Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
22:52 It's only going to get worse. So I think as far as near term, I can't tell you what copper is going to do this month or next month. That's going to be the vagaries of the market. But over time, you're going to see it go, I think, at least stick around $6 and at some point it's going to surpass Nickel. I appreciate that. And with the speed AI is moving, I assume you guys will be talking to some AI version of me next year if we have the same conversation. I hope he has better questions as much more interesting as I'm shifted off to the ice floe. I do want to talk about targets because I know major banks have been falling over themselves to raise targets as the year started. Wells Fargo put 6,100 to 6,300 Gold by year end. JP Morgan has Copper averaging around 12,000 a ton for the full year.
23:43 So, you know, certainly higher than some bankers are saying. You guys are actually on the precipice of building mines at these prices. How do you think about forecasts? Do they change your planning? Are they on your mind at all? Are there any that you feel more favorably towards than others? Dan, I'll start with you on gold price. It's always a bit of a dark art. I think when you're looking to build a project, the most important thing is how robust is that project, right? It's not what the price is and the assumption that you're putting into it. You also need to understand what price does the project need to work, right? In order to raise the money, as Kerry's talking about, there's a bunch of different sources that are coming in that have different levels of risk tolerance that we haven't seen in, you know, in generations in terms of governments, you know, actually now investing in productive capacity or helping finance productive capacity of mining companies.
24:40 I think you sort of pick a point. You're comfortable how your project looks relative to every other project in the cost curve at a certain point, right? So you kind of know where you are relatively and that's largely dictated by your ore body, the strip ratio, the grade and the infrastructure around you. Because that stuff's not going to change, you know, relative to different projects. And then, you know, what kind of the minimum level is to allow your shareholders or the people building the project to get a good return. What's that incentive price that you need to get a satisfactory equity return on building a project?
25:27 And then everything above that is a little bit of a race of the price versus what's going to be commodity price inflation. Right. And the one thing we can say is in the last couple of years with the big step ups that we've seen in the commodity pricing, it buys you a fair amount of headroom for ultimate like input cost inflation or production cost inflation. Because the average all-in sustaining cost of the Gold industry, I don't think it's quite to US$2,000 yet, but it's certainly on its way. But US$2,000 to US$3,100, US$3,200, where a lot of people are putting out studies now, it's still, that's a decent margin. Now that margin is phenomenal at 5,500, right? And that's where you start seeing really some of the excitement.
26:15 So the trick, as someone who's seen a few cycles, the trick is to, again, understand kind of what are the levels that get your project financed, and then hopefully be in a position where you are finding that money at a time when the sort of recency bias of where prices are gives investors excitement or confidence in your returns because they're building in an expectation of $4,500 or $5,000 or $6,000. So where do I think Gold could go here? I mean, we talked before about kind of peak to trough in a non-disrupted world of Gold going to $7,000.
27:04 I'm not the only one who kind of holds that view. And I think there's the financial reset, fiscal calamity scenario, which is not at all unrealistic. And I think that could be a $10,000 to $20,000 goal. I mean, look at all the, if you had to sort of back by Gold, the US Dollar, what the price of Gold would need to be. And that's well in excess of $20,000. And by the way, it's getting US$6 trillion or whatever, bigger every year by the deficits of the U.S. Government. So I don't know. I am certain Gold is going higher than we thought in the near term. But long-term, I'm a big believer that long-term it will always trend toward a small margin above the 90th percentile of the cost curve. And that's Gold that's always a little bit difficult because you've got pretty much every ounce that's ever been produced is still around. It's not like Copper, like Kerry was saying, where it gets consumed.
28:13 But Copper will, I think, reliably over the longer term trade to something at or around the incentive price to build more production. Because the real issue in Copper, which is what Kerry, I'm sure, is going to talk about, is that the growth demand is just going to outstrip supply. And the supply constraints are that no one has been able to find or build nearly enough capacity in the industry to have even a hope of producing the copper that the world's going to need 10 years from now, because it's on a whatever, 4 or 5% growth trajectory. And the reality of productive capacity is it may have peaked unless there is an incentive price that's markedly higher than where we are today.
