By Robb M. Stewart


Marathon Gold Corp. has boosted the size of a loan to help fund the construction and development of its Valentine gold project in eastern Canada and plans to buy back a portion of the smelter royalty for the project.

The Toronto-based gold company said Wednesday it amended and restated a term loan facility with Sprott Resource Corp., lifting the loan size to $225 million from $185 million with a reduced interest margin but an increase on the back-ended production-linked payment.

The terms of the credit facility are in line with Marathon's goal of balancing traditional term loan debt and equity, without excessive debt leverage, the company said.

"With the project's construction now well underway, and this significant component of our financing completed, we are on track with the development of what will be the largest gold mining operation in Atlantic Canada," Marathon President and Chief Executive Matt Manson said.

With available credit to Marathon of $225 million, the facility will mature at the end of 2027, with a six-month extension option available, Marathon said. On top of interest payable on the loan, Marathon said $17 an ounce will be payable on 1.6 million ounces of payable gold produced by the project starting on July 31, 2025, and it will issue 10 million warrants to Sprott with a strike price of 1.35 Canadian dollars ($1.01) and a term of five years.

Marathon has plans for a three-pit mine at the Valentine project in the central region of Newfoundland and Labrador. An updated feasibility study released in December projected an operation producing 195,000 ounces of gold a year for 12 years.

The company said it has provided notice that it will exercise an option to buy a half-percentage point of the 2% net smelter returns royalty on the Valentine project held by to Franco-Nevada Corp. Closing of the exercise of the buy-back option is set for Feb. 22, when Marathon said it will pay Franco-Nevada $7 million.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

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