Marathon Gold Corporation (“Marathon” or the “Company”;
TSX: MOZ) today announces its financial results for the
first quarter ending March 31, 2022 and provides an update on the
Company’s activities at the Valentine Gold Project (the “Project”)
in the central region of Newfoundland and Labrador (“NL”).
First Quarter Highlights
- At March 31,
2022 the Company had cash and cash equivalents of $72.4
million, leaving it well positioned to execute on its
permitting, development, and exploration activities at the
Project;
-
On March 31, 2022, the Company closed a US$185 million term
loan credit facility with Sprott Private Resource Lending
II (Collector-2) LP for the construction, development and working
capital requirements of the Project;
- On March 17,
2022, the Company was notified that the Newfoundland and Labrador
Minister of Environment and Climate Change had completed its review
of the Project’s Environmental Impact Statement (“EIS”) and
concurrently, that the Project had received approval by the Cabinet
of the Government of NL. Marking completion of the
provincial Environmental Assessment (“EA”) process;
- On March 16,
2022, the Company was notified that the Impact Assessment Agency of
Canada had completed its technical review of the Project’s EIS. The
Federal EA is approaching a ministerial decision
and site-specific permitting has commenced;
-
Purchased for cancellation a historical 7.5% net profit
interest royalty (the “NPI Royalty”) that covers certain
mineral resource areas at the Project;
-
Incurred capital expenditures of $13.4 million in
the period, primarily related to pre-construction capital spending,
including detailed engineering and consulting fees, milestone
payments related to the procurement of a permanent camp, access
road upgrades and initial deposits on drilling and mobile
equipment;
-
Completed 12,530 metres of exploration drilling in
62 holes from a total full-year 50,000 metre exploration drilling
program. 9,810 metres were drilled in the Berry Deposit and 2,720
metres in the Victory Deposit; and
-
Strengthened the Company’s management team with
the appointment of Ms. Julie Robertson as Chief Financial Officer
of the Company, bringing extensive experience in capital projects
financial management, planning, and control.
Matt Manson, President, and CEO commented: “The
first quarter of 2022 ended with important achievements for
Marathon in the permitting and financing of the Valentine Gold
Project. Over two days in mid-March we were very pleased to report
the emphatic approval in of the Project at the Newfoundland and
Labrador cabinet, marking the completion of our provincial EA
process, and the completion of the technical and public review
phase under our federal EA process. This has allowed us to guide to
the commencement of early works in the third quarter and, subject
to a formal board construction decision, full construction
mobilization by year-end. Then, at the end of March, we announced
the closing of our previously announced US$185 million term loan
with Sprott Resource Lending, which will comprise the debt portion
of our project financing.” Mr. Manson continued: “Alongside our
project permitting and financing achievements, and the ongoing
engineering and procurement work in support of our project-build,
we will be updating the Project’s Mineral Resource estimate by
mid-year, which will incorporate 100,000 metres of drilling at the
Berry Deposit and the results of our 2021 Reverse Circulation drill
program. This new estimate is expected to be both larger, with an
expected increase in open-pit Measured and Indicated Resources, and
more robust. We will then demonstrate the impact of this new
estimate in an updated technical report, scheduled for the fourth
quarter, which will reflect a new, longer-term vision for the
Project’s mine plan, the current cost environment, a higher gold
price environment, and our settled development schedule. Taken
together, this work will present a major new gold mining project
that is well conceived, well engineered, well financed, and fully
permitted, with clear cost and schedule-to-complete objectives, and
a mineral resource that is both tested and still growing. Our
treasury at quarter-end was strong, at $72.4 million, and we
continue to enjoy all the advantages of building a mining team and
business located in the central region of Newfoundland and
Labrador.”
Financial Performance
The results of operations for the first quarter
2022 are summarized below (all figures are in Canadian dollars
unless otherwise noted):
(Stated in thousands of
Canadian dollars) |
|
|
For the Three Months EndedMarch
31, |
|
|
|
2022 |
|
2021 |
EXPENSES |
|
|
|
|
|
|
|
|
|
General and administrative expense |
|
|
$ |
2,325 |
|
|
$ |
1,709 |
|
Finance income, net |
|
|
|
(100 |
) |
|
|
(26 |
) |
Other income |
|
|
|
(42 |
) |
|
|
(36 |
) |
Loss before tax |
|
|
|
2,183 |
|
|
|
1,647 |
|
Deferred income tax expense |
|
|
|
1,622 |
|
|
|
995 |
|
Net Loss |
|
|
$ |
3,805 |
|
|
$ |
2,642 |
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
$ |
13,352 |
|
|
$ |
5,595 |
|
Factors affecting financial results for the
three months ended March 31, 2022:
- General and
administrative expenses increased from $1.71 million to $2.33
million due to an increase in Project Financing advisory &
professional fees and Share-based compensation expense, partially
offset by a decrease in Salaries and wages expense, as
pre-construction costs are being capitalize.
