Generation Mining Limited

…is Chairman Kerry Knoll. Over to you, Kerry.

Thank you. Thank you. Hi, everybody, and thanks for coming out today. My name’s Kerry Knoll. I’m the co-founder and the chairman of Generation Mining. Generation has been around for eight years, and for seven years we’ve been working on the Marathon Copper Palladium project in Northwestern Ontario. Our single focus is on this project and getting this project into production, and I’m very happy to report for the first time to anyone that construction started on this project yesterday. We are a fully financed construction. We’re trading at a huge discount to our peers, and I’ll go over what I believe are the reasons for that a little bit later.

And we’ve also got, in addition to a 13-year mine life, enough measured and indicated resources on the property that we think we can double that mine life, and we’re going to be doing a PEA on that early in the new year. And this is without having to do any more drilling. We think we can double the mine life based on just known measured and indicated. And the reason for that, of course, is the rise in the copper price has taken a lot of mineralization, which would have been marginal at $3 when we first did the resource, and at $6 a pound copper would be very, very profitable.

So we’re a multi-element property. Copper is, of course, the dominant one, but we also have substantial palladium resources as well as credits on platinum, gold, and silver. And as far as a revenue split goes, and this is at recent spot prices in August, 47% of the revenue will be coming from copper, 38% from palladium, and the rest from platinum, gold, and silver. And the gold and a portion of the platinum have been streamed to Wheaton Precious Metals, and I’ll be talking about that a little bit later.

So we’re located in Northwestern Ontario, just outside the town of Marathon. In fact, we are in the town city limits, and we will be, of course, by far the largest contributor to their local taxes once we get into production. We’re just down the road from the Hemlo gold mine, and if you look a little bit closer, inside that yellow circle is the Marathon deposit. There’s the town of Marathon. The Ontario electrical grid goes right across our property, the CPR main rail line, the Trans-Canada Highway, and there’s an airport right on our property. In fact, we had to adjust our tailings location because it was going to interfere with the planes landing. That’s how close it is, and you can get there from the Toronto Island Airport in about 90 minutes and land right on the property. So great infrastructure. We have the town of Marathon. We also have the Biigtigong Nishnaabeg First Nation near the property, and we’ll be employing a lot of people from both of those locations.

I won’t focus too much on copper, but this is the slide that I like to talk about why you should own a copper stock, because there have been a paucity of discoveries in the last several years, and these are numbers of tons that have been discovered in major projects worldwide. And as you can see, in the last few years, there’s been almost nothing discovered. And if you’re going a decade ahead, there will be very few projects left to develop in the world because of the lack of discovery.

So we did a feasibility study in 2021. We updated it in ’23 and updated it again in 2025. That last update was done by Ausenco, the large international engineering firm. And it came up with a capital cost, and these are all Canadian dollars, of $992 million, or about US$724 million. So that gave us an after-tax net present value of just over a billion Canadian dollars, but that was done at $4 copper. At recent spot, that net present value jumps to $2 billion, and that’s against a market cap that we have today of about $400 million. The payback on this project is incredible at today’s spot prices, 1.4 years or about 16 months. And the after-tax IRR in the original feasibility study at $4 copper was 28%, and it’s jumped now to 39%, which, I’m sure you all know, is in the higher tier of any base metal mine, especially a greenfields operation.

Our all-in sustaining cost to produce metal on a co-product basis, this third box from the right on the bottom, is $781 for an ounce of palladium and just over two bucks for a pound of copper. So very, very profitable at today’s metal prices. And that’s the breakdown of the money we will be spending, including the sustaining capital and the closure costs.

What’s really interesting on this project is the feasibility study was, I think, done very conservatively, and that is now coming out in reality. We’ve already put down deposits on 30% of the CapEx, or about $300 million. And so far, not one item has gone over the estimated amount in the feasibility study, and some of them were actually below cost. So we’ve already put down payments on the grinding mills and the electrical substations, the thickeners, the crushers, the cyclones, and the building itself. And this has all happened this week. We literally got our money two weeks ago, so we’ve been running fast getting things going. And [coughs] I will say in addition to all of this… I’ll come back to this in a moment.

