10-Q 1 a11-29351_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2011

 

OR

 

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

 

For the transition period from                        to                      

 

Commission File Number 1-09025

 

 

VISTA GOLD CORP.

(Exact name of registrant as specified in its charter)

 

Yukon Territory, Canada

 

98-0542444

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

Suite 5, 7961 Shaffer Parkway

 

 

Littleton, Colorado

 

80127

(Address of principal executive offices)

 

(Zip Code)

 

(720) 981-1185

(Registrant’s telephone number, including area code)

 

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

 

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

 

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

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 71,480,883 common shares, without par value, outstanding at November 3, 2011.

 

 

 




Table of Contents

 

PART I — FINANCIAL INFORMATION

 

ITEM 1.  UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONSOLIDATED BALANCE SHEETS

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

 

 

 

September 30,

 

December 31,

 

 

 

2011

 

2010

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

26,946

 

$

39,838

 

Marketable securities (Note 5)

 

940

 

1,703

 

Other current assets

 

1,117

 

1,084

 

Total current assets

 

29,003

 

42,625

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Mineral properties (Note 6)

 

16,401

 

16,622

 

Plant and equipment (Note 7)

 

18,817

 

18,809

 

Amayapampa disposal consideration (Notes 3)

 

4,813

 

4,813

 

Long-term investment - Midas Gold Corp. (Note 3 and 8)

 

110,267

 

 

Deferred debt issuance costs

 

 

103

 

Total non-current assets

 

150,298

 

40,347

 

 

 

 

 

 

 

Total assets

 

$

179,301

 

$

82,972

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Convertible notes (Note 10)

 

$

 

$

23,000

 

Accounts payable

 

106

 

147

 

Accrued interest payable

 

 

109

 

Accrued liabilities and other

 

2,323

 

1,374

 

Total current liabilities

 

2,429

 

24,630

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Deferred tax liability, net (Note 9)

 

33,546

 

 

Total non-current liabilities

 

33,546

 

 

 

 

 

 

 

 

Total liabilities

 

35,975

 

24,630

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Capital stock, no par value - unlimited shares authorized; shares outstanding: 2011 - 71,435,883 and 2010 - 61,919,752 (Note 11)

 

379,861

 

349,719

 

Stock-based compensation (Note 12)

 

4,489

 

4,695

 

Warrants (Note 13)

 

10,876

 

10,721

 

Additional paid-in capital (Note 14)

 

8,729

 

7,565

 

Accumulated other comprehensive income (Note 15)

 

38

 

929

 

Deficit

 

(239,086

)

(239,086

)

Accumulated deficit during exploration stage

 

(21,581

)

(76,201

)

Total shareholders’ equity

 

143,326

 

58,342

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

179,301

 

$

82,972

 

 

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

 

1



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

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

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

 

 

 

Three Months ended
September 30,

 

Nine Months ended
September 30,

 

Cumulative
during
Exploration

 

 

 

2011

 

2010

 

2011

 

2010

 

Stage

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income and (expenses):

 

 

 

 

 

 

 

 

 

 

 

Exploration, property evaluation and holding costs

 

$

(5,803

)

$

(3,324

)

$

(13,606

)

$

(9,860

)

$

(49,957

)

Corporate administration and investor relations

 

(1,312

)

(837

)

(4,069

)

(2,904

)

(30,641

)

Depreciation and amortization

 

(87

)

(70

)

(247

)

(202

)

(1,167

)

Loss on extinguishment of convertible debt

 

 

 

 

(1,565

)

(1,218

)

Gain/(loss) on currency translation

 

17

 

152

 

53

 

70

 

(110

)

Gain/(loss) on disposal of mineral property, net (Note 3)

 

(5

)

 

77,802

 

 

79,663

 

Total operating income/(loss)

 

(7,190

)

(4,079

)

59,933

 

(14,461

)

(3,430

)

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating income and (expenses):

 

 

 

 

 

 

 

 

 

 

 

Gain/(loss) on sale of marketable securities

 

(2

)

52

 

445

 

265

 

7,788

 

Unrealized gain on long-term investment (Note 3)

 

27,762

 

 

27,762

 

 

27,762

 

Write down of marketable securities

 

 

 

 

 

(849

)

Interest income

 

11

 

17

 

37

 

106

 

2,800

 

Interest expense

 

 

(174

)

(120

)

(889

)

(4,096

)

Other income/(expense)

 

109

 

39

 

109

 

135

 

(5,147

)

Total non-operating income/(loss)

 

27,880

 

(66

)

28,233

 

(383

)

28,258

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) from continuing operations before income taxes

 

20,690

 

(4,145

)

88,166

 

(14,844

)

24,828

 

Deferred income tax (expense)

 

(9,957

)

 

(33,546

)

 

(33,546

)

Income/(loss) from continuing operations after income taxes

 

10,733

 

(4,145

)

54,620

 

(14,844

)

(8,718

)

Loss from discontinued operations

 

 

 

 

 

(12,863

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

10,733

 

$

(4,145

)

$

54,620

 

$

(14,844

)

$

(21,581

)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/(loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(319

)

$

233

 

$

(446

)

$

202

 

 

 

Realized (gain)/loss on available-for-sale securities

 

2

 

(46

)

(445

)

(233

)

 

 

 

 

(317

)

187

 

(891

)

(31

)

 

 

Comprehensive income/(loss)

 

$

10,416

 

$

(3,958

)

$

53,729

 

$

(14,875

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding (Note 16)

 

71,213,543

 

46,586,708

 

67,441,707

 

45,897,307

 

 

 

Income/(loss) per share

 

$

0.15

 

$

(0.09

)

$

0.81

 

$

(0.32

)

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding (Note 16)

 

72,781,902

 

46,586,708

 

68,202,974

 

45,897,307

 

 

 

Income/(loss) per share

 

$

0.15

 

$

(0.09

)

$

0.80

 

$

(0.32

)

 

 

 

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

 

2



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

 

 

 

Common
stock

 

Stock-based
compensation

 

Warrants

 

Additional
paid-in
capital

 

Deficit

 

Accumulated
other
comprehensive
income

 

Total
shareholders’
equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2010

 

$

349,719

 

$

4,695

 

$

10,721

 

$

7,565

 

