Marathon intends to use the proceeds from the offering of flow-through shares to fund its discovery-oriented exploration programs in 2023 and 2024, including the exploration at the underexplored Eastern Arm Prospect
Valentine gold project is located in Newfoundland and Labrador. (Credit: omid roshan on Unsplash)
Canada-based royalty and streaming company Franco-Nevada will buy an additional 1.5% net smelter returns royalty (NSR) on Marathon Gold’s Valentine Gold Project for $45m.
With the transaction, the Canadian company will hold around 3% NSR on the project.
In addition, Franco-Nevada has the option to buy common shares of the Marathon, comprising a C$6.9m ($5.1m) non-brokered charity flow-through offering.
Marathon intends to use the proceeds from the offering of flow-through shares to fund its discovery-oriented exploration programs in 2023 and 2024.
It includes the exploration at the underexplored Eastern Arm Prospect, said the company.
Marathon Gold president and CEO Matt Manson said: “We are very happy to be announcing this amendment to our royalty arrangements with Franco-Nevada, which sees their NSR royalty on the Valentine Gold Project increase to 3% for consideration of $45m.
“With this transaction, we have strengthened our balance sheet for the Valentine build in a substantial fashion, while maintaining a disciplined overall approach to our capital structure.”
Franco-Nevada president and CEO Paul Brink said: “Having initially invested when Marathon was an exploration play, it is very rewarding to see Matt and the team advancing the asset through construction. We look forward to celebrating the first production with them.”
Valentine gold project, located in the Central Region of Newfoundland and Labrador, one of the world’s top mining jurisdictions, is the marathon’s principal asset.
The project includes a series of mineralised deposits along a 20km trend.
Once completed, Valentine will be the largest gold mine in Atlantic Canada and a significant contributor to the economy of Newfoundland and Labrador, according to Marathon.
The last year’s Feasibility Study (FS) estimated an open pit mining and conventional milling operation over a 14.3-year mine life with a 22% after-tax rate of return.
It forecasts an average gold production profile of 195,000oz/annum of gold for the first 12 years.
In September last year, Marathon made a formal decision to commence the construction of the Valentine Gold Project following the completion of the environmental assessments.