10-K 1 vgz-20131231x10k.htm 10-K c18e5f61fa38441

 

_____________________________________________________________________________________________________________________________________________   

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

FORM 10-K

 

 

 

 

 

x

   

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

For the fiscal year ended December 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: 001-9025

 

Vista-Logo-2-300dpi 

 

VISTA GOLD CORP.

 (Exact Name of Registrant as Specified in its Charter)

 

 (Exact Name of Registrant as Specified in its Charter)r 

 

 

British Columbia

   

98-0542444

(State or other jurisdiction of incorporation or organization)

   

(I.R.S. 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)

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

 

 

 

Title of Each Class

Name of Each Exchange on Which Registered

 

Common Shares without par value

NYSE MKT

 

 

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes Nox

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes Nox

 

Indicate by checkmark whether the registrant (1)  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 such filing requirements for the past 90 days.  Yes xNo

 


 

 

 

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 (§ 229.405 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 xNo

 

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-K or any amendment to the Form 10-K.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “Accelerated filer and large accelerated filer” 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 Act).  Yes Nox

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:        $79,335,170

 

The number of shares of the Registrant’s Common Stock outstanding as of March 5, 2014 was 82,275,217.

 

Documents incorporated by reference:  To the extent herein specifically referenced in Part III, portions of the Registrant’s Definitive Proxy Statement on Schedule 14A for the 2014 Annual General Meeting of Shareholders are incorporated herein.  See Part III.

 

 

 _____________________________________________________________________________________________________________________________________________

 

 

 


 

   

 

TABLE OF CONTENTS

 

 

 

   

Page

GLOSSARY

USE OF NAMES

CURRENCY

METRIC CONVERSION TABLE

NOTE REGARDING FORWARD-LOOKING STATEMENTS

PART I

ITEM 1. BUSINESS

ITEM 1A. RISK FACTORS

11 

ITEM 1B. UNRESOLVED STAFF COMMENTS

16 

ITEM 2. PROPERTIES

16 

ITEM 3. LEGAL PROCEEDINGS

37 

ITEM 4. MINE SAFETY DISCLOSURES

37 

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

38 

ITEM 6. SELECTED FINANCIAL DATA

41 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

41 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

48 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

49 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

73 

ITEM 9A. CONTROLS AND PROCEDURES

73 

ITEM 9B. OTHER INFORMATION

73 

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

73 

ITEM 11. EXECUTIVE COMPENSATION

73 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

74 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

74 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

74 

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

74 

 

 

 

 

 

 

 

   

 


 

   

 

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES AND PROVEN AND PROBABLE RESERVES

 

The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”)CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Definition Standards”). These definitions differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 (“SEC Industry Guide 7”) under the United States Securities Act of 1933, as amended (the “Securities Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves, and the primary environmental analysis or report must be filed with the appropriate governmental authority.

 

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all or any part of a  mineral deposit in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all, or any part, of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.

 

Accordingly, information contained in this report and the documents incorporated by reference herein contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder. 

 

The term “mineralized material” as used in this annual report on Form 10-K, although permissible under SEC Industry Guide 7, does not indicate “reserves” by SEC Industry Guide 7 standards.  We cannot be certain that any part of the mineralized material will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves”.  Investors are cautioned not to assume that all or any part of the mineralized material will ever be confirmed or converted into reserves or that mineralized material can be economically or legally extracted.

 

CAUTIONARY NOTE TO ALL INVESTORS CONCERNING ECONOMIC ASSESSMENTS THAT INCLUDE INFERRED RESOURCES

 

Mineral resources that are not mineral reserves have no demonstrated economic viability.  The preliminary assessment on the Guadalupe de los Reyes gold/silver project is preliminary in nature and includes “inferred mineral resources” that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves.  There is no certainty that the preliminary assessment at the Guadalupe de los Reyes gold/silver project will ever be realized.

 

GLOSSARY

 

acanthite” is a low-temperature modification of silver sulfide. 

 

acid rock drainage (ARD)” results from the interaction of meteoric water with oxidizing sulfide minerals.

 

arsenopyrite means an iron arsenic sulfide. It is the most common arsenic mineral and the primary ore of arsenic metal.

 

assay” means to test ores or minerals by chemical or other methods for the purpose of determining the amount of valuable metals contained.

 

bedding”  means the characteristic structure of sedimentary rock in which layers of different composition, grain size or arrangement are layered one on top of another in a sequence with oldest on the bottom and youngest at the top.

 

bismuthinite” means a mineral consisting of bismuth sulfide; it is an ore for bismuth.

 

breccia” means rock consisting of fragments, more or less angular, in a matrix of finer-grained material or of cementing material.

   


 

   

 

chalcopyrite” means a  brass-yellow colored sulfide of copper and iron.  It is a copper mineral.

 

claim” means a mining title giving its holder the right to prospect, explore for and exploit minerals within a defined area.

 

clastic” refers to sedimentary rock (such as shale or siltstone) or sediment.  An accumulation of transported weathering debris.

 

comminution” means the process in which solid materials are broken into small fragments by crushing, grinding, and other processes. 

 

conglomerate” refers to clastic sedimentary rock that contains large (greater than two millimeters in diameter) rounded particles.  The space between the pebbles is generally filled with smaller particles and/or a chemical cement that binds the rock together. 

 

cut-off grade” means the grade below which mineralized material or ore will be considered waste.

 

deposit”  is an informal term for an accumulation of mineralized material.

 

diamond drill” means a rotary type of rock drill that uses a diamond impregnated bit to cut a core of rock, which is recovered in long, cylindrical sections, two centimeters or more in diameter.

 

epithermal” refers to a type of lode deposit containing economic concentrations of gold, silver and, in some cases, base metals such as copper, lead and zinc.

 

exploration stage enterprise”  refers to an issuer engaged in the search for mineral deposits (reserves) which are not in either the development or production stage, per SEC Industry Guide 7. A development stage enterprise is engaged in the preparation of an established, commercially minable deposit (reserve) which is not in the production stage. A production stage enterprise is engaged in the exploitation of commercially mineral deposits (reserves).

 

facies” means the characteristics of a rock mass that reflects its depositional environment.

 

fault” means a fracture in rock along which there has been displacement of the two sides parallel to the fracture.

 

feasibility study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal,

environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified or economically mineable.

 

felsic” is a term used to describe an igneous rock that has a large percentage of light-colored minerals such as quartz, feldspar and muscovite.  Felsic rocks are generally rich in silicon and aluminum and contain only small amounts of magnesium and iron.

 

ferruginous” means containing iron oxides or rust.

 

fire assay” is a type of precious metal assay, which results in destruction of the precious metal, but provides the most accurate assay information.  

 

foliation” means planar arrangement of structural or textural features in any rock type.

 

fold” is a bend or flexure in a rock unit or series of rock units caused by crust movements.

 

g Au/tonne” or “g Au/t” means grams of gold per tonne.

 

galena” means a lead sulfide mineral commonly found in hydrothermal veins; it is the primary ore of lead and is often mined for its silver content.

 

geosyncline” means a major trough or downwarp of the Earth’s crust, in which great thicknesses of sedimentary and/or volcanic rocks have accumulated. 

 

granitoid” means a variety of coarse grained plutonic rock similar to granite, which are composed predominantly of feldspar or quartz.

 

greywackes” means fine-ground sandstone generally characterized by its hardness, dark color and poorly sorted angular grains of

   


 

   

quarts, feldspar and small rock fragments set in a compact, clay-fine matrix.

 

heap leach” means a gold extraction method that percolates a cyanide solution through ore heaped on an impermeable pad or base.

 

hornfels” refers to nonfoliated metamorphic rock that is typically formed by contact metamorphism around igneous intrusions.

 

indicated mineral resource” and “indicated resource” means “indicated mineral resource” as defined by the CIM in the CIM Definition Standards and is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

 

inferred mineral resource” and “inferred resource” means “inferred mineral resource” as defined by the CIM in the CIM Definition Standards and is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

 

intrusion” refers to an igneous rock body that formed from magma that forced its way into, through or between subsurface rock units.

 

intrusives” refers to igneous rocks that crystallize below Earth’s surface.

 

ironstone” is a sedimentary rock, either deposited directly as a ferruginous sediment or created by chemical replacement, that contains a substantial proportion of an iron compound from which iron either can be or once was smelted commercially.

 

joint” means a fracture in a rock along which there has been no displacement. 

 

measured mineral resource” and “measured resources” means “measured mineral resource” as defined by the CIM in the CIM Definition Standards and is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

 

mica” any of a group of phyllosilicate minerals having similar chemical compositions and highly perfect basal cleavage.

 

mineralization” means the concentration of valuable minerals within a body of rock.

 

mineralized material” under SEC Industry Guide 7 is a mineralized body that has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors conclude legal and economic feasibility. Mineralized material is equivalent to measured plus indicated mineral resources but does not include inferred mineral resources, which terms are defined by the CIM.

 

mudstone” is a fine grained sedimentary rock whose original constituents were clays or muds. 

 

ore” means material containing minerals in such quantity, grade and chemical composition that they can be economically extracted.

 

oxide” means mineralized rock in which some of the original minerals have been oxidized (i.e., combined with oxygen). Oxidation tends to make the ore more porous and permits a more complete permeation of cyanide solutions so that minute particles of gold in the interior of the minerals will be more readily dissolved.

 

preliminary economic assessment” (“PES”) as defined by Canadian National Instrument 43-101 is a study, other than a pre-feasibility study or feasibility study, which includes an economic analysis of the potential viability of mineral resources.