$

(315,287

)

$

929

 

$

58,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity financing, net of transaction costs

 

28,396

 

671

 

588

 

 

 

 

29,655

 

Stock options exercised

 

1,055

 

(349

)

 

 

 

 

706

 

Stock options expensed

 

 

424

 

 

 

 

 

424

 

Stock options expired

 

 

(828

)

 

828

 

 

 

 

Restricted stock units exercised

 

392

 

(392

)

 

 

 

 

 

Restricted stock units expensed

 

 

268

 

 

 

 

 

268

 

Cash paid in lieu of capital stock issuances

 

(107

)

 

 

 

 

 

(107

)

Warrants expired

 

 

 

(336

)

336

 

 

 

 

Warrants exercised

 

406

 

 

(97

)

 

 

 

309

 

Other comprehensive loss

 

 

 

 

 

 

(891

)

(891

)

Net income

 

 

 

 

 

54,620

 

 

54,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at September 30, 2011

 

$

379,861

 

$

4,489

 

$

10,876

 

$

8,729

 

$

(260,667

)

$

38

 

$

143,326

 

 

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

 

3



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

Cumulative
during
Exploration

 

 

 

2011

 

2010

 

2011

 

2010

 

Stage

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) for the period

 

$

10,733

 

$

(4,145

)

$

54,620

 

$

(14,844

)

$

(8,718

)

Adjustments to reconcile income/(loss) for the period to net cash used in operations:

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

87

 

70

 

247

 

202

 

1,167

 

Stock-based compensation

 

415

 

427

 

1,363

 

501

 

6,403

 

(Gain)/loss on disposal of marketable securities

 

2

 

(52

)

(445

)

(265

)

(8,050

)

Loss on extinguishment of convertible notes

 

 

 

 

1,565

 

1,218

 

Accrued interest and accretion of interest

 

 

 

120

 

 

4,096

 

(Gain)/loss on disposal of mineral property

 

 

 

(78,072

)

 

(79,933

)

Transaction costs

 

 

 

 

 

1,841

 

Unrealized gain on long-term investment

 

(27,762

)

 

(27,762

)

 

(27,762

)

Write down of marketable securities

 

 

 

 

 

849

 

Deferred tax expense

 

9,957

 

 

33,546

 

 

33,546

 

Other non-cash items

 

 

(74

)

 

112

 

2,477

 

Change in working capital account items:

 

 

 

 

 

 

 

 

 

 

 

Other current assets

 

(64

)

(64

)

(33

)

(498

)

(1,379

)

Accrued interest payable

 

1

 

140

 

(504

)

(411

)

(8,090

)

Accounts payable, accrued liabilities and other

 

7

 

169

 

295

 

178

 

(489

)

Net cash used in operating activities

 

(6,624

)

(3,529

)

(16,625

)

(13,460

)

(82,824

)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

(139

)

(19

)

(267

)

(26

)

(1,626

)

Proceeds from sales of marketable securities

 

7

 

57

 

583

 

285

 

11,040

 

Acquisition of long-term investment - Midas Gold Corp.

 

 

 

(3,632

)

 

(3,632

)

Proceeds from sales of short-term investments

 

 

 

 

250

 

 

Additions to mineral property

 

(538

)

(141

)

(588

)

59

 

(7,351

)

Additions to plant and equipment

 

(165

)

(114

)

(255

)

(294

)

(19,727

)

Proceeds from additional option agreement

 

1,000

 

 

1,000

 

 

1,000

 

Proceeds on disposal of mineral property

 

 

 

 

 

188

 

Proceeds on disposal of plant and equipment

 

 

 

 

 

52

 

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

 

 

 

 

 

(24,517

)

Net cash provided by/(used in) investing activities

 

165

 

(217

)

(3,159

)

274

 

(44,573

)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

Net proceeds from equity financings

 

(4

)

 

28,984

 

 

137,070

 

Repayment of convertible notes

 

 

 

(23,000

)

(2,242

)

(26,108

)

Proceeds from exercise of warrants

 

261

 

 

309

 

 

39,329

 

Proceeds from exercise of stock options

 

264

 

8

 

706

 

8

 

3,797

 

Issuance of convertible notes

 

 

 

 

 

28,345

 

Cash paid in lieu of capital stock issuances

 

(107

)

 

(107

)

 

(107

)

Transaction costs

 

 

 

 

 

(1,841

)

Net cash provided by/(used in) financing activities

 

414

 

8

 

6,892

 

(2,234

)

180,485

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

(6,045

)

(3,738

)

(12,892

)

(15,420

)

53,088

 

Decrease in cash and cash equivalents - discontinued operations

 

 

 

 

 

(26,816

)

Net increase/(decrease) in cash and cash equivalents

 

(6,045

)

(3,738

)

(12,892

)

(15,420

)

26,272

 

Cash and cash equivalents, beginning of period

 

32,991

 

16,726

 

39,838

 

28,408

 

674

 

Cash and cash equivalents, end of period

 

$

26,946

 

$

12,988

 

$

26,946

 

$

12,988

 

$

26,946

 

 

Supplemental cash flow information — Note 17

 

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

 

4



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

1.                                      Nature of Operations

 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Corporation,” “we,” “our” or “us”) operate in the mining industry and are focused on the evaluation, acquisition and exploration of gold exploration and potential development projects, which may lead to gold production, as well as the realization of market value of our assets. 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 reengineering the operating assumptions underlying previous engineering work.

 

We are continuing to move our more advanced projects through technical, engineering and feasibility studies in preparation for mine development so that production decisions can be made on those projects.

 

2.                                      Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated interim financial statements of Vista consolidate the accounts of entities in which we have a controlling financial interest under the voting control model. All intercompany balances and transactions have been eliminated in the consolidated financial statements. Our subsidiaries and percentage ownership in these entities as of September 30, 2011 are:

 

 

 

Ownership

 

Vista Gold U.S., Inc. and its subsidiary

 

100

%

Vista California, LLC

 

100

%

Granges Inc.

 

100

%

Desarrollas Zapal Holding Corp. and its subsidiaries

 

100

%

Desarrollas Zapal S.A. de C.V. (1% owned by Granges Inc.) and its subsidiaries

 

99

%

Servicios Administrativos MPA S.A. de C.V. (1% owned by Granges Inc.)

