Dave Erfle – Reviewing Company Merger Nuances In Light Of Marathon Gold Combining With Calibre Mining

Shad Marquitz
November 14, 2023

Dave Erfle, Founder and Editor of The Junior Miner Junky, joins us break down the key macroeconomic data moving the markets and gold, and gold stocks; as well as reviewing precious metals company merger nuances in light of the recently announced transaction to combine Marathon Gold (MOZ) with Calibre Mining (CXB).  We dive into this merger in more detail, and also get into a wide-ranging discussion of the structure of M&A deals we’ve seen and may continue to see in the precious metals sector, the good criteria to look for, and conversely, what elements represent red flags.




Click here to visit Dave’s website – The Junior Miner Junky.

    Nov 14, 2023 14:32 PM

    Don Durrett – – @DonDurrett on X-Twitter:

    “Calibre Mining acquires Marathon Gold for 32% premium. They are paying $45 per oz in one of the best mining locations in the world! A stunning discount. It’s worth at least $300 per oz.”

    “This happens over and over. The slippery slope of greed. This was not done in the interest of shareholders. Deals like this never are. They are always done in the interest of mgt and board.”

    “Marathon had an excellent mine in an excellent location. It was going to be worth billions at higher gold prices.”

    “Calibre is a solid company, but it has location risk, which impacts its FCF multiple (currently a 4). Marathon was likely to get a huge FCF multiple premium for its location over the next 10 years. Thus, mgt saddled shareholders with that location risk, and reduced their upside potential.”

    “The bottom line is this. Marathon was not sold at a premium. It was sold at a discount (a huge discount). Forget about the current gold price. Forget about the current market price for gold in the ground. This is a long-life mine. Gold prices are going higher. This company is clearly worth $1B or $1.5B, when you project out the FCF over the next 10 years.”

    “Calibre has to be extremely excited to steal it. I guarantee you when this deal was done they were giddy. Even if they paid $500M, they would have been happy. They paid about half that.”

    “A fair price would have been $300 per oz. Which would have been a $1.5B valuation. They paid $45 an oz.”

      Nov 14, 2023 14:46 PM

      As someone that has a healthy portfolio weighting in Calibre Mining, I am obviously biased, but feel that they did use their solid financial strength as a mid-tier producer to make an accretive acquisition while the development stage companies with a higher cost of capital and challenges raising it are trading at silly valuations.

      >> Really, it is shocking that more mid-tier gold and silver producers are not out scooping up all the good developers at fire-sale prices right now.

      As far as the risk of Nicaragua, yes, it has always been a factor and is why companies like Calibre and Mako have been trading at a significant discount to their peers, based on their production profiles and attractive margins… so that is already well factored in and people are making too big of a deal about it. Yes, the US sanctioned Nicaragua last year, but they’ve done that a dozen times before and with relation to commodities and it’s not interrupted business for foreign Canadian companies operating successfully within country. It would take a sanction from Canada, which has not happened to create more of a challenge… so that risk is out there… but look at the reward with Calibre as a solid growth-oriented gold producer, that helps mitigate that risk.

      We had both companies on to discuss this and there was no material impact to their operations last year or this year, and the way it was presented in the mass media at the time was misleading or flat out disingenuous.

      Since that selloff in October of 2022, Calibre went on to rally triple digits and was one of the better performers in the sector and rightly so… the hand-wringing about Nicaragua was way overdone at the time, and Calibre has been slaying it with the drill bit, massively increased their reserves on a percentage basis, brought 2 new mines into production just last year, with more on tap, and CXB has had true grade-driven growth. Many of the areas they’ve been exploring have been building out new resources at much higher grades than their average head-grade, and thus they’ve grown production each year, largely through better grade ore and better recovery rates.

      Calibre also has an operating mine and also a solid development project that could more than double production there in Nevada, the #1 best jurisdiction on the planet. I sure didn’t see their exposure to Nevada being discussed by the grumbling Marathon shareholders today warning about jurisdiction risk.

      Look there is always a winner and loser in any business combination. Sometimes the acquiring companies overpay and sometimes they get a good deal. That is life and with this current low valuations in all developers, then it’s a buyers market where the big boys can grab projects at fantastic deals.

