Marathon Gold Corp T.MOZ

Updated FS

[FeartheReaper]

I'm as down on this group as anyone else, but people using 600 million as the NPV and the new share total to calculate per share value are being a bit disingenuous. The 600m was at $1500 gold (we're not there yet), and the 3-pit plan has to change things significantly. What's the target for the updated FS?

March 29/2021: 

• After-tax Internal Rate of Return (“IRR”) of 31.5% and Net Present Value at a 5% discount rate (“NPV 5 % “) of $600M (US$450M) at US$1,500/oz gold, increasing to 42.2% and $868M (US$651M) at US$1,750/oz gold;

[metalhead666]

To your point...If management had a clue they would have waited until the revised (and expected to be materially better) feasibility study comes out and then look towards equity financing with a higher share price instead of folding to a predatory bank. 

[Angelique01]

Yes timing and sequencing of the events don't make sense.  Only thing I can think of is that it would mean another 4 month delay to project had they waited till after updated FS to do equity financing.  A bird in the hand is worth two in the bush. 

[metalhead666]

They had plenty of money to begin construction. They could have put out a robust FS, maybe got a run in the stock and then do the offering without warrants....they paniced and were taken advantage of by the loan shark banks at shareholder expense. They clearly blew it TWICE. A company that under promises and over delivers does well...this was all backasswards

[Angelique01]

Presentation was good.  Unfortunately not many questions asked.  One key item to remember is that $45M of the $175M capx increase is not additional funding required simply a reallocation from sustaining capital in the plan over to initial capx.  

[theCurse]

I turned off the webcast when i heard "...I can't discuss because we have a open offering in the market" A series of miscalculations and errors by an explorer trying to be a miner.  Where is this converstion now if the EA was not delayed?  I don't care how complex the process was, having that delayed put this whole situation in a different hemisphere as far as the gold

[sr500lover]

"It would seem the mine costs are higher for reasons other than inflation  (or img - it should have been revised prior!).  Construction materials are lower today than a year ago - in my world anyway." People costs are outta sight.  Material costs are similarly insane, particularly anything related to a hydrocarbon.  Which pretty well means anything.  The costs

[NLMoose]

More importantly, Marathon Gold made a careless mistake in their Valentine Lake project financing plans as they are now relying on private placements which hurt shareholders and goes against the Law of Finance. When you embark on Capital Budgeting projects, notably Valentine Lake, you need to focus more on debt financing as opposed to an equity counterpart and here's why. Unlike equity

[sr500lover]

This isn't a PP.  Where'd you get that idea? This is free trading paper FOR SURE with what i assume is a tradeable warrant.  

[AlwaysLong683]

The fly in the ointment with debt financing is you will not be able to claim interest expenses until you start generating revenue, which won't happen until the mine is complete, gold is poured and sold, and the company can sustain itself financially. Also, given the risk assoiated with a mine build which could have it's first pour delayed, the confidence a potential creditors may have in

[Angelique01]

Not sure why a portion of the $150M couldn't have been debt. Yes it does usually result in a lower  weighted average cost of capital than equity.  The interest incurred during the construction phase would be capitalized as part of the asset  cost and then amortized over the life of the asset once available for use.  Interest on the debt once the mine is in production would

[AlwaysLong683]

Good point re. the option / possibility of financing a portion with debt and the rest with equity. My point re.interest was the actual repayment schedule of dollars flowing out of the company, not the amortization or interest expense item on the income statement. The interest rate and other terms would dictate how much of the principle plus interest would be expected to be paid, and at what

[NLMoose]

Since most Capital Budgeting projects are determined based on its Net Present Value or Internal Rate of Return, debt financing is always factored into calculating Weighted Average Cost of Capital (Required Rate of Return) whether its generating income or not.

[theCurse]

I'm not going to bother countering every statement you made in any detail but... - hydrocarbon related materials most definitely have peaked -  $85USD per barrell right now.  Certainly a slow down if not a recession coming as well. - i don't wildly overestimate the purchasing power....I did not consider this a $1.25 stock.  I considered this was beaten down to be a 1.25

[sr500lover]

No player on a bought deal doesn't have a good idea, bordering on complete certainty, as to how much they can sell, unless they're on the deal just to get a cut of the fee and the lead u/w is the sole bookrunner. If you don't think they've got an idea of the appetite of their main clients before the announcement comes out, you're dangerously naive.  And the issuers have

[theCurse]

Showed up of stockhouse March 30, 2022.  Only has posted on MOZ.  Apparently is down $5M on MOZ.  No reply on being part of this financing or of the MOZ org (who cares - we can all lie behind our computers).  You call me (i think the reference is to me) "dangerously naive".  I call you having ulterior motives with your post.  You sound like a seasoned suit.&

[Angelique01]

That is the million dollar question.  At $1750 gold the NPV after tax was $868M for the old FS. New FS wil incorporate higher capex of $480M versus $305M  plus higher operational costs due to inflation.   This will be offset by inclusion of Berry zone resulting in longer mine life and better production profile.  Assuming its a wash we get NAV of around $1.75 a share.