 

preliminary feasibility study”  (“PFS” or “pre-feasibility study”)  as defined by the CIM is a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and an effective method of mineral processing has been determined, and includes a

   


 

   

financial analysis based on reasonable assumptions of technical, engineering, legal, operating, economic, social and environmental factors and the evaluation of other relevant factors, which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve.

 

probable reserves” under SEC Industry Guide 7 means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

 

probable mineral reserves” as defined by the CIM in the CIM Definition Standards is the economically mineable part of an indicated and, in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

 

proven reserves” under SEC Industry Guide 7 means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.

 

proven mineral reserves”, as defined by the CIM in the CIM Definition Standards, is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

 

pyrrhotite” means a bronze-colored magnetic ferrous sulfide mineral consisting. 

 

qualified person” as defined under NI 43-101 means an individual who (a) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining; (b) has at least five years of experience in mineral exploration, mine development or operation, or mineral project assessment or any combination of these that is relevant to his or her professional degree or area of practice; (c) has experience relevant to the subject matter of the mineral project and the technical report; (d) is in good standing with a professional association; and (e) in the case of a professional association in a foreign jurisdiction, has a membership designation that (i) requires attainment of a position of responsibility in their profession that requires the exercise of independent judgment; and (ii) requires (A) a favorable, confidential peer evaluation of the individual’s character, professional judgment, expertise and ethical fitness; or (B) a recommendation for membership by at least two peers, and demonstrated prominence or expertise in the field of mineral exploration or mining. Note: a professional association is a self-regulatory organization of engineers, geoscientists or both that, among other criteria, requires compliance with the professional standards of competence and ethics established by the organization and has disciplinary powers over its members.

 

recovery” means that portion of the metal contained in the ore that is successfully extracted by processing and is expressed as a percentage.

 

sampling” means selecting a fractional, but representative, part of a mineral deposit for analysis.

 

schist” is a metamorphic rock containing abundant particles of mica, characterized by strong foliation and originating from a metamorphism in which directed pressure played a significant role. 

 

sediment” means solid material settled from suspension in a liquid.

 

sedimentary rock” means rock formed from the accumulation and consolidation of sediment, usually in layered deposits.

 

shale” is a fine grained, clastic sedimentary rock composed of mud that is a mix of flakes of clay minerals and tiny fragments (silt-sized particles) or other minerals, especially quartz and calcite. 

 

silicified” means to become converted into or impregnated with silica.

 

siltstone” is a sedimentary rock that has a grain size in the silt range, finer than sandstone and coarser than claystones.

 

sphalerite” means a zinc sulfide mineral commonly found in hydrothermal veins; it is the primary ore of zinc.

 

stockwork” means a rock mass interpenetrated by small veins of mineralization.

   


 

   

 

strike when used as a noun, means the direction, course or bearing of a vein or rock formation measured on a level surface and, when used as a verb, means to take such direction, course or bearing.

 

strike length” means the horizontal dimension of a mineral deposit or zone of mineralization.

 

stripping ratio” means the ratio of waste to ore in an open pit mine.

 

sulfidation” means reaction with sulfur to form sulfides.

 

sulfide” means a compound of sulfur and some other element. From a metallurgical perspective, sulfide rock is primary ore that has not been oxidized.  Both ore and waste may contain sulfide minerals.

 

tailings” means material rejected from a mill after most of the valuable minerals have been extracted.

 

tonne” means a metric ton and has the weight of 1,000 kg or 2,204.6 pounds.

 

tpd” means tonnes per day.

 

tuffs”  are a type of rock consisting of consolidated volcanic ash ejected from vents during a volcanic eruption.

 

vein” means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source.

 

volcaniclastic” means derived by ejection of volcanic material from a volcanic vent.

 

waste” means rock lacking sufficient grade and/or other characteristics of ore.

 

USE OF NAMES

 

In this annual report on Form 10-K, unless the context otherwise requires, the terms “we”, “us”, “our”, “Vista”, “Vista Gold”, “Corporation”, or the “Company” refer to Vista Gold Corp. and its subsidiaries.

 

CURRENCY

 

References to C$ refer to Canadian currency, A$ to Australian currency and $ to United States currency.  All dollars amounts are expressed in thousands of dollars except references to per ounce and per share amounts.

 

METRIC CONVERSION TABLE

 

To Convert Imperial Measurement Units

To Metric Measurement Units

Multiply by

Acres

Hectares                                                                

0.4047

Feet

Meters                                                                

0.3048

Miles

Kilometers                                                                

1.6093

Tons (short)

Tonnes                                                                

0.9071

Gallons

Liters                                                                

3.7850

Ounces (troy)

Grams                                                                

31.103

Ounces (troy) per ton (short)

Grams per tonne                                                                

34.286

 

 

NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This annual report, including all exhibits hereto and any documents that are incorporated by reference as set forth on the face page under “Documents incorporated by reference”, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information under Canadian securities laws that are intended to be covered by the safe harbor created by such legislation. All statements, other than statements of historical facts, included in this annual report on Form 10-K, our other filings with the SEC and Canadian securities commissions and in press releases and public statements by our officers or representatives that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements and forward-looking information, including, but not limited to, such things as those listed below:

 

   


 

   

·

our expectation that we are able to raise the cash necessary for full repayment of the 2013 Facility (as defined in Significant Developments in 2013, below)  when it is due and may potentially seek additional sources of financing;

 

·

the receipt by the Company of the $6,250 payment for the sale of the Los Cardones gold project;

 

·

estimates of future operating and financial performance;

 

·

potential funding requirements and sources of capital, including near-term sources of additional cash;

 

·

our expectation that we will continue to raise capital through the sale of non-core assets, equity and/or debt financings, and through the exercise of stock options and warrants;

 

·

our anticipated cash burn rate for 2014;

 

·

our expectation that the Company will continue to incur losses and will not pay dividends for the foreseeable future’

 

·

our estimates of our future cash position;

·

the potential monetization of our non-core assets;

·

our intention to identify and execute cost cutting initiatives;

·

our expectation that raising capital for mining companies without producing assets will continue to be difficult for the foreseeable future, and the potential impact of this on our ability to raise capital in sufficient amounts on reasonable terms;

·

our planned deferral of significant development commitments until market conditions improve;

·

our potential ability to generate proceeds from operations or the disposition of our assets;

·

the timing, performance and results of feasibility studies; 

·

plans and anticipated effects of the holding of 24.9% (reduced to 12.4% during February 2014) of the issued and outstanding common shares of Midas Gold Corp. (“Midas Gold shares”)

·

our potential entry into agreements to find, lease, purchase, option or sell mineral interests;

·

plans for evaluation and advancement of the Mt. Todd gold project, including our plans to complete the environmental impact statement approval process for the project; 

·

our ability to raise sufficient capital to complete a feasibility study of the Mt. Todd gold project;

·

the feasibility of the Mt. Todd gold project;

·

our belief that there is a possibility that with time and the appropriate exploration expenditures, a high-grade mineable resource could potentially de developed at the Guadalupe de los Reyes gold/silver project;

·

future business strategy, competitive strengths, goals and expansion and growth of our business; 

·

plans and estimates concerning potential project development, including matters such as schedules, estimated completion dates and estimated capital and operating costs; 

·

estimates of mineral reserves and mineral resources;

·

timing and receipt of proceeds from the sale of the mill equipment that we are currently seeking to sell;

·

timing and receipt of proceeds from the proposed option of our Guadalupe de los Reyes gold/silver project; and

·

our expectation that we will continue to be a passive foreign investment company (“PFIC”) in the future.

Forward-looking statements and forward-looking information have been based upon our current business and operating plans, as approved by the Board; our cash and other funding requirements and timing and sources thereof; results of pre-feasibility and feasibility studies, mineral resource and reserve estimates, preliminary economic assessments and exploration activities; advancements of the Company’s required permitting processes; current market conditions and project development plans. The words “estimate,” “plan,” “anticipate,” “expect,” “intend,” “believe,” “will,” “may” and similar expressions are intended to identify forward-looking statements and forward-looking information. These statements involve known and unknown risks, uncertainties, assumptions and other factors which may cause our actual results, performance or achievements to be materially different from any results,

   


 

   

performance or achievements expressed or implied by such forward-looking statements and forward-looking information. These factors include risks such as: 

 

·

our ability to raise additional capital on favorable terms, if at all;

·

pre-feasibility and feasibility study results and preliminary assessment results and the accuracy of estimates on which they are based; 

·

resource and reserve estimate results, the accuracy of such estimates and the accuracy of sampling and subsequent  assays and geologic interpretations on which they are based; 

·

technical and operational feasibility and the economic viability of deposits; 

·

our ability to obtain, renew or maintain the necessary authorizations and permits for our business, including its development plans and operating activities; 

·

the timing and results of a feasibility study on the Mt. Todd gold project;

·

delays in commencement of construction at the Mt. Todd gold project;

·

our ability to secure the permits for the Mt. Todd gold project including the environmental impact statement;  

·

receiving the payment in July 2014 related to the Los Cardones gold project sale;

·

increased costs that affect our financial condition;

·

our reliance on third parties to fulfill their obligations under our agreements;

·

whether projects not managed by us will comply with our standards or meet our objectives;

·

a shortage of skilled labor, equipment and supplies;

·

whether our acquisition, exploration and development activities, as well as the realization of the market value of our assets, will be commercially successful and whether any transactions we enter into will maximize the realization of the market value of our assets;

