Vista Gold Corp (VGZ) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Vista Gold's 2010 annual results and property review 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 is Thursday, March 17, 2011.

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

Thank you, Michelle. First of all, I'd like to welcome everyone and happy St. Patrick's Day. On the line, Fred Earnest, our President and COO; and Greg Marlier, our CFO.

And firstly, I am going to be making some forward -- or we are going to be making some forward-looking statements and I encourage all of our listeners to read our -- the 10-K, press releases, and other filings.

I believe back half of 2010 is a very important year. One in which we started to unlock the value in two of our major assets. Unfortunately, as yet our share price does not reflect this really because of our continued frustrations at Concordia. But I think over time, (inaudible) by our activities in 2010 a lot of value.

Firstly, we completed two, not one but two pre-feasibility studies at Mt. Todd. The last study showed we had over 4 million [ounces] and where else but Vista can you get exposure to this amount of gold in the ground that's recently -- (technical difficulty) Vista. Fred will give you some details.

Secondly, we are proposing and moving cost to combining our assets in Idaho with those of Midas Gold. The new Midas Gold, [one of] the most exciting new exploration companies in 2011, and we were all (technical difficulty) exciting new company. During the year the market will fully appreciate these values -- I hope that the market will fully appreciate these values, which potentially are very significant.

As (technical difficulty), it will be a challenge, but the project is worth it. It has a strong economics at current gold prices. If you believe, as we do, the gold price is going to increase, it can only improve. This is somewhat facetious, but in some respect -- therefore delay is good.

Now, I'll ask Greg to give us a brief review of our 2010 financials. Greg?

Yes. Good morning, everyone. Yesterday we went on with a press release that recapped the 2010 financial results which compared 2010 to 2009. I am not going to go into detail on that. If you want it in even more detail, you can go to our Form 10-K, which is on SEDAR and also EDGAR.

Just some brief points on the 2010 financial results. We had a $9.6 million loss in 2010 versus a $1.9 million loss in 2009. The variance was a gain on the sale of Allied shares of $6.5 million in 2009. Otherwise, our corporate overhead and other expense items generally were in line with the budget and also previous years.

At Mt. Todd, we had total expenditures of $7 million. The major capital expenditures were $6.8 million on exploration pre-feasibility and site management. An additional $200,000 of that $7 million was expensed overheads.

At Concordia, we had total expenditures of $5.8 million. The major capital expenditures were $4.4 million, of which $2.9 million was for consultants. An additional $1.8 million was spent on project administrative expenses.

At year end, Vista Gold Corp. had total assets of $120.4 million, of which cash was $39.8 million. Our working capital at year end was $18.5 million, of which notes were current liabilities as current debt of $22.5 million.

We completed the sale of $14.7 million special warrants at the end of 2010 for net proceeds of $33.3 million, which is included in the cash balance at year end of the $39.8 million. These proceeds are to be used for the repayment of the $23 million of principal convertible notes due on March 4, 2011.

And that's an update on 2011. We did, on March 4, 2011, repay the notes. It was completed with a final disbursement of $23.5 million, which included interest. The Company is now debt free.

I will now turn it over to Fred Earnest, our President and Chief Operating Officer, to discuss project updates.

Good morning, everybody. Adding to what Mike and Greg have said, 2010 was a very productive year for us, a lot of hard work. I think we're just starting to recognize and realize the value from that.

For those of you who are watching our share price, you will recognize and realize that in the first months of this year we have broken out and have reached a new 52-week high. There's been some correction in the last week since gold prices suffered.

Briefly going through the projects and to recap what's happened in the last quarter, and also to give an idea of where we're heading for 2011 at our Concordia project in Baja California Sur. State elections were held on February 6 and we perceive the outcome of those elections to be favorable. We're still waiting for the Secretariat of Agrarian Reform to finalize the process of defining the boundaries of the federal land and the project area. This resolution is needed in order to be able to finalize our application for the change of land use permit.

Although, we do not control this process being undertaken by the Secretariat of Agrarian Reform and are not in a position at the present time to estimate when this might be completed, we are prepared to submit the change of forest land use permit application within a couple of weeks of the time that we receive the resolution from Agrarian Reform.