      Nobody likes a “take-under”, but it was no different with Alexco being nabbed for pennies on the dollar by Hecla, or Gold Standard Venture being scooped up on the mega-cheap by Orla Mining. Heck, even the Sabina takeover by B2Gold, wasn’t stellar even at the higher part of a rally, as many long-suffering bag holders didn’t even get made whole or maybe came out with a wash, unless they happened to position at the recent low and ride it up into the takeover. Or how about the absolute slam dunk of a takeover of Anacortes Mining by Steppe Gold that few have even raised an eyebrow about that had them valued at 1/4 an ounce in the ground that Marathon just got. Now that was a “takeunder” and a stellar deal for Steppe Gold.

      We’ll see more of these “takeunders” if mid-tier producers are paying attention and put their better valuations to work to scoop up the best development projects out there all trading at ridiculously low valuations. Again, it is shocking we’ve not been seeing more of this kind of thing the last 2 years.

        Nov 14, 2023 14:15 PM

        Some other takes on this merger from comments over in the CXB room at

        @HealthyBones – “Feels like this confirms why CXB didn’t put too much effort in Nevada/Golden Eagle – I guess they don’t see too much potential in the assets, and it will be sold once Valentine gets up and running. Valetine is definitely a promising asset, and I would define it more of a tier 1 asset than Nevada/Golden Eagle asset due to life of mine, head grade, and one can argue the AISC (tho it’s not that low, but lower than Nevada).

        Also, this aligns with the NCIB – creates a buffer to prevent the stock from going too low with this takeover – though most of the capital now will most likely be used for the Valentine capex.

        Valentine might actually add more value than Gold Rock since that asset was supposed to add 50k of production when it goes into production (whenever that is), now we have more certainty that we will hit >500k oz in 2025 but wouldn’t be surprised if there were more delays.

        I like this deal as a CXB holder, but I do understand the frustration if you were a MOZ holder as they were sold relatively cheap for such a promising asset. If anything (but again, the whole space is taking a beating), the team at Valentine fumbled the bag when they couldn’t figure out the funding gap which created this opportunistic situation. There could also be issues that we aren’t aware of – St.Barbara themselves most likely regret buying Atlantic Gold with all the issues they are having in Moose River.

        I wouldn’t be surprised if another bid comes in, the termination fee is roughly 5% which I feel is a bit higher than normal (BTO – SBB was roughly 3.7%, and KGC – GBR was roughly 4.7%), but $17.5 million is non-material for such a deal.

        CXB is pretty much doing what every gold company does (e.g. start at a risky jurisdiction, get enough positive cash flow to buy a tier 1 asset in a tier 1 location, then diversify their old portfolio (e.g. BTO, ELD, AR).

        Overall long term this is good for CXB, short term wise – will hurt current investors with the drop in share price.”


        @orotoro – “@HealthyBones – agree with most of what you say – i have stated in the past i did not like the fiore acquisition and dilution – but with cxb’s past 18 months of exploration drilling in nevada the fiore purchase does look much better, even though aisc remains high for nevada operations – on a stand alone basis nevada is still cash flow positive and funding continued nevada exploration – i would not be surprised to see gold rock production begin within the next year with higher gade ore potentially being transported to pan facilities, similar to the hub and spoke concept being utilized in nicaragua – higher grade feed material from gold rock to pan could lower aisc significantly for nevada operations overall – golden eagle can sit on the back burner for years”


        @HealthyBones – “I also like how CXB is taking a 14.2% equity stake in MOZ at 60 cent per share which will close tomorrow (Nov 14) and NOT contingent to the closing of the transaction, which means if another suiter comes in and takes over MOZ at a higher price, CXB will benefit from the share appreciation and also the termination fee.”


        @TheLings – “yeah cxb with the PP makes this a no lose proposal. the funding gap is closed for moz now, which makes it more attractive, odds of an interloper are high. CXB could see a 2x on this if they don’t end up acquiring moz.”

          Nov 14, 2023 14:49 PM

          Yes, CXB grabbed a goody, I have watched Marathon grow over the years and I have a friend in this stock who isn’t happy with this takeover. I really like the action in Newfoundland it is drawing in a lot of players who are getting excited. Colin Kettell who is CEO of NFG and NKG is probably the new Robert Friedland or Ross Beaty. He is a mining entrepreneur to put on your bucket list. When you follow these guys, you can make money and sometimes you can make a lot of money.

          I will say this about Marathon they are not in production yet and may not be a producing mine until late 2025 or 2026. Opening a new mine is full of pitfalls as we all know look at Pure Gold. I have been studying the terrain lately in NFLD and Labrador and I have a large position in a junior in the Baie Verte. Happy Hunting and follow the serial entrepreneurs but also remember that if you want to be a success at this game you must try to figure where they will shoot the puck next. DT

            Nov 15, 2023 15:38 PM

            Well it will be Calibre taking the Valentine Mine into production now, instead of Marathon, pending the deal closing, but the plan (at least as it is now) is for the mine to go into production the first half of 2025. It will be interesting to follow, but most big builds in the mining space take longer than projected, so late 2025 wouldn’t surprise me either.

