When Stockhouse Editorial caught up with
Generation Mining Ltd. (TSX.GENM, OTC: GENMF, Forum)back in March, the Company has completed a feasibility study for its Marathon Palladium-Copper –
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.
In this timely and topical video podcast, Stockhouse’s Dave Jackson was joined, once again, by Generation Mining’s Executive Chairman and Company Director, Kerry Knoll, to get our investor audience up-to-date on all the latest news and happenings from this intriguing PGM exploration and development company.
(Click image to watch video)
TRANSCRIPT BELOW:
SH: So, first off, for our audience that may have missed our last interview, can you tell us a little bit about yourself and the history of the company?
KK: So the company was formed in 2018 as a spin out from another company that the CEO and myself had started called Pine Point Mining and that company was sold to Cisco Metals and we took some of the exploration assets and spun them out into this company but really what I do in my career is I look for a project that I could build into a mine. So we started that search in early 2018 and by the end of oh sorry, by the summer of 2018, we purchased this project from Sesbania out of South Africa. It's a large, as you mentioned, a large undeveloped palladium project and so my background previous to that was basically that I have been starting mining companies. I started my first company in in 1987 and I'd started six of them. Four of those went into production including Wheaton River which eventually merged with Gold Corp and got swallowed up by Newmont and also spun out Wheaton Precious Metals, started a company called Blue Pearl, which evolved into Thompson Creek, and was one of the world’s molybdenum producers and several other mining companies as well. The other two that didn't make it into production. Both of those companies got sold at the feasibility stage.
SH: Can you update our investor audience and your Generation Mining shareholders on any new company developments, especially your just-announced independent report on the operational carbon footprint of your Marathon palladium-copper project…one of world's lowest operational carbon intensities?
KK: Yes, absolutely and that's a big step for us because as I think everybody knows your carbon footprint is actually going to wind up being part of your annual reporting requirements in the very near future and investors are going to take that into account when they look at an investment from a lot of different funds and a lot of individuals as well. So we're going to produce a ton and a half of carbon for each ton of copper, which sounds like a lot but that's only about a third of the world average and that one ton of copper that when we're going to be producing, 40 million pounds a year, which is around can't do it in my head right now how many tons that is but that's enough. One ton is enough to supply 12 electric vehicles and an electric vehicle in replacing a gasoline powered vehicle will save about three tons to five tons per year of carbon. So those 12 cars will save about 55 tons is the actual number according to the Canadian government, 55 tons of carbon a year will be saved by producing one ton of copper. So it's pretty significant.
SH: You’ve also just announced an agreement to assume 100-percent ownership of the Marathon Project? Can you expand on this initiative for our investor audience?
KK: Yeah, so we had a partner Sibanye who was a minority partner and had elected not to build his mine with us. They have gone in the direction of pure battery metals, mainly nickel and lithium. So they made that decision last July and they were left hanging with a 16% interest. So we bought them out of that and we announced that last week. That gives us the right to go ahead and encumber the property with debt or whatever we want to do in order to finance the mine. We weren't able to do that with them as our partner and without a whole, whole lot of paperwork and negotiation and it was very difficult. So we're glad to have that done and we're glad to be able to move forward on financing this mine.
SH: The next major development will be virtual public hearings, scheduled for February 2022. Can you unpack how this process works?
KK: So we're in an environmental stream called the joint review panel and what that means is the joint part is that is it's a panel of very qualified scientists who have been appointed by jointly by the province of Ontario and the federal Canadian government. So this panel has been reviewing all of the documentation on the environment and we're talking about tens of thousands of pages and this has been going on all year. Finally I believe it was about a week ago, they reached what was called sufficiency mean that they have sufficient information to go to the next step which is community hearings and once the community hearings are over, they will have 90 days to give their recommendations to the federal minister of the environment and the provincial minister of the environment for a final decision on this project. So that's all going to be happening through the first half of next year we expect.
SH: Kerry, you released a feasibility study in March which estimates 245-thousand ounces of annual palladium-equivalent production over a 13-year mine life. What can investors glean from these kind of numbers?
KK: Well, it's a pretty big mine. I mean, when you look at the industry in Canada, if you looked at all the precious metal mines and this was in production today, we would be number seven in the country. Which is pretty big and for a little junior company that's a pretty big step.
SH: The Company looks set for strong growth in 2022. How are you placed to expand operations to meet demand?
KK: We don't plan to expand operations so much as get the mine built and it will be a fixed number it'll be around 9 million to tons a year and that 245,000 ounces of Palladium equivalent breaks down to about 145,000 ounces of actual palladium, 40 million pounds of copper, 50,000 ounces of platinum, 10,000 ounces of gold and a bunch of silver. So we've got a very, very nice mix of metal.
