Interview: A Generation(al) Opportunity
With gold hitting all-time highs (in U.S. dollars) today there is a lot of upside left in what I believe will be a generational opportunity to increase your wealth. That also means that several sectors and opportunities are being overlooked as everyone pivots to the flavor of the month.
Here at the Outsider Club, we pride ourselves on finding hidden gems (pun intended) in the space that present compelling upside while minimizing risk. The best way to do that is to find companies in overlooked sectors that are leaders in their space and have yet to be recognized by the mainstream. Generation Mining is a perfect example. Here is my interview with Generation Mining President Jamie Levy and COO Drew Anwyll. Enjoy.
To your wealth,
Gerardo Del Real: This is Gerardo Del Real with the Outsider Club. Joining me today is the President of Generation Mining (TSX: GENM)(OTC: GENMF), Mr. Jamie Levy. And as a bonus today, I have the COO of Generation, Mr. Drew Anwyll. Drew, Jamie, how are you this morning?
Jamie Levy: I'm doing just great. Thank you for asking. And yourself?
Gerardo Del Real: I'm well, I'm well. Thanks for asking also. Gentlemen, we have a pretty unique situation here. Palladium just broke the $2,000 level. If you were a gold company and gold had just broken through the $1,950 level or the $2,000 level, you would be trading at many multiples of where the stock trades today.
With that being said, you're a lot more advanced than most of the gold companies that are catching bids. Let's start by going over your most recent announcement, which is the fact that you're initiating a feasibility study on Marathon.
But before you do that, for those not familiar with you and your accomplished background, can you provide our audience with a glimpse of your experience in the resource space?
Drew Anwyll: Yeah. I grew up in the Placer Dome world and then joined Barrick after they bought into Placer. I had worked around the world, across Canada, little bit in the States, South Africa, moved to Australia, Papua New Guinea, Solomon Islands. I've been around the world quite a bit before I joined Generation. I was with Detour through the early stage of construction into operation, and I left at the end of 2018.
Gerardo Del Real: Excellent. Barrick. Detour. Small startups with a great future, right?
Drew Anwyll: Absolutely. Let's hope we can reproduce a couple of those things.
Gerardo Del Real: Drew, as I mentioned earlier I have the benefit of having you on here. I would love for you to provide us with a brief overview of the approach and the team that you've put together for this study. Because like your background it's an impressive one.
Drew Anwyll: Yeah, you're exactly right. What we have is a project that has had various feasibility studies done in the past and a lot of that work was top quality. We have the advantage of recently completing a PEA back in the early part of this year. Now we're in the process of starting the feasibility. So we already have a good groundwork of some historical feasibility-level work to work from. We haven't just taken that and assumed that it's a hundred percent. We did some of our own trade-off studies really comparing the work that was done in the past to what the current state of technology is, be it in collector reagents or plant design.
I'm pretty happy with the group that we have that's helping us on this. We've got a fellow by the name of Steve Haggarty, who's worked with some pretty big companies before, with Barrick most recently. He's a principal of his own consulting group right now. We have him on the team.
We looked at the past Met work. We're redoing some of that metallurgical work, like I said, to validate some alternate plant designs and some new collectors. On the technical environment side and permitting, which is pretty critical to the whole process, we can get through this feasibility really quick and then the permitting goes on the critical path. So they're largely working pretty closely.
Ruben Wallin, again a professional environmental engineer who's worked on some previous big operations, as well; Osisko Mining, Detour Gold, Placer Dome, Barrick, Yamana. A lot of the people we have working on this project have been on some pretty good projects in the past.
We also have the advantage of having two top performers, one in environment permitting, Tabatha LeBlanc. She has been on the project for quite a while and on the previous EA, or environmental assessment report update. She's a wealth of knowledge, as is our project geologist, John McBride.
It's pretty unique, the project we have. Like I said, there's been a number of past feasibility studies done in the project. What we see now is this is a project whose time has come, really. It's a great opportunity for palladium bouncing over $2,000. We're quite happy with the PEA that has been done recently. My expectation and my hope is that we can improve on those PEA results into the feasibility.
Gerardo Del Real: When you say improve, I want to provide some context here. You have an after-tax NPV at 5% using recent spot prices of over $1.6 billion Canadian — that's billion with a “B” — and an after-tax IRR over 46% using $2,000 palladium. Again, a severe disconnect for a company that has a market cap of sub-$60 million Canadian. Is that accurate, Jamie?
