Full Year 2020 Vista Gold Corp Earnings Call
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Good day, ladies and gentlemen, and welcome to Vista golds, 'twenty and 'twenty 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 at that time participants are asked to press star one to register for questions.
And I noticed this conference is being recorded today as of Monday March 1st 'twenty, and 'twenty, one and they're not my pleasure to introduce and will surely Vice President of Investor Relations. Please go ahead ma'am.
Thank you Eduardo and good day, everyone. Thank you for joining the fiscal 2020 financial results and corporate update conference call and Pamela Solly, 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'll be making forward looking statements. 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-K for details of the risks and other important factors that could cause actual results to differ materially from those and our forward looking statements I will now turn the call over to Fred earnest.
Thank you Pam.
And thank you everyone for joining us on the call today.
We're extremely pleased true.
Achieved many of our 2020 corporate objectives in spite of the challenges presented by the COVID-19 pandemic.
Before summarizing our 2020 highlights I'd like to begin by addressing the impacts of the ongoing COVID-19 pandemic.
The health and wellbeing of our employees and the communities and which we live and work continues to be a priority for our company.
Our corporate activities continue with the executive team working remotely and on a limited and office spaces.
Until the pandemic subsides videoconferencing has replaced corporate travel and conference or in person conference participation.
And the northern territory of Australia, and Covid, 19 cases or almost nil.
And control measures have been significantly relaxed Mount Todd continues to operate on and approved COVID-19 management and mitigation plan that is presently less restricted to date, our work force and both the U S and Australia remained healthy.
During 2020, we achieved strong financial performance as we executed and delivered on our initiatives to strengthen our balance sheet.
Identified opportunities to advance and bring greater value to our Mt. Todd Gold project.
<unk> maintained our social license and strong.
And commenced exploration opportunities targeting resource growth adjacent to the Batman deposit.
I'll discuss these topics and greater detail later in the call, but I will now turn the time over to Doug Tobler, Our CFO for a review of our financial results for the year ended December 31 2020.
Thank you Brad and thanks for those on the call with me today.
Start today by discussing the strength of our balance sheet at December 31, 2020 overall.
Overall, we had a very solid year and and achieved our goal as Fred said, we successfully realized sufficient proceeds from our noncore assets to fully cover our 2020 expenditures and build our cash position and importantly limit dilution.
We also put a few deals in place for additional sources of cash that will come during 2021.
We ended 2020 was $8 $2 million of cash and short term investments that's up about $3 5 million from $4 7 million on hand at the end of 2019.
And we also remained debt free.
This increase in cash was achieved through several means first we kept our spending and check with year over year total expenditures of just over $7 million for each of 2020 and 2019.
Secondly, and successfully monetize several non core assets during 2020, which provided us with cash proceeds of just over 9 million, sorry, and just under $90 million and this included sales of Midas gold shares and <unk>.
Personal cancellation of a royalty on a property and Indonesia and the final payment for the sale of a project in Mexico.
And I should mention that the Indonesia, and Mexico transaction for ones that including potential additional cash payments to vista of up to $4 $6 million during 2021 and.
And I can report that we've already received $1 $1 million of this amount.
And as a final note and cash flows.
These noncore transactions allowed us to keep our dilution to a minimum we issued just over 2 million shares during 2020 and realized net proceeds of $2 million is the way to provide additional balance sheet stability also these issuances were very effective with that.
US realizing net proceeds of about 1% above the trading price on days when the shares were issued.
Turning to our income statement with reported net income of $400000 for 'twenty and 'twenty that compares compares very favorably to our 2019 losses about nine and a half million dollars.
In a nutshell was for growth from a loss of income came from just over $6 million and gains from and Indonesia, and Mexico transactions and another two and a half million dollars from sales of might've sculptures.
Expenses and everything else on our income statements remain largely consistent and offset each other over the on a year over year basis.
I'll close the financial review with a brief outlook for 2021, our current balance sheet and the prospects of additional cash inflows from non core assets hold us in good shape to cover our corporate expenses and.
And I'll try and holding costs all of which we remain expect to remain consistent with the last couple of years. We also have room to effectively dewater.
And yet.
