Victoria Gold Corp. (TSX-V: VIT-V) is pleased to provide an update with respect to the previously announced sales of the Cove McCoy, Mill Canyon and Relief Canyon properties in Nevada.
On April 10, 2012, Victoria announced that it had accepted an offer from Premier Gold Mines (“Premier”) to purchase Victoria’s interest in the Cove McCoy Property. On June 4, 2012, Victoria and Premier executed a definitive asset purchase agreement in conjunction with the sale. Closing of the transaction is expected to occur in June 2012.
On May 25, 2012, Victoria announced that it had entered into a definitive purchase and sale agreement with a wholly owned subsidiary of Barrick Gold Corporation (“Barrick”) to sell Victoria’s interest in the Mill Canyon Property. As consideration for the Mill Canyon Property, Victoria received all of Barrick’s right, title and interest in the Santa Fe Property, located in Mineral County, Nevada along with a cash payment. Additionally, Victoria became entitled to receive a contingent cash payment based on the occurrence of certain future events. The transaction closed on June 1, 2012.
On March 27, 2012, Victoria announced that it had accepted an offer from Pershing Gold Corp. (“Pershing”) to purchase Victoria’s interest in the Relief Canyon Property. The definitive purchase agreement was executed on March 23, 2012 and the transaction closed on April 5, 2012.
“Not exactly gangbuster economics”?
What do you mean? Project at $1600 Oz has a pre-tax IRR of 37% and 2.3 years payback. And that is calculated on the basis of 2,3 million reserves out of 6,3 M + I + I resources.
I thought someone might ask. First off, I’m not implying the economics are terrible, but even if we assume no capital or operating cost inflation from feasibility assumptions (unlikely), the project has much higher gold production during years 1-3 (almost 50% of total production). In other words, with its 9 year life and under the $1600 oz assumption it maybe “pays itself back” 2-2.5x, not the roughly 4x that one might immediately expect. Generally I think an after-tax NPV@8% using reasonably conservative gold price assumptions can be characterized as robust, all else equal. Eagle’s after-tax NPV@8% using $1600 oz is probably less than 1x capital cost. Still upside and highly levered to gold prices, but not the cheapest development story around.