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Equity Research Profiles |
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Victoria Gold Corp. VITFF /
Other OTC / $3.97 March 23, 2020 |
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Business Overview |
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Victoria Gold Corp. (the Company)
owns 100% of the Eagle Gold Mine (the Mine) in central Yukon, Canada.
It is approximately 375 kilometers north of Whitehorse, accessible by road
year-round, and connected to Yukon Energy�s electrical grid. This open pit Mine
poured its first gold in September 2019 and is expected to be in commercial
production by mid-year 2020. Pre-production capital cost was $487.2 million. |
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Full production is estimated
to be 210,000 ounces per year at an all-in sustaining cost (AISC) of
US$774 per ounce Au. The estimated mineral reserve for the property is 3.3
million ounces of gold (0.65 g/t), the waste-to-ore
ratio is less than 1:1, and the metallurgical characteristics are favorable
to heap leach processing. The mine life is 11 years, which can be
significantly extended by higher gold prices. |
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The Mine is located within
the traditional territory of the First Nation of Na-Cho Nyak
Dun (FNNND), with which the Company has a long-standing Comprehensive
Cooperation and Benefits Agreement. At full production, the Mine will employ
350-400 people. |
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The 100%-owned Dublin Gulch
property (approximately 35,000 hectares) within which the Mine is located, contains
other areas of gold occurrence. The Olive Zone (approximately 2.5 km
northeast of the Eagle Zone) has had sufficient drilling to be defined as a mineral
reserve showing an estimated 200,000 ounces of gold (0.67 g/t) using an
assumed gold price of US$1,275 per ounce. Production (open pit) is planned to
commence in 2028. |
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The Company has staked 1,012 quartz mining claims
covering 20,500 hectares of FNNND lands immediately to the west of the Dublin
Gulch Property. Victoria holds an agreement with FNNND to conduct |
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2020 Focus |
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With commercial production
planned by mid-year, management hopes to scale up to a rate of more than 200,000
ounces by year end. |
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Management will strive to
achieve year-round stacking, a reduction or elimination of re-handling of ore
on the leach pad, refinement of water management and water treatment, reduction
of other operating costs, and improvement upon production targets. |
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The exploration program for
2020 has a $10.3 million budget, including 26,000m DDH, 10,000 soil samples,
7,500 trenches, and more than 8 kilometers of access trails. |
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Management and Directors |
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The backgrounds of the
management and directors are outlined on the Victoria website and investor
deck. John McConnell, President, CEO & a Director, has 35 years in the
mining industry, including operations, permitting, engineering, project
management, and executive positions. Other executives have extensive
backgrounds in the mining industry. |
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The six BoD members have
a broad range of relevant experience, including mining, permitting, Aboriginal
law in northern Canada, and investment banking. |
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Financials |
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Income Statement (6 months through 08/31/19 vs. 08/31/18) (C$) |
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Operating income (expense):
(883,387) vs. 1,303,542 Change in fair value of
derivative instruments: (23,306,786) vs 6,649,372 Other finance income
(expense): 215,875 vs. (337,885) Pretax income (loss): (22,207,524)
vs. 5,683,715 Net income (loss): (21,463,642)
vs. 5,683,715 Comprehensive income
(loss): (21,381,664) vs. 5,665,878 Earnings (loss) per diluted common share: (0.025) vs.
0.007 |
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Balance Sheet (08/31/19) (C$) |
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Cash & equivalents: 45,590,097 Other current assets: 4,334,758 Total current assets: 49,924,855 Property, plant, & equipment: 575,460,931 Other non-current assets: 94,194,129 Total assets: 669,655,060 Current liabilities: 67,374,250 Long-term debt: 251,381,791 Other long-term liabilities: 48,455,247 Stockholders
equity: 302,443,772 Number of
common shares outstanding: 858,394,437 Number of options
outstanding (01/25/19): 29,140,000 Number of
warrants outstanding (08/31/19): 25,000,000 |
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On February 27, 2020, the
Company completed a $7 million flow-through financing, issuing 801,822 common
shares at a price of C$8.73 per share. Gross proceeds were approximately
C$6,999,900. These shares are subject to a statutory four-month hold. |
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On August 31, 2019, the Company had a working
capital deficit of $17,449,395, and its debt facilities were fully drawn. These
considerations make it imperative that the Company recover mineral reserves economically
and ramp up production on time and on budget. |
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Valuation Considerations |
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The Eagle Gold Mine is a sizable, high-margin project in a favorable
jurisdiction, and higher gold prices would extend the mine life
significantly. |
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Management estimates that commercial production will be achieved by
mid-year 2020. Production data to date is in excellent agreement with the
reserve block model. The grade mined (0.79 g/t) is 3% higher than the
expected grade. |
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The post-tax NPV (5%) of the Mine is estimated to be $1.0 billion, and
the large land package offers additional upside potential. |
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A recent up-listing to the Toronto Stock Exchange (TSE) should help
broaden the investor audience. |
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The impact
from COVID-19 remains an uncertainly. In addition, the Company website and SEDAR
filings list a number of risks and are hereby incorporated by reference. |
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Executive offices: 80
Richmond Street West, Suite 303, Toronto, ON M5H 2A4; 416.866.8800 |
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Investor contact: John
McConnell, President & CEO; president@vitgoldcorp.com; 604.696.6605 |
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any compensation for publication of this Profile. Analyst: William J. Ritger. |
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