10-Q 1 vgz-20130331x10q.htm 10-Q 3f796962a505452

 

 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

 

FORM 10-Q 

 

(Mark One) 

 

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended March 31, 2013

 

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ______________

 

Commission File Number 1-09025 

 

VISTA GOLD CORP. 

(Exact name of registrant as specified in its charter) 

 

 

 

 

Yukon Territory, Canada

 

98-0542444

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

 

 

Suite 5, 7961 Shaffer Parkway

 

 

Littleton, Colorado

 

80127

(Address of principal executive offices)

 

(Zip Code)

 

 

(720) 981-1185 

(Registrant’s telephone number, including area code) 

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to the filing requirements for the past 90 days:  Yes x No  

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x No   

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 

 

 

 

 

Large accelerated filer

 

Accelerated filer x

 

 

 

Non-accelerated filer

 

Smaller reporting company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No x  

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 81,721,960 common shares, without par value, outstanding at April 30, 2013.

 

  

 


 

 

 

 

 

 

 

VISTA GOLD CORP. 

(An Exploration Stage Enterprise) 

FORM 10-Q 

For the Quarter Ended March 31, 2013 

INDEX 

 

 

 

 

 

 

 

 

 

 

Page

 

 

PART I — FINANCIAL INFORMATION

 

 

ITEM 1.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

11

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

20

ITEM 4.

 

CONTROLS AND PROCEDURES

 

21

 

 

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

21

ITEM 1A.

 

RISK FACTORS

 

21

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

21

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

21

ITEM 4.

 

MINE SAFETY DISCLOSURE

 

21

ITEM 5.

 

OTHER INFORMATION

 

22

ITEM 6.

 

EXHIBITS

 

22

 

 

 

 

 

 

 

SIGNATURES

 

23

 

 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in U.S. dollars and in thousands, except shares)

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

2013

 

 

2012

 

 

 

 

 

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

16,294 

 

$

18,281 

Restricted cash

 

169 

 

 

70 

Marketable securities  (Note 3)

 

461 

 

 

626 

Other investments (Note 4)

 

40,707 

 

 

69,489 

Other current assets

 

3,190 

 

 

2,963 

   Total current assets

 

60,821 

 

 

91,429 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Mineral properties (Note 5)

 

13,701 

 

 

13,701 

Plant and equipment, net (Note 6)

 

5,356 

 

 

3,592 

Assets held for sale (Note 6)

 

10,000 

 

 

10,000 

Amayapampa interest (Note 14)

 

4,813 

 

 

4,813 

Long-term investments

 

65 

 

 

65 

Long-term deferred tax asset

 

9,867 

 

 

9,465 

   Total non-current assets

 

43,802 

 

 

41,636 

 

 

 

 

 

 

Total assets

$

104,623 

 

$

133,065 

 

 

 

 

 

 

Liabilities and Shareholders' Equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

3,276 

 

$

4,409 

Debt (Note 7)

 

9,764 

 

 

 -

Accrued liabilities and other

 

1,820 

 

 

1,839 

Current deferred tax liability

 

14,276 

 

 

24,839 

   Total current liabilities

 

29,136 

 

 

31,087 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Other long-term liabilities

 

635 

 

 

635 

   Total non-current liabilities

 

635 

 

 

635 

 

 

 

 

 

 

Total liabilities

 

29,771 

 

 

31,722 

 

 

 

 

 

 

Commitments and contingencies – (Note 13)

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Common shares, no par value - unlimited shares authorized; shares

 

 

 

 

 

   outstanding: 2013 - 81,721,960 and 2012 - 81,563,498 (Note 8)

 

403,995 

 

 

403,583 

Additional paid-in capital (Note 9)

 

32,878 

 

 

32,155 

Accumulated other comprehensive income (loss) (Note 10)

 

(218)

 

 

Accumulated deficit (including during exploration stage: 2013 - $162,731 and 2012 - $135,325)

 

(361,803)

 

 

(334,397)

   Total shareholders' equity

 

74,852 

 

 

101,343 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

104,623 

 

$

133,065 

 

 

 

 

 

 

 

Approved by the Board of Directors

 

 

 

/s/ John M. Clark

 

/s/ Tracy A. Stevenson

John M. Clark

 

Tracy A. Stevenson

Director

 

Director 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.  

