Vista Gold Corp

TSX:VGZ

Earnings Call Transcript 2024-Q1

[Operator]

Good day, ladies and gentlemen. Welcome to Vista Gold's First Quarter 2024 Financial Results and Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Today is Tuesday, May 7, 2024. It's now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Please go ahead.

[Pamela Solly, executive]

Thank you, Andrew, and good afternoon, everyone. Thank you for joining the Vista Gold Corp. First Quarter 2024 Financial Results and Corporate Update Conference Call. I'm Pamela Solly, Vice President of Investor Relations. On the call today is Fred Earnest, President and Chief Executive Officer; and Doug Tobler, Chief Financial Officer.

During the course of this call and the question-and-answer session, we will be making forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Vista to be materially different from results, performance or achievements expressed or implied by such statements. Please refer to our most recently filed Form 10-Q for details of risks and other important factors that could cause actual results to differ materially from those in our forward-looking statements and the cautionary note regarding estimates of mineral resources and mineral reserves.

I will now turn the call over to Fred Earnest.

[Frederick H. Earnest, executive]

Thank you, Pam, and thank you to everyone for joining us on the call today. We've had a strong start to the year, and I'm pleased to talk about a few highlights today. During the first quarter, we received the second installment payment of $7 million under the $20 million royalty transaction with Wheaton Precious Metals. We updated the Mt Todd feasibility study to reflect current estimates of material capital and operating cost components. We commenced a drilling program targeting shallow gold resources at the north end of the Batman deposit and published our inaugural environmental, social and governance report.

We note that during the quarter, W. Durand (Randy) Eppler, a long-serving member of our Board passed away. We recognize his many contributions to the Board and the company. In February, Mr. Mike Sylvestre was appointed to take Mr. Eppler's place on the board.

On April 30, we hosted our Annual General and Special Meeting of the Shareholders where Patrick Keenan was elected as a new director and member of our Board. Pat has more than 30 years of executive mining industry experience and was most recently Executive Vice President and Chief Financial Officer of PolyMet Mining Corp.

Our focus in 2024 is on strengthening our balance sheet, advancing evaluations of an initially smaller scale Mt Todd project with the option for subsequent staged expansion, continuing our work with CIBC Capital Markets to maximize shareholder value, and successfully executing health, safety and environmental initiatives. I am pleased to report that we have had no lost time accidents this year-to-date and that the Mt Todd site has now reached 908 consecutive accident-free days.

I will discuss some of these topics in greater detail later in the call, but I will now turn the time over to Doug Tobler for a review of our financial results for the quarter ended March 31, 2024.

[Douglas Tobler, executive]

Thank you, Fred. Today, I'll provide a brief recap of our results of operations for the first quarter of 2024 and discuss our financial results as of March 31. Vista Gold's full financial statements and MD&A are included in our Form 10-Q that was filed last Thursday and is available at sec.gov or sedarplus.ca. I'm pleased to report that our financial results for the first quarter of 2024 were in line with management's expectations and due to gains on sales of noncore assets, resulted in a 45% reduction in the company's net loss compared to the first quarter of 2023.

We reported consolidated net losses for the 3 months ended March 31, 2024, and 2023 of $1.1 million and $2.0 million, respectively. Our recurring cost for Mt Todd and our general corporate purposes remained consistent during the current quarter compared to the same period last year. The $900,000 reduction in net loss resulted from an $800,000 gain on sale of a portion of the company's mill equipment and a combined $100,000 from greater interest income and the sale of marketable securities. Now turning to our financial position at March 31.

We advanced our goal of strengthening our balance sheet. During the first quarter, we improved our cash position, which was at $6.1 million at December 31 and $11.9 million at March 31, 2024. This $5.8 million increase resulted largely from our receipt of the $7 million second installment under the Wheaton Royalty Agreement, which was signed in December 2023. Sales of noncore assets and interest income, as I mentioned previously, also generated cash of approximately $900,000. Offsetting these sources of cash were operating cash outflows of $1.4 million and $500,000 expended for development drilling that was capitalized as mineral properties. I would also note that we continue to have no debt.

Looking forward now, we expect our recurring expenditures, drilling costs and other planned studies to remain in line with our expectations over the next 12 months. From a cash inflow perspective, the final installment of $10 million under the Royalty Agreement is to be received 6 months from the date of the first installment providing Vista Gold Australia has commenced a drilling program at Mt Todd and satisfied other customary conditions, representations and warranties.

Thank you. That concludes my remarks for today. I'll turn the call back over to you, Fred.

