10-Q 1 vgz-20130930x10q.htm 10-Q 96e3f8caf5ce4cf

 

 

 

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 September 30, 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) 

 

 

 

 

British Columbia, 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: 81,788,835 common shares, without par value, outstanding as of October 28, 2013.

 

 


 

VISTA GOLD CORP. 

(An Exploration Stage Enterprise) 

FORM 10-Q 

For the Quarter Ended September 30, 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

 

13

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

32

ITEM 4.

 

CONTROLS AND PROCEDURES

 

32

 

 

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

32

ITEM 1A.

 

RISK FACTORS

 

33

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

33

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

33

ITEM 4.

 

MINE SAFETY DISCLOSURE

 

33

ITEM 5.

 

OTHER INFORMATION

 

34

ITEM 6.

 

EXHIBITS

 

34

 

 

 

 

 

 

 

SIGNATURES

 

35

 

 

 

 


 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

September 30,

 

 

December 31,

 

 

2013

 

 

2012

 

 

 

 

 

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

4,329 

 

$

18,281 

Restricted cash

 

43 

 

 

70 

Marketable securities  (Note 4)

 

231 

 

 

626 

Other investments (Note 5)

 

26,714 

 

 

69,489 

Other current assets

 

1,750 

 

 

2,963 

   Total current assets

 

33,067 

 

 

91,429 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Mineral properties (Note 6)

 

13,701 

 

 

13,701 

Plant and equipment, net (Note 7)

 

5,090 

 

 

3,592 

Assets held for sale (Note 7)

 

6,500 

 

 

10,000 

Amayapampa interest (Note 15)

 

4,813 

 

 

4,813 

Long-term investments

 

65 

 

 

65 

Long-term deferred tax asset

 

9,139 

 

 

9,465 

   Total non-current assets

 

39,308 

 

 

41,636 

 

 

 

 

 

 

Total assets

$

72,375 

 

$

133,065 

 

 

 

 

 

 

Liabilities and Shareholders' Equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

442 

 

$

4,409 

Debt (Note 8)

 

9,698 

 

 

 -

Accrued liabilities and other

 

1,415 

 

 

1,839 

Current deferred tax liability

 

9,139 

 

 

24,839 

   Total current liabilities

 

20,694 

 

 

31,087 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Other long-term liabilities

 

635 

 

 

635 

   Total non-current liabilities

 

635 

 

 

635 

 

 

 

 

 

 

Total liabilities

 

21,329 

 

 

31,722 

 

 

 

 

 

 

Commitments and contingencies – (Note 14)

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

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

 

 

 

 

 

   outstanding: 2013 - 81,788,835 and 2012 - 81,563,498 (Note 9)

 

404,252 

 

 

403,583 

Additional paid-in capital (Note 10)

 

32,957 

 

 

32,155 

Accumulated other comprehensive income (loss) (Note 11)

 

(318)

 

 

Accumulated deficit (including during exploration stage: 2013 - $186,773 and 2012 - $135,325)

 

(385,845)

 

 

(334,397)

   Total shareholders' equity

 

51,046 

 

 

101,343 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

72,375 

 

$

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 and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

Cumulative during Exploration

 

 

2013

 

2012

 

2013

 

2012

 

Stage

 

 

 

 

 

 

 

 

 

 

 

Operating income and (expenses):

 

 

 

 

 

 

 

 

 

 

Exploration, property evaluation and holding costs

$

(2,213)

$

(6,294)

$

(15,220)

$

(18,759)

$

(110,479)

Corporate administration

 

(1,060)

 

(1,739)

 

(4,195)

 

(5,816)

 

(48,302)

Depreciation and amortization

 

(250)

 

(132)

 

(792)

 

(391)

 

(3,190)

Loss on extinguishment of convertible debt

 

 -

 

 -

 

 -

 

 -

 

(1,218)

Gain on disposal of mineral property, net

 

 -

 

1,000 

 

 -

 

1,934 

 

79,766 

Write-down of mineral property

 

 -

 

 -

 

 -

 

 -

 

(250)

   Total operating expense

 

(3,523)

 

(7,165)

 

(20,207)

 

(23,032)

 

(83,673)

 

 

 

 

 

 

 