29:01 Gary, on that note, I'll throw it to you for copper price targets. Which do you think are the gurus? Which ones do you think are accurate? Where do you think it goes? I've always thought that these analysts that predict metal prices and other prices, if they actually knew where the prices were going, they wouldn't actually have to work anymore. They'd be on their yacht somewhere. And so they're not, you know, they're educated guesses is what these things are. A good example was 3 years ago, Goldman claimed that copper was going to 7 bucks. And and then as copper did finally get up into the sixes, they reversed it and said it's going down. So like, can you believe them? I mean, they keep changing their minds. But that said, certainly the banks in general have been increasing their copper and other metal forecasts and that makes it easier for us somewhat to raise the money because it's not just the stock promoter telling you that the metal price is going up that these banks are doing it. But if you look at the banks closely, it's not the banks that are loaning the money to build the mines that are predicting these, it's the other ones. So most banks don't finance mine construction, It's a real niche market out there.
30:18 But certainly the forecast moving up has been good for us. And I think they're correct in their general direction as far as picking a precise price. I mean, that's a mugs game, you can't really do that. I appreciate that very much. I wanna talk about- Just before we move on, I wanna put in a couple of shameless plugs for good friends and partners of ours who are the guys who spend all their time looking at this. We're good friends and sponsors of the In Gold We Trust report that Incrementum puts out. Ronnie Stifler, I think, and his team are some of, if not the best Gold fundamentals analysts in the world. And their report, I think, is par excellence.
31:10 Ronnie in 2020 was calling for $4,800 Gold before the end of the year, when people used to laugh at him when he was doing that. And now, you know, it's been overshot and they've called it all the way along. So they're very good folks. And then our good friend Florian Grimace on the technical side, if you're looking at, you know, where Gold and Silver are going day to day. There are experts out there and I would agree with Kerry. I've been a banker for 20 years. I can tell you it's rarely at the banks. It wouldn't be surprised to say that they do often have a trading bias in where their analysts are calling this stuff and some of them, you know, the trade might be already in before the analyst makes the call. But that's just the conspiracy theory in me.
31:59 No, I think you can you can there are some very good people that we really follow and rely on in the gold sector, that whether it's your day to day trading, looking at support and resistance, or your long term fundamental view, like those people are out there. And I think, you know, you just You really have to, I think, have spent a fair amount of time in the sector to understand who's providing really reliable, well thought out, detailed, fundamental research. Sure. I appreciate that. One thing I always say is I think developers don't get enough attention in pretty much every type of market. People don't talk enough about where they fit in. And right now, there's obviously the situation where project economics looked marginal 3 years ago.
32:46 Now they look really phenomenal on paper. They have a lot more projects are in the money right now. But at the same time, especially with, God, global oil prices with the war in Iran, costs have moved up. So I'll start with you here, Kerry, on this one. How are you thinking about that tension between better revenues and those kind of increasing costs that we're likely to see? How do you think that'll impact? Well, it's interesting what you say about increasing costs, because we did our first feasibility study in 2021, I think we released it. And then we saw this inflation happening around that time. And so in 2023, we came out with a new one and certainly the CapEx had gone up significantly. And then, but then We decided to, since we didn't have our permits yet, we decided to have another go at it and redesign some things. And we worked with our EPCM contractor, Asenko, to redesign the mill, which was the biggest price tag.
33:46 And we were able to knock about 150 million off of it. So, and I think the banks have recently gone over our feasibility study with a fine tooth comb. They've hired an independent contractor to do that. And they think that the prices have held. So our feasibility study, which came out 12 months ago, they think that the numbers are still valid. So we're not seeing the inflation that we did see before. And So that combined with an increase in the metal prices is obviously really great for us. Our cost to produce a pound of copper is around just over 2 bucks a pound. So at $4 we're doing great, but at $6 It's phenomenal. In fact, our payback period is 1.3 years.
