Vista Gold Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 18, 2024

There are 4 speakers on the call.

Operator

Good day, ladies and gentlemen. Welcome to Vista Gold's 2023 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. As a reminder, this conference is being recorded today is Monday, March 18, 2024.

Operator

It is now my pleasure to introduce Pamela Soley, Vice President of Investor Relations. Thank you. Please go ahead.

Speaker 1

Thank you, Ina, and good day, everyone. Thank you for joining the Vista Gold 20 23 financial results and corporate update conference call. I'm Pamela Solis, 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, we will be making forward looking statements.

Speaker 1

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 ks 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'll now turn the call over to Fred Earnest.

Speaker 2

Thank you, Pam, and thank you everyone for joining us on the call today. Before I begin with our 20 23 achievements, I would like to take this opportunity to acknowledge the many contributions of Mr. Randy Epler, who recently passed away. Randy served as a Director of our company since 2004 and chaired several Board committees during his tenure. Randy was a gentleman, a friend and a consummate professional who brought a wealth of knowledge and missed.

Speaker 2

As we turn to our 2023 results, I'm pleased to report that during 2023, we succeeded in efficiently managing our cash and strengthened our balance sheet by completing a 20,000,000 dollars royalty transaction with Wheaton Precious Metals. To date, we have received the first two installment payments totaling 10,000,000 dollars and expect to receive the final $10,000,000 installment prior to the end of the second quarter. In addition to completing the royalty, we completed an internal scoping study to evaluate smaller scale stage development alternatives at Mt. Todd, continued to process continued the process to refresh our Board of Directors and extended our agreement with the Northern Territory government pertaining to Mt. Todd through December 31, 2029 with the option for a 3 year extension.

Speaker 2

We continued to work with CIBC Capital Markets to identify and advance interest in Mt. Todd and are focused on achieving a transaction that maximizes shareholder value. We saw increased interest in Mt. Todd during the latter part of 2023, including new interest in our plans to advance an alternative development strategy. We are committed to the health and safety of our employees and to environmental 60 consecutive accident free days.

Speaker 2

We've had a very good start to 2024 with the commencement of a drilling program, on The feasibility indicates that at a gold price of $2,100 and a $0.66 foreign exchange rate, which are reflective of current market conditions, the after tax NPV at a 5% discount rate for the project is $1,880,000,000 and the IRR is 29.6%. I will discuss these topics along with our other 2023 results in greater detail later in the call. But I will now turn the time over to Doug Tober for a review of our financial results for the quarter ended December 30 1,

Speaker 3

recent Form 10 ks last week. I would encourage you to review this document for additional information on the topics presented today. I'll start today with a recap of our year over year results of operations. Vista reported a net loss of 6,600,000 dollars for 2023 compared to a net loss of $4,900,000 for 2022. This year's net loss increased by $1,700,000 because in 2022, we reported a $2,900,000 gain on the final disposition of our interest in the Alak Moss project located in Indonesia, and we had no similar gain during 2023.

Speaker 3

Otherwise, our 2023 operating expenses decreased by $1,500,000 to $6,800,000 Of this $1,500,000 decrease in operating expenses, about $1,300,000 related to Mt. Todd. This decrease for Mt. Resulted from us completing many of the work programs internally during 2023 compared to 20 22 when we had We also reduced our recurring holding costs for Mt. Todd by about $250,000 or 8%.

Speaker 3

$1,000 or 8%. The balance of the reduction in operating expenses related to corporate administration costs. Here we saw up my comments regarding our results of operations, I'd like to summarize our efforts over the past 2 years to reduce our our pleased with this result. Maintaining a low expenditure profile will continue to be an important part of our funding strategy as we move forward. Now moving on to our financial position, we ended 2023 with cash of 6 point continued to have no debt.

Speaker 3

During 2023, we took steps to strengthen our balance sheet as part of our objective to maintain adequate liquidity and minimize dilution as we advance our primary objective to maximize returns to our shareholders. In December 2023, we entered into a royalty agreement with Wheaton Precious Metals Cayman Co, which is an affiliate of Wheaton Precious Metals Corp. Vista granted Wheaton a 1% gross revenue royalty on Mt. Todd in exchange for $20,000,000 We received the 1st installment of $3,000,000 in December 2023 and the next $7,000,000 in February of this year. The remaining royalty proceeds of $10,000,000 are expected to be received by the end of the Q2 of 20 24.