 

 

 

 

Non-operating income and (expenses):

 

 

 

 

 

 

 

 

 

 

Gain/(loss) on sale of marketable securities

 

(15)

 

 

(33)

 

145 

 

8,016 

Unrealized gain/(loss) on other investments (Note 5)

 

4,547 

 

29,132 

 

(42,775)

 

(13,184)

 

(55,791)

Write-down of marketable securities

 

 -

 

 -

 

 -

 

 -

 

(959)

Write-down of plant and equipment

 

(3,500)

 

 -

 

(3,500)

 

 -

 

(10,617)

Gain/(loss) on currency translation

 

(246)

 

183 

 

126 

 

100 

 

(104)

Interest income

 

 

11 

 

30 

 

32 

 

2,808 

Interest expense

 

(193)

 

 -

 

(399)

 

 -

 

(4,511)

Other income/(expense)

 

(101)

 

32 

 

(63)

 

204 

 

(1,807)

   Total non-operating income/(expense)

 

497 

 

29,359 

 

(46,614)

 

(12,703)

 

(62,965)

 

 

 

 

 

 

 

 

 

 

 

Income/(Loss) from continuing operations before income taxes

 

(3,026)

 

22,194 

 

(66,821)

 

(35,735)

 

(146,638)

Deferred income tax benefit/(expense)

 

(1)

 

(9,925)

 

15,373 

 

6,276 

 

(2)

Income/(Loss) from continuing operations after income taxes

 

(3,027)

 

12,269 

 

(51,448)

 

(29,459)

 

(146,640)

Loss from discontinued operations

 

 -

 

 -

 

 -

 

 -

 

(5,192)

Net income/(loss)

$

(3,027)

$

12,269 

$

(51,448)

$

(29,459)

$

(151,832)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive gain/(loss):

 

 

 

 

 

 

 

 

 

 

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

 

45 

 

70 

 

(320)

 

(156)

 

(318)

Comprehensive income/(loss)

$

(2,982)

$

12,339 

$

(51,768)

$

(29,615)

$

(152,150)

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

81,788,835 

 

75,859,161 

 

81,711,289 

 

73,183,166 

 

 

Net income/(loss) per share

$

(0.04)

$

0.16 

 

(0.63)

$

(0.40)

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

81,788,835 

 

76,725,177 

 

81,711,289 

 

73,183,166 

 

 

Net income/(loss) per share

$

(0.04)

$

0.16 

 

(0.63)

$

(0.40)

 

 

 

 

 

 

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

2


 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

225,337 

 

259 

 

 -

 

 -

 

 -

 

259 

Warrants and options

 -

 

410 

 

802 

 

 -

 

 -

 

1,212 

Other comprehensive loss

 -

 

 -

 

 -

 

 -

 

(320)

 

(320)

Net loss

 -

 

 -

 

 -

 

(51,448)

 

 -

 

(51,448)

Balances at September 30, 2013

81,788,835 

$

404,252 

$

32,957 

$

(385,845)

$

(318)

$

51,046 

 

 

 

 

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

3


 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in U.S. dollars and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

Cumulative during

 

 

2013

 

 

2012

 

 

exploration stage

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss for the period

$

(51,448)

 

$

(29,459)

 

$

(151,832)

Adjustments to reconcile net loss for the period

 

 

 

 

 

 

 

 

  to net cash used in operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

792 

 

 

391 

 

 

3,190 

Stock-based compensation

 

1,212 

 

 

3,036 

 

 

13,263 

Loss/ (gain) on disposal of marketable securities

 

33 

 

 

(145)

 

 

(8,016)

Loss on extinguishment of convertible notes

 

 -

 

 

 -

 

 

1,218 

Accrued interest and accretion of interest

 

 -

 

 

 -

 

 

3,519 

Gain on disposal of mineral property

 

 -

 

 

(1,934)

 

 

(80,035)

Write-down of non-current assets

 

3,500 

 

 

 -

 

 

10,867 

Unrealized loss on other investments

 

42,775 

 

 

13,184 

 

 

55,791 

Write down of marketable securities

 

 -

 

 

 -

 

 

959 

Transaction costs

 

 -

 

 

 -

 

 

