Q2 2022 Vista Gold Corp Earnings Call

Good day, ladies and gentlemen.

Welcome to Vista, Gold's second quarter, 2022 financial results and corporate update conference call.

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Following the presentation, we will conduct a question and answer session.

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As a reminder, this conference is being recorded.

Tuesday, I apologies Thursday, the 20 <unk> of July 2022.

It is now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Please go ahead.

Thank you Michelle and good day, everyone. Thank you for joining the Vista Gold Corp, 's second 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 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 in 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.

During the quarter, we advanced our work with CIBC capital markets to seek a partner or other form of transaction to achieve greater value recognition for our Mt. Todd Gold project.

Vista and CIBC are working diligently towards this goal and we are pleased with our progress to date.

In June we announced the comprehensive results of our Mt. Todd exploration drilling program that was completed earlier this year.

We're extremely pleased with the results of this program and we believe there is an opportunity for significant resource growth and extension of the Mt. Todd Mine life we.

We ended the second quarter with a cash position of $11 1 million.

Completion of the exploration program and management's ongoing efforts to control costs resulted in a significant reduction in expenditures this quarter.

I'll discuss these topics in greater detail later in the call, but I will now turn the time over to Doug Tobler, Our Chief Financial Officer for a review of our financial results for the quarter ended June 30th 2022.

Thank you Fred and for those on the call today. Thanks for taking your time to join us.

Today I'll provide a brief recap of our financial position and results of operation for the quarter ended June 32022.

Vista Gold's full financial statements and MD&A are included in our Form 10-Q that was filed yesterday and is available either at SEC dot Gov or SEDAR dot com.

We ended the second quarter with cash on hand, totaling $11 1 million.

This reflected a net decrease of $1 $8 million during the quarter.

Year to date, our net cash position has decreased about $2 1 million.

Net expenditures this quarter were about $400000 less than expected because we came in under budget for the feasibility study work.

<unk> slightly better than planned on other expenses and received a refund of value added taxes paid in Mexico.

We also benefited during the first quarter from net proceeds of $2 $5 million for cancellation of the remaining royalty interest at the hour cost project in Indonesia.

With the feasibility study and drilling program complete our expenditures trended downward this quarter and we are evaluating opportunities to continue reducing overall expenditures going forward.

Vista Gold's results of operations continued to be in line with management's expectations. We reported a net loss of $1 4 million for the second quarter of 2022.

Compared to a net loss of $800000 for the second quarter of last year.

There were a few areas that accounted for this variance.

First we had no gain from sales of non core assets during Q2 2022.

While we recognized a $2 $1 million gain for the lowest Reyes project during Q2 of 2021.

However, during the most recent quarter, we had other income of $400000 compared to nil for the same quarter of last year.

This quarter's other income included the value added taxes paid refund that we got from Mexico, and the reversal of previously accrued contingent reclamation costs that we no longer believe are probable of being incurred.

We also benefited from lower exploration property valuation and holding costs, which were $1 million this quarter compared to $2 million for Q2 of 2021.

Looking at the six month period ended June 32022 and 2021.

Our net losses were $1 7 million.

And $3 $9 million respectively.

<unk> between these periods reflects the same components that I discussed previously for the second quarter.

Plus this year during the first quarter, we recognized a $2 $9 million gain for canceling the remaining royalty interest on the <unk> project, but had no gain during the first quarter of 2021.

In summary of our financial position and results of operations continuing to track as planned.

Feasibility study and drilling program provided important steps forward for Mt, Todd and were accomplished within budget.

We've also been able to supplement our liquidity position by monetizing non core assets and effectively managing other expenditures.

Management continues to seek opportunities to monetize its remaining non core assets and further manage down spending. We believe we are a good overall position with cash on hand of $11 1 million and no debt.

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

Thank you Doug.

I'll now move on to discuss several of our second quarter achievements in more detail.

As most of you know earlier this year.

<unk> CIBC capital markets is it strategic adviser.

To assist in evaluating a broad range of alternatives to unlock the value of the Mt. Todd Gold project Cibc's mandate includes leading a process to complete an accretive transaction with the objective of maximizing shareholder value.

Our primary focus during the second quarter continued to be the advancement of our work with CIBC and as mentioned earlier, we are pleased with our progress to date.

Roughly coinciding with our appointment of CIBC.

Australia lifted.

Striction on international travel to and from the country for fully vaccinated individuals I'm.

I am pleased to say that the elimination of these restrictions.

