Marathon Gold [stock_market_widget type="inline" template="generic" color="default" assets="MOZ.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock has more than doubled in 2019 as the price of gold has soared, and that’s despite the fact that the company is still in the development stage. The company is developing the 100%-owned Valentine Gold project located in Newfoundland.
This makes it clear that Marathon Gold’s stock price is being driven by the gold price rally. This is why investors need to be cautious of their investment in Marathon because any weakness on the gold pricing front could dent the company’s returns. Meanwhile, the company will also have to provide positive updates on project development; otherwise, it won’t take long for investors to hit the sell button.
In this article, we will take a closer look at Marathon’s Valentine project and where the company stands as far as its development is concerned.
An Overview of Valentine Gold
Toronto-based Marathon Gold says that Valentine Gold is spread across a 20-kilometre system that contains mineralized deposits. The company has delineated four gold deposits so far at the mine, and according to the preliminary economic assessment carried out, Marathon Gold can carry out open-pit mining at the site.
Marathon points out that Valentine has measured mineral resources of 16.6 million tonnes at a grade of 2.18 grams/ton containing 1,166,500 ounces of gold. Inferred mineral resources stand at 26.9 million tonnes at a grade of 1.77 grams/ton containing 1,531,600 ounces of gold.
According to the preliminary economic assessment, Marathon Gold anticipates producing 225,100 ounces of gold annually for 10 years at Valentine Gold at an all-in sustaining cost of just $666 an ounce. The after-tax rate of return is expected at 30%. In all, it can be said that Marathon Gold seems to be sitting on a promising project that could help it mint big money in the long run.
But investors will have to wait until the fourth quarter of 2019 for an update on the mineral resources at the mine. The preliminary feasibility study is expected to begin in the second quarter of 2020.
Keep an Eye on Gold Prices
By now it is clear that investors are betting on the potential of Marathon Gold’s Valentine project. The good news is that they can continue to remain invested in the stock for two reasons.
First, the gold pricing environment continues to remain favourable. And second, the company has a strong enough balance sheet that should aid the development of Valentine Gold.
The price of gold can jump to $2,000 an ounce, as certain analysts expect, driven by the trade tensions and geopolitical issues around the globe. If this happens, then Marathon Gold stock could keep rising on the basis of sentiment.
Meanwhile, Marathon Gold has a decent balance sheet with negligible debt and a cash position of nearly $16 million. So, there are a lot of reasons to remain invested in Marathon Gold and investors should not be selling the stock because of its impressive long-term potential.
