Victoria Gold: Cash and Gold within the Yukon
Junior gold explorers have had a tough couple of years. Gold prices were down and also the market seemed skeptical that gold would ever rise again. Which meant many junior explorers, despite very prospective properties and 43-101 resources, found themselves running out of money. Hunkering down and hoping for a gold turnaround was practically all they could do.
Which is the reason why 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 it is a “shovel ready” 43-101 compliant gold resource running to 4.8 M indicated oz Au (including Reserves). It’s additional, very attractive, drill targets on its property. But, most significantly, it’s 13 million dollars in its treasury.
“The nice thing about using a full treasury is that we don’t possess a gun to the head.” said CEO John McConnell.
While McConnell notes the junior resource market has been firming up recently, Victoria Gold is within no rush to raise money. “There are signs the equity marketplace is improving” said McConnell. “There has been a billion dollars raised within the last couple weeks. Even though this is encouraging, we try to protect shareholder value from dilution. Victoria has a bankable feasibility study which has been signed off with a syndicate of banks. “It is really bankable. The banks submitted their very own engineers” explained McConnell. The feasibility study suggested the CAPEX for the flagship Eagle Gold project is around 400 million dollars. This could include the pre-strip costs and a conventional open pit operation having a three-stage crushing plant, in-valley heap leach and gold recovery plant to produce dor bars.
Currently, Victoria Gold has a year-round road in to the site, one hundred person all season camp along with a signed Comprehensive Cooperation and Benefits Agreement using the local Nacho Nyak Dun First Nation, whose traditional territory the work is located within. Commercial grid power is 45 km by road from the site and there’s an airstrip suitable for commercial planes 80 km south from the project.
Perhaps most importantly from the market’s perspective, all of the required permits for construction and processes 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’s realistic about the timing. “We will re-engage using the banks for any 250 million dollar debt package, and look to boost the balance from the 150 million in equity.”
Over the past 24 months Victoria has been going through the Olive and Shamrock zones located approximately 2 km from the Eagle deposit. These zones contain outcroppings of fabric 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 season to classify Olive into the indicated resource category.
“In the following 6 months we try to update the feasibility report and, next fall, if the market is firmer, turn to financing” said McConnell.
“We have the funds to hold back. Our last hard dollar financing was for 30 million dollars this year and that we sold our Nevada assets for 60 million dollars.” said McConnell.
In the depressed junior exploration market McConnell has checked out a large number of distressed asset situations but is keeping Victoria’s focus on Eagle. “We’ve checked out perhaps 50 assets but, no projects have met our criteria for more consideration.”
At the same time, Victoria has signed a dozen Confidentiality Agreements with senior miners. McConnell only agreed to be back from the Florida BMO Conference where he met with over forty investors, institutions and company mining interests. If 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 financial institution, Victoria is focusing on expanding the scope of the resource at its Eagle Gold Project to include more ounces to its 43-101 reserve. Once the gold price improves and also the equity market swings up, McConnell has positioned Victoria well to consider full advantage of an upturn and get its gold mine built.
At duration of writing, Victoria Gold was trading at $.21 with 361.1 million shares outstanding along with a market cap of $77.64 million.
