Generation Mining Limited (9GN.F) Earnings Call Transcript & Summary

So Mr. Chairman, we can -- we've let everyone in who was in the waiting, so we can start whenever you're ready.

Okay. Good morning, everyone. My name is Kerry Knoll, I'm the Chairman of Generation Mining. And welcome to the 2023 Annual and Special Meeting of Generation Mining Limited. It's my pleasure to welcome our shareholders and the others present in person and those watching and listening via Zoom to this meeting. Thank you for your interest in Generation Mining. First, we'll proceed with the [ formal business ] of the meeting. As highlighted in our Notice of Meeting in our Management Proxy Circular, shareholders joining us via Zoom will not be able to vote or participate in the formal business of the meeting. Following the formal business of the meeting, Generation management will be available to present an update on the company, and those joining in person or participating via Zoom will have the opportunity to ask questions. Instructions on how to ask questions via Zoom will be provided after the formal business of the meeting has been completed. Meeting will now come to order. I, Kerry Knoll, the Chair of Generation Mining, will act as Chair of the meeting. And with the consent of the meeting, I appoint Adam Siegel, the company's General Counsel and Corporate Secretary, to act as Secretary to the meeting. With the consent of the meeting, I appoint TSX Trust Company, the registrar and transfer agent for the corporation acting through the representative, Mr. Sench Kathiravelu, to act as scrutineer of the meeting. In order for a quorum to be present in accordance with the bylaws of the company, the scrutineer's report must show that there are not less than 2 shareholders present in person or represented by proxy. The scrutineer has already provided his preliminary report, and I can report to the meeting that the requisite number of shareholders for a quorum is present at the meeting and is properly constituted for the transaction of business. I direct that the final scrutineer's report be annexed to the minutes of this meeting as a schedule. Notice calling this meeting and the accompanying management information circular and form of proxy have been mailed to all the shareholders of record and to directors and to the auditors of the company, and the Secretary has received and filed with me proof of mailing. I direct that the copy of such materials, together with proof of mailing, be annexed to the minutes of this meeting as a schedule. Before commencing the business of the meeting, I would like to comment on the voting procedure. Each holder of a common share on the record date for this meeting, May 19, 2023, is entitled to 1 vote for each share held by such shareholder in respect to each matter dealt with at the meeting. Based upon information I received from the scrutineer, to the best of my belief, if a ballot was conducted in respect to each matter to be voted on at the meeting, the total number of votes attached to the shares represented at the meeting by proxy and required to be voted against or withheld from voting on what would be a decision of the meeting in respect to each such matter was less than 5% of all the votes that might be cast at the meeting on each such balance. Accordingly, in order to expedite the voting on such matters unless a ballot is demanded in respect of a particular matter, each matter will be voted on by a show of hands. Each shareholder or proxy holder present in person at this meeting has the right to demand that a ballot be conducted on any resolution either before the show of hands, vote or following that vote. But in each case, the shareholders or proxies holder present in the meeting will receive a ballot at the appropriate time. Following the meeting, a complete report on the voting results of each -- of the items voted upon at this meeting, including the number of votes cast by ballot or proxy for or against or withheld from voting as reported by the scrutineer, will be filed on SEDAR and will be available for viewing under the corporation's profile at sedar.com. To make the best use of our time at the meeting, certain management -- shareholders have been asked to move and second items of business, which are called for in the Notice of Meeting. I shall now request the Secretary to table the minutes of the last Annual Meeting of Shareholders of the [ corporation ] held on June 15, 2022. The minutes of the June 15th meeting are available for review by any shareholder. Unless someone wishes to have them read, may I have a motion that the minutes be taken as read and approved?

Mr. Chair, I move that the minutes of the Annual Meeting of Shareholders held on June 15, 2022, be taken as read and approved.

Mr. Chair, I second the motion.

We'll conduct this vote by a show of hands. All those in favor of the resolution, please so signify by raising your hands. Contrary, if any? I declare the resolution carried. I'll now call upon the Secretary, to file with the company's records, a list of shareholders of the company [Technical Difficulty] respective shareholdings and the original proxies deposited at the meeting. I will now ask someone to move and second a resolution respecting the destruction of the proxies.

I move a resolution as follows: be it resolved that the proxies boarded by shareholders for use at this meeting of shareholders of the company be retained with the records of the company for a period of 6 months and after the date hereof and then that same be destroyed.

I second the resolution.

