Victoria Gold Corp. (TSX:VGCX) is pleased to announce its second 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 new 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 and six months ended June 30, 2022 and 2021, available on the Company’s website or on SEDAR.

Mr. John McConnell, President and CEO commented, “Similar to 2021, daily gold production at the Eagle Mine has increased substantially over the 2022 spring season. This is expected to result in materially higher gold production and revenues during the third and fourth quarters of 2022.”

Operational Highlights – Second Quarter 2022

• Mine production was 2.2 million tonnes of ore.
• Ore stacked on the heap leach pad was 2.3 million tonnes at an average grade of 0.85 grams per tonne (g/t).
• Gold production was 32,055 ounces.

Financial Highlights – Second Quarter 2022

• Gold sold was 28,580 ounces, at an average realized price¹ of $2,427 (US$1,901) per oz.
• Recognized revenue was $69.4 million based on sales of 28,580 ounces of gold.
• Operating earnings were $20.5 million.
• Net income was $17.1 million, or $0.27 per share outstanding.
• Cash costs¹ were $1,057 (US$828) per oz and all-in sustaining costs¹ were $1,750 (US$1,371) per oz of gold sold.
• EBITDA¹ were $44.2 million.
• Free cash flow¹ deficiency was $1.2 million, or a deficiency of $0.02 per share¹.
• Cash and cash equivalents were $29.1 million at June 30, 2022.

________________________
¹ _{Refer to “Non-IFRS Performance Measures” section.}

Second Quarter and First Half-Year 2022 Operating Results

Gold production and sales

During the three months ended June 30, 2022, the Eagle Gold Mine produced 32,055 ounces of gold, similar to the 32,140 ounces of gold production in Q2 2021.

During the three months ended June 30, 2022, the Company sold 28,580 ounces of gold, similar to the 28,731 gold ounces sold in Q2 2022.

Mining

During the three months ended June 30, 2022, a total of 2.2 million tonnes of ore were mined, at a strip ratio of 1.00:1 with a total of 4.3 million tonnes of material mined. In comparison, a total of 2.3 million tonnes of ore were mined, at a strip ratio of 1.45:1 with a total of 5.6 million tonnes of material mined for the prior comparable period in 2021.

Total tonnes mined were 23% lower during the three months ended June 30, 2022 versus the previous year’s comparable period primarily due to lower waste mining as per our mine plan. Mining rates are expected to increase in the second half of the year with shorter waste hauls becoming available late in the third quarter of 2022.

Processing

During the three months ended June 30, 2022, a total of 2.3 million tonnes of ore were stacked on the heap leach pad at a throughput rate of 25.3 k tonnes per day. A total of 2.4 million tonnes of ore were stacked on the heap leach pad at a throughput rate of 26.3 k tonnes per day for the prior comparable period in 2021.

Ore stacked on the pad during the three months ended June 30, 2022 is similar to the previous year’s comparable period.

Ore for the quarter had an average grade of 0.85 g/t Au, compared to 0.81 g/t Au in the prior comparable period in 2021.

As at June 30, 2022, the Company estimates there are 115,089 recoverable ounces within mineral inventory.

Capital

The Company incurred a total of $31.1 million in capital expenditures during the three months ended June 30, 2022 including:
(1)   sustaining capital of $17.1 million, including:
i. scheduled capital component rebuilds on mobile mining fleet of $7.0 million,
ii. expansion to the heap leach pad of $3.2 million, and
iii. construction of the water treatment facility of $2.8 million;
(2) capitalized stripping activities of $0.6 million;
(3) $10.2 million growth capital expenditures (growth exploration and mine expansion), and;
(4) $3.2 million adjustment to the Company’s asset retirement obligation during the quarter.