Had a positive impact on our work in country and our process to complete a strategic transaction by allowing greater in person interaction between senior management local stakeholders and interested parties.

Yes.

In June of this year.

<unk> announced the completion of the exploration drilling program at Mt. Todd.

The program was comprised of 26 holes totaling 8887 meters, which consistently intersected mineralization predicted by the Companys geologic model.

<unk> demonstrated both horizontal and vertical continuity of the targeted structures.

Program successfully identified for exploration targets with a combined potential to add 1.8 to $3 5 million ounces of gold to our resource base.

Several other early stage potential targets along a five four kilometer portion of the 24 kilometer Batman Driffield trend. We're also identified.

The work is conceptual in nature.

And was not intended to and did not yield additional mineral resources or mineral reserves when appropriate future drilling can be undertaken to efficiently drill out these targets and define additional gold resources.

As Doug mentioned, we ended the second quarter with a cash position of $11 $1 million and we continue to have no debt.

We believe our strong balance sheet will be very important as we advance toward the goal of completing a transaction that will maximize shareholder value.

We continue to engage with those who have expressed an interest in Mt. Todd and are evaluating a range of strategic opportunities to achieve greater value recognition for the project.

We remain focused on completing the REIT transaction.

One that creates value by recognizing a greater portion of the present value of Mt. Todd and provides ample opportunity for future additional value recognition.

Our primary objective is to achieve a valuation for Mt. Todd that is reflective of the gold production profile.

Long operating life excellent Golden recovery the projects.

Location in Australia, as low risk northern territory favorable low operating costs and robust project economics as demonstrated by the recently completed feasibility study and the fact that we hold approvals for all major permits.

The work of CIBC is continuing and we will provide additional process updates when it is practical to do so.

Continuing.

For the Investor looking for value growth potential low geopolitical risk exposure and strong leverage to the gold price.

Vista represents an exceptional investment opportunity.

At a gold price and foreign exchange rate of approximately $17 50, and 69 point of $69.05. That's close to today's market conditions for gold price and exchange rate.

Mt. Todd project Economics demonstrated an after tax NPV at a 5% discount rate.

Approximately 135 billion and an IRR of 24, 5%.

We find ourselves in a market with weaker gold prices, although improving over the last couple of days.

And lower equity values across the entire sector gold sector.

Ongoing hostile activities in Ukraine higher inflation.

Rising interest rates and fears of recession are creating greater uncertainty in the markets.

Presently these factors have a negative impact on.

On the price of gold.

With the exception of the last few days, but we believe that the gold price will rebound in the coming year.

Furthermore, these factors have had a significant impact on the operational cost of gold producers across the globe.

The work we have completed over the last several years along with the recently completed feasibility study is positioning the Mt. Todd Gold project is one of the largest and most advanced <unk>.

Developed gold projects in Australia with.

With 7 million ounces of proven and probable reserves Vista controls the third largest reserve package in Australia.

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

The existing basic infrastructure at Mt, Todd, including paved roads power lines and natural gas pipeline to the site combined with operational infrastructure comprised of the freshwater storage reservoir and tailings impoundment facility provide very distinct construction timeline and risk mitigation advantages are.

Our technical programs.

And focus on designs that are capital efficient with low operating costs have created the foundation for the leverage to gold price and improved shareholder value that the project enjoys.

We have worked hard to secure the authorization of all of the major permits of equal importance. We have earned the trust of the local stakeholders and are confident that our social license is firmly in hand.

We believe that 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 resolve to seek a partner or other form of transaction to achieve greater value recognition for the Mt. Todd Gold project.

For a more comprehensive assessment of the value accorded to 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 investors looking for value growth potential low geopolitical risk exposure and strong leverage to the gold price and that current prices represent a tremendous opportunity to establish a position we're in.

Chris one of his holdings in vehicle.

Michelle that concludes our prepared remarks, we will now.

Be happy to respond to any questions from participants on this call.

Thank you Sir ladies and.

Gentlemen, we will now begin the question and answer section.

If you would like to ask a question. Please press star followed by the number one on your telephone keypad.

If you would like to withdraw your question. Please press star followed by the number too.

Please standby one moment for your first question.

Your first question comes from Michael <unk>.

Of H C. Wainwright. Please go ahead.

Greetings from Europe , I hope everybody is well can you hear me okay.

Good morning Heiko.

Excellent that's had some issues on other calls that.

Youre sitting on the $11 1 million of cash on working capital I mean, the <unk>.

Both know that you run the firm quite lean and obviously, we comment that you and I are very aligned in that way.