1

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)

(Dollar amounts in U.S. dollars and in thousands, except shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Cumulative during Exploration

 

 

2013

 

2012

 

Stage

 

 

 

 

 

 

 

Operating income and (expenses):

 

 

 

 

 

 

Exploration, property evaluation and holding costs

$

(7,130)

$

(5,707)

$

(102,389)

Corporate administration and investor relations

 

(1,910)

 

(2,074)

 

(46,017)

Depreciation and amortization

 

(275)

 

(126)

 

(2,673)

Loss on extinguishment of convertible debt

 

 -

 

 -

 

(1,218)

Loss on currency translation

 

(421)

 

(24)

 

(651)

Gain on disposal of mineral property, net

 

 -

 

934 

 

79,766 

Write-down of mineral property

 

 -

 

 -

 

(250)

   Total operating income/(expense)

 

(9,736)

 

(6,997)

 

(73,432)

 

 

 

 

 

 

 

Non-operating income and (expenses):

 

 

 

 

 

 

Gain on sale of marketable securities

 

 

144 

 

8,055 

Unrealized loss on other investments (Note 4)

 

(28,781)

 

(7,365)

 

(41,797)

Write-down of marketable securities

 

 -

 

 -

 

(959)

Write-down of plant and equipment

 

 -

 

 -

 

(7,117)

Interest income

 

122 

 

13 

 

2,900 

Interest expense

 

(6)

 

 -

 

(4,118)

Other income/(expense)

 

26 

 

(12)

 

(1,718)

   Total non-operating income/(expense)

 

(28,633)

 

(7,220)

 

(44,754)

 

 

 

 

 

 

 

Income/(loss) from continuing operations before income taxes

 

(38,369)

 

(14,217)

 

(118,186)

Deferred income tax benefit/(expense)

 

10,963 

 

2,991 

 

(4,412)

Income/(loss) from continuing operations after income taxes

 

(27,406)

 

(11,226)

 

(122,598)

Loss from discontinued operations

 

 -

 

 -

 

(5,192)

Net income/(loss)

$

(27,406)

$

(11,226)

$

(127,790)

 

 

 

 

 

 

 

Other comprehensive income/(loss):

 

 

 

 

 

 

Unrealized fair value increase/(decrease) on available-for-sale securities

 

(220)

 

(84)

 

(218)

Comprehensive income/(loss)

$

(27,626)

$

(11,310)

$

(128,008)

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

Weighted average number of shares outstanding

 

81,597,452 

 

71,548,388 

 

 

Net income/(loss) per share

$

(0.34)

$

(0.16)

 

 

Diluted:

 

 

 

 

 

 

Weighted average number of shares outstanding

 

81,597,452 

 

71,548,388 

 

 

Net income/(loss) per share

$

(0.34)

$

(0.16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.  

2

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 

(Dollar amounts in U.S. dollars and in thousands, except shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

Common stock

 

Additional paid-in capital

 

Accumulated Deficit

 

Accumulated other comprehensive income/(loss)

 

Total shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2001

4,535,752 

$

197,900 

$

2,786 

$

(199,072)

$

 -

$

1,614 

Shares issued, net of transaction costs

57,384,000 

 

151,819 

 

9,329 

 

 -

 

 -

 

161,148 

Warrants and options

 -

 

 -

 

10,866 

 

 -

 

 -

 

10,866 

Dividend-in-kind

 -

 

 -

 

 -

 

(34,941)

 

 -

 

(34,941)

Other comprehensive income

 -

 

 -

 

 -

 

 -

 

929 

 

929 

Net loss

 -

 

 -

 

 -

 

(81,274)

 

 -

 

(81,274)

Balances at December 31, 2010

61,919,752 

$

349,719 

$

22,981 

$

(315,287)

$

929 

$

58,342 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, net of transaction costs

9,584,131 

 

30,400 

 

588 

 

 -

 

 -

 

30,988 

Warrants and options

 -

 

 -

 

1,101 

 

 -

 

 -

 

1,101 

Other comprehensive loss

 -

 

 -

 

 -

 

 -

 

(754)

 

(754)

Net income

 -

 

 -

 

 -

 

51,546 

 

 -

 

51,546 

Balances at December 31, 2011

71,503,883 

$

380,119 

$

24,670 

$

(263,741)

$

175 

$

141,223 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, net of transaction costs

10,059,615 

 

23,464 

 

 -

 

 -

 

 -

 

23,464 

Warrants and options

 -

 

 -

 

7,485 

 

 -

 

 -

 

7,485 

Other comprehensive loss

 -

 

 -

 

 -

 

 -

 

(173)

 

(173)

Net loss

 -

 

 -

 

 -

 

(70,656)

 

 -

 

(70,656)

Balances at December 31, 2012

81,563,498 

$

403,583 

$

32,155 

$

(334,397)

$

$

101,343 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, net of transaction costs

158,462 

 

259 

 

 -

 

 -

 

 -

 

259 

Warrants and options

 -

 

153 

 

723 

 

 -

 

 -

 

876 

Other comprehensive loss

 -

 

 -

 

 -

 

 -

 

(220)

 

(220)

Net loss

 -

 

 -

 

 -

 

(27,406)

 

 -

 

(27,406)

 

 

 

 

 

 

 

 

 

 

 

 

Balances at March 31, 2013

81,721,960 

$

403,995 

$

32,878 

$

(361,803)

$

(218)

$

74,852 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.  