34:36 And in fact, our copper at these prices today, our copper is all of our CapEx is covered by copper. And we have 200,000 ounces of PGMs that we're producing essentially for free. So certainly the copper is just an amazing thing to the economics if it holds where it is. I appreciate that. And before I give it to you, Dan, I'll just remind everybody in the room because I know there's quite a few, there is a request meeting button. If you scroll around, it's a new feature on our system, exciting stuff. If you press request meeting button, you can choose to request a meeting without the first mining or the generation mining team. Please do feel free to use that. But Dan, I'll throw it to you for how you think about that weird situation where projects look like they can make a lot more money, but also costs. We don't know what kind of hyperinflation we're in for. Yeah, I mean, I agree with Kerry and we have sort of been seeing the same thing. We had a pre-feasibility study on our SpringPool project that came out in January of 2021. And then we had sort of an update in, sort of an internal update that we'd done in mid-23.
35:41 And that became a Pre-Feasibility Study update that we put out in November of last year. And there was a market increase between 2021 and 2023. And then you're in the kind of, call it 5% to 10%, well, call it 2.5% to 5% a year sort of increase, depending on the category that you were looking at. So I think it has slowed down. And I think what a lot of people forget about in Generation Mining's project and ours, both Ontario, you're talking about fundamentally drawing from pretty similar resource pools to build it. People forget that from 2019, 2020 to 23, 24, there were 7 major Gold mines being built in Canada at the same time. And a lot of them in a pandemic, right? So cost inflation went rampant, but in large part because, you know, you had a lot of people deployed to sites and equipment wasn't getting there for supply chain issues. And just, you know, the fixed cost of what you need to have a full construction site staffed but people not able to work, it really took its toll. I think we're in a situation now where, again, you've got a couple of interesting projects here where the management teams somehow managed to find the way to get the money to do the hard work of environmental assessment and permitting
37:12 through the time when no one else was really doing it because they couldn't raise the money to do it. And so we're in a period now where I think you've got to call it a five-year runway. And listen, I hope, I'm sure Kerry hopes that all subsequent projects coming through Canada, through environmental assessment processes are gonna have it easier than we had it. We've been in the EA process for 8 years and thankfully kind of towards the tail end of it now. We're all hoping that it gets quicker and I know governments really across the country are working really hard to look at their processes and figure out collectively how we can do these things in a more streamlined fashion. But we're in this period where because so few companies had the ability to push through that permitting process.
38:03 You've got a window, and I think it's a five-year window, where those resources to build projects are actually available, and they're looking for work. And so you can get the best people, and often the best people who've just spent the last couple of years or last 5 years building 1 or 2 other projects. So it's the advantage of kind of the, you know, those of us who they said were crazy to keep bashing forward with these projects in a downturn. But when you get to the point where you now have this pretty open field, that really manifests itself in being able to maintain, put certainty around your costs and maintain that cost through a construction window, because you're the one person who's committing, by the way, to buy Canadian Steel when you're gonna build this project, right? Because no one else is in that kind of construction phase. These are major, major, you know, billion dollar plus construction projects. So it does give you that opportunity, I think, to have a little bit more of that cost certainty. Are there some things that are going to go up and down?
39:12 Oil, sure. You know, I think one of the other benefits is we're located in regions where, you know, the oil price for open pit mines is significant, but most of the energy that we're using is going to be grid electricity. And, you know, we and others in Canada are investing in building out the grid and governments investing in providing more stable clean energy, certainly in Ontario, Manitoba, BC, other places. So yeah, I think we're in a period where I'm less concerned about hyperinflation on the cost side right now just because it feels like a bit of an economic slowdown around tariffs and other things just take some of that pressure off.
