Marathon Gold begins early works at Valentine project in Newfoundland

Canada’s Marathon Gold (TSX: MOZ) has begun early site works at its proposed Valentine open-pit gold mine in central Newfoundland after satisfying pre-construction environmental assessment conditions.

The project is expected to see full mobilization by early 2023, the first ore to the mill at the end of 2024, and a production ramp-up during the first fiscal quarter of 2025.

Valentine is considered the largest undeveloped gold project in Atlantic Canada. It is located about 80 km southwest of the communities of Millertown and Buchans.

The board of Marathon announced in September a formal decision to proceed with construction of the Valentine project. It issued a new cost to completion figure of $470 million to $490 million, including early works to be carried out in the fourth quarter.

The estimate contrasts with the $305-million initial capital cost estimated in the project’s April 2021 feasibility study, which outlined a conventional surface mine with two open pits with a 13-year mine life.

“We have now mobilized our early works program to the Valentine site, based on the receipt of all appropriate permits to allow work to proceed. This program involves the installation of a temporary camp, clearing, grubbing and pad construction for the permanent camp, road and bridge upgrades on our access road from the community of Millertown, and pond dewatering ahead of pre-stripping at the Leprechaun deposit,” president and CEO Matt Manson said in a news release.

Marathon also said it continues to advance its updated feasibility study for the project, which is expected to take between 18 and 24 months. An updated technical report is scheduled to be complete in the fourth quarter of 2022. 

First gold at Valentine is expected in October, 2023, according to the feasibility study. The mine would produce 173,000 oz. per year in the first nine years at cash costs of US$704 per oz. and all-in sustaining costs (AISC) of US$833 per ounce. 

In a research note on Wednesday, Michael Fairbairn of Canaccord Genuity said in contrast that first gold at Valentine would happen in 2025, with the mine producing 180,000 oz. annually at $781 per oz. in cash costs and AISC of $993 over a 14-year mine life. Canaccord estimates the initial capex would come to $490 million.

“Notably, over the first five years we forecast annual production of 218,000 oz. at $750 per oz. cash costs and $980 per oz. in AISC as the company processes higher grades from its open pits and stockpiles lower-grade material,” Fairbairn said.