1,841 

Deferred tax benefit

 

(15,373)

 

 

(6,276)

 

 

Other non-cash items

 

(66)

 

 

 -

 

 

2,129 

Change in working capital account items:

 

 

 

 

 

 

 

 

Other current assets

 

1,491 

 

 

(590)

 

 

(723)

Interest paid

 

 -

 

 

 -

 

 

(7,586)

Accounts payable, accrued liabilities and other

 

(4,392)

 

 

(1,402)

 

 

404 

   Net cash used in operating activities

 

(21,476)

 

 

(23,195)

 

 

(155,009)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 -

 

 

(138)

 

 

(1,841)

Proceeds from sales of marketable securities

 

150 

 

 

248 

 

 

11,693 

Acquisition of long-term investments

 

 -

 

 

 -

 

 

(3,632)

Additions to mineral property

 

 -

 

 

 -

 

 

(11,571)

Additions to plant and equipment

 

(2,290)

 

 

(861)

 

 

(24,933)

Change in restricted cash at Awak Mas

 

27 

 

 

75 

 

 

(43)

Proceeds from non-current asset disposals

 

 -

 

 

4,500 

 

 

6,740 

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

 

 -

 

 

 -

 

 

(24,517)

   Net cash (used in)/provided by investing activities

 

(2,113)

 

 

3,824 

 

 

(48,104)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from debt financing, net (Note 8)

 

9,637 

 

 

 -

 

 

9,637 

Proceeds from equity financings, net

 

 -

 

 

14,231 

 

 

161,542 

Repayment of convertible notes

 

 -

 

 

 -

 

 

(26,108)

Proceeds from exercise of warrants

 

 -

 

 

1,365 

 

 

40,754 

Proceeds from exercise of compensation options

 

 -

 

 

733 

 

 

733 

Proceeds from exercise of stock options

 

 -

 

 

21 

 

 

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 

 

 

16,350 

 

 

217,023 

 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

(13,952)

 

 

(3,021)

 

 

13,910 

Decrease in cash and cash equivalents - discontinued operations

 

 -

 

 

 -

 

 

(10,255)

Net increase/(decrease) in cash and cash equivalents

 

(13,952)

 

 

(3,021)

 

 

3,655 

Cash and cash equivalents, beginning of period

 

18,281 

 

 

17,873 

 

 

674 

Cash and cash equivalents, end of period

$

4,329 

 

$

14,852 

 

$

4,329 

 

 

 

 

 

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

4


 

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, per option, per warrant and per ounce amounts 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 currently conducting a strategic review of our portfolio of gold assets, focused on our Mt. Todd gold project in Northern Territory, Australia. Our portfolio of assets also includes approximately 24.9% of the common shares of Midas Gold Corp. (TSX: MAX), a company exploring for gold and developing the Golden Meadows project in the Yellow Pine-Stibnite District in Idaho; the Guadalupe de los Reyes gold/silver project in Mexico (a preliminary economic assessment on this project was completed in March 2013);  the Awak Mas gold project in Indonesia (One Asia Resources Ltd. working to earn an 80% interest in this project);  the Long Valley gold project in California and a royalty on the Amayapampa gold project in Bolivia (project being advanced by LionGold Corp Ltd).

 

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 results for the period presented. Operating results for the three and nine months ended September 30, 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 sheets were derived from audited financial statements, but do not include all disclosures required in the annual financial statements by U.S. GAAP.

 

2. Liquidity

 

These unaudited condensed consolidated financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the normal course of business.  Accordingly, the continuing operations of the Company are dependent upon our ability to secure sufficient funding and to generate future profits from operations.  The underlying value and recoverability of the amounts shown as mineral properties, plant and equipment, assets held for sale, investments and other property interests in the consolidated balance sheets are also dependent on our ability to generate positive cash flow from operations and to continue to fund exploration and development activities that would lead to profitable production or proceeds from the disposition of these assets.  There can be no assurance that we will be successful in generating future profitable operations, disposing of these assets or securing additional funding in the future on terms acceptable to us or at all.  These unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or liabilities which might be necessary should we not be able to continue as a going-concern.

