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Marathon Gold Announces 2022 Fourth Quarter and Year-End Results

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Marathon Gold Announces 2022 Fourth Quarter and Year-End Results

 

 

 

 

 

Marathon Gold Corporation (TSX: MOZ) announces its financial results for the fourth quarter and year ending December 31, 2022, and provides an update on the Company’s activities at the Valentine Gold Project in the central region of Newfoundland and Labrador.

 

Fourth Quarter and Full-Year Financial Results (all figures are in Canadian dollars unless otherwise noted):

  • Cash and cash equivalents at December 31, 2022 of $132.9 million;
  • Capital Expenditures of $18.5 million and $74.6 million for the three and twelve months ended December 31, 2022, respectively, as the Company commenced construction activities at the Project;
  • The Project’s cost-to-complete at October 31, 2022 was estimated at $463 million. Construction costs incurred from November 1, 2022 to the end of February 2023 were $44 million, of a total $190 million committed. The Project’s cost to complete at February 28, 2023 was estimated at $422 million, reflecting a variance trend of +$3 million related to Project insurance costs. An aggregate $1.4 million of contingency had been drawn against a total contingency reserve of $38.9 million at February 28, 2023; and
  • Net Loss of $2.1 million and $8.7 million for the three and twelve months ended December 31, 2022, respectively.

 

Full-Year 2022 Highlights

  • The Project received release from its provincial and federal Environmental Assessments in March 2022 and August 2022 respectively, marking the culmination of three years of environmental and social impact study and regulatory review. Following the receipt of key operating permits and authorizations and a construction decision by Marathon’s Board of Directors, site construction activities commenced in October 2022.
  • In July 2022, the Company released the results of an updated Mineral Resource Estimate (“MRE”) for the Project. Total Measured and Indicated Mineral Resources are 4.0 Moz Au (64.6 Mt at 1.90 g/t Au), increases of 26% in ounces, 14% in tonnes and 10% in grade compared to the previous estimate. Additional Inferred Mineral Resources are 1.1 Moz Au (20.8 Mt at 1.65 g/t). Mineral Resources are inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
  • During 2022, the Company completed 34,849 metres of exploration, condemnation and geotechnical drilling at the Project. In-fill drilling at the Berry Deposit consistently returned multiple intercepts of high-grade mineralization outside of the current Berry geological model but within the conceptual pit-shells used in the MRE, offering the potential to add mineable ounces to the Project’s mine plan.
  • During 2022, programs of prospecting and geochemical sampling identified bedrock quartz-tourmaline-pyrite veining with gold anomalies in surficial samples in the new “Eastern Arm” and “Western Peninsula” areas, demonstrating the discovery potential of the full 32 kilometre trend of the Valentine Lake Shear Zone at the Project.
  • In September 2022, the Company closed an equity financing for aggregate gross proceeds of $153.4 million.
  • In December 2022, the Company released an Updated Feasibility Study, describing a 3 pit-mine plan delivering 195,000 oz Au per annum at an All-In Sustaining Cost1 of US$1,007 per oz for the first 12 years of a 14.3 year mine life. Proven and Probable Mineral Reserves are 2.7 Moz Au (51.6 Mt at 1.62 g/t Au), with first gold scheduled for the first quarter of 2025.
  • Subsequent to the quarter-end, the Company announced an Amended and Restated US$225 million Credit Facility (the “Facility”) with Sprott Resource Corporation (Marathon news release dated January 25, 2023). A first draw of US$50 million was made on the Facility in February 2023; and
  • Subsequent to the quarter-end, the Company Exercised an option to acquire 0.5% of the 2.0% net smelter returns royalty on the Project held by Franco Nevada Corporation for US$7 million.

 

Project KPIs (at February 28, 2023)

  • Since October 2022, 184,363 hours of work have been completed at the site with zero lost time incidents and zero reportable environmental incidents;
  • 442 persons were employed directly or contracted to the Project. On the basis of voluntary declaration, 17% of the persons employed by the Company or contracted to the Project are female, 5% are Indigenous persons, 5% are visible minorities, 1% are persons with disabilities, 25% are residents of the six communities within Project’s socio-economic area of influence and 73% are residents of the province of NL;
  • Overall completion at the Project stood at 24% compared to a plan of 22%. Engineering progress stood at 67%, procurement at 46% and construction at 7%;
  • 1.03 mtonnes of waste rock had been mined at the Leprechaun pit for construction purposes. Since the middle of February 2023, mining productivity has averaged 11,190 tonnes per day, successfully supporting ongoing civils work, including construction of haul roads and the Project’s process plant site; and
  • The Project remains on schedule for ore delivered to the mill by the end of 2024 and first gold in the first quarter of 2025.

 

Matt Manson, President, and CEO commented: “2022 was a year of milestones for Marathon and the Valentine Gold Project. First and foremost, we successfully completed full federal and provincial Environmental Assessments and received our project development authorisations, a significant achievement for a new greenfield mining project like Valentine. This was achieved on a foundation of strong support for the Project within the Province of Newfoundland and Labrador, and in particular amongst the communities of central Newfoundland. In July we published our largest and best quality Mineral Resource Estimate to date. This was followed by an updated Feasibility Study by year-end, which presented what is now a three-pit mine plan with higher gold production and a longer mine life. We arranged significant debt and equity financings, which allowed our construction to commence in October with financial certainty and on schedule. All of this was achieved in the face of a challenging economic and capital markets environment, with inflationary and labour pressures continuing to impact the global mining industry. Nevertheless, we ended the year with a strong balance sheet and our construction activities well advanced. Valentine is on track to be the largest gold project in one of the world’s best mining jurisdictions, and a company-making asset for Marathon and its shareholders.”