40:03 That makes sense. And it's good to note that the development story is still around how much grit it took to get through that 2020. Early 2020 is pretty grim. As the folks that made it, you know, got something to show for it. I don't talk about jurisdiction because I know I just talked to obviously you're both the big thing, major projects in Ontario. There's been a lot of talk from the Kearney government, but also from the Ford government, about positioning Ontario and Canada as a critical minerals powerhouse, mining powerhouse, streamlining permitting, attracting capital, all the fun stuff. Kerry, I'll start with you here. From where you sit, has all the rhetoric, and I use that in the politician-iest way you can possibly say it, has it translated anything tangible on the ground so far? Do you think Canada and Ontario are really moving in that direction? Well, the biggest surprise for me is Canada. The federal government in the last 5 years has really gone from an anti-mining stance to a pro-mining stance, as well as putting their money where their mouth is. They've got a number of different initiatives to help out start up mines, especially critical minerals, but mining in general. So as far as that goes, that's been a really pleasant surprise and Kearney has continued it. Interestingly, the Conservatives in their last campaign were actually going to kill some of those initiatives.
41:13 So That was also yet another surprise. As far as the province goes, it's no surprise that they've gone pro-mining. It's a conservative government. They have not as yet put their money where their mouth is. They've had some small grants here and there. We are still waiting to hear from them on that, and we're expecting something to happen, something very positive to happen, but it hasn't happened yet. As far as the permitting goes, they have done some initiatives to try to speed that up. I'm not sure that they are working. They kept telling us as the years went by. And of course, it's not just the time value, it's the money. We spent tens of millions of dollars on our permitting. And the longer it takes, the more you spend. I mean, you've got a staff. You've got a bunch of people there, you've got reports, you've got lawyers, you've got scientists, biologists, all this stuff and some of it is frankly nonsense.
42:10 For instance, we had to do a massive aerial survey to count the caribou in the area of our mine, like hundreds of square kilometers, maybe thousands of square kilometers. Well, guess what? We saw 0 caribou because we knew there weren't any there. But that's the kind of nonsense that you're running up against permitting. Incidentally, we got our permits first from the federal government and historically that's always been the laggard. So I will, but I will congratulate both governments as far as we go as pushing this, pushing the permitting. Incidentally, I don't know if people are aware, but the Mining Journal, a great mining publication out of London, England, surveyed their readers and chose Ontario as the number 1 mining jurisdiction in the world. And the Fraser Institute chose Ontario as the number 2 after Nevada in the world. So obviously the people in the industry are aware of what's happening in Ontario and those are good things.
43:13 No, I appreciate that. One of my hobbies is explaining Canadian politics to Europeans. Like, well, we have a small C conservative, capital L liberal prime minister, and we have a small C centrist, capital C conservative premier. Just fun. Dan, I'll throw it to you for where you think governments have gone and where they're likely to go in the future. Yeah, I mean, I think I would echo what Kerry's saying with the one caveat that the gold mining industry doesn't seem to get quite the same love as critical minerals does. It's understandable in a period where there is kind of a different level of strategic importance when you're talking about different critical minerals. I get that. The one thing you have seen Ontario doing is really kind of proactively starting to build some infrastructure to enable projects to happen and certainly you know sort of north of Red Lake towards lithium project they're you know building a road they're building like an 80 million dollar bridge across the Barents River like some significant infrastructure there There's obviously all the infrastructure that they're pushing up to the Ring of Fire or or working to push up to the Ring of Fire, you know, it's it's making good progress.
44:33 And they have a commitment to, you know, putting in some of the infrastructure that allows the Indigenous communities around some of these more remote developments to actually, you know, participate in the development of it. So we're optimistic that we can have something similar happen around our spring poll project. On the permitting fronts, I mean, we're sort of at the very pointy end of an environmental assessment right now. So we spend a lot of time talking with a lot of the different ministries, and in some senses, Carrie's experience and our experience is similar, and generations, a few, probably almost 2 years ahead of us in terms of EA approval and where they are, and then the follow-on permitting after that.
45:22 We're often cited in government circles as kind of the case study as to why we need permitting change rather than to be the ones who are going to benefit from it, which is, you know, that'll be our contribution, I guess. They are serious about it, though. And that much I can say, particularly in Ontario, Minister Lecce and his team are very serious about, you know, streamlining and integrating processes. And the federal government, I think, has done a very, very good job of trying to establish, like, what is their lane through federal impact assessments and staying in their lane and delivering an open and transparent and collaborative process. Certainly that's been our experience with IAC. So I think it is going to get easier.