 

Management is strongly committed to careful cash management and maintaining liquidity. The Company’s cash burn rate has been dramatically reduced since the first half of the year as several cash intensive programs such as water treatment, environmental impact statement, and preliminary feasibility study have been completed. In addition, several significant cost cutting measures have been introduced including a reduction of management positions, significant reductions in cash compensation for executives, senior management and the Company’s Board of Directors, and the delay or elimination of all discretionary programs, including exploration activities. Other aggressive cost cutting measures, particularly at Mt. Todd, are being pursued. We continue to advance several important value-adding initiatives, including the authorization process for the Mt. Todd project environmental impact statement, none of which are capital intensive. The Company’s cash burn rate is expected to be reduced to approximately  $3,250 for the fourth quarter of 2013, with further reductions to $2,500 to $3,000 per quarter planned for 2014, assuming a normal wet season in the Northern Territory.

 

5


 

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, per option, per warrant and per ounce amounts unless otherwise noted) 

 

Subsequent to the period end (Note 16), as a result of the sale of the Los Cardones gold project, the Company reduced its debt from approximately $9,700 to approximately $6,700, and expects to reduce the debt by a further $3,000 (to approximately $3,700) in January 2014, subject to the receipt of a $6,000 final payment (to be made to us at the purchaser’s option) from the sale of the Los Cardones gold project.

 

We believe that our current cash position, together with the proceeds from the sale of the Los Cardones gold project (Note 16) will be sufficient to fund the Company through the third quarter of 2014, subject to the $6,000 final payment to be made to us at the purchaser’s option. In addition, the Company will continue to seek other financing sources with priority given to non-dilutive sources such as sale of our used mill equipment and monetization of other non-core assets. However, there can be no assurance that we will be able to timely monetize the non-core assets at a value acceptable to us or at all. The Company also believes that given its ability to liquidate all or a portion of its Other Investments (Note 5), if necessary, it will have access to sufficient financing to fully repay its debt, and to fund operations well into 2015.

 

3. Recent Accounting Pronouncements

 

Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income

 

In February 2013, the Financial Accounting Standards Board (“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 was effective for us as of 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.

 

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

 

In July 2013, the FASB issued guidance related to the financial statement presentation of an unrecognized tax benefit, a similar tax loss, or a tax credit carryforward exists.   The new standard requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless certain circumstances exist.  The standard is effective for us as of January 1, 2014, with early adoption permitted.  The adoption of this guidance is not expected to have a significant impact on our consolidated financial position, results of operations or cash flows.

 

4. Marketable Securities 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2013

 

At December 31, 2012

 

 

Cost

 

Unrealized loss

 

Fair value

 

 

Cost

 

Unrealized gain

 

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Marketable Equity Securities

$

549 

$

(318)

$

231 

 

$

624 

$

 

$

626 

 

$

549 

$

(318)

$

231 

 

$

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 recorded in other income/(expense) in our Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss). There were no such write-downs during the nine months ended September 30, 2013. In January 2013, we received a non-cash distribution of $109 that was paid in shares from an investment we held recorded in other income/(expense) in our Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss).

 

5. 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 assets in the Yellow Pine-Stibnite District, Vista Gold U.S., Inc. (“Vista US”) was issued

6


 

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, per option, per warrant and per ounce amounts unless otherwise noted) 

 

30,402,615 common shares in the capital of Midas Gold (“Midas Gold Shares”). Concurrently with the Combination, we purchased 1,400,000 Midas Gold 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 24.9%  of the total Midas Gold Shares outstanding based on the latest Midas Gold Corp financial information available).

 

During the three and nine months ended September 30, 2013, we recorded an unrealized gain on the Midas Gold Shares of $4,547 and an unrealized loss of $42,775, respectively with a corresponding U.S. tax expense of $1,670 and tax benefit of $15,701, respectively. As of September 30, 2013, the fair value of the Midas Gold Shares we hold was $26,714.  

 

6. Mineral Properties 

 

 

 

 

 

 

 

 

At September 30, 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 

 

 

 

 

 

See Note 16 for subsequent events related to mineral properties.

