Victoria PLC

In Q2 2022, Victoria Gold sold 28,580 ounces of gold at an average price of C$2,427/oz (US$1,900/oz), generating revenue of C$69.4 million. Operating earnings were C$20.5 million, net income was C$17.1 million, and EPS was C$0.27. Cash costs were C$1,057/oz (US$828/oz), all-in sustaining costs were C$1,750/oz (US$1,371/oz), EBITDA was C$44.2 million, sustaining capital was about C$17 million, free cash flow was a deficiency of C$1.2 million, and cash and cash equivalents were C$29 million at June 30, 2022. On production, the company mined 2.2 million tonnes of ore, moved 4.3 million tonnes of total material, stacked 2.3 million tonnes of ore at 0.85 g/t, and produced 32,055 ounces of gold; total tonnes mined were down 23% year over year, while ore tonnes, grade, and gold production were described as broadly similar to last year. Management did not provide formal 2022 or 2023 numerical guidance, but said 2023 should be a step-up year toward a run rate closer to 250,000 ounces by the end of 2023, with a non-stacking period reduced to about 4 weeks and year-round stacking remaining the key milestone.

John McConnell framed the quarter as consistent with the mine plan and emphasized that the company is still on track to build toward higher output through improved operating cadence rather than a sudden jump. He said the move toward 250,000 ounces per year depends largely on year-round stacking and reducing the winter maintenance shutdown to about 4 weeks, while the company first wants to reach a steady-state 200,000 ounces per year. His tone was constructive and cautious, especially on 2023, where he repeatedly avoided giving formal guidance.

Marty Rendall highlighted the quarter’s financial performance with C$69.4 million of revenue, C$20.5 million of operating earnings, C$17.1 million of net income, and C$44.2 million of EBITDA. He said cash costs were up significantly versus last year mainly because of inflation, especially fuel, and noted that this pressure should continue for the rest of the year. On liquidity, he said the revolving credit facility was increased from C$100 million to C$125 million, the company has repaid half of its C$100 million term loan and now owes C$50 million, and management is not looking at an equity issuance.

Analysts focused on the deferral of growth capex for ore scalping screens, the reduction in waste stripping capex, the path to 250,000 ounces, and whether weaker cash balances and higher payables implied a need for equity. Management said the screen installation was delayed because capital costs rose, construction crews were hard to find, and Metso proposed a lower-cost, more efficient alternative that is being engineered now, with announcements expected later in 2022 and installation in 2023. On cash, management said the expanded C$125 million revolver provides flexibility, the term loan is being paid down on schedule, and there are no plans for a rights issue or other equity financing.