Victoria Gold faces inflation, recruitment challenges

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Victoria Gold Corp. [VIT-TSXV] on Friday said production at its flagship Yukon mine for 2022 is expected to be close to the lower end of the company’s original guidance of between 165,000 ounces and 190,000 ounces.

The forecast is contained in the company’s second quarter financial report and is attributed to increased unplanned downtime within the crushing and conveying circuit caused by labour recruitment challenges.

“Unplanned downtime is high due to lower maintenance productivities as a result of recruitment and retention challenges within the Canadian, and specifically the Pacific Northwest, mining labour market,’’ the company said in a press release.

“Supply chain disruptions have exacerbated the maintenance difficulties as certain parts have taken longer to secure and deliver to site,” the company said.

Victoria’s flagship Eagle gold mine is situated on the Dublin Gulch gold property in the central Yukon Territory, about 375 kilometres north of Whitehorse and approximately 85 kilometres from the town of Mayo.

Covering 555 square kilometer, Dublin Gulch hosts the Eagle and Olive gold deposits, which contain proven and probable reserves of 3.3 million ounces of gold, with a grade of 0.65 g/t.

Gold production at the Eagle Mine is subject to significant seasonality. Stacking of ore on the heap leach pad was paused for six weeks in the first quarter of 2022 for regularly scheduled maintenance activities.

Gold production, which lags stacking activities in heap leach operations, will have a seasonal bias due to the winter scheduled maintenance program which will result in lower production in the first half of 2022 and higher production in the last half of 2022, similar to 2021.

All-in-sustaining costs for 2022 are expected to be close to the top end of the company’s original guidance of between US$1,225 and US$1,425 per ounce of gold sold.

Increased cost expectations are the result of lower production, combined with high inflation, specifically with respect to fuel pricing, which impacts many cost inputs, the company said.

During the three months ended June 30, 2022, the Eagle Gold Mine produced 32,055 ounces of gold, similar to the 32,140 ounces of gold produced in the second quarter of 2021.

Victoria reported second quarter net income of $17.1 million or 27 cents per share (basic), up from a profit of $1.3 million or $0.03 in the same period last year.

In the second quarter the company recognized revenue of $69.4 million, up from $63.5 million in the year ago period.

On Friday, Victoria Gold shares rose 4.3% or 43 cents to $10.38 on volume of 257,210. The shares currently trade in a 52-week range of $19.90 and $8.26.

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