The blue bars here are our revenue per year over the 13-year mine life. As you can see, in year two, the revenue in Canadian dollars is $1.3 billion, which is why we get such a fast payback. Our annual operating costs are about $300 million. So you can see that the cash flow in that second year is going to approach a billion dollars at today’s metal prices.

As I mentioned, we have a 13-year mine life. That is all represented by the green box on the slide here, and in the main pit, we’ve got another 73 million tons at a slightly lower grade, and that is all measured and indicated, and we want to start looking at putting that into the long-term mine plan. We have two other deposits on the property, and between them, they have another seven million tons, so it’s a 10 million ton a year project. So between the black, the brown, and the white boxes, we think we can double the mine life. All we’ll have to do is take some of that inferred on the very right and put that into measured and indicated with a bit of drilling. And we intend to do that and intend to show the market that we actually have a much longer than a 13-year mine life.

So just going back, as I mentioned, we did the feasibility study last year. We got our permits also last year. We awarded the EPCM contract to Ausenco. We have been building our owners team. So our owners team is a total of 39 people, and we’re getting a lot of questions of where are we going to get people. We have already hired 18 of those members, and some of them we’re not going to be hiring until next year because it includes some of the transition team into production, so we don’t need them quite yet. But we are in the process of hiring another 10 to 12 people as we start construction. And we are finding them. Fortunately for us, in Ontario, two years ago, there were three major mines under construction. Those mines are all finished. There are no mines under construction in Ontario currently, so that has freed up some people.

So where did we get the money? We have raised $1.3 billion, which I think is a pretty unusual feat for a company with a market cap at the time we raised it of $240 million. As I mentioned, we did a stream with Wheaton. The total stream was $240 million. And I’ll tell you, Wheaton looks at up to 100 projects a year, and they do a stream on two or three maybe. So we passed that level of scrutiny. We also have a syndicate of banks that are going to loan us $420 million. They hired an engineering firm called SLR, went through our feasibility study with a fine-tooth comb, and recommended no increase in the CapEx from the feasibility study, which, if you’ve ever dealt with SLR, is really unusual.

And we’ve got $145 million in leases from Caterpillar and other leasing companies. We’ve got a subordinated debt from the Canadian Infrastructure Bank for $200 million. And it says here equity-linked financing; that’s a convertible debenture convertible at 90 cents for $100 million. And then we’ve done equity of a total of $240 million, and we also are getting a small loan from the Ontario government of another $10 million. So that’s the breakdown of the $1.3 billion we’ve raised.

Now, you’re probably wondering why, with a $992 million CapEx, did we raise $1.3 billion? One of the reasons was that the banks are requiring us to increase the contingency by almost $50 million. So we have a contingency in our CapEx of $119 million. On top of that, the banks required us to have a cost overrun facility of another $185 million. So between the two, we’re over $300 million. Of the money that we have now committed, $300 million in equipment, we have not touched that contingency yet. We have $600 million more to spend, and we have $300 million in cost overrun and contingency to use in that. So that’s almost 50%. And that money’s raised. That’s not money that we have to go out and find. It’s already raised and committed.

This is probably a little hard for you to read, but that’s just the breakdown of the various cash sources and the money that we’re going to be spending, including the cost overrun facility and everything. And we had to put up an environmental bond also of $27 million. So we’ve been doing all those things.

So where are we against our peer group? We are trading at about 26% of our net asset value. This slide was prepared by one of the brokerage firms, and we are the only company on this slide that is fully funded, and yet we’re still trading at 26%. The analysts figure we should be trading somewhere between 75% and 100% of our net present value, or the net asset value, and the net asset value, depending on what copper price and what palladium price you use, would be probably, from an analyst point of view, between a billion and a billion six. So we should be trading up in that range, which is several times what we’re trading at now.

