DarrelCamden-Smith/iStock via Getty Images The Q4 Earnings Season is finally underway for the Gold Juniors Index ( GDX ), and one company getting ready to report its results is Victoria Gold ( OTCPK:VITFF ). Just last month, the company released its preliminary results, giving investors a look under the hood at what to expect from the upcoming results. Overall, Victoria had a solid year from an operations standpoint, but it came up short when it came to managing expectations, missing guidance by more than 10%. Having said that, Victoria’s future looks bright with organic growth on the horizon, and if weakness persists, I would not be surprised to see a takeover bid emerge in the next 12-18 months. Eagle Mine Operations (Company Presentation) Victoria Gold released its preliminary Q4 and FY2021 results last month, reporting quarterly production of ~49,500 ounces and ~164,200 ounces, respectively. While the H2 performance was solid, as expected (~105,300 ounces produced), this translated to a massive miss vs. the company’s initial guidance mid-point of ~190,000 ounces. This was in line with my earlier warnings that the stock did not appear to be in any position to meet this ambitious guidance, which is one reason I favored owning other producers heading into Q4. Let’s take a look at the results below: Victoria Gold – Quarterly Gold Production (Company Filings, Author’s Chart) As shown in the chart above, Victoria Gold saw a meaningful increase in gold production on a year-over-year basis in Q4, with production up 17% year-over-year to ~49,500 ounces. The results were just as impressive on an H2 2021 vs. H2 2020 basis, with production increasing from ~78,000 ounces to ~105,000 ounces. This should have sent the stock much higher with a great full first year of production under the company’s belt and a grade of B+ for the year related to operational performance. Unfortunately, the guidance miss overshadowed the solid annual performance, with a grade of D in my view, when it relates to managing expectations. Eagle Gold Mine – Key Operating Metrics (Company Filings, Author’s Chart) If we take a closer look at the results above, we can see that the Eagle Gold Mine’s key operating metrics continue to trend in the right direction. This is evidenced by ore mined up 10% year-over-year, ore stacked up nearly 10%, and grades up slightly to 0.85 grams per tonne gold in Q4. Notably, the reserve block model agrees with the blast hole model, and the company is actually benefiting from bonus ore. From a recovery standpoint, the results are also encouraging, actual production right in line with modeled production, good news for investors that may have been wary about a heap-leach operation in the frigid Yukon. Eagle Gold – Reserve vs. Blast Hole Model (Company Presentation) On a full-year basis, ore mined was up 27%, tonnes stacked on the pads was up 26%, and the company enjoyed a 1% increase in grades. This translated to a 41% increase in gold production year-over-year, an impressive result for a company that had to begin operations in unusual times due to COVID-19. Having said that, Victoria was up against year-over-year comps, given that commercial production was only reached in Q3 2020. Hence, while the year-over-year growth was certainly solid, it was to be expected.
After a weak November and December performance, it’s understandable that some investors might be a little frustrated, especially with the miss relative to guidance. However, while it’s easy to get hung up on the softer than expected results, I believe investors should be looking forward, not in the rear-view mirror. When it comes to what’s on the horizon, Victoria hopes to grow production meaningfully in the next two years, with a goal of 250,000 ounces in 2023. Let’s take a closer look below: Project 250
Victoria’s goal is to push production to 250,000 ounces per annum, and it plans to achieve this by stacking ore on the heap leach pads for an extra two months per annum and adding an intermediate scalping screen. When it comes to the additional ore stacking, this should have a material benefit on production, with ore stacked dipping considerably in Q1 due to this being the coldest portion of the year. The plan for the intermediate scalping screen is to bypass fine ore material from the crushing circuit directly to the heap leach pad.
Victoria stated last month that the results of the completed scoping study demonstrate an increase to design throughput of the crushing circuit by ~15%, increasing potential annual […]
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