Victoria Gold Corp VITFF

Metals & Mining Gold

Victoria Gold Corp. is a gold mining company. The Company’s flagship asset is its 100% owned Dublin Gulch property, which hosts the Eagle, Olive and Raven gold deposits along with numerous targets along the Potato Hills Trend including Nugget, Lynx and Rex Peso. Dublin Gulch is situated in the central Yukon, Canada, approximately 375 kilometers (km) north of the capital city of Whitehorse. The property covers an area of approximately 555 square kilometers and is the site of the Company's Eagle and Olive Gold Deposits. It also holds a suite of other development and exploration properties in the Yukon, including Brewery Creek, Clear Creek, Gold Dome and Grew Creek. The Eagle West target area lies as close as 500 meters northwest of the main Eagle Gold Deposit and hosts the exposures of the granodiorite. The Raven target is located at the contact zone at the extreme southeastern portion of the Nugget Stock. The Brewery Creek Project is a past producing heap leach gold mining operation.

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Victoria Gold Corp

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Post by bajanjohnon Mar 02, 2010 8:55am

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Post# 16832523

VIT Valuation

Fair Market Valuation Summary - 2010-Mar-01

Projected fair market stock price for Victoria Gold Corp. at the close of trading on 2010-Mar-01 was C$1.34. The actual closing stock price was C
.99.

At the close of trading, the current and projected Market Capitalization per ounce of Gold Equivalent for Victoria Gold Corp., were:

·current market valuation: US$47.35 per ounce of Au Eq.

·projected fair market valuation as a gold producer: US$161.50 per ounce of Au Eq.

oVictoria Gold Corp. in situ metal value is 100% from gold. Therefore, the expected fair market valuation for Victoria Gold Corp. should be on the Gold Producer Valuation Line.

The average ore value per tonne was US$43.47.

Projected fair market stock price for Victoria Gold Corp. is derived using the projected fair market valuation at start of production of US$161.50 per ounce of Au Eq (as derived above) and the following assumptions:

·Capital Expenditure for mine development: US$325M -- a very rough estimate of the capital costs required to bring the Eagle Gold, Big Springs, Cove Gold and Tassawini deposits into production. CapEx spending values used were:

oCove Gold CapEx (stages 1 and 2): $25M

oBig Springs, Eagle Gold, and Tassawini are assumed to average $100M each.

If higher CapEx expenditures are required the fair market stock price would be lowered. Conversely, lower CapEx spending would result in a higher stock price. The CapEx figure to be refined once scoping studies or pre feasibility studies are available for Eagle Gold, Big Springs and Tassawini.

·Risk Premium: 25% applied to the capital expenditure,

·Discount Factor: 20% -- set to cover a multi year gap between now and a future start of production on the deposit.

The discounting of the future gold metal prices after the start of production are already fully accounted for in the Gold Producer Valuation Line which is derived from current day market prices and company fundamentals.

Discussion

The supporting model and the calculations used to produce the projected fair market stock price are detailed in Fair Market Price Calculations.

The discounting applied to Victoria Gold Corp. is consistent with the discounting the current market applies to the producers Kinross Gold and Agnico-Eagle. This is conservative since Victoria Gold Corp. only holds gold while the reference producers derive approximately 90% of their in ground metal value from gold.

This blog does not assign any value to potential for organic growth on current Victoria Gold Corp. properties or future acquisitions by the company.

The fair market valuation of Victoria Gold Corp. illustrates the extent to which current gold explorers and gold developers such as Victoria Gold Corp. are undervalued relative to the valuation the market has assigned to Gold Producers.

Gold Explorer-Producer Valuation Hypothesis

Each company on the above chart is represented by its TSX trading symbol. The lower left hand corner of each box on the chart marks the company's Average Ore Value per tonne versus Market Capitalization per ounce of Gold Equivalent.

The Gold Explorer-Producer Valuation Hypothesis is based on the data driven observation that a company's market capitalization per ounce of gold equivalent tends to rise based on the current valuation of the metals contained in an average tonne of ore. For developer/explorers, it is also assumed that the true Explorer-Producer Gap should be large enough (but no larger) to cover the expected future capital expenditures, risk premiums and time discounts.

The original motivation for the Gold Explorer-Producer Valuation Chart was developed in Junior Gold Explorer Valuation Observations. Application steps and the generic factors that need to be considered in applying this valuation method are further described in Gold Explorer-Producer Valuation Exceptions.

This blog is based on the stock fundamentals and current metal prices as documented in the Victoria Gold Metal Valuation Report.

Updates

The Gold Explorer-Producer Valuation chart is updated after the close of trading using closing stock prices, closing spot market metal prices, fully diluted share counts, and NI 43-101 resource and reserve disclosures.

Last update was for the market close on 2010-Mar-01.

Caution

This GoldMinerPulse blog is presented for the sole purpose of illustrating how GoldMinerPulse per company metrics may be useful in judging valuation of individual gold and silver mining stocks. This blog should not be considered as investment advise. Anyone using this blog should become familar with the GoldMinerPulse metrics and the underlying assumptions to access their usefulness.

The Major Gold Producer Valuation Line is shown to be linear with respect to increasing ore value. From available data, this assumption appears sound for evaluating Victoria Gold Corp..

Research Links

·Victoria Gold web site.

·Victoria Gold NI 43-101 Metal Valuation Report for the company metrics derived using the last close of trading data.

·Canadian Insiders for insider trades on the TSX

·StockHouse for an active Victoria Gold discussion forum.

·StockCharts.com for price charts.

·Sedar for all TSX regulator filings. Sorry but you'll have to navigate the Sedar site as they do not allow direct links to company specific lists of document filings.

·Google News on Victoria Gold

About Links

I have listed the best of links for anyone interested in researching Victoria Gold Corp. further. If you have a blog or site withVictoria Gold Corp. specific pages, please send me the link for review and I will include your work in the link section as appropriate.