Given our present lack of control over the timing and outcome of the permitting process, we have shifted our focus to creating and realizing value from other projects in our portfolio.

At Mt. Todd, I'm pleased to report that we made excellent progress at that project which is located in the Northern Territory of Australia. We've signed agreements with the Northern Territory government extending our agreement for an additional five-year period.

On January 4 of this year, we announced the results of a new preliminary feasibility study and reported 4.1 million ounces of proven and probable reserves. This is a double of what we had reported in the late -- in the third quarter of 2010.

This preliminary feasibility study was published at the end of January and is available on SEDAR and it is based on a milling operation capable of 30,000 metric tons per day with a 14-year mine life. Average annual production is estimated to be 240,000 ounces of gold per year.

The results of the study using the three-year trailing average gold price and a three-year average foreign exchange rate estimated net present value at a 5% discount rate of $385 million. While the net present value at a 5% discount rate at a gold price of $1,350 and a foreign exchange rate of parity is estimated to be $945 million.

We are pleased with the results of the study and have confidently begun a definitive feasibility which we expect to complete in the latter part of this year.

We have retained SRK Consulting based in Denver to be the study author. Under the direction of Vista, SRK will be working with Tetra Tech, Golder Associates, Mine Development Associates, NTech, Polysius, AUSENCO, and Power Engineers in completing the definitive feasibility study.

We are in frequent communication with the permitting agencies in the Northern Territory and have initiated the environmental permitting process.

We have retained GHD, an Australian environmental firm, to undertake the collection of data and to manage the permitting process, including all document preparation, public consultation, and document reviews.

We have identified opportunities to streamline the permitting process and presently believe that we will be able to complete the permitting process by mid-2012.

GHD has already begun their work and is presently in the process of preparing the documents required to formally initiate the permitting process.

Our exploration team has commenced a 5,400-meter drilling program in support of the feasibility study to provide core for additional metallurgical testing and rock mechanics testing. At the same time, they are preparing to move back into the field with the approaching end of the wet season.

While we have had more than average precipitation at the Mt. Todd mine site, we have not experienced the flooding that was experienced in other parts of the country.

We plan to undertake 6,100-meters of drilling on four different exploration targets starting in late May. In addition, we plan to continue our generative exploration program with several targets slated for air-core drilling and additional soil sampling and field mapping.

While we are aggressively pursuing the feasibility study, environmental permits, and field exploration program with the objective of reaching a project development decision in 2012, others have expressed interest in the project as a result of the exploration success and results of the preliminary feasibility study.

As we continue to -- as part of our normal course of business, review, and evaluate opportunities for creating and realizing value, we have recently signed a confidentiality agreement with a major gold producer and have had similar expressions of interest from other major producers.

At the Yellow Pine property, on December 7, we signed a letter of intent with Midas Gold Inc., a privately held company to consolidate our interest in the Stibnite-Yellow Pine district.

On February 23, we announced that a combination agreement had been executed. Under the terms of this agreement, we contributed our wholly-owned Yellow Pine project in exchange for a 35% interest on a fully diluted basis in the newly formed company.

The combination will become final once approved by the Midas' shareholders, which approval is expected the first part of April.

On March 2, we announced resources for the district in addition to the 2.2 million ounces of measured and indicated resource and 800,000 ounces of inferred resource that our consultants have estimated for the Yellow Pine deposit. Midas estimates 1.7 million ounces of measured and indicated and 1.6 million ounces of inferred resources from the combined West End and Hangar Flats deposits.

Stephen Quin, formerly the president of Capstone Mining, has been appointed CEO of the new company. The key focus of the new company will be the aggressive exploration of the newly named Golden Meadows project.

We look forward to working with Stephen and his team as they move forward toward the definition of a gold resource, expected to be in the range of 10 million to 15 million ounces of gold in the Golden Meadows project.