SH: For company shareholders and potential investors, what kind of future development and progress can we expect at the Marathon project moving forward?
KK: Well, we've got a bunch of tasks ahead of us and the first one of course is to complete the environmental impact study and get that approved followed by the issuance of the permits to build the mine. Second thing we've got to ahead of us is the detailed engineering that has to be done before you can start construction and we've already started that, that's about a 17 million number. The third one is the financing of the mine. So we have a CapEx is $665 million Canadian. So we're in the process of arranging that, it's going to be likely a combination of streams equity, debt, quite a bit of debt. We've got a very short payback period on this 2.3 years at the base case numbers and then we also are talking to some private equity companies and smelters for other very various types of debt.
So we'll see how that's all going to play out but we want to have that all in place by no later than say May next year. We expect a string of announcements starting early in the new year. Then the other thing we're doing is we're starting to put down payments on long lead time equipment items, so that we can make sure that the deliveries get done on time, that we don't get caught up in this supply chain issue. So we're going in a little earlier than we would normally. So those are the main initiatives that we've got coming in the next year and there will probably be some more exploration and also some tweaking of the of the feasibility study due to the detailed engineering which is quite typical.
SH: Simply put, Kerry, what separates Generation Mining from the competition and makes your business model unique?
KK: As far as the competition goes, we're the only junior company that is near production in a Palladium project anywhere in the world. So we are anticipating turning on our mill in 2024. The only other mine that's currently under development and also slated to go into production that same year as Ivanhoe plant reef but I could hardly call Ivanhoe a junior company anymore and then and then there's a few others but their lead time to production is several years out. So we're not anticipating. So if you want to invest in a startup Palladium deal, this is kind of it. There's also some good exploration companies out there but their exploration and they're many years away from production.
SH: I have to mention your stock has been on a bit of a roller coaster ride this past year. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s a good buy right now?
KK: So typically a mining company at our stage of development trades at least 50% of its net present value and our net present value of this project is just about a billion Canadian dollars and yet we have a market cap of about $120 million. So we're vastly under valued in that metric. The things that I think are going to change that are getting our permits getting the financing in place and also getting the engineering done so that we're ready to build. I think once people see that, I think that we'll get a whole lot more respect and there are some junior mining companies out there that are trading at over a hundred percent of their net asset value or net present value. So we're way below them and I think that at some point we can catch up.
SH: What’s the long-term strategy for the company moving forward and what should retail and institutional investors be looking out for?
KK: So long term, we want to build the mine that's as simple as that and we're focusing on that. We're not focusing on too much else. We are doing some exploration but I think for a junior company to build a mine of this size has been done successfully but it's not real typical. So I think just putting our nose to the grindstone on the construction of the mine is enough for us right now.
SH: Can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to the PGM metals & mining space?
KK: So on the company founder side, it was Jamie Levy and myself and we both come from, well I come from a background of starting mining companies. He comes back from a background of financing mining companies and then to add to that team, we brought in Brian Jennings is our CFO and Brian has done some of the biggest corporate restructurings in Canada. He's a very senior accountant. We also brought in Drew Anwyll as our chief operating officer and drew has been building the mining team and Drew was one of the guys who built the big detour project that got sold for 5 billion. He was one of the top three engineers on that project when it was built and he was there for eight years and previous to that he was a senior guy at Plaster Dome. When it was acquired by Barack, he was at Barack for several years. So he's got the big company experience. He's also got the startup experience and he's built a number of mines in his background.
As far as the board of directors goes, we've got a really good well-rounded very senior board. We've got Cashel Meagher who just left to become CEO of or I think president of Capstone. He just left HUD bay where he was chief operating officer. We have Paul Murphy who was the chairman of Alamos and used to run Price Waterhouse mining division. We have Jennifer Wagner, who's lawyer and senior vice president at Kirkland Lake Gold, which is just being merged up with Agnico. So she's pretty busy these days. Phil Walford, who's a reserve geologist and won the Bill Dennis award at the PDAC this year for the discovery of the Valentine project. I mean, these are top people in their field and we cover kind of all the different aspects of mining. We have legal, we have accounting, we have geology, we have engineering. So we have geophysics with Steve Reford. So we've got a good board of directors.
SH: And finally, if there’s anything I’ve overlooked please feel free to elaborate.
KK: No, I think you've covered it. I think the questions have covered it pretty well. We're just nose to the grindstone, getting ready to build this mine and I think it's going to be a really, really interesting 2022!
For more information, visit
www.genmining.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.