Victoria’s Eagle clears construction hurdles

At more than 60% built, mine construction has unfolded mostly as planned at Victoria Gold’s (TSXV: VIT) Eagle gold project in the Yukon, according to president and CEO John McConnell.

“Mother nature has been the biggest nuisance,” McConnell says in a telephone interview with The Northern Miner.

“We had an extremely wet spring, which hampered earthworks. Then we had a very warm fall and start to winter. So we actually got back on track and are probably sitting about a month ahead of schedule.”

Earthworks, concrete, leach pad and liner systems are complete.

“The focus now is steel erection and electrical-mechanical. I would say everything is going very well.”

McConnell has been with Victoria since it acquired Dublin Gulch (which hosts Eagle) in 2009. He has served as CEO since 2011.

Victoria has had no problem attracting a top-notch operations team to Eagle, he says.

“There seems to be real excitement about going to work for a small company building a very large mine in Yukon,” he says. “I’ve been pleasantly surprised by the number of people we’ve been able to recruit with good operational and northern experience.”

McConnell notes that a few months into 2018, more than half of the 450 workers at Eagle were Yukoners, with more than one-third First Nations. “We’re making this Yukon’s project.”

The open-pit mine is set to produce 200,000 oz. gold per year over an 11-year mine life, as outlined in a 2016 feasibility study. All-in sustaining costs are pegged at US$638 per oz. gold.

“It shows we have a 10-plus year mine life based on the reserves, but my gut tells me this is a 15- to 20-year mine life.”

Interior work underway at the Eagle plant. Credit: Victoria Gold.

Geologically, Eagle is underlain by upper Proterozoic to lower Paleozoic clastic sedimentary rocks, which have seen regional deformation, including thrust faulting in the Cretaceous age, and later granitoid intrusions. Mineralization is associated with granitic intrusive bodies and occurs mostly in granodioritic material.

In December, Victoria updated Eagle’s resource, adding 450,000 oz. gold to its estimate — which now totals 199 million tonnes grading 0.64 gram gold — for more than 4 million contained oz. gold.

McConnell notes the update is based on “first principles,” with an independent qualified person starting from scratch.

“All we gave him was the drill hole data and said: ‘Rebuild the whole thing, rebuild the block model, and tell us your estimate.’ He had a little more drill hole information to work with, more holes at depth, a little better geology. The results confirmed everything we’ve been saying in the past.”

With a $370-million construction effort in full swing, exploration will be secondary for Victoria in the short-term.

“We all love exploration in the junior mining business. It’s what keeps the juices flowing. But it has certainly taken a back seat to the construction program this year [2018] and next.”

Despite some ups and downs in the market, McConnell always expected Victoria would be the one to build Eagle, especially after major investments from the Electrum Strategic Opportunities Fund and Sun Valley Gold in 2016.

“If somebody came in they would have to make a very good offer to acquire the asset,” he says. “I learned a long time ago as the CEO, you don’t necessarily decide whether you’re going to build it or not. You have some influence, but shareholders decide.”

While the 2019 exploration program is not yet defined, the company will direct resources towards the Nugget and Bluto targets at Dublin Gulch.

In December 2018, Victoria released the assays from the Nugget discovery hole that returned 101.5 metres grading 0.57 gram gold per tonne, including 10.1 metres of 2.79 grams gold.

“When I get out there with our team and geologists, I get very excited by what they’re finding,” McConnell says. “This is clearly not a one-project district.”

The company describes Nugget as the second-largest Cretaceous granodiorite intrusive body on the Dublin Gulch property (smaller only than the Dublin Gulch stock that hosts Eagle). The 2.2 by 1.2 km zone consists of medium- to coarse-grained granodiorite stock of the Cretaceous-age Tombstone Plutonic Suite. The Nugget stock is hosted in the Earn group and the Keno Hill Quartzite. Most of the zone has seen very little exploration.

At press time, Victoria Gold shares  traded for 38¢ apiece for a $292-million market capitalization. In the past 52 weeks the company’s shares have moved between 30¢ and 47¢.