Ongoing drilling program that we're doing now and at least a follow on program and Fred will discuss in a few minutes success.
Except for these drilling programs will help influence our payout for a few other things and reevaluate and generally we should be able to keep dilution for a minimum similar to 2020.
And larger issuance of course with favorably signal distinct opportunities to improve and I'll touch valuation and prospects by accelerating on the ground programs.
That concludes the financial review I'll turn the call back over to Craig. Thank you.
Thank you Doug I'll.
I'll begin with a review of our 2020 achievements and then providing the outlook for the remainder of the year.
And as part of our 'twenty and 'twenty objectives, we diligently focus on strengthening our balance sheet through the successful monetization of noncore assets and a disciplined approach to managing our costs and capital spending as debt.
Doug has stated we ended the year with $8 $2 million for cash and position the company to generate additional cash of up to $4 $6 million during 2021.
Which $1 1 billion was received in January.
Pleased to have zero debt.
Yeah.
Looking at our opportunities to advance and bring greater value to Mt. Todd.
We are focused on advancing the Mt. Todd project and seeing a greater portion of project value reflected in our share price and market cap with this and in mind, we have advanced for commenced several initiatives.
First and update on the mine management plan.
We are pleased to have effectively worked with the northern territory Division and mines and the newly formed Northern territory Department of industry Tourism and trade.
Of which the department of mines have apart to advance the review and approval of the Mt. Todd Mine management plan also referred to as the M. M P.
It is our understanding and the DMT government is finalizing its review and we believe that the MMP will be approved and the very near future.
With regards to exploration, we initiated a drilling program to test the continuity of mineralization extending north from the Batman deposit which includes holes across the mineralized structure as far as 500 meters north of the last modeled mineralization.
To date, we have reported assay results for holds one through four and.
And we'll be reporting results of the next three holes in the coming weeks.
We're very excited about the results of the program and.
And are adding a second drill to expand and accelerate the program.
Our water management program achieved significant results in 'twenty and 'twenty through continued dewatering the water level and the Batman pit was lowered by 23 meters.
In 2020.
And we expect the Batman pit to be effectively dewatered.
By mid 2021, representing an important milestone for the project and.
And future development decisions.
Also in 2020.
The company updated its project sensitivity analysis based on the sustained higher gold prices.
Mt. Todd demonstrate significant project level leverage to the gold price and as shown in the updated sensitivity analysis for every hundred dollar increase and the gold price. The net present value of the after tax net present value at a 5% discount rate increases of approximately $200 million.
We also initiated internal evaluations related to higher gold prices.
Our 2019 preliminary feasibility study was completed using a gold price of 13 $150 and and.
And exchange rate of 70 cents per <unk> per Australian dollar and.
And estimated and after tax.
N P b and 5% discount rate of $823 million.
And then after tax internal rate of return of 23, 4%.
Okay.
And a gold price of $17 50, and and the exchange rate of 78 cents.
The after tax NPV five is estimated to be approximately $1 $1 billion with and after tax IRR of 34, 2%.
Of note.
The Batman and open pit and design and reserve estimates and the 2019 preliminary feasibility study are based on a thousand dollar gold price.
Which in today's market is very conservative.
With higher sustained gold prices, we have begun evaluating the economic impact of modestly changing the gold price used for mine planning.
Considering $1100 and $200.
This has the potential to increase reserves.
And more times with only slightly lower overall grade and.
And at the same time to extend the life of the project.
Yeah.
Early in 2020, we announced the positive results from an independent benchmarking study.
Of the 2019 preliminary feasibility study.
And this benchmarking study confirmed.
The estimated capital and operating costs.
And schedules for construction and commissioning and ramp up are in line with those experienced by the peer group projects.
Yeah.
Maintaining our social license our strong social license continues to be another top priority for our company.
In November 2020, we announced that we had reached agreement with the Zhao and Association Aboriginal Corporation.
To update our existing agreement to include a sliding scale royalty and.
And mutual cooperation and support commitments.
The sliding scale royalty replaces the genre and associations previous right to become a 10% participating joint venture partner and Mt. Todd.
And provides vista with greater flexibility and its decisions to develop and operate Mt. Todd.
