RE:Victoria Gold: A Solid Buy-The-Dip CandidateSo IF Taylor Dart is right about AISC in 2025 at ~ US $1,220 and a ~ US $2,200 gold price and the result being ~ US $120 million or ~ CAD $175 million in free cash flow, then VG is looking golden! (Pun intended)
Taylor's projected cash flow of ~ US $50 million or ~ CAD $70 million in 2024 seems a bit low but I guess we'll see. Hopefully no further hedging or forward sales were done beyond what we're already aware of. Taylor's analysis of higher AISC and lower cash flow in 2024 vs. 2025 explains why VG Management decided to do the recent Flow-Through shares offerring at CAD $8.50 a share to fund this year's exploration.
This analysis is very positive going forward but as we all know, a lot can happen between now and 2025 and where the price of gold will ultimately settle out is anyone's guess is this volatile geopolitical environment Even the experts can't decide forcasting anywhere from $2,500 to $4,000 either of which is very positive for VG.
Notable Excerpts:
"Meanwhile, on a full-year basis, I think a conservative assumption for the gold price is US$2,160/oz, which would translate to AISC margins of US$600/oz for Victoria Gold assuming FY2024 AISC of US$1,560/oz. This would translate to a 500 basis point margin improvement year-over-year (27.9% vs. 22.9%), but it's important to remember that FY2024 is a year of elevated costs because of elevated waste stripping. And if we look forward to FY2025 where I think US$1,220/oz AISC is achievable and assume, AISC margins would improve to US$980/oz (44.5%) at a $2,200/oz gold price assumption. Hence, while Victoria will be free cash flow positive this year and close out the year with a much stronger balance sheet, FY2025 is on track to be a monster year if the gold price can hold on to most of its gains."
And this: "This leaves it trading at just ~0.55x P/NAV vs. an estimated net asset value of ~US$730 million ($1,900/oz long-term gold price), and the company remains attractively valued despite its recent rally, with the potential to generate ~$US50 million in free cash flow this year and ~$US120 million in free cash flow in 2024."
I'm expecting Q1 production results out sometime this week if as previous announcements have generally occurred within a couple weeks past the ending quarter.
HB77