Marathon Gold Corporation (MOZ-TSX) (Marathon) announced today its financial results for the three months ended March 31, 2019. Following the completion of the updated preliminary economic assessment (PEA) on the Valentine Lake Gold Project in October 2018 and a successful financing transaction in February 2019, Marathons current exploration and technical activity is in support of the pre-feasibility study (PFS) on the Valentine Gold Project.
Sale of NSR to Franco-Nevada
On February 21, 2019, Marathon completed the sale of a 2% net smelter returns royalty (NSR) to Franco-Nevada Corp. (the FNV NSR) for proceeds of $18 million. This attractive transaction is anticipated to fund Marathons exploration and technical work through to completion of the PFS and was pursued rather than an equity financing to manage the dilution of shareholders. The FNV NSR includes an 0.5% buy-back provision that allows Marathon to reduce the royalty to 1.5% prior to December 31, 2022 at a cost of US $7 million.
Financing and Liquidity
At March 31, 2019, Marathons cash position was $19.4 million compared to $3.7 million at December 31, 2018, reflecting the sale of the FNV NSR.
Infill drilling program:
Following on from successful 2018 drilling programs at the Marathon and Sprite deposits, Marathons 2019 infill drilling program is in progress with completion expected in the third quarter of 2019. This program is being carried out primarily on the main mineralized corridors of the Marathon and Leprechaun deposits with two concurrent objectives, both of which are directly connected to the PFS:
To further confirm Marathons geological models for the Marathon and Leprechaun deposits by demonstrating the lateral continuity of the QTP-gold veining along and across strike as well as to depth within the mineralized corridors, and
To continue to upgrade existing inferred resources in each deposit into the measured and indicated categories and to increase measured resources for the first five years of mining operations.
To date, Marathon has completed 73 holes covering 19,868 meters in the two deposits, representing approximately 44% of the infill drilling planned for the year. Results to date have exceeded managements objectives and are expected to not only upgrade the confidence levels of the resources but achieve an overall increase in gold grades in the measured and indicated resource categories. Upon completion of the infill drilling program, Marathon will update its mineral resource estimate to support the PFS.
Environment and Stakeholder Engagement:
Marathon filed an Environmental Assessment (EA) Registration/Project Description with the Newfoundland and federal governments on April 5, 2019, which was subsequently accepted into the formal EA review process on April 16, 2019. These documents are posted by both governments for public review and comment and are reviewed by the various regulatory departments to determine if, and to what extent, further EA is required. A decision on this stage of the EA process is due on May 31, 2019 by both levels of government.
Marathon commenced formal stakeholder engagement in March 2019, beginning with public meetings in the closest communities to the project, including Buchans, Millertown and Grand Falls-Windsor, to brief residents, municipal governments, and other local stakeholders on the status of the project and Marathons development plans.
The updated PEA was prepared in accordance with NI 43-101. Readers are cautioned that the PEA is preliminary in nature. It includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the economic results reflected in the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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