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The mining newspaper for Alaska and Canada's North
Establishes foothold for possible future buyout of Yukon miner North of 60 Mining News – May 10, 2021
Victoria's Eagle Gold Mine produced 116,644 oz of gold during 2020 and is forecast to produce around 190,000 oz this year.
The aurora borealis lights up the night sky over Coeur's Kensington Mine in Southeast Alaska, which is about 350 miles south of Victoria's Eagle Gold Mine in Canada's Yukon.
Coeur Mining Inc. is investing roughly US$117.2 million (C$141.7 million) to acquire a 17.8% interest in Victoria Gold Corp. and its Eagle Gold Mine in Canada's Yukon – a foothold that could see the Chicago-based miner gaining a much larger position in a northern gold mine it has been keeping an eye on.
"We have long admired the quality of Victoria's Eagle asset and its recent success in ramping up operations," said Coeur Mining President and CEO Mitchell Krebs.
Victoria transitioned from a mineral explorer to gold producing mining company with pouring of the first gold bar at Eagle Gold in September of 2019. Achieving commercial production on July 1, 2020, Eagle produced 116,644 ounces of gold during 2020, which included 38,896 oz recovered over the first six months of the year.
"Successful achievement of commercial production and operational ramp up were major milestones for Victoria in 2020 and were completed while navigating the additional challenges brought on by COVID-19," Victoria Gold President and CEO John McConnell said earlier this year.
Having worked its way through these challenges, Victoria anticipates producing 180,000 to 200,000 oz of gold at all-in sustaining costs of US$1,050 to US$1,175 per oz at Eagle during 2021.
Impressed with this success and having an opportunity to acquire a significant stake from a major shareholder, Coeur has cut a deal to acquire 11.07 million Victoria shares from Orion Co-VI Ltd. at C$13.20 per share. This is a roughly 5% discount to the trailing 30-day volume weighted price of Victoria shares for the period ending May 7.
In exchange for the Victoria shares, Orion will receive 12.79 million Coeur shares, which is valued at US$117.2 million based on the $9.17 30-day volume weighted price of Coeur through May 7.
"This compelling opportunity to acquire 17.8% ownership interest in Victoria from Orion is consistent with our stated strategy and capital allocation framework and complements our existing portfolio of precious metals assets in high-quality jurisdictions in North America," said Krebs.
This North American portfolio includes two mines in the neighborhood of Eagle Gold Mine – the Kensington Mine in Alaska and Silvertip Mine in Northern British Columbia.
A high-grade underground gold mine, Kensington is only about 350 miles (560 kilometers) south of Eagle. This Southeast Alaska operation produced 124,867 oz of gold during 2020 and is expected to produce between 115,000 and 130,000 oz this year.
Silvertip, which is about 320 miles (515 kilometers) southeast of Eagle and about 175 miles (280 kilometers) northeast of Kensington, is a silver-zinc-lead mine project in Northern BC.
Coeur temporarily shuttered production at Silvertip early in 2020 to accelerate investment in exploration and mill expansion. Much of this work is focused on expanding high-grade deposits and extending its mine life. A feasibility study for the expanded mine is expected to be finalized this summer and Coeur plans to restart operations at Silvertip by the end of the year.
With its initial investment in Victoria, Coeur is now positioned to add Eagle to the mines it owns in this neighborhood.
While Coeur says no present plans exist to buy a majority stake, it may engage in future discussions with Victoria about potential strategic transactions to acquire Victoria's shares, business, or assets.
Orion, which owns a roughly 37% stake in Victoria, has already agreed to vote in favor of a Coeur offer to acquire at least 50% shares and up to all of Victoria's properties and assets.
Orion's initial sale of 11.07 million Victoria shares to Coeur is expected to close on May 11.
"We are excited to become a shareholder of Victoria, and believe this transaction represents an attractive investment for our stockholders," said Krebs.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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