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Good morning, and welcome to the Victoria Gold video and conference call to discuss the company's fourth quarter and annual 2022 financial results.
Listeners are encouraged to read Victoria's 2022 annual audited financial results report and MD&A available both on the company's website and SEDAR.
Joining me on the call today are John McConnell, President and CEO; and Mark Ayranto, Chief Operating Officer. I'm Marty Rendall, Chief Financial Officer.
[Operator Instructions] Also note that this video call will be recorded and will be available for playback on the company's website.
We will be making forward-looking statements on this call and encourage participants to see our disclosure documents, including our corporate presentation, AIF and MD&A and the cautionary notes therein, which can all be found on SEDAR and the company's website.
I'll now turn it over to John McConnell, Director and CEO.
Thank you all for joining the call. I'll provide a brief summary of the year and fourth quarter and then pass the call to Marty and Mark to provide more details.
First and foremost, starting with safety. We've had one lost time injury in the fourth quarter, our first LTI in over 2 years. Our TRIF, or total recordable injury frequency for 2022 was 1.5%, which compares favorably against our industry peers. Although the Eagle mine has an impressive safety track record, we have redoubled our focus on health and safety and aim to achieve year-over-year improvements on these metrics in 2023.
Operationally, the fourth quarter capped off a challenging year for Eagle. The failure of our main overland conveyor early in the quarter caused 3 weeks of downtime at the mine and resulted in us retracting our original 2022 production guidance. This was particularly disappointing as prior to this failure, we were on track to meet the lower end of the original guidance range.
Looking forward, we have significantly improved our operational and maintenance staffing and protocols and expect to achieve material higher gold production in 2023, as demonstrated by our production guidance for the year we released yesterday.
In addition, we expect to release an updated mine plan for Eagle in the coming days that we expect will outline sustained production growth at reduced costs over the long mine life. An updated resource estimate for our exciting Raven discovery is also imminent and will include 25,000 meters of drilling we conducted at the deposit in 2022.
In summary, we anticipate 2023 will be an exciting year of growth for Victoria and our shareholders on both the production and exploration fronts.
I will now turn the call over to Marty Rendall, our Chief Financial Officer.
I will briefly discuss our financials before passing it back over to Mark to discuss operations. Currency will be in Canadian dollars unless specifically mentioned otherwise.
During the quarter, we produced about 44,000 ounces of gold and sold about 41,000 ounces, resulting in revenue of about CAD 92 million. That is about 17% lower than the CAD 110 million in revenue that was generated during the fourth quarter of 2021. The revenue differential is the result of reduced ounces sold. Realized gold prices in U.S. dollars were lower than the quarter of the previous year. However, the lower U.S. dollar gold price was almost entirely offset by higher Canadian U.S. dollar exchange rates, meaning quarter-over-quarter, we received approximately the same gold price in Canadian dollars.
Cost of goods sold was CAD 51 million during the quarter compared to CAD 45 million in the fourth quarter of the previous year. The increase was primarily due to inflation. Lower gold sales and revenues combined with higher costs year-over-year certainly reduced our profit margins. However, both gross profit at CAD 23 million and operating earnings also at CAD 23 million remained positive.
Net income after tax was a positive CAD 10 million during the quarter, and earnings per share were CAD 0.15.
At the end of December 2022, the company held cash and equivalents of CAD 21 million compared to CAD 31 million at the end of December 2021. I would like to remind listeners that we do use our revolving credit facility to manage our treasury and therefore, our cash balance generally stays fairly constant and relatively low while debt will fluctuate to match the liquidity needs of the company while keeping interest lower.
Working capital at the end of December 2022 was CAD 94 million compared to CAD 63 million at the end of December 2021. The increase in accounts payable year-over-year was more than offset by increases in inventory values, which includes both warehouse inventory and gold in process inventory.
During the most recent quarter, total capital expenditures were CAD 25 million, while 12 months year-to-date total capital expenditures were CAD 113 million. This is comprised of sustaining capital, capitalized stripping and growth capital and growth exploration. A detailed breakdown of the capital over the year is shared within our MD&A.
