10-Q 1 vgz-20200331x10q.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 March 31,  2020

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: 100,898,124 common shares, without par value, outstanding as of April 20, 2020.

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

 

    

2020

    

2019

 

Assets:

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,264

 

$

1,408

 

Short-term investments (Note 3)

 

 

961

 

 

3,260

 

Other investments, at fair value (Note 3)

 

 

2,247

 

 

3,676

 

Other current assets

 

 

336

 

 

482

 

Total current assets

 

 

5,808

 

 

8,826

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

Mineral properties (Note 4)

 

 

2,146

 

 

2,146

 

Plant and equipment, net (Note 5)

 

 

5,611

 

 

5,623

 

Right-of-use assets

 

 

63

 

 

89

 

Total non-current assets

 

 

7,820

 

 

7,858

 

Total assets

 

$

13,628

 

$

16,684

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity:

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

128

 

$

190

 

Accrued liabilities and other

 

 

758

 

 

640

 

Provision for environmental liability

 

 

 —

 

 

240

 

Total current liabilities

 

 

886

 

 

1,070

 

Non-current liabilities:

 

 

 

 

 

 

 

Deferred option gain (Note 4)

 

 

2,960

 

 

2,960

 

Provision for environmental liability (Note 7)

 

 

240

 

 

 —

 

Lease liability

 

 

 6

 

 

 8

 

Total non-current liabilities

 

 

3,206

 

 

2,968

 

Total liabilities

 

 

4,092

 

 

4,038

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common shares, no par value - unlimited shares authorized; shares outstanding: 2020 - 100,698,124 and 2019 - 100,268,161 (Note 6)

 

 

458,106

 

 

457,716

 

Accumulated deficit

 

 

(448,570)

 

 

(445,070)

 

Total shareholders’ equity

 

 

9,536

 

 

12,646

 

Total liabilities and shareholders’ equity

 

$

13,628

 

$

16,684

 

 

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 INCOME/(LOSS)

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

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended March 31, 

 

 

 

2020

    

2019

    

Operating expense:

 

 

 

 

 

 

 

Exploration, property evaluation and holding costs

 

$

(948)

 

$

(946)

 

Corporate administration

 

 

(1,376)

 

 

(1,147)

 

Depreciation and amortization

 

 

(12)

 

 

(12)

 

Total operating expense

 

 

(2,336)

 

 

(2,105)

 

 

 

 

 

 

 

 

 

Non-operating income/(expense):

 

 

 

 

 

 

 

Loss on other investments (Note 3)

 

 

(1,129)

 

 

(624)

 

Interest income

 

 

10

 

 

42

 

Other income/(expense)

 

 

(45)

 

 

35

 

Total non-operating income/(expense)

 

 

(1,164)

 

 

(547)

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(3,500)

 

 

(2,652)

 

Net loss

 

$

(3,500)

 

$

(2,652)

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

100,698,124

 

 

100,323,736

 

Net loss per share

 

$

(0.03)

 

$

(0.03)

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

100,698,124

 

 

100,323,736

 

Net loss per share

 

$

(0.03)

 

$

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

 

Accumulated

 

shareholders’

 

 

 

shares

    

Amount

    

deficit

    

equity

 

Adjusted 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)

 

127,000

 

 

66

 

 

 —

 

 

66

 

Stock-based compensation (Note 6)

 

 —

 

 

51

 

 

 —

 

 

51

 

Net loss

 

 —

 

 

 —

 

 

(2,652)

 

 

(2,652)

 

Balances at March 31, 2019

 

100,537,541

 

$

457,009

 

$

(438,336)

 

$

18,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2020

 

100,698,124

 

$

457,716

 

$

(445,070)

 

$

12,646

 

Stock-based compensation (Note 6)

 

 —

 

 

390

 

 

 —

 

 

390

 

Net loss

 

 —

 

 

 —

 

 

(3,500)

 

 

(3,500)

 

Balances at March 31, 2020

 

100,698,124

 

$

458,106

 

$

(448,570)

 

$

9,536

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31, 

 

    

2020

 

2019

    

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(3,500)

 

$

(2,652)

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

12

 

 

12

 

Stock-based compensation

 

 

390

 

 

51

 

Loss on other investments

 

 

1,129

 

 

624

 

Change in working capital account items:

 

 

 

 

 

 

 

Other current assets

 

 

146

 

 

70

 

Accounts payable, accrued liabilities and other

 

 

80

 

 

137

 

Net cash used in operating activities

 

 

(1,743)

 

 

(1,758)

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Proceeds from sales of marketable securities

 

 

300

 

 

 —

 

Disposition of short-term investments, net of acquisitions

 

 

2,299

 

 

985

 

