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The Berry Zone has ripened into a major, high-grade, open-pittable deposit after two years and 100,000m of exploration drilling. Marathon’s new Mineral Resource Estimate (MRE) for the Berry Deposit estimates 1.1mln ounces gold in the Measured and Indicated Resource category (17.2Mt averaging 1.97g/t gold) and 0.25mln ounces gold of Inferred Resources (5.33 Mt at 1.49 g/t Au), a substantial addition of in-situ gold ounces over the previous Berry Zone MRE which estimated 0.6mln ounces gold in the lower-confidence Inferred Resource category.
Additionally, Marathon tightened up the MREs for both the Marathon and Leprechaun Deposits after incorporating data from the 2021 Reverse Circulation (RC) drilling program. Despite total in-situ gold ounces in the M&I categories dropping 13% and 1% for the Marathon and Leprechaun Deposits, respectively, a proportionally higher amount of the lost tonnage was low-grade material (defined by Marathon as grading between 0.3g/t gold and 0.7g/t gold. Consequently, the overall estimated M&I grade for the two deposits increased by 9% each.
In aggregate, the total Valentine Project MRE (Marathon, Leprechaun, Berry, Victory and Sprite Deposits) was updated to Measured and Indicated Resources of 64.6Mt averaging 1.90g/t gold for 4.0mln ounces gold, at a gold price of US$1,800/oz. This improves on tonnage (+14%), grade (+10%) and in-situ ounces (+26%) over the previous estimate which did not include any M&I Resources from Berry. Project Inferred Resources are estimated at 20.8Mt averaging 1.65g/t gold for 1.1mln contained ounces gold.
With the positive MRE Update now behind, Marathon intends to produce a new Project Technical Report in the form of a Feasibility Study (FS) Update expected in Q4/2022. The increase in high-grade MRE material identified as potential direct mill feed could have a positive impact on the mining schedule and project economics in general.
Marathon continues to advance its 100%-owned and well-located Valentine Gold Project, in the central region of Newfoundland and Labrador, into development. The Valentine Project hosts a 20km-long, mineralized shear-zone system hosting gold in extensional quartz-tourmaline-pyrite-gold (QTP-Au) veins within a quartz-eye porphyry and trondhjemite in the shear zone hanging wall. Five known Deposits (Marathon, Leprechaun, Berry, Sprite and Victory) have been identified at present. The two deposits, Marathon and Leprechaun, currently in the mine plan host estimated Proven Mineral Reserves of 1.40mln gold ounces (29.68Mt averaging 1.46g/t gold) and Probable Mineral Reserves of 0.65mln ounces gold (17.38Mt averaging 1.17g/t gold). For more details on the Valentine Gold Project’s Reserves and Resources, see the ‘Company Highlights’ section below.
Exhibit 1. Marathon’s Valentine Gold Project Showing Project Resources by Deposit.
Berry has grown into a major contributor for the Valentine Project. In the updated Valentine MRE, the Berry Deposit now comprises 27.5% of total M&I Resources giving Marathon a third significant open-pittable deposit to work into the company’s mining plan. Berry’s average gold grade at 1.97g/t also now ranks it as Valentine’s second-highest grade Deposit after Marathon. Moreover, Berry is favourably located proximal to the potential gold mill as laid out in the April 2021 Feasibility Study (FS). Altogether, Berry has the potential to have a material impact on the upcoming FS update expected in Q4/2022.
In addition to the increased ounces from Berry, the new project MRE benefits from a higher proportion of high-grade material versus low-grade material over the previous estimate. Total high-grade, open-pittable resources increased 22% in tonnage, 5% in grade and 28% in ounces. With more high-grade material designated as direct mill feed, we could potentially see an even better mining schedule in the upcoming FS update.
One of the key points is the amount of high-grade, open-pittable ounces available at Valentine. With the addition of Berry to the Marathon and Leprechaun total, M&I ounces deemed to be high-grade and within the open pit whittle shells are estimated at 38.6Mt averaging 2.73g/t for 3.4mln ounces contained gold, representing approximately 85% of total estimated M&I ounces.