 

99

%

Servicios Industriales MPA S.A. de C.V. (1% owned by Granges Inc.)

 

99

%

Vista Gold (Barbados) Corp. and its wholly-owned subsidiary

 

100

%

Salu Siwa Pty. Ltd and its subsidiary

 

100

%

PT Masmindo Dwi (1% owned by Vista Gold (Barbados) Corp.)

 

99

%

Vista Minerals (Barbados) Corp. and its wholly-owned subsidiary

 

100

%

Vista Australia Pty Ltd.

 

100

%

Vitliq Holdings Corp.

 

100

%

Vitliq S.A. de C.V. (1% owned by Granges Inc.)

 

99

%

 

Basis of Presentation

 

We have, from our inception until December 31, 2010, reported to securities regulators in both Canada and the U.S. using Canadian generally accepted accounting principles (“GAAP”) financial statements with reconciliation to U.S. GAAP.  However, a change in the position of the United States Securities and Exchange Commission (“SEC”) in late 2009 required Canadian companies, such as Vista, that do not qualify as foreign private issuers to file their financial statements in the U.S. using U.S. GAAP for periods beginning after December 31, 2010.  Therefore, we have retrospectively adopted U.S. GAAP effective January 1, 2011 for all U.S. and Canadian filings.  Canadian securities regulators announced that they will continue to accept financial statements prepared in accordance with U.S. GAAP.

 

5


 


Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

A comparison of our September 30, 2011 and December 31, 2010 balance sheets in U.S. GAAP to our balance sheet at December 31, 2010 as reported in Canadian GAAP is as follows:

 

 

 

 

 

 

 

Canadian

 

 

 

U.S. GAAP

 

U.S. GAAP

 

GAAP

 

 

 

September 30,

 

December 31,

 

December 31,

 

 

 

2011

 

2010

 

2010

 

Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,946

 

$

39,838

 

$

39,838

 

Mineral properties (1)

 

16,401

 

16,622

 

54,195

 

Other assets

 

135,954

 

26,512

 

26,409

 

Total assets

 

$

179,301

 

$

82,972

 

$

120,442

 

 

 

 

 

 

 

 

 

Liabilities

 

$

35,975

 

$

24,630

 

$

24,135

 

Shareholders’ equity (1)

 

143,326

 

58,342

 

96,307

 

Total liabilities and shareholders’ equity

 

$

179,301

 

$

82,972

 

$

120,442

 

 


Note:

 

(1)

 

The decrease in mineral properties and increase in the shareholders’ equity during exploration stage is primarily due to the conversion to U.S. GAAP from Canadian GAAP. In accordance with U.S. GAAP, our property acquisition costs, including directly related acquisition costs, are capitalized when incurred, and mineral property exploration costs are expensed as incurred. Under Canadian GAAP, however, both acquisition costs and exploration expenditures had been capitalized when incurred.

 

In accordance with U.S. GAAP for interim financial statements, these consolidated financial statements do not include certain information and note disclosures that are normally included in annual financial statements prepared in conformity with U.S. GAAP.  Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2010 and 2009 and for each of the three years ended December 31, 2010 and with Note 20 — Differences between Canadian and United States generally accepted accounting principles included in our Annual Report on Form 10-K for the year ended December 31, 2010.  In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal, recurring nature) necessary to present fairly in all material respects our financial position as of September 30, 2011 and the results of our operations and cash flows for the nine months ended September 30, 2011 and 2010 in conformity with U.S. GAAP.  Interim results of operations for the nine months ended September 30, 2011 may not be indicative of results that will be realized for the full year ending December 31, 2011.

 

Use of Estimates

 

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Significant areas requiring the use of estimates include capital costs of projects, mine closure and reclamation obligations, useful lives for asset depreciation purposes, impairment of mineral properties, valuation of investments and the calculation of stock-based compensation. Actual results could differ from these estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand, demand balances held with banks and certificates of deposit all with maturities of three months or less when purchased.

 

Marketable Securities

 

We classify marketable securities as available-for-sale.  Accordingly, these securities are carried at fair value with unrealized gains and losses being reported in other comprehensive income until such time that the securities are disposed of or become impaired.  At that time, any gains or losses will then be realized and reported in our Consolidated Statement of Income/(Loss). We use the specific identification method for determining cost in computing realized gains and losses on sales of investment securities.  We evaluate investments in a loss position to determine if such a loss is other-than-temporary.  If so, such loss will be recognized and reported during that period.

 

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Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

Mineral Properties

 

Mineral property acquisition costs, including directly related acquisition costs, are capitalized when incurred, and mineral property exploration costs are expensed as incurred.  When we determine that a mineral property can be economically developed in accordance with U.S. GAAP, the costs then incurred to develop such property are capitalized.  When ore reserves associated with the projects can be determined, capitalized costs will be depleted using the units-of-production method over the estimated life of the proven and probable reserves.  If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to loss in that period.

 

We assess the carrying cost of our mineral properties for impairment whenever information or circumstances indicate the potential for impairment.  Such evaluations compare estimated future net cash flows with our carrying costs and future obligations on an undiscounted basis.  If it is determined that the future undiscounted cash flows are less than the carrying value of the property, a write down to the estimated fair value is charged to loss for the period.  Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.

 

Plant and Equipment

 

Plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging primarily from three to ten years. Significant expenditures that increase the life of an asset, including interest capitalized on expenditures on qualifying assets, are capitalized and depreciated over the remaining estimated useful life of the asset. Upon sale or retirement of assets, the costs and related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gains or losses are reflected in operations.

 

Asset Retirement Obligation and Closure Costs

 

The fair value of a liability for our legal obligations associated with the retirement of long-lived assets is recognized in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset unless the asset has been previously written off, in which case the amount is expensed.

 

The liability will be adjusted for changes in the expected amounts and timing of cash flows required to discharge the liability and accreted to the full value over time through periodic charges to income.

 

Warrants

 

Warrants and compensation options issued are recorded at fair value.

