Marathon Gold Corporation (TSX: MOZ) announces its financial results for the first quarter ending March 31, 2021 and provides an update on the Company’s activities at the Valentine Gold Project located in central Newfoundland.

First Quarter Highlights

• Completed the Feasibility Study for the Project confirming robust economics for a conventional open pit mining and milling operation, with low initial capital cost and high rate of return over a 13-year mine life. After-tax Internal Rate of Return was 31.5% and Net Present Value at a 5% discount rate was C$600 million (US$450 million) at US$1,500/oz gold, increasing to 42.2% and C$868 million (US$651 million) at US$1,750/oz gold;
• Subsequent to the end of the quarter, the Company released the results of the maiden mineral resource estimate for the new Berry Deposit. Inferred Mineral Resources of 638,700 oz (11.33 Mt at 1.75 g/t Au) were estimated based on 42,000 metres of drilling completed to the end of November 2020;
• On May 6, 2021, the Company announced an additional 50,000 metres of drilling to be completed at the Berry Deposit. Together with drilling completed in 2020, and the 30,000 metres of drilling already budgeted for 2021, this will bring the total drilling inventory at Berry to approximately 120,000 metres by mid-2022, sufficient to establish Berry’s resource potential over its full 1.5 kilometre long extent. The Company will also commence a Reverse Circulation drill program of approximately 8,000 metres for resource reconciliation and grade control at the Leprechaun and Marathon Deposits;
• At March 31, 2021, the Company had completed 15,233 metres of its initially budgeted 52,000 metre 2021 exploration program. A total of 13,695 metres were drilled in the Berry Deposit;
• Consistent with the Environmental Assessment process, during the quarter the Company received Information Requests from both the federal and provincial regulators pursuant to the Project’s Environmental Impact Statement (“EIS”) filed on September 2020. Subsequent to the quarter end, responses to all federal government information requests had been submitted;
• Subsequent to the end of the quarter, the Company signed a Socio-Economic Agreement with the Qalipu Mi’kmaq First Nation (“Qalipu”), establishing a framework for a long-term positive working relationship between the Company and Qalipu over the life of the mine.

Matt Manson, President and CEO commented: “During the first quarter of this year we accomplished a number of important milestones in the development of the Valentine Gold Project. We completed the Feasibility Study and confirmed the Project’s ‘right sized’ design, cost and value attributes first laid out in our 2020 Pre-Feasibility Study. Our exploration efforts continued to deliver strong results, with a maiden resource estimate at the new Berry Deposit pointing to substantial mine life extension potential. Our Environmental Assessment continues on course, with diligent technical support being provided for the public and regulatory review of our EIS. Our Socio-Economic Agreement with Qalipu, completed in early April, reflects the focus on communities and people that we are bringing to the development process. Finally, subsequent to the quarter end, we announced a re-commitment to exploration at the Project, with additional drilling metres committed at Berry, and an optimized construction strategy based on prioritizing the construction of the Project’s infrastructure elements prior to commencing site works, and establishing the ‘best’ conditions for a successful build. Our work going forward into the summer will be focussed on continued exploration and resource growth, detailed project engineering and scheduling, and support for the ongoing Environmental Assessment. This will be supported with ongoing public consultation and the build-out of our Newfoundland based team.”

Financial Performance

The results of operations for the first quarter of 2021 are summarized below (all figures are in Canadian dollars unless otherwise noted):

Three months ended March 31, 2021:

