10-Q 1 vgz-20190630x10q.htm 10-Q vgz_Current_Folio_10Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

 

 

 

 

 

   

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

For the quarterly period ended June 30, 2019

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)

 

 

 

 

 

 

 

British Columbia

   

98-0542444

(State or other jurisdiction of incorporation or organization)

   

(I.R.S. Employer Identification No.)

 

   

 

7961 Shaffer Parkway, Suite 5

   

   

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:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Shares, no par value

 

VGZ

 

NYSE American

 

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 ☒No

 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes No

 

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

 

Large Accelerated Filer    Accelerated Filer Non-Accelerated Filer

Smaller Reporting Company   Emerging Growth Company     

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 100,537,541 common shares, without par value, outstanding as of July 19, 2019.

 

 

2

 

 

 

PART I

 

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

 

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 

 

December 31, 

 

 

    

2019

    

2018

 

Assets:

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,315

 

$

1,071

 

Short-term investments (Note 3)

 

 

5,009

 

 

6,997

 

Other investments, at fair value (Note 3)

 

 

3,745

 

 

5,462

 

Other current assets

 

 

325

 

 

540

 

Total current assets

 

 

10,394

 

 

14,070

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

Mineral properties (Note 4)

 

 

2,146

 

 

2,421

 

Plant and equipment, net (Note 5)

 

 

5,649

 

 

5,635

 

Right-of-use assets (Note 2)

 

 

126

 

 

 —

 

Total non-current assets

 

 

7,921

 

 

8,056

 

Total assets

 

$

18,315

 

$

22,126

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity:

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

93

 

$

195

 

Accrued liabilities and other

 

 

505

 

 

435

 

Provision for environmental liability

 

 

240

 

 

242

 

Total current liabilities

 

 

838

 

 

872

 

Non-current liabilities:

 

 

 

 

 

 

 

Deferred option gain (Note 4)

 

 

1,392

 

 

 —

 

Lease liability (Note 2)

 

 

40

 

 

 —

 

Total non-current liabilities

 

 

1,432

 

 

 —

 

Total liabilities

 

 

2,270

 

 

872

 

 

 

 

 

 

 

 

 

Commitments and contingencies – (Note 7)

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common shares, no par value - unlimited shares authorized; shares outstanding: 2019 - 100,537,541 and 2018 - 100,268,161 (Note 6)

 

 

457,425

 

 

456,938

 

Accumulated deficit

 

 

(441,380)

 

 

(435,684)

 

Total shareholders’ equity

 

 

16,045

 

 

21,254

 

Total liabilities and shareholders’ equity

 

$

18,315

 

$

22,126

 

 

Approved by the Board of Directors

 

Racy A. S

 

 

 

 

 

/s/ Tracy A. Stevenson

Tracy A. Stevenson

Director

/s/ John M. Clark

John M. Clark

Director

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

 

 

3

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 

 

 

2019

    

2018

    

2019

    

2018

    

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration, property evaluation and holding costs

 

$

(947)

 

$

(1,055)

 

$

(1,893)

 

$

(2,600)

 

Corporate administration

 

 

(1,067)

 

 

(888)

 

 

(2,214)

 

 

(2,311)

 

Depreciation and amortization

 

 

(14)

 

 

(12)

 

 

(26)

 

 

(240)

 

Total operating expense

 

 

(2,028)

 

 

(1,955)

 

 

(4,133)

 

 

(5,151)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/gain on other investments (Note 3)

 

 

(1,093)

 

 

 —

 

 

(1,717)

 

 

2,028

 

Interest income

 

 

34

 

 

68

 

 

76

 

 

250

 

Other income/(expense)

 

 

43

 

 

(36)

 

 

78

 

 

 2

 

Total non-operating income/(expense)

 

 

(1,016)

 

 

32

 

 

(1,563)

 

 

2,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(3,044)

 

 

(1,923)

 

 

(5,696)

 

 

(2,871)

 

Net loss

 

$

(3,044)

 

$

(1,923)

 

$

(5,696)

 

$

(2,871)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$

(3,044)

 

$

(1,923)

 

$

(5,696)

 

$

(2,871)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

100,537,541

 

 