 

Stock-Based Compensation

 

We record compensation expense on the granting of all stock-based compensation awards, including stock options grants, restricted stock units grants and restricted stock awards grants, calculated using the fair-value method. We use the Hull-White Trinomial method of determining the fair value of the stock option on the date of the grant. When an option is granted, the fair value of the immediately vested portion is expensed and included within the stock-based compensation balance within shareholders’ equity. As to the options vesting, the fair value is amortized using the straight-line method over the vesting period and expensed on a monthly basis. When an option is exercised, the grant-date fair value of the options is transferred to common stock. When options are cancelled, the vested fair-value balance of the stock options is transferred to additional paid-in capital. When stock options are forfeited prior to becoming fully vested, any expense previously recorded is reversed through income. When options expire, the related fair value is transferred to additional paid-in capital.

 

We use the fair-value method of determining the fair value of restricted stock units and restricted stock awards on the date of grant.  The fair value is amortized using the straight-line method over the vesting period and expensed on a monthly basis.  On the date of vesting, the grant-date fair value of the restricted stock units or restricted stock awards is transferred to common stock.  When restricted stock units or restricted stock awards are forfeited prior to vesting, any expense previously recorded is reversed through income.

 

Foreign Currency Exchange Gains or Losses

 

Our functional currency is the U.S. dollar.  All of our foreign subsidiaries are direct and integral components of Vista and are dependent upon the economic environment of our functional currency.  Therefore, the functional currency of our foreign entities is considered to be the U.S. dollar in accordance with the Accounting Standards Codification (“ASC”) Topic 830, “Foreign Currency Matters,” and accordingly, translation gains and losses are reported in the loss for that period.  Assets and liabilities of these foreign operations are translated using period-end exchange rates and revenues and expenses are translated using average exchange rates during each period.

 

Income Taxes

 

We provide for income taxes using the liability method of tax allocation.  Under this method, future income tax assets and liabilities

 

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VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

are determined based on deductible or taxable temporary differences between financial statement values and tax values of assets and liabilities using enacted income tax rates expected to be in effect for the year in which the difference are expected to reverse.

 

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognized as income or an expense and included in the profit or loss for the period, except when it arises from a transaction that is recognized directly in equity, in which case the deferred tax is also recognized directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

 

We establish a valuation allowance against the future income tax assets if, based on available information, it is more likely than not that all of the assets will not be realized.

 

Uncertainty in Income Tax Positions

 

The Company recognizes tax benefits from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the taxing authorities. The Company records the related interest expense and penalties, if any, as tax expense in the tax provision.

 

Net Income/(Loss) Per Share

 

Basic income/(loss) per share amounts are calculated by using the weighted average number of common shares outstanding during the period. Diluted income per share amounts reflect the potential dilution that could occur if securities or other contracts that may require the issuance of common shares in the future were converted unless their inclusion would be anti-dilutive. As Vista incurred a net loss in 2010, potential shares to be issued from the assumed exercise of stock options, warrants and restricted share units were not included in the computation of diluted earnings per share in 2010, since their result would have been anti-dilutive.

 

Subsequent Events

 

We have evaluated events, if any, which occurred subsequent to September 30, 2011 to ensure that such events have been properly reflected in these consolidated financial statements.

 

Recent Accounting Pronouncements

 

Business Combinations

 

In December 2010, ASC guidance for business combinations was updated to clarify existing guidance that requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only.  The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  The updated guidance became effective for our fiscal year that began on January 1, 2011.  Adoption of this guidance has had no impact on our consolidated financial position, results of operations or cash flows.

 

Fair Value Accounting

 

In January 2010, the ASC guidance for fair-value measurements and disclosures was updated to require enhanced detail in the Level 3 reconciliation, which includes financial instruments valued using management’s judgment and estimations.  The updated guidance became effective for our fiscal year that began on January 1, 2011.  Adoption of this guidance had no impact on our consolidated financial statements for the nine months ended September 30, 2011 and is expected to have minimal impact for the full year ending December 31, 2011.

 

3.                                      Disposal Activity

 

Midas Gold Corp. Combination

 

On April 6, 2011, Vista completed a combination (the “Combination”) with Midas Gold, Inc. (“Midas”).  As part of the Combination, each of Midas and Vista Gold U.S. Inc. (“Vista US”) contributed their respective interests in gold assets in the Yellow Pine-Stibnite District in Idaho to a new Canadian private company named Midas Gold Corp. (“Midas Gold”). In exchange for the contribution of its equity interests in Idaho Gold Holding Company, Vista US was issued 30,402,615 common shares in the capital of Midas Gold (“Midas Gold Shares”).  Concurrently with the Combination, Midas Gold completed a private placement of 6,129,800 Midas Gold Shares at a purchase price of Cdn$2.50 ($2.59 based on the exchange rate on April 6, 2011) per share to raise gross proceeds of Cdn$15,325 ($15,876 based on the exchange rate on April 6, 2011) (the “Private Placement”).  We purchased 1,400,000 Midas Gold Shares through the Private Placement for an aggregate purchase price of Cdn$3,500 ($3,632 based on the exchange rate on April 6,

 

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Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

2011). Following completion of the Combination and the Private Placement, Vista and Vista US together hold 31,802,615 Midas Gold Shares representing as at April 6, 2011 approximately 37.4% (basic) and 34.2% (fully diluted basis) of the issued and outstanding Midas Gold Shares.

 

On July 14, 2011, Midas Gold successfully completed an initial public offering (“IPO”), issuing 13,930,855 Midas Gold Shares.  Midas Gold Shares began trading on the Toronto Stock Exchange (“TSX”) under the symbol “MAX.”  Vista owns 31,802,615 Midas Gold Shares, which following the completion of Midas Gold’s IPO, represents 30.2% of the issued and outstanding Midas Gold Shares.

 

Upon initial recognition of its investment in the Midas Gold Shares, Vista elected to apply the fair value option, and as such, the investment is recorded at fair value in the Consolidated Balance Sheet.  Subsequent changes in fair value are recorded in the Consolidated Statement of Income/(Loss) in the period in which they occur.  The difference between the fair value of the 30,402,615 Midas Gold Shares and the carrying value of our Yellow Pine assets has been recorded as a gain on disposal of mineral property given that Vista ceased to have a controlling financial interest in the Yellow Pine gold project upon completion of the Combination.

 

The Midas Gold Shares are currently subject to a contractual restriction on transfer from the date of Midas’ IPO.  Because management intends on holding this investment for the long term, we have classified our investment in the Midas Gold Shares as a long-term investment.

