8 May 2020

Revisiting Victoria Gold As It Ramps Up To Commercial Production

by | posted in: Gold, Gold Stocks, Victoria Gold | 0

When I woke up this morning and flipped on my phone the first thing I received was this picture of 1,000 ounce gold bars produced at Victoria Gold’s Eagle Gold Mine in Canada’s Yukon Territory.

It’s pretty impressive to be staring at more than US$8.5 million worth of gold. I hope Victoria Gold CEO John McConnell has some good security at Eagle. Even though it’s the Yukon and a relatively isolated location, we’ve seen people do some pretty brazen things for that much gold.
I think now might be the time to add to existing Victoria Gold (TSX:VGCX) positions OR to initiate new positions. My rationale is a combination of fundamentals and technicals.
First of all, the VGCX.TO chart is extremely bullish on the daily time frame:
VGCX.TO (Daily)
Over C$8.50 and VGCX heads to the C$10.00 area. Dips have been shallow and the recent consolidation has a distinctly bullish flavor to it. One can use C$7.50 as a stop loss level.
Fundamentally, Victoria Gold will be entering commercial production in June/July and ramping up operations to eventually reach 210,000 ounces of gold production per year. The company just completed a C$20 million private placement in which the underwriters fully exercised the over-allotment to C$23 million.
This is one of those situations in which Victoria didn’t necessarily need the money, but they were offered it and the prudent move was to take it, especially considering the current macro backdrop. I expect the guys who took down this PP to be very supportive of VGCX over the coming months and the timing of it is no accident – the shares begin free trading in early September, a seasonally bullish time of the year for the gold sector.

What is 210,000 ounces per year of gold production worth at a ~US$800 all-in sustaining cost? That’s a nearly $1,000 per ounce margin at today’s gold price. My guess is a lot more than the current market cap of roughly C$500 million. I still view VGCX as a probable double from current levels over the next 12 months.

Disclosure: I own VGCX.TO shares and Victoria Gold is an Energy & Gold sponsor. 

 

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