Victoria has first C$174M for Eagle Gold

Victoria Gold Corp. April 16 announced that it received an initial C$174 million of a C$505 million financing package the company put together for the development of the Eagle Gold Mine project on its Dublin Gulch property in the Yukon.

This financing package involves two credit facilities totaling US$175 million (roughly C$220 million); a private placement of Victoria common shares to two separate subscribers for a total of C$125 million; a C$98 million royalty financing; and an equipment financing facility for up to US$50 million (C$63 million).

This financing provides Victoria Gold with all the funds needed to develop an open-pit, heap-leach operation at Eagle Gold that is expected to produce 190,000 ounces of gold annually over a 10-year mine life from 123 million metric tons of reserves averaging 0.67 grams per metric ton (2.66 million oz) gold.

"Together with our partners, we are now moving forward with the development of the most significant mining project in the Yukon to date," said Victoria Gold President and CEO John McConnell.

Yukon Premier Sandy Silver said, "Today's announcement is great news for the territory and testament to the hard work of so many that have worked to make Yukon one of the world's most attractive places to invest. I would like to congratulate all parties including the First Nation of Na-Cho Nyak Dunn and Victoria Gold for getting the project to this stage in the process."

Expected to employ 350-400 people, the Eagle Gold Mine will be a significant economic contributor to Yukon and the Na-Cho Nyak Dunn First Nation.

"We have worked with Victoria for many years establishing a mutually beneficial relationship and they have exemplified the 'model' for companies wishing to work in our traditional territory," said Na-Cho Nyak Dunn Chief Simon Mervyn. "Several of our citizens are already employed early in the construction phase and many of our business partners are delivering value via construction contracts including earthworks, camp maintenance, catering, fuel supply, concrete and tire supply for the main mining equipment."

With the agreements now finalized, Victoria issued 150 million shares to Orion Mine Finance and 100 million shares to Osisko Gold Royalties Ltd. at C50 cents per share, for C$125 million. As part of the financing, Victoria issued Orion 25 million warrants, which provides the mine financier the ability to acquire another 25 million Victoria shares at C62.5 cents each for five years.

After the closing of this private placement, Orion controls approximately 19 percent and Osisko controls roughly 16 percent of Victoria Gold's common shares.

In addition to the C$125 million raised through the equity financing, Victoria received an initial C$49 million under a royalty agreement with Osisko.

Osisko has purchased a 5 percent net smelter return (NSR) royalty on all metals produced from the Dublin Gulch property, which includes the Eagle Mine, until 97,500 ounces of refined gold have been delivered to Osisko, and a 3 percent NSR royalty thereafter.

"The addition of the Eagle royalty strengthens our Canadian asset base and adds near-term Canadian gold to Osisko's growth profile from a fully permitted, fully-financed and shovel-ready project located in Yukon, a premier mining jurisdiction," said Osisko CEO Sean Roosen. "We are very pleased to partner with Victoria to develop Canada's next premier gold mine, and to generate important benefits for all project stakeholders."

Orion's part of the financing package also involves two project finance debt facilities totaling US$175 million, or about C$220 million.

Separately, Victoria has also entered into a US$50 million equipment financing facility with Caterpillar Financial Services Ltd.

"We look forward to building a high-quality, profitable, and environmentally safe project that will deliver significant economic benefit to all of our stakeholders," said McConnell.

Victoria is targeting the first gold pour from Eagle by the end of next year.

–SHANE LASLEY