We expect sustaining capital expenditures to fall materially in 2023 from 2021 and '22 levels. 2023 sustaining capital is expected to be CAD 30 million compared to CAD 60 million in 2022. 2023 capitalized stripping is expected to be CAD 50 million, while growth capital is estimated at CAD 25 million, which includes both heap leach pad expansion and growth exploration initiatives.
A quick note on the accounting behind the capitalized stripping. Each quarter, we'll capitalize a portion of operating costs if the strip ratio for that quarter is higher than the life of mine strip ratio. Therefore, capitalized stripping can vary quite widely quarter-over-quarter and year-over-year, depending on the mine plan. If you do see high capitalized stripping in 1 quarter or 1 year, you should expect to see lower or no capitalized stripping at some point in the future when our strip ratio is below life of mine strip ratio.
I'll now review our non-IFRS performance measures. Once again, the detailed numerical breakdown along with commentary on the calculation is within our MD&A. During this section, I will switch to U.S. dollars to allow for unit-based comparisons with our peers.
The average realized price per ounce of gold sold during the most recent quarter was USD 1,678 per ounce. This compares to the fourth quarter of 2021, where we realized USD 1,786 per ounce. Cash cost per ounce of gold sold during the most recent quarter were USD 920. This compares to the fourth quarter of '21 where cash costs were USD 718 per ounce.
All-in sustaining costs per ounce of gold sold during the most recent quarter were USD 1,376. This compares to the fourth quarter of '21, where 2021 all-in sustaining costs were USD 1,052 per ounce. During 2023, we expect all-in sustaining costs to fall between USD 1,350 and USD 1,550 per ounce of gold sold.
Free cash flow during the most recent quarter was negative CAD 9 million. This compares to the fourth quarter of 2021, where free cash flow was positive CAD 31 million with the differences already discussed being ounces of gold produced and higher operating costs.
EBITDA, earnings before interest, taxes and depreciation and amortization in the fourth quarter was positive CAD 35 million. This compares to the fourth quarter of 2021, where EBITDA was CAD 66 million.
I will now turn it over to Mark, our Chief Operating Officer.
Thanks, Marty. Good morning, everybody.
In the fourth quarter of 2022, the Eagle mine produced approximately 44,000 ounces of gold, a slight decrease year-over-year from approximately 49,000 ounces of gold produced in the fourth quarter of 2021. The decrease is primarily related to our stacking operations being down for 3 weeks in October, as John had mentioned.
We stacked 1.4 million tonnes of ore, grading 0.9 grams per tonne in the fourth quarter for a total of 6.6 million tonnes, grading 0.85 grams per tonne stacked for the year. The mining rate in the fourth quarter was 49,000 tonnes per day, which is in line with the annual average of 48,000 tonnes per day.
We ended 2022 with 150,000 ounces produced. And despite production challenges we faced in 2022, there have been some real notable positives. Our heap leach pad performance remained strong for the fourth quarter. Recoveries are continuing to trend in line with our forecasted levels. And for the second quarter in a row, we saw a reduction in our in pad inventory of recoverable gold with a net of approximately 5,000 ounces recovered from in pad inventory in the fourth quarter.
Grade stack in Q4 remained strong as the Eagle reserve continues to reconcile well to actual production results. And in fact, since commencing operations in mid-2019, we've encountered a total of over 4 million tonnes of bonus ore, which is material above and beyond what was included in our reserve model.
Our production guidance for 2023 of 160,000 to 180,000 ounces is a notable improvement from our 2022 annual production. This is achievable with our existing crushing and conveying circuit and our existing mine fleet.
As Marty outlined, our capital guidance for 2023 has decreased markedly year-over-year, which reflects the reality that we have everything we need at site and available to us to deliver on the increased production profile. We've optimized our maintenance schedules, our supply chain and inventory and labor force and are seeing our crushing and conveying assets show improvement -- improved availability as these improvements have been implemented.
One notable change for 2023 is that as we've gained operational experience at Eagle over the past few years and with respect to cold weather heap leaching, we've been able to extend the number of months during the winter period that we stack fresh ore onto the pad. These efforts are ongoing currently, and we expect to report a significant increase in tonnes in recoverable ounces stacked year-over-year when we release our first quarter 2023 production results.
John, back to you for concluding remarks.
