Vista Gold Corp (VGZ) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Vista Gold Corp. third-quarter 2010 financial results and project activity 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. (Operator Instructions) As a reminder this conference is being recorded today, Friday, November 12, 2010.

It is now my pleasure to introduce your host, Mr. Mike Richings, Executive Chairman and CEO of Vista Gold. Please go ahead.

Thank you, operator. Good morning, everyone. I have with me here today Greg Marlier, our CFO, and Fred Earnest, our President and Chief Operating Officer.

It has been a good quarter for us. We were able to close a private placement financing -- it's still subject to shareholder and regulatory approval -- for $33 million. The proceeds from this will be used to repurchase the notes -- if you will recall, we used to purchase mining equipment for the Concordia project -- and also to advance our Mt. Todd gold project towards a bankable feasibility study or to complete the bankable feasibility study on Mt. Todd project.

We also announced the results of the first pre-feasibility study on Mt. Todd and Fred will be going into some of the details on that. Finally, we chose to change the name of our project in Mexico to Concordia, originally known as Paredones Amarillos.

I will pass the conference now over to Greg Marlier, who will run through the financials, and then will be followed by Fred who will update us on our operating activities. Greg?

Thanks, Mike. Good morning to everyone and thank you for participating in today's conference call.

Before I review the third-quarter financials I would like to discuss the private placement financing that closed on October 22, 2010. Mike has summarized it a little earlier; I will go into a little bit more detail, not much.

This financing consisted of 14.7 million special warrants which consists of one share and one warrant. It was supplies priced at $2.30 per the special warrants for gross proceeds of $33.7 million. These proceeds are being held in escrow until the Corporation receives shareholder and regulatory approval. A special general meeting is to be held on December 15, 2010, at 10 a.m. Vancouver time in Vancouver.

These proceeds that I just mentioned will be used, as Mike mentioned, to pay off $23 million of the principal balance of our senior secured convertible notes that come due on March 4, 2011. The remaining funds, as Mike said, will be spent on advancing the Mt. Todd project and other corporate expenses.

I will now move on to summarizing the financial results for the period ending September 30, 2010. Our consolidated net loss for the three-month period ended September 30 was $1.3 million or $0.03 per share compared to $1.7 million or $0.05 per share for the same period in 2009.

Our consolidated net loss for the nine-month period ended September 30 was $7.2 million or $0.16 per share compared to consolidated net earnings of $300,000 or $0.01 per share for the same period in 2009. For the nine-month period ended September 30 the increase in the consolidated net loss is $7.5 million from the respective period is primarily due to decreases in the gain on the disposals of Allied Nevada Gold marketable securities of $6.6 million in 2009.

Our net cash used in operating activities was $931,000 for the three-month period compared to $964,000. The decrease of $33,000 is mostly the result of a decrease in the interest paid of $11,000 for the three-month period ended September 30, 2010. This decrease is attributable to the payment of interest associated with the repurchase of $1.3 million of the notes in July of 2009.

Net cash used in operating activities was $5.2 million for the nine-month period ended September 30, 2010, compared to $5.2 million for the same period in 2009. Roughly the same.

Net cash used in investing activities was $2.8 million for the three-month period ending 2010 as compared to $1.5 million for the same period in 2009. The increase in cash used by investing activities of $1.4 million is primarily due to an increase in cash used for additions to mineral properties of $1.4 million, primarily for the drilling program at the Mt. Todd project.

Net cash used in investing activities was $8 million for the nine-month period ended September 30, 2010, as compared to net cash provided by investing activities of $5.8 million for the same period in 2009. The increase in cash used in investing activities of $13.8 million is mostly the result of the following two items -- the proceeds we receive from the sale of marketable securities of $8.8 million on the Allied shares in 2009 and an increase in cash used for additions to mineral properties of $5.2 million as I stated earlier.

Our financing activities; net cash provided by financing activities was $8,000 at September 30, 2010, and net cash used by financing activities was $2.2 million for the nine-month period September 30, 2010, compared with net cash provided by financing activities of $19.8 million for both the three- and nine-month periods of 2009.

