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3/8/18

Victoria Gold (VIT.v) announces its capex blowout early

So, if I have this straight:

  • In 2016, Victoria Gold (VIT.v) tells us in its Feasibility Study that it needs CAD$369m to build its Eagle Gold mine in the Yukon.
  • In 2017 it arranges a U$220m credit facility and starts the ball rolling by spending CAD$40m on phase one capex.
  • Today it announces a funding package that comes to CAD$505m, including an equity raise that adds a little under 50% to an already blown out share count (we go from around 515m S/O to 765m S/O) and giving a 5% NSR to Roosen. To be clear, this new C$505m package includes those previously announced facilities, but it's still way over what VIT told us it would need.

Which begs the obvious question, why so much money? Why, when according to the company's own literature the company did indeed spend C$38.4m on capex at Eagle in 2017, doesn't it put together a funding package for around CAD$330m to complete construction? Either they're planning to keep a contingency fund of epic proportions or VIT.v has just told the market that its project is built on the back of an unreliable Feasibility Study, which of course means in turn that all the NPV and IRR figures it's used to sell Eagle are complete balderdash.