Vista Gold Corp (VGZ) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to Vista Gold's 2014 financial results and update on recent activities conference call. (Operator Instructions). As a reminder, this conference is being recorded. Today is Friday, March 6, 2015.

It is now my pleasure to introduce Vista's President, CEO, and your host, Mr. Fred Earnest. Please go ahead, sir.

Thank you, Michelle. Good morning, ladies and gentlemen. Thank you for joining Vista Gold Corp.'s 2014 annual financial results and corporate update conference call.

I'm pleased to be joined on this call by Jack Engele, our Senior Vice President and Chief Financial Officer, and Connie Martinez, our Director of Investor Relations, both of whom are joining me on this call from our corporate office in Denver.

2014 was a pivotal year in the financial stability of the Company, as a result of our cash on hand at the close of the year. Combined with the cash received since the start of 2015 and to be received in the coming days, we believe we are now funded through most of 2016.

This has been achieved consistent with our strategy -- our stated strategy of funding the Company without dilution to our shareholders, and with the continuation of cost-cutting measures implemented in 2013, we are well positioned to continue to fund the programs and activities of the Company without the need to raise capital in the equity markets in the current market conditions.

We remain focused on the Mt Todd gold project in Australia, where continued weakness in many macroeconomic factors provides positive offsets to the lower gold price. We announced the successful completion of the Environmental Impact Statement review process in the third quarter. This was a significant milestone and culminated over three years of hard work and expenditures. As a result of this accomplishment, the remaining permitting obligations are well defined and at the appropriate times attainable within reasonable time frames.

The Northern Territory is providing funding for the first year of what we hope will be a multiple-year program to effectively treat and reduce the volume of water presently stored at the Mt Todd mine site. A recent evaluation of gold projects in Australia confirms that Vista controls the third largest total of proven and probable reserves in Australia, behind Newcrest and Newmont and ahead of Barrick, Gold Fields, and AngloGold Ashanti. We continue to work as efficiently as possible to position this project as a shovel-ready project.

In the course of this call, we will be making forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance, or achievements of Vista to be materially different from any future results, performance, or achievements expressed or implied by such statements. Please refer to our Form 10-K for a detailed discussion of risks and other important factors that could cause actual results to differ materially from those in our forward-looking statements.

I will now turn the time over to Jack Engele. Following his discussion of the financial results, I will discuss our progress at the Mt Todd gold project.

Thank you, Fred. Good morning, everyone.

I will start with our statement of income and loss for December 31, 2014. For the year ended December 31, 2014, we reported a net loss of $18.9 million or $0.23 a share. The main components of this loss include operating expenses of $14.2 million and an unrealized mark-to-market loss of $4.3 million on our Midas shares. A material component of the $14.2 million operating loss was a $4.8 million non-cash write-down of our interest in the Amayapampa project in Bolivia.

Operating expenses also included $4.0 million at Mt Todd, mainly for site maintenance and management. This represents a 74% reduction from 2013 expenses. This dramatic reduction is mainly scope related. We had no large programs in 2014, whereas in 2013 we completed a major water remediation program in the Batman pit and we also completed the prefeasibility study. In addition, in 2014 we continued the cost-cutting initiatives introduced in 2013.

The 2014 operating expenses also included $3.8 million for corporate G&A costs. This is down 31% from 2013. Here again, we see the continued effects of our 2013 cost-cutting initiatives.

Turning to our balance sheet and liquidity, our cash and cash equivalents as of December 31, 2014, totaled $3.7 million. Our working capital totaled $8.6 million.

In January, we announced that we had settled in full the sale of the Los Cardones project to Invecture for $3 million. This payment was in lieu of the originally agreed final $6 million payment. Recall that Invecture had the right to elect not to make this $6 million payment, and given that they had suspended activities in the project, it appeared probable that they would have elected not to make this payment.

In February, we received a $500,000 option payment for the Guadalupe de los Reyes project from Cangold, and next week we expect to close the sale of 8 million of our Midas shares for net proceeds of about $2.8 million. Following the close, we have agreed to a six-month lockup on our remaining 7.8 million shares of Midas.

After giving effect to these transactions, our December 31, 2014, pro forma cash position increases to about $10 million.

Looking ahead, at Mt Todd we expect our 2015 basic fixed cash costs to average approximately $750,000 to $875,000 per quarter, assuming we have normal wet seasons in the Northern Territory. The 2014-2015 wet season has been pretty benign so far.

Our 2015 corporate G&A fixed costs are also expected to average about $750,000 to $875,000 per quarter. I should point out that these are gross G&A costs. We do not allocate G&A costs down to our projects.

At both Mt Todd and the corporate level, we continue to manage our fixed costs carefully and are committed to reducing them wherever possible, without jeopardizing our commitment to high standards of safety and environmental stewardship and the fulfillment of our regulatory obligations.

