOW:
SH: So, first off, Kerry, for Stockhouse investors that might be new to the palladium play, can you quickly run us through its applications, supply and demand, prices etc.
KK: Sure. Palladium, and its sister element platinum, are both used in mainly used in something called catalytic converters. And what they do is when they get warmed up in the car exhaust stream, they convert two things. Three things actually they convert carbon monoxide into carbon dioxide. So both, both of those are greenhouse gases, but carbon monoxide is poisonous and, and in cities where there's a lot of smog and sometimes not a lot of wind people can actually get ill from, from car exhaust, previous to the catalytic converter. The other thing it converts is nitrous oxide, which is 300 times more stronger as a greenhouse gas than carbon dioxide. And it converts it to nitrogen, which is 70% of our atmosphere. So it does those two things and the third thing it does is there is always a little bit of unburned fuel coming out of your exhaust. And it burns that. So rather than have a multi multiple gases coming out, it burns it. And that's why if you ever start a car, you'll notice that it smells, it has a smell to it. And that smell goes away after about a minute. And that's when the converter starts converting and burning up those gases. Right. So, go ahead. And you were talking about price and demand. So there's, there's a on palladium, there's about an 11-million-ounce market per year into catalytic converters and a few other, a few other chemical applications. And but there's only about 7 million ounces mined and about 3 million ounces recycled. So you've got a million-ounce deficit has been happening for the last several years, and that's why the price of palladium has gone from $600 an ounce to $2,400 US an ounce.
It's been one of the best performing of all the elements. And there's no cure in sight for that. And the reason for the deficit is because China and Europe have upped their standards to equal those in North America and Japan. And by upping those standards, it means more palladium goes into every automobile. So it's gone from about two grams per automobile to about five. And at the same time as all that's been happening, there's been no increase in production. There has been an increase in recycling, but that, that can only happen as fast as cars are taken out of, off the streets and recycled. Then, then you've got an opportunity to do some recycling and, and so it's limited. And we're going to be the next really, we expect we're going to be the next new mine to come on stream in the world.
SH: Why do you consider the Marathon Project a source of green metals?
KK: Well, our, our three main metals that we're going to be producing are palladium copper and platinum. So everybody's hot right now on the metals, the green metals of the future nickel, cobalt, copper, lithium and, and that's, that's great. And, and it's going to happen. The question is we don't know when it's going to happen, is it going to be in five years? Is it going to be in 10 years? I've seen predictions that electric cars won’t dominate sales until 2037 or 2040. We don't know exactly when it's all going to happen. But what we do know is right now, the greenest of the metals is palladium because it's, it's used now, it's, it's doing its job now. And if, if electric cars start to take off, well, we're going to need a whole lot of copper that we don't have right now, a typical electric car as 180 pounds of copper, a typical car today, that's not electric has about 40 pounds of copper, so that copper has to come from somewhere.
And that's why it's a green metal. It's not used in the batteries themselves. It's used in the wiring and in the motor itself. And it's going to be needed in your garage to hook up your 220-volt charger that you're going to be putting into your garage or in front of your house or in the parking lot where you park at work.
And then the third one that we're producing is platinum. And we're going to be producing about 50,000 ounces a year of platinum and platinum is necessary platinum, or palladium can either be used, but the platinum is preferred in, in the hydrogen fuel cell. And a lot of people think including Toyota, that hydrogen fuel cells are the ultimate. I think they've got a long way to go personally. They will. I also believe that at some point in the future of this planet, they will dominate transportation, but it's a long, long time from now, but nevertheless, that platinum is needed. So whether you're going to go all electric, whether you're going to go hydrogen fuel cell, or whether you're just going to scrub the emissions from a gasoline powered car, we've got the three metals to do that.
SH: Let’s talk some more in detail about the Marathon Project, specifically what kind of a land package do you have in the region?