- Deferred income
tax (recovery)/expense increased from $1.00 million to $1.62
million, as the increase in the deferred tax liability of $3.90
million in the first quarter of 2022 was higher than the $1.10
million increase in the deferred tax liability in the comparable
period in 2021. This was partially offset by a higher decrease in
the flow-through share tax liability in the first quarter of 2022
of $2.28 million, compared to $0.10 million in the comparable
period in 2021.
- Capital
expenditures excluding working capital movements, were $7.76
million higher in the first quarter of 2022 than the prior year
primarily because of project pre-construction capital spending,
which commenced in the third quarter of 2021 and continued into the
first quarter of 2022. Pre-construction capital spending in the
first quarter of 2022 included detailed engineering and consulting
fees, milestone payments related to the procurement of a permanent
camp, road maintenance and initial deposits on drilling
equipment.
2022 Exploration Drilling Program
Marathon’s 2022 exploration drilling program
commenced in January 2022 with a full-year plan of 50,000 metres of
diamond drilling at a total budget of $12.0 million. The components
of the 2022 exploration drilling program are as follows:
- 38,000 – 40,000
metres of drilling in the Berry Deposit, designed to increase drill
density over the 1.5 kilometres of mineralization previously
delineated and for further resource expansion; and
- 10,000 – 12,000
metres of drilling at the Victory Deposit, with a view to potential
resource expansion.
The 2022 program will also include a significant
prospecting program along the approximately 13 kilometres of
geological contact at the Valentine Lake Shear Zone between the
Victory Deposit and the eastern boundary of the property. The above
noted drilling and prospecting programs will also be supported by
additional structural geological and geophysical surveys, which
will be utilized to better understand the setting of the five
currently known Project mineral deposits.
At March 31, 2022, the Company had completed
12,530 metres of its total full-year plan of 50,000 metres. A total
of 9,810 metres were drilled in the Berry Deposit and 2,720 metres
in the Victory Deposit. All assay results from the 2022 exploration
drill program remain outstanding. As of April 21, 2022 the Company
had released results from a total of approximately 100,000 metres
of drilling at the Berry Deposit and a total of approximately
19,000 metres of drilling at the Victory Deposit (see Marathon news
release dated April 21, 2022). Results from the Berry Deposit
continued to show multiple long intercepts of high-grade
mineralization, and the recent drilling at the Victory Deposit has
demonstrated its potential to host additional large-scale
mineralization.
2022 Development Activity
Marathon’s project development activities for
the remainder of 2022 will primarily be focused in the following
key areas:
- Completion of
the 2022 Valentine Gold Project exploration program;
- Release from the
federal EA process;
- Completion of
ongoing detailed engineering, procurement and site-specific
permitting;
- Commencement of
site early works, scheduled for the third quarter, supporting full
site mobilization by the end of the year;
- Completion of an
update to the Project’s Mineral Resource estimate, inclusive of
updates to the Marathon, Leprechaun, Berry and Victory
Deposits;
- Completion of a
new NI 43-101 technical report for the Project, which will
constitute an updated Feasibility Study;
- Completion of a
24,000 metre RC drill program at the Leprechaun and Marathon
Deposits, aimed at establishing a grade control dataset ahead of
the commencement of pre-stripping activities;
- Ongoing
stakeholder engagement and consultation activity;
- Continued
capacity building and development of the project execution team;
and
- Ongoing support for project
financing activities.
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, and Mr. James
Powell, P.Eng. (NL), Vice President, Regulatory and Government
Affairs for Marathon, and Mr. David Ross, P.Geo. (Ont), Director of
Mineral Resources for Marathon Gold Corporation. 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. Ross, 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 news release. Marathon’s mineral
resources and mineral reserves have been estimated 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, 2021 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 (TSX:MOZ) 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, 2021 and other filings made with
Canadian securities regulatory authorities and available at
www.sedar.com for further details and assumptions relating to the
Valentine Gold Project.
For more information, please
contact:
Amanda MalloughSenior Associate, Investor RelationsTel: 416
855-8202amallough@marathon-gold.com |
Matt MansonPresident & CEOmmanson@marathon-gold.com |
Julie RobertsonCFOjrobertson@marathon-gold.com |
To find out more information on Marathon Gold
Corporation and the Valentine Gold Project, please visit
www.marathon-gold.com.