[Frederick H. Earnest, executive]

Thank you, Doug. I'll begin with our first quarter achievements, followed by an outlook for the remainder of the year. In March, we announced the results of an updated feasibility study for the Mt Todd gold project. This updated feasibility study reflects changes in project economics that have occurred since the previous feasibility study was filed in February of 2022. Material capital and operating cost components were updated with quotes obtained in the first quarter of 2024.

The updated study also reflects the current outlook for the long-term gold price and foreign exchange rates and the previously announced royalty. Mt Todd mineral resources and mineral reserves, mine plans, gold recoveries and gold production schedules remain unchanged. Project economics were approximately the same or slightly better than reported 2 years ago, inclusive of cost increases that have affected the entire gold mining sector. We are pleased that Mt Todd's value is confirmed at the given foreign exchange rates and conservative gold price selected.

A few highlights of the Mt Todd 2024 updated feasibility study include at an $1,800 gold price and a $0.69 foreign exchange rate, the after-tax net present value at a 5% discount rate is $1.13 billion, up $131 million from the previous study. And the after-tax IRR is now 20.4%, down just 0.2%. Average life of mine cash costs are estimated to be $913 per ounce. This is up $96 per ounce and is still highly competitive under current market conditions.

Average life of mine all-in sustaining costs now estimated to be $1,034 an ounce, up $104 per ounce. Using a gold price of $2,300 an ounce and a $0.66 foreign exchange rate which are more reflective of current market conditions, the after-tax net present value at a 5% discount rate of the project is $2.3 billion, and the after-tax IRR is 34.4%. Initial capital requirements of $1.03 billion, that's up $138 million from the previous study and continues to reflect the use of third-party owner-operator of the power plant and Vista-owned and operated mining fleet. Moving on to the drilling program.

In January, we commenced a drilling program expected to total 6,000 to 7,000 meters with a focus on shallow gold resources at the north end of the Batman deposit. We believe that this drilling has the potential to add value to Mt Todd through a more constant production profile, reduced stripping in the early years of the project and increase mine life for all development scenarios. The drilling is expected to have an all-in cost of approximately $2 million and to be completed by year-end.

In March, we published our inaugural environmental, social and governance report. This report provides an overview of progress on our environmental, social and governance performance in 2023 and goals and key initiatives for the coming year. We recognize the importance of conducting our business in a responsible and sustainable manner. And we are fully committed to aligning our business practices with current and evolving environmental, social and governance principles to ensure the long-term success and positive impact of our operations.

At our recent Annual General and Special Meeting of the shareholders, Patrick Keenan was elected as a new director and member of our Board of Directors. As I mentioned, Pat is a retired mining executive and accomplished Chief Financial Officer with more than 30 years of executive mining industry experience. Pat was formerly an Executive Vice President and Chief Financial Officer of PolyMet Mining Corp, and a former Senior Vice President, Finance and Treasurer of Newmont Mining. He also served in various senior management roles for Rio Tinto. We are pleased to welcome Pat to our Board and look forward to his contributions as we pursue strategic opportunities for Vista and the Mt Todd gold project. Pat joins Mike Sylvestre, who was appointed to the Board in February; Tracy Stevenson, who is the Chair of the Board; John Clark, Deborah Friedman and I as members of the Board.

Now looking ahead, in addition to maintaining a strong balance sheet, we are advancing evaluations of an initially smaller scale Mt Todd project with the option for subsequent stage expansion and continuing our work with CIBC Capital Markets to maximize shareholder value. As part of our evaluation of a stage development strategy for Mt Todd, we plan to leverage the work of previous technical studies in our evaluations of a smaller scale stage development scenario.

Previous studies demonstrated the opportunity to significantly lower the initial CapEx, maintain high margins, and deliver attractive economic returns. We believe that alternative development strategies offer valuable optionality as we focus on creating shareholder value and attracting investor interest in Mt Todd. At this time, we anticipate completing a feasibility study on a smaller initial scale project in the first half of next year.

In conclusion, the Mt Todd gold project is one of the largest and most advanced undeveloped gold projects in Australia with 7 million ounces of proven and probable reserves. In addition to its size, Mt Todd offers a number of other strategic advantages. Mt Todd is ideally located in the Northern Territory of Australia, an extremely stable and mining-friendly jurisdiction. The existing project infrastructure at Mt Todd provides construction time line and risk mitigation advantages. All of the major permits to initiate development of Mt Todd had been approved. Of equal importance, we have earned the trust of the local stakeholders and are confident that our social license is firmly in hand.