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Cumulative during

 

 

2013

 

 

2012

 

exploration stage

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income/(loss) for the period

$

(27,406)

 

$

(11,226)

$

(127,790)

Adjustments to reconcile net income/(loss) for the period

 

 

 

 

 

 

 

  to net cash used in operations:

 

 

 

 

 

 

 

Depreciation and amortization

 

275 

 

 

126 

 

2,673 

Stock-based compensation

 

876 

 

 

1,012 

 

12,927 

Gain on disposal of marketable securities

 

(6)

 

 

(144)

 

(8,055)

Loss on extinguishment of convertible notes

 

 -

 

 

 -

 

1,218 

Accrued interest and accretion of interest

 

 -

 

 

 -

 

3,519 

Gain on disposal of mineral property

 

 -

 

 

(934)

 

(80,035)

Write-down of non-current assets

 

 -

 

 

 -

 

7,367 

Unrealized loss on other investments

 

28,781 

 

 

7,365 

 

41,797 

Write down of marketable securities

 

 -

 

 

 -

 

959 

Transaction costs

 

 -

 

 

 -

 

1,841 

Deferred tax (benefit)/expense

 

(10,963)

 

 

(2,991)

 

4,412 

Other non-cash items

 

 -

 

 

 -

 

2,195 

Change in working capital account items:

 

 

 

 

 

 

 

Other current assets

 

50 

 

 

(86)

 

(2,164)

Interest paid

 

 -

 

 

 -

 

(7,586)

Accounts payable, accrued liabilities and other

 

(1,153)

 

 

(171)

 

3,643 

   Net cash used in operating activities

 

(9,546)

 

 

(7,049)

 

(143,079)

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of marketable securities

 

 -

 

 

(68)

 

(1,841)

Proceeds from sales of marketable securities

 

62 

 

 

208 

 

11,605 

Acquisition of long-term investments

 

 -

 

 

 -

 

(3,632)

Additions to mineral property

 

 -

 

 

 -

 

(11,571)

Additions to plant and equipment

 

(2,041)

 

 

(342)

 

(24,684)

Change in restricted cash

 

(99)

 

 

(22)

 

(169)

Proceeds from non-current asset disposals

 

 -

 

 

3,500 

 

6,740 

Cash transferred to Allied Nevada Gold Corp., net of receivable

 

 -

 

 

 -

 

(24,517)

   Net cash (used in)/provided by investing activities

 

(2,078)

 

 

3,276 

 

(48,069)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from debt financing, net (Note 7)

 

9,637 

 

 

 -

 

9,637 

Proceeds from equity financings, net

 

 -

 

 

 -

 

161,542 

Repayment of convertible notes

 

 -

 

 

 -

 

(26,108)

Proceeds from exercise of warrants

 

 -

 

 

 -

 

40,754 

Proceeds from exercise of compensation options

 

 -

 

 

733 

 

733 

Proceeds from exercise of stock options

 

 -

 

 

 -

 

4,068 

Issuance of convertible notes

 

 -

 

 

 -

 

28,345 

Cash paid in lieu of capital stock issuances

 

 -

 

 

 -

 

(107)

Transaction costs

 

 -

 

 

 -

 

(1,841)

   Net cash provided by financing activities

 

9,637 

 

 

733 

 

217,023 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

(1,987)

 

 

(3,040)

 

25,875 

Decrease in cash and cash equivalents - discontinued operations

 

 -

 

 

 -

 

(10,255)

Net increase/(decrease) in cash and cash equivalents

 

(1,987)

 

 

(3,040)

 

15,620 

Cash and cash equivalents, beginning of period

 

18,281 

 

 

17,873 

 

674 

Cash and cash equivalents, end of period

$

16,294 

 

$

14,833 

$

16,294 

 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

 

 

1. Nature of Operations and Basis of Presentation 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Company,” the “Corporation,” “we,” “our” or “us”) operate in the gold mining industry. We are focused on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements or leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration. As such, we are considered an Exploration Stage Enterprise. Our approach to acquisitions of gold projects has generally been to seek projects within political jurisdictions with well-established mining, land ownership and tax laws, which have adequate drilling and geological data to support the completion of a third-party review of the geological data and to complete an estimate of the gold mineralization. In addition, we look for opportunities to improve the value of our gold projects through exploration drilling and/or technical studies resulting in changes to the operating assumptions underlying previous engineering work. 

 

We are continuing to move our more advanced projects through technical, engineering and feasibility studies in order to make production decisions on those projects. 

 

These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and should be read in conjunction with the audited consolidated financial statements as of December 31, 2012 and 2011, in our Annual Report on Form 10-K for the year ended December 31, 2012. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts, which are based on information available as of the date of the financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly in all material respects the financial position as of March 31, 2013, the results of operations for the three months ended March 31, 2013 and 2012, and cash flows for the three months ended March 31, 2013 and 2012, in conformity with U.S. GAAP. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or for any future period. The December 31, 2012 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required in the annual financial statements by U.S. GAAP.

