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Victoria Gold Reports 2022 First Quarter Results

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Victoria Gold Reports 2022 First Quarter Results

 

 

 

 

 

Victoria Gold Corp. (TSX-VGCX) is pleased to announce its first quarter 2022 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 Canadian $ unless stated otherwise.

 

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, 2022 and 2021, available on the Company’s website or on SEDAR.

 

First Quarter 2022 Highlights 
Gold produced 24,358 ounces
Average gold price realized US$ 1,838
Revenue US$ 46,950,612
Gross Profit US$ 20,766,149
Net Income US$ 12,672,645
Earnings (loss) per share – Basic US$ 0.20
EBITDA US$ 30,220,630

 

Mr. John McConnell, President and CEO commented, “Similar to previous years, the Eagle Mine’s gold production profile during 2022 will continue to be seasonal in nature. As summer approaches in the Yukon and the days get longer, we expect increased ore stacking and gold production to result in greater earnings and cashflows.”

 

Operational Highlights – First Quarter 2022

  • Mine production was 1.3 million tonnes of ore in the quarter.
  • Ore stacked on the heap leach pad in the quarter was 0.9 million tonnes at an average grade of 0.72 grams per tonne (g/t).
  • Gold production was 24,358 ounces in the quarter.

 

Financial Highlights – First Quarter 2022

  • Gold sold in the quarter was 25,518 ounces, at an average realized price1 of $2,328 (US$1,838) per ounce.
  • Recognized revenue was $59.5 million based on sales of 25,518 ounces of gold in the quarter.
  • Operating earnings were $23.5 million in the quarter.
  • Net income was $16.0 million, or $0.25 per share outstanding in the quarter.
  • Cash costs1 were $783 (US$618) per ounce and all-in sustaining costs (“AISC”)1 were $1,904 (US$1,504) per ounce of gold sold in the quarter.
  • EBITDA1 were $38.3 million in the quarter.
  • Free cash flow1 deficiency was $40.0 million, or a deficiency of $0.63 per share1 in the quarter.
  • Cash and cash equivalents were $40.7 million at March 31, 2022 after net draw of $20.4 million against the Company’s debt facilities.

____________
1 Refer to “Non-IFRS Performance Measures” section.

 

 

First Quarter Operating Results

 

    Three months ended
    March 31,
2022
March 31,
2021
Operating data      
Ore mined tonnes 1,328,023 1,562,230
Waste mined tonnes 2,274,894 4,675,295
Total mined tonnes 3,602,917 6,237,525
Strip ratio waste:ore 1.71 2.99
Mining rate tonnes per day 40,032 69,311
Ore stacked on pad tonnes 881,415 950,513
Ore stacked grade g/t Au 0.72 0.87
Throughput (stacked) tonnes per day 9,794 10,567
Gold ounces produced ounces 24,358 26,759
Gold ounces sold ounces 25,518 27,538

 

 

Gold production and sales

During the three months ended March 31, 2022, the Eagle Gold Mine produced 24,358 ounces of gold, compared to 26,759 ounces of gold production in Q1 2021. The 9% decrease in gold production is attributed to the decrease in ore mined and stacked during the current quarter as well as Q4 2021.

 

During the three months ended March 31, 2022, the Company sold 25,518 ounces of gold, compared with 27,538 gold ounces sold in Q1 2021. The 7% decrease in gold sold is primarily attributed to the decrease in gold produced.

 

Mining

During the three months ended March 31, 2022, a total of 1.3 million tonnes of ore were mined, at a strip ratio of 1.7:1 with a total of 3.6 million tonnes of material mined. In comparison, a total of 1.6 million tonnes of ore were mined, at a strip ratio of 3:1 with a total of 6.2 million tonnes of material mined for the prior comparable period in 2021.

 

Total tonnes mined were 42% lower during the three months ended March 31, 2022 as a result of sufficient stockpiles of ore and low stripping requirements for the current period.

 

Processing

During the three months ended March 31, 2022, a total of 881,000 tonnes of ore was stacked on the heap leach pad at a throughput rate of 9,800 tonnes per day. A total of 951,000 tonnes of ore was stacked on the heap leach pad at a throughput rate of 10,600 tonnes per day for the prior comparable period in 2021.

 

Ore stacked on the pad decreased by 7% for the three months ended March 31, 2022 as a result of higher frequency of cold weather operational delays and supply chain challenges which increased unplanned maintenance.

 

As expected, ore for the quarter had an average grade of 0.72 g/t Au, compared to 0.87 g/t Au in the prior comparable period in 2021 due to mine sequencing.

 

As at March 31, 2022, the Company estimates there are 102,467 recoverable ounces within mineral inventory.