Future cash costs -- future cost cuts, I should say, will be at the margins. The magnitude of cost improvements going forward cannot be expected to resemble those that we have achieved through 2014.

We are considering an offer for our Colomac mill equipment, which is held for sale with AM King Industries. At this point, we are not in a position to disclose any further details.

With the recent improvements to our treasury and the anticipated close of our Midas share sale, we believe we have sufficient cash to fund our basic fixed costs through most of 2016. The scope of any discretionary programs that we could introduce will affect that timing, of course.

In summary, our costs are well under control. Our treasury is in good shape and we have no debt and we have access to additional nondilutive financing. Overall, a very good start to 2015.

That concludes my comments. Fred will now give you an update on recent activities at Mt Todd.

Thank you, Jack.

First, let me add a few comments with respect to our decision to settle the sale of the Los Cardones project to Invecture. Many factors contributed to Invecture's decision to suspend activities on the project. I am satisfied that Invecture's decision was made in the best interest of advancing the project at the appropriate time.

Current market conditions, timing for the ultimate development of the project, and the prospect of repeated extensions of our agreement motivated us to give serious consideration to the buyout at a price below the contract value. We wish Invecture the very best of luck in the development of the project.

Turning to Mt Todd, we have been analyzing the impacts of the changes in foreign exchange rates, the significant reduction in capital project spending in Australia and its impact on the availability of construction labor and EPCM cost competitiveness, the favorable changes in the consumable supply costs on a global basis, and the cost reductions observed in major process plant components, and have compared these to the change in the gold price.

It is our conclusion that with the net effects of these various market changes, the Mt Todd project now demonstrates better project economics today than it did two years ago. Based on this conclusion, we intend to undertake the completion of a revision of the Mt Todd preliminary feasibility study project economics in the coming months.

As Jack indicated, water management costs are a significant component of our Mt Todd site management costs. I am pleased to report two matters that are favorable to us this wet season.

First, the amount of precipitation received this wet season is approximately 200 millimeters behind normal for this time of the year. During my visit to the site a couple of weeks ago, I noted that our pond levels are generally at pre-wet season pond levels and pumping activities have been significantly reduced as a result. This obviously is favorable for costs at Mt Todd, which are traditionally higher during the wet season.

Second, we have reported in the past that funding had been committed by the Northern Territory government to facilitate the treatment and discharge of water stored at the Mt Todd mine site. I'm very pleased to report that the NT government has funded the successful treatment of water in the Batman pit and that treated water is being discharged in accordance with the standards of our new waste discharge permit.

The Mt Todd project is raising the bar for water management practices in the Northern Territory, and the result is the growing community support for the Company and its activities at the Mt Todd project. At the conclusion of the wet season, we will be meeting with the Northern Territory government to discuss their continued involvement in water management at the Mt Todd site.

With the successful completion of the EIS review approval process, we have turned our attention to the remaining permits. Work on the mine management plan, which is our definitive mine operating permit, is being advanced to the extent possible using the internal resources of our team. We are presently finalizing plans to complete the required studies and file for the authorization required under the Environment Protection and Biodiversity Conservation Act in the next couple of months. We expect this authorization to be granted late this summer.

As the first step toward being able to convert the Quigleys resource to reserves, a metallurgical testing program has been completed. And we have concluded that the material from a potential operation in the Quigleys deposit could be effectively treated using the flow sheet proposed for the Mt Todd project.

In conclusion, gold price volatility continues to be one indication of the challenges of the present market. Our current cash position allows us to look beyond the present market conditions. I would like to reiterate our belief that we will be able to continue to fund our corporate obligations and programs without the need to raise capital in the current market conditions.

I am pleased with the financial and project milestones that we have achieved in the last 12 months. We believe these are important stepping stones to value creation for our shareholders and the ultimate development of the Mt Todd project. We believe that Vista continues to provide its shareholders with exceptional leverage to improving gold prices.

We are taking the appropriate steps in this market to position the Mt Todd gold project, which is Australia's largest undeveloped gold resource, for development at the right gold price. We remain focused on the effective use of financial resources and expect to continue to maintain a solid balance sheet without further dilution to the Vista shareholder.

We believe that Vista is a compelling investment opportunity, especially at current prices.

We will now be happy to respond to any questions from participants on this call.

(Operator Instructions). There are no questions at this time. Please continue.

Very well, Michelle. Thank you very much.

Ladies and gentlemen, I will bring this conference call to a close by thanking you for your time and your participation in the call. I reiterate that Vista has a very strong cash position at the present time. We expect this to be able to carry us through nearly all of the year 2016.

We do not expect to go to the market to raise money to fund our activities. I think that's very important for Vista shareholders to understand, that there are no plans to undertake activities which would result in dilution. Management is available to talk on an off-line basis, and if there is any of you that would like to make further inquiries, please feel free to contact Connie Martinez and she will be happy to direct you to the appropriate person, if needed.

With that, once again, thank you for your participation in the call and we will bring this call to a close.

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