Victoria Gold Corp. (VIT:TSX.V), which holds 100% ownership of the Eagle property, located 375 kilometers north of Whitehorse in Yukon Territory, announced the onset of Phase 1 construction on Aug. 21. The CA$40 million first phase will include "road upgrades, camp expansion, and detailed engineering" as well as "critical path earthworks, including earthwork at the toe of the in-valley leach facility, and cut and fill of the crusher foundation," according to the company press release.
John McConnell, Victoria's president and CEO, called the start of construction "an exciting milestone in the ongoing development of the Eagle Gold Project. The Phase 1 construction program will set us up for an efficient, low-risk construction program in 2018."
In an Aug. 21 research report, PI Financial's Adam Melnyk wrote that, in light of the onset of construction, his firm expects production at the Eagle mine "to commence in 2019 and average 183,000ozs Au at C$720/oz cash costs. This will place Victoria in a good position to scale up construction in 2018 as some of the construction work is limited to only the warm and dry months of the year."
Melnyk also noted that "on July 31st Victoria Gold (VIT) received commitment from BNP Paribas (BNPP) that they would underwrite 100% of the planned C$275M (US$220M) project finance facility for the construction of the Eagle Gold mine."
In conclusion, Melnyk wrote, "Victoria controls what we consider to be a strategic asset: a sizeable gold development project (~200koz/y), which can be developed for a reasonable initial capital expenditure (~C$400m), located in a toptier political jurisdiction (Yukon), with full permits for construction in hand (received December 2015). We expect Victoria will garner interest from a variety of gold producers as an M&A target."
PI Financial has a Buy rating and $1.10 target price on Victoria. The shares are currently trading at around $0.52.
On Aug. 28, Victoria released exploration results for its Olive-Shamrock zone, located near the Eagle property, noting that results yielded "39.6m of 1.04 g/t Au in drillhole DG17-818C, 22.5 metres of 2.78 g/t Au in hole DG17-848C and 16.5 metres of 2.24 g/t Au in drillhole DG17-845C." Based on what a company official calls "a very exciting exploration season," Victoria Gold's "2017 exploration budget has been more than doubled, from $6.2M to $12.5M."
Ryan Walker, an analyst with Echelon Wealth Partners, noted in a Aug. 28 report that "the results continue to suggest the potential for relatively quick mine-life additions, while demonstrating the substantial exploration potential remaining along the 18km-long Potato Hills Trend at Dublin Gulch."
Walker also commented that "all Dublin Gulch exploration targets in 2017 have thus far returned significant mineralization that may be potentially accretive to the Eagle Gold project's economics – though considerably further drilling and metallurgical test work will be required before an impact can be estimated."
The Echelon analyst concluded that "our positive bias towards VIT shares reflects the project's strategic size, fully permitted and shovel-ready status, district-scale land package with substantial exploration potential near excellent infrastructure, and situation in Canada."
Echelon has a Speculative Buy rating on Victoria and a target price of $0.90.
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1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from PI Financial, Victoria Gold, Corporate Update, Aug. 21, 2017
I, Adam Melnyk, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.
1) PI Financial Corp. and its affiliates’ holdings in the subject company’s securities, in aggregate exceeds 1% of each company’s issued and outstanding securities. No
2) The analyst(s) responsible for the report or recommendation on the subject company, a member of the research analyst’s household, and associate of the research analyst, or any individual directly involved in the preparation of this report, have a financial interest in, or exercises investment discretion or control over, securities issued by the following companies. No
3) PI Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12-month period. No
4) PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company. Yes
5) PI Financial Corp. and/or its affiliates have managed or co-managed a public offering of securities for the subject company in the past 12 months. No
6) The following director(s), officer(s) or employee(s) of PI Financial Corp. is a director of the subject company in which PI provides research coverage. No
7) A member of the research analyst’s household serves as an officer, director or advisory board member of the subject company. No
8) PI Financial Corp. and/or its affiliates make a market in the securities of the subject company. No
9) Company has partially funded previous analyst visits to its projects. Yes
10) Additional disclosure: No
Echelon Wealth Partners, Victoria Gold Corp., Aug. 28, 2017
Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.
I, Ryan Walker, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
During the last 12 months, has Echelon Wealth Partners Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer? Yes
During the last 12 months, has Echelon Wealth Partners Inc. received compensation for having provided investment banking or related services to this Issuer? Yes
Has the Analyst had an onsite visit with the Issuer within the last 12 months? (Dublin Gulch Site Visit – July 2016)