Cautionary Statement Regarding
Forward-Looking Information
Certain information contained in this news
release, constitutes forward-looking information within the meaning
of Canadian securities laws (“forward-looking statements”). All
statements in this news release, other than statements of
historical fact, which address events, results, outcomes or
developments that Marathon expects to occur are forward-looking
statements. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, or include words such as “expects”, “anticipates”,
“plans”, “believes”, “estimates”, “considers”, “intends”,
“targets”, or negative versions thereof and other similar
expressions, or future or conditional verbs such as “may”, “will”,
“should”, “would” and “could”. We provide forward-looking
statements for the purpose of conveying information about our
current expectations and plans relating to the future, and readers
are cautioned that such statements may not be appropriate for other
purposes. More particularly and without restriction, this news
release contains forward-looking statements and information about
the FS and the results therefrom (including IRR, NPV5%, Capex, FCF,
AISC and other financial metrics), the realization of mineral
reserve and mineral resource estimates, the future financial or
operating performance of the Company and the Project, capital and
operating costs, the ability of the Company to obtain all
government approvals, permits and third-party consents in
connection with the Company’s exploration, development and
operating activities, the potential impact of COVID-19 on the
Company, the Company’s ability to successfully advance the Project
and anticipated benefits thereof, economic analyses for the
Valentine Gold Project, processing and recovery estimates and
strategies, future exploration and mine plans, objectives and
expectations and corporate planning of Marathon, future
environmental impact statements and the timetable for completion
and content thereof and statements as to management's expectations
with respect to, among other things, the matters and activities
contemplated in this news release.
Forward-looking statements involve known and
unknown risks, uncertainties and assumptions and accordingly,
actual results and future events could differ materially from those
expressed or implied in such statements. You are hence cautioned
not to place undue reliance on forward-looking statements. In
respect of the forward-looking statements concerning the
interpretation of exploration results and the impact on the
Project’s mineral resource estimate, the Company has provided such
statements in reliance on certain assumptions it believes are
reasonable at this time, including assumptions as to the continuity
of mineralization between drill holes. A mineral resource that is
classified as “inferred” or “indicated” has a great amount of
uncertainty as to its existence and economic and legal feasibility.
It cannot be assumed that any or part of an “indicated mineral
resource” or “inferred mineral resource” will ever be upgraded to a
higher category of mineral resource. Investors are cautioned not to
assume that all or any part of mineral deposits in these categories
will ever be converted into proven and probable mineral
reserves.
By its nature, this information is subject to
inherent risks and uncertainties that may be general or specific
and which give rise to the possibility that expectations,
forecasts, predictions, projections or conclusions will not prove
to be accurate, that assumptions may not be correct and that
objectives, strategic goals and priorities will not be achieved.
Factors that could cause future results or events to differ
materially from current expectations expressed or implied by the
forward-looking statements include risks and uncertainties relating
to the interpretation of drill results, the geology, grade and
continuity of mineral deposits and conclusions of economic
evaluations; uncertainty as to estimation of mineral resources;
inaccurate geological and metallurgical assumptions (including with
respect to the size, grade and recoverability of mineral
resources); the potential for delays or changes in plans in
exploration or development projects or capital expenditures, or the
completion of feasibility studies due to changes in logistical,
technical or other factors; the possibility that future
exploration, development, construction or mining results will not
be consistent with the Company’s expectations; risks related to the
ability of the current exploration program to identify and expand
mineral resources; risks relating to possible variations in grade,
planned mining dilution and ore loss, or recovery rates and changes
in project parameters as plans continue to be refined; operational
mining and development risks, including risks related to accidents,
equipment breakdowns, labour disputes (including work stoppages and
strikes) or other unanticipated difficulties with or interruptions
in exploration and development; risks related to the inherent
uncertainty of production and cost estimates and the potential for
unexpected costs and expenses; risks related to commodity and power
prices, foreign exchange rate fluctuations and changes in interest
rates; the uncertainty of profitability based upon the cyclical
nature of the mining industry; risks related to failure to obtain
adequate financing on a timely basis and on acceptable terms or
delays in obtaining governmental or other stakeholder approvals or
in the completion of development or construction activities; risks
related to environmental regulation and liability, government
regulation and permitting; risks relating to the Company’s ability
to attract and retain skilled staff; risks relating to the timing
of the receipt of regulatory and governmental approvals for
continued operations and future development projects; political and
regulatory risks associated with mining and exploration; risks
relating to the potential impacts of the COVID-19 pandemic on the
Company and the mining industry; changes in general economic
conditions or conditions in the financial markets; and other risks
described in Marathon’s documents filed with Canadian securities
regulatory authorities, including the Annual Information Form for
the year ended December 31, 2021.
You can find further information with respect to
these and other risks in Marathon’s Annual Information Form for the
year ended December 31, 2021 and other filings made with Canadian
securities regulatory authorities available at www.sedar.com. Other
than as specifically required by law, Marathon undertakes no
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement is
made, or to reflect the occurrence of unanticipated events, whether
as a result of new information, future events or results
otherwise.
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