Additions to plant and equipment

 

 

 —

 

 

(40)

 

Proceeds from option/sale agreements, net

 

 

 —

 

 

100

 

Net cash provided by investing activities

 

 

2,599

 

 

1,045

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Payment of taxes from withheld shares

 

 

 —

 

 

(46)

 

Proceeds from exercise of stock options

 

 

 —

 

 

66

 

Net cash provided by financing activities

 

 

 —

 

 

20

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

856

 

 

(693)

 

Cash and cash equivalents, beginning of period

 

 

1,408

 

 

1,071

 

Cash and cash equivalents, end of period

 

$

2,264

 

$

378

 

 

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 look for opportunities 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”) in Northern Territory, Australia.  Mt Todd is the largest undeveloped gold project in Australia. We have invested substantial amounts to evaluate, engineer, permit and de-risk the Project. We believe these efforts have added to the underlying value of the Project and demonstrate strong development potential. In September 2019, Vista announced the positive results of an updated preliminary feasibility study (the “2019 PFS”) for Mt Todd. Process improvements reflected in the 2019 PFS include improved estimated gold recovery and increased estimated gold production at Mt Todd.

 

As of March 31,  2020, the Company held 6.2 million common shares of Midas Gold Corp. (“Midas Gold Shares”), a non-core project in Mexico subject to a third-party option agreement, royalty interests in the United States and Indonesia, mill equipment not in use and listed for sale, and miscellaneous holdings of third-party equity securities.

 

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, 2019 as filed with the United States Securities and Exchange Commission and Canadian securities regulatory authorities on Form 10-K (the “2019 Financial Statements”). 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 $ are to United States dollars and A$ are to Australian dollars.

 

2. Significant Accounting Policies

Significant accounting policies are included in the 2019 Financial Statements.

 

3. Short-term and Other Investments

 

Short-term investments

 

As of March 31,  2020, and December 31, 2019, the amortized cost basis of our short-term investments was $961 and $3,260, respectively. The amortized cost basis approximates fair value at March 31,  2020 and December 31, 2019. Short-term investments at March 31,  2020 and December 31, 2019 were comprised of U.S. and Australian government treasury bills and/or notes, all of which had maturity dates on the date of purchase greater than 90 days but less than one year. Investments with maturity dates of 90 days or less are included in cash and cash equivalents.

 

7

 

Other investments

 

The Company’s investments in Midas Gold Shares and Nusantara Resources Limited shares (“Nusantara Shares”) were 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 March 31,  2020, and December 31, 2019, the Company held 6,240,115 and 6,882,115 shares of Midas Gold, respectively. The Company also held 1,333,334 Nusantara Shares as of March 31, 2020 and December 31, 2019. The value of other investments was $2,247 and $3,676 as of March 31, 2020 and December 31, 2019, respectively.  During the three months ended March 31, 2020, the Company sold 642,000 Midas Gold Shares for net proceeds of $300 and a loss of $15 compared to the most recent measurement period. Cumulative realized loss since acquisition of these Midas Gold Shares was $2,577, of which $2,562 was recognized in previous periods as unrealized loss, net. No Midas Gold Shares were sold during the three months ended March 31, 2019.

 

 

 

 

4. Mineral Properties

 

 

 

 

 

 

 

 

 

 

    

At March 31, 2020

    

At December 31, 2019

 

Mt Todd, Australia

 

$

2,146

 

$

2,146

 

 

 

 

 

 

 

 

 

The Company holds the Guadalupe de los Reyes gold and silver project in Sinaloa, Mexico (“Los Reyes”), which is under an option agreement with Prime Mining Corporation (“Prime Mining”). Prime Mining has a final $1,500 option payment remaining under the option agreement, which is due by October 2021. The $4,500 paid to date under the option agreement eliminated our carrying value in the property and the remaining amount is carried as a deferred option gain. Upon receiving the final option payment, the Company will transfer control of the Los Reyes project to Prime Mining. The Company will retain a capped net smelter return royalty and may assume a partial interest in any underground projects developed at Los Reyes.

 

Vista holds a net smelter return royalty (“NSR”) on the Awak Mas project in Indonesia. During 2019, Vista and the holder of Awak Mas amended the original royalty agreement to allow the holder or a nominated party to make a $2,400 payment to Vista by April 30, 2020 to cancel a 1% NSR on the first 1,250,000 ounces produced at Awak Mas and a 1.25% NSR on the next 1,250,000 ounces produced. The due date for this payment was subsequently amended to May 8, 2020. On April 29, 2020, the holder provided notice to Vista to exercise the option to cancel the related 1% NSR and 1.25% NSR upon making a $2,400 payment, which is required to be made to the Company by May 8, 2020. Upon receipt of the $2,400 payment, the holder or a nominated party will then have the right to cancel the remaining 1% NSR and 1.25% NSR for an additional payment of $2,500 by April 30, 2021. If the holder does not make the $2,400 payment by May 8, 2020, Vista will retain the full royalty interests.