 

2. Recent Accounting Pronouncements

 

Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income

 

In February 2013, the FASB issued guidance related to items reclassified from accumulated other comprehensive income. The new standard requires either in a single note or parenthetically on the face of the financial statements: (i) the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its sources and (ii) the income statement line items affected by the reclassification.  The standard is effective for us January 1, 2013, with early adoption permitted.  The adoption of this guidance did not have a significant impact on our consolidated financial position, results of operations or cash flows.

 

3.  Marketable Securities 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At March 31, 2013

 

At December 31, 2012

 

 

Cost

 

Unrealized loss

 

Fair value

 

 

Cost

 

Unrealized gain

 

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Marketable Equity Securities

$

679 

$

(218)

$

461 

 

$

624 

$

 

$

626 

 

$

679 

$

(218)

$

461 

 

$

624 

$

 

$

626 

 

During the year ended December 31, 2012, we determined that certain of our securities had an other-than-temporary decline in value and a write-down of $39 was included in our Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss). There were no such write-downs during the three months ended March 31, 2013. In January 2013, we received a non-cash distribution of $109 that was paid in shares from an investment we held.

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

4. Other Investments 

 

Midas Gold Corp. Combination

 

In April 2011, Vista completed a combination (the “Combination”) with Midas Gold, Inc. As part of the Combination, each party contributed their respective interests in gold assets in the Yellow Pine-Stibnite District in Idaho to form a new Canadian private company named Midas Gold Corp. (“Midas Gold”). In exchange for the contribution of its equity interests in Idaho Gold Holding Company, the holding company in which we held our Yellow pine assets, Vista Gold U.S., Inc. (“Vista US”) was issued 30,402,615 common shares in the capital of Midas Gold. Concurrently with the Combination, we purchased 1,400,000 Midas Gold commons shares for an aggregate purchase price of $3,632 as part of a Midas Gold private placement. Following completion of these transactions, Vista holds a total of 31,802,615 Midas Gold shares, or 27.7% of the total Midas Gold shares outstanding at December 31, 2012

 

During the three months ended March 31, 2013, we recorded an unrealized loss on the Midas Gold shares of $28,781 with a corresponding US tax benefit of $10,563. As of March 31, 2013, the fair value of the Midas Gold shares we hold was $40,707.  

 

 

 

5.  Mineral Properties 

 

 

 

 

 

 

 

 

At March 31, 2013

 

At December 31, 2012

 

 

 

 

 

Mt. Todd, Australia

$

2,146 

$

2,146 

Guadalupe de los Reyes, Mexico

 

2,752 

 

2,752 

Los Cardones, Mexico

 

8,053 

 

8,053 

Long Valley, United States

 

750 

 

750 

 

$

13,701 

$

13,701 

 

 

 

 

 

 The recoverability of the carrying values of our mineral properties is dependent upon economic reserves being discovered or developed on the properties, permitting, financing, start-up, and commercial production from, or the sale or lease, of these properties. Development and/or start-up of any of these projects will depend on, among other things, management’s ability to raise additional capital for these purposes. Although we have successfully raised capital in the past, there can be no assurance that we will be able to do so in the future. 

 

We have determined that no impairment provision is currently required. A write-down in the carrying values of one or more of our mineral properties may be required in the future as a result of events and circumstances, such as our inability to obtain all the necessary permits, changes in the legal status of our mineral properties, government actions, the results of exploration activities and technical evaluations and changes in economic conditions, including the price of gold and other commodities or input prices. 

 

6. Plant and Equipment 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

 

December 31, 2012

 

 

Cost

 

 

Accumulated depreciation and write downs

 

 

Net

 

 

Cost

 

 

Accumulated depreciation and write downs

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mt. Todd, Australia

$

5,455 

 

$

1,360 

 

$

4,095 

 

$

3,497 

 

$

1,124 

 

$

2,373 

Los Cardones, Mexico

 

1,194 

 

 

114 

 

 

1,080 

 

 

1,194 

 

 

109 

 

 

1,085 

Guadalupe de los Reyes, Mexico

 

21 

 

 

 

 

18 

 

 

21 

 

 

 

 

18 

Corporate, United States

 

637 

 

 

474 

 

 

163 

 

 

556 

 

 

440 

 

 

116 

Awak Mas, Indonesia

 

242 

 

 

242 

 

 

 -

 

 

242 

 

 

242 

 

 

 -

 

$

7,549 

 

$

2,193 

 

$

5,356 

 

$

5,510 

 

$

1,918 

 

$

3,592 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets held for sale (mill equipment)

$

10,000 

 

$

 -

 

$

10,000 

 

$

10,000 

 

$

 -

 

$

10,000 

 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

7.  Debt

 

On March 28, 2013, the Company entered into a credit agreement with Sprott Resources Lending Partnership (the “Lender”) for purposes of establishing a $9,764 (C$10,000) loan facility (the “2013 Facility”). The 2013 Facility matures March 28, 2014, however early repayment of the 2013 Facility, at the Company’s option, is allowed provided that at least four months interest has been paid.  The maturity date can be extended by one year, to March 28, 2015, by mutual agreement of the Company and the Lender, subject to the payment of a 3.5% extension fee, which is payable in Vista common shares, and the Lender's satisfaction in Vista's capacity to repay the loan and that Vista's assets are not, or are not about to become, impaired.