The modernized agreement also formalizes, our commitment to create greater cultural awareness.
To be an industry leader and protecting cultural heritage sites.
And to work closely with the German association to identify.
And provide economic opportunities for Aboriginal people and is integral components of the development of Mt. Todd.
Moving to our share price.
Our share price performance at December 31, and 2020.
Our shares closed at $1 eight.
Which is up 49% from our December 31, 2019 share price for 73.
Vista shares significantly outperformed the Gtx day, which increased 28, 3% during the same period.
Looking ahead.
We are excited about ongoing programs that present.
Significant opportunities to realize shareholder value more in line with the value of Mt. Todd.
As part of these efforts and based on the early success of our current drill program.
We are adding a second drill to extend and accelerate the ongoing exploration program.
In addition, we look forward to a few of our upcoming catalysts, including <unk>.
And final approval of the Mt. Todd Mine management plan, which we believe is forthcoming and the very near future.
Jewelry sport drill results are expected over the coming weeks and continuing well into the second quarter.
And.
As I made reference to completion of dewatering of the Batman pit later this year.
We continue to engage with potential partners and identify strategic opportunities to advance the development of Mt. Todd.
As a result of the COVID-19 pandemic.
This process may take longer than anticipated.
However.
And we remain focused on completing the REIT transaction and one that meets three criteria.
First recognizes the intrinsic value of Mt, Todd and appropriately reward shareholders with value creation.
Second preserves maximum project ownership for our shareholders and third minimize future dilution.
We believe that debt and dilution needed to build Mt. Todd on a stand alone basis is not and the best interest of our shareholders. Our objective is to achieve a valuation for Mt. Todd that is reflective of the size of the gold deposits together with its location and in Australia, and low risk Northern territory.
Favorable low operating costs robust project economics, and the fact.
That we hold approvals.
For all major environmental permits and expect to have the operating permit for the mine management plan and the very near future. We believe that these factors coupled with the technically advanced stage of the project and the input and and the excellent infrastructure plays.
Place Mt. Todd on a short list of the most attractive development stage gold projects and the world.
Our exhaustive technical studies provide a solid basis for engagement with prospective development partners.
And current market conditions demonstrate the robust economics for the project.
Sure.
We continue to believe that Vista gold represents an exceptional investment opportunity for us and for the investor looking for value growth potential low geopolitical risk exposure and strong leverage to the gold price.
Today's gold price and foreign exchange rates the Mt. Todd project economics demonstrate and after tax.
Net present value and a 5% discount rate of approximately $1 1 billion and an after tax internal rate of return of greater than 34%.
Vista continues to advance and Derisk Mt, Todd and this well positioned and the girl current gold environment to consider prospective development partners, who we believe will recognize the value and Mt Todd and our per.
Corporately reward shareholders.
In conclusion.
And we find ourselves and a market with strong although somewhat volatile gold prices and governments around the world on the cusp of approving additional stimulus packages.
We believe this bodes well for sustained and modestly improving gold prices and in the coming 12 months to 24 months.
The work we have completed over the last several years, but especially in 2020 has positioned our Mt. Todd Gold project is the largest undeveloped gold project in Australia, with 585 million ounces of proven and probable reserves Vista controls the third largest reserve package and Australia.
At the current gold price and foreign exchange rate I reiterate that the project has exceptional economics.
And with an after tax NPV of approximately $1 1 billion and an after tax IRR greater than 34%.
Mt. Todd is ideally located and in the tier one mining jurisdiction of the northern territory of Australia with paved roads to the site.
And other existing infrastructure, including power lines, and natural gas pipeline freshwater storage reservoir and tailings impoundment facility.
Project and improvements we have achieved along with our estimated mineral reserves and production profile have created the foundation for the leverage to gold price and improved shareholder value that we have we have experience.
And have earned the trust of local stakeholders and believe that our social license is firmly in hand.
We've worked hard to secure the authorization of the major environmental permits and as I reiterated we believe that we are very close to receiving the authorization of the mine management plan.
We believe that Mt. Todd is a superior assets located in a politically stable and mining friendly jurisdiction and one of the most attractive development stage gold projects not just in Australia.