46:15 I think the biggest constraint to all of the grand ambitions of streamlining permitting is that, there's no way to shortcut or fast track building a relationship with the communities around the area in which you're operating. There's no shortcut to providing the capacity to the communities to work through, you know, what are very, very complicated and extensive project development decisions that the communities have to make. You know, we've been, we've working with a couple of communities around us have funded what's been one of the largest ever indigenous led assessments of a mining project. It's gone on for, you know, designing the project or the process and then executing it now more than 2 years.
47:13 And it's been a really important thing to be able to provide that capacity to the communities, because these communities have an infinite number of far more urgent things to deal with than working with companies who are trying to advance a project. Not necessarily more important, but I guarantee you more urgent. And those are, you know, often looking after the health and welfare of community members and trying to get money for infrastructure for their communities and just all the challenges that leadership in those communities face. But that's where if Canada and Ontario and other jurisdictions really wanna streamline the process, it is entirely incumbent on having a process that encourages the building of relationships between industry and Indigenous communities way earlier in that process and provides both capacity and incentive to those communities to want to see a project develop and just give certainty to, you know, some of the forms of what that economic participation are gonna look like. So communities don't think they're, you know, they're getting into a process and get to the end of it and have an uncertain outcome as to whether the communities are gonna benefit or not. So that to me is the one thing that's still kind of the big structural thing to be tackled in Canada. And it's not easy.
48:41 But I think government has a role to play. I think industry has a role to play. And I think the communities have obviously the most important role to play in helping shape how industry, government and the communities can better and earlier collaborate to shorten these timelines. I appreciate it very much. I think the extra context is helpful. Kerry, I got 1 crystal ball gazing question to wrap us up and then I'll let you get in on this one as well of just what the future might look like if we're sitting here in a year. And let's say, for example, gold's at a fairly conservative 5500 and copper's around 6 bucks a pound. What do you think the development landscape looks like? Do you think we finally see those construction decisions across Canada? Or you think there's still some bottlenecks? I think there's bottlenecks.
49:28 We're, as far as I understand, the only permitted unbuilt copper mine in Canada. 4N was the other one and they're almost built now. So I see, for example, one of the really great projects out there is Western Copper and Gold up in the Yukon, but their timeline is at least 3 more years of permitting. And that's after they've been at it for years. So it's not getting any faster. And so I think that that is the bottleneck permitting. I think the money is going to be there for construction. I think that studies have been done, but there are no other copper mines ready to build. There's a few nickel projects. There are other critical mineral projects, but not many.
50:16 I think those will get built, but I think it'll take a little bit longer than a lot of people think. And again, it's a 2 year construction period. So assuming we start this fall, we're still looking at the end of 2028 before we're actually producing. I appreciate that. Dan, I know you already kind of got into this a bit, so I'm going to give you an opportunity to talk about SpringPool and 2.0k right now. Because I know the updated PFS showed the NPV at SpringPool more than doubling to $2.1 billion. And the market gaps moved from, you know, you've been all over the place, but from 150 million, well up the last year. And I know you're still, as far as I understand, targeting EA approval in Q2 and feasibility study by year end. For somebody looking at first mining today, and I know lots of people in the chat have individual questions, which I'll make sure, by the way, that get to the first mining team. Walk us through where you are on those catalysts, what the partnership model looks like for getting this thing built.
51:07 Yeah, so still, I think, on track for that EA decision coming, you know, end of Q2, certainly federally. Provincially, we're optimistic it's going to come reasonably quickly on the heels there. But those, you know, that's a lot of work to do in the final stages of getting that pulled together. Feasibility study may push out into 2027, but you know, that's kind of where we're firming up some of those timeframes now. Yeah, I mean, particularly for a project like Spring Pool where it's had this perception issue of, you know, you're never going to get agreements with communities and you're never going to be able to permit this deposit because it sits in the Bay of Lake. We have a pretty uniquely kind of binary perception issue.
