Victoria Gold produced 35,312 ounces of gold in the September quarter at its mine in Canada's Yukon, which had achieved commercial production on July 1.

All-in sustaining costs were US$1,315 an ounce, against a realised gold price of $1,886/oz for the 32,029oz sold.

The company's inaugural guidance for the second half was 85,000-100,000oz with AISC between $950-$1,100/oz. 

This was revised on Friday to 72,000-77,000oz and $1,175-$1,275/oz respectively.

"Aside from the usual teething issues and learning curve experiences common to all start-ups, we are very pleased with our progress as we have moved in to and beyond commercial production and remain highly confident the best is yet to come over a very long mine life," president and CEO John McConnell said.

Victoria Gold said a comprehensive "operations reliability enhancement phase" was well underway, to address issues including the initial feeder and feed chute designs proving to be overly complex, the ore proving more abrasive than assumed and a bottleneck in the mobile conveyor stacking system.

It also said COVID-19 restrictions had a "manageable but significant impact" on employee turnover, on site vendor support, supply chain operations and costs.

The 10-year mine is expected to produce about 210,000oz annually at an AISC below $800/oz, according to a 2016 feasibility study.

Victoria Gold described itself as being an attractive takeover target in a recent presentation. 

The company reported having C$40 million in cash and equivalents at September 30 and a working capital deficit of $6.5 million.

Net income for the quarter was $20 million, compared with a net loss for the nine months to September 30 2019 of about $40 million, and basic earnings per share were 32.8c.

Its shares (TSX: VGCX), which have ranged from $4.02-$21.04 over the past year, closed down 15.9% on Friday to $13.29 to capitalise it about $822 million (US$627 million).