Victoria Gold: Producing Gold, Finding Gold in the Yukon
I usually write about companies I own, I wish I owned Victoria Gold (VGCX.T). I don’t (my order is in) but I have been following the company writing in the Financial Post and at motherlodetv.net for years. Right from the point where it was trading for $0.40 and reporting huge runs of 1.2-1.4 gpt gold from drilling at Dublin Gulch, 80 bumpy kilometres north of Mayo in the Yukon.
Over the years I have spoken to Victoria Gold’s CEO, John McConnell dozens of times and I visited the Eagle Mine site twice on the very useful Yukon Mining Tours. McConnell, a mining engineer by training, has overseen every step of Victoria’s progress from very early drilling to the company commissioning and operating the Eagle Mine.
The huge Eagle Mine is essentially taking down the side of a hill on one side of a valley, crushing the rock and transporting it to a very large leach pad on the other side of the valley. It is a tremendous undertaking and, according to the June 30, 2023 Management Discussion and Analysis (PDF link), an undertaking with All In Sustaining Costs of $1445 USD per ounce. The ore stacked grade is 0.80 gpt. Essentially, the Eagle Mine was designed and built to process a vast amount of very low-grade rock. (3rd Quarter results are substantially the same with a slight decrease in the stacked ore grade.)
Victoria has been continuously exploring to expand the Eagle deposit which remains open at depth and to the Southwest. It has also been exploring the Olive-Shamrock deposit 2 km away from the Eagle deposit with significant success.
From an investor’s perspective, the results from the rather higher grade, near surface, Raven deposit are the “blue sky”. This deposit is about fifteen kilometres away from the Eagle Mine and appears to be very large. It has a 2022 43-101 Mineral Resouce Estimate of 1,070,239 Inferred ounces with an average grade of 1.67 gpt.
The 2023 exploration of Raven included over 13,200 meters of diamond drilling reported in two press releases. In the first release, Victoria states it is finding “long intervals of gold mineralization (such as 144.0m of 0.81 g/t Au and 78.4m of 1.40 g/t Au) hosted within granodiorite lithologies punctuated by intervals of high grade massive sulphide veins (such as 3.5m of 13.68 g/t Au and 0.5m of 135.30 g/t Au).” McConnell is quoted in this release, “A busy 2023 exploration program served to validate and expand the mineralized footprint of Raven while increasing overall confidence in the Raven deposit. With each successive season, Raven has grown in size and 2023 should prove no different as we focused exploration towards growth of the deposit along strike - particularly to the east where 2023 results underscore the development of a high-grade trend."
The second release has equally interesting high-grade intervals and reports on infill drilling to increase the grade and confidence of the Raven Resource. McConnell is quoted in this release as saying, “Work on an updated Raven Resource is now underway and we look forward to seeing two full seasons of drilling added to the maiden resource estimate.”
The infill drilling at Raven should move many of the Inferred ounces over into the Indicated column and the exploration drilling should expand the overall size of the deposit. And it looks like the grade at Raven may be well in excess of a gram a ton.
It would not be at all surprising if an updated MRE for Raven was on the order of 500k ounces indicated and 1.5-2.0 M inferred. Essentially the beginnings of Eagle II. But with this difference: Eagle I is just down the road with a camp, electric power, a leach pad and crushers. 15 km is a long way for a haul truck, but not out of the question for a conveyor belt system. Of course, if there is enough ore at Raven, building a full-scale mine might make sense.
Victoria has traded as high as $20 but, recently, has been well below $10, last trading at just under $6.00 a share. Given a gold price close to USD $2000 and AISC of USD $1445, this valuation does not make a lot of sense. However, it is in line with the GDXJ which tracks the smaller gold producers.
The point is Victoria Gold is already in a free cash flow situation with Eagle and Raven is simply a cumulative, several million higher grade ounces. If gold takes a run, which it seems to be trying to, Victoria Gold is a very, very attractive buy at these prices.
It is increasingly obvious that the Dublin Gulch District has a very large gold endowment. With a mine in being, Victoria Gold can explore, develop and mine deposit after deposit. It can do it stand alone or a much larger company can buy the company outright. Either way, I am buying.
[Disclaimer: This is not investment advice. I am not an investment professional. I am down about 30% at the moment. I will write about companies that I hold. I will disclose any holdings. Do your own due diligence. Do it hard. Call the CEO.
I currently do not hold shares in Victoria Gold but, by the time you read this, I will. ]