A May 1 research note from Canaccord Genuity reported that Marathon Gold Corp. (MOZ:TSX; MGDPF:OTC.MKTS ) released an updated resource on its Valentine Lake gold project in Newfoundland. "The overall resource was increased to 2,137,400 ounces Measured and Indicated (M&I) at 1.99 grams per ton gold and 1,1074,000 ounces Inferred at 1.99 grams per ton gold, which further demonstrates the district size potential of the deposit," analyst Eric Zaunscherb wrote.
Most of the gain in the revised resource comes from the Marathon deposit, which is the largest of the main four of them. The others are Leprechaun, Victory and Sprite. At Marathon, M&I resources grew 28% to 312,600 ounces, and Inferred resources increased 55% to 124,900 ounces. "The Marathon deposit is double the size of the Leprechaun deposit and remains open to further expansion in all directions," noted Zaunscherb.
In the recent update, global open-pit resources at the Leprechaun deposit increased 18% whereas they decreased 13% at the Victory deposit, wrote Zaunscherb. As for Sprite, resource upside remains there. The pits were too small and require additional drilling, so Sprite will not be included in the upcoming preliminary economic assessment. The company will drill between the Sprite and Marathon deposits to extend the resource and try to join the mini-pits that comprise Sprite.
Marathon Gold is still investigating the potential at Valentine Lake for an underground mine. "Many of the new holes that contributed to the resource update were deeper than those that were included in the previous resource and demonstrate potential for an increase in grade and ounces to the current underground resource," Zaunscherb explained. Before a determination can be made, however, more drilling is needed and will take place this summer.
Marathon Gold, seen as "an attractive takeout target," is trading at a discount to its peers covered by Canaccord Genuity, which is unwarranted, Zaunscherb pointed out, because "the Valentine Lake gold camp is located in the low-risk sovereign jurisdiction of Newfoundland and there is potential scale and resource growth for this project."
Canaccord has a Speculative Buy rating and a CA$1.60 per share target price on Marathon Gold, whose stock is trading at around CA$0.94 per share.
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Disclosures from Canaccord Genuity, Marathon Gold Corp., Flash Update, May 1, 2018
Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.
Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Required Company-Specific Disclosures (as of date of this publication):
Marathon Gold Corporation currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Marathon Gold Corporation.
In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Marathon Gold Corporation.
In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or co-manager of a public offering of securities of Marathon Gold Corporation or any publicly disclosed offer of securities of Marathon Gold Corporation or in any related derivatives.
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Marathon Gold Corporation in the next three months.
An analyst has visited the material operations of Marathon Gold Corporation. Partial payment was received for the related travel costs.
Disclosures are available here.