 

The 2013 Facility bears an interest rate of 8% per annum, payable monthly. In addition to interest, the 2013 Facility provides the Lender total fees associated with the closing of the 2013 Facility of 3.5% of the 2013 Facility amount, including $99 (C$100)  in cash and the issue of 125,798 Vista common shares.  The 2013 Facility is secured by a general security agreement with exclusions for the Mt. Todd project and the mill equipment. The Company has the option to sell the mill equipment without utilizing the proceeds to repay the debt.

 

8.  Capital Stock 

 

Common shares issued and outstanding 

 

 

 

 

 

 

Number of shares issued

As of December 31, 2012

 

81,563,498 

Shares issued for restricted stock

 

32,664 

Shares issued in connection with debt issuance

 

125,798 

As of March 31, 2013

 

81,721,960 

 

In January 2013, the Company issued 32,664 shares in connection with the vesting of restricted stock. The Company also issued 125,798 shares as part of the 2013 Facility  (Note 7) which had a fair value of  $272 at the time of the debt issuance.  

 

9.  Additional Paid-in Capital 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

 

Stock options and RSUs

 

 

Compensation options

 

 

Other paid-in capital

 

 

Total additional paid-in capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2012

$

12,936 

 

$

7,655 

 

$

294 

 

$

11,270 

 

$

32,155 

Stock options amortization

 

 -

 

 

108 

 

 

 -

 

 

 -

 

 

108 

Restricted stock units expensed

 

 -

 

 

768 

 

 

 -

 

 

 -

 

 

768 

Restricted stock units exercised

 

 -

 

 

(153)

 

 

 -

 

 

 -

 

 

(153)

As of March 31, 2013

$

12,936 

 

$

8,378 

 

$

294 

 

$

11,270 

 

$

32,878 

 

Warrants 

 

Warrant activity is summarized in the following table: 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants outstanding

 

Valuation

 

Weighted average exercise price per share

 

Weighted average remaining life (yrs.)

 

Intrinsic value

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2012

 

19,977,743 

$

12,936 

$

4.25 

 

2.6 

$

 -

As of March 31, 2013

 

19,977,743 

$

12,936 

$

4.25 

 

2.3 

$

 -

 

The 19,977,743 outstanding warrants expire in the following time frames: 2,666,666 expire in July 2014, 2,091,275 expire in December 2014, and 15,219,802 expire in October 2015.

 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

Compensation Options 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation options outstanding

 

 

Valuation

 

 

Weighted average exercise price per share

 

Expiry date

 

Weighted average remaining life (yrs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2012

 

225,000 

 

$

294 

 

$

3.30 

 

April 2013

 

0.3 

As of March 31, 2013

 

225,000 

 

$

294 

 

$

3.30 

 

April 2013

 

0.1 

 

These options expired unexercised on April 20, 2013.

 

Stock-Based Compensation 

 

Under our Stock Option Plan (the “Plan”) and our Long-Term Equity Incentive Plan (the “LTIP”), we may grant options and/or restricted stock units (“RSUs”) or restricted stock awards (“RSAs”) to our directors, officers, employees and consultants. The combined maximum number of our common shares that may be reserved for issuance under the Plan and the LTIP is a variable number equal to 10% of the issued and outstanding common shares on a non-diluted basis. Options under the Plan are granted from time to time at the discretion of the Board of Directors (“Board”), with vesting periods and other terms as determined by the Board. The LTIP is administered by the Board, which can delegate the administration to the Compensation Committee of the Board or to such other officers and employees of Vista as designated by the Board. Stock-based compensation expense for the three months ended March 31, 2013 and 2012 is as follows: 

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

2013

 

 

2012

 

 

 

 

 

 

Stock options

$

108 

 

$

237 

Restricted stock units

 

768 

 

 

775 

 

$

876 

 

$

1,012 

 

 

 

 

 

 

 

As of March 31, 2013, stock options and RSUs had unrecognized compensation expense of $206 and $2,875, respectively, which is expected to be recognized over a weighted average period of 0.51 and 1.71 years, respectively. 

