www.vitgoldcorp.com
Victoria Gold Corp. is an exploration company with interests in 17 gold projects located in North Central Nevada covering over 50,000 hectares (120,000 acres).
The Company’s strategy is to add value per share through efficient exploration, accretive acquisitions and effective marketing.
Maintaining a low risk profile through project diversification sound financial management and operating in secure jurisdictions are key priorities for Victoria’s management team.
Preliminary assessment confirms robust economics for Victoria Gold’s Cove Gold Project
Victoria Gold (TSX-V: VIT) released a maiden resource calculation for the Helen Zone of the Cove Gold Project in Nevada, and released the findings of a Preliminary Assessment considering the project’s economic viability.
Victoria Gold has invested approximately US$11 million to date into the Cover Project to earn a 100% interest in the project from Newmont Mining (NYSE: NEM). Newmont Mining does retain a back-in-right for a 51% interest in exchange for contributing 2.5 times the amount spent on the property by Victoria Gold at the time of the back-in decision.
This morning, Victoria Gold released highlights of two crucial reports regarding the Cove Project. Scott Wilson Roscoe Postle Associates (“Scott Wilson”) has calculated a NI 43-101 inferred gold resource of 621,300 tonnes at an average grade of 26.4 grams per tonne gold containing 527,700 ounces. The resource is split into the Upper Helen Zone and Lower Helen Zone. In the upper zone, Scott Wilson calculated 315,200 tonnes at an average grade of 32.9 grams per tonne gold containing 333,100 ounces, with the remaining 306,100 tonnes grading 19.8 grams per tonne gold containing 194,600 ounces in the lower zone. The resource calculation was based on both historical geological data and 11 diamond drill holes completed by Victoria Gold completed in May 2009.
More importantly for Victoria Gold, Scott Wilson also confirmed the potential of the project as a gold producer.
Scott Wilson assumed an operation with a throughput of 360 tonnes per day, life of mine average diluted gold head grade of 21.9 g/t and 90% gold recoveries. Scott Wilson estimated a total life of mine (LOM) capital cost of US$63.2 million (including 25% contingency) and total operating cost per ounce of US$427 with an annual production of approximately 84,000 ounces.
Based on those metrics, and a flat gold price of $900/ounce, the pre-tax Internal Rate of Return (IRR) was calculated to be 48%. Assuming a flat gold price of $1100/ounce pushed the pre-tax IRR to 75%. The pre-tax Net Present Value (NPV) with a 5% discount rate and $900/oz flat gold price is $84 million, rising to $146 million on $1100/ounce gold.
"The PA clearly shows that this project has very robust economics, with low per ounce operating costs -- especially in the early years since the head grade could be well above the average resource grade; the project has an impressive IRR even at a gold price of $900/oz", said Chad Williams, President, CEO, and Director. "This is an ideal initial project for Victoria given its low risk, quick start-up, and attractive economics".
"This initial resource is based on only a very limited number of holes. As evidenced by the 3D illustrations on our website (www.vitgoldcorp.com), we believe that there is clear potential to significantly increase the Helen Zone's resource through in-fill and step-out drilling - plus, the exploration potential of the Helen Zone remains outstanding because the system is open in every direction laterally and at depth", said Mr Williams.
Victoria Gold also noted several other salient points about the Cove Project, including multiple new targets yet to be drill tested, the potential for additional resources in-between the upper and lower Helen zones, the favourable geometry of the resource blocks which will allow for underground mining development for a comparatively small amount of capital.
