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Generation Mining (TSX: GENM)(OTC: GENMF) Chairman Kerry Knoll on Fully Permitted, Shovel Ready Critical Metals Marathon Project

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today for a very overdue chat is the Co-Founder and the Chairman of Generation Mining (TSX: GENM)(OTC: GENMF), Mr. Kerry Knoll.

Kerry, it's been a bit. We tried doing this dance at the Beaver Creek Precious Metals Summit. Mother Nature did not cooperate. I'm so glad to have you on. How are you, sir?

Kerry Knoll: Great, thanks. How are you?

Gerardo Del Real: I am fantastic. Look, you and I haven't chatted publicly. I was looking back, it's been about two years. The world is a different place in very many ways, right? But it's definitely very different in the critical metal space. And the last two years have really accelerated the premiums and the demand for critical metals projects in top-tier jurisdictions that benefit from government support and infrastructure. There is not a lot of those, and you happen to be sitting on one.

And so I think a good place to start is what you've been doing the last couple of years and how you've been able to position this project, the Marathon Project now, to really benefit from all those boxes that you all checked off many, many years ago when advancing the exploration side of Marathon.

Kerry Knoll: So for the last couple of years, we have been focused on a couple of things, mainly permitting. And the permitting, unfortunately, took us a lot longer than we hoped and planned, and as that time dragged on, the 2023 feasibility study needed to be updated. So we did that earlier this year in March, so we got a nice, fresh feasibility study, and then in May, we got our final permits to construct the mine.

So that makes us actually, to my knowledge, the only unconstructed critical minerals mine that's fully permitted in Canada. And when I say, "Critical minerals," we have two main minerals that we're producing. The first one is palladium, and fortunately for us, palladium is one of the top performing commodities this year. It's up about 25 or 30% since January, well within the range of what we need to have a profitable mine.

And then the other half of our main mineral stream in our mine is copper, and of course copper is all over the news these days. The federal government announced that of their five big initiatives across the country, two of them will be to help financially support copper mines. Not ours, they didn't announce ours, but we have been in deep discussions with them now for almost two years about that very thing, and we expect them to be a big part of the eventual financing of our mine. And we haven't finalized the terms yet, but we're working on that and they are very receptive.

Gerardo Del Real: That feasibility study, the March feasibility study shows a project that's got an after-tax NPV of just over $1 billion, and here you sit with a market cap of a 10th of that, right?

And so the question, and we touched on this before we started recording here, the question becomes how do you take a company with a market cap of roughly $100 million and get the funding to construct what clearly is a very, very feasible project that is in-demand, and I believe is going to continue to attract more demand?

Kerry Knoll: Yeah, that's a very good question, and the first thing I'd like to say is that in my own background, mine building over the years, I have raised that much money before for a company that we founded about 20 years ago called Blue Pearl Mining. We raised $700 million US in 2006, which at the time was the largest raise, I believe, in the history of junior mining in Canada. So I have done it with a company was that had about $100 million market cap at that time.

Gerardo Del Real: Here we go again.

Kerry Knoll: So, parallels.

Part of the knock on us and the reason I think that we have such a low market capitalization is one of them is palladium. I think that the market had written off palladium. When palladium went from $2,000 down to $900, everybody says, "Well, electric cars are taking over. We're not going to need palladium anymore." But the fact is, electric cars are not taking over, number one. They are a big factor, but they're not taking over.

What is taking over though is hybrids, and hybrids are outselling electric cars more than two-to-one, and they require more palladium than a regular internal combustion engine car, so up to 20% more in some cases. So that won't entirely mitigate the issue with electric cars, but it will cut into it in a big way. That is one of the reasons that you've seen platinum come back. As the electric car mandates are falling all over the world and people are no longer saying, "By 2035 we need all electric cars," that's changed.

The other thing, of course, is the amount of money we have to raise, and people are very, very skeptical. So let me talk about that.

A couple of years ago, we got a mandate letter from a syndicate of banks, including SocGen and ING. These are banks that lend heavily to mining construction around the world for $400 million US, and that would be about $540 million Canadian, of the $1 billion CapEx that we need. Now, that number may be a little bit lower. That was calculated around $1,500 palladium. Palladium's around $1,200, so we might not get that full amount, but let's say we're going to get north of $400 million Canadian.

We also, of course, have announced and started taking some money on our $240 million streaming deal with Wheaton Precious. And we've taken $40 million, so we got $200 more million to bring in there to add to that. And of course, there's up to $100 million in leasing of equipment that we can get to knock off of that CapEx number as well. So now we're up to probably over north of $700 million, and that's where the government is going to come in, and we're talking about large amounts of money.

They want to see us get credit approval from the banks before we go any further with them, and I don't blame them. They rely on independent banks to do a lot of the due diligence that is necessary so that they don't have to make it as a political decision, that there's actually real hard due diligence done. And we've had that due diligence going on. The syndicate of banks, which we re-engaged them over the summer, did their site visit. Their consultants, did their site visits a few weeks ago, I think in late August, and so that process is ongoing and we're, with a little bit of luck, I think we're going to have that credit approval before the end of the year. So it's all moving along.