 

5.  Plant and Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

December 31, 2019

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

    

Cost

    

depreciation

    

Net

    

Cost

    

depreciation

    

Net

  

Mt Todd, Australia

 

$

5,237

 

$

5,126

 

$

111

 

$

5,237

 

$

5,114

 

$

123

 

Corporate, United States

 

 

333

 

 

333

 

 

 —

 

 

333

 

 

333

 

 

 —

 

Used mill equipment, Canada

 

 

5,500

 

 

 —

 

 

5,500

 

 

5,500

 

 

 —

 

 

5,500

 

 

 

$

11,070

 

$

5,459

 

$

5,611

 

$

11,070

 

$

5,447

 

$

5,623

 

 

 

6. Common Shares

 

Warrants

 

All outstanding warrants totaling 6,514,625 expired unexercised in August 2019.

 

8

Stock-Based Compensation

 

The Company’s stock-based compensation plans include: restricted share units (“RSUs”) currently outstanding under the Company’s long term equity incentive plan (“LTIP”), deferred share units (“DSUs”) issuable pursuant to the Company’s deferred share unit plan (“DSU Plan”) and stock options (“Stock Options”) issuable under the Company’s stock option plan (the “Plan”). Stock-based compensation may be issued to our directors, officers, employees and consultants. The maximum number of Common Shares that may be reserved for issuance under these stock-based compensation plans is a variable number equal to 10% of the issued and outstanding Common Shares on a non-diluted basis at any one time. Vista also issued phantom units in 2018 to be settled in cash. Stock-based compensation and phantom units may be granted from time to time at the discretion of the Board of Directors of the Company (the “Board”), with vesting provisions as determined by the Board.

 

Stock-based compensation expense for the three months ended March 31,  2020 and 2019 was: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

    

    

2020

    

2019

    

  

Restricted share units

 

 

 

151

 

 

 1

 

 

Deferred share units

 

 

 

209

 

 

 —

 

 

Stock Options

 

 

$

30

 

$

50

 

 

 

 

 

$

390

 

$

51

 

 

 

 

 

 

 

 

 

 

 

 

Phantom units

 

 

$

(1)

 

$

22

 

 

 

As of March 31,  2020, unrecognized compensation expense for RSUs,  Stock Options, and phantom units was  $776, $24, and $42, respectively, which is expected to be recognized over weighted average periods of 1.5,  0.6, and 0.8 years, respectively.

 

Restricted Share Units

 

The following table summarizes the RSUs outstanding under the LTIP as of March 31,  2020:

 

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

Number

 

grant-date fair

 

 

    

of RSUs

    

value per RSU

 

Unvested - December 31, 2018

 

1,002,670

    

$

0.78

  

Granted

 

1,412,500

 

 

0.49

 

Cancelled/forfeited

 

(657,573)

 

 

0.76

 

Vested, net of shares withheld

 

(266,296)

 

 

0.84

 

Unvested - December 31, 2019

 

1,491,301

    

$

0.51

  

Granted

 

1,609,000

 

 

0.41

 

Unvested - March 31, 2020

 

3,100,301

 

$

0.46

 

 

No RSU vesting events occurred during the three months ended March 31, 2020. During the three months ended March 31, 2019, the Company withheld Common Shares with an equivalent value to meet employee withholding tax obligations that resulted upon vesting of RSUs during the period. Common Shares withheld are considered cancelled/forfeited.

 

Deferred Share Units

 

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. During the three months ended March 31, 2020, the Board granted 360,000 DSUs and the Company recognized $209 in DSU expense.

 

9

The following table summarizes the DSUs outstanding as of March 31,  2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

Number of

 

grant-date fair

 

 

    

DSUs

    

value per DSU

 

Unvested - December 31, 2018

 

 —

    

 —

 

Granted

 

366,000

 

0.57

 

Outstanding - December 31, 2019

 

366,000

 

0.57

 

Granted

 

360,000

 

0.58

 

Outstanding - March 31, 2020

 

726,000

 

0.57

 

 

Stock Options

 

A summary of stock options as of March 31,  2020 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, 2018

 

1,319,149

    

 

0.71

 

3.84

 

$

 1

 

Granted

 

350,000

 

 

0.73

 

 

 

 

 

 

Exercised

 

(163,667)

 

 

0.54

 

 

 

 

33

 

Cancelled/Forfeited

 

(16,667)

 

 

0.75

 