99,547,531

 

 

100,431,813

 

 

99,496,641

 

Net loss per share

 

$

(0.03)

 

$

(0.02)

 

$

(0.06)

 

$

(0.03)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

100,537,541

 

 

99,547,531

 

 

100,431,813

 

 

99,496,641

 

Net loss per share

 

$

(0.03)

 

$

(0.02)

 

$

(0.06)

 

$

(0.03)

 

 

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

 

4

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other

 

Total

 

 

 

Common

 

 

 

Accumulated

 

comprehensive

 

shareholders’

 

 

    

shares

    

Amount

    

deficit

    

income/(loss)

    

equity

 

Balances at April 1, 2018

 

99,539,949

 

$

456,352

 

$

(427,918)

 

$

 —

 

$

28,434

 

Shares issued (exercise of stock options)
(Note 6)

 

30,000

 

 

16

 

 

 —

 

 

 —

 

 

16

 

Stock-based compensation (Note 6)

 

 —

 

 

246

 

 

 —

 

 

 —

 

 

246

 

Net loss

 

 —

 

 

 —

 

 

(1,923)

 

 

 —

 

 

(1,923)

 

Balances at June 30, 2018

 

99,569,949

 

$

456,614

 

$

(429,841)

 

$

 —

 

$

26,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at April 1, 2019

 

100,537,541

 

$

457,009

 

$

(438,336)

 

$

 —

 

$

18,673

 

Stock-based compensation (Note 6)

 

 —

 

 

416

 

 

 —

 

 

 —

 

 

416

 

Net loss

 

 —

 

 

 —

 

 

(3,044)

 

 

 —

 

 

(3,044)

 

Balances at June 30, 2019

 

100,537,541

 

$

457,425

 

$

(441,380)

 

$

 —

 

$

16,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other

 

Total

 

 

 

Common

 

 

 

Accumulated

 

comprehensive

 

shareholders’

 

 

 

shares

    

Amount

    

deficit

    

income/(loss)

    

equity

 

Balances at December 31, 2017

 

99,412,007

 

$

456,053

 

$

(426,968)

 

$

(2)

 

$

29,083

 

Cumulative adjustment related to Accounting Standard Update 2016-01

 

 —

 

 

 —

 

 

(2)

 

 

 2

 

 

 —

 

Adjusted balances at January 1, 2018

 

99,412,007

 

 

456,053

 

 

(426,970)

 

 

 —

 

 

29,083

 

Shares issued (RSUs vested, net of shares
withheld) (Note 6)

 

127,942

 

 

(39)

 

 

 —

 

 

 —

 

 

(39)

 

Shares issued (exercise of stock options)

 

30,000

 

 

16

 

 

 —

 

 

 —

 

 

16

 

Stock-based compensation (Note 6)

 

 —

 

 

584

 

 

 —

 

 

 —

 

 

584

 

Net loss

 

 —

 

 

 —

 

 

(2,871)

 

 

 —

 

 

(2,871)

 

Balances at June 30, 2018

 

99,569,949

 

$

456,614

 

$

(429,841)

 

$

 —

 

$

26,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2019

 

100,268,161

 

$

456,938

 

$

(435,684)

 

$

 —

 

$

21,254

 

Shares issued (RSUs vested, net of shares
withheld) (Note 6)

 

142,380

 

 

(46)

 

 

 —

 

 

 —

 

 

(46)

 

Shares issued (exercise of stock options)
(Note 6)

 

127,000

 

 

66

 

 

 —

 

 

 —

 

 

66

 

Stock-based compensation (Note 6)

 

 —

 

 

467

 

 

 —

 

 

 —

 

 

467

 

Net loss

 

 —

 

 

 —

 

 

(5,696)

 

 

 —

 

 

(5,696)

 

Balances at June 30, 2019

 

100,537,541

 

$

457,425

 

$

(441,380)

 

$

 —

 

$

16,045

 

 

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

 

5

 

 

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 

 

    

2019

 

2018

    

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(5,696)

 

$

(2,871)

 

Adjustments to reconcile net loss for the period to net cash used in operations:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

26

 

 

240

 

Stock-based compensation

 

 

467

 

 

584

 

