TD updateEvent Yesterday evening, Marathon Gold announced that Pierre Lassonde has agreed to make a strategic investment of $7.5mm in the company via a non-brokered private placement. Impact: SLIGHTLY POSITIVE
Mr. Lassonde has agreed to purchase ~2.6mm flow-through shares of the company at a price of $2.85/share, representing an ~20% premium to yesterday's closing price of $2.38.
Overall, the company issued a total of 3mm flow-through shares (increasing its shares outstanding by ~1.5%) at a price of $2.85/share for total proceeds of $8.7mm.
The proceeds of the private placement will be used to continue exploration of the company's Valentine Gold Project (100%) in central Newfoundland.
We estimate that the company now has ~$58.7mm in cash ($50mm as at September 30 plus the process from this placement).
Pierre Lassonde co-founded Franco-Nevada (FNV-N) and had served as nonexecutive Chair of FNV between 2007 (IPO) and May 2020.
As a reminder, in February 2019, Franco-Nevada provided a vote of confidence, purchasing a new 2.0% net smelter returns royalty (NSR) on the Valentine Gold Project for $18mm. We view the investment as a toehold that positions Franco-Nevada as a player in potential project funding post-permitting, which is anticipated in Q4/21.
Earlier this week, Marathon hosted a technical session that provided a comprehensive update on the company's exploration & engineering plans for its Valentine Gold Project. We provided the key points in our Flash Note here.
The company is currently working on a Feasibility Study, which is expected to be completed in late-Q1/21. We currently model first gold in Q1/24.
In April, the company completed a Pre-Feasibility Study (PFS), which outlined Reserves of 1.9 Moz at 1.41 g/t. The PFS contemplated a 6.8 ktpd mine (increasing to 11 ktpd in year 4), with average annual gold production of ~145 koz at AISC of US$739/oz over a 12-year life. Initial capex was estimated at $272mm.
We continue to view Marathon as having an attractive project for the company to bring to production on its own, or to be acquired once permitted.
Anticipated Timeline Exploration Results — Ongoing
Valentine Feasibility Study — late-Q1/21E
Berry Maiden Resource — late-Q1/21E
Main Permit — Q4/21E