Vista Gold Corp (VGZ) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen. Welcome to Vista Gold's second-quarter 2015 financial results and update on recent activities conference call. (Operator Instructions) As a reminder, this conference is being recorded. Today is Tuesday, August 4th, 2015. It is now my pleasure to introduce Vista's President and CEO and your host, Mr. Fred Earnest. Please go ahead, Mr. Earnest.

Thank you, Ron. Good afternoon, ladies and gentlemen. Thank you for joining Vista Gold Corp.'s second-quarter 2015 financial results and corporate update conference call. I am 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.

Since our last conference call, we have benefited significantly from efforts that started more than a year ago. Approximately $10.2 million was added to treasury as a result of refunds received from the Australian government under a research and development incentive program. Jack Engele will discuss these payments in greater detail.

We remain focused on the Mt. Todd Gold project in Australia. We are working to obtain the authorization required under the environmental protection and biodiversity conservation act of 1999 from the federal government as it relates to the gold (inaudible) Finch and anticipate that this authorization will be granted by the end of this year.

We continue to closely monitor ongoing weakness in many macroeconomic factors including foreign exchange rates, soft demand for mining and process equipment, et cetera, and continue to observe positive offsets for the Mt. Todd project compared to the lower gold price affecting the sector generally.

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 this to be materially different from any future results, performance or achievements expressed or implied by such statements. Please refer to our Form 10-Q 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. And following his discussion of the financial results, I will review our activities at the Mt. Todd gold project.

Thank you, Fred, and good afternoon, everyone. I'll start with a summary of our Australian R&D tax rebate. The Australian government has an incentive program to encourage industry to conduct research and development that may not otherwise be conducted. Through this program, 45% of eligible R&D expenditures are refundable.

Our Mt. Todd gold project in the Northern Territory of Australia provided us with several opportunities to conduct eligible R&D work which resulted in several innovations that have industry-wide applications. The bulk of our R&D work involved developing a cost-effective means for the (inaudible) treatment of water in abandoned open pits. We also developed innovative and cost-effective ways to improve our long-term environmental protection and to optimize metallurgical recoveries from hard ores.

Our qualifying expenditures for these programs totaled AUD31 million in 2012 and 2013 together. Related to these expenditures, we received a net total of AUD13 million, or a total of about $10.2 million U.S. We received the refund related to the 2012 fiscal year in June, so it is included in our June 30, 2015 Form 10-Q financial statement. The payment related to fiscal 2013 was received in July, so it is not included in our June 30, 10-Q financial statement, but we do disclose it as a subsequent event in the notes to the financial statement. I will comment in a few minutes on its pro forma effect on our June 30, 2015 cash and working capital.

In 2013, we curtailed our discretionary spending in an effort to conserve cash. This policy continued through all of 2014. Consequently, any R&D rebate that we may receive for 2014 fiscal year is not expected to be material.

Turning now to our balance sheet and liquidity, our working capital totaled $14.9 million as at June 30, 2015. This includes cash and short-term investments of about $12.6 million. Our short-term investments consist mainly of US treasury bills. Our cash and short-term investments have increased by about $8.9 million since December 31, 2014. The increase resulted from the R&D rebate of $5.9 million net of costs and $6.3 million in total proceeds from the sale of non-core assets during the first quarter this year.

After giving effect to the $4.3 million R&D rebate that we received in July, our June 30, 2015 pro forma cash and short-term investments would be about $16.9 million. And our June 30 pro forma working capital would be about $19.2 million.

Turning to our statement of income and loss for the three months ended June 30, 2015, for the quarter we reported net income of $3.6 million or $0.04 a share. The income arises from the $5.9 million R&D rebate related to fiscal 2012.

The R&D rebate has accounted for this grant income as opposed to an income tax recovery. That's under accounting rules. Expenses in the period included operating expenses of about $2 million and an unrealized mark-to-market loss of about $300,000 on our remaining 7.8 million Midas shares.

The $2 million of operating expenses for the second quarter included about $800,000 for exploration and property holding costs principally at our Mt. Todd gold project; about $200,000 for discretionary drilling and technical programs at Mt. Todd; and corporate G&A costs of about $800,000. These costs are in line with our previous guidance.

Looking ahead, at Mt. Todd, our fixed costs are those expenditures necessary to ensure that we preserve our property rights and meet all of our safety, regulatory and environmental responsibilities. Are expected to average approximately $750,000 to $850,000 as US dollars per quarter for the foreseeable future. We expect to be at the lower end of this range for the remainder of this year. And with the onset of the wet season, we expect to be at the higher end of this range at Q1 2016.

In addition, we have begun discretionary drilling and technical programs at Mt. Todd that are expected to cost about $1 million through the rest of 2015.

Our corporate G&A costs are also expected to average about $750,000 to $850,000 per quarter for the foreseeable future.

With the recent improvements to our treasury and our tight cost controls, we believe we will have sufficient cash to fund our future fixed costs into 2018.