Following the positive MRE update, an update to the April 2021 FS is in progress with completion expected in Q4/2020. The FS update will utilize the new Mineral Reserve Estimate, and update the production schedule and mine plan, as well as capital and operating cost expectations. This is expected to include the control budget and schedule for the construction of the Project.
Exploration focussed potentially accretive discovery continues with 50,000m of drilling spread over the Berry and Victory Deposits. Grassroots exploration drilling of targets along the eastern arm of the Property is also reportedly planned for 2022.
Marathon awaits the completion of the federal portion of the Project Economic Assessment which would be marked by a positive Decision Statement on the acceptability of the Project by the Minister of Environment and Climate Change Canada.
- New Berry Zone MRE Update* (July 2022) – Follows the maiden Berry MRE (April 2021) – the 1.5km-long Berry Zone is a major contributor to total Valentine Resources:
- Measured Resource: 6.75Mt averaging 2.42g/t gold for 530,000 contained ounces gold
- Indicated Resource: 10.41Mt averaging 1.67g/t gold for 560,000 contained ounces gold
- Inferred Resource: 5.33Mt averaging 1.49g/t gold for 250,000 contained ounces gold
- Largest undeveloped gold resource in Canada* (effective July 2022 and inclusive of Reserves)
- Measured Resource: 29.23Mt averaging 2.19g/t gold for 2.06mln contained ounces gold
- Indicated Resource: 35.40Mt averaging 1.67g/t gold for 1.90mln contained ounces gold
- Inferred Resource: 20.75Mt averaging 1.65g/t gold for 1.10mln contained ounces gold
- Reserve Estimate** – included in the above Measured and Indicated Resources (effective Nov 20, 2020)
- Proven Reserves: 29.68Mt averaging 1.46g/t gold for 1.4mln contained ounces of gold
- Probable Reserves: 17.38Mt averaging 1.17g/t gold for 0.65mln contained ounces of gold
- Positive Feasibility Study (FS) (April 2021) – Contemplates open-pit mining from the Marathon and Leprechaun Deposits only
- Base Case Highlights Include:
- After-tax IRR = 31.5%; After-tax NPV(5%) = C$600mln (using a US$1,500/oz gold price)
- After-tax Payback Period = 1.8 years
- Initial Capex = C$305mln
- 13 Year Mine Life; 173,000oz/yr in years 1 to 9 (from high-grade mill feed), 56,000oz/yr in years 10-13 (from low-grade stockpile)
- LOM Total AISC estimated at US$833/oz
- Mill Expansion Strategy
- In years 1-3, 6,800tpd (Gravity-Leach)
- In years 4-13, 11,000tpd (Gravity-Flotation-Leach)
- Base Case Highlights Include:
- Controls 20km-long system hosting the four Valentine Gold Camp Deposits – room for expansion and discoveries in a top-tier jurisdiction
- Accessible by year-round roads and proximal to provincial electrical infrastructure – Hydro substation at Star Lake, only 30km from the property
- Metallurgical tests have demonstrated an average recovery of 94.2%
- Franco-Nevada Corp (FNV-TSX) holds a 2% NSR on the Valentine Gold Project
- Strong treasury
- Reported C$62mln in Cash and Cash Equivalents (as of June 30, 2022)
- US$185mln in secured project debt financing
- Released from the provincial Environmental Assessment with a positive outcome
- Several Key Stakeholder Agreements and Permitting Milestones Achieved
- Community Cooperation Agreements with the six surrounding communities signed in December 2020
- Benefits Agreement between Marathon and the province of Newfoundland and Labrador completed and signed
- Outfitter Environmental Effects Monitoring Plan between Marathon and the Newfoundland and Labrador Outfitters Association
- Surface Lease approved
- Completion and acceptance of a provincial Environmental Preview Report for the Project’s powerline
- Inaugural Sustainability Report published on July 28, 2022 – The report covers the years 2019-2021 and demonstrates Marathon’s commitment to responsible mining.
*Assumptions include US$1,800 per gold oz and CAD/USD= $1.28.
**Assumptions include US$1,500 per gold oz and CAD/USD= $1.33.
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