 

________________________
1 Denotes a “specified financial measure” within the meaning of National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators (“NI 52-112”). See note on “Non-IFRS Financial Measures”.

Financial Performance

 

The results of operations for the three and twelve months ended December 31, 2022 are summarized below (all figures are in Canadian dollars unless otherwise noted):

 

(Stated in thousands of Canadian dollars)     Three Months Ended
December 31,
  For the Years Ended
December 31,
      2022   2021   2022   2021
EXPENSES                                  
General and administrative expense     $ 3,184     $ 2,921       8,365     $ 9,703  
Finance (income)/expense, net       (815 )     (148 )     585       (250 )
Other income, net       (55 )     (55 )     (177 )     (177 )
Loss before tax     $ 2,314     $ 2,718     $ 8,773     $ 9,276  
Deferred income tax recovery       (171 )     (347 )     (104 )     (2,210 )
Net Loss     $ 2,143     $ 2,371     $ 8,669     $ 7,066  
                                   
Capital expenditures¹     $ 18,532     $ 16,400     $ 74,592     $ 41,408  

Factors affecting financial results for the three months ended December 31, 2022:

  • Capital expenditures were $2.13 million higher in the three months ended December 31, 2022 than the comparable prior year period, primarily as a result of the commencement of early works in the fourth quarter of 2022. Early works construction activities in the fourth quarter of 2022 consisted of the construction of haul roads and pads, the establishment of a temporary construction camp, tree clearing and grubbing, earthworks associated with the Project’s fresh water intake from the Victoria Reservoir, upgrades to the Project’s access road from the community of Millertown, and replacement of the Victoria River Bridge; and
  • General and administrative expenses increased from $2.92 million in the three months ended December 31, 2021 to $3.18 million in the three months ended December 31, 2022.

 

Factors affecting financial results for the twelve months ended December 31, 2022:

  • Capital expenditures were $33.18 million higher in the twelve months ended December 31, 2022 than the comparable prior year period, primarily as a result of an increase in project pre-construction and early works capital spending compared to the prior year. Project pre-construction capital spending commenced in 2021 and included detailed engineering and consulting fees, milestone payments related to the procurement of a permanent camp, deposits on drilling and mobile equipment, access road maintenance and NL Hydro contribution payments;
  • General and administrative expenses decreased from $9.70 million in the twelve months ended December 31, 2021 to $8.37 million in the twelve months ended December 31, 2022, primarily due to a decrease in salaries and wages being expensed, and lower share-based compensation expense;
  • Finance (income)/expense, net change from income of $0.25 million to expense of $0.59 million, primarily as a result of $2.32 million in upfront fees and standby fees related to a Master Lease Agreement, offset partially by an increase in interest income from $0.34 million to $2.05 million; and
  • Deferred income tax recovery decreased from $2.21 million to $0.10 million, as the reassessment of temporary differences associated with Mineral Exploration and Evaluation assets made in 2021 was not required in the current period, partially offset by a decrease in the change in flow-through share tax liability of $3.18 million compared to $0.24 million in the comparable period in 2021.

 

Qualified Persons

 

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, Mr. James Powell, P.Eng. (NL), Vice President, Regulatory and Government Affairs for Marathon and Mr. David Ross, P.Geo. (NL), Vice President of Geology and Exploration for Marathon. Mr. Williams, Mr. Toscano, Mr. Powell and Mr. Ross are qualified persons under National Instrument (“NI”) 43-101. Mr. Roy Eccles, P.Geo. (NL), of APEX Geoscience Ltd. is a Qualified Person for purposes of NI 43-101, is independent of Marathon and the Valentine Gold Project, and has reviewed and takes responsibility for the updated 2022 MRE prepared by John T. Boyd Company.

 

Non-IFRS Financial Measures

 

The Company has included certain references in this document that constitute “specified financial measures” within the meaning of National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators, such as, for example, All-In Sustaining Cost (“AISC”). None of such specified measures is a standardized financial measure under International Financial Reporting Standards (“IFRS”) and such measures might not be comparable to similar financial measures disclosed by other issuers. Such specified measures are intended to provide additional information to the reader and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Certain non-IFRS financial measures used in this news release and common to the gold mining industry are defined below.

 

AISC is reflective of all of the expenditures that are required to produce an ounce of gold from operations. AISC reported in the Updated Feasibility Study includes total cash costs, sustaining capital, expansion capital and closure costs, but excludes corporate general and administrative costs and salvage. AISC per ounce is calculated as AISC divided by payable gold ounces.

 

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 32-kilometre system. A December 2022 Updated Feasibility Study outlined an open pit mining and conventional milling operation producing 195,000 ounces of gold a year for 12 years within a 14.3-year mine life. The Project was released from federal and provincial environmental assessment in 2022 and construction commenced in October 2022. The Project has estimated Proven Mineral Reserves of 1.43 Moz (23.36 Mt at 1.89 g/t) and Probable Mineral Reserves of 1.27 Moz (28.22 Mt at 1.40 g/t). Total Measured Mineral Resources (inclusive of the Mineral Reserves) comprise 2.06 Moz (29.23 Mt at 2.19 g/t) with Indicated Mineral Resources (inclusive of the Mineral Reserves) of 1.90 Moz (35.40 Mt at 1.67 g/t). Additional Inferred Mineral Resources are 1.10 Moz (20.75 Mt at 1.65 g/t Au). Please see the NI 43-101 Technical Report “Valentine Gold Project, NI 43-101 Technical Report and Feasibility Study” effective November 30, 2022, Marathon’s Annual Information Form for the year ended December 31, 2022 and other filings made with Canadian securities regulatory authorities available at www.sedar.com for further details and assumptions relating to the Valentine Gold Project.

 

Posted March 24, 2023

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