Q1 2022 Vista Gold Corp Earnings Call

Good day, ladies and gentlemen, welcome to Vista golds first quarter 2022 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 a question.

For assistance during the call. Please press star zero on your Touchtone telephone.

As a reminder, this conference is being recorded today Tuesday may three 2022 it's now my pleasure to introduce Pamela Solly, Vice President of Investor Relations.

Please go ahead.

Thank you, Chris and good day, everyone. Thank you for joining the Vista Gold Corp, first quarter 2022 financial results and corporate update conference call I'm, 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 will 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 <unk>.

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 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 call over to Fred.

Ernest.

Pam.

And thank you everyone for joining us on the call today.

As announced in February we achieved a significant milestone with the completion of the feasibility study for our 100% owned Mount Todd Gold project.

Which increased gold reserves by 19% to $6 nine 8 million ounces gold and extended the life of the mine to 16 years.

And confirm the robust economic returns of the project, even after taking into consideration the inflationary pressures being experienced on a global basis.

The completion of the 2020 to feasibility study.

Represents a significant step in Derisking Mt, Todd and readying the project for development with.

We subsequently announced the appointment of CIBC capital markets.

Is this a strategic advisor to lead a formal process to assist us in evaluating a broad range of alternatives to unlock the value of Mt. Todd.

And in arranging an accretive transaction.

During the quarter. We also successfully completed the exploration drilling program at Mt. Todd.

Continued to monetize core noncore assets and maintain the strength of our balance sheet with quarter end cash of $12 8 million.

I'll discuss these topics in greater detail later in the call, but I'll now turn the time over to Doug Tobler for a review of our financial results for the quarter ended March 31 2022.

Thanks, Fred and thanks to everybody on the call. We appreciate your interest.

I am pleased to report that our first quarter financial results were in line with management's expectations I'll start today with a brief recap of a few measures of our financial position.

Our cash liquidity position as the first metric I'll discuss.

At March 31, 2022, total cash totaled $12 8 million as Fred mentioned.

Which reflected a net decrease of $300000 during the first quarter.

We benefited from net proceeds of $2 $5 million for cancellation of the remaining I'll walk Moss royalty.

And the cash inflow was largely offset by expenditures of $2 $8 million. The key programs that we advanced during the most recent quarter included the additional exploration drilling work necessary to do to complete the feasibility study related engineering and design work and several other technical studies.

And another important metric that we track is our working capital position, which is measured as current assets less current liabilities.

Again, we performed well this quarter with working capital at $12 million at March 31, 2022, and this reflected the decline of just $200000. During this most recent quarter.

The largest offset in our working capital calculation as accounts payable and at March 31, 2022, our payables still included remaining amounts due for several drilling and feasibility study vendors will make final payments for this work during the second quarter of 2022, and we expect our spending pattern to.

<unk> to our more normal and typical historical level.

Well close the financial review with a brief summary of our results of operations we.

We reported consolidated net losses for the three months ended March 31, 2022, and 2021 of $320000 and $3 $1 million respectively. The decrease in the loss for the quarter compared to last year's first quarter is almost entirely related to <unk>.

The $2 $5 million payment for cancellation of remain our most royalty this.

This amount plus the previously deferred option gain of $383000 were recognized as income for last year's comparable period. There were no similar income amounts otherwise, our corporate administration and Mt. Todd expenses were consistent period over period.

As noted earlier, we have now concluded our exploration drilling and feasibility study. So beginning with Q2 of this year, we expect to see our Mt. Todd expenses declined back towards historical levels.

That concludes my remarks, Fred I'll turn the call back over to you.

Thanks, Doug.

During the quarter, we continued to advance and Derisk Mt, Todd and initiated a strategic process to identify and evaluate a broad range of development alternatives for the project.

Let me first talk about the feasibility study.

We completed a feasibility study for the Mt. Todd project and announce the results on February nine of this year.

And filed the S. K 1300 Technical report summary, and the National instrument 43, 101 Technical report on February 24th of this year.

The 2022 feasibility study highlights a 19% increase in gold reserves.