·

trading price of our securities and our ability to raise funds in new share offerings due to future sales of common shares in the public or private market and our ability to raise funds from the exercise of our warrants;

·

risks related to our 2013 Facility;

·

the lack of dividend payments by us;

·

the success of future joint ventures, partnerships and other arrangements relating to our properties;

·

the market price of the securities held by us;

·

our ability to timely monetize Midas Gold shares;

·

our lack of production and experience in producing;

·

perception of environmental impact of the Mt. Todd gold project;

·

reclamation liabilities, including reclamation requirements at the Mt. Todd gold project;

·

our history of losses from operations;

·

future water supply issues at the Mt. Todd gold project;  

·

environmental lawsuits;

·

lack of adequate insurance to cover potential liabilities;

·

our ability to retain and hire key personnel;

·

fluctuations in the price of gold;

·

inherent hazards of mining exploration, development and operating activities;

·

the accuracy of calculations of mineral reserves, mineral resources and mineralized material fluctuations therein based on metal prices, inherent vulnerability of the ore and recoverability of metal in the mining process;

   


 

   

·

changes in environmental regulations to which our exploration and development operations are subject;

·

changes in climate change regulations;

·

changes in corporate governance and public disclosure regulations;

·

intense competition in the mining industry;

·

conflicts of interest of some of our directors as a result of their involvement with other natural resource companies;

·

potential challenges to the title to our mineral properties;

·

political and economic instability in Mexico;

·

fluctuation in foreign currency values; and

·

our likely status as a PFIC for U.S. federal tax purposes.

For a more detailed discussion of such risks and other important factors that could cause actual results to differ materially from those in such forward-looking statements and forward-looking information, please see “Item 1A. Risk Factors” below in this annual report on Form 10-K. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements and forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that these statements will prove to be accurate as actual results and future events could differ materially from those anticipated in the statements. Except as required by law, we assume no obligation to publicly update any forward-looking statements and forward-looking information, whether as a result of new information, future events or otherwise.

PART I

 

ITEM 1.  BUSINESS.

 

Overview

 

Vista Gold Corp. operates 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, option 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 principal assets include our flagship Mt. Todd gold project in Northern Territory (“NT”), Australia, and a 24.9%  (reduced to 12.4% during February 2014) holding in Midas Gold shares.  In addition to non-core projects in Mexico and California, we hold royalty interests in projects in Bolivia and Indonesia.

 

We do not produce gold and do not currently generate operating earnings. Through 2013, funding to explore our gold properties and to operate the Company was acquired primarily through debt and equity financings and the sale of non-core assets. We expect to continue to raise capital through the sale of non-core assets, additional equity and/or debt financings, and through the exercise of stock options and warrants.

 

Vista Gold Corp. was originally incorporated on November 28, 1983 under the name “Granges Exploration Ltd.” Effective November 1, 1996, two predecessor entities amalgamated under the name “Vista Gold Corp.” and, effective December 17, 1997, Vista Gold continued from British Columbia to the Yukon Territory, Canada under the Business Corporations Act (Yukon Territory).  On June 11, 2013, Vista Gold continued from the Yukon Territory, Canada to the Province of British Columbia, Canada under the Business Corporations Act (British Columbia). The current addresses, telephone and facsimile numbers of our offices are:

 

Executive Office

Registered and Records Office

Suite 5 - 7961 Shaffer Parkway

Littleton, Colorado, USA 80127

Telephone: (720) 981-1185

Facsimile: (720) 981-1186

1200 Waterfront Centre – 200 Burrard Street

Vancouver, British Columbia, Canada V7X 1T2

Telephone: (604) 687-5744

Facsimile: (604) 687-1415

 

   


 

   

 

Corporate Organization Chart

 

The name, place of incorporation, continuance or organization and percent of equity securities that we own or control as of March 5,  2014 for each of its subsidiaries is set out below.

Picture 2

Employees

 

As of December 31, 2013, we had 14 employees globally. In addition, we use consultants with specific skills to assist with various aspects of our project evaluation, due diligence, corporate governance and property management.

 

Geographic and Segment Information

 

We have one reportable segment, consisting of evaluation, acquisition and exploration activities which are focused principally in Australia and North America.  We reported no revenues during 2013, 2012 and 2011.  Geographic location of mineral properties and plant and equipment is provided in Notes 6 and 7 to our Consolidated Financial Statements under the section heading “Item 8. Financial Statements” below.

 

Significant Developments in 2013

 

Mt. Todd gold project

 

In April 2013, the NT Government of Australia awarded our Mt. Todd gold project Major Project Status, signifying the NT Government's support for the timely and responsible development of the Mt. Todd gold project.

 

In May 2013, we completed a pre-feasibility study which evaluates two development scenarios including a (i) 50,000 tpd project that develops more of the Mt. Todd mineral resource and generates a larger net present value and (ii) a smaller and higher-grade 33,000 tpd project that focuses on improving internal rate of return and operating margins. 

 

In June 2013, we submitted the initial environmental impact statement (“EIS”) to the regulators in the NT. During November 2013, we submitted our final EIS to the regulators in the NT.

 

See the section heading “Item 2. Properties – Mt. Todd Gold Project, Northern Territory, Australia” below.

Los Cardones gold project

During October 2013, we entered into a purchase and sale agreement with Invecture Group S.A. de C.V. (“Invecture”) and RPG Structured Finance S.a.r.L. to sell our 100% interest in our Los Cardones gold project in Baja California Sur, Mexico for a total of $13,000.

   


 

   

See the section heading “Item 2. Properties – Los Cardones Gold Project, Baja California Sur, Mexico ” below.

 

Corporate

 

During March 2013, we completed a loan facility for C$10,000 with an original maturity date of March 2014, which was further extended to March 2015 during the fourth quarter of 2013 (the “2013 Facility”).  In addition, we repaid C$3,041 of the principal outstanding during the fourth quarter of 2013.

 

During June 2013, we changed our jurisdiction of incorporation by continuing from the Yukon Territory, Canada to the Province of British Columbia, Canada (the “Continuation”).  Our shareholders approved the Continuation at the annual general and special meeting of shareholders held on April 30, 2013.  For further details on the continuation see our Current Report on Form 8-K filed with the SEC and the Canadian securities commissions. 

 

See the section heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Position, Liquidity and Capital Resources”, below.    

 

Reclamation

 

We generally will be required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping and revegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts would be conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies.

 

Government Regulation

 

Our mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, Mexico, Australia, and other jurisdictions, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct our exploration and other programs. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and regulations in all of the jurisdictions in which we operate. There are no current orders or directions relating to us with respect to the foregoing laws and regulations.

 

Environmental Regulation

 

Our projects are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material compliance with applicable laws and regulations.

 

Changes to current local, state or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.

 

During 2013, none of our project sites had any material non-compliance occurrences with any applicable environmental regulations.  

 

Competition

 

We compete with other mining companies in connection with the acquisition, exploration, financing and development of gold properties. There is competition for the limited number of gold acquisition and exploration opportunities, some of which is with other companies having substantially greater financial resources than we have. As a result, we may have difficulty acquiring attractive gold projects at reasonable prices. We use consultants and compete with other mining companies for the man hours of consulting time required to complete our studies.  We also compete with other mining companies for mining engineers, geologists and other skilled personnel in the mining industry and for exploration and development equipment and services.

 

Gold Price History

 

The price of gold is volatile and is affected by numerous factors, all of which are beyond our control, such as the sale or purchase of gold by various central banks and financial institutions, inflation, recession, fluctuation in the relative values of the U.S. dollar and foreign currencies, changes in global gold demand and political and economic conditions.

 

   


 

   

The following table presents the high, low and average afternoon fixed prices in U.S. dollars for an ounce of gold on the London Bullion Market over the past five years:

 

 

 

 

 

 

 

 

 

Year

 

High

 

Low

 

Average

2009

$

1,213 

$

810 

$

972 

2010

 

1,421 

 

1,058 

 

1,225 

2011

 

1,895 

 

1,319 

 

1,571 

2012

 

1,792 

 

1,540 

 

1,669 

2013

 

1,694 

 

1,192 

 

1,411 

2014 (to March 5, 2014)

 

1,349 

 

1,221 

 

1,276 

 

   Data Source: www.kitco.com

 

Seasonality

 

None of our properties are subject to material restrictions on our operations due to seasonality.

 

Available Information

 

We make available, free of charge, on or through our Internet website, at www.vistagold.com, our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934. Our Internet website and the information contained therein or connected thereto are not intended to be, and are not incorporated into this annual report on Form 10-K.

 

ITEM 1A.  RISK FACTORS.

 

An investment in our securities involves a high degree of risk.  The risks described below are not the only ones facing the Company or otherwise associated with an investment in our securities.  Additional risks not presently known to us or which we currently consider immaterial may also adversely affect our business.  If any of the following risks actually occur, our business, financial condition and operating results could be materially adversely affected. 

Operating Risks

 

We cannot be assured that our Mt. Todd gold project is feasible or that a feasibility study will accurately forecast operating results.

Before arranging financing for the Mt. Todd gold project, we will have to complete a feasibility study.  There can be no assurance that the results of the feasibility study will be positive or that such study will be completed when expected.   

If the Mt. Todd gold project feasibility study is favorable, and if the project can be financed, there is no assurance that actual production rates, revenues, capital and operating costs at the Mt. Todd gold project will not vary unfavorably from the estimates and assumptions included in the feasibility study.