All those in favor of the resolution, please so signify by raising your hands. Contrary, if any? I declare the resolution carried. I now present to the meeting the audited financial statements of the company for the financial year ended December 31, 2022, and the report of the auditor thereon. The Board of Directors has approved these financial statements, and the financial statements were mailed to registered and [ beneficial ] shareholders, who requested a copy. Shareholders not being -- are not being asked to approve the audited financial statements. However, I will be pleased to deal with any relevant shareholder questions concerning the financial statements after the formal part of the meeting is completed. We'll now proceed with the nomination and election of directors. The number of directors to be elected at this meeting has been set by the Board at 7. All of management's recommended nominees are currently members of the Board. Particulars relating to the 7 nominees are set out in the circular. I now declare the meeting open to nominations.

Mr. Chair, I nominate Jamie Levy, Kerry Knoll, Stephen Reford, Paul Murphy, Phillip Walford, Cashel Meagher and Jennifer Wagner as Directors of the company to hold office until the next Annual Meeting of Shareholders or until their successors are elected or employed.

Are there any further nominations? If there are no further nominations, I will entertain a motion that nominations be closed.

Mr. Chair, I move that nominations be closed.

I second the motion.

All those in favor, please so signify? Contrary, if any? I declare the nominations closed. I will now ask someone to move and someone to second a resolution for the election of the 7 persons nominated as Directors and directing Mr. Levy to cast a single ballot for such election.

I move a resolution as follows: [ we resolve ] that the 7 persons nominated are hereby elected as Directors of the company to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed. And Mr. Levy be hereby authorized to cast a single ballot for such election of the 7 persons as Directors of the company.

I'll second the resolution.

All those in favor of the resolution, please so signify by raising your hands. Contrary, if any? Based on the show of hands and the votes cast by proxy in advance of the meeting, I can declare the resolution carried and those nominated to have been duly elected as Directors of the company to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed. The next item of business is the appointment of the auditor and the authorization of the directors to fix the auditor's remuneration. I will now ask someone to move and someone to second a resolution appointing the auditors -- the auditor and authorizing the directors to finish -- to fix the auditors remuneration. I think you're up, Jamie.

I move a resolution as follows: We have resolved that RSM Canada LLP chartered accountants be and is hereby appointed auditor of the company to hold office until the next annual meeting of shareholders [ have set ] remuneration as made to be fixed by the Directors and the Directors be, in it, are hereby authorized to fix such remuneration.

I second the resolution.

All those in favor, please so signify by raising your hand. Contrary, if any? I declare the resolution carried. The next item of business is the approval of the new Omnibus Equity Incentive Plan, which was adopted by the Board on May 11, 2023 and has been conditionally accepted by the TSX, subject to shareholder approval. If approved, this new plan will replace the corporation's existing stock option plan. Additional information on the new equity plan, along with a copy of the full text of the plan, was provided in a circular made available to shareholders in advance of the meeting. I will now ask someone to move and someone to second an ordinary resolution to approve the new equity incentive plan.

Mr. Chair, I move a resolution as follows: Be it resolved that: one, the new incentive plan as more particularly described under the heading Approval of New [Audio Gap] and substantially in the form attached as Schedule B to the company's management information circular dated May 19, 2023 is hereby approved, and the company is hereby authorized to issue securities pursuant to the new incentive plan. Two, any director or officer is hereby authorized and directed to make such other changes to the new incentive plan as any such director or officer may, in his or her sole discretion, determine our necessary, desirable or useful as a consequence of the approval of the new incentive plan; and three, any director or officer is hereby authorized to take all necessary steps and proceedings and to execute, deliver and file any and all applications, declarations, documents and other instruments and do all such other things and acts, whether under corporate sale of the corporation or otherwise, that may be necessary or desirable to give effect to this resolution.

I second the resolution.

All those in favor, please so signify by raising your hands. Contrary, if any? I declare the meeting -- I declare the resolution carried. Next item of business is the approval of the new bylaw, which was adopted by the Board on May 11, 2001, subject to the ratification and confirmation of the shareholders of the company. If approved, this new bylaw #1 will replace the corporation's existing bylaw #1. Additional information on the new bylaw, along with a copy of the full text of the bylaw, was provided in the information circular made available to shareholders in advance of the meeting. I will now ask someone to move and someone to second an ordinary resolution to approve the new bylaw.