 

 

 

 —

 

Expired

 

(51,815)

 

 

0.70

 

 

 

 

 2

 

Outstanding - December 31, 2019

 

1,437,000

    

$

0.73

 

3.49

 

$

35

 

Cancelled/Forfeited

 

(70,000)

 

 

1.02

 

 

 

 

 —

 

Outstanding - March 31, 2020

 

1,367,000

 

$

0.72

 

3.31

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable - March 31, 2020

 

1,103,001

 

$

0.72

 

3.18

 

$

 —

 

 

A summary of unvested stock options as of March 31,  2020 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, 2018

 

759,669

 

$

0.45

 

1.14

 

Granted

 

350,000

 

 

0.30

 

 

 

Cancelled/Forfeited

 

(35,000)

 

 

0.43

 

 

 

Vested

 

(560,665)

 

 

0.41

 

 

 

Unvested - December 31, 2019

 

514,004

 

$

0.40

 

0.61

 

Vested

 

(250,005)

 

 

0.48

 

 

 

Unvested - March 31, 2020

 

263,999

 

$

0.32

 

0.58

 

 

The fair value of stock options granted is estimated at the grant date using the Black-Scholes option pricing model. No option grants were made during the three months ended March 31, 2020.

 

10

Phantom Units

 

A summary of unvested phantom units as of March 31,  2020 is set forth in the following table:

 

 

 

 

 

 

 

 

 

 

Weighted average

 

 

 

 

 

remaining

 

 

 

Number of

 

vesting term

 

 

    

phantom units

    

(years)

 

Unvested - December 31, 2018

 

265,000

    

 

 

Cancelled/forfeited

 

(32,667)

 

 

 

Vested

 

(88,333)

 

 

 

Unvested - December 31, 2019

 

144,000

 

1.00

 

Unvested - March 31, 2020

 

144,000

 

0.75

 

 

 

7. Provision for Environmental Liability

 

Vista maintains a $240 provision for reclamation costs attributable to certain mining claims previously held by the Company should no other potentially responsible parties be identified.

 

8.  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, our agreement requires that we 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.

 

9.  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 March 31, 2020

 

 

    

Total

    

Level 1

    

Level 3

 

Other investments

 

$

2,247

 

$

2,247

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at December 31, 2019

 

 

    

Total

    

Level 1

    

Level 3

 

Other investments

 

$

3,676

 

$

3,676

 

$

 —

 

 

Our investment in Midas Gold Shares and Nusantara Shares shares are classified as Level 1 of the fair value hierarchy as they are valued at quoted market prices in an active market.

 

There have been no transfers between levels in 2020, nor have there been any changes in valuation techniques.

11

10.  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 months ended March 31,  2020 and 2019.  Geographic location of mineral properties and plant and equipment is provided in Notes 4 and 5, respectively.

12

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 three months ended March 31, 2020, 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 $ are to United States dollars and to A$ are to Australian 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 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 look for opportunities 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”) in Northern Territory, Australia. Mt Todd is the largest undeveloped gold project in Australia. We have invested substantial amounts to evaluate, engineer, permit and de-risk the Project. We believe these efforts have added to the underlying value of the Project and demonstrate strong development potential. In September 2019, Vista announced the positive results of an updated preliminary feasibility study (the “2019 PFS”) for Mt Todd. Process improvements reflected in the 2019 PFS include improved estimated gold recovery and increased estimated gold production at Mt Todd.

 

As of March 31, 2020, the Company held 6.2 million common shares of Midas Gold Corp. (“Midas Gold Shares”), a non-core project in Mexico subject to a third-party option agreement, royalty interests in the United States and Indonesia, mill equipment not in use and listed for sale, and other miscellaneous holdings of third-party equity securities.

 

COVID-19 Pandemic Update

 

The COVID-19 pandemic is having a significant impact on human life and health, and on the global economy, financial markets and commodities. The full extent and impact of the COVID-19 pandemic in human and financial terms remains unknown. The slowdown in economic activity resulting from the global response to slow the spread of COVID-19 is elevating the prospects of a severe global recession, which is causing many countries to introduce economic stimulus measures. Financial, oil and certain other commodity markets have declined significantly and remain highly volatile. Precious metals, while volatile, have recently demonstrated an upward trend.

 

The global response undertaken to slow the spread of COVID-19 commonly includes travel restrictions, stay-at-home orders and social distancing. These and other actions are causing many entities to suspend operations, re-direct resources and defer activities. The impact on investors, banking institutions, businesses, the global economy or financial and commodity markets may have a material adverse impact on the Company’s financial condition and results of operations.