Second Quarter and First Half-Year 2022 Financial Results

Revenue

For the three months ended June 30, 2022, the Company recognized revenue of $69.4 million compared to $63.5 million for the previous year’s comparable period. The increase in revenue is attributed to a higher average realized price, partially offset by a lower number of gold ounces sold. Revenue is net of treatment and refining charges, which were $0.1 million for the three months ended June 30, 2022. The Company sold 28,580 ounces of gold at an average realized price of $2,427 (US$1,901) (see “Non-IFRS Performance Measures” section), compared to 28,731 ounces at an average realized price of $2,208 (US$1,798) (see “Non-IFRS Performance Measures” section), in the second quarter of 2021.

Cost of goods sold

Cost of goods sold was $30.3 million for the three months ended June 30, 2022 compared to $27.7 million for the previous year’s comparable period. The increase in cost of goods sold is primarily attributed to the change in inventory.

Depreciation and depletion

Depreciation and depletion was $16.2 million for the three months ended June 30, 2022 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 June 30, 2022, the Company had cash and cash equivalents of $29.1 million (December 31, 2021 – $31.3 million) and a working capital surplus of $94.1 million (December 31, 2021 – $62.8 million surplus). The decrease in cash and cash equivalents of $2.1 million over the year ended December 31, 2021, was due to investing activities ($48.4 million decrease in cash) primarily from capital expenditures incurred at the Eagle Gold Mine. This is partially offset by operating activities and changes in working capital including increase in inventory ($12.7 million increase in cash) and financing activities ($33.4 million increase in cash) from shares issued for cash and draws made on credit facilities and long term debt.

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 page 1 “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.

Production at the Eagle Gold Mine for 2022 is expected to be close to the lower end of original Guidance, of between 165,000 and 190,000 ounces.

Reduced production expectations are the result of increased unplanned down time within the crushing and conveying circuit. Unplanned down time is high due to lower maintenance productivities as a result of recruitment and retention challenges within the Canadian, and specifically the Pacific Northwest, mining labour market. Supply chain disruptions have exacerbated the maintenance difficulties as certain parts have taken longer to secure and deliver to site.

Gold production at the Eagle Gold Mine is subject to significant seasonality. 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 close to the top end of original Guidance, of between US$1,225 and US$1,425 per oz of gold sold.

Increased cost expectations are the result of lower production, as outlined above, combined with high inflation, specifically with respect to fuel pricing which impacts many cost inputs.

Sustaining capital, not including waste stripping, is estimated at US$50 million for 2022 (was US$55 million in the previous quarter’s MD&A). Sustaining capital is high in 2022 compared with future years due to one-time infrastructure expenditures including construction of the water treatment plant US$14 million (was US$17 million in the previous quarter’s MD&A).

Capitalized waste stripping is estimated at US$15 million (was US$21 million in the previous quarter’s MD&A) 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. 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 US$18 million (was US$40 million in the previous quarter’s MD&A) for 2022. Ore scalping screens have been deferred to 2023 due to supply chain constraints and inflationary pressures. In addition to growth capital, growth exploration spending in 2022 is estimated to be US$10 million (was US$20 million in the previous quarter’s MD&A). Raven exploration spending funded by the 2022 flow-through equity raise will occur over the 2022 and 2023 exploration programs.

________________________
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 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 Company issued a National Instrument 43-101 Technical Report for the Eagle Gold Mine dated December 3, 2019 (the “2019 Eagle Technical Report”). Since the date of the 2019 Eagle Technical Report, the Company has produced gold from its Eagle Mine. Based on the 2019 Eagle Technical Report and after adjusting for depletion through December 31, 2021, the Eagle and Olive deposits include Proven and Probable Reserves of 2.7 million ounces of gold from 133 million tonnes of ore with a grade of 0.64 grams of gold per tonne. Based on the 2019 Eagle Technical Report and after adjusting for depletion through December 31, 2021, the Mineral Resource for the Eagle and Olive deposits has been estimated to host 207 million tonnes averaging 0.63 grams of gold per tonne, containing 4.2 million ounces of gold in the “Measured and Indicated” category, inclusive of Proven and Probable Reserves, and a further 28 million tonnes averaging 0.61 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.