RBC Construction UpdateAugust 2, 2023
Marathon Gold Corp Plant design change to increase capex by C$41M; on track for first gold in Q1/25 TSX: MOZ | CAD 0.79 | Outperform | Speculative Risk | Price Target CAD 1.50
Sentiment: Neutral Our view: We expect a relatively neutral reaction from Marathon shares following the Q2 construction update on the Valentine project. Overall completion stood at 35%, with the project remaining on track for first gold in Q1/25. More importantly, design modifications have been made at the plant to facilitate the planned expansion from 2.5 to 4.0 Mtpa, which will include upsized grinding, gravity, and CIL circuit components. This entails a C$33M increase in upfront capex for the mill, but will help accelerate the move to expanded capacity in the initial years of production. Overall cost to complete is now C$391M from June 2023 with total budget increase of C$40.5M (+8% overall), and first gold remains on track for Q1/25 with focus the next few months on mining, processing plant and TMF.
Valentine tracking to schedule; budget increased by C$41M: • At end of Q2/23, the project was 35% complete with engineering at 87%, procurement 60% and construction 15%
• Following design adjustments to the processing plant, current cost to complete stands at C$391M from end of Q2/23, reflecting a variance of C$40.5M vs the October 2022 budget estimate.
At end of Q2, total contingency draw was C$7.3M, with unused contingency currently standing at C$31.6M.
• Mining continues to advance in support of construction with a second shift being added at the end of May. During June mining rates achieved 16Kt per day. Overburden removal has also commenced at the Marathon pit and is ahead of schedule.
• Overall permitting for the project is 89% complete.