 

Vista is responding to the COVID-19 pandemic to ensure the health and safety of its employees and other stakeholders. Corporate activities continue with personnel working remotely. Corporate travel and participation in conferences has been replaced by an increased use of video conferencing technology.  In Australia, Mt Todd is classified as a critical business and is operating under a COVID-19 Management and Mitigation Plan. Direct costs to implement this plan were minimal. To date, our workforce remains healthy and free of symptoms of the virus. Vista has experienced a decline in the value of its

13

other investments and expects to incur ongoing costs while certain corporate objectives are delayed. These and other conditions may ultimately have a material adverse impact on the Company’s financial condition and results of operations. See “Liquidity and Capital Resources” and “Risk Factors” for additional information.

 

Results from Operations

 

Summary

 

Consolidated net loss for the three months ended March 31, 2020 and 2019 was $3,500 and $2,652 or $0.03 and $0.03 per share, respectively. The principal components accounting for this year-over-year change is discussed below.

 

The Company had $4,922 of working capital and no debt as of March 31, 2020.

 

Exploration, property evaluation and holding costs

 

Exploration, property evaluation and holding costs were $948 and $946 during the three months ended March 31, 2020 and 2019, respectively. These costs remained relatively constant for the three months ended March 31, 2020 compared to the same period last year. Vista realized a benefit of approximately $40 due to a stronger U.S. dollar compared to the Australian dollar and incurred lower costs for monitoring and water discharge. Offsetting these reductions was non-cash stock-based compensation, which was $64 and $10 for the three months ended March 31, 2020 and 2019, respectively.

 

Corporate administration

 

Corporate administration costs were $1,376 and $1,147 during the three months ended March 31, 2020 and 2019, respectively. The three months ended March 31, 2020 and 2019 included non-cash stock-based compensation of $324 and $41, respectively.

 

Non-operating income and expenses  

 

Gain/(Loss) on other investments

 

Gain/(Loss) on other investments was $(1,129) and $(624) for the three months ended March 31, 2020 and 2019, respectively. These amounts resulted from changes in fair value of our Midas Gold Shares and Nusantara Resources Limited shares (“Nusantara Shares”). The Company sold 642,000 Midas Gold Shares and received net proceeds of $300 with a realized loss of $15 during the three months ended March 31, 2020. There were no Midas Gold Share sales during the three months ended March 31, 2019.

 

Financial Position, Liquidity and Capital Resources

 

Operating activities

 

Net cash used in operating activities was $1,743 and $1,758 for the three months ended March 31, 2020 and 2019, respectively. This relative stability in operating cashflows reflects reduced expenditures due to a stronger U.S. dollar compared to the Australian dollar and lower costs for monitoring and water discharge at Mt Todd, partially offset by a minor increase in corporate expenditures.

 

Investing activities

 

Net cash provided by investing activities was $2,599 and $1,045 for the three months ended March 31, 2020 and 2019, respectively. Disposition of short-term investments, net of acquisitions, increased during 2020 by $1,314 compared to the same period in 2019. The Company also realized $300 from the sale of Midas Gold Shares during the three months ended March 31, 2020 while other net investing proceeds were $60 for the same period in 2019.

 

14

Financing activities

 

During the three months ended March 31, 2020 and 2019, net cash of $nil and $20, respectively, was provided by financing activities. The net amount received during the three months ended March 31, 2019 was proceeds from exercises of stock options, offset by payments of employee withholding tax obligations in lieu of issuing common shares.

 

Liquidity and capital resources

 

Cash and short-term investments as of March 31, 2020 decreased by $1,443 to $3,225 from $4,668 at December 31, 2019 due mainly to expenditures for operating activities, offset partially by proceeds of $300 from sales of Midas Gold Shares. Our working capital decreased by $2,834 to $4,922 at March 31, 2020 from $7,756 at December 31, 2019 due mainly to the decrease in cash and short-term investments and an unrealized loss of $1,129 resulting from a reduction in fair value of equity securities included in other investments, primarily the Midas Gold Shares, which declined significantly at the onset of the COVID-19 pandemic. While the fair value of the Midas Gold Shares has recovered partially, there can be no assurances that the previous fair value will be attained.

 

Vista is responding to the COVID-19 pandemic to ensure the health and safety of its employees and other stakeholders. To date, the current direct effect on Vista’s liquidity and capital resources is largely limited to a decline in value of Midas Gold Shares held at March 31, 2020 and ongoing costs incurred while certain corporate objectives are delayed. The duration of global travel restrictions and the extent of economic recovery as restrictions ease may affect the Company’s ability to raise additional working capital on reasonable terms, or at all, and is likely to delay arranging a potential strategic partner for Mt Todd and monetizing non-core assets. Extended delays will continue to affect Vista’s liquidity and capital resources and may ultimately have a material adverse effect on Vista’s short-term and long-term financial position and results of operations.

 

Despite these conditions, we believe our existing working capital at March 31, 2020, together with other potential future sources of non-dilutive financing, will be sufficient to fully fund our currently planned activities for more than 12 months.

 

The Company continues to focus on monetizing non-dilutive sources of funding. Potential future sources of non-dilutive financing include sale of Midas Gold Shares, future option payments under the Awak Mas royalty and Los Reyes option agreements, and sales of other non-core assets including our mill equipment and other royalties. Vista received notice on April 29, 2020 that the counterparty exercised its option for partial cancellation of the Awak Mas royalty, requiring that the counterparty deliver a $2,400 payment to the Company by May 8, 2020. If this payment is received, the counterparty will then have the right at its discretion to cancel the remaining balance of the royalty for an additional payment of $2,500 due by April 30, 2021. Should the counterparty not make the $2,400 payment, Vista retains the full royalty interests and can pursue alternative monetization strategies. The final Los Reyes option agreement payment in the amount of $1,500 is due, at the discretion of Prime Mining, in October 2021. Vista has previously received $4,500 in option payments from Prime Mining. Vista also holds other royalty and property interests that it may seek to monetize. The Company’s mill equipment is being marketed by a third-party pre-owned mining equipment dealer.

 

If other potential sources of non-dilutive financing cannot be realized within the timeframe or for the amounts required to meet obligations when due, Vista will be required to raise additional capital through equity issuances, or other means. Among other means that are available, the Company has an at-the-market offering agreement (the “ATM Agreement”) with H. C. Wainwright & Co., LLC (“Wainwright”) to provide additional balance sheet flexibility at a potentially lower cost than other means of equity issuances.

 

Under the ATM Agreement the Company may, but is not obligated to, issue and sell common shares of the Company (“Common Shares”) through Wainwright as sales manager in an at-the-market offering under a prospectus supplement to a base shelf prospectus for aggregate sales proceeds of up to $10,000 (the “ATM Program”). The ATM Agreement will remain in full force and effect until the earlier of August 31, 2020, or the date that the ATM Agreement is terminated in accordance with its terms. Offers or sales of Common Shares under the ATM Program will be made only in the United States, subject to an effective registration statement under the U.S. Securities Act of 1933, as amended, and no offers or sales of Common Shares under the ATM Agreement will be made in Canada. The Common Shares will be distributed at

15

market prices prevailing at the time of sale. At March 31, 2020 no offers or sales had been made under the ATM Program. Subsequent to March 31, 2020 through April 20, 2020, we sold an aggregate of 200,000 Common Shares under the ATM Program at an average price of $0.63 per share for total proceeds of approximately $127.

 

Vista’s viability beyond 12 months is dependent upon our ability to maintain a low expenditure profile, realize value from non-dilutive assets, and, if necessary, issue additional equity or find other means of financing to secure sufficient funding. Our objective is to maintain adequate liquidity and seek to preserve and enhance the value of our core assets in order to assure positive equity returns to our shareholders. The underlying value and recoverability of the amounts shown as mineral properties and plant and equipment in our Condensed Consolidated Balance Sheets are dependent on our ability to attract sufficient capital resources to execute our strategy and the ultimate success of our programs to enhance value, most importantly at Mt Todd.

 

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 March 31, 2020

 

 

    

Total

    

Level 1

    

Level 3

 

Other investments

 

$

2,247

 

$

2,247

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at December 31, 2019

 

 

    

Total

    

Level 1

    

Level 3

 

Other investments

 

$

3,676

 

$

3,676

 

$

 —

 

 

Our investment in Midas Gold Shares and Nusantara Shares are classified as Level 1 of the fair value hierarchy as they are valued at quoted market prices in an active market.

 

There have been no transfers between levels in 2020, nor have there been any changes in valuation techniques.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Contractual Obligations

 

We have no material contractual obligations as of March 31, 2020. 

 

Project Updates

 

Mt Todd Gold Project, Northern Territory, Australia

The following scientific and technical information about Mt Todd has been reviewed and approved by Mr. John Rozelle, Senior Vice President of Vista.  Mr. Rozelle is a qualified person as defined by Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).

Environmental Approvals and Metallurgical Optimization Program

In January 2018, we announced that the “authorization of a controlled activity” at Mt Todd, as required under the Environment Protection and Biodiversity Act, as it relates to the Gouldian Finch, had been approved by the Australian Commonwealth Department of Environment and Energy. With this authorization, Vista has all major environmental approvals necessary to allow development of Mt Todd.

