Marathon Gold Corp
(TSX: MOZ)
(OTCQX: MGDPF)
CEO: Phil Walford
About: Marathon is a Toronto based gold exploration company rapidly advancing its 100% owned Valentine Lake Gold Camp located in Newfoundland, one of the top mining jurisdictions in the world. The Valentine Lake Gold Camp currently hosts four near-surface, mainly pit-shell constrained, deposits. The majority of the resources occur in the Marathon and Leprechaun deposits, which also have resources below the pit shell. The Valentine Lake Gold Camp is accessible by year-round road and is located in close proximity to Newfoundland’s electrical grid. Marathon maintains a 50-person all-season camp at the property. Recent metallurgical tests have demonstrated 93% to 98% recoveries via conventional milling and 50% to 70% recoveries via low cost heap leaching at both the Leprechaun and Marathon Deposits.
Podcast: Play in new window
INTERVIEW TRANSCRIPTS:
WSA: Good day from Wall Street. This is Juan Costello, Senior Analyst with the Wall Street Analyzer, joining us today is Philip Walford, CEO and President for Marathon Gold. The company trades on the Toronto Stock Exchange, ticker symbol MOZ and on the OTCQX right here in the US it’s MGDPF. Thanks for joining us today there Philip.
Philip Walford: Well, thank you for the opportunity.
WSA: Yes, for sure, certainly. So please start off by talking about some of the recent news there as you put out a year-end review for last year and outlined some of your plans here for 2019 moving forward?
Philip Walford: Certainly, Before I get into that I just like to go over some of the newer things that have happened to us prior to the end of last year. We’ve recently put out a preliminary economic analysis in November that looked at the deposit we have, which contains 4.2 million ounces of gold, almost all of which is open pit in three or four deposits. The graded good is close to two grams. When we revised our PEA we’ve come out with an annual production rate of 225,000 ounces a year for 12 years. And all in all sustaining cost of $666 an ounce. This is very good. This is excellent when your commodity price is double what your “all in” capital costs that means you’ve got a great margin.
Our after tax net present value, and that’s discounted of course, is almost $500 million. So this is a very robust property and now we’re advancing to a preliminary feasibility study. We have lots of room to grow so I personally would like to see us at a production rate of 250,000 to 300,000 ounces a year for 10 years, so we’ll see if that can happen. And that’s part of our plan for this year is to go through with a lot of metallurgical work underway right now to optimize the metallurgical process. Our recoveries are excellent. We have two types of processing we’re looking at using jointly. One is for low grade to use heap leach and so far we’ve got about 60% recovery on the heap leach this would be material averaging half a gram or less and normally would be thrown away or put into a low-grade stock pile. We think and our numbers show that we could actually make money from this by processing it as it comes out of the pit.
The other method is milling and we have a fairly high recovery of about 95% plus we’re just seeing if we can get that up to 97 or so percent recovery. And if so that would be really good and that’s for the higher grade material. So it gives us a lot of flexibility and it’s certainly this mix is something that other operations are using because of the economy of course, and making good profit out of it.
WSA: Right, yeah, I was just going to ask you not to cut you off but I know yeah, can you perhaps explain a little bit what the difference is cost wise between conventional milling and the heap leaching.
Philip Walford: The heap leaching is considerably less (cost) like it’s more than 30% less than conventional milling because in the process of heap leach, you have in our case, the ore has to come out of the ground anyway or the material has to come out of the open pit anyway. So it goes to a pad, a large pad that’s where a run of mine pad where it would be crushed to half inch probably and then put on the pad either by truck or by a conveyor system and irrigated with cyanide. So if we got a 60 to 70% recovery from that material that’s very good. It means that ore – material that we have to take out of the ground because the milling is paying for, the mill ore is paying for it then we’re getting something back. We’re getting – we’re actually make a profit on it whereas it would just be considered as waste and you’d lose that opportunity to make money out of it. It would cost you money to have that material come out of the ground.
WSA: Right.
Philip Walford: So the milling is pretty straight forward. When we’re dealing with high recoveries like we are, you want to make sure that we’ve got great ranges from a gram to locally hundreds of grams per ton of gold. And so you want to make sure that you get as much of that material as possible and with high recovery rates there is a trade-off between where you’re going to put your heap leach and where you’re going to put your milling line. So right now we’re doing optimizing milling tests and we’ll have them done probably by the end of next month.