(Gain)/loss on other investments

 

 

1,717

 

 

(2,028)

 

Change in working capital account items:

 

 

 

 

 

 

 

Other current assets

 

 

89

 

 

389

 

Provision for environmental liability

 

 

(2)

 

 

 —

 

Accounts payable, accrued liabilities and other

 

 

 8

 

 

(1,309)

 

Net cash used in operating activities

 

 

(3,391)

 

 

(4,995)

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Proceeds from sales of marketable securities

 

 

 —

 

 

64

 

Disposition of short-term investments, net of acquisitions

 

 

1,988

 

 

6,166

 

Additions to plant and equipment

 

 

(40)

 

 

(45)

 

Proceeds from option/sale agreements, net

 

 

1,667

 

 

 —

 

Net cash provided by investing activities

 

 

3,615

 

 

6,185

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Payment of taxes from withheld shares

 

 

(46)

 

 

(39)

 

Proceeds from exercise of stock options

 

 

66

 

 

16

 

Net cash provided by / (used in) financing activities

 

 

20

 

 

(23)

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

244

 

 

1,167

 

Cash and cash equivalents, beginning of period

 

 

1,071

 

 

1,431

 

Cash and cash equivalents, end of period

 

$

1,315

 

$

2,598

 

 

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

 

 

6

VISTA GOLD CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

 

1. Nature of Operations and Basis of Presentation

 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Company,” “we,” “our,” or “us”) operate in the gold mining industry. We are focused on 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, leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration. We undertake programs designed to improve the value of our gold projects through exploration drilling and/or technical studies focused on optimizing previous engineering work. 

 

The Company’s flagship asset is its 100% owned Mt Todd gold project (“Mt Todd” or the “Project”) in the Northern Territory, Australia. Mt Todd is the largest undeveloped gold project in Australia. In January 2018, the Company received authorization for the last major environmental permit for Mt Todd and announced the positive results of an updated preliminary feasibility study (“PFS”) for Mt Todd. Subsequently, we announced additional metallurgical testing results that demonstrated improved gold recovery compared to the PFS and ongoing fine grinding and leach recovery tests are demonstrating that further improvements in gold recovery may be possible. Vista plans to integrate these and other improvements in a new update to the PFS, scheduled for release in the coming months.

 

The Company also holds 7.8 million common shares of Midas Gold Corp. (“Midas Gold Shares”), a non-core project in Mexico subject to a third-party option agreement, and royalty interests in the United States and Indonesia. 

 

The interim Condensed Consolidated Financial Statements (“interim statements”) of the Company are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with the Company’s Consolidated Financial Statements for the year ended December 31, 2018 as filed with the United States Securities and Exchange Commission and Canadian securities regulatory authorities in February 2019 on Form 10-K. The year-end balance sheet data was derived from audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by United States generally accepted accounting principles have been condensed or omitted. 

 

References to A$ are to Australian dollars and $ are to United States dollars.

 

2.  Significant Accounting Policies

 

Lease Accounting

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company adopted the standard on January 1, 2019 using the modified retrospective approach.  We recognized additional operating liabilities of $186 on adoption, with corresponding ROU assets of the same amount, based on the present value of the remaining lease payments. Adoption of the standard did not affect lease classification or expense recognition. The Company does not include short term leases in its ROU and lease liability calculations. As of June 30, 2019, the ROU asset was $126 and the lease liability was $126, comprised of $86 in accrued liabilities and other, and $40 in non-current liabilities. The Company’s leases had remaining terms ranging from 0.5 to 2.5 years as of June 30, 2019.

 

7

 

3. Short-term and Other Investments

 

Short-term investments

 

As of June 30,  2019 and December 31, 2018, the amortized cost basis of our short-term investments was $5,009 and $6,997, respectively. The amortized cost basis approximates fair value at June  30, 2019 and December 31, 2018. Short-term investments at June 30, 2019 and December 31, 2018 were comprised of U.S. government treasury bills and/or notes, all of which have maturity dates on the date of purchase greater than 90 days but less than one year. 

