Victoria Gold Corp. (TSX-VGCX) (“Victoria” or the “Company”) 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 (“MD&A”) 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 salesDuring
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.
MiningDuring 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.
ProcessingDuring 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.
CapitalThe 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:
- scheduled capital component
rebuilds on mobile mining fleet,
- expansion to the heap leach
pad,
- final construction on the truck
shop, and
- 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 |
RevenueFor 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 soldCost 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
depletionDepreciation 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
ResourcesAt 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 PersonThe 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
PropertyVictoria 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
(“IFRS”), 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.
Cautionary Language and Forward-Looking
StatementsThis press release includes certain statements
that may be deemed "forward-looking statements". Except for
statements of historical fact relating to Victoria, information
contained herein constitutes forward-looking information, including
any information related to Victoria's strategy, plans or future
financial or operating performance. Forward-looking information is
characterized by words such as “plan”, “expect”, “budget”,
“target”, “project”, “intend”, “believe”, “anticipate”, “estimate”
and other similar words, or statements that certain events or
conditions “may”, “will”, “could” or “should” occur, and includes
any guidance and forecasts set out herein (including, but not
limited to, production and operational guidance of the
Corporation). In order to give such forward-looking information,
the Corporation has made certain assumptions about the its
business, operations, the economy and the mineral exploration
industry in general, in particular in light of the impact of the
novel coronavirus and the COVID-19 disease (“COVID-19”) on each of
the foregoing. In this respect, the Corporation has assumed that
production levels will remain consistent with management’s
expectations, contracted parties provide goods and services on
agreed timeframes, equipment works as anticipated, required
regulatory approvals are received, no unusual geological or
technical problems occur, no material adverse change in the price
of gold occurs and no significant events occur outside of the
Corporation's normal course of business. Forward-looking
information is based on the opinions, assumptions and estimates of
management considered reasonable at the date the statements are
made, and are inherently subject to a variety of risks and
uncertainties and other known and unknown factors that could cause
actual events or results to differ materially from those described
in, or implied by, the forward-looking information. These factors
include the impact of general business and economic conditions,
risks related to COVID-19 on the Company, global liquidity and
credit availability on the timing of cash flows and the values of
assets and liabilities based on projected future conditions,
anticipated metal production, fluctuating metal prices, currency
exchange rates, estimated ore grades, possible variations in ore
grade or recovery rates, changes in accounting policies, changes in
Victoria's corporate resources, changes in project parameters as
plans continue to be refined, changes in development and production
time frames, the possibility of cost overruns or unanticipated
costs and expenses, uncertainty of mineral reserve and mineral
resource estimates, higher prices for fuel, steel, power, labour
and other consumables contributing to higher costs and general
risks of the mining industry, failure of plant, equipment or
processes to operate as anticipated, final pricing for metal sales,
unanticipated results of future studies, seasonality and
unanticipated weather changes, costs and timing of the development
of new deposits, success of exploration activities, requirements
for additional capital, permitting time lines, government
regulation of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims, limitations on
insurance coverage and timing and possible outcomes of pending
litigation and labour disputes, risks related to remote operations
and the availability of adequate infrastructure, fluctuations in
price and availability of energy and other inputs necessary for
mining operations. Although Victoria has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in, or implied
by, the forward-looking information, there may be other factors
that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. The reader is cautioned not to
place undue reliance on forward-looking information. The
forward-looking information contained herein is presented for the
purpose of assisting investors in understanding Victoria's expected
financial and operational performance and Victoria's plans and
objectives and may not be appropriate for other purposes. All
forward-looking information contained herein is given as of the
date hereof, as the case may be, and is based upon the opinions and
estimates of management and information available to management of
the Corporation as at the date hereof. The Corporation undertakes
no obligation to update or revise the forward-looking information
contained herein and the documents incorporated by reference
herein, whether as a result of new information, future events or
otherwise, except as required by applicable laws.
For Further Information
Contact:John McConnellPresident & CEOVictoria Gold
Corp.Tel: 604-696-6605ceo@vgcx.com
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