Mr. Chair, I move a resolution as follows: be a result of that: Number one, the original bylaw of the company be repealed as a new bylaw being a general bylaw in the form attached as to the management information circular dated May 19, 2023 of the company as scheduled to see -- be, and it's hereby ratified and confirmed as a bylaw of the company. And two, any director or officer of the company be and he or she is hereby authorized as directed for and on behalf of the company to execute and deliver all such documents when to do all such other acts or things as he or she may determine to be necessary or advisable to give effect to these resolutions. The execution of such documents or the doing of any such other acts or things being conclusive evidence of such determination, and if any of the foregoing has been done before the date of this resolution that they'd be approved, confirmed and ratified in all respects.

I second the resolution.

All those in favor, please so signify by raising your hands. Contrary, if any? I declare the resolution carried. If there are no further business to come before the meeting, I entertain a motion to terminate the formal part of the meeting. I will now ask someone to move and someone to second the motion. But just before we do that, I just want to note that some of you may have noticed that Rod Thomas, one of our Directors, has decided not to run for reelection. And I just want to thank Rod for all of his work for the company. He's been -- he was one of the founding directors of the company. And he was very, very instrumental in us acquiring the Marathon project and in the studies we've done on the Marathon project. And I just want to thank Rod for all of his hard work. And as he's become a friend over this time, and it's been a really good, great working relationship. So thanks, Rod.

I'll second that.

Thanks, Jamie. All right. So someone can make a motion to terminate?

Mr. Chair, I move the meeting be terminated.

I second the resolution.

All those in favor of the motion, please so signify by raising your hands. Contrary, if any? I declare that this meeting is now terminated. The formal part of the business meeting is now terminated. And before beginning the next part of the meeting, I would like to ask Ann Wilkinson to read a statement regarding forward-looking information.

Before Jamie begins his presentation, I'd like to remind everyone that the following discussion will relate to the performance and business conditions of Generation Mining Limited and as such, may contain forward-looking information about strategies and expected financial results. Various factors, many difficult to predict and control, could cause actual results to differ materially from our forward-looking statements. Forward-looking statements may be made in connection with business objectives and targets, company operations, anticipated financial results and the outlook for the company, its industry and the global economy. Accordingly, the audience is cautioned against undue reliance on these remarks. We refer everyone to the cautionary language regarding forward-looking statements set out in our most recently filed annual information form, which is available both on the corporation's website at www.genmining.com and on SEDAR at www.sedar.com.

Thank you, Ms. Wilkinson, and I would like to turn the meeting over to Mr. Levy, our Corporation's President and Chief Executive Officer, who will provide an update on the business and affairs of the corporation. Should you have any questions or comments regard for Mr. Levy or myself that you wish to bring forward at today's meeting, you'll have an opportunity at the conclusion of Mr. Levy's remarks. For those of you attending via Zoom, please answer your questions through the chat function at any time, and Ms. Wilkinson will present your question at the conclusion of Mr. Levy's remarks. For those attending in person, please raise your hand at the conclusion of Mr. Levy's remarks, and I will recognize you before giving you an opportunity to speak.

