On March 32, 2022, Marathon announced the completion of a US$185 million term loan facility with a fund managed by Sprott Resource Corp. The proceeds of the facility are to be used for the construction, development and working capital requirements of the project. An initial advance of US$125 million of the facility was financed into a debt proceeds account (DPA) upon close. These funds remain undrawn from the DPA, the company said in a press release.
The company said it is engaged with Sprott in constructive discussions regarding a potential increase in the facility. To this end, the parties have concluded an amendment to the credit agreement adjusting the effective date for certain terms and conditions of the facility from December 31, 2022 to January 31, 2023. The amendment adjusts the effective date for the second advance, the period under which the initial interest rate will calculated, the date upon which the facility will bear interest and the effective date of mutual termination rights. Marathon said it expects to provide a further update when these discussions have been concluded.
Marathon also said it has agreed with Franco Nevada Mining Corp. [FNV-TSX, NYSE] to extend a right in favour of the company to repurchase 0.5% of a 2.0% net smelter return royalty from Franco-Nevada for US$7 million from December 31, 2022, to January 31, 2023.
Marathon Gold shares were active on the news, easing 1.5% or $0.015 to 96.5 cents on volume of 993,460. The shares are currently trading in a 52-week range of $3.25 and 73 cents.
Marathon recently published a feasibility study for the project, demonstrating robust economics for a conventional open pit mining operation and a low initial capital cost and high rate of return. The feasibility study estimates an initial capital cost of $305 million.
The feasibility study also envisages a 13-year mine life, a 22-months construction and commissioning schedule.
The study forsees annual gold production of 173,000 ounces per year and $119 million of annual average free cash flow between 2024 and 2033 from the processing of high-grade mill feed. Proven and probable reserves stand at 2.05 million ounces.
“The results of this study will be incorporated into a new NI 43-101 technical report, which will constitute an updated feasibility study for the Valentine Gold Project,’’ said Marathon Gold President and CEO Matt Manson.
The updated feasibility study will contain an updated estimate of capital and operating costs, and as such will comprise the control budget and schedule for the construction of the project.