MINING IN THE MARITIMES
MARATHON FINDS VALENTINE’S SWEET SPOT Development would be Atlantic Canada’s biggest gold mine By Alisha Hiyate
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n April, Marathon Gold released a prefeasibility study for its Valentine gold project in central Newfoundland that forecast it could produce 175,000 oz. gold a year for the first nine years of its 12-year mine life. While that would make the project the biggest gold mine in Atlantic Canada, the scope of the project was somewhat reduced in comparison to a 2018 preliminary economic assessment (PEA) that projected annual production of 225,100 oz. gold over 12 years. “We had a number of scope changes between the PEA and prefeasibility – the PEA in 2018 was a bigger project,” said Marathon president and CEO Matt Manson in an interview with CMJ in September. Why did the company decide to go smaller? For one, it chose to focus on reducing the project’s capex, which in the PEA was estimated at US$355 million. “Whenever you start any study, there are certain parameters that you’re trying to maximize and that’s sometimes at the expense of other parameters,” Manson said. “The PEA, quite reasonably, was going for maximum NAV (net asset value) and maximum gold production profile. But it was at the expense of capex
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and rate of return.” To get the higher gold production and a NAV of US$493 million, the 2018 study included both a mill and a heapleach operation to treat lower-grade ore. The prefeasibility scraps the heap-leach component and includes only one central mill fed by two slightly smaller open pits. Under the simplified plan, the project achieves an after-tax IRR of 36% (up from 30% in the PEA) and a NAV of $472 million (at a 5% discount rate), at an initial capex of only $272 million (US$205 million). “The heap leach was around $110 million in capital, but it was only about 7-8% of the gold production profile,” Manson says. “(With the prefeasibility) the NAV came down somewhat, but we ended up with a project that has a 36% rate of return using US$1,350 per oz. gold. If you took the spot price – US$2,000 it’s a 77% rate of return and $1.1 billion NAV.” Life-of-mine all-in sustaining costs were pegged at US$739 per oz. A feasibility study based on the same parameters is under way and due to be completed in the first quarter of 2021. Meanwhile, the company is expected to submit its evironmental impact statement
Examining drill core at Marathon Gold’s Valentine gold project in Newfoundland. CREDIT: MARATHON GOLD
for Valentine to provincial and federal regulators in September, with that work led by Stantec as the principal consultant. Plant expansion A key part of the prefeasiblity is a plant expansion in the third year of mining. While the processing of ore was simplified in the prefeasibility by doing away with the heap-leach component, getting the most out of the lower-grade ore will require a plant expansion in the third year of mining. At that point, a flotation cirwww.canadianminingjournal.com
2020-10-05 5:45 PM