    Nov 14, 2023 14:02 PM

    Harmony Gold hit a 52 week high today on the best volume in 8 months and is up 55% since its October low 6 weeks ago…

    Nov 14, 2023 14:06 PM

    May be the CEO….Matt a serial destroyer of shareholder value….was a shareholder of Stornoway which he deftly flew into bankruptcy….taking 50 K of my money with him…

    Nov 14, 2023 14:29 PM

    I can understand why Dave is upset. When the miners got beat down for no apparent reasons and to levels totally irrational with fundamentals, it became concerning that the vulnerability would lead to “unreasonable” transfers of ownership favoring some form of insider. Well it is starting to happen.
    It appears that the better place to be may be some form of “insider” …. or the owner of stock in an early stage project with demonstrated potential that “hasn’t” eliminated enough risk to be a takeover target ….until prices become closer to “proper value” instead of theft levels. Just a thought.

    Nov 14, 2023 14:09 PM

    When I complained about the price down-rigging of Alexco before its „take-under” by Hecla, I got a lot of headwind here on this board. I was adviced that „ I should have owned Hecla” ( by Excelsior) and look where Hecla is being priced currently. What if Hecla is being taken under itself?
    I would have expected a clear positioning against this shark-behavior by this board.
    Well, I learned my lesson and turned away from those possible take-under targets.
    No wonder that the sector is where it is.

      Nov 15, 2023 15:21 AM

      Michael, you just explained why everyone is responsible for the decisions they make in life no matter what others say. Investing is a very tough game add that onto buying mining companies and you are living in a financial swamp, and everyone must decide for themselves is this what I want. DT

        Nov 15, 2023 15:56 AM

        Of course.
        Thanks to David Erfle who found the right words for this behavior.

      Nov 15, 2023 15:46 AM

      Michael, for the record I owned Alexco too since late 2015 and actually made lots of money in it trading for years on the swings up and then reloading on pullbacks and overall had a positive experience in the stock. However, I too was very disappointed with their final chapter trying to get back into production, and continually missing deadlines, pushing back the timeline repeatedly to get back into production, then doing it with a fizzle and without the appropriate stockpiles or stopes open underground to appropriately feed their mill, and then repeatedly needing more capital that expected, and eventually losing the confidence of investors; (which was their downfall). They had PLENTY of time to prepare properly to go back into production and failed to get escape velocity and get off the ground with their mine restart, and were punished accordingly.

      It wasn’t share price “down-rigging” from nefarious players with Alexco — it was simply poor execution for a whole period of 1-2 years trying to get into production. People exited the stock in droves when they saw the blood in the water and the need for even more capital raises. That was the point I made then to you, and the exact same point I’d make about Marathon Gold now. Marathon Gold has done a crappy job now for the last 2 years, their shares have cratered from late 2021 into all of 2022 and 2023 up until recently, and their team has had several cost overruns, and ultimately lost the confidence and interest of the street. There was no positive momentum in their stock for a long time now, because they’ve been a sinking ship and most analysts knew it.

      People that regularly point to manipulation are just trying to soothe themselves with a narrative that it is some other outside group driving the price down, instead of themselves getting positioned in a story that is unraveling. Look, sometimes it is a fund exiting, but come on…, it is simply terrible performance and selling for years and months before it leading to even more selling recently. That is what happened with Alexco and what happened here with Marathon – a loss of faith, a failure to execute, and selling begetting more selling, as everyone knew they both needed more capital and it would be highly dilutive.

      Now, with Alexco, they actually did a fantastic job of exploring and expanding Flame & Moth and Bermingham deposits, and developing the underground incline, and they had many solid rallies on that part of their journey for years leading up to their downfall. So did some of the prior management team of Marathon when they were exploring and derisking Valentine in years past, and had really good runs in the past. However, in the end both companies failed getting into production, and needed to be rescued by a larger more competent operator. Very very few junior teams can make the leap into being producers successfully and it is far more common for a larger operator to watch the floundering during the construction phase or early production years and then come in and put them out of their misery as better experienced and well-capitalized producers.