Thank you, Mr. Chair. We'll try to keep this presentation fairly short and light, so we'll leave some time for Q&A. Thank you all for attending. Just some of the investor highlights from Generation Mining. As probably mentioned earlier in some of our older presentations, we did put out an updated technical report or feasibility study at the end of March. We'll talk about later on some of the strong, robust economics from this project being in a Tier 1 jurisdiction, Ontario, Canada, just on the North Shore, Lake Superior. Some of the other highlights, obviously, are the Phase I execution of the project financing of earlier 2022 of the stream [indiscernible] in precious metals $240 million. To date, we've drawn down a $40 million. The remaining $200 million will be on construction. We've also put out a press release, about 2 months ago, about a mandate letter and term sheets from senior project finance, syndicated banks led by Export Development Corporation in Canada, Societe Generale and ING Capital, upwards of USD 400 million. We've also been supported by the Canadian and provincial Ontario government by receiving our environmental assessment, which is the highest standard of permitting our EA [ company ] could go-through at the end of November 2022, so that EA is approved, which will allow us to start to apply for the provincial permits. Drew will talk later on, on where we're at on the permitting so far. We did announce a CBA, community benefit agreement, which is similar to an impact benefit agreement with our partner support of [ Biigtigong Nishnaabeg ], which [ bores ] the southern portion of our project. Like us and many other companies, we're currently undervalued. We're really undervalued, I believe, but a forward-looking statement, but we could talk about that later on another slide. And we did mention in another press release a couple of months ago that we did sign term sheets with Glencore and an unnamed European smelter to secure our copper concentrate. We'll talk about that as well. And next slide, please. We can just jump through these slides, but we are in the North Shore, Lake Superior, about 30 kilometers from the famous Hemlo gold camp, 10 kilometers from the town of Marathon, very supportive of this project. As you can see, it's a very mining-happening area, if I could call it, a little project, a couple of hundred kilometers away. [indiscernible] was purchased by Impala back in 2019 in [ Palomares ] Impala Platinum, similar production profile to what we would be producing and that was purchased for about $1 billion. And what's good to see about on this map here is there's a few projects that will be finished by the time, hopefully, we start construction early next year, the Greenstone project, [indiscernible] Lake, just off the map and Magino, so there will be a construction workforce around for us. I'll just jump over this slide here very fast. But as you can see, it's a very excellent infrastructure for being in Northern Canada or Northern Ontario. We've got a roadway to the project. We've got the Trans-Canada Highway right to the project. We've got 2 power lines intersecting the project more than enough power to supply the project on the [ Marathon ] line to start. We have the town as supportive. We've got a first [indiscernible] group that's supportive, and we have a large exploration potential outside of Marathon deposit, which is where all of our economics are based on. Our feasibility highlights. I mentioned we put it out the -- an updated technical report feasibility study in March of 2023. Initial capital was increased from our feasibility study in 2021 of just over 25%, so it went from $888 million to $1.1 billion, which was as expected during the supply chain and COVID issues, inflationary issues. We still produced an after-tax IRR of 26% and a 6% after-tax NPV of $1.16 billion, short payback of 2.3 years. Our all-in sustaining cash cost is just under [ $815 ] an ounce of palladium equivalent. As you can see, we're producing a fair amount of metals there, just under 283,000 ounces of palladium equivalent a year. So that works out to 166,000 ounces of palladium a year, [ 41 million ] pounds of copper and 38,000 ounces of platinum. The mining plant was optimized to produce as much palladium as soon as we can. We're mining at Southern pit first. But as you can see, we're mining about 1/3 of the reserves of palladium the first couple of years. So we'd hope to capitalize on what was in the feasibility study, higher palladium prices than they are now. But it's a good split of palladium on copper, depending on your view of copper. Copper will be more than a byproduct. It's more of a co-product at palladium. I'll hand it off to Drew here. Drew, do you want to take it over?

Yes. Thanks, folks. Welcome, everyone, to the meeting. Again, this is just looking at a general arrangement of the overall site. We've got 3 pits that we'll be mining through the life of the mine, which is about 13 years. You can see it's quite a tight compact site. What we've advanced since over the last year is largely to advance the engineering of the plant just slightly over 40%. And we also advanced on metallurgical testing in 2022 as part of the updated technical report. And specifically now, our focus is really advancing on the key permits associated. And I'll have a slide later on in that. So the project, this updated feasibility study is really more than a simple feasibility study. It's getting the project ready for construction. So a lot of the engineering is included in the designs, as is additional derisking associated with a project, be it on the geotechnical site investigations that we've completed, as I mentioned, the improved metallurgical performance and the additional testing we've done and the procurement of the sag [indiscernible] mill, transformer and site substations. So again, what we see now is a greatly derisked project with further confidence in the design. And interesting enough, what we also did in 2022 was we did drilling in and around the reserve-resource and near-resource locations, with about 1/3 of that drilling was within the reserve pit. And what the result of that was we've slightly decreased our strip ratio. We've increased our proven and probable reserves. And remarkable for a project of this size, we have roughly 90% of our reserves in the proven category. So that really gives us an awful lot of confidence going into the early start of the operation to get what we expect to get out of the pits. So again, this is just a view. It's sort of looking from the plan view you see the North pit, which, like I said, goes for the life of the asset. The South pit comes out in the first half of the mine life when we use that for in-pit dumps of waste material. And the mine rock storage area is to the east on the right side of that little gray area. So our -- one of our busiest distractions, in addition to financing, is really getting the permits in place. We've broken the permitting into 3 phases. The first phase allows us to start the early works. The Phase 2 are the secular permits that really we need to complete the project, and Phase 3 are the longer lead -- the longer-duration permits, which aren't fundamental for the start of the project, but we will need it later on. So Phase 3 is a Schedule 2, which is related to some water and dam construction. And Phase 3 will also include the process of us getting the operational permits. So where we are right now is it was a little more challenging than we originally expected to get the Phase 1 permits. And again, it has some detail associated with a bit of a quirky range for Caribou on the North Shore of Lake Superior called the Lake Superior Coastal range. It's a very unique habitat for Caribou, of which there's very few Caribou on the Mainland. So through MECP and ourselves and a bunch of the elected officials, we've greatly advanced that permit. And again, all of the Phase 1 and Phase 2 permits -- stage permits are largely derisked. So we'll see the Phase 1 permits coming in later on in the summer and the Phase 2 permits coming in, in Q3 and Q4 to allow us to start construction, the full bulk of construction. I think probably back to you, Jamie or Brian.

