Victoria Gold: Cash and Gold in the Yukon

March 15, 2016

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Junior gold explorers have had a rough few years. Gold prices were down and the market seemed skeptical that gold would ever rise again. Which meant many junior explorers, even with very prospective properties and 43-101 resources, found themselves running out of money. Hunkering down and hoping for a gold turnaround was pretty much all they could do.

Which is what makes Victoria Gold (V.VIT) a standout company in the junior exploration sector. Working in the mining friendly Yukon, Victoria’s Eagle Gold Project is a very prospective property and is a “shovel ready” 43-101 compliant gold resource running to 4.8 M indicated oz Au (including Reserves). It has additional, very attractive, drill targets on its property. But, most importantly, it has 13 million dollars in its treasury.

“The nice thing about having a full treasury is that we don’t have a gun to our head.” said CEO John McConnell.

While McConnell notes that the junior resource market has been firming up recently, Victoria Gold is in no rush to raise money. “There are signs the equity market is improving” said McConnell. “There has been a billion dollars raised in the last few weeks. Although this is encouraging, we aim to protect shareholder value from dilution. Victoria has a bankable feasibility study which has been signed off by a syndicate of banks. “It really is bankable. The banks sent in their own engineers” explained McConnell. The feasibility study suggested that the CAPEX for the flagship Eagle Gold project is approximately 400 million dollars. This would include the pre-strip costs and a conventional open pit operation with a three-stage crushing plant, in-valley heap leach and gold recovery plant to produce doré bars.

Currently, Victoria Gold has a year-round road into the site, a 100 person all season camp and a signed Comprehensive Cooperation and Benefits Agreement with the local Nacho Nyak Dun First Nation, whose traditional territory the Project is located within. Commercial grid power is 45 km by road away from the site and there is an airstrip suitable for commercial planes 80 km south of the project.

Perhaps most importantly from the market’s perspective, all of the required permits for construction and operations are in place. “Our stock doubled when those permits were issued” said McConnell.

Raising 400 million dollars in a tough market does not seem to worry McConnell although he is realistic about the timing. “We will re-engage with the banks for a 250 million dollar debt package, and look to raise the balance of the 150 million in equity.”

Over the past 2 years Victoria has been exploring the Olive and Shamrock zones located approximately 2 km from the Eagle deposit. These zones contain outcroppings of material similar to Eagle but with a higher grade.

These numbers made the Olive Shamrock zones attractive enough that Victoria is undertaking a 3.5 million dollar drill program this year to classify Olive into the indicated resource category.

“In the next six months we aim to update the feasibility report and, next fall, if the market is firmer, look to financing” said McConnell.

“We have the cash to wait. Our last hard dollar financing was for 30 million dollars in 2011 and we sold our Nevada assets for 60 million dollars.” said McConnell.

In the depressed junior exploration market McConnell has looked at dozens of distressed asset situations but is keeping Victoria’s focus on Eagle. “We’ve looked at perhaps 50 assets but, no projects have met our criteria for further consideration.”

At the same time, Victoria has signed a dozen Confidentiality Agreements with senior miners. McConnell was just back from the Florida BMO Conference where he met with over forty investors, institutions and corporate mining interests. When you have a fully permitted multi-million ounce project a lot of people want to talk to you.

McConnell is in no hurry to “do a deal”. With cash in the bank, Victoria is working on expanding the scope of the resource at its Eagle Gold Project to add more ounces to its 43-101 reserve. When the gold price improves and the equity market swings up, McConnell has positioned Victoria well to take full advantage of an upturn and get its gold mine built.

At time of writing, Victoria Gold was trading at $.21 with 361.1 million shares outstanding and a market cap of $77.64 million.

Category: General