The view from RBCSeptember 1, 2022
Marathon Gold Corp
Positive construction decision for Valentine, along with higher capex
TSX: MOZ | CAD 1.69 | Outperform | Speculative Risk | Price Target CAD 3.00
Sentiment: Neutral
We expect a neutral reaction from Marathon shares following the positive construction decision for the Valentine Gold project, and the updated timeline and capex estimate. In our view, the increase in capex estimate vs the 2021 FS had been well flagged by management given industry-wide inflation and is expected to be offset by added economics via the Berry Zone.
Initial capex is now expected at C$470-490m vs. the April 2021 FS estimate of C$305m (RBCe: C$450m), while first gold production is expected in early 2025 (RBCe: H2/24). Procurement has been completed on the Project's mobile equipment and orders have been placed for major long-lead time components.
Site early works are expected to start at the beginning of 4Q22, with full construction underway by early 2023.
Marathon is also advancing an updated feasibility study, which would incorporate updated capex and operating costs along with inclusion of the Berry Zone as a third mining front. Including Berry in the mine plan will require additional permitting, which management expects can be completed during construction and ahead of commissioning, with the process expected to take between 18-24 months.