In summary, 2022 did not meet our expectation in terms of operational performance and production. We have implemented a number of changes to support our 2023 guidance and show year-over-year production growth at the Eagle mine. With an updated mine plan for Eagle and an updated resource for Raven, both on the near-term horizon, we expect to demonstrate that the long-term future of the operation is secure and that we believe we are starting to define a true gold camp on the Dublin Gulch property.
Thank you all for listening, and I will now open the call for Q&A.
[Operator Instructions]
Marty, it's Lenora. I have a question here from Heiko and he is asking, can you provide some color on cash flow implications from the conveyor belt failure in the calendar '22 and the calendar '23? I assume the latter is extremely small, correct?
I can comment on that one. The cost of the new belt and the cost to get it back up and running was fairly minor. Mark will correct me if I'm wrong, but it's in the $1 million to $2 million range. The real costs, as you'll all understand is the lost production and the opportunity cost. So 3 weeks can add up to about 15,000 ounces if we're operating for those 3 weeks. And most of those 15,000 ounces are lost in Q4, but there will be a small portion lost in Q1. So we will see some small cash flow implications in Q1 due to the October down, but most of that has already been felt in Q4 production.
And Andrew Mikitchook has a question. Andrew, you just have to unmute.
Maybe Mark or John, could somebody just comment generally on what is a reasonable grade expectation for '23 or failing that, what -- are you expecting to stack any ROM or that would average down from kind of the mined grade or the process for crush grade, I guess?
Thanks, Andrew. I'll start and then Mark can chime in. But first, your question of ROM, we have no intention of adding ROM to the leach pad this year. Just from a cost perspective, it's -- and the capital required to put a proper road in, it's just not economic to use ROM. So we'll be stopped filing ROM. You'll see more about that when we release our life of mine plan later this week.
Then, what was the other part of your question there? Was, oh, what to expect for grade? Mark, you want to comment on grade for 2023?
Yes. Andrew, our grade will be, as John mentioned, we're not planning on putting ROM to the pad in the near future. So grade expectations are fairly similar, certainly in line with what you saw in 2022, probably slightly lower, but on the average, about 0.8.
Don Blyth?
John, obviously, Q4 was a bit challenging there. Just a question on the guidance for 2023, 160,000 million to 180,000, that sort of suggests 40,000 to 45,000 per quarter run rate. Obviously, we're more -- talking 50,000 was sort of often quoted production kind of steady run rate. What's the -- obviously, you may be addressing this in the update -- upcoming update. But what's the sort of biggest delta for 2023?
Yes, I would say we still have some challenges at the mine. The biggest one is still related to people. We're short of people and we have higher turnover rates than we like. So to address that, we've beefed up our recruiting efforts as well as our training on site. And we're seeing the improvements in that. And we certainly think that the run rate of 50,000 ounces per quarter is doable, but we're being overly -- or being cautious with our guidance for 2023. And I think you'll see our long-term mine plan tomorrow and -- or the next day. And I think you'll be quite pleased with numbers going forward.
Okay. So -- maybe you're just being a little conservative to make sure that you hit guidance for 2023.
Yes.
A question here from Andrew. Can John or Mark reconfirm the expected release of the life of mine plan update?
Yes, it's always dangerous, Andrew, but we've got everybody crossing the Ts and dotting the Is today and our desire is to release it tomorrow morning before the market opens. That can slip if the guys find anything today, but I'm pretty confident you'll see it release tomorrow morning.
Chris Thompson has got hand up there.
Just quick questions on the guidance there. Could you -- what is your guidance for cash costs for this year?
Marty, do you have that at your fingertips?
No, I don't. We don't provide guidance on cash costs. However, Chris, you can assume the difference between cash costs and all-in sustaining costs for 2023 will be similar to 2022. Our sustaining capital is significantly lower, but our capitalized stripping is a little higher. So capital is similar year-over-year due to that capitalized stripping.
And just a final question. Obviously, you've spoken a bit about grades. Can you give us a sense of tonnes that we can anticipate being stacked this year?
Yes, Chris, we're in the order of 9 million to 10 million tonnes for the year.
As Marty said, this call will be available on our website later today if you want to listen to it again. We will close the session, and have a great day.