Marathon Gold Corporation (TSX: MOZ) announces its financial results for the second quarter ending June 30, 2021 and provides an update on the Company’s activities at the Valentine Gold Project located in central Newfoundland.

Second Quarter Highlights

• On April 21, 2021, 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 through mid-2022. The Company also commenced a Reverse Circulation drill program of approximately 8,000 metres for resource reconciliation and grade control at the Leprechaun and Marathon Deposits;

• The Company signed a Socio-Economic Agreement with the Qalipu Mi’kmaq First Nation, establishing a framework for a long-term positive working relationship between the Company and Qalipu over the life of the mine;
• The Company concluded a Memorandum of Understanding with Miawpukek First Nation providing a process of ongoing engagement and consultation between the Company and Miawpukek;
• Consistent with the Environmental Assessment process, the Company received Information Requirements from both the federal and provincial regulators pursuant to the Project’s Environmental Impact Statement filed on September 2020. Responses to all federal requirements were submitted during the quarter, and provincial government information requirements have been submitted subsequent to the quarter;
• On May 27, 2021, the Company closed a private placement financing for gross proceeds of $50.4 million consisting of 14,373,101 common shares at $2.45 per common share and 4,888,629 flow-through common shares at $3.10 per flow-through common share;
• Subsequent to the end of the quarter, the Company entered into an exclusive non-binding Indicative Term Sheet with Sprott Resource Lending Corp. for a senior secured project financing facility of US$185 million;
• The Company’s June 30, 2021 cash balance of $107.5 million leaves Marathon well positioned to execute on its permitting, development, and exploration activities at the Valentine Gold Project through to a targeted construction decision in the second half of 2021.

Matt Manson, President and CEO commented: “During the second quarter we continued to make important progress in our development work for the Valentine Gold Project in each of our priority areas of environmental assessment, community engagement and engineering. We announced a highly encouraging maiden mineral resource estimate for the new Berry Deposit, and recommitted to significant, ongoing exploration work. At the same time, we strengthened our balance sheet with a successful equity placement and gave guidance to our contemplated debt facility for mine project financing. All of this sets the stage for the second half of the year, during which we expect to see the completion of our environmental assessment process ahead of construction ground-breaking in the new year.” Mr. Manson continued: “Marathon’s strong quarter-end treasury of $107.5 million reflects a series of carefully executed financings undertaken over the last 24 months. We would like to remind holders of the share-purchase warrants issued with an exercise price of $1.60 at the time of the September 2019 financing of their scheduled expiry on September 30, 2021. The full exercise of these warrants is expected to yield an additional $12.7 million in cash proceeds to the Company.”

Financial Performance

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

Three months ended June 30, 2021:

• General and administrative expenses increased from $2.27 million to $2.49 million. The principal components of this increase are set out below:
  • Salaries, wages, and benefits expenses increased from $0.53 million to $0.62 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 $0.57 million, resulting from advisory, legal and due diligence related costs, as the Company commenced the process of assessing project financing alternatives in the fourth quarter of 2020.
  • Share-based compensation expense decreased from $0.85 million to $0.77 million in the quarter, resulting from a $0.52 million decrease in stock option expense as there was less vesting in the second quarter of 2021 compared to the same period in the prior year, offset partially by an increase in deferred share unit (“DSU”) expense of $0.36 million resulting in an increase in the Company’s share price during the second quarter of 2021 and an $0.09 million increase in restricted share unit (“RSU”) expense resulting from additional vesting and an increase in the Company’s share price during the second quarter of 2021.
• Finance expense/(income), net increased from income of $0.04 million to expense of $0.03 million, as a result of a $0.09 million increase in other finance expense, as a portion of the share issuance costs related to the May 2021 private placement financing were allocated to the flow-through share tax liability, partially offset by a $0.03 increase in net income, as the surplus cash balance and the interest rate earned on it increased during the second quarter of 2021.
• Deferred income tax expense/(recovery) increased from a recovery of $0.19 million to an expense of $0.85 million, as the increase in the deferred tax liability of $0.92 million in the quarter was significantly higher than the $0.08 million increase in the deferred tax liability in the comparable period in 2020, and the $0.07 million decrease in the flow-through share tax liability in the second quarter of 2021 was lower than the $0.27 million decrease in the comparable period in 2020.
• Capital expenditures excluding working capital movements, were $1.95 million higher than the prior year primarily as a result of increased exploration drilling completed compared to the prior year and increased detailed engineering activities as the Company Progresses towards construction. Exploration drilling continued to be the largest capital expenditure of the Company during the second quarter of 2021, with drilling concentrated in the Berry Deposit in support of further delineation of the ore body and resource growth.

Six months ended June 30, 2021:

• General and administrative expenses increased from $3.15 million to $4.20 million. The principal components of this increase are set out below:
  • Salaries, wages, and benefits expenses increased from $0.94 million to $1.27 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 half of 2021.
  • Project Financing advisory & professional fees increased from $nil to $0.98 million, resulting from advisory, legal, and due diligence related costs, as the Company commenced the process of assessing project financing alternatives in the fourth quarter of 2020.
  • Other expense increased from $0.15 million to $0.27 million, due to increased office, information technology, and insurance expenses related to growth in headcount and corporate activities as the Company continues to progress towards construction.
  • Investor relations and corporate communication expenses decreased from $0.22 million to $0.15 million, resulting from a reduction in in-person investor relations initiatives and corporate communication consulting fees in the first half of 2021 compared to the same period in the prior year.

• Finance expense/(income), net increased from income of $0.15 million to expense of $0.01 million, as a result of a $0.09 million increase in other finance expense, as a portion of the share issuance costs related to the May 2021 private placement financing were allocated to the flow-through share tax liability. In addition, interest income decreased $0.05 million as the interest rate earned on surplus cash balances during the six months ended June 30, 2021, was lower than the comparable period in 2020.
• Deferred income tax expense/(recovery) increased from a recovery of $0.85 million to an expense of $1.85 million, as the increase in the deferred tax liability of $2.01 million in the six months ended June 30, 2021 was significantly higher than the $0.89 million increase in the deferred tax liability in the comparable period in 2020, and the $0.17 million decrease in the flow-through share tax liability in the six months ended June 30, 2021 was significantly lower than the $1.74 million decrease in the comparable period in 2020.
• Capital expenditures, excluding working capital movements, were $3.55 million higher than the prior year primarily as a result of increased exploration drilling completed and increased detailed engineering activities as the Company progresses towards to construction. Exploration drilling continued to be the largest capital expenditure of the Company during the first half of 2021, with drilling concentrated in the Berry Deposit in support of the maiden mineral resource estimate for this new area. This resource estimate was released during the second quarter of 2021 and drilling is now focused on further delineation of the ore body and resource growth.

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.