VGCX 2021 Q3 Production 55,827 OuncesAlot of copy and paste here so who knows what this will look like once posted...here goes....
For those that weren't here in 2021, in 2021 Q3 VG produced a quarterly production record of 55,827 ounces. Can they repeat or exceed this kind of production in Q3 2024, I believe they can barring no wildfires or other major unexpected negative events this year.
But in order to at least match or exceed the 2021 Q3 results in Q3 2024, let's compare some metrics gathered from VG's 2021 and 2023 Q3 MD&A reports:
2021 vs. 2023 Q3 Operating data:
2021 Q3 2023 Q3
Ore mined t 3,122,007 1,997,519
Waste mined t 3,829,647 3,093,063
Total mined t 6,951,654 5,090,582
Strip ratio w:o 1.23 1.55
Mining rate tpd 75,561 55,332
Ore stacked on pad t 3,270,692 2,321,719
Ore stacked grade g/t Au 0.90 0.65
Throughput (stacked) tpd 35,551 25,326
Gold ounces produced oz 55,827 41,561
So considering VG mined 1.1 million less tons of ore in 2023 Q3, stacked 950K tons less ore on the pad in Q3 2023, and had a stacked grade of 0.65 gpt vs. 0.90 gpt in 2021 Q3, it's no wonder VG produced 14,000 less ounces. Had they met the 2021 Q3 metrics and produced another 14K ounces, VG 2023 full year production would have been around 182K (top end of guidance).
Now let's look at VG full year metrics in 2021 vs. 2023:
2021 and 2023 Operating data (Full Year):
2021 2023
Ore mined t 9,488,128 8,518,784 (Mined less ore)
Waste mined 15,028,269 11,669,306 (Mined less waste)
Total mined t 24,516,397 20,188,090 (Mined Total was less)
Strip ratio w:o 1.58 1.37 (Strip Ratio lower)
Mining rate tpd 67,168 55,310 (Mining rate tpd lower)
Ore stacked on pad t 9,157,313 8,984,508 (Less ore stacked on pad)
Ore stacked grade g/t Au 0.85 0.72 (Lower avg ore stacked grade)
Throughput (stacked) tpd 25,089 24,615 (Lower throughput stacked)
Gold ounces produced oz 164,222 166,730 (Higher prod in 2023 vs. 2021)
So considering that VG mined a million tons less ore in 2023, had a mining rate (tpd) almost 12,000 tpd less, stacked less ore on the pad and at a lower grade (0.72 vs. 0.85) and produced 2,500 ounces more gold in 2023 vs. 2021, I'd say they did pretty good in 2023. Not what we hoped for but based on the overall lower metrics in 2023 production improvement is on track going into 2024.
Now if they can meet or exceed the 2024 metrics as outlined in the Eagle Technical Report and in particular:
2024 MINE PRODUCTION SCHEDULE
Ore k tonnes 12,693,000
Ore Grade g/t 0.64
Au Contained koz 263,000
Waste ktonnes 20,632,000
Total Mined ktonnes 33,324,000
Strip Ratio w:o 1.63
2024 HEAP PRODUCTION SCHEDULE
Ore k tonnes 10,494,000 (Need 1.5 million more more tons on pad)
Ore Grade g/t 0.73 (Avg 0.72 in 2023 so 0.73 in 2024 should be too difficult)
Au Contained koz 246.1
Au Produced koz 193,900 (This production in 2024 vs. 2023 would exceed guidance)
Au Inventory (EOP) koz 109.3 (Inventory was at 86K 2023 Year End so increase expected)
The AISC in 2023 were higher in 2023 vs. 2021 but it's important to note that the Technical Report is based on $1,700 US gold and a .75 CAD dollar. The CAD dollar is now below .74 CAD and since VG sells gold in US dollars and pays most expenses (excluding interest) in CAD dollars, the lower CAD dollar affects NAV.
2021 AISC was $1,193 US and was $1,488 US in 2023. With the gold price above $2,100 VG's higher AISC is less critical but they still need to work to get AISC costs down even though they are guiding for higher AISC in 2024.
Average realized gold price in 2021 was $1,790 vs. $1,929 in 2023. If we average $2,100 gold in 2024 that shoud give us about a $550 to $600 profit margin and at 180K ounce production in 2024 that's alot of Cash Flow (~ $108 million US at $600).
So in conclusion, I'd say 2024 isn't looking so bad for VG and the current market cap is clearly much lower than it should be.
My opinion only, DYODD.
HB77