Victoria Gold: Deutsche Goldmesse Spring 2024 Presentation

0:09 And I'm looking forward to the last presentation, corporate presentation of the day. It's Victoria Gold. And as I said, they're a sponsor of the company. We're really close to the company. As I said, we're sharing an office in Vancouver. And I've been to the mine, John, 4 times, 3 times, 4 times. It's absolutely impressive operation. It's been running fairly smoothly recently. And mining is not easy. And you're going to give us an update on how you're doing and how you're building Victoria into a Yukon-focused gold producer and gold mega monster.

0:39 It's a term I just came up with. John, thank you so much for coming. Cheers. How's that? Good afternoon, everyone. Nice to see a crowd. I assume everybody's sticking around for Lobo, not John McConnell. But anyway, I've got you. Thought I'd try and wake the crowd up with a little joke. You know, I have a 10-year-old daughter, so I have a lot of father-daughter jokes. And she's quite a witty little girl. So anyway, This guy has 2 cats. The first cat is named 123. And the second cat is named Unde Toi. He decides 1 day to have the cats in a swimming race. So he takes them out to the pool, and he puts them in the water, and he goes around to the other side of the pool, and he calls them.

1:36 Which cat do you think won the race? Think about it. 1231. Undertoil hat sank. Works better in Paris. All right. I assume we're starting early, so I got lots of time. Oh, yeah. Tell me another one. No. All right. So as Kai said, we're looking at building a mining company focused in the Yukon. And the reason we can do this is the Eagle asset is a large-scale asset with a long life. Current resource or reserve is 11 years but I'm pretty comfortable saying this mine will run for the next 25 years because I'll talk about how the deposit is open.

2:39 We're forecasting year-over-year production growth. We're highly levered to the price of gold. We're delivering on ESG. And one thing I emphasize in all the projects we acquire is that they have to be road accessible. Because in the Yukon and in many other jurisdictions in Canada, The First Nations do not want to see new roads built into pristine environmental areas. So if you've got a road, you're good to go. If you don't, it's going to be very challenging building a mine. Now I'm going to start with a video. I'm hoping it works. It's probably, you know, Kai talked, he's been to the mine last summer. This was done a little before that, but I think it gives you, it's as close as you're going to get to a mine site visit without actually leaving Germany.

3:37 And for those who only speak English and don't speak German, I apologize, you'll have to go on to our website and have a look at it. But this video today is in German.

4:00 Victoria Gold's Eagle Gold mine in central Yukon, Canada produces gold bars in a conventional day-to-day construction with heap mining. The process includes explosive work in the day-to-day construction, the transport of the ore to the three-stage mining, the transportation of the mined ore across the country to the heap mining plant in the valley, heap mining, gold mining in the gold mining re-plant, where the gold is heated and poured into gold bars, which are then sold to a refinery and transported. The current life expectancy of the mine is 11 years, but given the deep expansion of the ore body and the regional closure, the management is confident that the mine will run for over 20 years and produce more than 6 million ounces of gold.

4:46 The Igel Tagebau is located on a slope and after completion will be more than 2000 meters long, 1000 meters wide and 800 meters deep.

5:01 In the opencast mine, the stone is blown up and then loaded into a mould-kipper. The gold-hardened ore is transported to the fore-breaker. Non-gold-hardened material is brought to a storage place for waste stone. The Egel Goldmine's fleet includes 2 CAT 6040 large hydraulic excavators and 11 CAT 785D mould kippers. 40 tons of material fit into one shovel and each mould kipper loads over 3 shovels or 150 tons. The mould kippers drive at a speed of about 20 kmh from the pit to the pre-breaker and unload the material into the tiller's mould. The pre-breaker is a circular breaker. It shreds the ore to a size of about 12 cm, about as large as a grapefruit.

