GEN director provides additional funding

Our development stage African iron ore Investment Genmin (ASX:GEN) has just received additional funding from one of its directors.

The funding comes from an entity related to director John Hodder who is also a founding principal at Tembo capital (a private mining equity fund).

Tembo are GEN’s single biggest shareholders - owning 40.6% of the company.

Over the last three months GEN’s drawn down on two different director related loans:

• A$1.7M from an entity related to director John Hodder, an additional A$800k today.
• A$2.6M from an entity related to director Greg Lilleyman.

We see this as a positive sign that at the very least the directors are confident in securing a funding deal for GEN’s project in Gabon.

We are hoping these are just bridging loans to get GEN in a position to sign a deal that repays these AND finances the development of the project.

GEN mentioned in its prior update which claimed that the expected CAPEX for the project is now forecast to cost less than the prior 2022 feasibility study, we covered this update here.

With the project through the feasibility stage, funding is the next key step to get the project into production.

The project is expected to begin as a 5mtpa processing operation that will be powered by green hydro power, then expanding this to 10mtpa.

The hydropower in the area is operated by PowerChina (Power Construction Corporation of China), who GEN have an agreement with to supply power for 20 years.

PowerChina is also driving financing talks with Chinese funding partners.

(Source)

We know from prior MoU’s signed, GEN has 3 of the top 15 global steel producers with these 3 being Chinese based, which includes Baowu Resources Co. Ltd.

Based on an analyst report from earlier in the year, GEN could partner with any of the following to get that financing:

• Chinese company (with which it already has an offtake MoU),
• Chinese construction company with a presence already in Gabon.

What’s next for GEN?

Project financing update (US$200M CAPEX financing)

We want to see GEN show a pathway to getting its project financed and into construction.

Milestones

🔲 Confirm funding strategy

🔲 Secure debt financing

🔲 Secure equity financing

🔲 Secure binding offtake agreements

🔲 Secure prepayments for offtake or other strategic capital partners.

Convert offtake MoU’s into binding agreements

In the near term we are looking for GEN to make progress across its offtake MoUs.

With 4 non-binding MoUs for offtake already secured, we think GEN will be looking to make these offtakes binding and in doing so, firm up the financing picture.

We expect there would be some competitive tension around GEN’s premium product - and things could move quickly once any of these 4 MoUs are converted into a binding agreement.

Milestones

🔄 Binding offtake #1

🔄 Binding offtake #2