KK: So we are located just off the Trans-Canada Highway near the town of Marathon Ontario. Marathon is a mining town. It supplies the workforce for the big Hemlo gold mine, which is about 20 kilometers away. We're just four kilometers north of the town site. And we own about the mining rights to about 220 square kilometers, big, big package that has three deposits on it. We're doing a feasibility study on one of those deposits currently. And you had said in your introduction that that was going to be released in early 2021. So that is on schedule to be released in the next few weeks. Let's call it less than that. Even it's very close, we're just putting the final touches on it. So that will be coming out soon. The land itself is, is literally just, just a Northern forest. It's very accessible. We have a, we're just like I say, we, we have a road in, right off the Trans-Canada Highway. We've got power lines go over the property. We have an airport literally on the property, the local Marathon airport, we have the CPR mainline goes right by the property as well. And we've got a workforce in the, in the local town who are, who are mining people.
SH: In January, you announced high-grade results from Marathon’s exploration drill program. Can you walk us though them?
KK: Sure. So the drilling we're doing last fall and the drilling that we're doing currently is not to add material to our feasibility study. Our feasibility study is nearly finished. And that's an open pit. What we're drilling now is we're looking down deeper, deeper into the earth. If you look at a volcano the magma comes, usually what's in, what's called a conduit or a feeder zone, and that it comes from deeper, much deeper in the earth. And it comes up basically up in a tube of some sort. And what we're doing is we've, we've identified that feeder zone for our property. And we've been drilling down and we're looking for a lot higher grade material and we've started finding it. So the deposit itself is a gram and a gram and a quarter palladium equivalent. And we're finding material down deeper.
That is six, eight, six and eight-gram material. So those are the kinds of grades you can mine underground. And so we may have a second mine at the end of this mine life underground, or else we might supplement it at some point. You know, that's, it's not, it's not, the deposit has not been defined yet, so, so we're not there yet. We've just discovered it and we have to drill it off now and see if it, if it all holds together, but we're getting some very good grades. And this was all prompted by there have been found on the property, some very, very high-grade samples. We're talking a couple of hundred grams per ton and 9% copper, and those didn't come out of our deposit. They came from somewhere else, and we think that we have a geological model for where they came from. And we're trying to find that, you know, whether we'll be successful or not, I don't know, but if we were, it could be a big game changer for us. So that's what we're drilling. We've got eight holes, I think, plan for this this winter, and then another drilling program over the summer.
SH: How are you planning to finance the mine and when do you think you’re going to get into production?
KK: Okay. The mine is finance is the traditional way to finance a mine was 60 or 65% debt and the rest equity. So you do a financing. The world has changed since we've got streaming companies. Very well healed streaming companies. And I'm talking about the Wheaton Precious and the Franklin Nevada, and, and there's, there's a whole raft of them now. And they’ve got a lot of cash. We have a bunch of metals that aren't central, so we're producing mainly palladium and copper, but we could stream possibly the platinum and the gold and the silver. And by doing that, we can get a lot of cash and we've done some models and we could get a big part of our equity side of our cash requirements could come from a stream. We have private equity companies that have been circling.
We were in constant discussions with several of them. We’re in discussions with some smelters who we will be producing a concentrate, a copper concentrate with high platinum and palladium grades in it. And some of the smelters we're discussing are offering us financing packages as well. So we've got a lot of different balls in the air, and we're expecting it to take about 13 or 14 months from now to, to finalize our environmental assessment which will be then followed by permitting. And we were going to be able to take that time to arrange the financing. And we think because of the robust economics at $1,900 palladium, our PEA showed a payback of only a year and a half. So banks love that. I mean, you know, a lot of these mines take four or five, and even up to seven or eight years to pay up, pay off their, their capital costs. We’re literally at today's price a year and a half.