 

 

7. Plant and Equipment 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2013

 

 

December 31, 2012

 

 

Cost

 

 

Accumulated depreciation and write downs

 

 

Net

 

 

Cost

 

 

Accumulated depreciation and write downs

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mt. Todd, Australia

$

5,500 

 

$

1,789 

 

$

3,711 

 

$

3,497 

 

$

1,124 

 

$

2,373 

Los Cardones, Mexico

 

1,219 

 

 

125 

 

 

1,094 

 

 

1,194 

 

 

109 

 

 

1,085 

Guadalupe de los Reyes, Mexico

 

21 

 

 

 

 

16 

 

 

21 

 

 

 

 

18 

Corporate, United States

 

818 

 

 

549 

 

 

269 

 

 

556 

 

 

440 

 

 

116 

Awak Mas, Indonesia

 

242 

 

 

242 

 

 

 -

 

 

242 

 

 

242 

 

 

 -

 

$

7,800 

 

$

2,710 

 

$

5,090 

 

$

5,510 

 

$

1,918 

 

$

3,592 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets held for sale (mill equipment)

$

10,000 

 

$

3,500 

 

$

6,500 

 

$

10,000 

 

$

 -

 

$

10,000 

 

During the three months ended September 30, 2013, based on an independent assessment from a third party, the Company recorded an impairment charge of $3,500 to write down the value of our mill equipment held for sale. The impairment is based on an estimated sale value of approximately $7,300, net of commissions and other costs to sell of approximately $800 and is included in our Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss) for the three and nine months ended September 30, 2013.

 

See Note 16 for subsequent events related to plant and equipment.

 

8. Debt

 

During March 2013, the Company entered into a credit agreement with Sprott Resources Lending Partnership (the “Lender”) for purposes of establishing a C$10,000 ($9,698) loan facility (the “2013 Facility”). The 2013 Facility originally matured March 2014, with early repayment of the 2013 Facility allowed, at the Company’s option, provided that at least four months interest has been paid. 

 

The 2013 Facility bears an interest rate of 8% per annum, payable monthly. In addition to interest, the 2013 Facility provided the Lender total fees of 3.5% of the 2013 Facility amount, including C$100 ($99) in cash and the issuance of 125,798 Vista common shares. The 2013 Facility is secured by a general security agreement (“GSA”) with certain exclusions. If the Company completes an asset disposition or other financing subject to certain conditions the Company is required to utilize 50% of the net proceeds exceeding $1,000 to repay the 2013 Facility up to the full amount outstanding. The Company is in compliance with all related debt covenants.

7


 

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, per option, per warrant and per ounce amounts unless otherwise noted) 

 

 

The Company and the Lender have reached an agreement, subject to certain conditions, to extend the maturity date of the 2013 Facility to March 2015. The Company has agreed to pledge all the Company’s Midas Gold Shares (Note 5) as security and to pay the Lender an extension fee comprised of 486,382 Vista common shares.

 

9. Capital Stock 

 

Common shares issued and outstanding 

 

 

 

 

 

 

Number of shares issued

As of December 31, 2012

 

81,563,498 

Shares issued for restricted stock units

 

99,539 

Shares issued in connection with debt issuance

 

125,798 

As of September 30, 2013

 

81,788,835 

 

During the nine months ended September 30, 2013, the Company issued 99,539 common shares in connection with the vesting of restricted stock units (“RSUs”). The Company also issued 125,798 common shares as part of the 2013 Facility (Note 8) which had a fair value of $272 at the time of the debt issuance.

 

10. 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

 

 -

 

 

290 

 

 

 -

 

 

 -

 

 

290 

Restricted stock units expensed

 

 -

 

 

922 

 

 

 -

 

 

 -

 

 

922 

Restricted stock units vested

 

 -

 

 

(410)

 

 

 -

 

 

 -

 

 

(410)

Compensation options expired

 

 -

 

 

 -

 

 

(294)

 

 

294 

 

 

 -

As of September 30, 2013

$

12,936 

 

$

8,457 

 

$

 -

 

$

11,564 

 

$

32,957 

 

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 September 30, 2013

 

19,977,743 

$

12,936 

$

4.25 

 

1.8 

$

 -

 

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.

