Victoria Gold Corp VITFF

2023 VGCX Revised Production Guidance - Misguided?

[HoneyBadger77]

On Aug 9, as part of Q2 Results, the following remarks were included in the Outlook portion of the report that clearly spooked VGCX retail shareholders to dump their shares or not add more to their holdings Victoria Gold Corp. | Victoria Gold: 2023 Second Quarter Results (vgcx.com):

" 2023 Production Guidance remains intact at the Eagle Gold Mine and is estimated to be between 160,000 and 180,000 ounces of gold.

Prior to the impacts of the East McQuesten wildfire, which led to the evacuation of the Eagle mine site in late July and early August, the Company expected to achieve annual production toward the top end of the Guidance range. After considering the impact of the evacuation, the Company expects production to be closer to the lower end of the Guidance range. Should wildfire activity in the Yukon cause further disruption to the Eagle mine site, the Company may need to revise Production Guidance."

At the time, the wildfire situation was dynamic and so it was no doubt difficult to assess just how bad things would or could get and so revising guidance lower was necessary and prudent to prevent potential shareholder litigation.  However, we now know that the impact of the wildfires on VGCX Operations and Production was not nearly as dire as it could have been and thus, the revised production guidance to the lower end ~160,000 ounces is in my opinion not very likely. In fact, my assessment is that full year production is quite likely to meet or even exceed the ~180,000 ounces upper end of guidance.

Now before you all say HB77 has lost it, here's how I've come to this conclusion.  Upon analyzing / comparing VGCX quarterly and annual data from 2020 to 2023 (to June 30th) I found that 2023 results are tracking very closely with 2021 when VGCX produced 164,222 ounces.  Except now, VGCX in Q1 and Q2 2023 has already exceeded 2021 Q1 and Q2 production by 24,289 ounces.  So if we add these additional ounces to the reported 2021 annual produciton and assume that 2023 Q3 and Q4 production will be at least the same as Q3 and Q4 2021, we get a potential 188,511 ounces produced in 2023!  That's considerably more than the lower end  ~ 160,000 the company guided in August.

I'm estimating that the wildfires cost us about 5,000 ounces of lost production in 2023 but let's be generous and say we lost 10,000 ounces.  That takes my estimate for 2023 full year production to around ~178,000 ounces (so top end of revised guidance not lower end).   If I'm right about lost production being only 5,000 ounces then that equates to ~ 183,000 ounces produced in 2023.  Now if VGCX was to produce 183,000 this year does anyone think the share price will be sub $6.00, I don't.

I'm going to include the various links I used so you can do your own due diligence analysis but the main metrics I compared was Mining Rate (tpd), Ore Stacked on Pad (tonnes), Ore Stacked Grade, Thoughput (Stacked tpd), and Gold Ounces Produced.  Of particular note, the Ore Stacked on Pad in Q1 and Q2 2023 in is 4,607,539 tonnes and in the full year 2021 was 9,157,313 tonnes so assuming stacking in 2023 Q3 and Q4 is more or less equal to Q1 and Q2 then we are on track to Stack about 9.2 million tonnes ( ~ the same as in 2021).  The stacked grade in 2023 so far is .80 gt vs. .85 gt in 2021 but if VGCX stacks .90 gt grade for the last half of this year that will average the grade out to .85 gt (same as 2021).  I didn't compare the 2021 vs. 2023 gold recovery rates but they should be the same or better since 2021.

Here's the links I used:
Victoria Gold Corp. | Victoria Gold: 2021 Fourth Quarter and Full Year 2021 Results (vgcx.com)

Victoria Gold Corp. | Victoria Gold: 2022 Fourth Quarter & Full Year Results (vgcx.com)

Victoria Gold Corp. | Victoria Gold: 2023 Second Quarter Results (vgcx.com)

Victoria Gold Corp. | Victoria Gold: Eagle Gold Mine Q4 And Annual 2021 Production Results (vgcx.com)

Victoria Gold Corp. | Victoria Gold: 2023 Second Quarter Results (vgcx.com)