TD updateMarathon Gold Corp. (MOZ-T) C$2.28 Valentine FS; Next Step Permitting (Q4/21E) Arun Lamba, CFA Jamie Carmichael, (Associate)
Event Yesterday evening, Marathon released the highlights of a Feasibility Study (FS) for its Valentine Gold Project (100%) in central Newfoundland. Management will host a virtual technical session at 10:00 a.m. ET Today; click here.
Impact: SLIGHTLY POSITIVE The new study follows from a Pre-Feasibility Study (PFS) completed in April 2020. The company also updated its Reserves yesterday.
Overall, the FS was largely in line with our estimates. Total estimated LOM production was slightly higher than expected (1.9 Moz vs TD: 1.7 Moz). Sustaining capital expenditure estimates were above TD, while operating costs came in lower (Exhibit 1).
We believe that this study continues to demonstrate that Marathon has an attractive project for the company to bring to production on its own, or to be acquired once permitted.
The FS contemplated a 6.8 ktpd mine (increasing to 11 ktpd in year 4), with average annual gold production of ~146 koz (173 koz/year over the first 10 years) at AISC of US$833/oz over a 13-year life.
At US$1,500/oz Au (US:C$ 0.75 FX), the NAV5% of the project was estimated at $600mm ($765mm at US$1,650/oz Au; spot gold is currently ~US$1,700/oz) and the after-Tax IRR at 31.5%. Initial capex (including expansion) was estimated at $349mm (TD: $342mm) and sustaining capex was estimated at $312mm (TD: $275mm).
Reserves (March 2021) were estimated at 2.05 Moz (+10%) grading 1.36 gpt (-4%). 2021 Reserves are based on a US$1,500/oz gold price (US$1,300/oz previously).
Opportunities not included in the FS — (1) Acceleration of Phase 2 Mill Expansion (from 2026 to 2024); (2) Potential for future Reserve growth via upgrading Inferred Resources (OP Inf of 0.61 Moz within mining pit shells); and (3) Opportunity to bring in additional open-pit ore sources (e.g. Berry) through exploration.
According to the FS, construction is anticipated to start in January 2022 (subject to receiving permits) and first gold in October 2023 (TD: Q1/24)
As at December 31, the company reported ~$52mm of cash and no debt.
Anticipated Timeline Berry Maiden Resource — April
Main Permit — Q4/21E