52:00 And I think, not I think, we are very confident that by the end of Q2, we're going to have some very clear direction that's going to say that this is a project that we think can and should be built. And we then have to go from an EA approval through a lot of the permitting that Cary and Generation have gone through as well. And that's not an unsubstantial process. It's probably another 18 months for us to just to get to the detailed engineering and finish a feasibility study and get your permits to be ready to build. So yeah, but I think, you know, 2026 is a year of the major, major catalysts for us at Springpole. And then, You know, we never really talk about it all that much, but we've got, we remind people a bigger project in Quebec, you know, located in an area of unbelievable infrastructure with a highway that runs actually over top of part of the project, half an hour from Canada's only Copper smelter at DuParcay. So we're doing a lot of really important environmental baseline data collection at DuParcay, ultimately collecting a bunch of data to move that towards the pre-fees and then Feasibility study there as well. So, that's, as we have it scoped now, easily another top 10, maybe top 5 Gold mine in Quebec.
53:27 That might follow not that far on the heels if we're able to benefit from some of this streamlined permitting at DuParcay, which feels like it could work. So lots to keep eyes on here, but for us, in the next 3 months, very focused on getting to a couple of major, major milestones. Hopefully, we're gonna have some clarity towards agreements with communities and ultimately towards those EA decisions. I appreciate it. 2026 is as they say in France, grand shows. I like to see it. I'll throw it to you. Marathon, like we've talked about today, one of the few fully permitted shovel-ready copper palladium projects in North America, close to 1 billion pounds of copper and measured in indicated category. You've said the metrics are in place for a 2026 financing and construction start. So take us through where that process stands today, why I think the timing's right.
54:24 Let's tell the audience, there's quite a few people in the room. Now's the time for Jen M. Sorry, Kerry, you're on mute. I just requested a mute. Apologies. With the permits last year, we restarted our negotiations with the banks and the banks had to do a number of reports on metal prices, on ESG, on certainly on the engineering. They had to review the engineering. And that process went on all through last fall and into the spring, and now those are finished and approved, and we're just waiting for final bank credit approval. So our CapEx is roughly 1 billion dollars Canadian. We're gonna need more than that. We're gonna need a cost overrun facility, as well as some pre-production interest payments, etc. And where's all that money going to come from? Well, the bank term sheet we have is for 540 million Canadian dollars.
55:17 It might at the end of the day be slightly lower than that but it'll be in that range. We have 200 million coming in for to construction from our streaming deal with Wheaton Precious. They've streamed the gold and a little bit of the platinum byproducts out of our project or which are a minor part of the revenue stream and then possibly up to 300 million dollars coming from various government departments and then another hundred and 35 million dollars from Caterpillar or Komatsu depending on who we choose in the end as far as advance leasing payments or you know we basically get the equipment up front and lease it back and that's getting us very close to it. We will still need to do another equity raise, but we're very close with 2 different strategic potential partners for doing that. So we may never go to market with that.
56:12 And that's all coming together as we speak. Everybody's waiting for the banks. The government thinks they need about 30 days after the banks to put a nail in everything. And then of course, Wheaton's already there. And then the last part will be the equity, but that's being negotiated right now. So, and we won't know the exact amount until we know the exact amount we're getting from the banks. But it's very doable, very doable numbers. Oh, exciting stuff. I'd say grand chose pour les deux for the rest of the year. I'm looking forward to hopefully seeing more of you guys as news comes out more and more. But Dan, Kerry, thank you so much for running through letting me have a chat about markets. I know there's so many people in the room. Thank you all for behaving, first of all. I always appreciate that. For putting in your meeting requests and all your questions. I'll make sure they get to the right teams afterwards for the ones that we missed and the ones that came in on email as well. So I'll send those through to the team. But Dan, Kerry, thank you so much. This was fun. I hope you have a wonderful Easter and a great long weekend.
57:11 Yeah, thanks everyone. Thanks everyone for joining. Thanks Kerry. Cheers. To you. To you. To you. To you.
