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Victoria Gold: 2023 Third Quarter Results

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Victoria Gold: 2023 Third Quarter Results

 

 

 

 

 

Victoria Gold Corp. (TSX:VGCX) provides its third quarter 2023 summary financial and operating results.

 

Third Quarter 2023 Highlights  
Gold produced 41,561 ounces
Average gold price realized C$ 2,583
Revenue (000s) C$ 105,127
Gross Profit (000s) C$ 19,899
Income before taxes (000s) C$ 10,465
Net Income (000s) C$ 5,631
Earnings per share – Basic C$ 0.08
EBITDA (000s) C$ 34,637
Free Cash Flow before working capital (000’s) C$ 18,245
Free Cash Flow after working capital (000’s) C$ 25,235

 

Mr. John McConnell, President and CEO noted, “The Eagle mine was able to produce approximately 125,000 ozs through the first 9 months of 2023. We continue to expect to achieve both 2023 production and cost guidance.” Mr. McConnell continued, “The mine also generated significant earnings, EBITDA and free cash flow which was used to repay debt.”

 

This release should be read in conjunction with the Company’s Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2023 and 2022, available on the Company’s website or on SedarPlus.

 

Operational highlights – Third Quarter 2023

  • Mine production was 2.0 million tonnes (“t”) of ore in the quarter.
  • Ore stacked on the heap leach facility (‘HLF”) in the quarter was 2.3 million tonnes at an average grade of 0.65 grams per tonne (“g/t”).
  • Gold production was 41,561 ounces (“oz”) in the quarter.

 

Financial highlights – Third Quarter 2023

  • Gold sold in the quarter was 40,623 oz, at an average realized price1 of $2,583 (US$1,926) per oz.
  • Recognized revenue was $105,1 million based on sales of 40,623 oz of gold in the quarter.
  • Operating earnings were $18.3 million in the quarter.
  • Income before tax was $10.5 million for the quarter.
  • Net income was $5.6 million, or $0.08 per share on a basic basis and $0.08 per share on a diluted basis for the quarter.
  • Cash costs1 were US$1,224 per oz of gold sold in the quarter.
  • All-in sustaining costs 1 were US$1,484 per oz of gold sold in the quarter.
  • EBITDA1 were $34.6 million in the quarter, or $0.52 per share1 in the quarter.
  • Free cash flow1 before working capital was $18.2 million in the quarter.
  • Free cash flow1 after working capital was $25.2 million in the quarter.
  • Cash and cash equivalents were $18.9 million at September 30, 2023.

 

Third Quarter and YTD 2022/2023 Operating Results

 

    THREE MONTHS ENDED NINE MONTHS ENDED
    September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Operating data          
Ore mined t 1,997,519 2,060,062 6,500,794 5,555,335
Waste mined t 3,093,063 3,054,624 8,312,576 7,491,690
Total mined t 5,090,582 5,114,686 14,813,370 13,047,025
Strip ratio w:o 1.55 1.48 1.28 1.35
Mining rate tpd 55,332 55,594 54,261 47,791
Ore stacked on pad t 2,321,719 2,070,840 6,929,257 5,256,031
Ore stacked grade g/t Au 0.65 0.89 0.75 0.84
Throughput (stacked) tpd 25,236 22,509 25,382 19,252
Gold ounces produced oz 41,561 50,028 124,749 106,441
Gold ounces sold oz 40,623 44,925 123,534 99,023

 

Notes – Strip ratio: waste to ore (“w:o”)
  Mining rate: tonnes per day (“tpd”)
 

 

Gold production and sales

During the three months ended September 30, 2023, the Eagle Gold Mine produced 41,561 ounces of gold, compared to the 50,028 ounces of gold production in Q3 2022. The 17% decrease in gold production is primarily attributed to interruptions to stacking related to evacuations for wildfires in the months of July and August.

 

During the three months ended September 30, 2023, the Company sold 40,623 ounces of gold, compared to the 44,925 gold ounces sold in Q3 2022. The 10% decrease in gold sold is the result of decreased gold production as a result of the East McQuesten wildfires.

 

Mining

During the three months ended September 30, 2023, a total of 2.0 million tonnes of ore was mined, at a strip ratio of 1.55:1 with a total of 5.1 million tonnes of material mined. In comparison, a total of 2.1 million tonnes of ore was mined, at a strip ratio of 1.48:1 with a total of 5.1 million tonnes of material mined for the prior comparable period in 2022.

 

Total tonnes mined were 1% lower during the three months ended September 30, 2023.

 

Processing

During the three months ended September 30, 2023, a total of 2.3 million tonnes of ore was stacked on the HLF at a throughput rate of 25.2 k tpd. A total of 2.1 million tonnes of ore was stacked on the HLF at a throughput rate of 22.5 k tpd for the prior comparable period in 2022.

 

Ore stacked on the HLF increased by 12% for the three months ended September 30, 2023 reflecting continued improvements to the reliability of material handling operations. Crushing utilization improved by 24% relative to the same period in 2022, which was offset by evacuations for the wildfires.

