Mr. Matt Manson reports

MARATHON GOLD ANNOUNCES 2020 SECOND QUARTER RESULTS

Marathon Gold Corp. has released its financial results for the second quarter ending June 30, 2020, and has provided an update on the company's activities at the Valentine gold project in central Newfoundland.

Highlights of the quarter are as follows:

• Completed the prefeasibility study (PFS) for the project in April, supporting an open-pit mining operation with low initial capital cost and high rate of return over a 12-year mine life. The PFS shows an after-tax IRR (internal rate of return) of 36 per cent and NPV (net present value, at a 5-per-cent discount) of $472-million ($354-million (U.S.)) based on $1,350 (U.S.) per ounce of gold, and an initial capital cost of $272-million ($205-million (U.S.)). Proven and probable mineral reserves comprise 1.87 million ounces (41.05 million tonnes at 1.41 grams per tonne gold);
• Developed return-to-work protocols in response to COVID-19, allowing for site activities such as exploration, geotechnical assessment and environmental baseline studies to restart on June 9, 2020, following their suspension on March 13, 2020;
• To June 30, 2020, completed 7,110 metres of drilling in the six-kilometre-long Sprite corridor and 6,502 metres of footwall drilling. Results include the confirmation of significant intersections of high-grade mineralization in the new Berry zone. Approximately 30,000 metres of exploration drilling budgeted for the second half of 2020;
• Advanced the company's environmental assessment activities for the project, ahead of the expected submission of an environmental impact statement in the third quarter, and conducted virtual meetings with multiple communities, stakeholder groups and first nations;
• Established a regional office in Grand Falls-Windsor, and committed $110,000 to community development initiatives and a further $90,000 to COVID-19 relief initiatives, including regional health and food security programs;
• Completed an equity offering for net proceeds of $32.35-million in May, resulting in cash and cash equivalents of $53.98-million at June 30, 2020;
• Subsequent to the end of the quarter, announced the appointment of Tim Williams to the role of chief operating officer and Paolo Toscano to the role of vice-president, projects.

Matt Manson, president and chief executive officer, commented: "In the second quarter we progressed our work at the Valentine gold project on multiple fronts. The prefeasibility study released in April presented the low-capital, high-rate-of-return mining project based on conventional open-pit mining and milling that we intend to take into development. We continued to make steady progress on our environmental assessment, with continued community consultations, data gathering and technical analysis in support of the submission of our environmental impact study, which is expected shortly. We successfully adapted our site management activities to the new COVID-19 challenges, and restarted exploration, condemnation and geotechnical work in June. Our exploration in the Sprite corridor is continuing to see success at the new Berry zone, which has now returned one of the best drill intersections in the project's history, at 3.33 g/t Au over 120 metres starting at 87 metres depth (new release dated July 22, 2020). Finally, we ended the quarter with a strong treasury of $54-million, following a successful financing in May, and announced the appointments of Tim Williams and Paolo Toscano in the key operating roles of COO and VP projects, respectively. All of these events are significant milestones for the development of a successful gold mining project at Valentine."

Financial performance

The results of operations for the second quarter are summarized in the accompanying table.

(in thousands of dollars)                         Three months ended June 30,       Six months ended June 30,
                                                        2020            2019            2020            2019
Expenses
General and administrative expense                  $  2,266        $    762        $  3,147        $  1,345
Finance income, net                                      (38)            (69)           (154)           (103)
Other income                                             (40)            (28)            (79)            (54)
Loss before tax                                        2,188             665           2,914           1,188
Deferred income tax (recovery)/expense                  (193)             88            (851)            193
Net loss                                               1,995             753           2,063           1,381
Capital expenditures                                   3,338           3,224           7,332           5,404

Three months ended June 30, 2020:

• General and administrative expenses increased from $760,000 to $2.27-million. The principal components of this increase are set out below:
  • Salaries and wages increased from $270,000 to $1.04-million, reflecting higher overall compensation costs as a result of the additions made to the company's management team in the second half of 2019 and the first half of 2020, as well as $510,000 in severance costs incurred during the second quarter of 2020. These increases were partially offset by lower bonus expense in the three months ended June 30, 2020, compared with 2019, as 2018 bonuses were expensed and paid in the second quarter of 2019.
  • Share-based compensation expense increased from $240,000 to $850,000 in the quarter, resulting from an increase of $400,000 in stock option expense, related to vesting of options on completion of the PFS and 2020 annual employee option grants, as well as a $240,000 increase in the deferred share unit (DSU) liability resulting from the increase in the company's share price between the end of the first and second quarters of 2020. A total of 3,175,000 options were issued in the three months ended June 30, 2020.
  • Investor relations and corporate communications expenses increased from $20,000 to $80,000, reflecting increased investor and corporate communication initiatives, including engagement with stakeholders in the local communities around the Valentine gold project.
• Finance income, net, decreased from $70,000 to $40,000, primarily as a result of a decrease in interest income from $70,000 to $50,000, as the interest rate earned on surplus cash balances decreased in the second quarter of 2020 relative to the prior-year quarter.
• Other income increased from $30,000 to $40,000, resulting from an increase in royalty income due to higher gold prices and increased tonnes mined at the Golden Chest mine, where the company holds a 2-per-cent net smelter return royalty.
• Capital expenditures decreased from $3.22-million to $2.80-million. Exploration and camp activities in the second quarter of 2020 were less than planned due to the camp closure related to COVID-19; however, activities related to the completion of the environmental impact statement (EIS) and various underlying environmental studies and community initiatives remained on schedule.