I believe that the market is just beginning to realize the value of creating potential of this transaction. While we do not intend to dividend shares to our shareholders, this transaction reflects many of the important elements that contribute to the success of the Allied Nevada transaction. It has a good management team, a property with very significant exploration potential, we find ourselves in a strong gold market. And we believe that this new company is a very good investment vehicle.

At our Guadalupe de los Reyes project in Sinaloa, Mexico, we have initiated an exploration program. The first phase of the program involves a review of the available geologic information, field reconnaissance, development of drill targets, and obtain permits for the drilling, which comprises the second phase of the program.

The Guadalupe de los Reyes district was consolidated by Vista in 2008 and hosts an estimated 800,000 ounces of gold resources and 17.7 million ounces of silver resources in open-pittable deposits. The district hosts a small underground mine with historic production of 600,000 ounces of gold and more than 40 million ounces of silver.

The mineralization in this district is part of a low-sulphidation epithermal vein system. While all modern exploration has focused on the discovery of open-pittable resources, our geologists believe that the district is the host to a much more important underground vein system with potential for high gold grades and bonanza silver grades. We are very excited about this project and expect to begin drilling in the third quarter of this year.

That concludes my summary of activities in the last quarter and review of our proposed activities for the coming year. I'll turn the time over to Mike Richings for any brief concluding remarks he has, and after which we will open the floor for questions and answers.

Thanks, Greg. And I'm not sure I have much to say in conclusion. I think you did a very good job of summing up our activities of the year. And I think the important thing now is to open up for questions.

(Operator Instructions). Adrian Day, Adrian Day Asset Management.

Yes. Good morning, everybody. That was a very, very interesting wrap up, if I may. I have a couple of questions that really are going to what your longer term strategy might be and that's what I'm really driving at here.

With regard to Yellow Pine, I think I heard the comment that you don't intend to dividend the shares out, but I'm taking that was meant in a short-term basis rather than as a permanent policy, but maybe you could -- I know it's early days, but just explain what you're looking at there in the long term.

And then similarly with Mt. Todd, obviously you can't tell us who's got the CA and all that kind of stuff, but would you say that you're getting interest? Is it more likely to be an entire purchase? Would you like someone just to buy the property or would like to joint venture or where are you going with that?

Adrian, if I may answer -- I'll try to answer that question and it's the same question that many of our shareholders ask, and it's always a very difficult question because we -- fortunately, have always been presented with multiple (inaudible).

And as to what we're going to do in the future, as you know, I think the Company has to proceed as if it's moving forward to develop Mt. Todd on its own and it to become a mid-size producer.

But that's not to say that we won't aggressively pursue other opportunities that might realize significant portions of the value in some less risky fashion by either joint venturing or selling a part off. And any one of the assets that we hold -- but the only way that we know that we can really create value for sure is to advance these projects to the next stage.

I think as we do that it's the best opportunity that we have to be presented with more valuable offers that may represent better value or less risky value for our shareholders.

With respect to Midas, yes, you're right. I mean our intention at the moment is to keep this on the balance sheet. And what our intention might be -- [because] strengthening the balance sheet will allow us to -- maybe get the value more (technical difficulty) for our share price and which would enable us to get lower cost capital in the future. However, in the future we hope as we create value that we will be presented with -- and get that value back in some fashion to the shareholders.

Okay. But with regard to Mt. Todd specifically, if I may just follow up, you don't have a preferred road you'd like to go. It's more a matter of what's the best approach or what's the best offer at any given time.

I think that's right. Clearly, recognized Mt. Todd is a very large project and large (inaudible) suit -- or better data suit development by a large company and if we were to receive an attractive offer that allowed us to continue to participate in the substantial part of the (technical difficulty) while at the same time and reducing our risk and we would probably like to pursue that, but that's not to say that that is the only path we'll follow.

Okay. I got you. Thank you. Thank you that helps.

Thanks for your question, Adrian.

Thank you. (Operator Instructions). There are no further questions at this time.

Okay. Well, I thank everybody for their -- [the conference] and I think we can close the conference call.

Ladies and gentlemen, this does conclude the conference call for today. You may now disconnect your line and have a great day.

Thanks, Michelle.

You're welcome. Have a great day.

Thank you.