Junior accelerates work at Eagle Gold

Victoria Gold Corp. is making good on its promise to put the Eagle Gold Project in east-central Yukon Territory on a fast track once its merger with StrataGold Corp. was completed.

The Toronto-based junior June 29 reported the commissioning of a pre-feasibility study and a comprehensive project proposal that satisfies Yukon regulatory requirements and associated permits necessary for development of Eagle Gold, a sizeable, advanced, lower-risk project through its merger with Vancouver, B.C.-based StrataGold Corp., which closed June 4.

Victoria describes itself as a high-growth gold company with a focus on adding value per share through efficient exploration, project development, accretive acquisitions and effective marketing. The company boasts acquisition of NI 43-101-compliant resources totaling 4.4 million ounces of gold at a cost of C$3 per ounce in the past 12 months. It now owns five core projects in Yukon and Nevada, a joint venture gold project in Guyana with a Newmont Mining Co. subsidiary, and 10 pipeline gold projects.

Victoria said its strategy is to maintain a low-risk profile through project diversification, sound financial management and operating in secure jurisdictions like Yukon.

Gold and tungsten prize

Eagle Gold, known as the Eagle Zone Project under StrataGold, is located within the Dublin Gulch land package in central Yukon. The Dublin Gulch property is located about 48 kilometers, or 30 miles, northeast of the village of Mayo.

Historic placer operations dating back to the Klondike Gold Rush are evident at Dublin Gulch and surrounding areas. The Eagle Gold area has actively been explored since the late 1970s and was brought to bankable feasibility in 1997 but shelved due to depressed gold prices. StrataGold had been exploring the property since 2004.

The junior, which agreed to merge with Victoria in February, had explored not only Eagle Zone on the Dublin Gulch property but also the Mar Tungsten deposit. In December StrataGold reported an NI 43-101-compliant indicated resource of 86.2 million pounds of tungsten trioxide in 12.7 million metric tons grading 0.31 percent for Mar Tungsten along with an inferred resource of 8.9 million pounds WO3 grading 0.30 percent using a 0.10 percent cutoff grade.

StrataGold had already spent C$50 million on exploration and other work at Dublin Gulch, and also developed a relationship with the nearby Nacho Nyak Dun First Nation.

Based on a recent NI 43-101-compliant technical report, Wardrop Engineering Inc. has recommended that the project be taken to pre-feasibility, Victoria said.

Similarities to Fort Knox

Victoria said it intends to complete a NI 43-101-compliant pre-feasibility study on the Eagle Gold Project by year-end 2009 and submit a project proposal to the Yukon Environmental and Socio-economic Assessment Board in the second quarter of 2010.

Eagle Gold is located in a historically significant gold producing region and boasts an estimated NI 43-101 indicated resource of 2.7 million ounces of gold in about 98.6 million metric tons grading 0.849 grams per metric ton gold.

The Eagle Gold Project appears to be a geological twin to the Fort Knox Mine near Fairbanks, Alaska. Fort Knox is owned by Kinross Gold Corp., which is also Victoria's largest shareholder, holding 28 percent of the company's outstanding common shares.

Victoria is also roughly 25 percent owned by more than 10 financial institutions.

In addition to a high-category indicated gold resource, Victoria said the Eagle Gold Project offers the advantages of road accessibility, a low waste-to-ore ratio, attractive metallurgical characteristics that may make the deposit amenable to lower-cost heap leach processing, and access to power nearby at the Mayo hydroelectricity dam.

Heap leaching is a lower-cost method of refining gold from a heap of crushed ore using a chemical solution to leach out the mineral.

Victoria President and CEO Chad Williams said developing a gold mine on the Dublin Gulch project is a top priority for his company. "We have already made notable progress in the very short time that we have controlled the Eagle Gold Project," he said June 29.

Williams said the potential mine could be significant to Yukon's economy, as its gold production would potentially rival or exceed the 278,484 ounces of gold produced at the former Brewery Creek mine near Dawson City before it was shut down in 2002 due to low prices.

Pre-feasibility work under way

Victoria hired Scott Wilson Roscoe Postle Associates of Toronto to complete the pre-feasibility study on Eagle Gold by December. The junior advanced StrataGold C$1 million in loans in May to move the project forward. The camp on site has been opened for selective geotechnical drilling this summer to collect information for the pre-feasibility study and for the permitting process.

The company also hired a consultant to complete baseline and socioeconomic studies and to prepare a project proposal for submission to YESAB for the Eagle Gold Project.

Victoria also hired Mike Padula to serve as project manager for the Eagle Gold Project. Padula, a 21-year project management veteran, most recently worked with Western Keltic as the engineering manager for the Kutcho Creek advanced copper-gold project in northern British Columbia. He has worked for De Beers Canada on the Snap Lake diamond project and for AMEC Americas on a variety of mining and industrial projects.

Victoria also said it aims to raise at least C$2 million through a private placement flow-through offering of warrants at a price of C50 cents per share. The junior said it currently has about C$10.4 million in working capital (of which about $10 million is in unrestricted cash). A further C$2.7 million or so may be realized from the proceeds of the warrant exercise.