MOZ financing facility of US$185 million ORONTO, July 20, 2021 (GLOBE NEWSWIRE) -- Marathon Gold Corporation (“Marathon” or the “Company”; TSX: MOZ) is pleased to announce that it has entered into an exclusive non-binding Indicative Term Sheet with Sprott Resource Lending Corp. for a senior secured project financing facility of US$185 million (the “Credit Facility”). Proceeds from the Credit Facility are to be used to fund the construction of the Valentine Gold Project, located in the central region of Newfoundland and Labrador (the “Project”).
The Credit Facility is structured as a term loan with a 6.5 year tenor. Conditions precedent to closing include the completion of technical, legal, and environmental and social due diligence, the receipt and review of the Project’s final development budget and schedule, the completion of definitive documentation, and the receipt of applicable environmental permits, operating licences and regulatory approvals. Closing is scheduled for not later than March 31, 2022.
Matt Manson, President and CEO, commented: “We are very pleased to announce this significant milestone in our project financing efforts for the construction of the Valentine Gold Project. Sprott Resource Lending is an experienced and well regarded project finance partner to the mining industry, and we are excited to be working with them to develop what we anticipate will be Atlantic Canada’s largest gold mining operation.” Mr. Manson continued: “Detailed engineering, staffing and procurement for the Valentine Gold Project is underway, supported by our strong treasury. Construction is scheduled to commence in early 2022, subject to the timely receipt of all necessary permits and approvals.”
Marathon recently published a Feasibility Study (“FS”) for the Project demonstrating robust economics for a conventional open pit mining and milling operation with low initial capital cost and high rate of return. An Environmental Assessment is ongoing with federal and provincial regulators, and is expected to be completed later this year.
The FS estimates an initial capital cost of C$305 million. Final project financing will include additional provisions for working capital, financing and interest costs, mine closure guarantees, cost overrun facilities, and corporate costs. The Credit Facility represents the contemplated senior secured debt portion of these financing arrangements. Additional financing is contemplated by way of equity and equipment leasing. The Credit Facility permits additional indebtedness associated with the leasing of mobile equipment, including mobile equipment included in the Project’s sustaining capital estimates, with a value of up to US$110 million. As of June 30, 2021 Marathon had cash and cash equivalents (on an unaudited basis) of C$107 million, plus in-the-money warrants due in September 2021 that could provide an additional C$12 million of liquidity to the Company.
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