 

Other investments - Midas Gold Shares 

 

The investment in Midas Gold Shares was recorded at fair value in the Condensed Consolidated Balance Sheets. Subsequent changes in fair value are recorded in the Condensed Consolidated Statements of Comprehensive Income/(Loss) in the period in which they occur. 

 

As of June 30, 2019 and December 31, 2018, the Company held 7,802,615 shares of Midas Gold valued at $3,745 and $5,462 respectively. The unrealized loss on these shares was $1,093 and $1,717 for the three and six months ending June 30, 2019, respectively. The unrealized gain on these shares was $- and $2,028 for the three and six months ending June 30, 2018, respectively.

 

 

 

 

4. Mineral Properties

 

 

 

 

 

 

 

 

 

 

    

At June 30, 2019

    

At December 31, 2018

 

Mt Todd, Australia

 

$

2,146

 

$

2,146

 

Guadalupe de los Reyes, Mexico

 

 

 —

 

 

275

 

 

 

$

2,146

 

$

2,421

 

 

During October 2017, we entered into an agreement (the “Option Agreement”) to option our interest in the Guadalupe de los Reyes gold and silver project in Sinaloa, Mexico (the “GdlR Project”) to Minera Alamos Inc. and its subsidiary Minera Alamos de Sonora S.A. de C.V. (“Minera Alamos”). In June 2019, the Option Agreement was assigned from Minera Alamos to ePower Metals Inc. (“ePower”) by way of assignment agreement (the “Assignment Agreement”), with our consent. Completion of the Assignment Agreement is subject to a number of conditions. The Assignment Agreement provides that in certain circumstances, the rights under the Option Agreement will revert from ePower to Minera Alamos.

 

Pursuant to the terms of the Option Agreement and the Assignment Agreement, we granted Minera Alamos or ePower, as applicable, (the “GdlR Optionholder”) an exclusive right and option right to earn a 100% interest in the GdlR Project by:

·

making payments totaling $6,000, comprised of a payment of $1,500 made at the execution of the Option Agreement (the “Option Grant Date”); two successive payments of $1,500 each to be made at the one-year and two-year anniversaries of the Option Grant Date; and a final $1,500 payment to be made before the four-year anniversary of the Option Grant Date;

 

·

maintaining the concessions comprising the GdlR Project in good standing;

 

·

fulfilling all obligations to the Ejido La Tasajera (the “Ejido”) as set out in the temporary occupation contract between us and the Ejido;

 

·

granting us a capped net smelter return royalty (“NSR”) on production from open pit mining (the “Open Pit NSR”) at rates that range from 1% (at gold prices of $1,400/oz or less) to a maximum of 2% (at gold prices above $1,600/oz) up to an aggregate of $2,000 in royalty payments;

 

8

·

granting us a perpetual NSR on production from underground mining (the “Underground NSR”) at rates that range from 1% (at gold prices of $1,400/oz or less) to a maximum of 2% (at gold prices above $1,600/oz); and

 

·

granting us the right to assume a 49% non-carried interest in an underground project if GdlR Optionholder decides to develop an underground mine at the GdlR Project (the “Back-in Right”).

 

The Option Agreement provides that all cash payments are non-refundable and optional to the GdlR Optionholder, and in the event the GdlR Optionholder fails to pay any of the required amounts as set out in the Option Agreement, or fails to comply with its other obligations, the Option Agreement will terminate and the GdlR Optionholder will have no interest in the GdlR Project. Provided it is not in breach of the Option Agreement, the GdlR Optionholder may, at its discretion, accelerate the above payment schedule. 

 

Subject to the GdlR Optionholder timely making all the option payments, and fulfilling its other obligations with respect to the Option Agreement, we will transfer 100% of the shares of the Company’s 100% owned subsidiary Minera Gold Stake S.A. de C.V., the entity which owns the GdlR Project, to the GdlR Optionholder and the Open-Pit NSR and Underground NSR will be granted to us.

 

If the GdlR Optionholder discovers and decides to develop an underground mine at the GdlR Project and we exercise the Back-in Right, we and the GdlR Optionholder have agreed to form a joint venture to develop and operate the underground mine. If the joint venture is formed, the Underground NSR will terminate.

