Victoria Gold Bids For StrataGold

Nevada-focused Victoria Gold (VIT-V, VITFF-O) has made a friendly offer for StrataGold (SGV-T, SAGDF-O) in pursuit of its advanced Dublin Gulch gold project in the Yukon.

Victoria is offering 0.1249 of a Victoria share for each StrataGold share, which works out to be an 18.7% premium to StrataGold’s closing share price on Feb. 10, the day before the offer was announced. Warrants and options will be exchanged on similar terms.

Victoria shares were trading at 38¢ apiece on Feb. 10 with 134.2 million shares outstanding, while StrataGold shares were at 4¢ with 184.2 million shares outstanding.

Victoria president and CEO Chad Williams says the company has been working on the deal for about eight months.

“We reviewed well over one hundred different opportunities in gold in Canada and the U. S. and somewhat in Mexico and this was the very best opportunity that we saw,” Williams says.

The company says that the addition of Dublin Gulch, located 700 km north of Whitehorse and 48 km northeast of the village of Mayo, will increase Victoria’s total National Instrument 43-101-compliant gold resources to about 4.3 million oz. gold from 1.2 million oz. with equity dilution of only 17%.

A 2009 resource estimate for the Eagle zone at Dublin Gulch put indicated resources at 98.6 million tonnes grading 0.85 gram gold per tonne for 2.7 million oz. gold at a cutoff grade of 0.5 gram gold per tonne. Inferred resources are 2 million tonnes grading 0.67 gram gold for nearly 44,000 oz. gold.

A bankable feasibility study in 1997 proposed a heap-leach operation, but a mine was never developed. Williams says the company plans to move ahead with the project.

“Shareholders should be encouraged because the path is very clear,” Williams says. “We need to create a concrete plan on Dublin Gulch. . . We know this project can be a mine.”

Williams says it’s now up to Victoria to demonstrate it can take all of the work done on the project and synthesize it into a coherent mine plan that will create value for shareholders.

“This is a very advanced project. We don’t need to drill there, we don’t need to do any metallurgical work, we can use a lot of the older information,” Williams says, pointing out that the company will have to update a lot of the older information and that there’s considerable exploration potential. “It gives us a tremendous base to go on and removes a lot of the risk.”

Williams says the company’s goal is to transform its assets into assets that produce cash flow.

“This is not a science fair project. It’s about economic return for shareholders,” Wiliams says.

If the deal goes through, Victoria’s share count will increase to 157.2 million shares from 134.2 million. Victoria shareholders will own 85.4% of the new company and former StrataGold shareholders, the remainder.

StrataGold shareholders will have to tender at least two-thirds of the company’s shares to the offer for the merger to go ahead.

StrataGold’s executive chairman, Roman Friedrich, said in a statement that StrataGold and its Dublin Gulch project would benefit from the merger through Victoria Gold’s northern project development expertise.

StrataGold also has less developed gold projects in Guyana, as well as a tungsten project in the Yukon that Victoria hasn’t yet evaluated.

Other Victoria News

Victoria is focusing on five key projects in Nevada this year, and plans to spend about $2.5 million on exploration.

The company says it wants to contain costs as much as possible in 2009.

Victoria completed a $4-million financing in December, adding to the $3.9 million it had as of Nov. 30.

At the end of January, Victoria said that a drill was ready to go at the Cove gold project, about 50 km south of Battle Mountain, Nev., where the company discovered the Helen zone in 2008.

The Helen zone is about 600 metres northwest of the Cove open pit, which produced 2.3 million oz. gold and 100 million oz. silver between 1987 and 2001.

Victoria plans to drill two holes at the Helen zone to test the depth extension, and possibly a few other exploration holes on the property.

Victoria plans to get started on its newly acquired Santa Fe project, about 80 km northeast of Hawthorne in Mineral Cty., an addition from its merger with Gateway Gold late last year. The Santa Fe property includes a former mine that produced 350,000 oz. gold and 500,000 oz. silver from several open pits. Victoria will investigate some mineralized zones discovered by Gateway last year for a future drill program.

Another former mine site, the Big Springs project, about 100 km north of Elko Cty., hosts an in- ferred resource of 1.2 million oz. with an average grade of around 0.078 oz. per ton (2.7 grams gold per tonne).

Victoria says it will conduct a scoping study to see if mining the resource and processing the ore at nearby mills would be economic. Surface mapping, followed by drilling is also on the to-do list, but first the company needs the necessary drill permits.

Another scoping study will be carried out on the Mill Canyon project, about 120 km southeast of Battle Mountain, next to Barrick Gold’s (ABX-T, ABX-N) massive Cortez mine and Cortez Hills development project. Victoria will focus the study on the open-pit target and identify new drill targets.