Victoria Gold (VGCX.TO / VITFF) operates in the Yukan, Canada. Despite wild fires, the company had a pretty good 2023, producing 166,700 ounces of gold. It should do much better in 2024 and 2025, given the increasing price of gold.
Here is the most recent investor presentation: https://vgcx.com/investors/corporate-presentation/
The market cap is $358.9 million, while enterprise value (EV) is $514.76 million.
Here are the multiples:
-
- EV/EBITDA = 3.74
- P/E = 10.45
- P/NAV = 0.49
- P/CF = 3.15
- P/S = 1.17
Victoria Gold has a Piotroski F_Score of 7, which is good.
Cash is $26.75 million. Debt is $239.65 million. TL/TA is 42.0%, which is good. ROE is 4.43%. This is low but will likely improve in 2024 and 2025, given increasing gold prices.
Insider ownership is 5.2%, worth $18.7 million. This includes 1.3% for the CEO John McConnell, worth $4.7 million.
Intrinsic value scenarios:
-
- Low case: If there is a bear market or recession, the stock could drop 50%. This would be a buying opportunity because long-term intrinsic value would likely stay the same or increase once gold prices moved higher.
- Mid case: Free cash flow will hit at least $120 million in the next year or so. With an EV/FCF multiple of 7, EV would be $800 million. That works out to a market cap of $644.14 million, or $9.57 per share, which is 80% higher than today’s $5.33.
- High case: If it’s a secular bull market for gold, then gold could hit $3,000 or more. Free cash flow could hit at least $240 million. With a EV/FCF multiple of 7, EV would be at least $1,600 million. That works out to a market cap of $1,444.14, or $21.45 per share, which is over 300% higher than today’s $5.33.
RISKS
As noted, if there is a bear market or recession, the stock could drop 50% temporarily.
It’s also possible the company’s exploration for new resources won’t be very successful. But, in this case, probable intrinsic value would still be much higher than the current stock prices of $5.33.
BOOLE MICROCAP FUND
An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/
This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.
There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.
The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.
Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.