 

In October 2018, the Company agreed to extend the due date for the second $1,500 option payment for the GdlR Project by six months to April 23, 2019, at which time the payment was made. As consideration for the deferral, the Company received an additional $150 in cash, $50 paid on October 24, 2018 and $100 paid on January 23, 2019. In addition, Minera Alamos paid interest of $67 at a rate of 1.5% per month on the unpaid balance of the $1,500 payment beginning January 24, 2019.

 

The Company has determined that control of the GdlR Project has not been transferred for accounting purposes. Therefore, the first option payment of $1,500 received in October 2017 and the $150 for extension of the second option payment were accounted for as a  reduction to carrying value. Receipt of the second option payment of $1,500 and interest of $67 during April 2019 reduced the carrying value to zero and resulted in recognition of $1,392 as a deferred option gain. In addition, potential royalty revenue and future option payments have not been recognized for accounting purposes.  

 

5.  Plant and Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019

 

December 31, 2018

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

    

Cost

    

depreciation

    

Net

    

Cost

    

depreciation

    

Net

  

Mt Todd, Australia

 

$

5,238

 

$

5,089

 

$

149

 

$

5,197

 

$

5,062

 

$

135

 

Corporate, United States

 

 

333

 

 

333

 

 

 —

 

 

333

 

 

333

 

 

 —

 

Used mill equipment, Canada

 

 

5,500

 

 

 —

 

 

5,500

 

 

5,500

 

 

 —

 

 

5,500

 

 

 

$

11,071

 

$

5,422

 

$

5,649

 

$

11,030

 

$

5,395

 

$

5,635

 

 

9

6. Common Shares

 

Warrants

 

Outstanding warrants are summarized in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

 

 

average

 

average

 

 

 

 

 

 

Warrants

 

exercise price

 

remaining life

 

 

 

 

 

    

outstanding

    

per share

    

(yrs.)

    

Intrinsic value

  

As of December 31, 2017

 

6,514,625

 

$

1.92

 

1.6

 

$

 —

 

As of December 31, 2018

 

6,514,625

 

$

1.92

 

0.6

 

$

 —

 

As of June 30, 2019

 

6,514,625

 

$

1.92

 

0.1

 

$

 —

 

 

These warrants expire in August 2019.

 

Stock-Based Compensation

 

Under the Company’s stock option plan (the “Plan”), we may grant options to purchase common shares in the capital of the Company (“Common Shares”) to our directors, officers, employees and consultants. The maximum number of Common Shares that may be reserved for issuance under the Plan, together with all other stock-based compensation arrangements, which include restricted share units (“RSUs”) currently outstanding under the Company’s long term equity incentive plan (“LTIP”) and deferred share units (“DSUs”) issuable pursuant to the Company’s deferred share unit plan (“DSU Plan”), is a variable number equal to 10% of the issued and outstanding Common Shares on a non-diluted basis at any one time. In 2018, the Company issued phantom units to be settled in cash. Options, RSUs, DSUs, and phantom units are granted from time to time at the discretion of the Board of Directors of the Company (the “Board”), with vesting periods and other terms as determined by the Board.

 

Stock-based compensation expense for the three and six months ended June 30, 2019 and 2018 is as follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 

 

    

2019

    

2018

    

2019

    

2018

    

Stock options

 

$

81

 

$

54

 

$

131

 

$

200

 

Restricted stock units

 

 

126

 

 

192

 

 

127

 

 

384

 

Deferred share units

 

 

209

 

 

 —

 

 

209

 

 

 —

 

 

 

$

416

 

$

246

 

$

467

 

$

584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Phantom units

 

$

22

 

$

 —

 

$

44

 

$

 —

 

 

As of June 30, 2019, unrecognized compensation expense for stock options, RSUs, and phantom units was $132,  $569, and $134, respectively, which is expected to be recognized over weighted average periods of 1.0,  1.5,  and 1.0 years, respectively.   