The cash used in financing activities for the nine-month period ended September 30, 2010, was a result of the cash consideration of $2.2 million paid for the repurchase of $5.7 million of notes on May 20, 2010. The cash provided by financing activities for both the three- and nine-month period in 2009 was mostly the result of the completion of a public offering on September 21, 2009.

At September 30, 2010, our total assets were $89.2 million compared to $92.6 million at December 31, 2009, representing a decrease of $3.4 million. At September 30, 2010, we had negative working capital of $8.6 million as compared with positive working capital of $29.4 million at December 31, 2009, representing a decrease of $38 million. This decrease relates primarily to a reclassification of the notes to a short-term debt obligation of $21.8 million as of September 30, 2010, as compared to a long-term debt obligation of $24.9 million as of December 31, 2009.

The principal components of working capital at September 30, 2010, are cash and cash equivalents of $13 million and the notes of $21.8 million.

This wraps up the financial results for the third quarter of 2010. I will now pass it on to Fred Earnest, our President and Chief Operating Officer.

Good morning, everybody. I will provide a brief update on advances at the Concordia project in Mexico, the Alpine project in Idaho, and the Mt. Todd project in Australia.

In August the Company changed the name of its wholly-owned project in Baja California Sur. The project is now called the Concordia project. The name Concordia is synonymous with harmony or oneness.

The name was changed as part of our ongoing community relations efforts and renewed efforts to communicate technological advances that are incorporated into the project development plans. We are able to report that we have seen increased interest in the project in recent months and enjoy the very strong support of the local communities.

We continue to work extensively with these local communities and I am pleased to report that ASUDES our foundation or civil association in Baja California Sur has achieved a couple of significant milestones this quarter. ASUDES has inaugurated community-wide wireless networks in the three communities in the project area and has awarded laptop computers to families with students in the local schools. ASUDES has also sponsored several scholarships for students attending local universities.

In addition to these activities, ASUDES has undertaken a community outreach program consistent with Concordia's core values of improving the quality of life for people in the project area, practicing principles to protect the planet, and improving the prosperity of members in the community and the shareholders of the Company.

During the third quarter the Company continued with the preparation of the studies and other documents required for the presentation of the new change of forest land use permit application. The Company retained two academic institutions in Baja California Sur to complete technical studies in support of the new change of forest land use permit application. One completed this work and issued a final report; the other has completed its work and is in the process of finalizing its report with input from the Company and other consultants.

In addition, one other academic institution was retained to complete a study required for the expansion modification of the existing environmental permits. They are scheduled to complete their work at the end of this month.

The Company expects to receive the new change of forest land use permit application for internal review and comment on November 15. Following internal review our Mexican environmental team will meet with SEMARNAT and CONANP to review the application in working meetings and to ensure the completeness of the document. We are targeting the end of November to have the document finalized.

One key issue to the change of forest land use permit application is still pending. We are waiting for the resolution from the Secretary of Agrarian Reform which will define the limits of the federal land in the project area. We expect that this resolution will result in the validation of the temporary occupation permits that were issued a year ago.

We recently completed the purchase of the private lands in the project area by making the final payments as determined in our land purchase agreement. These activities, i.e., the definition of the federal land, the validation of the temporary occupation permits, and the purchase of the surface land clearly established our right to request the desired change of forest land use permit. Our application will be presented once the resolution from the Secretary of Agrarian Reform is received.

At the Yellow Pine project in Idaho the Company continued to collect baseline environmental data in the Yellow Pine district. We continued to evaluate the possibility of consolidating the Yellow Pine district under the ownership of one company, as we believe that the true potential of this district will not be fully realized otherwise.

At the Mt. Todd project in Australia we have made significant progress in the third quarter of this year. On August 18 the Company announced the results of a preliminary feasibility study for the project and reported 2 million ounces of proven and probable reserves. In September we completed the Mt. Todd preliminary feasibility study report and publish it the first week of October.