16

Subsequent to the issuance of the Company’s pre-feasibility study in 2018 (the “2018 PFS”), Vista initiated additional metallurgical optimization testing. The objective of this program was to determine overall gold recoveries at finer grind sizes and evaluate the efficiency of the FLSmidth VXP mills as opposed to the Glencore ISA mills, which were contemplated in the 2018 PFS. As a result of this test work and related leach recovery tests, a final grind size of 80% passing 40 microns (µm) was selected. The outcomes of our metallurgical testing and other findings were incorporated into an updated PFS (see 2019 PFS, below), which was issued in October 2019.

In support of the metallurgical test work, we completed four additional large diameter core holes and extracted approximately 6 tonnes of higher-grade material from the Batman deposit. We prepared two additional 2.5 tonne composite samples for high-pressure grinding roll crushing and sorting tests using the same equipment as previous test work. The two 2.5 tonne tests were prepared to confirm the efficiency of sorting higher-grade ores. Additional feasibility-study-level grinding tests with manufacturers of fine grinding mills were completed in order to obtain material for further metallurgical studies and specific operating data for future design and evaluation work. We also completed additional testing with an impeller manufacturer in order to achieve optimal efficiency at designed slurry densities and P80 product particle size.

In August 2019, we announced the results of the 2019 fine grinding tests completed on samples of various grade ranges, under the direction of Resource Development Inc. These tests confirm that the Mt Todd ore can be efficiently ground to a finer final product size with lower power consumption in the grinding circuit than estimated in the 2018 PFS. Leaching the finer final product size material reconfirmed higher recoveries at finer grind sizes.  It also demonstrated that at 40µm grind size, the tail grade is nearly constant, with minor changes easily definable within specific head-grade ranges. 

Vista’s latest metallurgic test programs have confirmed: (1) the efficiency of ore sorting across a broad range of head grades and the natural concentration of gold in the screen undersize material prior to sorting; (2) the efficiency of fine grinding and improved gold leach recoveries at an 80% passing grind size of 40 microns; and (3) the selection of FLSmidth VXP mill as the preferred fine-grinding mill.

2019 PFS

In September 2019, we announced the results of an updated preliminary feasibility study for the Mt Todd project and in October 2019 we filed a technical report entitled “NI 43-101 Technical Report Mt Todd Gold Project 50,000 tpd Preliminary Feasibility Study Northern Territory, Australia” with an effective date of September 10, 2019 and an issue date of October 7, 2019 (the “2019 PFS”).  The 2019 PFS was based on the results of metallurgical testing, a comprehensive review of the Project and the re-design of elements of the process flow sheet, and most importantly, grinding circuit design changes. Key inputs that changed in the 2019 PFS include higher gold recoveries due to the finer grind size, a higher gold price, and improved foreign exchange rates.

 

The process improvement efforts resulted in revised estimates that reflect reduced operating costs, increased gold recovery and higher gold production. In addition, we commissioned an independent benchmarking study to assess the appropriateness of capital and operating cost estimates, construction and ramp-up schedules, owner's costs and key components of the Mt Todd project. Recommendations from the study were incorporated, as appropriate, in the 2019 PFS. We also updated revenue, capital, and operating costs based on current market conditions and recent quotes from suppliers. 

 

The 2019 PFS evaluates two development scenarios: a 50,000 tpd project that develops more of the Mt Todd resource and generates a larger net present value (“NPV”) (the “Base Case”); and a smaller and higher-grade 33,000 tpd project (the “Alternate Case”). The Alternate Case of the 2019 PFS supersedes a similar study in the 2018 PFS, but is not deemed material. The Alternate Case is disclosed in the 2019 PFS.

 

17

Highlights of the 2019 PFS Base Case are presented in the table below: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years 1-5

 

Life of Mine (13 years)

 

Average Milled Grade (g Au/t)

 

 

0.96

 

 

 

 

0.82

 

 

Payable Gold Annual Average (000's ozs)

 

 

495

 

 

 

 

413

 

 

Payable Gold Total (000's ozs)

 

 

2,476

 

 

 

 

5,305

 

 

Gold Recovery

 

 

92.3

%  

 

 

 

91.9

%  

 

Cash Costs ($/oz)(2)

 

$

575

 

 

 

$

645

 

 

AISC ($/oz)(2)

 

$

688

 

 

 

$

746

 

 

Strip Ratio (waste:ore)

 

 

2.65

 

 

 

 

2.52

 

 

Initial Capital ($ millions)

 

 

 

 

 

 

$

826

 

 

After-tax NPV 5% ($ millions)

 

 

 

 

 

 

$

823

 

 

After-tax IRR

 

 

 

 

 

 

 

23.4

%  

 

After-tax Payback (Production Years)

 

 

 

 

 

 

 

2.9

 

 

 

Notes: Economics presented using $1,350/oz gold and a flat $0.70:A$1.00 exchange rate and assumes deferral of certain Northern Territory tax obligations as well as realization of equipment salvage values at the end of the mine life. The mine plan includes both proven and probable reserves.