• General and administrative expenses increased from $0.88 million to $1.71 million. The principal components of this increase are set out below:
  • Salaries and wages increased from $0.41 million to $0.65 million, reflecting higher overall compensation costs as a result of the additions made to the Company’s management team in the second half of 2020 and through the first quarter of 2021.
  • Project Financing advisory and professional fees increased from $nil to $0.40 million, resulting from advisory, legal and due diligence related costs, as the Company has commenced the process of assessing project financing alternatives.
  • Listing fees increased from $0.08 to $0.16 million, due to additional fees incurred related to the increase in market capitalization of the Company.
  • Share-based compensation expense increased from $0.01 million to $0.07 million in the quarter, resulting primarily from a $0.26 million increase related to stock options granted during the first quarter of 2021 and further vesting of prior period stock option grants, offset partially by a decrease in the deferred share unit (“DSU”) liability resulting from a decrease in the Company’s share price between year-end 2020 and March 31, 2021. A total of 809,573 options were granted in the three months ended March 31, 2021, under the Company’s annual long-term incentive plan.
• Finance income, net decreased from $0.12 million to $0.03 million, as the interest rate earned on surplus cash balances decreased substantially in late March 2020 due to COVID-19, more than offsetting the increase in surplus cash from the May 2020 equity financing.
• Deferred income tax expense/(recovery) increased from a recovery of $0.66 million to an expense of $1.00 million, as the increase in the deferred tax liability of $1.10 million in the quarter was higher than the $0.81 million increase in the deferred tax liability in the comparable period in 2020, and the $0.10 million decrease in the flow-through share tax liability in the quarter was significantly lower than the $1.47 million decrease in the comparable period in 2020.
• Capital expenditures excluding working capital movements, were $1.60 million higher than the prior year primarily as a result of increased exploration drilling completed compared to the prior year and the completion of the remaining activities related to the finalization of the FS during the quarter. Exploration drilling continued to be the largest capital expenditure of the Company during the quarter, with drilling concentrated in the Berry Zone in support of a targeted maiden mineral resource estimate for this new area in the second quarter of 2020.

Qualified Person

Disclosure of a scientific or technical nature in this news release has been approved by Mr. Tim Williams, FAusIMM, Chief Operating Officer of Marathon, Mr. Paolo Toscano, P.Eng. (Ont.), Vice President, Projects for Marathon, and Mr. James Powell, P.Eng. (NL), Vice President, Regulatory and Government Affairs for Marathon. Mr. Williams, Mr. Toscano and Mr. Powell are qualified persons under National Instrument (“NI”) 43-101. Nicholas Capps, P.Geo. (NL), Exploration Manager of Marathon, is responsible for the design and operation of exploration programs at the Valentine Gold Project. Exploration data quality assurance and control for Marathon is under the supervision of Jessica Borysenko, P.Geo (NL), GIS Manager for Marathon. Mr. Williams, Mr. Toscano, Mr. Powell, Mr. Capps and Ms. Borysenko are Qualified Persons in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and have approved the technical content of this MD&A. Marathon’s mineral resources and mineral reserves have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) and in accordance with the requirements of NI 43-101. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Mineral resources are reported inclusive of mineral reserves. Information on data verification performed on, and other scientific and technical information relating to, the Valentine Gold Project are contained in Marathon’s Annual Information Form (“AIF”) for the year ended December 31, 2020 and the current technical report for the Valentine Gold Project prepared in accordance with NI 43-101 titled “NI 43-101 Technical Report & Feasibility Study on the Valentine Gold Project, Newfoundland and Labrador, Canada” prepared by Ausenco Engineering Canada Inc. with an effective date of April 15, 2021 (the “2021 Valentine Technical Report”). The AIF and the 2021 Valentine Technical Report are available at www.sedar.com.

About Marathon

Marathon is a Toronto based gold company advancing its 100%-owned Valentine Gold Project located in the central region of Newfoundland and Labrador, one of the top mining jurisdictions in the world. The Project comprises a series of five mineralized deposits along a 20-kilometre system. An April 2021 Feasibility Study outlined an open pit mining and conventional milling operation over a thirteen-year mine life with a 31.5% after-tax rate of return. The Project has estimated Proven Mineral Reserves of 1.40 Moz (29.68 Mt at 1.46 g/t) and Probable Mineral Reserves of 0.65 Moz (17.38 Mt at 1.17 g/t). Total Measured Mineral Resources (inclusive of the Mineral Reserves) comprise 1.92 Moz (32.59 Mt at 1.83 g/t) with Indicated Mineral Resources (inclusive of the Mineral Reserves) of 1.22 Moz (24.07 Mt at 1.57 g/t). Additional Inferred Mineral Resources are 1.64 Moz (29.59 Mt at 1.72 g/t Au). Please see Marathon’s Annual Information Form for the year ended December 31, 2020 and other filings made with Canadian securities regulatory authorities and available at www.sedar.com for further details and assumptions relating to Marathon and the Valentine Gold Project.