 

Our Mt. Todd gold project requires substantial capital investment and we may be unable to raise sufficient capital on favorable terms or at all.  

The construction and operation of our Mt. Todd gold project will require significant capital. Our ability to raise sufficient capital will depend on several factors, including a favorable feasibility study, acquisition of the requisite permits, macroeconomic conditions, and future gold prices. Uncontrollable factors such as lower gold prices, unanticipated operating or permitting challenges, illiquidity in the debt markets or a further dislocation in the gold mining equity markets as experienced in recent years, could prohibit our ability to finance the Mt. Todd gold project on acceptable terms, if at all.  

 

If we decide to construct the mine at our Mt. Todd gold project, we will be assuming certain reclamation obligations resulting in a material financial obligation.

The Mt. Todd gold project site was not reclaimed when the original mine closed.  Although we are not currently responsible for the reclamation of these historical disturbances, we will accept full responsibility if we make a decision to finance and construct the mine.  At that time, we will be required to provide a bond in a form satisfactory to the NT Government (in whose jurisdiction the Mt. Todd gold project is located) that would cover the expense of the reclamation of the property.  In addition, the regulatory authorities may

   


 

   

increase reclamation and bonding requirements from time to time.  The satisfaction of these bonding requirements and continuing or future reclamation obligations will require a significant amount of capital.

We may not be able to get the required permits to begin construction at our Mt. Todd gold project in a timely manner or at all.  

Any delay in acquiring the requisite permits, or failure to receive required governmental approvals (including the approval of the environmental impact statement), could delay or prevent the start of construction of our Mt. Todd gold project.  If we are unable to acquire permits to mine the property, then it will have no reserves under SEC Industry Guide 7 and NI 43-101, which would result in an impairment of the carrying value of the project.

There may be other delays in the construction of our Mt. Todd gold project.

Delays in commencement of construction could result from factors such as availability and performance of engineering and construction contractors, suppliers and consultants; availability of required equipment; and availability of capital. Any delay in the performance of any one or more of the contractors, suppliers, consultants or other persons on which we depend, or lack of availability of required equipment, or delay or failure to receive required governmental approvals, or financing could delay or prevent commencement of construction at the Mt. Todd gold project. There can be no assurance of whether or when construction at the Mt. Todd gold project will start or that the necessary personnel, equipment or supplies will be available to the Company if and when construction is started. 

We cannot be assured that we will have an adequate water supply at our Mt. Todd gold project.

Water at the Mt. Todd gold project is expected to be provided from a fresh water reservoir which is fed by seasonal rains. Drought or drought-like conditions in the area feeding the reservoir could limit or extinguish this water supply, and all operations would have to stop until the water supply is replenished. 

 

We could incur substantial costs or disruptions to our business if we cannot obtain, renew or maintain the necessary authorizations and permits.

In order to conduct our operations, we must obtain authorizations and permits from governmental authorities.  Delays in obtaining authorizations or permits, failure to obtain an authorization or permit or receipt of an authorization or permit with unreasonable conditions or costs could have a material adverse effect on our ability to develop our gold projects.

The failure to obtain necessary permits could result in an impairment of the carrying value of our projects as the project(s) will not have mineral reserves under SEC Industry Guide 7 or NI 43-101.

We rely on third parties to fulfill their obligations under agreements.

Our business strategy includes entering into agreements with third-parties (“Partners”) which may earn the right to obtain a majority interest in certain of our projects, in part by managing the respective project. Whether or not we hold a majority interest in a respective project, our Partner(s) may: (i) have economic or business interests or goals that are inconsistent with or opposed to ours; (ii) exercise veto rights to block actions that we believe to be in the best interests of the project; (iii) take action contrary to our policies or objectives; or (iv) as a result of financial or other difficulties, be unable or unwilling to fulfill their obligations under the respective joint venture, option, earn-in right or other agreement(s), such as contributing capital for the expansion or maintenance of projects.  Any one or a combination of these could result in liabilities for us and/or could adversely affect the value of the related project(s) and, by association, damage our reputation and consequently our ability to acquire or advance other projects and/or attract future co-venturers. 

Our exploration and development operations are subject to evolving environmental regulations.

All phases of our operations are subject to environmental regulation. Environmental legislation is becoming more restrictive in some countries or jurisdictions in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect our projects. Currently, we are subject to U.S. federal and state environmental regulations in California, as well as government environmental regulations in Australia and Mexico.

   


 

   

We could be subject to environmental lawsuits.

Neighboring landowners and other third parties could file claims based on environmental statutes and common law for personal injury and property damage allegedly caused by the release of hazardous substances or other waste material into the environment on or around our properties.  There can be no assurance that our defense of such claims would be successful.  This could have a material adverse effect on our business prospects, financial condition, results of operation, and corporate reputation.

There may be challenges to our title to mineral properties.

There may be challenges to our title to our mineral properties. If there are title defects with respect to any of our  properties, we may be required to compensate other persons or perhaps reduce our interest in the affected property. Also, in any such case, the investigation and resolution of title issues would divert management’s time from company business, including any ongoing exploration and development programs.

Our property interests in Mexico, Bolivia and Indonesia are subject to risks from political and economic instability.

We have property interests in Mexico, Bolivia and Indonesia that may be affected by risks associated with political or economic instability in those countries. The risks include, but are not limited to, military repression, extreme fluctuations in currency exchange rates, labor instability or militancy, mineral title irregularities and high rates of inflation. In addition, changes in mining or investment policies or shifts in political attitude in these countries may adversely affect our business. We may be affected in varying degrees by government regulation with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. The effect of these factors cannot be accurately predicted.

Financial and Business Risks

 

The Purchasers of the Los Cardones project may elect to not make a $6,250 payment to us by July 31, 2014, which would severely reduce our expected working capital and negatively affect our planned liquidity.

 

During October 2013, Vista and Invecture terminated the 2012 Earn-in Right Agreement whereby Invecture could have earned a 62.5% interest in the Los Cardones gold project located in Baja California Sur, Mexico, and entered into new agreements whereby Vista sold 100% of its debt and equity interests in the Los Cardones gold project (the “Los Cardones Sale”) to Invecture and RPG Structured Finance S.a.R.L.  (the “Purchasers”), for a total of $13,000,  $7,000 of which was paid in October 2013 and $6,000 was payable in January 2014, subject to the Purchasers’ option to elect to not make this payment. As a result of permitting delays, we and the Purchasers have agreed to extend the due date of the $6,000 payment to July 31, 2014 for consideration of $250. If the Purchasers elect to not make the $6,250 payment, Vista will retain the $7,000 already paid and 100% of the Los Cardones gold project will be returned to Vista. The Company would also assume all of the responsibilities associated with maintaining the Los Cardones gold project on a going forward basis.

 

A substantial or extended decline in gold prices would have a material adverse effect on the value of our assets, on our ability to raise capital and could result in lower than estimated economic returns.

 

The value of our assets, our ability to raise capital and our future economic returns are substantially dependent on the price of gold. The gold price fluctuates on a daily basis and is affected by numerous factors beyond our control. Factors tending to influence gold prices include:

·

gold sales or leasing by governments and central banks or changes in their monetary policy, including gold inventory management and reallocation of reserves;

·

speculative short positions taken by significant investors or traders in gold;

·

the relative strength of the U.S. dollar;

·

expectations of the future rate of inflation;

·

interest rates;

·

changes to economic activity in the United States, China, India and other industrialized or developing countries;

·

geopolitical conflicts;

·

changes in industrial, jewelry or investment demand;

·

changes in supply from production, disinvestment and scrap; and

·

forward sales by producers in hedging or similar transactions.

A substantial or extended decline in the gold price could:

   


 

   

·

negatively impact our ability to raise capital on favorable terms, or at all;

·

 jeopardize the development of our Mt. Todd gold project;

·

reduce our existing estimated mineral resources and reserves by removing ores from these estimates that could not be economically processed at the lower gold price;

·

reduce the potential for future revenues from gold projects  in which we have an interest;  

·

reduce funds available to us for exploration with the result that we may not be able to further advance any of our projects;

·

reduce the market value of our assets;  and

·

reduce the value of our investment in Midas Gold shares and our royalty interests in projects in Bolivia and Indonesia.

 

We have a history of losses, and we do not expect to generate earnings from operations or pay dividends in the near term.

 

We are an Exploration Stage Enterprise.  As such, we devote our efforts to exploration, analysis and development of our projects.  We do not currently produce gold and do not currently generate operating earnings.  We finance our business activities principally by issuing equity and/or debt and sale of non-core assets.  

 

We have incurred losses in all periods since 1998, except for the year ended December 31, 2011, during which we recorded non-cash net gains. Our historic accumulated deficit totals approximately $394,000 as at December 31, 2013.  We expect to continue this trend of incurring losses, until one or more of our gold properties becomes a producing mine(s), or is otherwise monetized, and generates sufficient revenues to fund all of our operations, including our corporate headquarters.  We have no history of paying dividends and we do not expect to pay dividends or to make any similar distribution in the foreseeable future.

 

We may be unable to raise additional capital on favorable terms, if at all.

The exploration and development of our properties, specifically the construction of any mining facilities and commencement of any mining operations, require substantial additional financing. We will have to raise additional funds from external sources in order to maintain and advance our existing property positions and to acquire new gold projects. There can be no assurance that additional financing will be available at all or on acceptable terms, and, if additional financing is not available, we may have to substantially reduce or cease operations.

We cannot be certain that any of our exploration and development activities or any acquisition activities will be commercially successful.

