In an April 7 research note, BMO Capital Markets analyst Andrew Mikitchook reported that Victoria Gold Corp. (VGCX:TSX; VITFF:OTCMKTS) is expected to increase gold production significantly at its Eagle mine in the Yukon, with commercial production starting in late Q2/20 or early Q3/20.
The latter "remains a key deliverable for Victoria's valuation, and we are monitoring progress closely," he added. Until commercial production commences, the Canadian gold company will likely remain in a break even status or close to one, according to BMO's modeling.
While operations continue at Eagle, Victoria Gold is adhering to a COVID-19 action plan to minimize risks to its employees.
Mikitchook reviewed the production from Eagle to date, which totaled 27,822 ounces (27,822 oz). In 2019, the mine produced 17,214 oz and in Q1/20, produced 10,608 oz, both lower than BMO's estimates of $20,000 oz and 23,000 oz, respectively.
Stacking was restarted earlier this year and amounted to 888,000 tons in March, exceeding BMO's forecast. Of the total stacking, though, only a small part was "likely under leach for any significant portion of Q1/20," noted Mikitchook. "This is a timing adjustment, and we expect this production to roll over into Q2/20 and beyond."
BMO has an Outperformer rating and a CA$14 per share target price on Victoria Gold, which is currently trading at around CA$7.60 per share.
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Disclosures from BMO Capital Markets, Victoria Gold, April 7, 2020
IMPORTANT DISCLOSURES
Analyst's Certification
I, Andrew Mikitchook, hereby certify that 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.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Company Specific Disclosures
Disclosure 16: A research analyst has extensively viewed the material operations of Victoria Gold.
Disclosure 17: Victoria Gold has paid or reimbursed some or all of the research analyst's travel expenses.
For Important Disclosures on the stocks discussed in this report, please click here.
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