GREY:VITFF - Post by User
Post by
bajanjohnon Nov 29, 2012 8:56am
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Post# 20658957
BMO Analyst
BMO Analyst ____________________
VICTORIA GOLD (VIT-TSXV)
JOHN HAYES, P.GEO.
Title: Sale of Big Springs Project
Impact: Slightly Negative
Details & Analysis: Victoria Gold continues to rationalize and monetize its exploration assets as it focuses efforts on its flagship Eagle gold project in the Yukon. The company announced that it will sell its Big Springs project, located in northeast Nevada, to MRG Copper LLC (which is being acquired by Kimberley Rare Earths Ltd) for total consideration of up to US$6M. Victoria will receive: US$2M upon closing; an additional US$2M 60 days from closing; and mainly resource contingent payments up to US$2M. The proceeds are expected to be used to advance the Eagle project, where the company plans to commence construction in 2013. Big Springs is the most advanced of Victoria’s early-stage exploration projects. As of August 31, 2012, the company had C$24M in cash and working capital of C$36M. The key challenges for the company are to complete permitting and financing of the Eagle project. We had previously ascribed a nominal value of US$30M to the Big Springs project in BMO Research’s estimates. The sale could decrease BMO Research’s 10% NAV estimate on the order of 3.5%. Using spot metal prices, Victoria’s shares are trading at a 51% discount to our 10% NAV estimate of US$0.57/share, below the emerging producers in BMO Research’s coverage universe which trade, on average, at a 31% discount.
Losing groung to its peers again.