Substantial expenditures are required to acquire gold properties, to establish mineral reserves through drilling and analysis, to develop metallurgical processes to extract metal from the ore and to develop the mining and processing facilities and infrastructure at any site chosen for mining. We cannot be assured that any mineral reserves or mineral resources acquired, established or discovered will be in sufficient quantities to justify commercial operations or that the funds invested in them will ever be recovered.  

 

We face intense competition in the mining industry.

The mining industry is intensely competitive in all of its phases. Some of our competitors are much larger, established mining companies with greater financial and technical resources than ours.  We compete with other mining companies for attractive mining claims, for capital, for equipment and supplies, for outside services and for qualified managerial and technical employees. 

If we are unable to acquire attractive mining claims we could lose an opportunity to improve our business. Competition for capital recently reduced the amount of capital available and raised the associated cost.  If we are unable to raise sufficient capital, our exploration and development programs may be reduced in scope or stopped completely, as done at our Guadalupe de los Reyes gold/silver project during 2013, for example.  Competition for equipment and supplies could result in shortage of necessary supplies and/or increased costs. Competition for outside services could result in increased costs, reduced quality of service and/or delays in completing services. If we cannot successfully attract and retain qualified employees our exploration and development programs may be slowed down or suspended. 

The occurrence of events for which we are not insured may affect our cash flow and overall profitability.

 

We maintain insurance policies that mitigate certain risks related to our operations. This insurance is maintained in amounts that we believe to be reasonable based on the circumstances surrounding each identified risk. However, we may elect not to have insurance for certain risks because of the high premiums associated with insuring those risks or for various other reasons; in other cases, insurance may not be available for certain risks. We do not insure against political risk. Occurrence of events for which we are not insured could result in significant costs that could materially adversely affect our financial condition and our ability to fund our business.  A significant loss or liability could force us to reduce or terminate operations on a specific project.

   


 

   

Currency fluctuations may adversely affect our costs.

Currency exchange rate fluctuations may affect the costs that we incur at our projects as those costs are incurred in the local currency.  The appreciation of the local currencies against the U.S. dollar increases our costs of exploration and development activities in U.S. dollar terms at our projects located outside of the United States.  As a result, our results of operations and financial condition could be adversely affected.  

The Company is likely a “passive foreign investment company,” which will likely have adverse U.S. federal income tax consequences for U.S. shareholders. 

U.S. shareholders of shares of our common stock (the “Common Shares”) should be aware that the Company believes it was classified as a PFIC during the taxable year ended December 31, 2013, and based on current business plans and financial projections, management believes there is a significant likelihood that the Company will be a PFIC during the current taxable year.  If the Company is a PFIC for any year during a U.S. shareholder’s holding period, then such U.S. shareholder generally will be required to treat any gain realized upon a disposition of Common Shares, or any so-called “excess distribution” received on their Common Shares, as ordinary income, and to pay an interest charge on a portion of such gain or distributions, unless the shareholder makes a timely and effective “qualified electing fund” (“QEF Election”) or a “mark-to-market” election with respect to the Common Shares.  A U.S. shareholder who makes a QEF Election generally must report on a current basis its share of the net capital gain and ordinary earnings for any year in which the Company is PFIC, whether or not the Company distributes any amounts to its shareholders.  However, U.S. shareholders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a QEF Election, or that the Company will supply U.S. shareholders with information that such U.S. shareholders require to report under the QEF Election rules, in event that the Company is a PFIC and a U.S. shareholder wishes to make a QEF Election.  Thus, U.S. shareholders may not be able to make a QEF Election with respect to their Common Shares.  A U.S. shareholder who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the Common Shares over the taxpayer’s basis therein.  This paragraph is qualified in its entirety by the discussion below under the heading “Certain U.S. Federal Income Tax Considerations.”  Each U.S. shareholder should consult his or her own tax advisor regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the PFIC rules and the acquisition, ownership, and disposition of Common Shares

 

 

 

eepening political unrest in the Middle East and North Africa, strong economic growth in China, India and other developing economies could have the effect of constraining supplies of oil and other commodities, which could force related prices higher. A similar trend in labor costs has been observed, resulting mainly from a shortage of skilled labor and growing pressure for the extractive industries to provide compensation commensurate with higher metals prices.  There is also a growing trend for governments to expect more income from their resources in the form of increased royalties, taxes and fees. These factors undermine the long-term viability of the mining industry generally, and potentially reduce and/or increase the cost of financing available to new mining projects.  

 

 

 

 

 

 

 

 

 

 

   


 

   

Industry Risks

Cost inflation could negatively affect the long-term viability of our industry.

Operating costs within the gold mining industry have been increasing dramatically in recent years.   Deepening political unrest in the Middle East and North Africa, strong economic growth in China, India and other developing economies could have the effect of constraining supplies of oil and other commodities, which could force related prices higher. A similar trend in labor costs has been observed, resulting mainly from a shortage of skilled labor and growing pressure for the extractive industries to provide compensation commensurate with higher metals prices.  There is also a growing trend for governments to expect more income from their natural resources in the form of increased royalties, taxes and fees. These factors undermine the long-term viability of the mining industry generally, and potentially reduce the availability of, and/or increase the cost of, financing for new mining projects.  

Calculations of mineral reserves and mineral resources are estimates only and subject to uncertainty.

The estimating of mineral reserves and mineral resources is an imprecise process and the accuracy of such estimates is a function of the quantity and quality of available data, the assumptions used and judgments made in interpreting engineering and geological information and estimating future capital and operating costs. There is significant uncertainty in any reserve or resource estimate, and the economic results of mining an ore deposit may differ materially from the estimates.

Feasibility studies are estimates only and subject to uncertainty.

Feasibility studies are used to determine the economic viability of an ore deposit, as are pre-feasibility studies and preliminary economic assessments. Feasibility studies are the most detailed studies and reflect a higher level of confidence in the estimated production rates, and capital and operating costs. Generally accepted levels of confidence are plus or minus 15% for feasibility studies, plus or minus 25-30% for pre-feasibility studies and plus or minus 35-40% for preliminary economic assessments. These levels reflect the levels of confidence that exist at the time the study is completed.  Subsequent changes to metal prices, foreign exchange rates (if applicable), reclamation requirements, operating and capital costs may differ materially from these estimates.

Regulations and pending legislation involving climate change could result in increased operating costs.

Gold production is energy intensive, resulting in a significant carbon footprint. A number of governments and/or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. For example, Australia passed the Clean Energy Act in 2011 that establishes a mechanism to combat climate change by imposing a carbon tax on greenhouse gas emissions and encourages investment in clean energy.  This type of legislation and possible future legislation and increased regulation regarding climate change could impose significant costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. 

 

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

 

None.

 

ITEM 2.  PROPERTIES. 

 

The following scientific and technical disclosures about the Mt. Todd gold project and the Guadalupe de los Reyes gold/silver project have been reviewed and approved by Mr. John W. Rozelle, Senior Vice President of Vista.  Mr. Rozelle is a qualified person as defined by NI 43-101.

 

Cautionary Note to U.S. Investors:  This section and other sections of this annual report on Form 10-K contain the terms “measured mineral resources,” “indicated mineral resources,” “inferred mineral resources,” “proven mineral reserves,” and “probable mineral reserves” as defined in accordance with NI 43-101. Please note the following regarding these terms:

 

·

“Measured mineral resources” and “indicated mineral resources” – we advise U.S. investors that although these terms are recognized and required by Canadian regulations, these terms are not defined in SEC Industry Guide 7 and the SEC does not normally permit such terms to be used in reports and registration statements filed with the SEC. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.

 

·

 “Inferred mineral resources” – we advise U.S. investors that although this term is recognized by Canadian regulations, the

   


 

   

SEC does not recognize it. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or pre-feasibility study, except in rare cases. The SEC normally only permits an issuer to report mineralization that does not constitute “reserves” as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of an inferred mineral resource exists or is economically or legally minable.

 

·

“Proven mineral reserves” and “probable mineral reserves” – The definitions of proven and probable mineral reserves used in NI 43-101 differ from the definitions for “proven reserves” and “probable reserves” as found in SEC Industry Guide 7. Accordingly, our disclosures of mineral reserves herein may not be comparable to information from U.S. companies subject to reporting and disclosure requirements of the SEC.

 

Please see “Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” for further discussion on the differences between terms under NI 43-101 and SEC Industry Guide 7.

 

Cautionary Note To All Investors Concerning Economic Assessments That Include Mineral Resources: Mineral resources that are not mineral reserves have no demonstrated economic viability.

 

Units of measurement are reported in units used by the qualified person in compiling reports on a project, usually, Imperial units for properties in the U.S. and metric units for properties outside the U.S. We use the units of measurement as reported by the qualified persons in their respective reports, regardless of property location, in order to correspond to those units as reported by the qualified persons.

 

   


 

   

Mt. Todd Gold Project, Northern Territory, Australia

 

Property Description and Location

 

In 2006, we acquired the concession rights to the Mt. Todd gold project from the Deed Administrators for Pegasus Gold Australia Pty Ltd. (“Pegasus”), the government of the Northern Territory of Australia (the “NT Government”) and the Jawoyn Association Aboriginal Corporation (“JAAC”). In 2010, our agreement with the NT Government was renewed for a five-year period to 2015.  In 2014, the agreement was extended through the end of 2018. Mt. Todd was an operating mine in the late 1990’s, but the project had been closed due to bankruptcy and was held by these organizations.  The failure of the project was primarily a result of inefficiencies in the comminution circuit, poor gold recoveries and low gold prices. We hold the Mt. Todd gold project through our wholly-owned subsidiary Vista Gold Australia Pty. Ltd. (“Vista Gold Australia”).