Jamie Levy: Yes, you are correct. I think we're trading around $50, $55 million Canadian market cap today.
Gerardo Del Real: Again, the disconnect is significant there. How long, Drew, will the feasibility study take? You mentioned the fact that it benefits from the fact that there's been past studies. You have the recent PEA and you have an excellent team, top to bottom. How long do you anticipate this taking?
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Drew Anwyll: Normally, a feasibility will take a little longer than 12 months. We actually have the opportunity because of the past work that's been done, we're looking at getting it tidied up in the first quarter next year. All being told, it'll be about a 9-month schedule that we have. We're quite comfortable. Again, it's a bit of a tight schedule. But we're quite comfortable we can get through the process we have to in that timeframe, to get everything done and dusted largely in Q1 2021.
Gerardo Del Real: You also have the benefit of a healthy and robust treasury. Can you speak to that and where that stands right now?
Drew Anwyll: You're exactly right. You mentioned our market cap compared to if we were in a gold mining space. Of course, we're not in the gold mining space. Although we do have some gold, that's not the main benefit of our property. The main benefit is palladium and copper.
As for the cash position, we're in a good situation to get through this feasibility and the permitting phase. We have roughly $13 million, just short of $14 million in our treasury. We should be tracking very well to get through this first part of the project, and even into some of the detailed engineering. That'll also allow us to get some of the exploration done that we have currently taking place on-site right now, in terms of some geophysics. The goal is to get some drilling in early August.
Gerardo Del Real: Excellent. Jamie, you do plan on drilling here in early August. That is moving forward?
Jamie Levy: Yes. The short-term plan is we're waiting for magnetotelluric results. MT is a geophysical tool. We're waiting for the results from that. Hopefully, we'll get some drill targets from that. If we don't, we still have alternative drill targets that we already have planned to drill starting the first or second week of August. We do have that.
To go back on the background of Drew, Drew has worked at gold companies in the past. We're not saying this is a gold company. Drew, why don't you just go over your past experience over at Detour Gold, which I'm sure Gerardo knows about it and a lot of his listeners or viewers or subscribers know about.
Jamie Levy: Gerardo, Drew does have the experience of working with a large mining operation, a lot larger than this, moving a lot of dirt. He's quite experienced or capable of putting this into production. I just wanted to give you that leading sort of remark.
Gerardo Del Real: I appreciate it. Look, the team is top-notch. The share structure is excellent, given how advanced the project is. You have some big shareholders that include Eric Sprott, Osisko. There's several names, I could continue on. There's a lot to like here and I suspect that shareholders and potential shareholders that look at the company at these levels are going to be rewarded pretty well moving forward.
Jamie, Drew, anything to add to that? I want to thank you gentlemen for your time today.
Jamie Levy: Just one other point. I know we call the company Generation Mining and talk about it being a palladium developer, and just for everyone to realize, it is a copper deposit as well. We have almost a billion pounds of copper measured and indicated, and some inferred in that as well. There is a large copper component. I know a lot of people out there looking for some copper projects as well. We're not just a one-trick pony in PGMs, platinum, palladium. We do have a bunch of copper.
We're in Canada, a safe jurisdiction. I think most people know of Marathon. If they don't know Marathon, we have very excellent infrastructure. To be a Canadian company with copper, there's not too many copper near-development stories that are out there right now. For the green revolution or technology that's going on, it's kind of nice that we have this copper component as well.
Gerardo Del Real: Well put. Let me just go ahead and provide a recap of the resource base here. It's approximately 3.8 million ounces of palladium in the measured and indicated category, over 1.2 million ounces of platinum in the same measured and indicated category, nearly 500,000 ounces of gold and, as you mentioned, over a billion pounds of copper, again in the higher confidence category.
All of that bodes well moving forward. All of those commodities, obviously, are having great, great parts of the cycle that I think will only accelerate here soon. Platinum being the laggard. But again, the bulk of the value comes from the palladium and the copper.
Gentlemen, thanks again. Anything else, Drew?
Drew Anwyll: No, it's all good. Thanks for your time.
Gerardo Del Real: Appreciate it, guys.
Jamie Levy: Thank you. Have a good day.
For the past decade, Gerardo Del Real has worked behind the scenes providing research, due diligence, and advice to large institutional players, fund managers, newsletter writers, and some of the most active high-net-worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.
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