Victoria Gold Corp. (TSX:VGCX) is pleased to announce its first quarter 2023 summary financial and operating results.

The Company uses certain non-IFRS performance measures throughout this news release. Please refer to the “Non-IFRS Performance Measures” section of this news release for more information. All currency figures are in Canadian $ unless otherwise indicated.

This release should be read in conjunction with the Company’s Financial Statements and Management’s Discussion and Analysis for the three months ended March 31, 2023 and 2022, available on the Company’s website or on SEDAR.

“2023 is off to a very good start at the Eagle Gold Mine,” noted Mr. John McConnell, President and CEO. “During previous years, the Mine underwent a period during the winter where no ore was stacked on the heap leach pad. We have now proven that year-round stacking is feasible and this has resulted in record first quarter production, including ore tonnes mined and stacked on the heap leach pad as well as gold production. As we look forward, we expect production improvements to continue resulting in a 10 – 20% annual increase in gold production and sales in 2023 versus 2022.”

Operational highlights – First Quarter 2023

• Mine production was 2.2 million tonnes (“t”) of ore in the quarter.
• Ore stacked on the heap leach facility (“HLF”) in the quarter was 2.1 million t at an average grade of 0.86 grams per tonne (“g/t”).
• Gold production was 37,619 ounces (“oz”) in the quarter.

Financial highlights – First Quarter 2023

• Gold sold in the quarter was 38,201 oz, at an average realized price¹ of $2,526 (US$1,867) per oz.
• Recognized revenue was $96.5 million based on sales of 38,201 oz of gold in the quarter.
• Operating earnings were $17.8 million in the quarter.
• Net income was $1.0 million, or $0.02 per share on a basic basis and $0.02 per share on a diluted basis for the quarter.
• Cash costs¹ were $1,508 (US$1,115) per oz of gold sold in the quarter.
• All-in sustaining costs¹ were $1,921 (US$1,420) per oz of gold sold in the quarter.
• EBITDA¹ were $26.4 million in the quarter, or $0.41 per share¹ in the quarter.
• Free cash flow¹ deficiency was $15.1 million, or $0.23 per share¹ in the quarter.
• Cash and cash equivalents were $23.6 million at March 31, 2023 after net draw of $11.3 million against the Company’s debt facilities for the year.

First Quarter 2023 Operating Results

Gold production and sales

During the three months ended March 31, 2023, the Eagle Gold Mine produced 37,619 ounces of gold, compared to the 24,358 ounces of gold production in Q1 2022. The 55% increase in gold production is attributed to higher gold inventory on the heap leach pad and improved heap leach pad operations over the winter period.

During the three months ended March 31, 2023, the Company sold 38,201 ounces of gold, compared to the 25,518 gold ounces sold in Q1 2022. The 50% increase in gold sold is primarily attributed to the increase in gold produced.

Mining

During the three months ended March 31, 2023, a total of 2.2 million tonnes of ore was mined, at a strip ratio of 1.43:1 with a total of 5.2 million tonnes of material mined. In comparison, a total of 1.3 million tonnes of ore was mined, at a strip ratio of 1.71:1 with a total of 3.6 million tonnes of material mined for the prior comparable period in 2022.

Total tonnes mined were 45% higher during the three months ended March 31, 2023 due to increased ore stacking in the period from implementation of year-round stacking. Additionally, waste hauls have become progressively shorter in the mine plan.

Processing 

During the three months ended March 31, 2023, a total of 2.1 million tonnes of ore was stacked on the HLF at a throughput rate of 23.3 k tpd. A total of 0.9 million tonnes of ore was stacked on the HLF at a throughput rate of 9.8 k tpd for the prior comparable period in 2022.

Ore stacked on the HLF increased by 138% for the three months ended March 31, 2023 due to implementation of year-round stacking of ore on the HLF. In prior years, ore stacking on the HLF was halted during the first quarter due to seasonally cold temperatures. The Company has now successfully demonstrated year-round stacking of ore on the heap leach pad is both technically feasible and operationally achievable. This has allowed for a seamless transition to year-round operations, resulting in an increase in stacked ore for the period.

Ore stacked for the quarter had an average grade of 0.86 g/t Au, compared to 0.72 g/t Au in the prior comparable period in 2022.

As at March 31, 2023, the Company estimates there are 106,980 recoverable oz within mineral inventory.

Capital

The Company incurred a total of $16.9 million in capital expenditures during the three months ended March 31, 2023:

(1) sustaining capital of $6.3 million, including:

1. scheduled capital component rebuilds on mobile mining fleet of $3.2 million,
2. upgrades and capital component rebuilds on material handling system of $1.3 million,
3. construction of the water treatment facility of $1.0 million, and
4. other ongoing sustaining capital initiatives of $0.8 million;

(2) capitalized stripping activities of $7.6 million;
(3) $4.0 million spend on growth capital expenditures and;
(4) $1.0 million adjustment to the Company’s asset retirement obligation during the quarter.

First Quarter 2023 Financial Results

Revenue 

For the three months ended March 31, 2023, the Company recognized revenue of $96.5 million compared to $59.5 million for the previous year’s comparable period. The increase in revenue is attributed to a higher average realized price, a higher number of gold oz sold and a higher C$/US$ exchange rate. Revenue is net of treatment and refining charges, which were $0.2 million for the three months ended March 31, 2023. The Company sold 38,201 oz of gold at an average realized price of $2,526 (US$1,867) (see “Non-IFRS Performance Measures” section), compared to 25,518 oz at an average realized price of $2,328 (US$1,838) (see “Non-IFRS Performance Measures” section), in the first quarter of 2022.