Big Panther Silver, formally Cam Gold, recently announced a significant drilling program for our Guadalupe de los Reyes gold-silver project in Mexico. We believe this improves the likelihood of receiving the Guadalupe de los Reyes option payments, of which $1.5 million is due in January 2016.

Our lock-up agreement on our remaining 7.8 million shares of Midas expires in September, and we continue to talk to potential buyers for our used mill equipment.

In summary, the Company's balance sheet has greatly improved. We have addressed our liquidity needs while retaining opportunities to access additional financing from the non-dilutive sources and retaining 100% of the largest undeveloped gold resource in Australia.

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

Thank you, Jack. Highlights from the Mt. Todd site include the recent achievement of three years without a lost-time accident. We're obviously very pleased with the safety-conscious work habit of our Australian team as manifested by the achievement of this milestone.

We continue to benefit from the practices and procedures developed in the years 2012 to 2013 with respect to water treatment and water management, and can report that water levels across the site are lower than at any similar time in the past several years. We hope to be able to maintain and improve upon this current status.

You will recall that during the review and approval process for the Mt. Todd environmental impact statement, the Federal Environmental Protection Authority indicated that an authorization under the environmental protection and biodiversity conservation act of 1999 would be required with respect to the Gouldian finch. We are working closely with SLR Consulting to satisfy all of the requirements of the Federal Environmental Protection Authority.

Our team has met with the authorities on several occasions. Understanding has been reached, and analysis is in progress that is expected to meet all of the agency's requirements for approval of our request for authorization. We now expect that authorization to be granted prior to the end of this year. Successful achievement of this authorization will mark the receipt of all critical environmental permits for the Mt. Todd project.

Jack referenced discretionary drilling and technical programs that have commenced. Those familiar with business activities at Mt. Todd are aware that we control exploration licenses covering over 1,100 square kilometers and that we have expenditure commitments on these licenses. In recent years, we have advanced work on the development of several targets and have now initiated a drilling program designed to drill-test a couple of these targets. We have just started to receive assay results.

Consistent with past practice, we will announce the results and provide the appropriate explanation of the relative significance of the results as results for complete holds become available. Additionally, we will continue to evaluate opportunities to improve the metallurgical recovery of gold from the Mt. Todd ore and to do so more efficiently. An alternative culmination circuit that has the potential to improve operating costs and recovery is being evaluated. Results of this evaluation are not expected until later this year.

We continue to closely monitor macroeconomic factors that affect the project. Foreign exchange rate has dropped to the range of $0.72 to $0.73 US per Australian dollar. This is a tremendous improvement from the parity between the US and Australian dollars that existed two years ago. This has significant favorable impact on the operating costs of the Mt. Todd project and on certain aspects of the capital costs.

Soft demand for mining and processing equipment has resulted in more favorable prices. We believe that these favorable changes have contributed significantly toward offsetting the impacts of the falling gold price. As a result of these economic considerations, the work being done to obtain the final project environmental authorizations and other evaluations designed to optimize and improve project economics, we believe that we are in a much better position than many of our peers to move forward in an improving gold price environment.

In conclusion, I want to use the same statement that I made in previous conference calls but emphasize that it is even more relevant today. Weak gold prices, gold price volatility, general apathy in the gold equity market and the need to raise capital to ensure corporate viability continue to be defining factors for our sector.

But, our current cash position, relative to our planned expenses, allows us to look beyond the present market conditions and provides confidence that we will be able to fund all of our corporate obligations and programs without the need to raise capital in the equity market at current share price conditions.

This is a distinguishing factor between Vista and many of its peers. We believe that Vista continues to provide its shareholders with exceptional leverage to improving gold prices. And recent improvements to treasury minimize the risk on the downside, a condition that one of our important investors calls asymmetric risk.

We are taking the appropriate steps in this market to position the Mt. Todd gold project, which is Australia's largest known undeveloped gold resource, for development when economic conditions permit. And we believe that we are ahead of most of our peers in this regard. We remain focused on the efficient 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.

This concludes our prepared remarks, and we will now respond to any questions from the participants on the call.

(Operator Instructions) Mr. Earnest, there doesn't appear to be any questions at this time. Please continue.

Very well. Thank you, Ron. Once again, ladies and gentlemen, I would just like to thank everyone for your participation on the call this afternoon. I think that you see as a result of the published financial results that Vista is in a very strong position financially compared to many of its peers. I think that this is an interesting time in the gold market, and certainly we believe we are better prepared to face this and to move forward than most of our peers.

I realize that some of you may have questions you don't want to ask in a public forum. Those of you who would like to call and ask questions to management, we invite you to please feel free to do so. And we can be reached at our offices in Denver.

With that, I will conclude our remarks and once again express our appreciation for the long-standing support of our shareholders and for your participation on this call. Have a good afternoon, everyone.

Ladies and gentlemen, this does conclude the conference call for today. Thank you for your participation. You may now disconnect your lines.