Speaker 3

By completing this royalty, Vista now has the financial resources in place to complete the drilling program that started earlier this year and then follow on with studies of an initially smaller scale project at Mt Todd. These studies will target a significantly lower capital cost and operating costs close to those estimated in the Mt. Todd feasibility study that we announced last week. Fred will talk more about this opportunity later in today's call. That concludes my remarks for today.

Speaker 3

I'll now turn the call back to Fred.

Speaker 2

Thank you, Doug. I'll now discuss our 2023 achievements and then provide an update on 20 24. First, the completion of the $20,000,000 royalty with Wheaton not only strengthened our balance sheet, but confirms the strength, credibility and value of our world class Mt. Todd asset. We look forward to working with Wheaton as we continue to derisk and advance Mt.

Speaker 2

Todd. In March of 2023, we announced the completion of an internal scoping study in which we evaluated the technical and economic merits

Speaker 3

of

Speaker 2

smaller scale development alternatives for Mt. Todd. The results were very encouraging and demonstrated the potential for significantly lower initial capital costs, while preserving the opportunity for subsequent expansion or stage development. The scoping study indicates that a nominal 5,000,000 ton per year project or 15,000 tons per day could be designed and constructed with an initial capital expenditure of less than US350 $1,000,000 including contract mining and annual production in the range of 150,000 to 200,000 ounces of gold per year. Operating would remain very competitive in today's environment.

Speaker 2

On May 25, 2023, we signed an amendment to our our As you may be aware, last year, the Northern Territory Mineral Development Task Force presented its report outlining recommendations to enhance the importance of the mining industry and increase mining investment in the territory. Most notably, the report emphasized the importance of a simpler ad valorem royalty structure and aligning the royalty rate more closely with other mining jurisdictions where rates typically range from 2.5% to 5%. We have been part of the public consultation and review process for new legislation and expect royalty regime in the coming months. As the new royalty regime is implemented, we expect Vista and Mt. Todd to benefit in several ways.

Speaker 2

Turning to the present year. In March, earlier this month, we published our ESG performance in 2023 and goals and key objectives 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 ESG principles to ensure the long term success and positive impact of our operations. We continue to maintain strong working relationships with the Jawan people and the leaders of the Jawan Association Aboriginal Corporation. We also continue to work with leaders and stakeholders in the Katherine area and more broadly in the Northern Territory as well as the NT government.

Speaker 2

I'm pleased that our social license is firmly in place and strongly supported. We remain committed to responsible environmental management, protecting heritage sites and developing Mt. Todd in a way and at the time that maximizes the benefit for our shareholders and stakeholders in the Northern Territory. Updated feasibility study for the Mt. Todd project.

Speaker 2

The updated feasibility study reflects changes in project economics that have occurred since the previous feasibility study was mineral reserves, mine plans, gold recoveries and gold production schedules remain unchanged. Project

Speaker 3

Project

Speaker 2

cost increases that 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 updated feasibility study include, at an $1800 gold price and a $0.69 foreign exchange rate, the after tax net present value at a 5% discount rate is estimated to be $1,130,000,000 up $131,500,000 from the previous study and the IRR is estimated to be 20.4%, down 0.2% from the previous ounce from the previous study. Average all in sustaining costs are estimated to be $10.34 per ounce, up $104 from the previous study and that's on a life of mine basis.

Speaker 2

Using a gold price of 2,100 dollars a little less than today's gold price and a $0.66 foreign exchange rate, which is slightly more than today's foreign exchange rate. The company believe which and we believe that these numbers are more reflective of current market conditions. The after tax net present value at a 5% discount rate of the project is estimated to be 1,880,000,000 dollars and requirements of the project are now estimated to be $1,030,000,000 which is up $138,000,000 from previous study. This we continue to use and these numbers reflect the use of 3rd party owner operator of the power plant. Moving on, earlier this year, we also appointed Mike Sylvester as Director of Vista Gold and a member of our Health, Safety, Environment and Social Responsibility Committee.