So that's finance side. As far as when we get into production, if we can get our environmental assessment approved in the first quarter of next year and followed by the permit shortly after that, we could conceivably begin construction in the second quarter of 2022. And it's about a 20-month construction period. So you can do the math on that. It would be early 2024 that we would be in, into production and we're aggressive. But, you know, we have only had this property for 19 months. And in that 19 months, we have done a new resource. We have done a lot of drilling. We have done a PEA, we've almost finished a feasibility study, and we've gotten halfway through a permitting and that's in 19 months, normally that takes four or five years for these companies. I don't know why they take so long. I have put mines into production before, and I know that we can make this this timeline. Detour Lake, which is the biggest open pit gold mine in Ontario was built in 17 months. So you can do it … we're allowing 20 months, but you can do it faster than that.
SH: Both retail and institutional investors take notice when a project gets backing from billionaire mining investment guru Eric Sprott. Can you tell us some more about the Sprott private placement and the raise?
KK: Well, Eric and my companies go back a long way. He financed me the first time in 1993. He was the largest shareholder of our company called Thompson Creek. And in 2006 when it famously went from 10 cents to $24 and got listed on the New York Stock Exchange, he owned 14% of the company. So we go a long way back. He was involved in our last two financings. He was approximately 50% of our financing in about a year ago. And he was I think over half of our financing that we did last fall. So he, he, he likes the project and it's not just Eric. We also have some other significant investors another mining, billionaire named Lucas Lundin. And he has also, his family trust has been a strong supporter of us as has the company Osisko Mining has been involved in, in every single one of our recent financings since we started this company, so we've got some pretty wise people buying our shares.
SH: Can you update us on the completion of the pilot plant and the status of the feasibility study that I briefly mentioned in the intro?
KK: So the pilot plant was done at SGS, which is an international firm, and it was done over the last three months of last year. The results were very successful. We were basically testing what we had done in the lab to make sure it works in actual practice, and it did work. And it also gave us some samples of concentrate that we can show to the smelters as part of our negotiations with them that will be happening later on this year. So the long and short of it is the pilot plant confirmed that our flow sheet design works. So that's a, that, and that's important because, and we're not doing really anything new in our process. So we're not trying to reinvent the wheel or anything, but we just wanted to make sure it works because every, every deposit is different.
There are no two deposits that are exactly alike in terms of mineralogy. So that, that information is put into the feasibility study and the feasibility study itself, which is being overseen by Gene mining, who is one of the largest mining contractors in Canada. That study, we're just putting the final touches on it now, and it should be out soon. And it's, it's basically the one big change from the PEA we did last year was the PEA was based on 14,000 tons a day. Our feasibility study is based on 25,000 tons a day. So we're making the mine quite a bit larger than it was.
SH: After the feasibility study, what is the rest of 2021 going to look like for Generation Mining?
KK: So there's three different items that we have to look after. The first one is, is of course the environmental assessment. We're in something called the joint panel review between the federal and the provincial governments. That panel has been appointed and they're reviewing our environmental stuff. And, and we're hoping to get the approval of that early next year. That's our main job this year. The other two jobs we have, and what I've mentioned is arranging the financing for the mine. And the third one being doing the detailed engineering that you need to do before you begin construction, and you can't just start building from off a feasibility study, you have to do the detailed engineering, and that's a big job. It's about six months. So a lot of companies wait until after their permits to make sure that that engineering is, is going to be right. We're pretty confident in our permits. So we're, we're going ahead. And we're going to do that engineering this year as well, so that we're ready to build. And then there's a few smaller things we're going to have to staff up a little bit. We're going to have to start ordering some of the long lead time items, for example, ball mills. Usually you have to order those a year before delivery. So we have to put a few dollars into those, as well.
SH: And finally, Kerry, if there’s anything else that I’ve overlooked and you’d like to add, please feel free to elaborate.
KK: Well, just the one other thing I'd like to add is we are a precious metal company, but palladium has become an industrial mineral, but we are doing our feasibility study based on a palladium price of $1,725. And I just want to point out that that's about $700 below spot. You don't see that happen in the gold business, that people go $700 below spot. That would be around a thousand dollars an ounce. So we are, we think we're being extremely conservative. And I think that, you know, that that will reflect eventually in our share price when people realize that the, the palladium price is actually way, way higher than we're banking on.
To find out more, visit
www.genmining.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.