 

Amayapampa Disposal Consideration

 

On April 7, 2008, we entered into an agreement to dispose of our wholly-owned subsidiary Vista Gold (Antigua) Corp. (“Vista Gold Antigua”) to Republic Gold Limited (“Republic”). Vista Gold Antigua indirectly held our interest in the Amayapampa gold project in Bolivia. Under the terms of the transaction, Republic agreed to pay to us a total amount of $3,000 in three payments of $1,000. The first of these payments will be due and payable upon the start of commercial production (as defined in the purchase and sale agreement) at the Amayapampa gold project followed by $1,000 payments on each of the first and second anniversaries of the start of Commercial Production.  In addition, Republic agreed to pay to us a net smelter return royalty (“NSR”) on the gold produced by or on behalf of Republic from the Amayapampa gold project in varying percentages depending on the price of gold per ounce. When the price of gold is between $500.01 and $650.00 per ounce, a 2% NSR is payable; when the price of gold is between $650.01 and $750.00 per ounce, a 3% NSR is payable; and when the price of gold is $750.01 per ounce and above, an NSR of 3.5% is payable. The NSR is capped at 720,000 gold equivalent ounces, and no NSR payments are due to us if the gold price is below $500 per ounce. The Amayapampa disposal consideration has been accounted for in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.” The balance of the Amayapampa disposal consideration at September 30, 2011 was $4,813. See Note 4 below for details regarding inputs used in determining the fair value of this asset.

 

4.                                      Fair Value of Financial Instruments

 

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

 

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

 

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

 

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

 

Our financial instruments include cash and cash equivalents, marketable securities, Amayapampa disposal consideration, long-term investment, accounts payable and certain other current assets and liabilities.  Due to the short-term nature of our cash and cash equivalents, accounts payable and certain other current assets and liabilities, we believe that their carrying amounts approximated fair value.  Our marketable securities are classified as available-for-sale. Accordingly, these securities are carried at fair value, which is based upon quoted market prices in an active market, with unrealized gains and losses being reported in other comprehensive income until such time that the securities are disposed of or become impaired.  As such, these financial instruments are included in Level 1 in our fair-value hierarchy.  The value of our long-term investment in the Midas Gold Shares is based upon its quoted market price in an active market, discounted to the extent considered appropriate by management for the contractual restriction on transfer.  Based on these factors, this financial instrument is included in Level 2 in our fair-value hierarchy.  The value of the Amayapampa disposal consideration was estimated at $4,813 based on probability-weighted cash flow scenarios and assumptions, including future gold prices, estimated gold production and the timing of commencement of commercial production, which are management’s best estimates based on current available information.  As such, this financial instrument is included in Level 3 in our fair-value hierarchy.

 

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Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

5.                                      Marketable Securities

 

 

 

At September 30, 2011

 

At December 31, 2010

 

 

 

Cost

 

Unrealized
gain/(loss)

 

Fair value

 

Cost

 

Unrealized
gain

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Esperanza Silver Corp.

 

$

10

 

$

106

 

$

116

 

$

10

 

$

203

 

$

213

 

Black Isle Resources

 

50

 

(19

)

31

 

50

 

13

 

63

 

Nevgold Resources Corp.

 

87

 

24

 

111

 

87

 

205

 

292

 

Sprott Resources Corp.

 

138

 

69

 

207

 

220

 

150

 

370

 

Canadian Phoenix

 

99

 

(4

)

95

 

99

 

12

 

111

 

Other

 

518

 

(138

)

380

 

308

 

346

 

654

 

 

 

$

902

 

$

38

 

$

940

 

$

774

 

$

929

 

$

1,703

 

 

6.                                      Mineral Properties

 

 

 

2010

 

2011

 

 

 

December 31,

 

Acquisition
costs

 

Option
payments

 

Capitalized
interest

 

Cost
recovery

 

Disposals

 

Year to
date activity

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long Valley, United States

 

$

750

 

$

 

$

 

$

 

$

 

$

 

$

 

$

750

 

Yellow Pine, United States

 

800

 

 

 

 

 

(800

)

(800

)

 

Concordia, Mexico

 

8,588

 

1,150

 

50

 

379

 

 

 

1,579

 

10,167

 

Guadalupe de los Reyes, Mexico

 

2,752

 

 

 

 

 

 

 

2,752

 

Awak Mas, Indonesia

 

1,586

 

 

 

 

(1,000

)

 

(1,000

)

586

 

Mt. Todd, Australia

 

2,146

 

 

 

 

 

 

 

2,146

 

 

 

$

16,622

 

$

1,150

 

$

50

 

$

379

 

$

(1,000

)

$

(800

)

$

(221

)

$

16,401

 

 

The amounts disclosed as mineral properties as of December 31, 2010 differ from those previously presented in the U.S. GAAP reconciliation to our Canadian GAAP financial statements by $2,206.   This amount represents option payments expensed as incurred in the years 2002 to 2006, which have been treated as property acquisition costs in these consolidated financial statements prepared in accordance with U.S. GAAP.

 

On April 6, 2011, the Combination with Midas Gold was completed.  As part of the Combination, Midas and Vista US contributed each of their respective gold assets in the Yellow Pine-Stibnite District in Idaho to Midas Gold.  See Note 3.

 

On June 13, 2011, our subsidiary Vista Gold (Barbados) Corp. (“Vista Barbados,”) entered into an additional option agreement (“Additional Option Agreement”) with Pan Asia Resources Corp. (“Pan Asia”).  The Additional Option Agreement provides Pan Asia with the opportunity to earn an additional 20% interest in our Awak Mas gold project in Indonesia after it has earned a 60% interest in the project pursuant to the JV Agreement (as defined below).  Pan Asia can acquire the additional 20% interest by (a) making cash payments totaling $2,500 over a nine-month period; (b) issuing shares with a value equal to $2,000 or making a cash payment of $2,000 within 12 months, depending on whether Pan Asia completes an initial public offering; and (c) carrying out a 5,000 meter drilling program in an area outside of the current project resource area within 18 months.  In September 2011, the Additional Option Agreement and JV agreement were assigned from Pan Asia to Awak Mas Holdings Pty. Ltd. (an affiliate of Pan Asia). During the nine months ended September 30, 2011, Vista received $1,000 under the Additional Option Agreement and has recorded these proceeds as a cost recovery against the carrying value of the Awak Mas gold project.  Any further proceeds received under these option agreements will be applied against the carrying value of the Awak Mas gold project until the carrying value is reduced to zero.  Any proceeds received in excess of the carrying value of the project will be recorded as a realized gain in the Consolidated Statement of Income/(Loss).

