Noted Higher Margins And Free-Cash Flow As Year Progresses
Victoria Gold Corp. (TSX-VGCX) has announced first quarter 2021 summary financial and operating results.
“As expected with seasonal ore placement on the heap leach pad, ore stacking and gold production grows quarter over quarter throughout the year,” President and CEO, John McConnell, said.
“Increased ore stacking and gold production are accompanied by falling unit costs which result in higher margins and free-cash flow as the year progresses.”
Operational Highlights – First Quarter 2021
• Mine production was 1.6 million tonnes of ore.
• Ore stacked on the heap leach pad was 1.0 million tonnes at an average grade of 0.87 grams per tonne (g/t).
• Gold production was 26,759 ounces.
Financial Highlights – First Quarter 2021
• Gold sold was 27,538 ounces, at an average realised price of C$2,274 (US$1,795) per ounce.
• Recognised revenue of C$62.7 million based on sales of 27,538 ounces of gold.
• Operating earnings were C$22.3 million.
• Net income of C$31.8 million, or C$0.51 per share and C$0.48 per share on a diluted basis.
• Cash costs of C$903 (US$713) per ounce and all-in sustaining costs (AISC) of C$2,009 (US$1,586) per ounce of gold sold.
• EBITDA of C$57.1 million.
• Free cash flow deficiency of C$21.0 million, or a deficiency of C$0.34 per share.
• Cash and cash equivalents of C$21.6 million at March 31, 2021 after repaying C$13.4 million of principal payments against the Company’s debt facilities.
First Quarter 2021 Operating Results
Gold production and sales
During the three months ended March 31, 2021, the Eagle Gold Mine produced 26,759 ounces of gold, compared to 10,544 ounces of gold production in Q1 2020. The company was primarily focused on operations ramp up throughout 2020 and declared commercial production on July 1, 2020.
During the three months ended March 31, 2021, the company sold 27,538 ounces of gold, compared with 10,179 gold ounces sold in the same quarter in the prior year.
During the three months ended March 31, 2021, 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. In comparison, 0.9 million tonnes of ore were mined, at a strip ratio of 1.7:1 with a total of 2.5 million tonnes of material mined for the prior comparable period in 2020.
Total tonnes mined were 248% higher in Q1 2021 as we advanced phase 2 waste stripping within the open pit versus Q1 2020. The resulting average daily mining rate for Q1 2021 was 69.3 k tonnes per day compared to 27.9 k tonnes per day during Q1 2020.
During the three months ended March 31, 2021, a total of 1.0 million tonnes of ore was stacked on the heap leach pad at a throughput rate of 10,600 tonnes per day. A total of 0.9 million tonnes of ore was stacked on the heap leach pad at a throughput rate of 9,900 tonnes per day for the prior comparable period in 2020.
Ore stacked on the pad was similar in Q1 2021 versus the prior comparable period in 2020. In the first quarter of both 2020 and 2021, the Company operated under the seasonal stacking plan wherein stacking of ore on the heap leach pad is curtailed for the 90 coldest days of the year, January through March.
Stacked ore grade for the quarter was 0.87 g/t Au, compared to 0.83 g/t Au in the prior comparable period in 2020. Some material in phase 2 of the open pit which was expected to be waste was mineralized and above cut-off grades; as such a portion of waste was converted to ore, which resulted in a minor increase in overall tonnes and ounces with a small decrease in grade, compared to expectations.
As at March 31, 2021, the company estimates there are 64,279 recoverable ounces within mineral inventory.
During the first quarter of 2021 and through the date of this press release, a number of improvements related to material handling within the process circuit have been completed. These corrective measures are significantly improving reliability and plant uptime and, in turn, will improve ore stacking and gold production on a go forward basis.
The Company incurred a total of C$31.8 million in capital expenditures during the three months ended March 31, 2021: sustaining capital of C$15.2 million (primarily upgrades to the material handling system including chute liners of C$12.4 million); capitalised stripping activities of C$16.1 million, and; C$0.5 million spend on growth capital expenditures (growth exploration) during the quarter.
First Quarter 2021 Financial Results
For the three months ended March 31, 2021, the company sold 27,538 ounces of gold at an average realized price of C$2,274 (US$1,795) resulting in revenue of C$62.7 million. Revenue is net of treatment and refining charges, which were C$0.1 million for the three months ended March 31, 2021.
Cost of goods sold
Cost of goods sold of C$25.3 million for the three months ended March 31, 2021 are comprised of production costs, (including mining, processing, site services and site general and administration costs), royalty and selling costs.
Depreciation and depletion
Depreciation and depletion was $12.6 million for the three months ended March 31, 2021. 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.
Management believes 2021 production and financial guidance remain achievable assuming there is no significant impact on operations at the Eagle Gold Mine due to the COVID-19 pandemic.
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.
The company produced 26,759 ounces of gold during the first quarter of 2021. The company’s 2021 gold production guidance at the Eagle Gold Mine of 180,000 ounces to 200,000 ounces is unchanged. Gold production is expected to be strongly weighted to the second half of the year due to the seasonal stacking of ore on the Eagle leach pad.
The company has initiated ‘Project 250’ aimed at increasing the average annual production of the Eagle Gold Mine to 250,000 ounces gold by 2023. The two primary opportunities to increase production are the scalping of fine ore from the crushing circuit and adjustments to the seasonal stacking plan.
Scalping of fine ore is expected to reduce wear and energy requirements as well as increase overall capacity of the crushing circuit. Further investigation is underway on year-round stacking of ore to the heap leach pad. Early engineering on Project 250 is expected to be complete in the second half of 2021.