"We will be producing some of the cleanest palladium in the world, and, at some point, we believe that is going to command a premium price in the market."
Can you provide an overview of Generation Mining’s (GENM) efforts to advance its Marathon project in 2022?
KK: Generation Mining had four main initiatives over the past year. First, we have been navigating our environmental assessment process for the past several years, and this year we had our public hearings. We now expect a decision which should enable us to proceed with permitting before the end of 2022. This will give us the federal and provincial approval to proceed with mine construction, subject to individual permits. The second initiative was to secure financing. At the end of 2021 we announced that we had a C$240 million stream with Wheaton Precious Metals to help fund the project, and we followed this up by announcing that we had a consortium of banks looking to fund up to C$500 million. We are now looking at additional financing strategies to bring in the balance required. Once that funding package is secure, we will be in a position to start construction. The third vector of progress is related to our relationships and agreements with surrounding indigenous communities. As a result of progress made, we hope to have a benefit agreement in place with our nearest First Nations group by the end of 2022. The last area to highlight is the build out of our team. We now believe we have the staff and expertise in place to execute through to production. We will hire up to 1,100 workers during Marathon’s construction phase.
What efforts is Generation Mining taking to mitigate risks associated with project construction?
JL: Our plan is to get 75% of our detailed engineering complete before we start construction. As a single asset company, we are maniacally focused on our Marathon project, so we will not get distracted. We also feel that the inflationary environment is shifting, and if that is the case, we will benefit substantially.
Can you outline the medium-term supply-demand dynamics you see for palladium and copper?
KK: Marathon’s primary commodity is palladium, and it is used in catalytic converters and automobiles. One positive demand driver is that China is increasing the amount of palladium required in each car to lower pollution levels. India has followed. Although we have been mitigating car exhaust in North America for the past 45 years, some countries have not even started yet. Hybrid cars are also getting more popular, and they need more palladium than a typical vehicle.
The bear case for palladium is one in which electric cars begin to dominate the market. They do not use any palladium. However, they do use a substantial amount of copper. There is an immense amount of copper demand, so fortunately our secondary product is copper. This provides Generation Mining with a built-in hedge.
Can you speak of the carbon footprint associated with the Marathon project? How does this compare to other PGM projects throughout the world?
JL: The two main sources of platinum group metals in the world are Russia and South Africa. Russia's production is powered 55% by carbon intensive fuels. South Africa is over 90% powered by coal. In contrast, our Marathon project is on the Ontario grid making it 96% carbon free. End users like Tesla and GM are now required to go down their entire supply chain to figure out how much carbon was produced in the making of an EV battery. Fortunately, we will be producing some of the cleanest palladium in the world, and, at some point, we believe that is going to command a premium price in the market.
Are there any advantages Generation Mining is able to leverage given it is attempting to take two critical minerals into production?
KK: One example in which being a critical mineral producer has provided an advantage was when the Export Development Corporation of Canada expanded their indicated interest in their share of the debt financing from C$100 million to C$200 million.