 

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 

Expired

 

(225,000)

 

 

(294)

 

 

 

 

 

 

 

As of September 30, 2013

 

 -

 

$

 -

 

 

 

 

 

 

 

 

8


 

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, per option, per warrant and per ounce amounts unless otherwise noted) 

 

Stock-Based Compensation 

 

Under our Stock Option Plan (the “Plan”) and our Long-Term Equity Incentive Plan (the “LTIP”), we may grant stock 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 and nine months ended September 30, 2013 and 2012 is as follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

 

2013

 

 

2012

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

$

72 

 

$

429 

$

290 

 

$

872 

 

Restricted stock units

 

396 

 

 

614 

 

922 

 

 

2,164 

 

 

$

468 

 

$

1,043 

$

1,212 

 

$

3,036 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2013, stock options and RSUs had unrecognized compensation expense of $24 and $2,932, respectively, which is expected to be recognized over a weighted average period of 0.22 and 1.96 years, respectively.

 

Stock Options

 

A summary of stock option activity under the Plan as of September 30, 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 

Cancelled/Forfeited

 

(100,000)

 

3.24 

 

 

 

 

Expired

 

(755,000)

 

3.32 

 

 

 

 

Outstanding - September 30, 2013

 

2,247,500 

$

2.61 

 

2.41 

$

 -

 

 

 

 

 

 

 

 

 

Exercisable - September 30, 2013

 

2,147,500 

$

2.61 

 

2.32 

$

 -

 

A summary of the status of our unvested stock options as of September 30, 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 

 

 

Vested

 

 

 

 

 

(200,000)

 

1.65 

 

 

Unvested - September 30, 2013

 

 

 

 

 

100,000 

$

1.10 

 

0.22 

 

9


 

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, per option, per warrant and per ounce amounts unless otherwise noted) 

 

Restricted Stock Units 

 

A summary of RSU activity under the LTIP as of September 30, 2013 and changes during the period then ended is set forth in the following table: 

 

 

 

 

 

 

 

 

Number of units

 

Weighted average grant-date fair value per unit

Unvested - December 31, 2012

 

1,994,507 

$

3.52 

Cancelled/forfeited

 

(351,340)

 

3.58 

Vested

 

(116,875)

 

3.51 

Granted

 

1,850,424 

 

0.82 

Unvested - September 30, 2013

 

3,376,716 

$

2.03 

 

In general, a portion of the RSUs vest over a defined period of time, usually three years, and the remainder vest subject to certain Company and/or share price performance criteria, provided the recipient continues to be affiliated with Vista on the vesting date.

 

11.  Accumulated Other Comprehensive Income (Loss) 

 

 

 

 

 

Accumulated
other comprehensive
income (loss)

As of December 31, 2012

$

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

 

(287)

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

 

(33)

Net current-period other comprehensive loss

 

(320)

As of September 30, 2013

$

(318)

 

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

 

12.  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 and nine months ended September 30, 2013 and 2012. Geographic location of mineral properties and plant and equipment is provided in Notes 6 and 7, respectively. The Company has one reportable operating segment, consisting of evaluation, acquisition, and exploration activities.

 

13. Related Party Transactions 

 

On April 1, 2009, we entered into an agreement with Sierra Partners LLC (“Sierra”) pursuant to which Sierra provided us with support for 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 paid Sierra a monthly retainer fee of $10 for the duration of the agreement, which was terminated on August 31, 2103. We paid to Sierra $20 and $80 during the three- and nine-month periods ended September 30, 2013 and $30 and $90 during the three- and nine-month periods ended September 30, 2012, respectively.

 

14. Commitments and Contingencies 

 

Our 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. We conduct our operations to minimize effects on the environment and we believe that operations are in compliance with applicable laws and regulations in all material respects. 

 

We have 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 gold produced. The Company can at its discretion terminate any of these agreements within defined notice periods.

10


 

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, per option, per warrant and per ounce amounts unless otherwise noted) 

 

 

15. 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 September 30, 2013

 

 

 

 

Total

 

Level 1

 

Level 3

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,351 

$

1,351 

$

 -

 

Marketable securities

 

 

231 

 

231 

 

 -

 

Other investments (Midas Gold Shares)

 

 

26,714 

 

26,714 

 

 -

 

Amayapampa interest

 

 

4,813 

 

 -

 

4,813 

 

Mill equipment

 

 

6,500 

 

 -

 

6,500