Marathon Gold Corporation (TSX: MOZ) has made a formal decision to proceed to construction of the Valentine Gold Project in the central region of Newfoundland and Labrador.
The decision was made following the recent successful completion of the Project’s provincial and federal environmental assessments, an updated cost to complete assessment, and an evaluation of the overall investment merits of the Project.
“Valentine is one of Canada’s best undeveloped gold deposits located in one of the world’s best mining jurisdictions,” President and CEO, Matt Manson, said.
“This is a Project blessed by its location, by the simplicity of its design and operation, by the strong support of its stakeholders and community partners, and by its rich endowment of gold mineralisation. After more than three years of environmental assessment we have now been approved by the regulators to move forward with its development.
“The company’s decision to proceed with construction of the Valentine Gold Project considers the impact of almost two years of market inflation on the Project’s costs, as well as a necessarily cautious approach to project management, contingency and scheduling.
“We currently assess that the Project’s construction cost to complete, including early works being carried out in the fourth quarter of 2022, will be in the range of C$470 to C$490 million.
“However, we are also recognising the potential value of the Project as it continues to grow. The future addition of the new Berry Deposit, which forms the centre of our ongoing mine planning, offers an extension to the Project’s mine life and an improved gold production profile, even as we manage the increased cost-of-entry to the business.
“This formal decision to proceed to a build, made by the Board of Directors, reflects our confidence in the significant value that the Valentine Gold Project offers to Marathon’s shareholders, and its many stakeholders in the province of Newfoundland and Labrador.”
Permitting and Schedule
Provincial and Federal Environmental Assessments (EAs) for the Project were successfully concluded in March and August of this year respectively. The Project can now proceed to development based on the satisfaction of the release conditions of each EA, and the acquisition of relevant site-specific permits. This process is progressing well.
The Project’s Mining and Surface Leases were issued by the NL Department of Industry, Energy and Technology in June, and the province has most recently approved the Project’s Environmental Protection Plan and the Early Works Development, Rehabilitation and Closure Plan. The progress of permitting supports a development schedule of site early works commencing at the beginning of the fourth quarter of 2022, full construction mobilisation by January of 2023, first ore delivered to the mill by the end of 2024, and first gold production in early 2025.
Cost to Complete
With the Project’s schedule confirmed, Marathon is able to give guidance on the Project’s capital cost estimate. Marathon currently assesses a cost to complete of between C$470 and C$490 million. Compared to the C$305 million initial capital cost contained within the Project’s April 2021 Feasibility Study (FS), the new assessment incorporates approximately 20 months of market inflation as well as the reallocation of costs previously characterised as sustaining capital items into the initial capital period.
The new assessment also incorporates certain scope changes relating, principally, to updated staffing levels and the impact of moving from the 22-month construction schedule contained within the FS to the current 28-month construction schedule.
The cost estimate is effective as of August 2022, and includes current market bids, contracted pricing, finalised equipment leasing arrangements, and current market data for labour and consumables, including diesel. Pre-development and owner’s costs incurred to the end of July 2022 are excluded.
Mine Planning
The April 2021 FS contemplated a 13-year mine life based on two mining pits at the Marathon and Leprechaun Deposits and a Mineral Reserve of 2.05 Moz of gold (47.1 Mtonnes at 1.36 g/t Au). This is the project scope that was assessed under the recently completed environmental assessments, and which Marathon will proceed to develop.
However, Marathon recently released an updated Mineral Resource Estimate for the Project that incorporated Measured and Indicated Mineral Resources from the new Berry Deposit for the first time. Berry, discovered as recently as 2020, is located midway between the Leprechaun and Marathon Deposits, immediately adjacent to the proposed location for the Project’s mill.
The Project’s total Measured and Indicated Mineral Resources now stand at 4.0 Moz Au (64.6 Mt at 1.90 g/t Au), increases of +26% in ounces, +14% in tonnes and +10% in grade compared to the previous estimate. Additional Inferred Mineral Resources stand at 1.1 Moz Au (20.8 Mtonnes at 1.65 g/t).
Within these totals, the Berry Deposit has Measured and Indicated Mineral Resources of 1.1 Moz Au (17.2 Mtonnes at 1.97 g/t Au) and Inferred Mineral Resources of 0.25 Moz Au (5.33 Mt at 1.49 g/t Au). Mineral resources which are not mineral reserves do not have demonstrated economic viability.
Consequently, Marathon is currently engaged in a mine planning exercise that will assess the potential for Berry to comprise a third mining pit in the Project’s production schedule. This new “3-Pit” mine plan is expected to show an increased Mineral Reserve, an extended mine life, and a higher gold production profile compared to the existing plan. The new study will constitute an Updated Feasibility Study and will include the updated life-of-mine capital and operating cost assessments, and an updated financial evaluation.
The Updated FS will develop the incremental design and costs associated with the development of a Berry pit and waste rock facility. However, it will not require any changes to the Project’s mill flow sheet or processing strategy, its camp, its major facilities, its road and power infrastructure, the Tailings Management Facility design, or the site’s overall footprint.
For further information please visit: https://marathon-gold.com/