 

Stock Options 

 

A summary of option activity under the Plan as of March 31, 2013 and changes during the period then ended is set forth in the following table:

 

 

 

 

 

 

 

 

 

 

 

Number of options

 

Weighted average exercise price per option

 

Weighted average remaining contractual term

 

Aggregate intrinsic value

Outstanding - December 31, 2012

 

3,102,500 

$

2.80 

 

2.68 

$

637 

Outstanding - March 31, 2013

 

3,102,500 

$

2.80 

 

2.43 

$

248 

 

 

 

 

 

 

 

 

 

Exercisable - March 31, 2013

 

2,802,500 

$

2.79 

 

2.25 

$

248 

 

A summary of the status of our unvested stock options as of March 31, 2013 and changes during the period then ended is set forth in the following table: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of options

 

Weighted average grant-date fair value per option

 

Weighted average remaining amortization period (Years)

Unvested - December 31, 2012

 

 

 

 

 

300,000 

$

1.47 

 

 

Unvested - March 31, 2013

 

 

 

 

 

300,000 

$

1.47 

 

0.51 

 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

Restricted Stock Units 

 

The following table summarizes the RSU activity under the LTIP as of March 31, 2013 and changes during the period then ended is set forth in the following table: 

 

 

 

 

 

 

 

 

Number of units

 

Weighted average fair value

Unvested - December 31, 2012

 

1,994,507 

$

3.52 

Cancelled/forfeited

 

(9,288)

 

3.23 

Vested

 

(50,000)

 

3.07 

Granted

 

51,424 

 

1.68 

Unvested - March 31 , 2013

 

1,986,643 

$

3.47 

 

 On March 5, 2013, the Board granted a total of 51,424 RSUs to an employee. 40% of the RSUs granted vest three years from the grant date and the remaining 60% vest based on the performance of the Company’s share price relative to the average of the AMEX Gold Basket of Unhedged Gold Stocks Index and Philadelphia Gold and Silver Sector Index (the “Benchmark”) expressed as a percent change over the period. The lower threshold is defined by the Company’s share price underperforming the Benchmark by 20% and the upper threshold is defined by the Company’s share price exceeding the Benchmark by 20%. Vesting will be calculated linearly with the lower threshold being zero, performance equal to the Benchmark being 50% and the upper threshold being 100%. If the performance vesting conditions are not met within 24 months of the date of grant, the RSUs are cancelled and of no further force and effect.

 

10.  Accumulated Other Comprehensive Income (Loss) 

 

 

 

 

 

 

 

Accumulated
other comprehensive
income (loss)

 

Accumulated other comprehensive income (loss), net of tax

As of December 31, 2012

$

$

Other comprehensive loss due to change in fair market value of marketable securities during period before reclassifications

 

(214)

 

(182)

Reclassifications due to realization of a gain on sale of marketable securities (1)

 

(6)

 

(5)

Net current-period other comprehensive loss

 

(220)

 

(187)

As of March 31, 2013

$

(218)

$

(185)

 

 

(1) Reclassified to gain on sale of marketable securities on the Condensed Consolidated Statement of Income/(Loss) and Comprehensive Income/(Loss).

 

11.  Geographic and Segment Information 

 

We evaluate, acquire, explore and advance gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions. These activities are focused principally in Australia, North America and Indonesia. We reported no revenues during the three months ended March 31, 2013 and 2012. Geographic location of mineral properties and plant and equipment is provided in Notes 5 and 6, respectively. The Company has one reportable operating segment, consisting of evaluation, acquisition, and exploration activities.

 

12.  Related Party Transactions 

 

On April 1, 2009, we entered into an agreement with Sierra Partners LLC (“Sierra”) pursuant to which Sierra agreed to provide us with support and analysis of our general corporate finance and strategy efforts. A founder and partner of Sierra is also one of our directors. As compensation for these services, we have agreed to pay Sierra a monthly retainer fee of $10 for the duration of the agreement. We  paid to Sierra $30 during each of the three month periods March 31, 2013 and 2012.

 

13.  Commitments and Contingencies 

 

The Company’s exploration and development activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. As such, the future expenditures that may be required for compliance with these laws and regulations cannot be predicted. The Company conducts its operations to minimize effects on the environment and believes its operations are in compliance with applicable laws and regulations in all material respects. 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise) 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar amounts in U.S. dollars and in thousands, except per share and per ounce unless otherwise noted) 

 

 

The Company has entered into, or may enter into, various agreements to find, lease or purchase mineral interests. These agreements typically require initial payments plus future payments for the life of the agreement; and may include provisions requiring the Company to pay a net smelter return (“NSR”) royalty on the gold produced. The Company can at its discretion terminate any of these agreements within defined notice periods.

 

14.  Fair Value Accounting 

 

U.S. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority): 

 

·

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. 

 

·

Level 2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. 