 

Gold mineralization in the Batman deposit at the project occurs in sheeted veins within silicified greywackes/shales/siltstones.  The Batman deposit strikes north-northeast and dips steeply to the east.  Higher grade zones of the deposit plunge to the south.  The core zone is approximately 200-250 meters wide and 1.5 km long, with several hanging wall structures providing additional width to the orebody.  Mineralization is open at depth as well as along strike, although the intensity of mineralization weakens to the north and south along strike.

 

The Mt. Todd gold project is designed to be a conventional, large open-pit mining operation that will utilize large-scale mining equipment in a blast/load/haul operation.  Ore is planned to be processed in a large comminution circuit consisting of a gyratory crusher, two cone crushers, two High Pressure Grinding Roll (“HPGR”) crushers, and three ball mills as discussed in greater detail below.  Vista plans to recover gold in a conventional carbon-in-leach (“CIL”) recovery circuit.

 

The Mt. Todd gold project site was not reclaimed when the mine closed in the late 1990’s.  Liability for the reclamation environmental conditions existing prior to Vista’s involvement with the project remains the responsibility of the NT Government until 30 days after we have provided notice to the NT Government that we intend to take over and assume the management operation and rehabilitation of the Mt. Todd gold project.  Vista will not give such notice until a production decision has been made, the project is fully permitted to construct the mine, and the necessary financing for construction has been arranged

 

The Mt. Todd gold project is located 56 kilometers by road northwest of Katherine, NT, Australia, and approximately 250 kilometers southeast of Darwin.  Access is by existing paved public roads and approximately four kilometers of paved private road. We control and maintain the private paved road.

 

The area has a sub-tropical climate with a distinct wet season and dry season. The area receives most of its rainfall between the months of January and March. Temperatures are moderate, allowing for year-round mining operations. Topography is relatively flat. The tenements encompass a variety of habitats forming part of the northern Savannah woodland region, which is characterized by eucalypt woodland with tropical grass understories. Surface elevations are approximately 130 to 160 meters above sea level in the area of the previous and planned plant site and waste dump.

 

Total land holdings controlled by Vista Gold Australia are approximately 140,000 hectares. A map showing the location of the mineral licenses (“MLs”) and exploration licenses (“ELs”) and a table with a list of MLs and ELS and the holding requirements follows.    Substantially all of the estimated mineral resources at Mt. Todd are located in the Batman pit.

 

   


 

   

C:\Users\aturner\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\VR6L8E6O\MT Licenses 2014.JPG

 

   


 

   

Mt. Todd Land Holdings of Vista Gold Australia

 

 

 

 

 

 

 

 

 

 

 

 

 

License Name

Surface Area (hectares)

Location Description (UTM)

Location Date/
Grant Date

Expiration Date

 

Estimated Holding Requirements Annual Rent & Admin Fee (thousands of A$)

 

Annual Work Requirement (thousands of A$)

 

Annual Expenditure and Technical Reports Due

Mineral Licenses

 

 

 

 

 

 

 

 

 

 

MLN 1070

3,982 

Mining License Block

March 5, 1993

March 4, 2018

 

76                                  (due March 4)

 

N/A

 

May 3

MLN 1071

1,327 

centered at approximately

March 5, 1993

March 4, 2018

 

24                                    (due March 4)

 

N/A

 

May 3

MLN 1127

80 

188555E, 435665N

March 5, 1993

March 4, 2018

 

2                                       (due March 4)

 

N/A

 

May 3

Subtotals

5,389 

 

 

 

 

102 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration Licenses

Square Kms

 

 

 

 

 

 

 

 

 

EL 28321

198 

Centered at approximately 806729E, 8429210N

May 3, 2011

May 2, 2017

 

3                                      (due May 2)

 

43 

 

June 1

EL29882

556 

Centered at approximately 189100E, 84520000N

September 16, 2013

September 15, 2019

 

34                                    (due September 15)

 

33 

 

May 14

EL29886

596 

Centered at approximately 200300E, 8452000N

September 16, 2013

September 15, 2019

 

38                                    (due September 15)

 

330 

 

May 14

Subtotals

1,350 

 

 

 

 

75 

 

673 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals A$

 

 

 

 

 

177 

 

673 

 

 

Totals US$ (exchange rate of A$1.00 = $0.89 on March 5, 2014)

 

 

158 

 

602 

 

 

 

The surface land in the area of the contiguous mineral licenses and exploration licenses (excluding EL28321) is freehold land owned by the JAAC.  Because the JAAC have title to the land, such land is not part of the lands classified by the government as indigenous lands, and as a result such lands are not subject to an Indigenous Land Use Agreement. Vista has a private agreement with the JAAC for the use of and access to the land.

 

We must offer  the JAAC the opportunity to establish a joint venture with Vista holding 90% and the JAAC holding a 10% participating interest in the Mt. Todd gold project. In addition, the JAAC will be entitled to an annual cash payment, or payment in kind, equal to 1% of the value of the annual gold production from the current MLs, and a 1% NSR royalty on other metals, subject to a minimum payment of A$50 per year.

 

We are required annually to submit a Mine Management Plan that details work to be done on the property.  We have received approval for all work done on the project to date.  Further permitting will be required to continue exploration and development, and an environmental impact statement will be required before mine development can start. The related permitting processes are relatively straight-forward and are not expected to impede to a material extent our exploration and future development plans.  Any future mining will require an approved closure plan and sufficient surety bonding to fund that closure.

 

Following the bankruptcy of the previous operator in the 1990’s, most of the processing equipment and facilities were removed from the site; but basic infrastructure is still in place, including project access control point, a small shop and office, a mill building, and various concrete slabs and floors, as well as a fully functioning tailings impoundment facility that has capacity to store additional mill tailings, and a fresh water storage reservoir. In addition, a medium voltage power line supplies the site with electrical power, and a natural gas pipeline, used for power generation by the former operators, is still in place.  The Mt. Todd gold project is located sufficiently close to the city of Katherine to allow for an easy commute for workers.

 

Because the Mt. Todd gold project site was not reclaimed when the mine closed, the dumps and heap leach pad require ongoing care and maintenance, which we provide.  Precipitation on the waste dumps and heap leach pad have resulted in acid rock drainage which

   


 

   

is controlled to the extent possible through collection in retention ponds, storage, pH adjustment and controlled release of acidic or treated water into the Edith River when water levels are high enough, in accordance with the waste discharge license. 

 

Water Treatment

 

We completed the installation of a water treatment plant in 2009. The treated water was initially to be stored in the existing tailings impoundment facility, but the above average rainfall experienced in the 2010-2011 wet season raised the level of water in the tailings impoundment facility which resulted in the suspension of water treatment.  In 2011, we started pumping water from the tailings impoundment facility into the Batman pit. Following extensive chemical and toxicological testwork, in 2012 we received authorization from the NT Government to in situ treat the water stored in the Batman Pit to neutralize the acidity and to precipitate the contained metals. In February 2013, we received a waste discharge license from the NT Government that authorizes the release of treated water from the Mt. Todd gold project site during the wet season. We will have to dewater substantially all of the pit before mining operations can be started.  

 

Geology, Mineralization, and Exploration

 

The Mt. Todd gold project is situated within the southeastern portion of the Early Proterozoic Pine Creek Geosyncline. Meta-sediments, granitoids, basic intrusives, acid and intermediate volcanic rocks occur within this geological province.  Within the Mt. Todd region, the oldest outcropping rocks are assigned to the Burrell Creek Formation.  These rocks consist primarily of interbedded greywackes, siltstones, and shales of turbidite affinity, which are interspersed with the minor volcanics.  The Burrell Creek Formation is overlain by interbedded greywackes, mudstones, tuffs, minor conglomerates, mafic to intermediate volcanics and banded ironstone of the Tollis Formation.  The Burrell Creek Formation and Tollis Formation comprise the Finniss River Group.  The Finniss River Group strata have been folded about northerly trending F1 fold axes.  The folds are closed to open style and have moderately westerly dipping axial planes with some sections being overturned.  A later north-south compression event resulted in east-west trending open style upright D2 folds.  The Finniss River Group has been regionally metamorphosed to lower green schist facies.  Late and Post Orogenic granite intrusions of the Cullen Batholith occurred from 1789 Ma to 1730 Ma, and brought about local contact metamorphism to hornblende hornfels facies.

 

The Batman pit geology consists of a sequence of hornfelsed interbedded greywackes and shales with minor thin beds of felsic tuff. Bedding consistently strikes at 325 degrees, dipping 40 degrees to 60 degrees to the southwest. Northerly trending sheeted quartz sulfide veins and joints striking at 0 degrees to 20 degrees and dipping 60 degrees to the east are the major controls for mineralization in the Batman pit. The veins are 1 to 100 millimeters in thickness with an average thickness of around 8 to 10 millimeters and occur in sheets with up to 20 veins per horizontal meter. These sheeted veins are the main source of gold mineralization in the Batman pit. In general, the Batman pit extends 2,200  meters in length by 365 to 450 meters in true width and has been drill tested to a depth of 800 meters down-dip. The deposit is open along strike and at depth.

