Marathon Gold (T.MOZ) had an outstanding 2017.
It extended the areas in which it found gold mineralization and published two 43-101 Resource Estimates in February and November. However, for Phil Walford, Marathon’s CEO, perhaps the most significant event of 2017 was the decision to go to a Preliminary Economic Assessment (PEA) of the property to be completed Q2 of 2018.
“We needed to go to the PEA for a number of reasons,” said Walford. “First, we think our resource is undervalued. As PEA will let us demonstrate our real value by way of a full economic study. We also want to show how we will have significant production for the first ten years of the mine life. But a PEA is also a planning device to identify the issues that need to be addressed for a more advanced economic studies.”
“We’re still drilling,” said Walford. “The Marathon deposits are still open in all directions. And a large area between the Marathon and the Leprechaun deposits has not been drilled at all.”
“In 2018 we’re looking forward to the new drill results from both the known deposits and the areas which have not been drilled at all,” said Walford. “And we’ll have the PEA in Q2.”
In a January 9th press release indicating the formal regulatory filing of the November 2017 Resource Estimate for the overall Valentine Lake property, Walford was quoted as saying “Valentine Lake now hosts the largest gold resource in Atlantic Canada. The results of the new resource and early work from the PEA are proving to be a very good guide in planning the new drilling in the known deposits.”
At a strategic level, Walford sees 2018 as the year in which “Marathon goes from being an exploration play to transitioning into a development focused company.”
That transition will be guided by the PEA but Walford already sees areas where Marathon will be working. “We’re going to be optimizing the elements of our plan.”
“We’ll be finalizing the metallurgy. Which means considering whether a heap leaching operation makes sense. And that means more testing.” Said Walford.
“We’ll also be doing advanced environmental work and moving towards an environmental assessment of the project,” said Walford. That work will, of course, be required for the permitting process which proceeds actual mining.
At the same time, Marathon will be coming to grips with the engineering nuts and bolts of the project. “We need to engineer the tailings pond and plan the mill site. This will involve geo-technical drilling as well as engineering studies,” said Walford.
With the PEA set for Q2 and the possibility of an updated resource estimate in late Q3 or Q4, Marathon is set to pivot towards development. “We’ll be refining the pit designs and looking at an underground element,” said Walford. “Which will line things up for a full scoping study. A PEA gets the numbers to +/- 30%. A scoping or pre-feasibility study will tighten those numbers. That will de-risk the project and let us fine tune the plan.”
All of which is taking place in an improving environment for gold mining. Walford points to a Canadian Mining Journal article which outlines “the North American Advantage” which really comes down to a very limited geo-political risk.
The rising price of gold is not unwelcome either. “We have a large resource running 2 grams per ton. We don’t have a strategic partner which makes us one of the very few independent explorers in the gold business. We are confident we’ll have reasonably good margins,” said Walford.
Overall, Marathon has managed to follow its plan to define and explore the gold deposits at Valentine Lake. The company has cash on hand, having just completed a 5 million dollar flow-through private placement.
Marathon’s shares traded at a low of $0.55 at the beginning of 2017 and rose to a high of $1.29 in April. At time of writing Marathon is trading at $1.15. The company appears on many analysts’ watchlists both as a company ready for a market revaluation and as a potential takeover target.
Walford will not speculate. “We’re de-risking the Valentine Lake asset and we’re dedicated to creating shareholder value,” said Walford. 2018 should mark the year where Marathon shareholders begin to see the real value of the company’s careful, methodical, hard work.