Speaker 2

Mr. Sylvester is a successful mining executive with over 45 years of international and domestic industry experience with major, mid tier and junior companies. He retired in November 2022 from his position as Senior Vice President, Americas at Kinross Goldcorp. Mike's well rounded technical expertise, corporate leadership roles and international experience will be valuable as we pursue strategic to identify and advance interest in Mt. Todd and are focused on achieving a transaction that maximize the shareholder value.

Speaker 2

Management expects to continue to host site visits and respond to inquiries from engaged parties. Our evaluation of a smaller scale stage development strategy for Mt. Todd complements the work that we are doing with CIBC and increases optionality. We remain focused on recognizing value for shareholders through the completion of the right transaction, one that realizes a value recognition. In January, we commenced a drill program expected to total 6,000 meters with the focus to add shallow gold resources at the north end of the Batman deposit.

Speaker 2

We believe that if we are able to convert gold resources to gold reserves in this area, that it would add value to Mt. Todd by improving cash flow a result of more constant production profile, reduced stripping and increased mine life for all development scenarios. We expect to report initial results of the program in the coming weeks. The drilling is expected to have an all in cost of approximately US2 $1,000,000 and to be completed by the end of the year. As part of our evaluation of a stage development strategy for Mt.

Speaker 2

Todd, we plan to leverage the results of the the 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. The scope of technical studies will be one of the largest and most advanced undeveloped gold projects in Australia. With 7,000,000 ounces of proven and probable reserves, Mt.

Speaker 2

Todd controls or Vista controls towards Mt. Todd project, the 2nd largest reserve package in Australia. In a potential transaction. 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 very distinct construction timeline and risk Of Our enhance the project's leverage to gold price and provide a stronger foundation for improved shareholder value.

Speaker 2

We believe Mt. Todd is a superior asset and one of the most attractive development stage 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 gold production profile, long operating life, excellent gold recovery, favorable operating costs, robust project economics as demonstrated by the complete the 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 w ww.vistagold.com.

Speaker 2

We believe that Vista Gold represents an exceptional investment opportunity and that current prices represent a tremendous opportunity to establish a position or increase 1's holdings in Vista Gold. We will now

Operator

There are no questions at this time. Mr. Ernest, please proceed.

Speaker 2

Royalty agreement with Wheaton Precious Metals has given us the resources to be able to maintain and continue the course that we have selected, of course, that we believe will add value. We're very pleased with the updated feasibility study. And note that it provides confirmation of our belief that Mt. Todd is a robust project and capable of withstanding many, many changes that we've seen in the world in the last 2 years. We feel that this is an exciting time for the project.

Speaker 2

Drill holes. The work that we're doing and have contemplated for evaluating smaller scale stage development strategies for advancing Mt. Todd are very exciting and I believe that they will attract additional interest in the project and in the you have given us this afternoon. We hope that today's call has been informative. We invite you to seriously the opportunity that is presented by an investment in Vista Gold.

Speaker 2

We think that there is a tremendous a tremendous value creation opportunity here and we would love for each of you who are on the call today to be part of that. With that, I thank you for your time and wish each of you a very pleasant afternoon.

Operator

Thank you. This concludes today's call. Thank you for participating. You may all disconnect.

Powered by Quartr

Key Takeaways

  • Completed a $20 million royalty agreement with Wheaton Precious Metals, receiving $10 million to date and expecting the final installment by end of Q2 2024 to fund Mt. Todd activities.
  • Updated feasibility study highlights Mt. Todd’s robust economics: at US$2,100/oz gold and US$0.66 FX, after-tax NPV5% is US$1.88 billion with a 29.6% IRR and ~US$1.03 billion capex.
  • Internal scoping study for a smaller‐scale 5 Mtpa development shows initial capex under US$350 million and annual production of 150,000–200,000 ounces, adding project optionality.
  • Launched a 6,000 m drilling program at the Batman deposit to convert resources to reserves, with first assay results due in coming weeks and completion by year-end at ~US$2 million cost.
  • Reported a 2023 net loss of US$6.6 million versus US$4.9 million in 2022, but reduced operating expenses by US$1.5 million, ended the year debt-free with strong liquidity.
AI Generated. May Contain Errors.
Earnings Conference Call
Vista Gold Q4 2023
00:00 / 00:00