 

The mineralization within the Batman pit is directly related to the intensity of the north-south trending quartz sulfide veining.  The lithological units impact on the orientation and intensity of mineralization.  Sulfide minerals associated with the gold mineralization are pyrite, pyrrhotite and lesser amounts of chalcopyrite, bismuthinite and arsenopyrite.  Galena and sphalerite are also present, but appear to be post-gold mineralization, and are related to calcite veining in the bedding plains and the east-west trending faults and joints.  Two main styles of mineralization have been identified in the Batman pit.  These are the north-south trending vein mineralization and bedding parallel mineralization. 

 

Based on our review of the historic project files, we believe that approximately 24.6 million tonnes grading 1.06 grams gold per tonne and containing 826,000 ounces of gold were extracted between 1996 and the termination of mining in 2000. Processing was by a combination of heap leach production from oxide ore and cyanidation of sulfide ore. The remaining mineralization consists of sulfide mineralization lying below and along strike of the existing open pit, and in hanging wall structures parallel to the main zone in the existing open pit.

 

Preliminary Feasibility Study, May 2013 

 

In May 2013, we completed a pre-feasibility study (the “PFS”) at our Mt. Todd gold project in NT, Australia pursuant to NI 43-101.  The technical report was filed on SEDAR on June 28, 2013, and is entitled “NI 43-101 Technical Report - Mt. Todd Gold Project 50,000 tpd Preliminary Feasibility Study – Northern Territory, Australia” and was issued on June 28, 2013 with an effective date of May 29, 2013.

 

The PFS evaluates two development scenarios including a 50,000 tpd project that develops more of the Mt. Todd resource (the “Base Case”) and generates a larger Net Present Value (“NPV”) and a smaller and higher-grade 33,000 tpd project that focuses on maximizing return and operating margins (the “Alternate Case”). 

   


 

   

Highlights of the 50,000 tpd Base Case include:

·

estimated measured and indicated categories of 7.40 million ounces of gold (280 million tons at 0.82 g Au/t) and estimated proven and probable reserves of 5.90 million ounces of gold (223 million tonnes at 0.82 g Au/t) at a cut-off grade of 0.40 g Au/t (1);

·

average annual production of 369,850 ounces of gold per year over the mine life, including average annual production of 481,316 ounces of gold per year during the first five years of operations;

·

life of mine average cash costs of $773 per ounce, including average cash costs of $662 per ounce during the first five years of operations;

·

a 13 year operating life;

·

after-tax NPV5% of $591.3 million and internal rate of return of 15.9% at $1,450 per ounce gold prices, increasing to $876.6 million and 21.1%, respectively, at $1,600 per ounce gold prices; and

·

initial capital requirements of $1,046 million.

Highlights of the 33,000 tpd Alternate Case include:

·

estimated proven and probable reserves of 3.56 million ounces of gold (124 million tonnes at 0.90 g Au/t) at a cut-off grade of 0.45 g Au/t(1);

·

average annual production of 262,826 ounces of gold per year over the mine life, including average annual production of 294,502 ounces of gold per year during the first five years of operations;

·

life of mine average cash costs of $684 per ounce, including average cash costs of $676 per ounce during the first five years of operations;

·

an 11 year operating life;

·

after-tax NPV5% of $440.2 million and internal rate of return of 16.9% at $1,450 per ounce gold prices, increasing to $615.6 million and 21.4%, respectively, at $1,600 per ounce gold prices; and 

·

Initial capital requirements of $761 million.

(1)

Cautionary note to U.S. investors:  Proven and probable reserves are estimated in accordance with NI 43-101 and do not constitute SEC Industry Guide 7 compliant reserves see the section heading “Cautionary Note to United States Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” above.

Base Case Scenario Presented in PFS

Highlights of the PFS Base Case scenario are presented in the table below:

 

 

 

 

 

 

 

 

 

 

Base Case (50,000 tpd) @ $1,450/oz Au

 

Years 1-5

 

Life of Mine ("LOM") (13 years)

 

 

Annual Average

 

Total

 

Annual Average

 

Total

Average Milled Grade (g/t)

 

1.03

 

0.82

Payable Gold (000's ozs)

 

481

 

2,407

 

370

 

4,808

Gold Recovery

 

82.0%

 

81.5%

Cash Costs ($/oz)

 

$662

 

$773

Strip Ratio (waste:ore)

 

2.5

 

2.7

Initial Capital ($ millions)

 

 

 

 

 

$1,046

Pre-tax NPV 5% ($ millions)

 

 

 

 

 

$1,094

After-tax NPV 5% ($ millions)

 

 

 

 

 

$591

IRR (Pre-tax/After-tax)

 

 

 

 

 

21.8% / 15.9%

After-tax Payback (Production Years)

 

 

 

 

 

3.5

    Note: Economics presented using $1,450/oz gold and a flat $1.00 USD : $1.00 AUD exchange rate and assumes deferral of certain Territory tax obligations as well as realization of equipment salvage values at the end of the mine life.

The following table provides additional details of the Mt. Todd gold project’s Base Case economics at variable gold price and Australian dollar assumptions:

   


 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After-Tax NPV 5%, in Millions

 

Base Case (50,000 tpd) Gold Price per Ounce

ForEx USD/AUD

 

$1,200

 

$1,300

 

$1,400

 

$1,450

 

$1,500

 

$1,600

 

$1,700

 

$1,800

USD$1.10

 

($51.4)

 

$155.9

 

$352.1

 

$448.4

 

$543.8

 

$734.5

 

$924.9

 

$1,114.1

USD$1.00

 

$108.1

 

$304.5

 

$496.1

 

$591.3

 

$686.6

 

$876.6

 

$1,065.6

 

$1,255.1

USD$0.90

 

$258.5

 

$448.3

 

$638.8

 

$733.6

 

$828.3

 

$1,017.2

 

$1,206.5

 

$1,395.9

USD$0.80

 

$400.6

 

$591.0

 

$780.0

 

$874.4

 

$968.9

 

$1,157.9

 

$1,347.2

 

$1,536.1

    Note: Changes in Foreign Exchange rates are only applied to operating costs and not applied to either initial or sustaining capital costs.

Base Case key capital expenditures for initial and sustaining capital requirements are identified in the following table:

 

 

 

 

 

 

 

 

 

 

Capital Expenditures ($ Millions)

 

 

 

 

 

Initial

 

Sustaining

Base Case (50,000) tpd)

 

 

 

 

 

Capital

 

Capital

Capitalized Stripping & Dewatering

 

 

 

 

 

$57

 

$40

Mobile Equipment

 

 

 

 

 

$139

 

$151

Process Facility

 

 

 

 

 

$410

 

 -

Tailings

 

 

 

 

 

$20

 

$184

Power Plant

 

 

 

 

 

$91

 

 -

Water Supply & Treatment

 

 

 

 

 

$19

 

 -

Owners Cost

 

 

 

 

 

$203

 

($10)

Sub-Total

 

 

 

 

 

$938

 

$366

Contingency

 

 

 

 

 

$107

 

$23

Salvage Value

 

 

 

 

 

 

 

($124)

Mine Closure

 

 

 

 

 

$1

 

$94

Total Capital

 

 

 

 

 

$1,046

 

$359

Total Capital per payable ounce gold

 

 

 

 

 

$218

 

$75

    Note: Amounts may not add due to rounding.  The negative value in the sustaining capital category of the owners' cost line is the recapture of the cash component of the project's cash reclamation bond, which is spend as cash under the Mine Closure category.

The following table presents a breakdown of Base Case operating costs. The project includes a 76MW gas-fired power plant in the initial capital.  The Base Case project consumes all power generated during the operating life. Self-generated power creates significant savings in operating costs compared to a grid-sources power solution. During the four years of reclamation and closure, the PFS assumes we will continue to generate power and will sell that power into the NT electrical grid, for which there is a known market and indicative purchase rates have been provided by the government-owned utility. 

 

 

 

 

 

 

 

 

 

 

Operating Cost - Base Case (50,000 tpd)

 

First 5 Years

 

LOM Cost

 

 

Per tonne processed

 

Per ounce

 

Per tonne processed

 

Per ounce

Mining

 

$8.18

 

$302.30

 

$6.95

 

$321.88

Processing

 

$8.71

 

$321.47

 

$8.78

 

$406.86

Site General and Administrative

 

$0.49

 

$18.27

 

$0.50

 

$22.94

Jawoyn Royalty

 

$0.39

 

$14.50

 

$0.31

 

$14.50

Water Treatment

 

$0.07

 

$2.60

 

$0.10

 

$3.39

Refining Costs

 

$0.09

 

$3.19

 

$0.07

 

$3.19

Power Credit

 

 -

 

 -

 

 -

 

 -

Total Cash Costs

 

$17.93

 

$662.06

 

$16.70

 

$772.76

   Note: Jawoyn Royalty and Refining Costs calculated at $1,450 per ounce of gold.  Amounts may not add due to rounding.

The 50,000 tpd Base Case mine plan contains plan contains 209.5 million tonnes of material mined from the Batman open pit plus 13.4 million tonnes of material from the existing heap leach pad that is processed through the mill at the end of the mine life.  Together, 222.8 million tonnes of material containing 5.901 million ounces of gold at an average grade of 0.82 g Au/t are processed over the 13 year operating life.  Total gold recovered is expected to be 4.808 million ounces.  Average annual gold production over the life of mine is 369,850 ounces, averaging 481,316 ounces during the first five years of operations, with 580,472 ounces produced in the first year of operations.  Commercial production would begin following two years of construction and commissioning.