The preliminary feasibility study was based on a milling operation capable of processing 18,500 tonnes of ore per day. The base case was limited to 60 million tonnes of ore which equates to the capacity of the existing tailings impoundment facility with the appropriate raises. The mining plan was prepared to optimize the grade of ore mined.

The results of the base case using the three-year trailing average gold price and three-year average foreign exchange rate estimate a net present value at a 5% discount rate of $210 million, while the net present value at the same discount rate at a gold price of $1,200 and the mid-August foreign exchange rate is estimated to be $487 million.

The Company also completed a sensitivity case which contemplated a 30,000 tonne per day mill without the restrictions on tailing storage capacity. While this sensitivity evaluation did not meet 43-101 requirements for a preliminary feasibility study due to the fact that some of the costs were factored or were not current at the time of the completion of the study, the results have prompted the Company to move forward with another 43-101 compliant feasibility study for this operating scenario.

This study is in progress at this time and we expect to be able to announce the results of this new preliminary feasibility study in the first half December. At this time we expect that the new feasibility study will nearly double the 43-101 compliant proven and probable reserves for the Mt. Todd project.

In early September the Company started drill testing the MSTS 4 exploration target. This target has since been named the Goldeneye target. Four 200-meter holes were completed prior to the termination of program due to the start of the wet season. The results of these four holes were inconclusive and we have plans to conduct additional drilling next year once the wet season ends.

Plans to drill the [RKD] target were postponed till next year due to the onset of the wet season.

The Company has been in discussions with the Northern Territory government for the extension of the Mt. Todd agreement and we expect to be able to announce the extension of this agreement for an additional five-year period in the near future. Upon completion of the preliminary feasibility study now in progress the Company intends to undertake a definitive feasibility study and to start environmental permitting activities.

The Mt. Todd project is located in an area genuinely interested in mining development. We believe that we have solved the technical challenges that faced previous operators and I would suggest that we are just now beginning to realize the market recognition of the potential value of the Mt. Todd project in the Company's portfolio.

This concludes my report of operating activities for the quarter. I will turn the time over to Mike Richings for some concluding comments prior to question-and-answer.

Thanks, Fred. As you can see, we had a pretty interesting quarter and we are looking forward to a good fourth quarter with the completion of the Mt. Todd preliminary feasibility study.

I would now like to open the conference up to questions and so we are ready for your questions.

(Operator Instructions) Paolo Lostritto, Wellington West.

Good morning, guys. Have you guys been able to cross reference any of your data with Boddington at all? I know that they have had, I think, about six to nine months of data that they have been collecting there with regards to their HBGR and wondering whether or not there is any data that is coming out of them or cross-referencing data out of that project?

Paolo, that is a very good question. We are in the process of trying to benchmark our prefeasibility study results against the results from Boddington. As you are probably aware, Newmont has been very cautious about releasing information and we have not been able to obtain the information we would like as of yet but we continue to work on that.

(Operator Instructions)

Am I live, operator? Can I say something?

Yes, you may.

Paolo, with respect to your question, the one thing that we do -- that we are aware of, and I think this is just from Newmont's public announcements, is that their plant is performing at or close to specifications. And while they did a lot of private plant testing I believe that throughput and productivity reflects the original test results.

Our test results were very consistent and we expect to, of course, carry out further tests during the feasibility study period.

There are no further questions at this time. Please continue.

Well, if there are no further questions, we will call the conference to a close. (multiple speakers) And with respect -- yes, thank you.

I apologize; we do have someone that did have some questions. [David Barry].

Yes, I just had a question about the private offering, the price at which it was struck. Has there been any discussion about restriking that price in light of the market action?

There has been no discussion about it. I mean this is something we can't control.

Thank you. There are no further questions at this time, please continue.

There are no further questions at this time, please continue.

Well, once again, if there is no further questions we will call the conference to a close. Thank you, operator.

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for your participation. You may now disconnect your line and have a great day.