Increasing from $5 eight 5 million ounces as reported in the company's amended 2019 pre feasibility study to now $6 98 million ounces of gold and this extends the life of the mine to 16 years average annual production of 479000 ounces of gold during the first seven years of commercial operations.

And a low operating cost profile that deliver significant cash flows established Mt. Todd is a compelling investment opportunity.

This study addressed a recommendations from the 2019 preliminary feasibility study it reflects minor updates of the project designed to be consistent with the approved mining management plan and advanced the levels of engineering and detailed costing in all areas of the project.

As a result of favorable tradeoff study results. The feasibility study includes contract power generation, which insulates the project from certain construction and operating risk, while resulting in direct economic benefit to the project.

Economic highlights from the study include.

And after tax net present value at a 5% discount rate of 999, and a half million dollars.

Our $999 $5 million to be more precise and an IRR of 26% at a gold price of <unk> hundred dollars. The official study price.

The after tax net present value at a 5% discount rate at 1900 dollar gold price is estimated to be $1 $7 billion with an IRR of 29, 4%.

And after tax cash flow of $2 $3 billion in the first seven years of commercial operations at 1900 dollar gold price.

These results all assume a foreign exchange rate of 71 cents U S. Prostrate dollar almost exactly what the foreign exchange rate is today.

For more study details I invite you to refer to our February 9th news release and.

And feasibility study webcast or download a copy of either the SK <unk> hundred or Ni 43, 101 compliant report.

All of which can be found on our website at www Dot Vista gold Dot com.

Now, let me turn your attention to the appointment of CIBC capital markets is our strategic adviser.

As indicated in March of this year, we appointed CIBC.

As our strategic advisor to assist in evaluating a broad range of alternatives to unlock the value of the Mt. Todd Gold project.

<unk> mandate includes leading a formal process to complete an accretive transaction with a primary focus on maximizing shareholder value.

I am pleased with the progress of CIBC has worked to date and confirm as announced yesterday that the formal process has commenced coinciding with the work of CIBC in February of this year, Australia lifted restrictions on international travel to and from the country for fully vaccinated.

Visuals. We believe this action will have a positive impact for the formal process by allowing greater in person interaction between senior management local stakeholders and interested parties.

I'll now turn to export the exploration drilling program.

As Youre all aware for the last 18 months, we've been undertaking drilling at Mt. Todd and we've now completed this exploration program with final drilling completed in March and we are now awaiting final assay results.

The drilling program focused on identifying connecting structures and mineralization.

Between previously interpreted discrete mineralized occurrences.

And it also confirmed the potential for efficient resource growth with future drilling along strike from the Batman deposit approximately one nine kilometers north to the Gulf tell us and Penguin targets. This.

This program also successfully achieved our goals of demonstrating the potential along a 454 kilometer portion.

Of the 24 kilometer Batman Driffield trend.

And and outline areas, where future drilling can be undertaken to efficiently define additional gold resource.

Mr completed 26 planned drill holes for approximately.

8900 meters the drill holes consistently intersected mineralization predicted by our geologic model and demonstrated both horizontal and vertical continuity of the targeted structures.

Looking ahead.

Management believes the results of the 2022 feasibility study will appeal to potential partners investors and lenders as we continue to focus on maximizing shareholder value. We believe the size location permitting status and recently completed feasibility study position Mt. Todd is one.

The most attractive development ready gold projects in the world.

In addition.

With total cash of $12 8 million at quarter end.

At March 31 of this year, our balance sheet is strong and our prospects for unlocking shareholder value has never been greater.

With Australia, just recently lifted international travel restrictions to and from the country for fully vaccinated individuals several members of vistas senior management team, including myself have traveled to Australia.

With open borders we believe due diligence activities will also be more easily undertaken by potential partners and other interested parties.

We continue to engage with those who have expressed an interest in Mt. Todd and our and are evaluating a broad range of strategic opportunities to advance the development of the project.

It's important to note that we remain focused on completing the REIT transaction.

One that creates and achieves a structure that provides appropriate opportunity for value creation by recognizing a greater portion of the intrinsic value of Mt. Todd.

Our primary objective.