   


 

   

The following table highlights the Base Case production schedule:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years

 

Ore Mined (kt)

 

Waste mined (kt)

 

Strip Ratio (W:O)

 

Milled Ore (kt)

 

Milled Grade (g/t)

 

Contained Ounces (kozs)

 

Mill Production (kozs)

(1)

 

11,764 

 

24,761 

 

2.1 

 

 -

 

 -

 

 -

 

 -

1

 

28,101 

 

33,803 

 

1.2 

 

17,799 

 

1.24 

 

708 

 

580 

2

 

20,983 

 

55,290 

 

2.6 

 

17,750 

 

0.92 

 

525 

 

430 

3

 

23,941 

 

78,227 

 

3.3 

 

17,750 

 

1.07 

 

613 

 

502 

4

 

18,285 

 

71,608 

 

3.9 

 

17,750 

 

0.82 

 

471 

 

386 

5

 

29,066 

 

58,329 

 

2.0 

 

17,799 

 

1.08 

 

620 

 

508 

6

 

7,561 

 

71,279 

 

9.4 

 

17,750 

 

0.71 

 

408 

 

334 

7

 

4,777 

 

54,405 

 

11.4 

 

17,750 

 

0.55 

 

312 

 

256 

8

 

7,078 

 

45,482 

 

6.4 

 

17,750 

 

0.53 

 

301 

 

247 

9

 

10,700 

 

38,710 

 

3.6 

 

17,799 

 

0.57 

 

325 

 

266 

10

 

24,331 

 

27,864 

 

1.1 

 

17,750 

 

0.83 

 

473 

 

388 

11

 

22,861 

 

2,592 

 

0.1 

 

17,750 

 

1.14 

 

653 

 

535 

12

 

 -

 

 -

 

 -

 

17,750 

 

0.57 

 

324 

 

258 

13

 

 -

 

 -

 

 -

 

9,659 

 

0.54 

 

168 

 

117 

Total

 

209,451 

 

562,349 

 

2.7 

 

222,805 

 

0.82 

 

5,901 

 

4,808 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Note: Amounts may not add due to rounding.  Total milled ore includes material from the heap leach pad that is processed at the end of the mine life.

 

 

The table below illustrates the updated reserve and resource estimate for the Project.  The effective date of the Batman deposit resource estimate is March 18, 2013.  The effective date of the heap leach resource estimate is May 29, 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mt. Todd Gold Project Reserves, Base Case (50,000 tpd) 0.40 g Au/t cut-off.  Reserves calculated at $1,360 per ounce of gold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Batman Deposit

 

Heap Leach Pad

 

Quigleys Deposit

 

Total

 

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

Proven

 

72,495 

 

0.88 

 

2,057 

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

72,495 

 

0.88 

 

2,057 

Probable

 

136,955 

 

0.82 

 

3,612 

 

13,354 

 

0.54 

 

232 

 

 -

 

 -

 

 -

 

150,309 

 

0.80 

 

3,844 

Total

 

209,451 

 

0.84 

 

5,669 

 

13,354 

 

0.54 

 

232 

 

 -

 

 -

 

 -

 

222,805 

 

0.82 

 

5,901 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mt. Todd Gold Project Resources Base Case (50,000 tpd)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Batman Deposit

 

Heap Leach Pad

 

Quigleys Deposit

 

Total

 

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

 

Tonnes (000s)

 

Grade (g/t)

 

Contained Ounces

Measured

 

77,793 

 

0.88 

 

2,193 

 

 -

 

 -

 

 -

 

571 

 

0.98 

 

18 

 

78,364 

 

0.88 

 

2,211 

Indicated

 

201,792 

 

0.80 

 

5,209 

 

13,354 

 

0.54 

 

232 

 

6,868 

 

 

181 

 

222,014 

 

0.79 

 

5,622 

Total

 

279,585 

 

0.82 

 

7,401 

 

13,354 

 

0.54 

 

232 

 

7,439 

 

0.83 

 

199 

 

300,378 

 

0.81 

 

7,832 

Inferred

 

72,458 

 

0.74 

 

1,729 

 

 -

 

 -

 

 -

 

11,767 

 

0.85 

 

320 

 

84,225 

 

0.76 

 

2,049 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Note: Measured and indicated resources include proven and probable reserves.  Batman and Quigleys resources are estimated at a 0.40g Au/t cut-off grade.  Heap leach resources are the average grade of the heap, no cut-off applied.  Economic analysis conducted on proven and probable reserves.

 

Cautionary note to U.S. investors:  Proven and probable reserves are estimated in accordance with NI 43-101 and do not constitute SEC Industry Guide 7 compliant reserves see the section heading “Cautionary Note to United States Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” above.

   


 

   

Alternative Case Scenario Presented in PFS

The key differences between the Base Case and the alternative case include:

·

a 33,000 tpd processing facility versus a 50,000 tpd facility in the Base Case with associated lower mining rates and a smaller fleet; and

·

an ultimate pit design based on a reserve pit shell of $925/oz versus $1,360/oz in the Base Case and the application of a higher cut-off grade (0.45g Au/t versus 0.40g Au/t).

Highlights of the PFS alternative case scenario are presented in the table below:

 

 

 

 

 

 

 

 

 

 

Alternate Case (33,000 tpd) @ $1,450/oz Au

 

Years 1-5

 

LOM (11 years)

 

 

Annual Average

 

Total

 

Annual Average

 

Total

Average Milled Grade (g/t)

 

0.95

 

0.90

Payable Gold (000's ozs)

 

295

 

1,473

 

263

 

2,891

Gold Recovery

 

82.0%

 

81.2%

Cash Costs ($/oz)

 

$676

 

$684

Strip Ratio (waste:ore)

 

2.1

 

2

Initial Capital ($ millions)

 

 

 

 

 

$761

Pre-tax NPV 5% ($ millions)

 

 

 

 

 

$777

After-tax NPV 5% ($ millions)

 

 

 

 

 

$440

IRR (Pre-tax/After-tax)

 

 

 

 

 

22.1% / 16.9%

After-tax Payback (Production Years)

 

 

 

 

 

3.2

    Note: Economics presented using $1,450/oz gold and a flat $1.00 USD : $1.00 AUD exchange rare and assumes deferral of certain Territory tax obligations as well as realization of equipment salvage values at the end of the mine life.

The following table provides additional details of the project’s alternative case economics at variable gold price and Australian dollar assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

After-Tax NPV 5%, in Millions

 

Base Case (50,000 tpd) Gold Price per Ounce

ForEx USD/AUD

 

$1,200

 

$1,300

 

$1,400

 

$1,450

 

$1,500

 

$1,600

 

$1,700

 

$1,800

USD$1.10

 

$58.5

 

$187.2

 

$305.1

 

$363.2

 

$421.5

 

$538.2

 

$655.5

 

$773.2

USD$1.00

 

$146.4

 

$265.6

 

$381.9

 

$440.2

 

$498.5

 

$615.6

 

$733.2

 

$850.9

USD$0.90

 

$225.6

 

$342.4

 

$458.8

 

$517.1

 

$575.8

 

$693.2

 

$810.9

 

$928.6

USD$0.80

 

$303.3

 

$419.3

 

$535.9

 

$594.6

 

$653.2

 

$770.9

 

$888.6

 

$1,006.3

    Note: Changes in Foreign Exchange rates are only applied to operating costs and not applied to either initial or sustaining capital costs.

Alternate Case key capital expenditures for initial and sustaining capital requirement are identified in the table below:

 

 

 

 

 

 

 

 

 

 

Capital Expenditures ($ Millions)

 

 

 

 

 

Initial

 

Sustaining

Alternative Case (33,000) tpd)

 

 

 

 

 

Capital

 

Capital

Capitalized Stripping & Dewatering

 

 

 

 

 

$24

 

$38

Mobile Equipment

 

 

 

 

 

$77

 

$73

Process Facility

 

 

 

 

 

$310

 

 -

Tailings

 

 

 

 

 

$19

 

$86

Power Plant

 

 

 

 

 

$64

 

 -

Water Supply & Treatment

 

 

 

 

 

$11

 

 -

Owners Cost

 

 

 

 

 

$75

 

($14)

Sub-Total

 

 

 

 

 

$680

 

$183

Contingency

 

 

 

 

 

$80

 

$11

Salvage Value

 

 

 

 

 

 -

 

($77)

Mine Closure

 

 

 

 

 

$1

 

$94

Total Capital

 

 

 

 

 

$761

 

$211

Total Capital per payable ounce gold

 

 

 

 

 

$263

 

$73

   


 

   

    Note: Amounts may not add due to rounding.  The negative value in the sustaining capital category of the owners' cost line is the recapture of the cash component of the project's cash reclamation bond, which is spend as cash under the Mine Closure category.

 

The following table presents a breakdown of Alternate Case operating costs.  The Alternate Case project includes a 58MW gas-fired power plant in initial capital.  During the operating life, the power plant generates excess power and Vista has assumed a power credit against operating costs.  Additionally, during the four years of reclamation and closure, Vista intends to generate and sell power into the NT electrical grid, for which there is a known market and indicative purchase rates have been provided by the government-owned utility.

 

 

 

 

 

 

 

 

 

Operating Cost - Alternate Case (33,000 tpd)

 

First 5 Years

 

LOM Cost

 

 

Per tonne processed

 

Per ounce

 

Per tonne processed

 

Per ounce

Mining

 

$6.55

 

$260.99

 

$5.49

 

$234.75

Processing

 

$9.37

 

$373.32

 

$9.51

 

$406.86

Site General and Administrative

 

$0.74

 

$29.42

 

$0.74