VICTORIA GOLD CORP. (OTCMKTS:VITFF) stock surged from as low as $0.45 to more than $0.65 last week. However, the stock has failed to build on the momentum of last week. It was expected by the market as the run up in stock was unsupported by any promising press release. It was mainly a result of a newsletter writer’s recommendation.
The highlights
Investors are thrilled about Victoria Gold’s Eagle Project as Kaminak Gold’s Coffee Project was retorted up by Goldcorp for nearly C$500 million, however, these two firms are not the same. The two projects boasts some similarities as both are based in the Yukon and are open pit projects. Irrespective of the similarities, it is also fact that Kaminak’s project is of much premium quality. Its average gold grade stands at 1.45 g/t while Victoria’s average gold grade is 0.78 g/t.
Also, Kaminak’s initial capex amounts to C$317 million compared to C$411 million of Victoria. Therefore, Kaminak’s after-tax IRR and NPV5 are 37% and C$455 million versus Victoria’s 23.5% and C$366M. Moreover, Kaminak’s assumption of gold price stood at US$1150, while Victoria’s assumption was US$1200.
The impact
The differences make leading analysts believe that Victoria is a not a takeover target. Many of the majors are following debt reducing approach and have mediocre assignments in their portfolios. These assignments they can take further without going for any acquisitions. In fact, the majors are facing the result of taking more than required debt to get mediocre projects in the last bull market.
The company’s corporate presentation can be termed as a bit misleading because they represent that their “g/t” is the highest among their competitors. The metric’s utility can’t be refuted completely when assessing pre-PEA assignments, it is already considered the economics of an assignment as outlined by a proper PFS, PEA, or FS.
