Opinions
Dennis da Silva
Victoria Gold
VGCX-T
DON'T BUY
Apr 26, 2023
N/A
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DON'T BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
The issue is uncertainty. The heap leach failure raises multiple issues: First, there is the cost to remedy the issue. This is unknown, but could be huge. Next, there is the environmental damage and the likelihood of very large penalties. The mine could be permanently shut by regulators. Then, we have potential default. The mine operations have been suspended, so no cash flow is now coming in. With more than $200M in debt, VGCX's debt covenants will likely be breached soon, and lenders will be largely in control of the company's destiny. Overall, we would consider it a very precarious situation and would not advise buying.
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In Northern Canada. Fallen victim to the typical mining curse: takes longer, costs more, ramps up slower. Last quarter wasn't too bad. Still in the penalty box on consistency of operations. Inherent risk of a single-mine operator.