Marathon Gold Tax Information

On 24 January 2024, Calibre Mining Corp. (“Calibre Mining”) acquired all outstanding common shares of Marathon Gold Corporation (“Marathon Gold”) pursuant to a Canadian court approved plan of arrangement (the “Arrangement”) as detailed within the Marathon Gold Notice of Special Meeting of Shareholders and Management Information Circular dated 11 December 2023 (“Circular”).  Click here to see the Circular as posted on sedar.com on 22 December 2023 under the heading of Marathon Gold Corporation.

Pursuant to the Arrangement, Calibre Mining acquired all issued and outstanding Marathon Gold common shares in exchange for Calibre Mining issuing 0.6164 of a Calibre Mining common share for each Marathon Gold common share received.  The Arrangement was completed in the early hours of 24 January 2024 and prior to the opening bell of the Toronto Stock Exchange.   

The closing price of Calibre Mining common shares on 23 January 2024 as reported by the Toronto Stock (TSX) Exchange (as CXB) was C$ 1.27.  The closing price of Calibre Mining common shares on 23 January 2024 as reported by the United States over-the-counter (OTCQX) market (as CXBMF) was US$ 0.9303.

The closing price of Marathon Gold common shares on 23 January 2024 as reported by the Toronto Stock (TSX) Exchange Exchange (as MOZ) was C$ 0.78.  The closing price of Marathon Gold common shares on 23 January 2024 as reported by the United States over-the-counter (OTCQB) market (as MGDPF) was US$ 0.5680.

Below is a simplistic summary of the income tax result to a Marathon Gold shareholder that is: tax resident in Canada, tax resident in the United States (“U.S.”), or tax resident in neither the U.S. nor Canada.

The U.S. and Canadian income tax consequences of this reorganization Arrangement whereby Calibre Mining acquired Marathon Gold is complex.

Marathon Gold shareholders are urged to consult their own tax advisors regarding the U.S. and Canadian federal income tax consequences of the Arrangement applicable to their tax circumstances as described in pages 129 to 144 of the Circular posted on Sedar.com on 22 December 2023 under the heading of Marathon Gold Corporation.

Shareholders should not construe the contents of this simplistic summary as legal, tax or financial advice.  Neither Calibre Mining nor Marathon Gold make any representation with respect to the tax consequences to any shareholder.

The Canadian income tax consequences to a Marathon Gold shareholder are complex.  You are directed to read the tax summary as provided in the Circular on pages 129 to 133.   

In very general terms, a Canadian tax resident should (generally) report the tendering of Marathon Gold common shares in exchange for Calibre Mining common shares as a tax-deferred disposition. 

There is a procedure for an eligible Marathon Gold shareholder (that is not a dissenting shareholder) to self-choose to recognize a capital gain (or a capital loss) on the exchange of Marathon Gold shares for Calibre Mining shares.

The U.S federal income tax consequences to a Marathon Gold shareholder are very complex.  You are directed to read the tax summary as provided in the Circular on pages 136 to 144.  

Pursuant to the Arrangement, and subject to the PFIC discussion contained within the Circular, the combination of the exchange of Marathon Gold shares for Calibre Mining shares was intended to qualify as a tax-deferred reorganization. Neither Marathon Gold nor Calibre Mining has sought or obtained an opinion of legal counsel or a ruling from the U.S. Internal Revenue Service (“IRS”) regarding any of the tax consequences of the Arrangement.  Accordingly, there can be no assurance that the IRS will not challenge the status of the Arrangement as a reorganization or that the U.S. courts will uphold the status of the Arrangement as a reorganization in the event of an IRS challenge.  

Click here for the Internal Revenue Service Form 8937 applicable to this reorganization.

A U.S. shareholder may also be subject to Canadian tax consequences.  Please read pages 133 to 136 of the Circular starting with the heading of “Holders Not Resident in Canada”.  

If a Marathon Gold shareholder is not considered tax resident in the U.S. and Canada, then you are advised to read pages 133 to 136 of the Circular starting with the heading of “Holders Not Resident in Canada” to understand the potential Canadian income tax consequences.