Is to achieve a valuation for Mt. Todd that is reflective of the gold production profile. The long operating life excellent gold recovery the project's location in Australia as low risk Northern territory.

Favorable low operating cost robots robust project economics as demonstrated by the recently completed feasibility study.

And the fact that we hold approvals for all major permits.

This is a very comprehensive list and we believe that these factors coupled with the excellent infrastructure who.

We will present opportunities for us to evaluate a broad range of development partners structures and alternatives as we continue to focus on maximizing shareholder value.

Now, let me talk about investor opportunity for a moment.

For the Investor looking for value.

Growth potential low geopolitical risk exposure and strong leverage to the gold price Vista gold represents.

An exceptional investment opportunity.

At a gold price and foreign exchange rate of approximately 90 to $100 71 per Aussie dollar that's close to today's market conditions. The Mt. Todd project economics demonstrate an after tax NPV at a 5% discount rate of approximately $1 7 billion and an IRR of 29%.

This is well positioned to evaluate a broad range of development alternatives and transaction structures as we continue to focus on maximizing shareholder value.

In conclusion.

We find ourselves in a strong market.

With although somewhat volatile gold prices.

Hostile activities in Ukraine, and higher inflation are creating greater uncertainty in the markets.

We believe this supports a view for sustained strong gold prices in the coming 12 months to 24 months.

The work we have completed over the last several years along with the recently completed feasibility study has positioned Mount the Mt. Todd Gold project.

As the largest undeveloped gold project in Australia.

With 7 million ounces of proven and probable.

Gold reserves Mount Todd controls.

And Vista controls for Mt. Todd the third largest reserve package in Australia.

Mt. Todd is ideally located in the northern territory of Australia, and extremely stable and mining friendly jurisdiction.

The existing basic infrastructure at Mt. Todd include including paved roads.

Power lines and natural gas pipeline to the site.

Combined with the operational infrastructure comprised of the freshwater storage reservoir and tailings impoundment facility provide very distinct construction timeline.

And risk mitigation advantages our technical programs.

We're focused on designs that are capital efficient with low operating costs.

We have created the foundation for the leverage to gold price and improved shareholder value that we enjoy.

And are seeking we have worked hard to secure.

The authorization of all of the major permits.

<unk> importance, we have earned the trust of the local stakeholders and are confident that our social license is firmly in hand.

We believe Mt. Todd is a superior asset.

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. We believe the completion of the feasibility study and the recently completed drilling program further demonstrate the significant upside potential of the project and strengthen our position as we evaluate a broad range of development partners transaction structures and other alternatives for realizing a greater portion of the intrinsic.

Value of Mt. Todd.

I reiterate our commitment to focus more intensely on maximizing shareholder value as we move forward.

For a comprehensive assessment of the value accorded to Vista in the Mt. Todd project are reverting 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 investors looking for value growth potential low geopolitical risk exposure and strong leverage to the gold price.

And the current prices represent a tremendous opportunity to establish a position or increase one's holdings in Vista gold.

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

As a reminder to ask a question you will need to press star one on your telephone.

To withdraw your question.

Please standby, while we compile the Q&A roster.

Yes.

Your first question comes from Michael <unk>.

Of HC Wainwright.

<unk> is open.

Good afternoon, Hi, Brett.

Hey, Fred Thanks for taking my question you saw very cheaper today very nice.

Thank you.

Question for you you spend a good amount of time of this call going through valuation.

The company is worth.

Probably more so than I've seen amongst earnings calls I've been all my life.

Maybe just a little bit what our analysts missing with the value gap for the company because clearly something is there.

That is being missed and I mean I'm looking at my own model. There you know what I'm looking at a $3 price targets and stocks, obviously well below that.

I'm trying to see.

But you know maybe in phone calls that you're getting inbound calls what are people missing.

Well Heiko the last 10 days have been very very interesting in the market, especially the gold sector.

We briefly approach $2000, an ounce and have since fallen.

70, $580 really from what the price was before that run up.

And in the aftermath of that we've seen the value of the company decreased by almost 25%.

There is truly a tremendous disconnect between the value of Vista gold and the value of the value of the Mt. Todd project.

We are.

As I as I pointed out.