We’re also doing 12 heap leach columns and those are going to tell us what our recoveries are because the previous tests were preliminary in nature and these are fairly detailed tests. And so far it’s looking really very positive so it’s going to be interesting to see our results for those column tests will be out probably in April because it takes us a little time to get all the numbers, but they’re still in leach. So it’s really what we’re seeing is really exciting. So we’ll see what happens.
WSA: Yeah, it sounds like definitely and just to give our listeners here a little bit of a better picture so we’re speaking about the Valentine Lake gold deposit there which is in Newfoundland, can you talk a little bit about the area. You got pretty good strategic position there next to the electrical grids and things like that.
Philip Walford: Sure, it’s a gold deposit that’s fairly large, it’s the largest one on the island. We’re in what’s called the green stone belt. And the green storm belt has previous other significant mine and it’s got a lot of smaller occurrences and deposits that are being worked on both base metal and gold. And really the belts where we are is best known for a historic mining for the Sarko deposit which produce a significant amount of copper, zinc, silver and gold. And we also have another deposit near us called Duck Pond which recently shutdown and that was owned by Teck Resources and it’s a base metal—It’s copper, zinc, silver, gold as well but we’re pure gold. And it’s just a classic gold system that one would see in the Mother Lode district of California for instance or in the Canadian Shield. So it’s one I’ve dealt with types I’ve dealt with for many years and so very comfortable with it.
What surprised lot of people is the size that this is becoming and it’s drawing a lot of attention to the belt. Its infrastructure is really good, as was mentioned we’re close to a power grid. We have an all weather road that goes right to the Trans-Canada Highway, and we have towns nearby, but far enough away that we’re not really an issue for them. We also have which is really important in this day and age is we have a lot of government support. The government of Newfoundland just put out a paper, strategy paper and they say they want five mines in production on the island by 2/5/2030 and we’re one of them and they’ve been very cooperative. They’ve actually given us money – some money it’s not just us but others as incentives to do exploration and development. So it’s really good to be in a place where they want you. And the people want to see jobs and that’s really important in this day and age.
WSA: Yeah, exactly so you already as mentioned started the winter drill program there, what are some of the milestones and markers there you see here going over the next six months and as you’re putting out results?
Philip Walford: We’re starting off with what’s definition or infield drilling. That drilling is starting on our Marathon deposit. The Marathon deposit hosts almost three million ounces on its own and it’s getting larger. It’s open to depth. We’ve drilled down to a depth of a kilometer or 3000 feet and it’s still going down. So we know we’ve got a large deposit but our focus is on the open pit area which we would mine first. And so we’re putting in more tightly grouped holes to confirm the resource and bring some of the inferred resource up to measure and indicated that measured and indicated in preliminary feasibility study becomes proven and probable ore and that’s what our focus is on now, is converting this into an ore reserve.
WSA: Yeah, so you have a pretty good position there. You added some new members there to the team. Can you talk about some of the management and who is running the operations behind the scenes?
Philip Walford: Sure, well, I’m the President and CEO. I’ve just as a matter of background I’ve got about 40 years of experience almost 50 now in mining geology. I’ve worked for majors and most of my roles have been once I got out of being a mine geologist it was most of our my roles have been in management as chief geologist and looking after –.
Juan Costello: The old “boot and shovel.”
Philip Walford: Yeah, I did a lot of boot and shovel, and I enjoy it a lot. But what I like, what I enjoy doing is developing ore reserves like finding more ore in the mine. And in our case this is a green field site, but the fields that we use underground and on surface at mine sites are no different than what you use in exploration. But what it does give to our exploration into our evaluation process is because I know very well what it takes to make a mine. Our focus is really quickly, very quickly evaluate a project or a property and asked a question, “can this host more than a million ounces of gold.” Number two, is that potentially economic. And number three, can we permit it. And so that’s the approach we take.
The Senior VP of Exploration, Sherry Dunsworth is a structural geologist and that’s really good for this project because it’s all about the ore controls or all of the structural geology. And she has got quite a bit of experience and we’ve worked together for about 12 years now. And so we make a good team and her skills at management and exploration are very high. We also have Robbert Borst who just joined us who is an engineer, mining engineer fairly well experienced and he has steered the preliminary economic analysis that was done last year. And now he is guiding the preliminary feasibility study. And we’ve just added another engineer Jamie Powell, who has done a lot. He is a mining engineer but he is also done a lot of environmental work and a lot of permitting. And so his role now is to guide the permitting process which is largely environmental to get us to a point where we can permit a mine.