But in the world.
And I reiterate our commitment to finding a partner to advance the project and at the same time realized value for our shareholders.
For a more comprehensive assessment of the value accorded the Vista and the Mt. Todd project I refer you to our corporate presentation, which can be found on our website at www Dot Vista gold Dot com.
We believe that Vista gold.
Represents an exceptional investment opportunity for the and for investors looking for value growth potential low geopolitical risk exposure and strong leverage to the gold price.
We will now take any.
Any questions from participants on the call.
Yeah.
Thank you I'd like to ask a question. Please signal by pressing star one on your telephone keypad share using a speaker phone. Please make sure. Your mute function is turned off till our simple tree chart equipment.
Once again that is star one to ask a question, we'll pause for just a moment.
I don't want to take our first question from Jake Sokolowski at Alliance Global Partners. Please go ahead.
Hey, guys. Thanks for taking my questions.
Good morning, Greg.
Following up on Doug's comments from the balance sheet.
What are your expectations around the timing of the remaining three and a half a million dollars and payments that you said previously.
Sure so.
The one I'm about to speak to as an option agreement that would be two and a half million dollars.
And that would come during Q2.
And then potentially another $1 million would come in Q3.
So that'd be three and happened we already received one one.
Okay, So from Q2 and Q3.
Yes.
And then shifting to exploration for.
Greg You mentioned that you had in the sector and a drill rig is that more to accelerate the existing program or should we view this as an expansion of the.
We initially planned exploration activities.
It's actually both.
The results that we've seen so far is the intersection of the projected mineralized zones north of the Batman deposit had been very encouraging.
We want to be able to get results back faster and make decisions with regards to where to drill next and a more efficient manner and as a result, our we've added a second rig and so it will be both bolt and expansion of the program, we're going to be drilling more meters, we're going to be drilling more sections trying to string together.
Other and closer spacing and the continuity of the extension of the mineralization, but also because we want to drill more sections, we want to be able to generate generate results more quickly and that and hence that are there and the decision that we've made to bring in a second drill.
Okay. That's that's helpful.
And then lastly, just on permitting and I know you're expecting the MMP shortly.
Once that and hand or are there any other permits that are needed or is the project fully shovel ready at that point.
And that will be the last major permit for the project there will be a number of other minor permits will require a.
And and explosives use permit there will be individual construction permits, but the pathway to getting all of the other permits is is very short and in many cases only involves presenting designs and plans paying fees and receiving the appropriate approvals. So this is a very significant.
Milestone one that we've been working on really since two that the latter part of 2018 and as a it will be a tremendous a.
A tremendous milestone and <unk> and advancing the project.
Got it okay. That's all for me thanks again.
Thanks for being on the call this morning Jake.
Or do you want to take the next question from Heiko, Sheila H C. Wainwright. Please go ahead.
Maybe for my starting Heiko.
Hey, there good morning nice.
Nice to see you guys outperforming the index last year, and let's talk a little bit more about really aid with the question with Zeke earlier with the second rig what's the are the costs are you assuming the availability is secure and if you could maybe just provide a touch more color than you did earlier of the app.
Hi, Brian.
Brian I would come and go.
Yeah. So right now we're anticipating are increasing the budget from what we had for last year or two.
Something on the order of 1.2 to two $2 million for additional drilling.
The planned outcome of the drilling is.
And those who are familiar with our corporate presentation. There's.
The Batman deposit is located at the southern and of a structural corridor, that's known to host mineralization.
And trending from the southwest for the northeast across the boundaries of the mining license from the Batman deposit on the southwest and two the quickly as deposits on the northeast for many years, we thought that there were a number of very localized gold occurrences between these two deposits we knew.
Now believe that the mineralization is much more continuous.
And the purpose of the drilling that we started last fall was to test more on the on the level of proof of concept to validate the work that our geologists had done and mapping and trying to better understand the geology and the structure of the main hosts the gold.
Based on the drilling that we've completed we have a we have a high degree of confidence that there is a significantly greater continuity of the mineralization between these two deposits and where and where are the purpose of the drilling program is to try to identify both the continuity and to locate the major structures.
