Victoria Gold lowers production guidance due to supply chain troubles

Victoria Gold (TSX: VGCX) expects 2021 gold production to be 10% lower than its previous guidance of 180,000 oz. due to supply chain issues. 

It produced 114,726 oz. gold in the first nine months of the year. 

As a result of the adjusted production guidance, all-in sustaining cost per gold ounce is expected to be up to 5% above its earlier guidance of US$1,175 per ounce. 

“While it is disappointing to be revising our gold forecast for 2021, our cash flow remains strong and we will realize the delayed gold ounces early in 2022,” John McConnell, the company’s CEO said in a press release. “Like many companies, we are experiencing pressure on our supply chain. We continue to work with all of our suppliers very closely to avoid such disruptions as Covid-related challenges persist.” 

The supply chain issues involved a five-week delay in receiving driplines used to irrigate the heap leach pad. Low-flow driplines were installed instead until the new driplines arrived, which resulted in less leach solution being applied to freshly stacked ore on the heap leach, and therein extending the leach cycle. 

Freshly stacked ore contains the highest portion of recoverable gold and contributes significantly to gold production, the company said.  

Andrew Mikitchook, a BMO analyst who follows the company, said in a research note that he expects the company’s overall production to come in at 160,000 oz. from his previous forecast of 178,000 oz. and expects production in the first quarter of next year to increase to 30,000 oz. from 18,000 ounces.  

“While today’s announcement is negative … we expect the net long-term impact to be minimal,” he said.  

At presstime in Toronto, Victoria Gold was trading at $15.11 per share within a 52-week trading range of $22.54 and $10.42.