Marathon Gold Announces 2023 First Quarter Results
TORONTO, May 15, 2023– 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.
The results of operations for the three months ended March 31, 2023 are summarized below (all figures are in Canadian dollars unless otherwise noted):
- 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.
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.
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:
Manager, Investor Relations
Tel: 416 855-8202
President & CEO