Marathon Gold

Approaching the finishing line at what will be Atlantic Canada’s largest gold mine



The Canadian Province of Newfoundland and Labrador (NL) is unquestionably a natural resource-based jurisdiction. The economy was historically built on fishing, but today major industries include logging, oil & gas and mining. The latter is one of NL’s largest and oldest trades and a major contributor to the economy, which is comprised of just half a million citizens. More than 15 mineral commodities have been produced or mined in the province, with notable projects including Vale’s Voisey’s Bay nickel operation, the iron ore projects near the towns of Wabush and Labrador City on the mainland, and the recently closed Duck Pond base metals mine on the island of Newfoundland. There has also been a long history of high-grade, narrow vein-type gold mines on the island. The province’s newest mine is set to be Marathon Gold’s Valentine gold project, located in central NL, with the TSX-listed company closing in on the finishing line after completing a feasibility study in April. “We’re presenting a project with an open pit, large production profile and that is relatively new for NL,” Marathon’s president and CEO Matt Manson tells RGN. “We’re the largest undeveloped mineral resource in Atlantic Canada and will be the largest gold mine in Atlantic Canada.” 


The Valentine project currently boasts 4.8 million ounces (Moz) of gold in the total mineral resource (measured and indicated + inferred), with an average grade of 1.75 g/t. The feasibility estimates 2.05 Moz in the initial mineral reserve at a grade of 1.35 g/t after dilution, over a 13-year mine life. The first nine years will see the company producing a sizeable 173,000 ounces of gold per annum. 


While the feasibility paints the picture of a low initial capital, high rate of return gold development, Manson believes that the most important function of the study is to depict the simplicity of the project. 


The facilities at Valentine will be comprised of two open pit deposits (Marathon and Leprechaun), a mill and tailings facility, and the work camp. “That’s it,” Manson proclaims. “When we show stakeholders and investors the setting of the project, we point out that we’re not at the top of a mountain, we’re not up in the high Arctic or in a national park.  


“We’re not moving communities or diverting rivers or draining lakes. We’re on Crown Land in central Newfoundland with a road and a power station nearby. It has all the makings of a successful project due to those elements of simplicity.”


Manson also stressed the need to keep the project’s capital expenditures to a manageable level for a company like Marathon to reasonably conceive of financing and developing independently. The current C$305 million capex will allow Marathon to do just that, according to its chief. 


Marathon not a sprint 


Environmental Assessment (EA) is arguably the most crucial stage of a mining application in NL, and certainly the most time-consuming in terms of the overall project development timeline. The filing of the Valentine Environmental Impact Statement (EIS) in September last year was about the mid-way point of Marathon’s EA process, which is governed at Federal and Provincial levels. 


The EIS provides an all-encompassing description of the social and environmental impacts of the project, with 17 value components (VCs) under assessment, including: wildlife, water, air, communities and social health to name a few. 


“Every one of those VCs is assessed based on our potential impact on them and then we propose mitigation strategies where we see potential for impact. We are currently focused on minimising our impact on water quality and fish habitats. 


“We’re also focused on the local caribou population. One of the sub-herds on the island of Newfoundland migrates seasonally through the Eastern part of the property, so there is a mitigation strategy around that.” 


Marathon is also engaged in the area of community health. There are six local communities within the socio-economic catchment area of the Valentine project, as well as the Qalipu Mi’kmaq and Miawpukek First Nation groups on the island. Last year, the company signed a social economic agreement with the former and a MoU designed to lead to a similar agreement with the latter group. 


Social licence to operate 


“In the pantheon of mining projects, we hope that Valentine is one that presents all those elements of simplicity I discussed before, is something that regulators can see and understand, and social acceptability can be built in a constructive way.” 


However, social acceptability is not only gained through cooperation agreements, or commitments to local employment and procurement. Manson believes a mining company’s licence to operate starts with the core principles of the organisation, from the top down.


“As the CEO of the company, am I communicating to the team the values under which we operate, and what’s acceptable and not acceptable? I think so far, the proof is in the pudding in terms of how our relationships have developed with local communities and with the government of N&L.  


“It’s not for me to characterise those relationships, but I believe they are very strong and it’s something we do well as a company. We’re not seeking to do this project in a way that will cause stress or discomfort for anybody,” he assures. 


There’s a lot of expectation on the shoulders of Marathon in Newfoundland. The Valentine project will deliver 400 direct jobs and a significant number of ancillary jobs through local procurement of goods and services, in a region which has suffered economic and fiscal distress in recent years. 


The company has no shortage of resumes in its bank as the project approaches construction phase, so a large part of Marathon’s ‘SG’ performance will come down to how it meets the expectations of the highly skilled labour market that exists within the resource-based local economy.  


High risk high reward 


Typically, development stage companies will down tools on any exploration activities in order to present a static project for financing and permitting, then head back into the field once the mine is up and running. However, Marathon has elected to double down on exploration this year because it sees great potential to add ounces along the 20 km Valentine shear zone. 


The decision to execute higher risk exploration along the shear zone was made when Manson joined the company as CEO in 2019. This approach quickly led to the discovery of the Berry deposit in 2020, following a successful step out drilling campaign. 


Berry is in fact one of five deposits with mineral resources identified along the shear zone, but it remains the main focus of Marathon’s exploration efforts. In April, a maiden resource estimate of 640,000 ounces, with an average grade of 1.75 g/t, was released to the market.


“It’s located in between the existing Marathon and Leprechaun orebodies, right beside the future location of the mill. This year, it’s been about expanding and drilling the deposit. We’re heading up towards 120,000 metres of drilling at Berry and believe it has the potential to be another Leprechaun, which is 1.3 Moz in all resource categories.  


“I believe the resource inventory is still growing here, but beyond that we’re still carrying forward this ethos of higher risk exploration; rolling the dice and going to places we haven’t explored,” Manson declares.  


But in order to sustain this high risk exploration strategy, the company needs to have the requisite funds in the treasury at any given time. A series of flow through financings on TSX over the last few years have given Marathon that licence to keep drilling, with the treasury sitting at $107 million at the end of Q2. 


“That’s a good springboard for the final debt financing effort, then they’ll be additional equity on top of that. It also gives us a lot of flexibility now as we look at long-lead procurement, team building and doing the types of early works that are required to secure the overall schedule of a project build.  


“I think we’ve also benefitted from an equity market over the last couple of years that’s been interested in investing in quality gold projects in good jurisdictions and we haven’t been shy to take advantage of that.” 


The home stretch  


Manson believes the company is on the home stretch with regards to the EA, which he describes as ‘the schedule driver for our overall business’. The EA process and final project financing should be completed by year-end, giving Marathon the opportunity to commence mine construction and site infrastructure works in Q1 2022, with first gold pour slated for 2023. 


The construction phase will bring the first wave of employment opportunities to the central Newfoundland economy, which has been crying out for a new mining project since the closure of the Duck Pond operation, and the polymetallic Buchans mine before that.  


“Many workers left the province to work on natural resource projects elsewhere in Canada, but we are hoping to attract those highly skilled people back home to work on our project. They will be on rotation here as well, but with a camp closer to home. I think in terms of the social dynamic of that and the economic impact of the project, I hope it’s all going to be positive.”