Q2 2023 Vista Gold Corp Earnings Call
Good day, ladies and gentlemen, welcome to Vista golds second quarter 'twenty to 'twenty three financial results and corporate update conference call. At this time all participants are in a listen only mode. Following the passing patient they will conduct the question and answer session at that times like this.
Things are asked to press Star one to register for a question.
During the call. Please press star zero on your touch downtime as a reminder, this conference is being recorded today Thursday August eight 2020, it's now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Please go ahead.
Thank you Laura and good morning, everyone. Thank you for joining the Vista Gold second quarter 2023 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.
Please refer to our most recently filed Form 10-Q 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 earnest.
Thank you Pam.
And thank you everyone for joining us on the call today.
This morning, I'm pleased to highlight the extension of this disagreement with the northern territory of Australia and.
And actions taken by the northern territory to make the territory more competitive and attractive for mining investment.
Extension of our agreement with DMT government was a very important achievement as we continue our activities to Derisk Mt, Todd and demonstrates our strong relationship.
With TNT government and local stakeholders.
Recommendations from the northern territories mineral development task force reflect the territories commitment to enhance and increase mining investment in the territory.
The strategic process with CIBC capital markets is ongoing and.
And we continue to take actions to implement cost reductions, which we haven't had a pot, which have had a positive impact.
On vista's financial position for a second consecutive quarter.
Vista continues to have no debt.
We remain committed to the health and safety of our employees and to environmental stewardship at Mt. Todd.
There have been no lost time accidents this year and the site has now achieved 621 consecutive accident free days.
I'll now turn the time over to Doug Tobler for a review of our financial results for the quarter ended June 30th 2023.
Thank you Fred.
Today I'll provide a brief recap of our results of operations for the quarter ended June 32023, and our financial position as of June 32023.
Vista Gold's full financial statements and MD&A are included in our Form 10-Q that was filed yesterday.
It's available at either SEDAR Dot Gov.
Or I'm, sorry, SEC dot Gov, or SEDAR plus dossier.
<unk> reported a consolidated net loss of $1 5 million or one per common share for the quarter ended June 32023 <unk>.
Compared to a consolidated net loss of $1 4 million.
Or <unk> <unk> per common share for the quarter ended June 32022.
The loss for the current quarter was in line with management's expectations and reflects a 16% reduction of operating expenses compared to the same period in the prior year. This was offset by lower nonrecurring other income.
This reduction reflects our objective of achieving a 7% reduction in recurring costs, which is on track and other reductions for Mt, Todd exploration and site maintenance programs.
The comparative second quarter net losses for 2023, and 2022 were similar but there were offsetting variances that werent discussion first we reported $300000 lower operating expenses, which is a 16% reduction previously mentioned.
We also received $60000 more interest income during Q2 of 2023.
These amounts were offset by lower other income in the current quarter because the prior years quarter reflected a $200000.
Other income amount for a value added tax refund and $240000 for reversal of a previously recorded reclamation accrual.
For the six months ended June 32023, and 2022, our net loss was $3 5 million and $1 $7 million respectively.
Loss in 2023 was greater than 2022.
Because the 2022 period included a $2 $9 million gain on the disposal of our <unk> property.
And other income of 420000 as I discussed previously.
Offsetting the effects of the 2020 to gain and other income items Vista reported $1 $4 million lower operating expenses for the six months period ended June 32023.
Consistent with our results for Q2 of 2023. This decrease for the year to date period reflects our overall reduction of recruiting costs and other reductions for Mt. Todd exploration completion of technical reports and site maintenance program.
Turning to our financial position our balance sheet remained in good condition. At June 32023, we ended with cash of $6 million and maintained our position of having debt.
That concludes my remarks for today I'll now turn the call back over to Fred Thank you.
Thank you Doug.
I will begin with a review of our ESG initiatives and performance and then review our second quarter 2023 achievements.
We have established a record of environmental leadership and the northern territory.
We continue to maintain this leadership position through the execution of our site management plans.
With the wet season recently concluded I am pleased to report that even with significantly higher than normal total rainfall, we had no unplanned discharging water from the site and we're in complete compliance with our environmental obligations.
As previously noted our team in Australia has now completed 621 consecutive days with no lost time accidents.
We are very pleased with our safety oriented culture and the accomplishments of the team.
We continue to maintain a strong working relationship with the traditional owners and Mt. Todd as many will know we have agreements in place with the Joe and people and work closely with them and the leaders of the Joan Association Aboriginal Corporation.
This quarter, we have worked very closely with the javelin Rangers in the design and execution of prescribed burns in a way that has allowed us to achieve joint land management objectives.
Duration of Golden Finch habitat and the protection of assets at the Mt. Todd project.
Presently we are also collaborating with the board of the Javelin Association to finalize and implement a cross cultural training program for employees and contractors at Mt. Todd.
We continue to work with leaders and stakeholders in the Katherine area and more broadly in the northern territory.
I am pleased that our social license is firmly in place and strongly supported.
We continue to aggressively pursue best governance practices across our organization.
And are pleased with the inclusive atmosphere that is part of our culture.
Note that during the quarter, we announced the retirement of two long serving directors and the resizing of our board.
More on that in a moment.
Let me now turn to.
<unk> talked a little bit more about our agreement with the northern territory.
On May 25 of this year, we signed an amendment to our agreement with the northern territory of Australia.