 

Ore stacked for the quarter had an average grade of 0.65 g/t Au, compared to 0.89 g/t Au in the prior comparable period in 2022. Grades were impacted in Q3 mine sequencing which resulted in a higher portion of lower grade material being mined.

 

As at September, 2023, the Company estimates there are 92,735 recoverable oz within mineral inventory.

 

Capital

The Company incurred a total of $21.1 million in capital expenditures during the three months ended September 30, 2023:
(1)   sustaining capital of $6.5 million, including:

  1. scheduled capital component rebuilds on mobile mining fleet of $5.2 million,
  2. upgrades and capital component rebuilds on material handling system of $1.2 million, and
  3. other ongoing sustaining capital initiatives of $0.1 million;

(2)   capitalized stripping of $7.6 million,
(3)   $5.9 million spend on growth capital expenditures including exploration, and;
(4)   $1.1 million adjustment to the Company’s asset retirement obligation during the quarter.

Third Quarter and Nine Months 2023 Financial Results

 

Expressed in 000s, except per share amounts   THREE MONTHS ENDED NINE MONTHS ENDED
  September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Financial data          
Revenue $ 105,127 100,698 320,478 229,533
Gross profit $ 19,899 15,697 65,518 64,859
Net income (loss) $ 5,631 (8,595) 22,576 24,579
Earnings (loss) per share – Basic $ 0.08 (0.13) 0.34 0.38
Earnings (loss) per share – Diluted $ 0.08 (0.13) 0.34 0.38

 

Expressed in 000s, except per share amounts   As at
September 30, 2023
As at
December 31, 2022
Financial position      
Cash and cash equivalents $ 18,879 20,572
Working capital $ 140,280 94,687
Property, plant and equipment $ 671,003 670,813
Total assets $ 1,016,118 1,016,806
Long-term debt $ 188,905 184,512

 

Revenue

For the three months ended September 30, 2023, the Company recognized revenue of $105.1 million compared to $100.7 million for the previous year’s comparable period. The increase in revenue is attributed to a higher average realized price, and a higher C$/US$ exchange rate, partially offset by a lower number of gold oz sold. Revenue is net of treatment and refining charges, which were $0.2 million for the three months ended September 30, 2023. The Company sold 40,623 oz of gold at an average realized price of $2,583 (US$1,926) (see “Non-IFRS Performance Measures” section), compared to 44,925 oz at an average realized price of $2,242 (US$1,717) (see “Non-IFRS Performance Measures” section), in the third quarter of 2022.

 

Cost of goods sold

Cost of goods sold was $67.0 million for the three months ended September 30, 2023 compared to $65.5 million for the previous year’s comparable period. The increase in cost of goods sold is attributed to a higher average cost per ounce of gold within inventory, partially offset by a lower number of gold oz sold. The average cost per ounce of gold in inventory is higher in the current quarter due to inflation resulting in higher production costs per ounce compared to the prior comparable quarter.

 

Depreciation and depletion

Depreciation and depletion was $18.3 million for the three months ended September 30, 2023 compared to $19.5 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 September 30, 2023, the Company had cash and cash equivalents of $18.9 million (December 31, 2022 – $20.6 million) and a working capital surplus of $140.3 million (December 31, 2022 – $94.7 million surplus). The decrease in cash and cash equivalents of $1.7 million over the year ended December 31, 2022, was due to operating activities ($82.0 million increase in cash) primarily from operating cash flow before working capital adjustments, and financing activities ($5.4 million increase in cash) from draws made on credit facilities, and exercises of stock options and warrants. This is partially offset by investing activities ($89.1 million decrease in cash) primarily from the settlement of gold call options, capital expenditures incurred at the Eagle Gold Mine, exploration activities from the Dublin Gulch, and the acquisition of Golden Predator.

 

2023 Outlook

Note that cost information in this Outlook section, including AISC1 and capital, are in US currency to allow for ease of comparison with our peers, who often report in US currency.

 

2023 Production Guidance remains unchanged at the Eagle Gold Mine and is estimated to be between 160,000 and 180,000 ounces of gold.

 

Prior to the impacts of the East McQuesten wildfire, which led to the evacuation of the Eagle mine site in late July and early August, the Company expected to achieve annual production in the top half of the Guidance range. After considering the impact of the evacuation, the Company expects production to be in the lower half of the Guidance range.

 

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, has been reduced in 2023 as the Company has 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 now spread over the year.

 

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

 

As a result of the East McQuesten wildfire and resulting mine site evacuation, the Company expects AISC1 to be in the top half of the Guidance range.

 

Sustaining capital, not including waste stripping, is estimated at C$30 million (US$23 million) for 2023. Sustaining capital during 2023 is materially lower than previous years due to the absence of major one-time infrastructure construction (water treatment plant in 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$25 million (US$19 million) for 2023. This is lower than previously estimated (C$35 million) due to timing of waste mining. Capitalized waste stripping is included in AISC1 but is not included in the sustaining capital above. Waste stripping is expensed or capitalized based on the actual quarterly stripping ratio versus the expected life of mine stripping ratio of 1.0 waste to ore and may be quite variable quarter over quarter and year over year.

 

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 (the “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.

 

Posted November 10, 2023

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