 

In December 2009, Pan Asia and Vista Barbados executed a joint venture agreement (“JV Agreement”) allowing Pan Asia to earn a 60% interest in the project by: (a) expending $3,000 on the project within a specified period of time; (b) completing an environmental impact assessment and feasibility study (in compliance with Canadian National Instrument 43-101); and (c) issuing to Vista 2,000,000 shares of Pan Asia and the right to purchase up to an additional 2,000,000 shares of Pan Asia in the event Pan Asia completes an initial public offering of its shares. The 2,000,000 shares of Pan Asia received under the JV agreement were subsequently exchanged for equivalent shares of One Asia Resources Ltd.

 

If Awak Mas Holdings Pty. Ltd. completes the undertakings required in the JV Agreement and the Additional Option Agreement, it will hold an 80% indirect interest in the Awak Mas gold project.

 

In September 2011, the Company acquired some additional land from a third party for $1,150 as part of Vista’s efforts to advance the Concordia gold project. Vista paid $538 in cash, while the remaining $612 is due upon the achievement of certain milestones and is included in accrued liabilities and other on our Consolidated Balance Sheet.

 

The recoverability of the carrying values our mineral properties is dependent upon the successful start-up and commercial production

 

10



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

from, or the sale or lease of, these properties, and upon economic reserves being discovered or developed on the properties.  Development and/or start-up of any of these projects will depend on, among other things, management’s ability to raise additional capital for these purposes.  Although we have been successful in raising such capital in the past, there can be no assurance that we will be able to do so in the future.

 

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

 

7.                                      Plant and Equipment

 

 

 

September 30, 2011

 

December 31, 2010

 

 

 

Cost

 

Accumulated
depreciation and
write downs

 

Net

 

Cost

 

Accumulated
depreciation and
write downs

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concordia, Mexico

 

$

18,185

 

$

87

 

$

18,098

 

$

18,185

 

$

63

 

$

18,122

 

Awak Mas, Indonesia

 

119

 

91

 

28

 

119

 

91

 

28

 

Mt. Todd, Australia

 

1,298

 

668

 

630

 

1,110

 

494

 

616

 

Corporate, United States

 

422

 

361

 

61

 

355

 

312

 

43

 

 

 

$

20,024

 

$

1,207

 

$

18,817

 

$

19,769

 

$

960

 

$

18,809

 

 

8.                                      Long-Term Investment - Midas Gold Corp.

 

Summarized financial information for Midas as of June 30, 2011 and for the three and six months then ended, which represents Midas’ latest available financial data, prepared in accordance with International Financial Reporting Standards for interim financial statements is as follows (in thousands, except share and per share data):

 

 

 

June 30,

 

 

 

2011

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

 

$

18,821

 

Prepaid and other assets

 

201

 

Total current assets

 

19,022

 

Non-current assets

 

 

 

Buildings and equipment, net

 

475

 

Exploration and evaluation assets

 

93,197

 

Other non-current assets

 

1,516

 

Total non-current assets

 

95,188

 

Total assets

 

$

114,210

 

 

 

 

 

Liabilities & Shareholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

 

$

1,570

 

Current portion of notes payable

 

178

 

Accrued interest

 

2

 

Total current liabilities

 

1,750

 

Long-term portion of notes payable

 

566

 

Shareholders’ equity

 

 

 

Share capital

 

112,478

 

Equity reserve

 

4,644

 

Deficit

 

(5,228

)

Total shareholders’ equity

 

111,894

 

Total liabilities & shareholders’ equity

 

$

114,210

 

 

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Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

 

 

Three Months ended

 

Six Months ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Operating income/(expense)

 

$

(3,350

)

$

(152

)

$

(4,331

)

$

(297

)

Other income/(expense)

 

(52

)

7

 

(47

)

9

 

Net loss

 

$

(3,401

)

$

(145

)

$

(4,378

)

$

(288

)

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

0.04

 

$

 

$

0.07

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

86,903,000

 

37,543,000

 

65,376,000

 

32,729,000

 

 

9.                                      Income Taxes

 

As of December 31, 2010, our deferred tax assets were fully reserved with a related valuation allowance.  On April 6, 2011, we completed the Combination with Midas Gold Inc. that was a tax-free reorganization for U.S. tax purposes.  However, upon completion of the Combination, Vista US received Midas Gold Shares with an initial fair value of $78,872.  The corresponding estimated deferred tax liability of $29,675 at the time of the Combination exceeded the valuation allowance of $6,086 for Vista US.  Therefore, the valuation allowance against Vista US’s deferred tax asset was released upon receipt of the Midas Gold Shares.  At September 30, 2011, the deferred tax asset of $6,086 has been offset against the deferred tax liability of $39,632, representing the deferred tax liability for our unrealized gain on the Midas Gold Shares, and has been recorded in the Consolidated Balance Sheet.  The tax calculation is based on an effective rate of 38.01% (US Federal — 35% and state — 3.01%).

 

As of September 30, 2011, the Company has identified an uncertain tax position of $826 related to the utilization of certain net operating loss carry forwards that are expected to be taken on future income tax returns.   This uncertain tax position increased the Company’s effective income tax rate for the three and nine months ended September 30, 2011 to 40.04% and 38.82%, respectively.

 

10.                               Repayment of Convertible Notes

 

On March 4, 2011, we used a portion of the net cash proceeds of $33,074 from our October 22, 2010 private placement to repay the outstanding principal of $23,000 and accrued interest of $504 on our 10% senior secured convertible notes (the “Notes”).