 

·

Level 3 – Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable. 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at March 31, 2013

 

 

 

 

Total

 

Level 1

 

Level 3

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

3,991 

$

3,991 

$

 -

 

Marketable securities

 

 

461 

 

461 

 

 -

 

Other investments (Midas Gold shares)

 

 

40,707 

 

40,707 

 

 -

 

Amayapampa interest

 

 

4,813 

 

 -

 

4,813 

 

Mill equipment

 

 

10,000 

 

 -

 

10,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at December 31, 2012

 

 

 

 

Total

 

Level 1

 

Level 3

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

15,834 

$

15,834 

$

 -

 

Marketable securities

 

 

626 

 

626 

 

 -

 

Other investments (Midas Gold shares)

 

 

69,489 

 

69,489 

 

 -

 

Amayapampa interest

 

 

4,813 

 

 -

 

4,813 

 

Mill equipment

 

 

10,000 

 

 -

 

10,000 

 

Our cash equivalent instruments, marketable securities and investment in Midas Gold are classified as Level 1 of the fair value hierarchy as they are valued at quoted market prices in an active market. 

 

The estimated fair value of the Amayapampa interest is based on probability-weighted cash flow scenarios discounted using a risk-adjusted discount rate (15%) and assumptions including future gold prices (average gold prices realized range from $1,038 to $1,247 per ounce, depending on timing of assumed start-up), estimated life-of-mine gold production (ranging from 350,000 to 650,000 ounces) and the expected timing of commercial production (periods ranging from 3 to 6 years or never), which are management’s best estimates based on currently available information. Significant changes in any of the unobservable inputs in isolation would result in a significant change in fair value measurement.  As a result of our analysis no change in fair value was deemed necessary as of March 31, 2013.

 

The Company incurred an impairment loss on certain mill equipment in 2012. This equipment was valued at $10,000 based on a third party assessment of the projected sale value. The mill equipment is categorized as assets held for sale on the Consolidated Balance Sheets.

 

At March 31, 2013, the assets classified within Level 3 of the fair value hierarchy represent 25% of the total assets measured at fair value.  There were no transfers between levels in 2013.  

 

 

 


 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

 

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with our interim consolidated financial statements for the three months ended March 31, 2013 and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). This MD&A contains forward-looking statements that involve risks, uncertainties and assumptions.  Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.  See “Note Regarding Forward-Looking Statements” below. 

 

All dollar amounts stated herein are in thousands of U.S. dollars, except per share amounts and per ounce amounts. References to C$ refer to Canadian currency, A$ to Australian currency and $ to United States currency.   

 

Overview

 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Company,” the “Corporation,” “we,” “our” or “us”) operate in the gold mining industry. We are focused on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements or leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration. As such, we are considered an Exploration Stage Enterprise. Our approach to acquisitions of gold projects has generally been to seek projects within political jurisdictions with well-established mining, land ownership and tax laws, which have adequate drilling and geological data to support the completion of a third-party review of the geological data and to complete an estimate of the gold mineralization. In addition, we look for opportunities to improve the value of our gold projects through exploration drilling and/or technical studies resulting in changes to the operating assumptions underlying previous engineering work. 

 

Our holdings include the Mt. Todd gold project in Australia, the Guadalupe de los Reyes gold/silver project in Mexico, the Los Cardones gold project in Mexico, the Long Valley gold project in California, the Awak Mas gold project in Indonesia, and mining claims in Utah. In addition, we own approximately 28% of the shares of Midas Gold Corp. (“Midas Gold”), a company exploring for gold and developing the Golden Meadows project in the Yellow Pine-Stibnite District in Idaho.  Midas Gold is listed on the Toronto Stock Exchange under the trading symbol “MAX”.

 

Outlook

 

Our Mt. Todd gold project in the Northern Territory, Australia will be our principal focus in 2013.  Our 2013 plans for Mt. Todd include completing a final resource estimate, initiating the process to permit development of the project including an environmental impact statement, and completing a pre-feasibility study.  Other programs, particularly significant development commitments, will be deferred until market conditions improve.    

 

We do not currently generate operating cash flows. Our principal source of financing in the past has been the issuance of our common stock. The prices for gold equities, particularly those with early stage projects, have decreased steadily during the past six months, and capital raising has become more difficult for junior mining companies which do not have producing assets.  Consequently, raising sufficient amounts of equity capital on reasonable terms has become increasingly difficult. These conditions are expected to continue in 2013, and could affect our ability to raise the necessary capital on reasonable terms, if at all.

 

Results from Operations 

 

Summary 

 

For the three-month period ended March 31, 2013,  we continued to advance our Mt. Todd gold project in Northern Territory, Australia with a view towards potential development. Consolidated net loss for the three months ended March 31, 2013 was $27,406 or $0.34 per basic share compared to consolidated net loss for the same period in 2012 of $11,226 or $0.16 per basic share. The principal components of these period-over-period changes are discussed below. 

 

Exploration, property evaluation and holding costs 

 

Exploration, property evaluation and holding costs were $7,130 during the three-month period ended March 31, 2013 compared to $5,707 for the same period in 2012. The higher 2013 costs were primarily due to increased expenses at our Mt. Todd gold project

 

 


 

 

 

associated with the significant water treatment program completed in the existing open pit, the pre-feasibility study and related activities,  and permitting. At our Los Cardones gold project, costs decreased substantially in 2013 from 2012 since as of February 2012, Invecture Group, S.A. de C.V. (“Invecture”) has incurred all costs associated with the progression of this project under an earn-in right agreement (“Earn-in Right Agreement”). At our Guadalupe de los Reyes gold/silver project, costs decreased significantly in 2013 from 2012 as we incurred drilling costs in 2012 that did not occur in 2013. 