5:52 From the primary breaker, the crushed ore is transported to the secondary and tertiary breakers. The secondary and tertiary breakers further reduce the ore to a target size of 10 about the size of a grapefruit core. The chopped ore is transported to a heap mining plant on an over-roofed overland conveyor over a distance of about 1.5 km. The heap mining plant is located in a valley that is provided with a protective double coating. The crushed, gold-like ore reaches the equipped heap moulding plant via a series of mobile conveyor belts, which stack or layer the ore 12 meters high. 1 million tons of ore are processed per month.

6:39 A network of drop pipes is installed on each layer. The pipes emit a weak cyanide solution that seeps through the ore and dissolves the gold. In the frost months, the pipes are buried 1 meter below the surface. The gold-containing or fruitable solution is then pumped from the holding plant into the gold mining plant. In the gold mining plant, the gold is extracted from the solution and the resulting pigeon solution is recycled and used again for the heap mining. The gold is heated in the melting plant to over 1000 degrees Celsius and poured into gold barrels with a weight of about 1000 ounces.

7:20 The Eagle Gold Mine's gold bars contain gold and some silver. The gold bars are then transported to the Canadian Mint where they are refined to 99.99%. I think you'll agree that does a pretty good job of showing you what we've built and are operating in the Yukon. Just in terms of the location, I think most people know where the Yukon is in Canada. Geographically, we're roughly the center of the Yukon, just north of the small community of Mayo. One of the reasons this project works is the infrastructure. You know, we have road access.

8:08 We're tied into grid power that is 98% hydroelectric. You know, in Mayo, there's an airport, and that's how we move our people in and out of the mine site.

8:24 This is certainly becoming a district. People have heard about the snow line discovery, but there's probably 10 companies working in the area. Once you have success of an operating mine in an area, people tend to come in and stake around you. The blue there is Victoria's ground. Starting from the left, you can see Brewery Creek. We acquired that last year, and I'll talk more about that. We also have a large property at Clear Creek adjacent to Sitka. And then also we acquired a new property called Gold Dome. And then over to the right is the Dublin Gulch property where that hosts Eagle.

9:15 And we have our new Discovery Raven out to the east. The gold ground is Banyan's ground. Their ORMAC deposit is now over 7 million ounces and I'll talk a little more about Banyan in a minute. So again, Eagle is a long life asset. As I said, I think it'll run for plus 25 years. It's a big open pit, caterpillar fleet. Those shovels you saw were manufactured here in Germany. We use leach as the processing and we see recoveries of around 75%.

10:02 Again, good infrastructure. You know, ramping up to full production has been a challenge. As Kai said, you know, mining is tough and it's certainly not for the faint of heart. I can attest to that. But we are making progress. Every month things get better and you can see 2022, you know, we produced 150,000 ounces and we were quite disappointed in that. We missed our guidance. But 2023,166,000 ounces, so going in the right direction. And we've guided the market that this year will produce between 165 and 185.

10:51 So probably we'll be right in the middle there at 175,000 ounces. So how have we turned things around? You know, the mining has never been an issue. That big equipment works very well. The ore body is very consistent. The leach pad works well. The gold recovery plant or ADR works well. Our bottleneck has always been the crushing and conveying system. And we continue to tweak that and make improvements there every day. The other area that's been an issue for us post COVID has been people. It's been very difficult to get good quality people.

11:38 It's not just our industry. I flew over here on Air Canada and the flight was delayed because they were short a pilot. Every industry, I don't know if it's the same in Germany, but every industry in Canada is experiencing problems, whether it's a restaurant or hospitals or manufacturers, Everybody is short of people. But we're, you know, 2022, our turnover rate was 35%. 2023, our turnover rate was 20%. And I looked at the first quarter of this year just the other morning and we're down to about 15%. So that's getting back to the pre-COVID levels. But you can imagine trying to run a mining operation like this if you have 35% turnover. It's just mind-boggling how difficult it is.

12:41 This is why I get excited about the long life of the mine. Currently, the open pit is planned down to 350 meters, But over the last couple of years, we've drilled a number of deep holes and we've extended the ore body to 850 meters. We're working through the economics of deepening the pit now, but certainly at current gold price I think it's certain that we'll do a push back of the high wall eventually and take the pit deeper, probably adding in increments of 5 years to the mine life at a time. Brewery Creek, this is an asset we acquired last fall. We paid about $13 million for the Brewery Creek and a couple of exploration assets in the Yukon.

13:39 Along with those assets came tax pools of a similar amount of money that we can use against EGLE earnings. So essentially we acquired these assets for nothing. Burry Creek has a reserve of over 2 million ounces, of which we think probably a million are mineable. And it's our intention to put this operation in production. It'll take us probably 3 years to permit it, but it won't be the size of Eagle, it'll probably produce 60,000 ounces per year for a 10-year mine life. So, that's our growth is at Burry Creek.

14:23 The other development story we have is Raven. This is a new discovery by our team. The maiden resource was just over a million ounces and there's probably potential to increase that to a couple million ounces. It sits about 15 kilometers east of Eagle, so can use a lot of the same infrastructure that we have at Eagle. In terms of exploration, we have another meaningful exploration target called Lynx out to the east. I showed you Gold Dome is south of Eagle and then Clear Creek is adjacent to Sitka's new Discovery RC. I think the first 2 bullets there are the important one on each of these, you know, multi-gram drill intercepts and road accessible.

15:18 So that equates to again being able to permit them eventually.

15:26 We also own interests in 2 other juniors. 1 I talked about is Banyan Gold. And I overheard 2 gentlemen talking out here and 1 said, I hear a rumor John McConnell is married to the CEO of Banyan Gold. So I want to dispel that rumour. It's true. Anyway, yeah, my wife Tara runs Banyan Gold and they've done a great job. Their current resource is over 7 million ounces. People say, well, why don't you take them over?

16:07 And eventually, I think we will, but right now, they're doing such a good job, and we've got our hands full with Eagle that we're quite happy to let them continue. Unless somebody else comes and makes an attempt to buy them, then we'd have to step in. But we own 11% of their shares, so that gives us a foot up. And we also own 6% NSR on the property. So I think we're somewhat in the driver's seat in terms of acquiring it someday. The second junior we have an interest in is we own just over 30% of a company called Lahontan. We acquired this because we vended a property in Nevada into a shell called Lahontan and it's got its own management team that are based in Nevada so and they know the geology and the rocks there.

17:04 We assist them technically as well as financially, but they now have a resource of over 1.7 million ounces, and I think it'll probably be over 2 million by the end of a current drill program.

17:20 Shareholders, you know, I think you'll agree this is a blue chip shareholder group. I'll talk a little bit about our largest shareholder, GMT Capital, in a minute. But I also want to point out management's interest. I own a lot of shares of Victoria and it's important that you know that I acquired every share I own in the market, so I'm very much aligned with our shareholders. That's a question you should always ask a junior company because when people, IPO companies, they give the management team a lot of stock for free or for pennies. So they'll tell you they own 5% of the company, but they never put any money up themselves.

18:09 So this is, I've put a lot of money into this company. As have our chairman, Sean Harvey, our CFO, Marty Rendell, and our chief operating officer, Mark Coranto. So as the saying goes, we have skin in the game. GMT Capital is interesting. It's a family office.

18:35 It's an individual that's worth about $3.5 billion. And he started with nothing 40 years ago. Made all his money in the oil and gas business in the US. About 2 years ago he decided gold was going to $5,000. He agrees with Claude and he started looking around at gold companies. We had a common friend that is a shareholder of Victoria, and he recommended that Thomas have a look at Victoria. He did about 6 months of due diligence, and called me 1 day and said, would you do a private placement? I would like to have a significant holding in Victoria. And I said, well, I would, but I doubt I can get my board to agree to it because nobody wants the dilution of somebody putting that kind of money into the company.

19:36 He said the second question was, well, do you have any weak shareholders? I said, well, actually, there's a group that are weak. That is T. Rowe Price, a large fund out of the U.S. They don't traditionally invest in gold, and I could tell that they were very nervous about their holding in Victoria. So anyway, he went away and eventually phoned me up 1 day and he said, I've just acquired a large piece of T. Rowe Prices Block and as well I've been buying in the market and I now own 9.9% of Victoria.

20:22 That was welcome news for me because he's a great shareholder. I usually send him an email after our quarterly results and say, do you want to have a phone call? And he usually says, no, I'm good. I'm following you. But his investment in Victoria, when you're worth $3.5 billion, is almost a rounding error. But I like the fact that we have these generalists that are now looking at gold and he thinks gold is going to take off over the coming years. Financials, again, our guidance, 165,000 to 185,000 ounces, all in sustaining costs, the range will be 1450 to 1650.

21:12 You can look at what our all in sustaining costs were last year. They were, I think, 1479. So we'll be in that range again this year. And then you can see our outstanding shares there, very tight share structure, and we've got no warrants out there and a small number of options, RSUs and DSUs to motivate management. Analyst coverage, 7 groups cover Victoria and you can see their 12-month target prices there. Overall, the average is $1,460 per share. Hedging, I think it was probably a year ago, somebody asked me about hedging and I completely screwed up my answer and the individual berated me in the media about it.

22:11 So now I put it in the presentation so that I don't screw it up. But we've roughly hedged 20% of our production for 2024. We've also put in place some puts, so even if gold were to drop to $1,600, we'd be able to make our term debt payments and we'd survive. ESG, very important to us. I think, you know, most Canadian miners do a great job on the ESG front, including safety, community investment, environmental stewardship, carbon intensity.

22:57 We've always done a good job, but it's only recently we've done a good job of reporting on it and if you go on our website we just recently published our second annual report. People always ask me, you know, you're the CEO of a mining company, gold mining company, you must know what the price of gold is going to do. And my cocky answer is if I knew what the price of gold was going to do, I wouldn't be up here. I'd be on a beach somewhere. And we all know the central banks have been buying. Jeff talked about that earlier today. Brian Lundin talked about it yesterday.

23:44 You know, We know gold is considered a safe haven for money. In high interest rate times, people are buying bonds, but in low interest rate times, the gold should go up. So everybody knows those things, but what I really believe is the reason gold is going up is people are scared. So it's I own gold because I'm afraid it will go to $5,000. You know, you see that often in real estate as well. People see real estate going up and they go, oh, geez, I got to buy a new condo or a new house. So, that's the reason I think we've seen that increase in the last 3 months.

24:33 And just to repeat, we're building an integrated mining company forecasting year-over-year production growth, highly levered to the price of gold, delivering on ESG, and our projects are all permittable. That's it, no more jokes. No more jokes. I think we have time for one question. Tell me 1. You are telling a big story about your company, but the performance of your fair is a disaster. The last 2 years, it lost more than 50%. Why is it? Why have it? Well, I don't think we're alone.

25:20 I think if you look at Newmont and Barrick, they've suffered the same decrease. In our case, I think, you know, I talked about that in 2022, we missed guidance and we're in the penalty box. We made guidance in 2023 and I think we're on track to do it in 2024. Hopefully, the market rewards us when we show good financials and good production. Yes, Jeff. Is gold hedging a company strategy we should expect going forward? No.

26:06 I said we've hedged out to the end of 2024. That's about the same time as our term debt facility is retired. Going forward, I know my board would probably not like to hedge, but I'll tell you, at these gold prices, it's very tempting as a CEO to want to hedge a little bit. But no, we don't intend to hedge. We'd like 100% to the upside after we've retired that term facility. John, thank you so much. Thanks so much for coming and supporting Dodger Goat So really, really appreciate it.