Copper Mining Co. Promising but in Need of Funds
Research Report

Generation Mining Ltd. (GENM:TSX; GENMF:OTCQB; 9GN:FSE) is a Canadian mining company based in Toronto that focuses on producing palladium and copper from its 100% owned Marathon project.

In a May 2, 2023 report, Adam Schatzker of Research Capital Corporation released a report arguing that the company has good prospects, but he currently refuses to upgrade its rating from Speculative Buy.

He writes, "At this time, we are not changing our valuation, recommendation or target price — we expect to do that once a funding gap is resolved."

Issues With Financing

Schatzker breaks down the cash flow limitations GENM is experiencing.

On May 2, 2023, GENM announced that it had secured US$400 million in financing for Marathon project construction costs from a syndicate of lenders. Schatzker points out, though, that this significant loan will not cover the projected costs.

"We calculate that this funding, combined with the undrawn stream from Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) and Caterpillar Inc.'s (CAT:NYSE) equipment financing, leaves GENM with a gap of ~CA$280 million to finance."

Shatzker goes on to argue that this significant funding gap presents a risk to shareholders and that he does not expect the stock's price to reach full valuation until this funding gap is closed.

Schatzker's report suggests three possible solutions to GENM's funding gap:

1.  One or more government organizations provides funding for the project as part of its critical minerals strategy. This may leave some equity to be raised by GENM, but Shatzker thinks it would be far less than the CA$280 million. This may also provide non-dilutive financing;
2. GENM finds a partner that would acquire a significant portion of the project and, together with GENM, funds the financing gap (GENM may issue equity under this scenario); and,
3. GENM is acquired. 

GENM's financing deal with a syndicate of companies such as Export Development Canada, ING Capital LLC, and Societe Generale S.A. is expected to close in late 3Q23, though the deal is still subject to terms and final approvals.

Structure and Predictions

While Schatzker is not raising GENM's rating, he isn't lowering it either. Research Capital Corporation maintains a Speculative Buy rating for the company.

Newman's research report also shares recent rating and target price information as well as current market data on the company:

• Rating: Speculative Buy
• Price: CA$0.54, with a 52-week range of CA$0.51-CA$0.96
• Price Target: CA$1.95
• Market Cap: CA$93.53 million

Shatzker expects a projected return of 261.11% for shareholders. GENM has a CA$78.7 million enterprise value with a cash flow of CA$18.8 million. The company has 180.4 million shares outstanding.

Important Disclosures:

1) Cori Rupe wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures for Research Capital Corp., Generation Mining Ltd., May 2, 2023

Analyst Certification: I, Adam Schatzker, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report. Adam Schatzker has visited Generation Mining Limited in the past 18 months. Relevant Disclosures Applicable to

Companies Under Coverage: Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca General Disclosures The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.

Potential Conflicts of Interest: All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies. RC USA INC. Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA).