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The Company's Eagle Gold Project in Yukon Canada hosts a National Instrument 43-101 compliant Reserve of 2.3 million ounces of gold.
Message: My Take on Today's Events
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My bottom line conclusion: Weakness in our stock is excessive relative to its long term value. This decline is a gift for long term investors who want to add to their long term holdings. I would suggest adding to your holding at its current price (C$1.02) and scaling in more shares should we see a further drop.
Here are my concerns:
1. Something is fishy! How could someone make a mistake transcribing the gold grades on all 4 holes that were previously drilled by Eco Bay at our Cove Property. Each hole had to have different grades. I could see one mistake in transcribing grade results, but making a mistake on all 4 holes is another matter altogether.
2. Victoria is hiring an outside third party to review all of our properties to make sure there aren't any other errors. Let's hope we don't get any other surprises.
3. The question now arises whether or not our company will be producing cash flow from bulk sampling later next year from our Cove property - cash flow that could be used to reduce additional stock holder dilution for developing our Eagle property.
4. Reduced likelihood that Newmont Mining will soon exercise their back in rights . When Victoria re-runs their model with the correct grades from the 4 holes that Eco Bay drilled at our Cove property, it is likely that the resource estimates for Cove will be reduced by 300,000 ounces, thus bringing the resource estimates well below a level that Newmont would consider worthy of doing a back-in.
Now lets look at the optimistic side of the equation for Victoria Gold:
1. Our stock has already declined 34% from its recent high @ C$1.55. If you subtract out 300,000 ounces of reserves from Victoria present reserves of over 6 million, our stock still remains significantly undervalued.
2. Victoria has the potential to increase the reserves at their Cove property. They completed their first of 9 holes at their Windy Point target over a month ago - Windy Point is part of our Cove Property and is located close to the "Helen Zone" where Victoria discovered 500,000 ounces of reserves (which may now be adjusted down to 200,000 ounces after Victoria re-runs its model with the correct grades from the 4 holes drilled by Eco Bay). We could get the drilling results from that hole at anytime, and if the results are comparable to the holes that Victoria drilled at the "Helen Zone", much of the concern that investors have today regarding today's press release will be removed.
3. Victoria will commence another drilling program at our Eagle property by the end of January. Results from this drilling program could add to existing reserves at this property.
4. Victoria should get permits for building the adit for our Cove property, possibly by year-end. If so, the adit will be built, and Victoria later next year will commence its 2nd drilling phase at the "Helen Zone" - underground drilling - quicker, less expensive, and more precise. Here again, we could see reserve estimates increased.
5. The closer we get to actual production on any of our properties, the markets will grant a higher evaluation for our stock.
6. I am convinced we will see gold bullion prices substantially higher than where they are today. That, it itself, will add value to Victoria's existing gold reserves.
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