 

12


 


Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

11.                               Capital Stock

 

 

 

Number of shares
issued

 

Common stock

 

As of December 31, 2010

 

61,919,752

 

$

349,719

 

 

 

 

 

 

 

Exercises of employee stock options - cash

 

64,742

 

118

 

Exercises of employee stock options - fair value - Note 12

 

 

78

 

Issued during the three months ended March 31, 2011

 

64,742

 

196

 

As of March 31, 2011

 

61,984,494

 

$

349,915

 

 

 

 

 

 

 

Exercises of employee stock options - cash

 

134,742

 

324

 

Exercises of employee stock options - fair value - Note 12

 

 

146

 

Exercises of October 22, 2010 warrants - cash

 

13,677

 

48

 

Exercises of October 22, 2010 warrants - fair value - Note 13

 

 

15

 

April 20, 2011 equity financing

 

9,000,000

 

28,396

 

Issued during the three months ended June 30, 2011

 

9,148,419

 

28,929

 

As of June 30, 2011

 

71,132,913

 

$

378,844

 

 

 

 

 

 

 

Exercises of employee stock options - cash

 

87,500

 

264

 

Exercises of employee stock options - fair value - Note 12

 

 

125

 

Exercises of restricted stock units - fair value - Note 12

 

140,905

 

392

 

Cash paid in lieu of capital stock issuances

 

 

(107

)

Exercises of October 22, 2010 warrants - cash

 

74,565

 

261

 

Exercises of October 22, 2010 warrants - fair value - Note 13

 

 

82

 

Issued during the three months ended September 30, 2011

 

302,970

 

1,017

 

As of September 30, 2011

 

71,435,883

 

$

379,861

 

 

On April 20, 2011, GMP Securities L.P. and Wellington West Capital Markets Inc. (collectively, the “Underwriters”) purchased, on a bought deal basis, 9,000,000 of our common shares at a price of Cdn$3.30 ($3.43 based on the exchange rate on April 20, 2011) per common share (the “Issue Price”) for aggregate gross proceeds of Cdn$29,700 ($30,870 based on the exchange rate on April 20, 2011) (the “Offering”).  Net cash proceeds after legal and regulatory fees were $28,984.  Also, in connection with the Offering, we issued 450,000 compensation options to the Underwriters with a fair value of $588 (see Note 13).  The common shares were sold by way of a prospectus supplement to our existing base shelf prospectus dated April 27, 2009 and filed with the securities commissions in all of the provinces and territories of Canada (other than the Province of Québec) and in the United States by way of a prospectus supplement to our base shelf prospectus included in our shelf registration statement filed with the SEC on April 28, 2009.  On May 20, 2011, an over-allotment option expired unexercised.

 

12.                               Stock-Based Compensation

 

A summary of the fair value of all awards issued under our stock compensation plans included within shareholders’ equity is as follows:

 

 

 

September 30,

 

December 31,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Stock options

 

$

4,489

 

$

4,570

 

Restricted stock units

 

 

125

 

 

 

$

4,489

 

$

4,695

 

 

Stock Option Plan

 

Under our Stock Option Plan (the “Plan”), we may grant options to our directors, officers, employees and consultants.  The maximum number of our common shares that may be reserved for issuance under the Plan, together with those reserved for issuance under the LTIP (as discussed below), is a variable number equal to 10% of the issued and outstanding common shares on a non-diluted basis.  Under the Plan, the exercise price of each option shall not be less than the market price of our common shares on the date preceding the date of grant, and an option’s maximum term is 10 years or such other shorter term as stipulated in a stock option

 

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VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

agreement between Vista and the optionee.  Options under the Plan are granted from time to time at the discretion of the Board of Directors (“Board of Directors” or “Board”), with vesting periods and other terms as determined by the Board.

 

A summary of option activity under the Plan as of September 30, 2011 and changes during the nine-month period then ended is set forth in the following table:

 

 

 

Number of shares

 

Weighted average
exercise price per
share

 

Weighted average
remaining
contractual term

 

Aggregate
intrinsic value

 

Outstanding - December 31, 2010

 

2,588,661

 

$

3.55

 

2.90

 

$

463

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

(64,742

)

2.37

 

 

 

 

 

Outstanding - March 31, 2011

 

2,523,919

 

$

3.58

 

2.38

 

$

2,455

 

 

 

 

 

 

 

 

 

 

 

Granted

 

891,000

 

2.93

 

 

 

 

 

Exercised

 

(134,742

)

2.16

 

 

 

 

 

Outstanding - June 30, 2011

 

3,280,177

 

$

3.45

 

2.85

 

$

733

 

 

 

 

 

 

 

 

 

 

 

Granted

 

155,000

 

3.29

 

 

 

 

 

Exercised

 

(87,500

)

3.53

 

 

 

 

 

Expired

 

(216,677

)

3.44

 

 

 

 

 

Outstanding - September 30, 2011

 

3,131,000

 

$

3.23

 

2.85

 

$

1,604

 

 

 

 

 

 

 

 

 

 

 

Exercisable - September 30, 2011

 

2,555,500

 

$

3.30

 

2.31

 

$

1,362

 

 

A summary of the fair-value changes included in stock-based compensation within shareholders’ equity as of September 30, 2011 is set forth in the following table:

 

 

 

Fair value

 

As of December 31, 2010

 

$

4,570

 

 

 

 

 

Exercised

 

(78

)

Expensed

 

28

 

As of March 31, 2011

 

$

4,520

 

 

 

 

 

Granted

 

671

 

Exercised

 

(146

)

Expensed

 

60

 

As of June 30, 2011

 

$

5,105

 

 

 

 

 

Granted

 

(124

)

Exercised

 

 

 

Expensed

 

336

 

Expired

 

(828

)

As of September 30, 2011

 

$

4,489

 

 

The total number of stock options outstanding at the end of the quarter is 3,131,000 with exercise prices ranging from approximately $1.77 to $7.45 and remaining lives ranging from 0.83 to 4.88 years.  The total number of options outstanding represents 4.38% of our issued and outstanding capital.

 

14



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

A summary of the status of our unvested stock options as of September 30, 2011 is set forth below:

 

 

 

Number of shares

 

Weighted average
grant-date fair
value per share

 

Unvested - December 31, 2010

 

82,500

 

$

1.36

 

 

 

 

 

 

 

Unvested - March 31, 2011

 

82,500

 

$

1.36

 

 

 

 

 

 

 

Granted

 

445,500

 

1.51

 

Vested

 

(30,000

)

1.17

 

 

 

 

 

 

 

Unvested - June 30, 2011

 

498,000

 

$

1.50

 

 

 

 

 

 

 

Granted

 

77,500

 

1.68

 

 

 

 

 

 

 

Unvested - September 30, 2011

 

575,500

 

$

1.51

 

 

As of September 30, 2011, there was $689 of unrecognized compensation expense related to the unvested portion of options outstanding.  This expense is expected to be recognized over a weighted-average period of 0.73 years.