Six months ended June 30, 2020:

• General and administrative expenses increased from $1.35-million to $3.15-million. The principal components of this increase are set out below:
  • Salaries and wages increased from $500,000 to $1.45-million, reflecting higher overall compensation costs as a result of the additions made to the company's management team in the second half of 2019 and the first half of 2020, as well as $510,000 in termination costs incurred during the second quarter of 2020. These increases were partially offset by lower bonus expense in the six months ended June 30, 2020, compared with 2019, as 2018 bonuses were expensed and paid in the second quarter of 2019.
  • Share-based compensation expense increased from $300,000 to $830,000, resulting from an increase of $500,000 in stock option expense, related to vesting of options on completion of the PFS and 2020 annual employee option grants, as well as a $70,000 increase in the DSU liability resulting from the increase in the share price in the first six months of 2020. A total of 3,175,000 options were issued in the six months ended June 30, 2020.
  • Investor relations and corporate communication expenses increased from $110,000 to $220,000, reflecting increased investor and corporate communication initiatives.
• Finance income, net, increased from $100,000 to $150,000 as a result of an increase in interest income from $100,000 to $160,000, as Marathon invested surplus cash from the September, 2019, and May, 2020, equity financings in interest-bearing deposits.
• Other income increased from $50,000 to $80,000, resulting from an increase in royalty income due to higher gold prices and increased tonnes mined at the Golden Chest mine.
• Capital expenditures increased from $5.40-million to $6.80-million, with the increase reflecting the continued advancement of the Valentine gold project, including: the completion of the updated January, 2020, mineral resource estimate and the April, 2020, PFS; the progression of the EIS, including various underlying environmental studies and community initiatives; and continued exploration drilling.

$34.5-million bought deal financing

On May 26, 2020, the company completed its previously announced bought deal prospectus offering of 23 million units at a price of $1.50 per unit for total gross proceeds of $34.50-million, which included the exercise in full of the underwriters' overallotment option. Each unit comprises one common share of the company and one-half of one common share purchase warrant of the company. Each warrant entitles the holder to acquire one common share of the company at a price of $1.90 per common share at any time on or before May 26, 2021.

The company intends to use the net proceeds from the offering to continue the permitting, development and exploration of the Valentine gold project, as well as for working capital and general corporate purposes.

For further information on Marathon's operational activities during the second quarter ended June 30, 2020, please see the company's financial statements and MD&A (management's discussion and analysis), available on SEDAR.

Qualified person

Scientific and technical information contained in this news release was reviewed and approved by James Powell, PEng (Newfoundland), vice-president of regulatory and government affairs, and Nicholas Capps, PGeo (Newfoundland), project manager for exploration at the Valentine gold project. Exploration data quality assurance/control for Marathon is under the supervision of Jessica Borysenko, PGeo (Newfoundland), GIS manager for Marathon. Mr. Powell, Mr. Capps and Ms. Borysenko are qualified persons in accordance with National Instrument 43-101 (Standards of Disclosure for Mineral Projects) and have approved the technical content of this MD&A. Marathon's mineral resources and mineral reserves have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) and in accordance with the requirements of NI 43-101. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Mineral resources are reported inclusive of mineral reserves. Information on data verification performed on, and other scientific and technical information relating to, the Valentine gold project is contained in the annual information form and the current technical report for the Valentine gold project prepared in accordance with NI 43-101, entitled "NI 43-101 Technical Report & Pre-Feasibility Study on the Valentine Gold Project, Newfoundland and Labrador, Canada," dated April 21, 2020, with an effective date of April 18, 2020. The technical report was prepared by Ausenco Engineering Canada and is available at SEDAR.

Acknowledgments

Marathon acknowledges the financial support of the junior exploration assistance program, Department of Natural Resources, government of Newfoundland and Labrador.

About Marathon Gold Corp.

Marathon is a Toronto-based gold company advancing its 100-per-cent-owned Valentine gold project located in the central region of Newfoundland and Labrador, one of the top mining jurisdictions in the world. The project comprises a series of four mineralized deposits along a 20-kilometre system. An April, 2020, prefeasibility study outlined an open-pit mining and conventional milling operation over a 12-year mine life with a 36-per-cet after-tax rate of return. The project has estimated proven mineral reserves of 1.3 million ounces (26.3 million tonnes at 1.52 g/t) and probable mineral reserves of 600,000 ounces (14.8 million tonnes at 1.23 g/t). Total measured mineral resources (inclusive of the mineral reserves) comprise 1.9 million ounces (31.7 million tonnes at 1.86 g/t) with indicated mineral resources (inclusive of the mineral reserves) of 1.19 million ounces (23.2 million tonnes at 1.60 g/t). Additional inferred mineral resources are 960,000 ounces (16.77 million tonnes at 1.78 g/t Au). Please see the technical report dated April 21, 2020, for further details and assumptions relating to the Valentine gold project.

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