 

10

Stock Options

 

A summary of options under the Plan as of June 30, 2019 is set forth in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

 

 

 

 

Weighted average

 

remaining

 

Aggregate

 

 

 

Number of

 

exercise price

 

contractual term

 

intrinsic

 

 

    

options

    

per option

    

(years)

    

value

 

Outstanding - December 31, 2017

 

1,144,500

    

 

0.42

 

1.15

 

$

346

 

Granted

 

1,142,000

 

 

0.71

 

 

 

 

 

 

Exercised

 

(218,600)

 

 

0.39

 

 

 

 

36

 

Cancelled/Forfeited

 

(748,751)

 

 

0.36

 

 

 

 

 —

 

Outstanding - December 31, 2018

 

1,319,149

    

$

0.71

 

3.84

 

$

 1

 

Granted

 

350,000

 

 

0.73

 

 

 

 

 

 

Exercised

 

(127,000)

 

 

0.52

 

 

 

 

29

 

Cancelled/Forfeited

 

(149)

 

 

0.52

 

 

 

 

 —

 

Outstanding - June 30, 2019

 

1,542,000

 

$

0.73

 

3.98

 

$

67

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable - June 30, 2019

 

877,330

 

$

0.75

 

3.86

 

$

28

 

 

 

A summary of unvested stock options as of June 30, 2019 is set forth in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

average

 

 

 

 

 

average

 

remaining

 

 

 

 

 

grant-date

 

amortization

 

 

 

Number of

 

fair value

 

period

 

 

    

options

    

per option

    

(years)

  

Unvested - December 31, 2017

 

246,250

 

 

0.22

 

0.99

 

Granted

 

1,142,000

 

 

0.45

 

 

 

Cancelled/Forfeited

 

(246,250)

 

 

0.22

 

 

 

Vested

 

(382,331)

 

 

0.45

 

 

 

Unvested - December 31, 2018

 

759,669

 

$

0.45

 

1.14

 

Granted

 

350,000

 

 

0.30

 

 

 

Vested

 

(444,999)

 

 

0.41

 

 

 

Unvested - June 30, 2019

 

664,670

 

$

0.40

 

0.99

 

 

The fair value of stock options granted to employees, directors and consultants was estimated at the grant date using the Black-Scholes option pricing model using the following weighted average assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

    

2018

    

Expected volatility

 

61.1

%

 

77.1

%  

 

Risk-free interest rate

 

2.0

%

 

2.6

%  

 

Expected life (years)

 

2.8

 

 

5.0

 

 

Dividend yield

 

0

%

 

0

%  

 

Forfeiture assumption

 

0

%

 

0

%  

 

 

11

Restricted Stock Units

 

The following table summarizes the RSUs outstanding under the LTIP as of June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

Number

 

grant-date fair

 

 

    

of RSUs

    

value per RSU

 

Unvested - December 31, 2017

 

1,567,907

    

$

0.85

  

Granted

 

319,000

 

 

0.75

 

Cancelled/forfeited

 

(246,683)

 

 

0.90

 

Vested, net of shares withheld

 

(637,554)

 

 

0.88

 

Unvested - December 31, 2018

 

1,002,670

    

$

0.78

  

Granted

 

1,349,000

 

 

0.47

 

Cancelled/forfeited

 

(198,821)

 

 

0.76

 

Vested, net of shares withheld

 

(142,380)

 

 

0.75

 

Unvested - June 30, 2019

 

2,010,469

 

$

0.58

 

 

A portion of the RSU awards vest on a fixed future date provided the recipient continues to be affiliated with Vista on that date. Other RSU awards vest subject to certain performance and market criteria, including the accomplishment of certain corporate objectives and the Company’s share price performance. The minimum vesting period for RSUs is one year.  

 

During the six months ended June 30, 2019, the Company withheld Common Shares with an equivalent value to meet the employee withholding tax obligations which resulted from RSUs that vested in the period. Common Shares withheld are considered cancelled/forfeited. 

 

Deferred Share Units

 

In May 2019, the Company’s shareholders approved the DSU Plan. The DSU Plan provides for granting of DSUs to non-employee directors. DSUs vest immediately, however the Company will issue one Common Share for each DSU only after the non-employee director has ceased to be a director of the Company. Additionally, in May 2019, the Company’s shareholders approved an amendment to the LTIP such that non-employee directors are excluded from future grants under the LTIP. At the time the DSU Plan was approved, the Board granted 366,000 DSUs and the Company recognized $209 in DSU expense.