That all said, we're going to probably have to do some equity at some point. We're also badgering the province. The province did a shout-out to the federal government saying, "Hey, you guys got to help these critical mineral mines in Ontario," and they listed five of them including ours, and ours is the only one that's permitted. And they indicated that if the federal government does help, that they're going to help too. So there could be another source of money there.

And we're not talking about grants here, we're talking about loans, low-interest loans, some kind of creative equity, that sort of thing. And there's a lot of different possibilities on the table, but we're negotiating that. Jamie Levy, our president, and Brian Jennings, our CFO, have been hard at that all summer, and that's going to be ongoing because it's a great deal of money and it's going to take some time and some paperwork and some lawyering and some accounting, but I'm pretty confident we can pull it all off.

And this critical mineral thing that we're all hearing about is real. Copper worldwide is going to hit the wall. Canada does produce a bunch of copper already, but if we want to continue our manufacturing base and start making more stuff ourselves in Canada with all these tariffs and all that, wire, for example, things like that, we're going to need the copper. And we don't want to have to rely on China. The US isn’t going to export any. There aren't too many places. I mean, we can get some out of Africa, but the Chinese seem to have tied that up, so having a local source is really key.

And Palladium having a local source because every internal combustion engine and hybrid car built in Canada needs palladium, and the only palladium mine in Canada is slated to close in the spring so we're going to be importing palladium again. And so it would be, I think, do well for our government to support another source of palladium, and they've said that they agree with that.

Gerardo Del Real: No, look, your market cap, again, it's $100 million right now. I love introducing and, in this case, reintroducing stories to our audience that allows them to do due diligence, but really does provide them an opportunity to make a lot of money if they get it right.

And so just to highlight that, if your market cap's at $100 million, and I'm looking at your feasibility study, your average annual production of just the copper is estimated to be roughly 42 million pounds. You can multiply, and let's just call it by five, to make it a nice number that everyone can multiply real quick. You're going to be generating more revenue in copper than you are, twice as much as the current market cap right now.

And so you mentioned between now and end-of-year wanting to see some of those commitments come to fruition. If that happens, the rerate here is going to be substantial.

Kerry Knoll: Yeah, I think we've seen a lot of junior companies get rerated when the final money has come in for construction of a mine. And I want to add another thing.

One of the questions we were getting at that Beaver Creek Conference was people were looking at our numbers and saying, "Why is your CapEx so high for the size of the mine?" And I think our answer to that was, "Well, we've updated this feasibility study twice." It's been really, really looked at by different engineering firms, and I think the fact is that our numbers are accurate. That's why they seem a little high compared to some of them.

I mean, there there's other companies building substantially larger mining operations that have a feasibility study that the CapEx is lower than ours for a larger mine and ours is on the Trans-Canada Highway, and we've got an airport there. We've got all the infrastructure, so it doesn't make sense that some of these other ones are lower than ours. And I think that that just shows that the people that did ours have put a realistic number out.

Gerardo Del Real: Well, kudos to you and the team because unfortunately, and you know this better than I, but unfortunately, a lot of these companies, they put a lot of lipstick on it, they make it look really pretty. And then a year or two later, in the midst of construction, all of a sudden there's cost overruns and unexpected inflation and unexpected unforeseen circumstances, and when in reality they probably were foreseen, but it wouldn't have looked as pretty upfront. So again, kudos to you and the team for doing it the right way.

Before I let you go, Kerry, I got to ask you, tell me about the team. You mentioned your background, you mentioned Jamie. You have a team and you're building a team that is designed to get this built in advance, right?

Kerry Knoll: We had assembled the construction team a few years ago when we thought we were going ahead a lot sooner, and as a couple of years drifted by, a lot of them left the company and we wish them well.

So we're now in the process of we're hoping to announce very shortly the first member of the team who will then help us add on to the team, and these people all have a lot of connections in the industry, and we're actually looking for people who have worked together before because often personalities get in the way of mine building, so we want to check that box as well.

So we're hoping to start announcing people throughout the fall and subject to, of course, having the money to do it. We did raise $11 million a few months ago, so we're financed to build that team and we're going to do that. And I think people will be impressed at the people we're signing up.

Gerardo Del Real: Copper, palladium, jurisdiction, infrastructure, most of the money, the rest seems to be lined up, pending some further due diligence that should come to a head here in the next several months. You're getting the team put together. It's a lot to like. I think 2026 is going to be a transformational year for Generation.

Anything to add to that, Kerry?

Kerry Knoll: No, other than I agree with you. I think that this is it. This is the time we're going to build the mine and we really look forward to it and we look forward to a rerating for our shareholders and for ourselves. And basically all of my friends and family own the shares, so they're looking forward to it as well.

Gerardo Del Real: I should highlight that before I let you go. A lot of skin in the game with this team, folks.

Kerry, thank you so much for your time. Let's do it again soon.

Kerry Knoll: All right, thank you.

Gerardo Del Real: Cheers.

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