Any thoughts on cash burn for the remainder of the year and if you'd be willing to share some ideas, where youre spending was during July I assume it wasn't a whole lot different than during two.

And can we just extrapolate the cash balance for end of Q3 by that.

Yes, I'm going to I'm going to turn that to Doug tobler to respond to your question Heiko.

How're you doing.

Yes, alright.

Yes, I'm good so for the balance of this year.

We will probably run towards the lower end of the range of our expenditures, we typically look at something one and a half to as high as $2 million per quarter. When it's when it's at the high end that's when we're dealing with all of the compliance issues around the 10-K and those things annual meetings. So I think the.

Lower end of one and a half per quarter for the rest of the year is probably a good way for you to extrapolate forward.

Perfect and Doug Youre going to appreciate this is my second question was actually intended for you.

Earlier on this call.

At monetizing some of your non core assets.

As much detail as you're willing to get into given the setting we're on where exactly are we with this let me clear this nothing like that CIBC process that you described earlier for ball Todd.

If nothing else because we're looking at smaller earlier stage assets much lower valuation done it up.

But maybe.

Maybe just help us I would've bit and tell me what you think we should expect to see over the next call. It three 612, whatever you're willing to get into amongst please.

Yes, So let me tell you what the non core assets are first that we're working with.

We have.

Yes.

Yes.

Some used mill equipment that we've had for a number of years actually and it's being marketed through a third party.

Hoping hoping to find somebody that is looking for a faster development track with a project.

Basically it's difficult to gauge the timing there is various stages theres been three or four groups looking at it it's time, sometimes there's only one or two so we would hope to do something with that asset over the next.

Put it in that six to nine months horizon, but by the end of 2023, we'd like to see something done with that and we feel we feel that for the right Party. We can we can work with people on terms for that to get something that works for us and for whoever's acquiring it.

Secondly, we have a royalty interest on a project called long Valley.

And that asset is held by a company called core mining.

There is there's obviously a lot of activity in the royalty space right now and it's relatively small in terms of what we suspect the value is but at the same time, it's something that.

With a little bit of marketing, we think we might.

We have an opportunity to move that by the end of next year as well. So those are the two key elements.

As I mentioned, we got a small refund of value added tax.

During the current quarter, we've got some more down in Mexico. This relates to back when we headquarter Lupe de Los Reyes.

And we've been chasing these refunds for awhile. So those are probably less likely to come in in the window Ive described just simply because there.

Involved with the government governments were always slow.

That's really the basis, yes.

Or at this point.

That said on the earlier you just a moment ago, you just talked about terms.

Youre not settled a sale you'd be willing to pay.

It takes some money have somebody that's the project.

In our neighborhood stores or anything like that right.

Well cash is always king, but again with the right party, there's opportunity for us to leverage that asset on a longer term basis.

Fair enough.

I just feel like sub assets are very underappreciated right now.

Youre not going to walk away with as much cash as you're probably right.

I. Appreciate your question I think the answers to my questions I'll get back in queue, and so having that you'll hear thank you guys. So much and talk to you soon.

Thanks Heiko.

Ladies and gentlemen, once again, if you would like to ask a question. Please press star one at this time.

There are no further questions from the phone lines I would like to turn the conference back to Mr. Fred Ernest for closing remarks.

Thank you Michelle.

Thank you to each of you who have taken time. This morning, or this afternoon wherever you may be to join us.

Hey.

We have reported there were some very significant accomplishments and things that were wrapped up in the second quarter.

I reiterate that the work that we're doing with CIBC is continuing.

And promise that we will provide additional process updates when it is practical to do so we're pleased with where that process is at the present time and we look forward to.

Being able to.

Announce updates.

As is practical.

We as Doug has indicated.

Mindful of.

The market conditions in <unk>.

We feel that we have a strong balance sheet, we are already in there.

Looking for ways to be more.

Cautious and careful and expenditures we are looking at cost cutting measures as I think most are.

And we look forward to being able to.

Report.

Next quarter's results.

<unk>.

Outperform.

Our expectations I'm very confident that we'll be able to do so.

With that.

I would just like to wish all of you a very pleasant day and thank you for taking time to join US on this call and we encourage you to.

To continue to stay tuned for news as the.

The work that we're doing with regards to the Mt. Todd project continues to unfold with that we wish you all a pleasant day and thank you for joining the call.

Ladies and gentlemen, this does conclude your conference call for this afternoon, we would like to thank everyone for participating and ask you to please disconnect your lines.

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