Our current technical programs aim to derisk the project by incorporating designs that significantly reduce the initial capital cost while maintaining competitive operating costs and preserving the option for future project expansion. We believe Mt Todd is a superior asset and one of the most attractive development-stage gold projects, not just in Australia, but in the world. Our primary objective is to achieve a valuation for Mt Todd that is reflective of the favorable operating costs and robust project economics as demonstrated by the updated feasibility study and the fact that we hold approvals for all major permits needed to initiate development.

For a more comprehensive review of the work completed by Vista on the Mt Todd project, I refer you to our corporate presentation, which can be found on our website at www.vistagold.com. We believe that Vista Gold represents an exceptional investment opportunity and that current prices represent a tremendous opportunity to establish a position or increase one's holdings in Vista Gold.

This concludes our formal remarks. We will now respond to any questions from the participants on this call.

[Operator]

[Operator Instructions]

[Frederick H. Earnest, executive]

Andrew, it appears that we have no questions on the call today.

[Operator]

I'm just seeing one coming now from Gina Bowman (sic) [ Tina Bowman ], private investor.

[Unknown Attendee]

Okay. Actually, it's Tina, T as in Tom [ Tina Bowman ]. Okay. I'm new to investing, and I only have like 3 shares, I think. What do you think -- and I missed part of the meeting, I'm so sorry, and I'm just not real smart about this kind of stuff. But what is the projected earning outlook? Like -- I mean, of course, I can say I should buy more shares, but I mean, would that be wise? I mean is there going to be like a huge -- more like not huge, huge, but -- okay, yes.

[Frederick H. Earnest, executive]

Tina, thank you for your question. Vista Gold is a company that is advancing a project in Australia. There are no earnings at this stage in the life of the project. You will have seen that we presently trade around $0.50 a share on the NYSE American. We don't give investing advice as a normal course of these calls. But if you would like to reach out to either -- if you work with Renmark or H.C. Wainwright or any other advisers, they can provide you with appropriate advice on what you should do with your individual investing opportunities and activities.

On a broad, big picture scale, given the market cap, the value of the company is determined by the market, and the reserve that we have of 7 million ounces, the value of Vista Gold presently is very cheap. And there's a tremendous opportunity. Whether that makes sense for you at this point in time or not is something that you should consult with your individual financial advisers.

[Unknown Attendee]

Okay. Yes. Sorry about that. Like I said, I'm new to investing. So I don't know how to word my words. So but there -- go ahead.

[Frederick H. Earnest, executive]

No, you go ahead and finish. I'm sorry.

[Unknown Attendee]

No, no, I'm sorry, you go ahead.

[Frederick H. Earnest, executive]

I was just going to say, we appreciate you taking time to be on the call today to learn more about Vista.

[Unknown Attendee]

Well, yes, I want to ensure if I should or not because I only have like 3 shares. And I know that's not a lot. So -- but I was like, okay, well, if I'm going to have shares, I should probably join. So all right.

[Operator]

Our next call is from [ Michael Schulz ] as a private investor. There are no further questions at this time. Please go ahead.

[Frederick H. Earnest, executive]

All right. Thank you, Andrew. Ladies and gentlemen, we want to thank each of you for your time and interest this afternoon and listening to this update for the first quarter results of Vista Gold Corp. We've had a very busy and we feel a very productive first quarter. And we look forward to the momentum that's already been created as we now are partway through the second quarter of the year. I reiterate there's a number of exciting things that have happened. We've demonstrated the intrinsic value, the robust nature of Mt Todd gold project with the updated feasibility study. Drilling is ongoing, and we are commencing some of the preliminary studies that will lead to what we expect to be the completion of a feasibility study later this year. Andrew, it looks like Michael is back in the queue. If he's got a question, I'd like to take that.

[Operator]

[ Michael Schulz ], private investor.

[Frederick H. Earnest, executive]

Okay. Well, very good. I'll go ahead and conclude then. As I was saying, we've many exciting things -- studies that will lead to completion of a feasibility study we'll be commencing in the near future. And we are very excited about the opportunity that lies before us with evaluating and demonstrating the viability and the lower CapEx of initially smaller scale project. We invite all of you to give serious consideration to whether this makes sense to either initiate a position or add to your position in Vista Gold at this point in time. If you need further information, I invite you to reach out to Pamela Solly, our Vice President of Investor Relations; and she'll be able to answer your questions with regards to Vista and the Mt Todd project.

Again, we thank you for your time this afternoon, and I wish all of you a very pleasant afternoon. Thank you.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask can you please disconnect your lines.