Victoria Gold finishes prefeasibility study at Eagle Gold

Vancouver – Victoria Gold (VIT-V) has released a prefeasibility study for its Eagle Gold project in the Yukon that moves two-thirds of resource into the reserve category.

Eagle Gold is the most promising of four mineralized areas, known collectively as Dublin Gulch, that Victoria Gold picked up when it acquired StrataGold in mid 2009. Since then Victoria has been busy finishing up a small drill program and putting together the prefeasibility study.

The study moves 66.14 million tonnes grading 0.823 gram gold per tonne into the probable reserve category, for 1.75 million oz. gold. Until now, Victoria Gold had been working under a 98.6-million-tonne indicated resource grading 0.85 gram gold for 2.7 million oz. gold.

The reserve would be mined in an open pit operation churning through almost 25,000 tonnes of ore daily, to produce an average of 187,000 oz. gold annually during the first four full years of operation. In its first, partial year of operation in 2013 the mine would produce an additional 40,000 oz. gold from a starter zone with a slightly higher average grade – 1.02 grams gold – than the average mill feed grade for next four years, which sits just below 0.9 gram gold.

To develop the operation is expected to cost $281.5 million and take two years. Once built, the mine should be able to produce an ounce of gold for between US$427 and US$489, though in its first few months cash costs are expected to average US$946 per oz.

At a gold price of US$900 an oz., the project’s internal rate of return (IRR) is estimated at 15%, the net present value (NPV) at $115 million (with a 5% discount rate), and capital payback would take 3.4 years. With gold selling at US$1,100, the IRR would be 29.9%, NPV would be $323 million (again at a 5% discount rate) and capital payback would take just over two years.

The company now plans to submit a project proposal to the Yukon Environmental and Socio-economic Assessment Board to initiate the formal permitting process, start condemnation drilling, and advance discussions with the Na-Cho Nyak Dun First Nations on a benefits agreement.

Victoria Gold also plans to start a $5-million exploration program to further test the other gold zones within trucking distance of the Eagle zone, which include the Shamrock, Steiner, and Olive zones, as well as work on a full feasibility study for Eagle Gold.

A previous feasibility study done by Mineral Resource Development in 1997, which was not compliant with National Instrument 43-101 regulations, outlined a heap leach mine that was viable at a gold price of $350 per oz.

Gold mineralization is generally hosted in sheeted vein sections within granodiorite that is weakly altered and moderately sheared, with weak sulphide mineralization. Higher-grade gold is associated with arsenopyrite veining. The granodiorite is the most significant phase of the intrusive Dulbin Gulch stock, which pushed through the Proterozoic to lower Cambrian-age Hyland Group metasediments that underlie the deposit.

Victoria Gold wholly-owns Dublin Gulch, including 1,896 quartz claims, 10 quartz leases and one federal crown grant quartz claim comprising an area of 34,576 ha. The property is 85 km north of the village of Mayo and is accessible year-round by road.

Further afield, Victoria Gold has signed a share-purchase agreement to sell all shares of its StrataGold Guyana subsidiary to Takara Resources (TKK-V). Victoria acquired the Guyana division of Stratogld when it took over the parent company StratoGold last year. StratoGold Guyana owns the Tassawini gold exploration property in Guyana.

Takara will issue a total of 38.9 million issued and outstanding shares on a post-acquisition and post-consolidated basis. The deal still requires shareholder approval and is subject to customary terms and conditions.

Victoria Gold’s share price was down 11¢ on the day to close at 94¢. The company’s 52-week share price range is between 30¢ and $1.13; the company has 225 million shares outstanding.