WSA: Right, yeah, he has a lot of experience in the area; Labrador and Newfoundland.
Philip Walford: That’s correct and he lives in St. John’s and that’s where the government is and those are the people he has to see so it works out well. So we’re building the team up which there’ll be more people as we go forward once we get beyond the preliminary feasibility study. We’ll go to feasibility and as we do we’ll start adding people to the roster both in Toronto and in Newfoundland.
WSA: Yeah, certainly. So what’s your take on all the consolidation going on right now in the sector and some of the other trends that you’re seeing right now?
Philip Walford: Well, I think it’s pretty exciting because when you see there is interest now. In the last couple of years there has really been no interest in the market on gold companies even though the price has remained high has just been that’s really been very lackluster. It was all you could do really to keep your value. But now we’re seeing the street coming back and these mergers and acquisitions are all I think very positive. If you look at us, where we have a significant resource, we are one of the few company’s projects in Canada and the US that doesn’t have a strategic partner yet and of our size and worth the four million mark and growing our resource.
WSA: Would you consider it?
Philip Walford: Of course, it depends – it’s all about price. It’s right now we’re very undervalued. Everybody says that but the net present value of our project from the PEA was 500 million US while the amount of stock we have, well there is 150 million so you can divide the two and see roughly where we should be at, it’s very simple. So clearly we were not anxious to jump at something that’s low-priced, but we’ll take a disciplined approach if someone makes an offer to us that it’s good for our shareholders then fine. But meanwhile we’ve got a mine to develop.
WSA: Yeah, certainly so what are some of the factors there that you feel make Marathon Gold unique from some of the other players in the sector and positioned to succeed?
Philip Walford: Well, I think the location is unique and that can work for you and against you. What’s good about our location in many respects is there is lot of people locally that have the skillsets we need, that is truck drivers and millwrights and things like that people like that so we’re very fortunate that way. We know that we have a lot of on-island talent that we can draw on. We do have as I mentioned a very supportive provincial government and that’s really important. And we are unique in an area that has had little exploration to the kind of detail that we have done. And we’ve got a huge resource that –.
WSA: You believe it’s under-explored then?
Philip Walford: People will absolutely. It’s has some quick passes it’s getting a lot more thorough pass now but you can imagine that three or four years ago we told there was a perception that there were no large gold deposits under Newfoundland in spite of fact there is actually a former producer to the size less that produced almost a million ounces. But this is something different and this has surprised a lot of people and they’re just getting, they’ve got their heads around that now that this is unique so far but it’s growing rapidly. We’ve added almost a million ounces last year in drilling and our cost to find a new ounce is 10 bucks. So we got a very efficient expiration group.
We have lots of blue sky here. This easily could be much more than 4 million ounces and nevertheless we’re not going to set and drill forever we’ve got to move along on a mine operation. So I’m pretty excited about it like as I say I spent a lot of time in my career with mining companies and senior positions and I’ve seen a lot of mines and I’ve seen a lot of prospects and I consider this one to be one of the best that I’ve seen outside of [Indiscernible] [00:20:22] that was available and rapidly developed. So again I’m pretty enthusiastic of this whole thing.
WSA: Yeah, sure. So yeah once again we’re speaking with Philip Walford, President and CEO for Marathon Gold Corporation trading on the Toronto Stock Exchange under the ticker symbol MOZ and their symbol is MGDPF that’s on the OTCQX, currently trading at 0.67 cents a share US and market cap is north of $100 million about $108 million US. And before we conclude here Philip, is there anything else that you’d like to add about MOZ?
Philip Walford: I think I would like to add that we’re really enthusiastic about our jobs and about the progress we’ve made and we really want to – I really want to the shareholders profit by. Personally I have over four million shares most of which I bought at many different prices and a lot of our management have shares as well and all of them do in fact. And we really feel that what’s best for the shareholder is best for us too and that’s our approach.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on your upcoming progress and we’d like to thank you for taking the time to join us today Philip and update on rest of our audience on Marathon Gold. It’s always good having you on.
Philip Walford: Well, thank you very much. I look forward to talking to you again.