That host the mineralization debt that hosts the gold at the Batman deposit I E.
And the courts, and calcite veining with the sulfides and and.
The appropriate structural domain and and so we believe that ultimately that the work that we're doing right now will lay the foundation for and increase in resources.
<unk> with with with significantly more drilling and increase in reserves and and an extension on the life for the Mount Todd project. So Heiko Youll appreciate that are there.
These are all very exciting things and that we hope that as were able to announce.
The results of the last four holes and the original program and the coming weeks that the market will understand our enthusiasm for the results thus far and why we've made the decision to go forward with with another drill.
Yep.
And completely completely different question very helpful by the way. Thank you.
And the adult draw when I assumed the community relations or unchanged falling your amended agreement that was three months ago pretty much to the day rate and the Ams announced November 30th if I remember right.
And I are a already.
Slightly more positive towards the company is it unchanged what are you hearing through the grapevine.
Our relationship with the Joe and average people is excellent.
Yeah. The modernization of the agreement was an initiative that we started and they they jumped in with some things that they wanted to achieve.
One of them one of the parts of that agreement was the formation of our leaders for them.
And we held our first leaders Forum meeting a couple of weeks ago.
And the job one and are very excited about the opportunity to work more closely with us more formally as we.
And.
As we execute on our goals and our and on our objectives of being an industry leader with regards with regards to the protection of cultural heritage sites.
Worked very closely with them, we pay them a monthly consulting for you right now to make it to help us identify and make sure that we know where these sites are and we don't disturb any of them that we treat them with the appropriate care and respect.
But we're working.
With them to develop a policy.
And and to refine our procedures for how we're going to how we're going to treat these of note. We had a visit from the northern territory Minister of mines, a couple of weeks ago and.
And Unbeknownst to us prior to visiting the Mount Todd site, she visited our wear and Brian Jeff Aboriginal community, which is a community within the Joe and our people.
And she reported that she was very surprised to find the people of the community the elders there V.
<unk> supportive of the development of the Mt. Todd project and commented that that was in Stark contrast to what she has observed when she's visited the average people around other mine sites and so she was very complementary of the work that we've done to engage with them the Zhao and Aboriginal people.
Lastly of note.
And we're very proud of the fact that over half of our workforce at Mt. Todd is Aboriginal and we expect to continue to provide employment opportunities for the average on people as we develop the project.
Very helpful.
And if so much for your comprehensive answer as always and stay safe.
Thanks, Heiko have a great day.
Yes.
Are there any other questions.
And it appears we do not have any more questions I'll turn it back to you for it.
Very well.
Well, we appreciate everyone's time. This morning. This afternoon as the case may be wherever you are we had a very successful year in 2020, and we expect to follow that with with another exceptional year and 2021, and we have a lot of work cut out for us and we're very we're very excited about.
Where the company is positioned as I indicated with regards to the prospects of <unk>.
Of finding a potential partner.
The impact of the pandemic has resulted and that's taking longer than we expected.
But bear in mind debt, we are focused on three things the first being recognizing the intrinsic value of Mt, Todd and appropriate you're appropriately rewarding shareholders with value creation second preserving maximum ownership for our shareholders and third minimum.
Using future future dilution.
Those continue to be our priorities as we seek a partner and we continue to believe that this is the best way to create value. We're very excited about debt the exploration work and and the offer and the potential that this is creating and we encourage you to stay tuned and be watchful for.
<unk> and exploration results last of all is.
Our questions have been asked please be mindful that we believe that we are very close to receiving the approval of the mine management plan and with that the project will then hold our Vista will then hold all of the major permits environmental and operating for the development of the project.
Not aware of very many other developers and our space and certainly none others of the size that the Mount Todd project is who have achieved this point of of permitting success. This represents a significant derisking of the project and we're very pleased with the results of our hard work over the last.
And number of years and.
And we thank you and we hope that you'll continue to follow and Mt, Todd and and and and that you'll talk about what you've heard on the call today with your friends and associates and encourage them to learn more about Vista gold as well again. Thank you for your time and we wish all of you a very pleasant day.
Yeah.
This concludes today's call. Thank you for your participation you may now disconnect.
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Okay.
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And.
And.
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