 

Corporate administration and investor relations 

 

Corporate administration and investor relations costs of  $1,910 during the three-month periods ended March 31, 2013 approximated those of $2,074 for the same period in 2012. 

 

Depreciation and amortization 

 

Depreciation and amortization expense was $275 and $126 for the three-month periods ended March 31, 2013 and 2012, respectively. The increase period-to-period was primarily attributable to increased capital expenditures at the Mt. Todd gold project. 

 

Gain on disposal of mineral property 

 

Pursuant to a joint venture agreement with Awak Mas Holdings Pty. Ltd. (“AM Holdings”), whereby AM Holdings may earn an 80% interest in our Awak Mas gold project in Indonesia, we received certain cash payments in excess of the carrying value of the project, which resulted in a realized gain of $934 during the three months ended March 31, 2012

 

The Company had no similar transactions during the three months ended March 31, 2013.

  

Non-operating income and expenses 

  

Unrealized loss on other investment

 

Unrealized loss on other investments was $28,781 and $7,365 for the three months ended March 31, 2013 and 2012, respectively.  These amounts are the result of changes in fair value of our Midas Gold shares. 

 

Deferred income tax benefit/(expense) 

 

The deferred income tax benefit/(expense) will fluctuate period-to-period based primarily on the change in the fair value of Vista US’s investment in Midas Gold. Deferred income tax benefit was $10,963 and $2,991 for the three months ended March 31, 2013 and 2012, respectively. 

 

Financial Position, Liquidity and Capital Resources 

 

Cash used in operations 

 

Net cash used in operating activities was $9,546 for the three-month period ended March 31, 2013, compared to $7,049 for the same period in 2012. The increase of $2,497 was primarily the result of increases in exploration, property evaluation and holding costs as discussed above. 

 

Investing activities 

 

Net cash used in investing activities was $2,078 for the three-month period ended March 31, 2013 was primarily due to capitalized water treatment facility costs at the Mt. Todd gold project. Net cash provided by investing activities of $3,276 for the same period in 2012 was primarily due to receipt of $3,500 in accordance with option and earn-in agreements associated with certain mineral properties, which was partially offset by additions to plant and equipment of $342. 

 

Financing activities 

 

Net cash provided by financing activities was $9,637 for the three months ended March 31, 2013 due to the completion of a  loan facility in March 2013, as discussed below.  

 

 


 

 

 

 

We received cash of $733 from the exercise of compensation options during the three months ended March 31, 2012.  

 

Liquidity and Capital Resources 

 

At March 31, 2013, we had working capital of $31,685 compared with working capital of $60,342 at December 31, 2012, representing a decrease of $28,657. Our working capital decreased primarily due to the decrease in the fair value of other investments.  Included in the $31,727 working capital amount is $16,294 of cash and cash equivalents. 

 

On March 28, 2013, we closed and drew a $9,764 (C$10,000) loan facility (the “2013 Facility”). The 2013 Facility matures March 28, 2014 and bears interest rate of 8% per annum.  In addition, the Company paid the lender fees of $99 (C$100) in cash and 125,798 common shares of the Company. The Company has the option to extend the 2013 Facility, as discussed in Note 7 of the Company’s March 31, 2013 Condensed Consolidated Financial Statements.

 

The 2013 Facility provides us with a non-dilutive source of liquidity during a very difficult equity market, and gives us the ability to continue our evaluation of the Mt. Todd gold project where we expect to complete a prefeasibility study and significantly advance the project permitting process, neither of which are particularly capital intensive.  Other programs, in particular significant development commitments, will be deferred until market conditions improve.  With these changes we believe that our current cash position will be sufficient for the remainder of 2013.   

 

Potential near-term sources of additional cash include the proceeds from the sale of the mill equipment, which is currently being actively marketed, and has an estimated sale value of $10 million; and the completion of the earn-in at the Los Cardones gold project in Mexico by the Invecture Group, which would result in a $20 million payment to Vista.  However, there can be no assurance that either of these events will occur.

 

Common shares issued and outstanding 

 

 

 

 

 

 

 

Number of shares issued

As of December 31, 2012

 

81,563,498 

Shares issued for restricted stock

 

32,664 

Shares issued in connection with the 2013 Facility

 

125,798 

As of March 31, 2013

 

81,721,960 

 

 

In January 2013, the Company issued 32,664 shares in connection with the vesting of restricted stock. The Company also issued 125,798 shares as part of the 2013 Facility, which had a fair value of $272 at the time of the debt issuance.

 

Off-Balance Sheet Arrangements