(1)

Cash Costs per ounce is a non-GAAP financial measure; see the Non-GAAP Financial Measures section below for additional disclosure.

(2)

All-in Sustaining Costs (“AISC”) per ounce is a non-GAAP financial measure; see the Non-GAAP Financial Measures section below for additional disclosure.

 

The following table illustrates the sensitivity of the Base Case after-tax economics to variable gold prices and foreign exchange assumptions:

Foreign

Exchange

($/A$)

Gold Price

$1,200

$1,300

$1,350

$1,400

$1,500

 

IRR

NPV5%

 

IRR

NPV5%

 

IRR

NPV5%

 

IRR

NPV5%

 

IRR

NPV5%

 

0.60

21.6%

$687

26.3%

$895

28.4%

$994

30.5%

$
1,094

34.7%

$
1,296

0.65

19.2%

$604

23.7%

$807

25.8%

$911

27.9%

$
1,011

32.0%

$
1,209

0.70

16.9%

$525

21.2%

$718

23.4%*

$823*

25.4%

$
928

29.4%

$
1,126

0.75

14.7%

$440

18.9%

$636

20.9%

$734

23.1%

$
839

27.0%

$
1,043

0.80

12.6%

$355

16.8%

$557

18.8%

$652

20.7%

$
750

24.7%

$
954

*  Assumptions used in the 2019 PFS. 

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

18

Key capital expenditures for Base Case initial and sustaining capital requirements are:

 

 

 

 

 

 

 

 

Capital Expenditures ($ Millions, except per ounce amount)

    

Initial

    

Sustaining

 

 

 

Capital

 

Capital

 

Mining

 

$

121

 

$

406

 

Process Plant

 

 

367

 

 

17

 

Project Services

 

 

109

 

 

72

 

Project Infrastructure

 

 

26

 

 

 —

 

Site Establishment & Early Works

 

 

18

 

 

 —

 

Management, Engineering, EPCM Services

 

 

82

 

 

 —

 

Preproduction Costs

 

 

16

 

 

 —

 

Contingency

 

 

87

 

 

40

 

Sub-Total

 

$

826

 

$

536

 

Asset Sale and Salvage

 

 

 —

 

 

(140)

 

Total Capital

 

$

826

 

$

397

(1)

Total Capital per payable ounce of gold

 

$

156

 

$

75

(1)

Notes: may not add due to rounding.

(1) Net of asset sales.

The following table presents a breakdown of Base Case operating costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cost 

 

First 5 Years

 

Life of Mine Cost 

 

 

    

Per tonne

    

 

 

    

Per tonne

    

 

 

 

 

 

processed

 

Per ounce

 

processed

 

Per ounce

 

Mining

 

$

6.51

 

$

234

 

$

6.02

 

$

251

 

Processing

 

 

7.82

 

 

281

 

 

7.88

 

 

328

 

Site General and Administrative

 

 

1.07

 

 

39

 

 

1.11

 

 

46

 

Jawoyn Royalty(1)

 

 

0.38

 

 

14

 

 

0.32

 

 

14

 

Water Treatment

 

 

0.07

 

 

 2

 

 

0.08

 

 

 4

 

Tailings Management

 

 

0.08

 

 

 3

 

 

0.07

 

 

 3

 

Refining Costs(1)

 

 

0.09

 

 

 3

 

 

0.08

 

 

 3

 

Power Credit

 

 

 —

 

 

 —

 

 

(0.10)

 

 

(4)

 

Total Cash Costs(2)

 

$

16.01

 

$

575

 

$

15.48

 

$

645

 

Notes: May not add due to rounding.  

(1)

Jawoyn Royalty and refinery costs calculated at $1,350 per ounce gold.

(2)

Total Cash Costs is a non-GAAP financial measure; see the Non-GAAP Financial Measures section below for additional disclosure.

The mine plan contemplates 221.0 million tonnes of ore containing an estimated 5.85 million ounces of gold at an average grade of 0.82 g Au/t to be processed over the 13-year operating life of the Project.  Total recovered gold is expected to be 5.3 million ounces.  Average annual gold production over the life of the Project is expected to be 413,400 ounces, averaging 495,100 ounces during the first five years of commercial operations, with 608,600 ounces produced in the first year of commercial operation. Commercial production is anticipated to begin after two years of construction and six months of commissioning and ramp-up.

19

The table below highlights the 2019 PFS Base Case production schedule.

 

 

 

 

 

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