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Marathon Gold Announces 2021 Third Quarter Results

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Marathon Gold Announces 2021 Third Quarter Results

 

 

 

 

 

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

 

Third Quarter Highlights

 

  • At September 30, 2021, the Company had cash and short term investments of $104.8 million, leaving it well positioned to execute on its permitting, development, and exploration activities at the Valentine Gold Project;
  • At September 30, 2021, the Company had completed 54,507 metres of its total full-year drilling budget of approximately 70,000 metres. A total of 44,240 metres were drilled in the Berry Deposit, 3,639 metres in the Victory Deposit, 2,885 metres in the Sprite Deposit and 3,744 metres in the Marathon Waste Rock Facility area. 12,141 metres of Reverse Circulation drilling in support of validation of the mineral resource model in the Marathon and Leprechaun deposits had also been completed;
  • During the quarter Marathon made significant progress in engineering and procurement activities, with construction packages valued at C$118 million awarded in the areas of mobile mining equipment, drilling equipment, earthworks, camp accommodations, camp services, bridge repair, security, and tree cutting. At September 30, 2021, 154 persons were employed or contracted to Marathon and/or the Project on a full-time basis, of which 86% are residents of the province of Newfoundland and Labrador (“NL”);
  • On July 20, 2021 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;
  • Subsequent to the end of the quarter, the Company was notified that the Department of Environment and Climate Change for Newfoundland and Labrador had completed its review of the Environmental Impact Study (“EIS”), and additional information is being requested. As noted in a news released issued by the Company dated November 4, 2021, the extended regulatory process will require a rescheduling of Marathon’s planned development timeline, which is currently estimated to be an impact of approximately 6 months;
  • Subsequent to the end of the quarter, the Company announced organizational changes reflecting the ongoing transition from explorer to project developer and miner. Team development will continue steadily over the next several months as the Company looks forward to project construction activities commencing next year.

 

Matt Manson, President and CEO commented: “During the third quarter we made steady progress in each of the important areas of engineering, procurement, team development and project financing in support of a potential construction decision at the Valentine Gold Project. We reported regular batches of positive drill results from the Berry Deposit through the quarter, showing this important new discovery to be “bulking-up” promisingly over a broad area. This work will continue into the new year to support an updated mineral resource estimate later in 2022. We also continued our engagement with the ongoing Environmental Assessments (“EAs”) at both the provincial and federal levels. Substantial effort has been applied to facilitate the technical reviews of the Project’s EIS currently underway with regulators, as well as to conduct our ongoing environmental baseline data acquisition and impact assessment, to engage with communities and First Nations, and to develop our operational social and environmental management plans.

 

We were therefore disappointed to receive notification of an additional round of review comments from the provincial regulator on October 29, 2021, which will unavoidably extend the timeline of the NL EA and consequently our project development timeline. However, as we noted in our update of November 4th, the additional review comments relate to existing areas of assessment, and we do not currently anticipate this extra work will require the acquisition of additional environmental or social data. The Valentine Gold Project will be an important new gold mine and economic engine in the central region of Newfoundland and Labrador, and our exploration and development work in support of this vision continues”.

 

Financial Performance

 

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

 

 

(Stated in thousands of Canadian dollars)     Three Months Ended
September 30,
  Nine Months Ended
September 30,
      2021   2020   2021   2020
EXPENSES                                  
    General and administrative expense     $ 2,587     $ 1,619       6,782     $ 4,766  
    Exploration expense       23       25       23       25  
    Finance income, net       (104 )     (29 )     (102 )     (183 )
    Other income       (50 )     (33 )     (145 )     (112 )
Loss before tax     $ 2,456     $ 1,582     $ 6,558     $ 4,496  
    Deferred income tax (recovery)/expense       (3,708 )     499       (1,863 )     (352 )
Net (Income)/Loss     $ (1,252 )   $ 2,081     $ 4,695     $ 4,144  
                                   
Capital expenditures     $ 14,699     $ 5,484     $ 25,008     $ 12,250  

 

 

Three months ended September 30, 2021:

 

  • General and administrative expenses increased from $1.62 million to $2.59 million. The principal components of this increase are set out below:
    • Salaries, wages, and benefits expenses increased from $0.47 million to $0.73 million, reflecting higher overall compensation costs as a result of the additions made to the Company’s management team in the fourth quarter of 2020 and throughout the first nine months of 2021.
    • Project Financing advisory and professional fees increased from $nil to $0.70 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.
    • Investor relations and corporate communications decreased from $0.18 million to $0.05 million, due mainly to a decrease in expenditures related to corporate communications and promotional items.
    • Share-based compensation expense increased from $0.59 million to $0.83 million in the quarter, resulting from a $0.48 million increase related to the granting of stock options in the quarter to the Board of Directors that vest immediately, and a $0.06 million increase related to the vesting of restricted share units (“RSUs”) granted during 2021, offset partially by a $0.30 million decrease in deferred share unit (“DSU”) expense resulting from a decrease in the Company’s share price during the third quarter of 2021.
  • Finance income, net increased from income of $0.03 million to expense of $0.10 million, as a result of an increase in interest income, as the surplus cash balance and the interest rate earned on it was higher in the third quarter of 2021 compared to the same period in the prior year.
  • Deferred income (recovery)/expense increased from an expense $0.50 million to a recovery of $3.71 million, mainly due to management’s reassessment of the temporary difference associated with Mineral Exploration and Evaluation assets.
  • Capital expenditures excluding working capital movements, were $9.22 million higher than the prior year quarter primarily as a result of project construction capital spending commencing in the third quarter of 2021, including procurement of a permanent camp and initial payments associated with the construction of the powerline by NL Hydro. In addition, there was increased exploration drilling completed compared to the prior year resulting from increased Berry Deposit drilling, in support of further delineation of the ore body and resource growth.

 

Nine months ended September 30, 2021:

 

  • General and administrative expenses increased from $4.77 million to $6.78 million. The principal components of this increase are set out below:
    • Salaries, wages, and benefits expenses increased from $1.40 million to $2.00 million, reflecting higher overall compensation costs as a result of the additions made to the Company’s management team in the fourth quarter of 2020 and throughout the first nine months of 2021. For additional details regarding the changes to the Company’s management team during the quarter, see the “Corporate Developments” section below.
    • Project Financing advisory & professional fees increased from $nil to $1.68 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 $0.25 million to $0.40 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 $0.39 million to $0.20 million, resulting from a decrease in corporate promotional items expenditures and corporate communication consulting fees in the first nine months of 2021 compared to the same period in the prior year.
  • Finance income, net decreased from income of $0.18 million to $0.10 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, offset partially by a $0.02 million increase in interest income as the surplus cash balance for the nine months ended September 30, 2021, was higher than the comparable period in 2020.
  • Deferred income tax (recovery)/expense increased from a recovery of $0.35 million to $1.86 million, mainly due to management’s reassessment of the temporary difference associated with Mineral Exploration and Evaluation assets.
  • Capital expenditures, excluding working capital movements, were $12.76 million higher than the prior year primarily as a result of project construction capital spending commencing in the third quarter of 2021, including procurement of a permanent camp and initial payments associated with the construction of the powerline by NL Hydro. In addition, there was increased exploration drilling completed compared to the prior year, 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 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 and have approved the technical content of this MD&A. Marathon’s mineral resources and mineral reserves have been estimated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum 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 Amended and Restated 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 Amended and Restated 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.

 

Posted November 10, 2021

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