 

The following table summarizes the DSUs outstanding as of June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

Number of

 

grant-date fair

 

 

    

DSUs

    

value per DSU

 

Outstanding - December 31, 2018

 

 —

 

 —

 

Granted

 

366,000

 

0.57

 

Outstanding - June 30, 2019

 

366,000

 

0.57

 

 

Phantom Units

 

In 2018, the Company granted a total of 265,000 phantom units to certain employees. The value of each unit is equal to the Company’s share price on the vesting date and is payable in cash. The phantom units vest on fixed future dates provided the recipient continues to be affiliated with Vista on those dates. The Company will account for these units as awards classified as liabilities with $67 included in current liabilities as of June 30, 2019. The Company recognized $22 and $44 of compensation expense for these phantom units in the three and six months ended June 30, 2019 respectively.     

12

A summary of unvested phantom units as of June 30, 2019 is set forth in the following table:

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

 

 

remaining

 

 

 

Number of

 

vesting term

 

 

    

phantom units

    

(years)

 

Unvested - December 31, 2017

 

 —

    

 

 

Granted

 

265,000

 

 

 

Unvested - December 31, 2018

 

265,000

 

1.50

 

Granted

 

 —

 

 

 

Unvested - June 30, 2019

 

265,000

 

1.00

 

 

7.  Commitments and Contingencies

 

Our exploration and development activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. As such, future expenditures that may be required for compliance with these laws and regulations cannot be predicted. We conduct our operations in an effort to minimize effects on the environment and believe our operations are in compliance with applicable laws and regulations in all material respects.

 

Under our agreement with the Jawoyn Association Aboriginal Corporation (the “JAAC”), 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 mining licenses, and a 1% NSR on other metals, subject to a minimum payment of A$50 per year. In addition, we have agreed to offer the JAAC the opportunity to establish a joint venture with Vista holding a 90% participating interest and the JAAC holding a 10% participating interest in Mt Todd.

 

8.  Fair Value Accounting

The following table sets forth the Company’s assets measured at fair value by level within the fair value hierarchy. As required by accounting guidance, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at June 30, 2019

 

 

    

Total

    

Level 1

    

Level 3

 

Other investments (Midas Gold Shares)

 

$

3,745

 

$

3,745

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at December 31, 2018

 

 

    

Total

    

Level 1

    

Level 3

 

Other investments (Midas Gold Shares)

 

$

5,462

 

$

5,462

 

$

 —

 

Used mill equipment (non-recurring)

 

$

5,500

 

$

 —

 

$

5,500

 

 

Our investment in Midas Gold Shares is classified as Level 1 of the fair value hierarchy as it is valued at quoted market prices in an active market.

 

The used mill equipment is classified as Level 3 of the fair value hierarchy as  its value at December 31, 2018 was based on an independent third-party valuation. As of June 30, 2019,  management had not identified sufficient changes in conditions to require an update to the independent third-party evaluation. The mill equipment is included in plant and equipment on the Condensed Consolidated Balance Sheets for each period presented. There have been no transfers between levels in 2019, nor have there been any changes in valuation techniques.

 

9.  Geographic and Segment Information

 

The Company has one reportable operating segment. We evaluate, acquire, explore and advance gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions.  These activities are currently focused principally in Australia. We reported no revenues during the three and six months ended June 30, 2019 and 2018.  Geographic location of mineral properties and plant and equipment is provided in Notes 4 and 5, respectively.

13

 

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

 

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements for the six months ended June 30, 2019, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties and assumptions.  Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors.  See section heading “Note Regarding Forward-Looking Statements” below.

 

All dollar amounts stated herein are in U.S. dollars in thousands, except per share and per ounce amounts and currency exchange rates unless specified otherwise. References to A$ are to Australian dollars and to $ are to United States dollars.

 

Overview

 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Company,” “we,” “our,” or “us”) operate in the gold mining industry. We are focused on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements, option agreements, leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration.  We undertake programs designed to improve the value of our gold projects through exploration drilling and/or technical studies focused on optimizing previous engineering work. We do not currently generate cash flows from mining operations.

 

The Company’s flagship asset is its 100% owned Mt Todd gold project (“Mt Todd” or the “Project”)