Momentum building in Gabon for GEN’s iron ore mine

Published 19-JUL-2024 12:07 P.M.

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A presidential name drop in Africa.

A state visit by China’s Xi Jinping to solidify business ties between two countries…

Today, we’re talking about our green iron ore Investment, Genmin (ASX: GEN) which is pushing hard to become a near term iron ore producer.

Yesterday, the transitional president of Gabon referred to GEN’s Baniaka project directly by name, and intimated that the government intends to make the project a centre piece of its efforts in the Haut-Ogooué region of the country.

(Source - Note: translated content)

President Brice Clotaire Oligui Nguema said the following:

“We are investing in concrete projects that will improve the quality of life of our fellow citizens and strengthen the regional economy…the Baniaka mine is an essential lever for job creation and sustainable development in our region.”

Given we are Invested in GEN to see it become an iron ore producer, we take this mention of GEN’s project as a strong positive sign that the government of Gabon intends for GEN’s mine to be a key pillar of the government’s economic agenda.

We note that GEN received its mining permit just 4 months after the regime change in Gabon.

Gabon’s president is heading to China, we’re hoping GEN comes up in meetings…

There’s more positive news on the macro front for GEN as well - Gabon’s transitional president will soon be in China to meet with the country’s President Xi Jinping, for important meetings designed to strengthen business ties between the two countries.

The meeting will take place between September 2-6 of this year and given GEN’s project has four pre-existing offtake MoUs (Memorandums of Understanding) with major Chinese steel producers - we hope that GEN’s project is a topic of discussion during the summit.

(Source - Note: translated content)

New CEO for GEN…

Last week, GEN also changed its CEO, with former CEO Joe Ariti moving to a Non-Executive Director role and a new CEO to come. In the meantime, Greg Lilleyman is entering the fray as a non-executive director. (Source)

We think Lilleyman is exceptionally well suited to the next phase of GEN’s trajectory, Lilleyman was CEO of $66BN capped Fortescue (yes, the massive Aussie iron ore producer) for 4 years between 2017 and 2021.

We take the appointment of Lilleyman as a serious sign of intent from GEN, appointing someone of his calibre and experience.

Welcome aboard the good ship GEN Greg:

(Source)

We note that since the appointment of Lilleyman, the GEN share price has been moving, up from 11.5c on July 11 when the appointment was made to now trade at ~14.5c today:

We Invested at 10c in a “recapitalisation” round that was completed in early April:

In short, we think things are looking good for GEN right now, with more experience added to the Board (specifically in production) and growing political momentum in Gabon to make the mine a reality.

How does this news impact our GEN Investment Memo?

Offtake with Hunan, the early backers of FMG
Hunan Valin Steel was one of the early backers of FMG back in 2009 with a >$500M direct investment into FMG. Hunan’s stake in FMG is worth about ~$6.7BN. Hunan currently has an offtake MOU in place with GEN.

Source: 2 April 2024 GEN Investment Memo

Given Hunan is currently a major shareholder of FMG, we expect new GEN CEO Greg Lilleyman to be familiar with one of GEN’s 4 offtake MoU partners.

Objective #2: Convert Offtake MoUs to Binding Contracts

Milestones
🔲Binding offtake #1
🔲Binding offtake #2
Source: 2 April 2024 GEN Investment Memo

We’re hoping GEN relationships with Hunan will help drive GEN forward towards a binding offtake with Hunan and GEN’s other offtake partners.

Jurisdiction risk/political risk
In August 2023, a military coup affecting regime change occurred in Gabon.

A transitional, appointed rather than elected, government has been put in place with elections scheduled to be conducted in August 2025.

While the population of Gabon has generally supported the coup - there are uncertainties about the future political climate of Gabon.

For example, delays in holding elections and returning to an elected civilian government may lead to economic, political, and social risks materialising that adversely impact GEN’s ability to develop Baniaka and subsequently produce, export and sell iron ore products.

Source: 2 April 2024 GEN Investment Memo

We see jurisdictional and political risk reducing in the wake of the indication that the Gabonese transitional government appears firmly behind GEN’s Baniaka project as a key pillar of their economic agenda.

What’s next for GEN?

We’re particularly interested in binding offtakes being signed right now, which we want to see converted from the pre-existing MoUs that GEN has with four major Chinese steel makers.

This is Objective #2 from our GEN Investment Memo, and we see binding offtakes as a key catalyst which would accelerate GEN’s progress on financing, and ultimately construction of the mine.

To read more about GEN, be sure to read our first note on the company, detailing our Investment and what we want to see from GEN as it pursues becoming Africa’s newest green iron ore producer: