Victoria Gold Corp. (TSX-V: VIT; OTC Other: VITFF) is an undervalued junior mining company with what we believe is significant upside potential. And it’s not just us as several recent analyst reports put a target price on the Company of between $2 and $7 per share. Not to mention that Kinross Gold Corporation (NYSE: KGC; TSX: K) owns approximately 21% of the Company’s outstanding shares.

Speaking of Kinross, this past Thursday, Kinross announced its intent to acquire Underworld Resources Inc. (TSX-V: UW) in an all stock transaction valued at approximately $139.2 million. According to a presentation on its Website, Underworld has indicated and inferred mineral resources totaling 1,582,453 ounces of gold. Based on the transaction value, Underworld is being acquired for approximately $88 per in ground ounce of gold.

Our purpose here is not to argue whether $88 per in ground ounce of gold is a fair valuation or not. For those who want to know, we think this is low compared to just a few short years ago, but unfortunately is representative of the market today. And regardless of our opinion, it is what it is and we have to assume that this is an arms length transaction between a willing buyer and willing seller. So, $88 per in ground ounce of gold it is.

Across all of its properties, Victoria Gold has indicated and inferred mineral resources totaling 5 million gold ounces. Using a valuation of $88 per in ground ounce of gold, Victoria Gold would be valued at approximately $440 million. And with 250 million shares outstanding on a fully diluted basis, this represents a per share price of $1.76. As of its most recent close, Victoria last traded at $0.88 per share, a 50% discount to where it should be trading based on the recently announced acquisition of Underworld by Kinross. In other words, Victoria Gold is trading at $44 per in ground ounce of gold compared to the $88 Kinross just paid.