The study the feasibility study was completed at a very modest and conservative gold price of <unk> hundred dollars and demonstrates an NPV five of just shy of $1 billion.

And at a gold price closer to today's gold price that MPV is approximately $1 7 billion.

I think the disconnect is utilized in the uncertainty.

The market has with regards to how Mt. Todd will be financed and ultimately constructed.

And I am very pleased that we have already embarked on a process has announced with CIBC capital markets.

<unk>.

Identify.

Potential opportunities.

And then two to commence as I've indicated a formal process that we believe will end then.

Successfully and the completion of an accretive transaction.

And I believe that once that transaction is announced that the discussion about how Mt. Todd will be financed will be answered and I believe that that will be a very important catalyst for unlocking value for Vista shareholders.

Fair Okay.

Question also for you, what's the current or I guess, there's a couple of questions at once.

What's the current spend that site, maybe maybe month by month or quarter by quarter and then also what have you encountered so far this year I mean, it's now may and what do you think we'll see by the end of the year. Please.

I'm going to let Doug answer that question Heiko, Yeah. So you can see our first quarter results and again, we were running two very heavy and important programs being the drilling and the feasibility study.

As we move back down to a more normal pace, what youll see is our recurring burn rate will be something just about $1 million in half slightly above that on a quarterly basis and thats split kind of 60 40, Australia versus the corporate organization.

We've got a few other programs in the works but.

Those will almost be lost in the rounding so figure somewhere just north of a million and half a quarter.

Got it okay. That's it on my end. Thank you all for your time and.

I'll talk to you soon.

Very good thank you heiko.

Once again, ladies and gentlemen to ask a question. Please press star one on your telephone.

Yeah.

There are no further questions I'd like to turn the call back to Fred.

Thank you Chris.

And thank you to all of you who have taken time to join the call. This afternoon and those of you who will listen to this call is rebroadcast or is found on our a link on our website.

We're in a period of time, which is very exciting for Vista gold with the completion of the feasibility study earlier in the first quarter of this year.

And subsequently the appointment of CIBC capital markets is our strategic adviser.

We are moving the ball forward, we are executing on the strategy that we laid out more than a year ago on how we would unlock value for shareholders.

As I've indicated.

The formal process has commenced.

And I'm very pleased with the work that CIBC has completed to date.

We invite you to to watch and look forward to news, we won't be making any announcements until we have a formal announcement that can be made.

But I invite you to not let time pass you by.

With the with the gold price and our share price, where they are I believe that this is.

Theres a tremendous opportunity.

To add to your holding in Vista gold or to establish a position in Vista gold appear not presently a shareholder.

If you need further information if you would like to chat with a member of the management team I invite you to contact Pamela Solly, our vice President of Investor Relations.

She will answer your questions and if need be she will get somebody else on the phone to also talk with you. We believe that this is a tremendous opportunity and we believe that there'll be there'll be a significant opportunity for value creation and for wealth creation for shareholders, who recognize the potential value in the catalyst.

That lies before us with the work that CIBC is doing I invite you to seriously review this and not Miss this opportunity.

To conclude with finally, the statement I'm not aware of many other gold projects across the world that meet the criteria that the Mount Todd project meets.

It's of large size tremendous production capacity with almost 500000 ounces per year on average over the first seven years of the project is located in a very stable and mining friendly jurisdiction net of the northern territory of Australia.

All in sustaining costs are are lower than the average all in sustaining costs of the of the major gold producers.

All of the major permits environmental and operating permits are already in hand.

We enjoy an outstanding relationship with the stakeholders and are and I feel very comfortable stating that our social license is firmly in place.

When you add all of these things together along with the very robust project economics estimated recently taking into consideration the inflationary pressures that we've seen in the latter part of last year, you have a very clear picture of what the Mt. Todd project can deliver and I don't think Theres very men.

Any other projects that can say the same.

We're undervalued tremendous opportunity to buy with the Blue light flashing. Thank.

Thank you for your time this afternoon I hope that Youll look at Vista gold and if appropriate for your portfolio. We invite you to make an investment.

Thanks for your time, and we wish you all a very pleasant afternoon.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Okay.

[music].