And I think that’s just a matter of the market digesting this rather large raise we did. We raised far more cash than our market cap was, and I think the market’s having a bit of trouble digesting that. But I think over time, as we start reporting additional construction milestones, and I fully expect us to continue to be on budget, that will get us the re-rating, of course, in the Lassonde Curve, which you’ve all seen.

I like to show this slide. This is a comparison of a company called Foren with us. We are very similar in that we’re copper dominant with other metals. We are actually a little bit larger than their mine. They got sold for an enterprise value of 3.8 billion to El Dorado. And we think that we deserve to be in that range at some point once the construction is finished and the mine is operating. That’s our goal. We have a higher IRR than Foren had. Their payback was 4.2 years. Ours is 1.9 years at $4 copper, 1.4 years at today’s copper price. So I think ours is a better project, and yet we’re trading at a fraction of the amount.

Who are the people that we are getting to build this mine? There’s a group of people that built a mine about 20 years ago in Ontario, similar size. It was a billion dollars. A bunch of them were lifetime DeBeers employees. They built the Victor Mine. They were nine months ahead of schedule, under budget, which is always music to my ears. So Jeremy Wyeth, Clinton Swemmer, Rachel Pineault; this is her fifth mine build. She’s HR. She’s the one who finds all the people for us. Eric Menges, down at the bottom on the left there, was very instrumental in Ivanhoe’s builds in the DRC and in the Plat Reef project in South Africa. He was the VP engineering for DRA. In fact, DRA bid on the construction of our mine as the EPCM, and when DRA lost out, DRA’s a big South African engineering firm, Eric left and joined us. So we’re getting among the best.

Above him, Anthony, or Anton, was the controller at Foren during their build. So he’s coming off a fresh build and all that he learned doing that for the first time in his career. So now he’s an experienced guy to do it. That’s just the start of our team. We’ll be announcing a lot more hires in the coming days. Board of directors, this is all on our website.

And then the corporate structure: we’ve got just under 700 million shares outstanding, with cash in the bank right now of 250 million and a market cap of… What’s our market cap there? [chuckles] Market cap just over 400 million. In fact, it’s a little lower than that today. This slide was made about a week ago. The shares have drifted off a little bit. But I think that we have a lot of room to move, and I look forward to going through the construction of this mine and producing our first copper and palladium and platinum. The timing is about 27 months from today. And we’ll be announcing shortly that we’ve actually started construction. We didn’t announce it today because, for the First Nations, it’s National Reconciliation Day today, and we elected to wait. But I’m telling everybody that I talk to that we have started construction.

So that’s the end of the presentation. I’ve got a few minutes here for some questions.

Okay. We’ve got one at the front, please. Get the microphone over there. Thank you.

Hi, Kerry. There was a news release about an acquisition that you’ve made. Could you go on that?

There was a news release because we’re all down here; our lawyer had a deadline to put it out, so we had to rush it out, and in my opinion, it wasn’t very well explained. It says we acquired 39 million shares of a company called Elton Resources. We did acquire them, but we sold them a property. We had an exploration property up in the Arctic, an old property that was in this company from its founding, called Darnley Bay. That property was sold to Elton for 39 million shares. We also received a million dollars cash as well from them. But it’s a minor transaction in the scheme of our company.

Yes?

Hey, Kerry. John Tamazos.

Hi, John. Thanks for all the good Facebook posts. [chuckles]

With the very short payback, if you really build the mine and no one buys you out, what do you want to do with all the money when the cash starts coming in?

The board hasn’t made that decision yet because that would be putting the cart before the horse. But if I had my druthers as a large shareholder, I would like to start dividending it out rather than try to expand the company, because I think we’re going to have a 25-year mine life here, and I think that getting a dividend on that would be pretty sweet. But that’s myself. The board has not made that decision.

Any other questions? Well, if we have no further questions for Kerry, Kerry, thank you very much for your very informative presentation.

Thank you, and I’ll be outside afterwards if you want to approach me with anything else. Thanks.