 

Capital

The Company incurred a total of $28.0 million in capital expenditures during the three months ended March 31, 2022 including:
(1)   sustaining capital of $18.4 million, including:

  1. scheduled capital component rebuilds on mobile mining fleet,
  2. expansion to the heap leach pad,
  3. final construction on the truck shop, and
  4. construction of the water treatment facility;

(2) capitalized stripping activities of $9.2 million;
(3) $3.3 million growth capital expenditures (growth exploration and mine expansion), and;
(4) $2.9 million adjustment to the Company’s asset retirement obligation during the quarter.

 

 

First Quarter Financial Results

 

    Three months ended
    March 31, 2022 March 31, 2021
Financial data      
Revenue $ 59,453,560 62,749,024
Gross profit $ 26,296,174 24,831,749
Net income $ 16,047,370 31,800,928
Earnings per share – Basic $ 0.25 0.51
Earnings per share – Diluted $ 0.24 0.48

 

 

    As at
March 31, 2022
As at
December 31, 2021
Financial position      
Cash and cash equivalents $ 40,694,558 31,250,867
Working capital $ 118,217,121 62,807,859
Property, plant and equipment $ 641,108,645 626,400,098
Total assets $ 958,334,820 891,386,863
Long-term debt $ 177,499,720 151,250,785

 

 

Revenue

For the three months ended March 31, 2022, the Company recognized revenue of $59.5 million compared to $62.7 million for the previous year’s comparable period. The decrease in revenue is attributed to a lower number of gold ounces sold, partially offset by a higher average realized price. Revenue is net of treatment and refining charges, which were $0.1 million for the three months ended March 31, 2022. The Company sold 25,518 ounces of gold at an average realized price of $2,328 (US$1,838) (see “Non-IFRS Performance Measures” section), compared to 27,538 ounces at an average realized price of $2,274 (US$1,795) (see “Non-IFRS Performance Measures” section), in the first quarter of 2021.

 

Cost of goods sold

Cost of goods sold was $20.1 million for the three months ended March 31, 2022 compared to $25.3 million for the previous year’s comparable period. The decrease in cost of goods sold is primarily attributed to the change in inventory.

 

Depreciation and depletion

Depreciation and depletion was $13.1 million for the three months ended March 31, 2022 compared to $12.6 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, 2022, the Company had cash and cash equivalents of $40.7 million (December 31, 2021 – $31.3 million) and a working capital surplus of $118.2 million (December 31, 2021 – $62.8 million surplus). The increase in cash and cash equivalents of $9.4 million over the year ended December 31, 2021, was due to financing activities ($47.8 million increase in cash) from shares issued for cash and draws made on credit facilities and long term debt. This is partially offset by operating activities and changes in working capital including foreign exchange losses on cash balances ($6.7 million decrease in cash) and investing activities ($31.5 million decrease in cash) primarily from capital expenditures incurred at the Eagle Gold Mine.

 

2022 Outlook

Outlook includes forward-looking statements which are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results. See the end of this news release “Cautionary Language and Forward-Looking Statements”.

 

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. Refer to the “Risk and Uncertainties” section of this MD&A.

 

2022 production and cost guidance is unchanged from when it was originally estimated and released in March 2022.

 

Production at the Eagle Gold Mine for 2022 is estimated to be between 165,000 and 190,000 ounces.

 

Mining, crushing, irrigation of ore on the heap leach pad and gold production are all expected to operate at full capacity during 2022. Stacking of ore on the heap leach pad was paused for six weeks in the first quarter of 2022 (late January through early March 2022) for regularly scheduled maintenance activities. Gold production, which lags stacking activities in heap leach operations, will have a seasonal bias due to the winter scheduled maintenance program which will result in lower gold production in the first half of 2022 and higher production in the last half of 2022, similar to 2021.

 

AISC1 for 2022 are expected to be between US$1,225 and US$1,425 per ounce of gold sold.

____________
1 Refer to “Non-IFRS Performance Measures” section.

 

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 Gold Mine is Yukon’s newest operating gold mine. The Eagle and Olive deposits include Proven and Probable Reserves of 3.3 million ounces of gold from 155 million tonnes of ore with a grade of 0.65 grams of gold per tonne, as outlined in a National Instrument 43-101 Technical Report for the Eagle Gold Mine dated December 3, 2019. The Mineral Resource under National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) for the Eagle and Olive deposits has been estimated to host 227 million tonnes averaging 0.67 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 28 million tonnes averaging 0.65 grams of gold per tonne, containing 0.6 million ounces of gold in the “Inferred” category.

 

Non-IFRS Performance Measures

The Company has included certain non-IFRS measures in this new release. Refer to the Company’s MD&A for an explanation, discussion and reconciliation of non-IFRS measures. The Company believes that these measures, in addition to measures prepared in accordance with International Financial Reporting Standards, provide readers with an improved ability to evaluate the underlying performance of the Company and to compare it to information reported by other companies. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other issuers.

 

Posted May 12, 2022

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