      That is why both Alexco and Marathon’s stocks sold off so hard for the last 6 months of their existence, where selling begot more selling, and why they became an attractive takeover candidate for Hecla, and Calibre – both superior operators with cash flows and histories of building and operating mines.

      Yes, Hecla is down as you mentioned, but so is the rest of the sector Michael, so I fail to see your point. Clearly it has been a bear market across the board, and most PM stocks are down substantially. Hecla is not down off it’s highs nearly as bad as other peer producers like Coeur, or First Majestic, or even the largest PM producer Newmont, where those companies are back down near their March 2020 pandemic crash lows. So, you’d still have fared much better with Hecla than many other producers, and why I was happy to have been positioned in HL at the time they rescued AXU and still am happy to hold it presently.

      Also, Hecla, unlike Alexco, is a competent operator that’s been around 125 years, and will be producing from Keno Hill for many years to come bringing future value to HL shareholders, as sentiment swings back up in this sector (like it always does). That was the point I made to you then… rather than trying to blame manipulated share prices or crying over spilled milk about the failures of Alexco’s management team, one could still ride up the next wave of the PM cycle with a quality producer by letting their AXU convert over HL. There is no advantage to crying into the wind about all the selling at the end of a company’s journey when their pockets are out and their hand is out asking for more money. Sell it and take your loss, or ride the new operator up in the next cycle. Those are the 2 choices.

      I’d make the exact same point here with Marathon’s management team failing repeatedly to execute, driving shareprice down to oblivion, losing investor confidence and momentum, and all in the backdrop of a sector-wide bear market adding to the selling. It doesn’t have to be “price down-rigging” at all, just look at most of the other stocks in the sector getting creamed right along side Marathon leading into September of this year and Beaver Creek. I was there in Beaver Creek, and even the pros and best investors in the sector at that event were selling many of their positions and moving to cash to get yield, waiting for a turn in the sector.

      People were selling all kinds of quality stocks in droves, so a large lower-grade bulk tonnage development project in Newfoundland that was having cost overruns was not going to be an exception and Marathon got sold too. There was not a compelling reason for Marathon to buck that trend, but eventually at extreme oversold technical levels, any stock can bounce. Management assured folks in late September conference season that they didn’t need to raise, but could if they wanted to with a stream, and that they weren’t looking for a “takeunder” offer. (Clearly we now have the rest of the story).

      Keep in mind that based on what they knew at the time, in late October investors were simply buying the oversold dip in Marathon (once gold finally bottomed and the PMs reversed up strongly). Gold had gone down into the $1820’s and then had a strong reversal of fortunes blasting back up to $1900 and then the mid $1950’s and $1960’s from late October into early November, and Marathon’s stocks rose in tandem with the yellow metal. It wasn’t a game being played by funds, MOZ was simply tracking the bottoming in PMs and then the raise back higher again over the last 3+ weeks.

      The reality was Marathon was in and had been in financial duress trying to get Valentine built and needed a lot more capital to finish building the mine and was having the same kind of cost overruns we saw at Argonaut’s Magino, or IamGold’s Cote’, or Ascot’s Premier mine in the Golden Triangle. Look at what happened to all 3 of those companies stock charts when they announced cost overruns during the construction phase of their big mines. Why would Marathon fare any differently?

      The management team at Marathon just took the easy way out of being acquired by a more competent mid-tier producer with cashflows and better cost of capital. Also consider that management scooped up their $5 million change of control golden parachute, rather than going back to the market and getting beat up trying to raise money in a terrible capital market environment, which would have diluted the snot out of current shareholders even further. They made the right call to stop the bleeding, and let a more competent team come into the equation, and it leaves investors at present better off than if the pain and dilution had continued (whether they’ll admit that to themselves or not).

      As for Calibre, they also had a string of positive news leading in to Beaver Creek, and I met with Darren and Ryan there, and follow their story very closely as a shareholder with a heavier weighting to CXB. Trying to explain away their solid exploration, development, and production execution this year (which was the real reason for the runup in their share price) and label it solely as funds playing games to push them higher, is rubbish in my opinion, and negates the fact that they had a string of good news during that period.

      There are funds in all these mid-tier producers and larger developers all the time, and comparatively Calibre has held up way better than most of it’s peers the last 2-3 years during this sector bear market, precisely because they are a quality team, and are executing, doing what they said they would, and hitting milestones regularly. In fact, investors that exited Calibre in October of 2022 during the far overblown US sanctions of Nicaragua, made a massive mistake, as CXB rallied up triple digits after that from Oct of 2022 through the banking crisis in April of 2023, because they continued to have success with exploration, development, and production in both Nicaragua and Nevada — hitting on all cylinders. We’ve covered this successful string of milestones from Calibre on the KE Report show very regularly the last few years, and anyone paying attention to their progress could have been positioned in Calibre and outperformed most of the other gold gold producers as a result. Sadly most fail to seize opportunities when they are presented, choosing instead to follow the herd, ignoring success hiding in plain sight, and not sizing up risk versus returns appropriately.

