An independent preliminary economic assessment on Marathon Gold Corp.'s Valentine Lake gold property defined an after-tax net present value of US$367 million, using a 5% discount, with a 25% internal rate of return.

Initial CapEx is estimated at US$379.9 million, with a 2.8-year payback period, according to a May 17 statement.

The proposed open pit operation on the island portion of the province of Newfoundland and Labrador is expected to produce 188,500 ounces of gold per year for the first 10 years of operations. Initial production is targeted for 2022.

All-in sustaining costs are expected to average US$595/oz over the 11-year mine life, with operating costs of US$19.20/t of ore. Valentine Lake will comprise two gold recovery processes: a milling, flotation and carbon-in-leach plant and a heap leach plant.

Marathon Gold said the Sprite deposit, one of four on the property, was excluded from mine development plans until further drilling increases resources.

The company posted increased resources for Valentine Lake earlier in May, with 2.1 million ounces of gold in the measured and indicated categories.

Further drilling is planned this year in order to increase and upgrade resources, along with further hydrogeological, geotechnical and metallurgical work.