Cost of goods sold

Cost of goods sold was $57.9 million for the three months ended March 31, 2023 compared to $20.1 million for the previous year’s comparable period. The increase in cost of goods sold is attributed to the higher number of gold ounces sold combined with a higher cost per ounce of gold within inventory. The cost per ounce of gold sold is based on the average cost per ounce held within gold inventory on the heap leach pad. The average cost per ounce of gold in inventory is higher year over year due to inflation combined with high production costs per ounce incurred in previous periods, specifically the second half of 2022. Production costs incurred during the current quarter will affect inventory valuation which will impact cost of goods sold in future periods. Cost of goods sold was also higher year over year due to a reduction in the inventory adjustment as the net ounces added to the heap leach pad (inventory) during the current quarter were less than the net ounces added to the heap leach pad in the corresponding quarter during the previous year.

Depreciation and depletion

Depreciation and depletion was $17.6 million for the three months ended March 31, 2023 compared to $13.1 million for the previous year’s comparable period. Assets are depreciated on a straight-line basis over their useful life, or depleted on a units-of-production basis over the reserves to which they relate.

Liquidity and Capital Resources

At March 31, 2023, the Company had cash and cash equivalents of $23.6 million (December 31, 2022 – $20.6 million) and a working capital surplus of $121.4 million (December 31, 2022 – $94.7 million surplus). The increase in cash and cash equivalents of $3.0 million over the year ended December 31, 2022, was due to operating activities ($11.8 million increase in cash) primarily from operating cash flow before working capital adjustments and financing activities ($13.3 million increase in cash) from draws made on credit facilities and long-term debt. This is offset by investing activities ($22.1 million decrease in cash) primarily from capital expenditures incurred at the Eagle Gold Mine.

2023 Outlook

Victoria’s operational outlook assumes that operations will continue without any significant COVID-19 related interruptions. The Company has taken precautions to mitigate the risk of COVID-19 on operations. However, the COVID-19 pandemic and any future emergence and spread of similar pathogens could have a material adverse impact on our business, operations and operating results, financial condition, liquidity and market for our securities.

2023 production and cost guidance is unchanged from when it was originally estimated and released in February 2023.

Production at the Eagle Gold Mine for 2023 is estimated to be between 160,000 and 180,000 ounces.

The seasonality experienced in 2021 and 2022, where gold production was lower in the first half of the year compared to the last half of the year, is expected to be reduced in 2023. Seasonality is expected to diminish compared to previous years, during the first quarter of 2023, the Company successfully demonstrated the feasibility of year-round stacking on the heap leach pad. Seasonality is further moderated as gold ounces in inventory, primarily on the heap leach pad, is higher than in previous years and regularly scheduled maintenance periods, which were previously weighted to the first quarter, are expected to be spread over the year.

AISC¹ for 2023 are expected to be between US$1,350 and US$1,550 per oz of gold sold.

Sustaining capital, not including waste stripping, is estimated at C$30 million (US$23 million) for 2023. Sustaining capital during 2023 is expected to be materially lower than previous years due to the absence of major one-time infrastructure construction (water treatment plant 2022 and truck shop in 2021). Major items included in 2023 sustaining capital include mobile equipment rebuilds and fixed maintenance rebuilds.

Capitalized waste stripping is estimated at C$50 million (US$38 million) and is included in AISC¹ but is not included in the sustaining capital above. Waste stripping will be expensed or capitalized based on the actual quarterly stripping ratio versus the expected life of mine stripping ratio and may be quite variable quarter over quarter and year over year. Waste stripping in 2023 is expected to be higher than the life of mine average annual waste stripping. This accounting treatment for waste stripping will affect earnings and capital but will not affect AISC¹ or cash flow.

Growth capital related to Eagle Gold Mine expansion initiatives is estimated at C$15 million (US$11 million) for 2023 and includes heap leach pad expansion. In addition, growth exploration spending in 2023 is estimated to be C$10 million (US$8 million).

Qualified Person

The technical content of this news release has been reviewed and approved by Paul D. Gray, P.Geo, as the “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About the Dublin Gulch Property

Victoria Gold’s 100%-owned Dublin Gulch gold property is situated in central Yukon Territory, Canada, approximately 375 kilometers north of the capital city of Whitehorse, and approximately 85 kilometers from the town of Mayo. The Property is accessible by road year round, and is located within Yukon Energy’s electrical grid.

The Property covers an area of approximately 555 square kilometers, and is the site of the Company’s Eagle and Olive Gold Deposits. The Eagle and Olive deposits include Proven and Probable Reserves of 2.6 million ounces of gold from 124 million tonnes of ore with a grade of 0.65 grams of gold per tonne. The Mineral Resource for the Eagle and Olive Gold Deposits has been estimated to host 245 million tonnes averaging 0.59 grams of gold per tonne, containing 4.7 million ounces of gold in the “Measured and Indicated” category, inclusive of Proven and Probable Reserves, and a further 36 million tonnes averaging 0.63 grams of gold per tonne, containing 0.7 million ounces of gold in the “Inferred” category.