Thanks, Drew. As mentioned earlier on the starting slide here, we separated our financing into Phase 1 and Phase 2. As mentioned, we're very happy to have , the largest streaming company in the world as a partner on this, kind of validates this projects [ inerts ] and to receive mandate letters for Phase 2 from the syndicate of banks, commercial banks, which is a little bit different. Syndicate them would be a private equity to get that sort of confidence from that sort of group is very -- we're very excited to have that sort of a cheap cost of capital for our shareholders. And the next phase is Phase 3, which is our final project financing. We're hoping to conclude that later on this year. And through that, we are in ongoing discussions with the provincial and federal governments of Canada. There is a big critical metal strategy that they have out there. We hope that we could tap into some of those resources that are available. There was some comments a couple of weeks ago that's a Canadian Infrastructure Bank that has some funding as long as well as the strategic innovation fund. So we're going to tap into that. And we'd hope to have some equity announcements, as mentioned to you, by the end of this year. So we could, hopefully, have a fully financed package so we can begin construction sometime in 2024. We also have ongoing discussions with private equity groups to help fund the funding gap that we have right now to begin construction, but we'll update the shareholders accordingly when we get some ability to put down some press releases. But I think Phase 3 will go -- be able to get something out to the investors by the end of this year. As mentioned on the slide about the mine financing, we'd hope to have it concluded by sometime in the fall or winter of 2023, and our aim is to begin the major construction in 2024, if we do receive some of those permits that Drew has mentioned to you sooner. Earlier than 2024, we could do some early works construction later on this year, if we do have the project financing or funding available. And then it would be a 20-month construction after we start. Just our shareholders, we do have a good group of shareholders, Sibanye Stillwater as our largest shareholder from when we purchased the project, and we bought the remaining interest. We do have Eric Sprott as our largest individual shareholder and Zebra Holdings, [ Cisco ] Mining. Now we do have a good bunch of shareholders to invest, 2 analyst coverage, Adam and Pierre over Research and Haywood. Our market cap is, as you can see here, just under $90 million, a little disappointing performance this year, but I don't think we're alone in that underperforming. We could talk about the curve, most of you have seen this. We believe we're in this orphan period or penalty box, I'd like to call it. Once we get through the permitting and the project financing, we should be rerated to a higher level from where we're trading at right now. You can jump over this slide, but as mentioned, we were trading at less than 10% of our net present value. So analysts have mentioned we should be trading at somewhere between 40% to 60% of our net present value, once we have the permits fully funded. And I think that I'd just go to the Director slide. As Kerry mentioned earlier, there were 8 and now we're 7. I just wanted to personally thank Rod Thomas for his help in helping find this project and working for the past, I guess, 4 years. As a founder, he was instrumental in the success of this company, and I want to personally thank Rod for being around. And enjoy your retirement, very jealous. And now, I'd like to open it up to Q&A if anybody would have any questions.

So just to -- on the bottom of your Zoom screen, there is a chat function, and you can enter in your questions into the chat function, and I will read them out or they can they unmute.

Yes. Yes. Well, thanks very much. I'd just like to thank Kerry and yourself, the opportunity and certainly take a great interest in the company going forward and wish you all the best of luck.

We have no questions thus far. So I'm going to turn the meeting back to you.

[Technical Difficulty ]

Kerry, can you shut off your video? I think your sound's getting messed up.

Forward's to providing you with further updates in the coming weeks...

Shut off your video, your audio is getting messed up.

I was talking about the copper -- or Marathon copper PGM project, status of which has been validated as an economic containable low-class producer of critical metals that is needed to support emission controls and the transition to a greener economy. We look forward to providing you with further updates in the coming weeks and the months and as we advance our project to a construction decision. Have a great morning.

Thank you, everyone.

Thank you all.