Marathon Gold (TSX: MOZ; US-OTC: MGDPF) has announced a $30 million (upsized from $26 million) bought deal. The net proceeds will be spent on permitting, development and exploration at its Valentine gold project in Newfoundland.
The syndicate of underwriters is co-led by Canaccord Genuity, Sprott Capital Partners and RBC Capital Markets. The underwriters have agreed to purchase 20 million units at $1.50 per unit for gross proceeds of $30 million. Each unit consists of one Marathon share and half of a warrant. The underwriters have an additional option to purchase up to a further 3 million units at $1.50 per unit for gross proceeds of $4.5 million, exercisable at any time for 30 days following the closing of the transaction, which is expected around May 26.
In April, Marathon released the results of a feasibility study on its wholly owned Valentine gold project, which outlines a 12-year open-pit mine, producing an average of 175,000 oz. gold annually in the first nine years of operation.
The study estimates an initial capital cost of $272 million and average life-of-mine, all-in sustaining costs of US$739 per ounce. The net present value estimate for the project, at a 5% discount rate, came in at $472 million with a 36% internal rate of return.
News of the financing on May 4 sent Marathon's shares down 6%, or 10 ?, to $1.58.
Over the last year, Marathon has traded in a range of 71 ? and $1.76. The company has 179 million common shares outstanding for a $283-million market capitalization.
- This article first appeared in our sister publication, Canadian Mining Journal.