      In the case of this merger transaction this week, the team at Calibre once again, pounced at the right time to make and accretive acquisition. The string of success continues… Additionally, now Calibre also has and equity stake in Marathon as a result of the $40 million capital raise Marathon needed (so even if another bidder comes in with a higher offer then they’ll do well on the equity stake) = brilliant. Also, they have a $17.5 million break fee included in the deal so if some other company comes in and overbids, then they get paid well there to not acquire Marathon. It’s a no lose situation for Calibre based on the terms of the deal. Again, just like when I owned Hecla during the Alexco final implosion and was focused on the future with a competent operator, I feel the same way now about Calibre being the superior proven operator, taking Marathon out of their misery, and structuring a solid deal, with solid terms, at the right time in the cycle to poach a fantastic deal.

      Now, this doesn’t insure the rest of the build will go great or on time or even stay on budget, so there is plenty of risk (as their always is in building a new mine of this size). However, Calibre has built a half dozen underground and open-pit mines in just the last few years and optimized the other mines in their stable in Nicaragua and Nevada, so they have a history of competence and execution, and cash flows, instead of being a cash-starved pre-revenue company. I’ll take that risk and bet, and look forward to them building out the rest of Valentine in 2025 and growing from a 275,000 ounce producer into a 500,000 ounce producer by 2026, in a better PM cycle backdrop.

        Nov 15, 2023 15:33 AM

        With Marathon as with most failed endeavors the acquiring company will have done their Due Diligence but inevitably, they will find hidden debt that wasn’t known or brought up at the time. Calibre got a good deal but there still could be skeletons that come to light once they move in. DT

          Nov 15, 2023 15:42 PM

          That’s a good point DT. There likely are some skeletons in the closet on the Valentine Mine under construction that won’t become evident until Calibre takes the reigns and dials in a bit more. However, I feel far more confident in the Calibre team on executing the build moving forward, as they have a proven track record of successful mine completions and just got done launching 2 new mines just this year with Pavon Central and Eastern Borosi. Granted this is a much larger mine in Newfoundland, and that may be a slightly different dynamic to digest… It is going to be interesting to see how this plays out over the next year and half.

            Nov 16, 2023 16:13 AM

            And they have snow and sub zero temps, unlike Nicaragu

    Nov 15, 2023 15:56 AM

    Long NatGas 45% (BOIL)

      Nov 16, 2023 16:49 AM

      Sold & Stopped Out

    Nov 15, 2023 15:59 AM

    Source Rock Royalties, SYL-SRR, a pure play oil and gas royalty company that pays a monthly dividend. DT

    Nov 15, 2023 15:29 AM

    Pick a # between 0 and 2 and that is where my account has been sitting all day: green + 1.01%. I guess I am supposed to be happy with +1% instead of – 1%. It probably wouldn’t enter their minds that investors do not like intervention.

      Nov 15, 2023 15:41 AM

      Interesting stat from a couple of minutes ago….if I remove Hercules from consideration, all other stocks combined equal + $17. Nothing new in my account. Great algo. (different stocks in different amounts, but remains the same of some up and some down).

      Edit: while typing it switched to – $79. Both sides of Zero in play.

        Nov 15, 2023 15:16 PM

        Big finish for some up …. Some down -.63%. Just like the old days.

    Nov 15, 2023 15:36 PM

    This sudden and significant strength in silver vs gold is just what we needed and it needs to continue. It tells us the sector is going “risk-on” which is obviously good for our miners.

    Nov 15, 2023 15:28 PM

    Have to ignore anyone who babbles t/a nonsense. The guy makes some good points but ruins it when he spews out “supports” and other t/a jargon that only exists in his head. Manson destroyed a great project. He’s a serial destroyer. I hope the lawsuits are a mile high and he’s held personally responsible.

      Nov 17, 2023 17:15 AM

      The babbling is all yours Rob. To deny t/a is to deny human nature and the mountains of evidence it has produced.

    Nov 15, 2023 15:55 PM

    Loved trading this. Dave is dead right. Lousy deal for MOZ.