Victoria Gold Corp VITFF

RE:RE:RE:Earnings estimate for q4?

[Human7]

MVargas wrote: A few observations/comments on Q4 results:

In the text of the NR the company announced production of 42,174 ounces, but in the table showing 2020 quarterly production, Gold Produced = 42,436.  Perhaps 42,436 produced and 42,174 sold? 

At the end of Q3 there were ~ 3,300 oz of unsold gold in inventory, so I would expect gold sold in Q4 to be 42,000 oz or more.

At an average Q4 gold price in Cdn$ of $2440, revenue = $102.5 million - a 30% increase of ~ $24 million from the $80.5 million in Q3.

Q3 AISC costs were C$1,752/oz times 35,312 oz = $61.87 million.  Costs are relatively fixed so as production increases AISC per ounce goes down. 

Labour costs are relatively fixed and fuel prices in Q4 were slightly lower than Q3, however higher production requires more energy.  A resonable estimate of Q4 total AISC costs might be $65 million.

Revenue of 102.5 million - AISC costs of $65 million = Profit of $37.5 million or 60 cents per share.  On an annualized basis that is $2.40/share.  A conservative P/E of 10 equals a share price of $24.

One of the more encouraging revelations from the Q4 production NR was that over 1 million tonnes were stacked on the HLP in December.  That is the kind of production that will lead to over 200,000 oz of gold per year.  This is in spite of less than 100% eqipment availability from tertiary crushers and stacking conveyors where remedial work will be completed in Q1 of 2021. 

Also with 1 million tonnes stacked in December, we can expect production of something closer to 20,000 oz in Q1 even if stacking does not resume until April.  However I suspect, depending on weather conditions, operations will resume sooner.  Last year they started back in mid-March during very cold weather.

 

Thanks for that detailed calculation. So helpful.

One comment: in the labour costs part of your equation the extra costs of Covid are unknown. In the latest interview McConnell made a point of mentioning it, so guessing it must be having some level of impact on AISC.

This should be eliminated or reduced from AISC sometime this summer hopefully.