 

Long-Term Equity Incentive Plan

 

In May 2010, our shareholders approved the Long-Term Equity Incentive Plan (the “LTIP”), effective March 8, 2010 (the “Effective Date”).  Under the LTIP, we may grant Restricted Stock Units (“RSU awards”) or Restricted Stock Awards (“RSA awards”) to the directors, officers, employees and consultants of Vista.  The maximum number of our common shares that may be reserved for issuance under the LTIP, together with those reserved for issuance under the Plan (as discussed above), is a variable number equal to 10% of our issued and outstanding common shares on a non-diluted basis.  The total number of common shares issuable to our insiders at any time and issued to our insiders within any one-year period under the LTIP, together with any stock options issued under the Plan, shall not exceed 10% of our issued and outstanding common shares on a non-diluted basis.  The total number of common shares issuable to a director under the LTIP shall not exceed the lesser of: (i) 1% of our issued and outstanding common shares; and (ii) an annual award value of $100 per director.

 

The LTIP is administered by the Board of Directors, which can delegate the administration to the Compensation Committee or to such other officers and employees of Vista as designated by the Board of Directors.  The Board of Directors will determine the persons to whom awards are made; set the size, type, terms and conditions of the awards; fix the prices (if any) to be paid for the award; interpret the LTIP; adopt, amend, rescind and take all other actions it believes are necessary or advisable for the implementation and administration of the LTIP.

 

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Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

Restricted Stock Units

 

The estimated fair value of each of our RSU awards was determined on the date of grant based on the closing market price of our common shares on the date of grant.

 

The following table summarizes the RSU awards during the period ended September 30, 2011:

 

 

 

Number of units

 

Weighted average
grant-date fair
value

 

Unvested - December 31, 2010

 

175,500

 

$

2.37

 

 

 

 

 

 

 

Unvested - March 31, 2011

 

175,500

 

$

2.37

 

 

 

 

 

 

 

Forfeited

 

(10,000

)

2.37

 

 

 

 

 

 

 

Unvested - June 30, 2011

 

165,500

 

$

2.37

 

 

 

 

 

 

 

Exercised

 

(165,500

)

2.37

 

 

 

 

 

 

 

Outstanding - September 30, 2011

 

 

 

 

 

A summary of the amortization of the fair value included in stock-based compensation within shareholders’ equity as of September 30, 2011 is set forth in the following table:

 

 

 

Fair value

 

As of December 31, 2010

 

$

125

 

 

 

 

 

Expensed

 

102

 

As of March 31, 2011

 

$

227

 

 

 

 

 

Expensed

 

104

 

Forfeited

 

(17

)

As of June 30, 2011

 

$

314

 

 

 

 

 

Expensed

 

78

 

Exercised

 

(392

)

As of September 30, 2011

 

$

 

 

13.                               Warrants

 

A summary of the fair value of warrants, including compensation options, outstanding and included within shareholders’ equity is as follows:

 

 

 

September 30,

 

December 31,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Warrants

 

$

10,288

 

$

10,721

 

Compensation options

 

588

 

 

 

 

$

10,876

 

$

10,721

 

 

16



Table of Contents

 

VISTA GOLD CORP. (An Exploration Stage Enterprise)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

 

Warrants

 

 

 

Warrants
granted

 

Valuation

 

Warrants
exercised

 

Warrants
expired

 

Warrants
outstanding

 

Weighted
average
exercise price
per share

 

Expiry
date

 

Weighted
average
remaining
life (yrs.)

 

Intrinsic
Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2010

 

28,347,397

 

$

10,721

 

(11,683,841

)

(525,077

)

16,138,480

 

$

3.48

 

 

 

4.6

 

$

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible notes broker warrants

 

 

(336

)

 

(200,000

)

(200,000

)

6.00

 

Mar-11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2011

 

28,347,397

 

$

10,385

 

(11,683,841

)

(725,077

)

15,938,480

 

$

3.45

 

 

 

4.5

 

$

8,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised from the October 22, 2010 private placement

 

 

(15

)

(13,677

)

 

(13,677

)

3.50

 

Oct-15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2011

 

28,347,397

 

$

10,370

 

(11,697,518

)

(725,077

)

15,924,803

 

$

3.45

 

 

 

4.2

 

$

334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised from the October 22, 2010 private placement

 

 

(82

)

(74,565

)

 

(74,565

)

3.50

 

Oct-15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding and exercisable as of September 30, 2011

 

28,347,397

 

$

10,288

 

(11,772,083

)

(725,077

)

15,850,238

 

$

3.45

 

 

 

3.9

 

$

656

 

 

On March 2, 2011, we announced that the 15,308,044 warrants issued on December 15, 2010 in connection with our private placement of special warrants, began trading March 1, 2011 on the TSX under the symbol VGZ.WT.U (subsequently changed to VGZ.WT.S on March 14, 2011).

 

On March 4, 2011, the warrants that were issued to the brokers in conjunction with the brokered private placement of the Notes expired.  The value attributable to these warrants has been reclassified to additional paid-in capital as a result.

 

On May 5, 2011, our resale registration statement on Form S-3, which we agreed to file pursuant to the terms of our October 22, 2010 private placement of 14,666,739 special warrants, was declared effective.  The registration statement registers for resale common shares, warrants and common shares issuable upon the exercise of warrants held by certain security holders named in the prospectus contained in the registration statement.  The registration statement also registers the issuance of common shares underlying the warrants by holders that purchase the warrants pursuant to the resale registration statement.

 

Compensation Options

 

 

 

Compensation
options

 

Valuation

 

Compensation
options
outstanding

 

Weighted
average exercise
price

 

Expiry
date

 

Weighted
average
remaining
life (yrs.)

 

Intrinsic
Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2010

 

 

$

 

 

$

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2011

 

 

$

 

 

$

 

 

 

 

 

$