Marathon Gold Corporation (“Marathon” or the “Company”; TSX: MOZ)
today announces its financial results for the three months ended
March 31, 2023, 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 Financial Results
(all figures are in Canadian dollars unless otherwise noted):
- Cash and
cash equivalents at March 31, 2023 of $130 million;
- Capital
Expenditures of $61 million for the three months ended
March 31, 2023, including $52 million related to construction of
the Project;
- The
Project’s cost-to-complete, including contingency, was
estimated at $463 million at October 31, 2022 and C$403 million at
March 31, 2023, reflecting a variance trend of +$4 million on the
estimated cost at completion. Project construction costs incurred
from November 1, 2022 to the end of March 2023 were $64 million, of
a total $144 million committed. An aggregate $2.6 million of
contingency had been drawn against a total contingency reserve of
$38.9 million at March 31, 2023; and
- Net
Loss of $0.9 million for the three months ended March 31,
2023.
First Quarter 2023
Highlights
- On January 25,
2023, the Company announced an Amended and Restated US$225
million Credit Facility (the “Facility”) with Sprott
Resource Corporation. A first draw of US$50 million was made on the
Facility in February 2023;
- On January 25,
2023, the Company Exercised an option to acquire 0.5% of
the 2.0% net smelter returns royalty (“NSR”) on the
Project held by Franco Nevada Corporation (“FNV”) for US$7
million;
- Subsequent to
the end of the quarter, the Company announced that it has completed
a Socio-Economic Agreement with the Miawpukek First Nation;
and
- Subsequent to
the end of the quarter, the Company announced that Mr. George
Faught, Chairperson of the Board of Directors of Marathon, has
decided not to run for re-election at the upcoming annual general
and special meeting of shareholders (“AGM") so that his position on
the Board is available to a new director whose election would
result in the Company satisfying its Board gender diversity target
of 30%. Ms. Teodora Dechev has been nominated by the Company to
stand for election as a new independent director at the AGM. It is
currently proposed that Mr. Peter MacPhail would be appointed the
new independent Chairperson of the Board, subject to his
re-election at the AGM and subsequent approval by the Board.
Project KPIs (at March 31,
2023)
- In the first
quarter of 2023, 149,289 hours of work have been completed at the
site with zero lost time incidents and
zero reportable environmental incidents;
- 440
persons were employed directly or contracted to the
Project. On the basis of voluntary declaration, 14% of the persons
employed by the Company or contracted to the Project are female, 5%
are Indigenous persons, 4% are visible minorities, 1% are persons
with disabilities, 24% are residents of the six communities within
Project’s socio-economic area of influence and 72% are residents of
the province of NL;
- Overall
completion at the Project stood at 27%
compared to a plan of 26%. Engineering progress stood at 71%,
procurement at 51% and construction at 9%;
- 1.35
mtonnes of waste rock had been mined at the Leprechaun pit
for construction purposes. In the month of March 2023, mining
productivity has averaged 11,815 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.
Financial Performance
The results of operations for the three months
ended March 31, 2023 are summarized below (all figures are in
Canadian dollars unless otherwise noted):
(Stated in thousands of
Canadian dollars) |
|
|
For the Three Months EndedMarch
31, |
|
|
|
2023 |
|
2022 |
EXPENSES |
|
|
|
|
|
|
|
|
|
General and administrative expense |
|
|
$ |
1,766 |
|
|
$ |
2,325 |
|
Finance income, net |
|
|
|
(1,065 |
) |
|
|
(100 |
) |
Other income |
|
|
|
(81 |
) |
|
|
(42 |
) |
Loss before tax |
|
|
|
620 |
|
|
|
2,183 |
|
Deferred income tax expense |
|
|
|
253 |
|
|
|
1,622 |
|
Net Loss |
|
|
$ |
873 |
|
|
$ |
3,805 |
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures¹ |
|
|
$ |
60,883 |
|
|
$ |
13,352 |
|
-
Capital expenditures are presented on a cash basis.
Factors affecting financial results for
the three months ended March 31, 2023:
General and administrative expenses decreased
from $2.33 million in the three months ended March 31, 2022, to
$1.76 million in the three months ended March 31, 2023. The
principal components of this decrease include decreases in
professional and advisory fees related to the Company’s project
financing and a decrease in share-based compensation expense due to
a decrease in the number of stock options granted in the three
months ended March 31, 2023, compared to the same period in 2022,
offset partially by slight increases in salaries and wages and
professional fees.
Finance income, net increased from $0.01 million
in the three months ended March 31, 2022 to $1.06 million in the
three months ended March 31, 2023, primarily as a result of an
increase in interest income due to a higher cash balance and higher
interest rates compared to the same period in 2022, and a net
increase in foreign exchange gains, offset partially by standby
fees related to the Company’s lease agreement with Caterpillar
Financial Services Limited.
Deferred income tax expense decreased from $1.62
million in the three months ended March 31, 2022 to $0.02 million
in the three months ended March 31, 2023, due to an increase in
deferred tax assets related to capitalized interest in the three
months ended March 31, 2023, compared to the same period in
2022.
Capital expenditures were $47.53 million higher
in the three months ended March 31, 2023 than the comparable period
in the prior year primarily as a result of an increase in project
construction capital spending and the repurchase of 0.5% of the
2.0% NSR on the Project from FNV. Major construction mobilization
at the Project commenced in January 2023, and included the
commencement of major civils work related to the process plant and
principal facilities, mining of the Leprechaun pit for waste rock
in support of construction of pads and haul roads, continued
overburden removal and clearing and grubbing, further advancement
of the permanent camp modules, continued road upgrades, and
continued advancement of the construction of the Project’s 66 kV
powerline connection to the Star Lake Generating Station.
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 (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 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.
For more information, please
contact:
Amanda MalloughManager, 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 Updated Feasibility Study and the results therefrom (including
IRR, NPV5%, Capex, FCF, AISC and other financial metrics and
economic analysis), 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 “inferred mineral
resource” or an “indicated 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, 2022.
You can find further information with respect to
these and other risks in 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. 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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