Victoria Gold up 32% on Yukon heap leach update

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Victoria Gold Corp. [VGCX-TSX] shares were up by over 30% Thursday after the company released an update on the heap leach facility incident that occurred at its flagship Eagle Gold Mine in the Canadian Yukon on June 24, 2024.

After the heap leach pad experienced a failure, operations were suspended while the site operations team along with management assessed the situation and gathered information.

“As initially reported, there were no injuries to personnel associated with the incident and Victoria’s primary focus has been on continued safety of its employees and mitigation of harm to the environment,’’ the company said in a press release, Thursday.

“The company has and will continue to liaise with the Government of Yukon, First Nation of Nacho Nyak Dun, the Village of Mayo, the Yukon Workers’ Safety and Compensation Board and other regulatory authorities,’’ it said.

“With respect to environmental mitigation, within hours of the incident a pumping system was established to return water from the heap leach facility material to lined containment ponds. Diversion systems have also been installed for the management of both non-contact and contact water and material. To date, continued environmental surface water quality sampling at multiple points downstream on the property has not detected any cyanide.’’

The company said production remains suspended with previous 2024 production and cost guidance forecasts retracted. It also said it expects to provide further information by the end of next week.

Meanwhile, the company advises that it has received notices of default from its lenders under a Credit Agreement dated December 18, 2020.

Still, after recently dropping to 87 cents, Victoria Gold shares jumped 32.2% or 28 cents to $1.15 on volumes of 1.24 million, Thursday. The shares trade in a 52-week range of $9.45 and 80 cents.

The Eagle Gold Mine produces gold from an open pit operation and employs 500 people. The mine produced 167,000 ounces of gold last year.

Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) is impacted as it holds a net smelter return royalty on the Eagle Gold Mine operation.

The 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 2.3 million ounces of gold, with a grade of 0.63 g/t.

Victoria Gold produced 29,580 ounces of gold during the first quarter of 2024. Gold production in the first quarter of 2024 was lower year-over-year due to lower grades related to mine sequencing of the Eagle orebody, the timing of placing stacked tonnes under the leach, and lower than planned stacking rates in the fourth quarter of 2023.

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