Which was set to expire at the end of this year.
Extends the term of the agreement to December 31.
2029, and gives us the option for an additional three year extension.
This is a significant achievement as we continue to Derisk Mt. Todd It not only reflects the clear commitment by the northern territory government, but also the strong relationship that has developed over years of working together with the with DNP government, the German people and other project stakeholders.
We believe the amended agreement also demonstrates the northern territory's desire to achieve shared goal goals and objectives.
Pursuant to the agreement Vista will continue to manage the Mount Todd site and fulfill its environmental cultural and social stewardship commitments.
The company continues to have no environmental liability for the condition of the site prior to its involvement in 2006. The said its sole option may elect to proceed with the development of Mt. Todd by giving notice to the NT government, which will then result in the transfer of the NT government owned assets at Mt. Todd.
And all pre existing historical rehabilitation liabilities for the project from the NT government to the company.
We remain committed to the responsible environmental management of the site protecting the sacred and culturally significant sites and developing Mt. Todd in a way and at a time that maximizes the benefit for our shareholders and for stakeholders in the northern territory.
Okay.
I will now discuss the recommendations of the northern territory mineral development Task Force.
During the quarter, we announced the release of a report prepared by the Northern territory mineral development task force that outlined positive recommendations to enhance the importance of the mining industry and increased mining investment in the territory.
As these recommendations are implemented we expect Vista and Mt. Todd to benefit in several ways, most notably the.
The report emphasizes the importance of updating the current royalty regime to make it more competitive with other leading mining jurisdictions and developing local skills to support a growing mining mining industry.
This potentially means moving from moving to a simpler AD valorem royalty structure.
And aligning the royalty rate more closely with other mining jurisdictions, where rates typically range from two 5% to 5%.
This represents a very meaningful opportunity for improved project economics and earlier shareholder returns at Mt. Todd.
Our 2022 feasibility study included N T royalties equivalent to a 7% to 9% AD valorem rate, depending on the gold price and other assumptions.
Skills development will also be an important benefit given that we strongly support the use of.
Local a local workforce at Mt Todd.
Over the more traditional fly in fly out staffing practices comment elsewhere in Australia.
The NT government is presently undertaking a consultation process with stakeholders and members of the mining industry to obtain feedback on the best approach to implement the key recommendations and specific actions proposed in the report.
Vista has submitted recommendations as part of this process.
Touching briefly on the retirement of two directors has indicated that the company's 2023 annual general meeting of shareholders to Avista has long standing board members retire, including the chair of the board.
As a result, we reduced the size of the board of directors of the company from seven members to five and appointed Tracy Stevenson has the new chair.
Tracy has served on <unk> board since November of 2000.
November six 2007.
And has contributed greatly to the company's many successes, including advancing Mt. Todd into one of the largest and most advanced gold projects in Australia.
Tracy is the chair of the audit Committee and a member of the compensation Committee and the corporate governance Nominating Committee.
As return a new page, we look forward to continued success under his board leadership.
Okay.
I will next talk briefly about the work that CIBC capital markets continues to do.
Yeah.
The strategic process with CIBC continues to generate interest and positive feedback on the technical merits of Mt. Todd.
Since announcing the completion of the scoping study earlier this year, there's been both new and renewed interest in the Optionality Mt. Todd offers under different development strategies.
Across our industry producers continued to maintain a cautious approach to new large scale development projects that said, we are pleased with the ongoing development activity are ongoing.
Evaluation activities of interested parties.
And confirm that the Optionality represented by Mt. Todd continues to be an important factor.
We remain focused on recognizing value for shareholders through the completion of the REIT transaction.
One that realizes a greater portion of the present value of Mt. Todd and provides ample opportunity for future additional recognition.
With regards to cost reductions.
Reducing costs and maximizing cost effectiveness are high priorities for 2023, we.
We have taken actions to further reduce recurring costs by approximately 7% and continued to evaluate and implement opportunities for additional cost reductions. Some of you will have noticed that we have moved the location of our corporate offices as part of cost savings activities at.
At current project expenditure levels, our annualized cost for preserving the value of Mt. Todd are less than 80 cents per ounce of proven and probable reserves, which is a very respectable holding costs.
In conclusion, the Mt. Todd project is one of the largest and most advanced undeveloped gold projects in Australia with 7 million ounces of proven and probable reserves Vista controls the third largest reserve package in Australia.
In addition to its size.
The Mount Todd provides a number of other advantages for those interested in a potential transaction.
Mount Todd is ideally located in the northern territory of Australia, and extremely stable and mining friendly jurisdiction.
The existing basic infrastructure Mt. Todd includes paved roads and power lines and natural gas pipeline to the site.
Combined with the operational infrastructure comprised of the freshwater storage reservoir and tailings pond facility.
Provide very distinct construction timeline and risk mitigation advantages.
All the major permits for the development of Mt. Todd has been approved.
Of equal importance, we have earned the trust of the local stakeholders and are confident that our social license is firmly in hand.
Technical programs focus on Derisking the project incorporating designs that are capital efficient with low operating costs.
We believe the proposed changes to the <unk> royalty regime will help improve project economics enhance the projects leverage to gold price and provide a stronger foundation for improved shareholder value.
We believe Mt. Todd is a superior asset with one of the most attractive development stage gold projects not just in Australia, but in the world.
Our primary objective is to achieve a valuation for Mt. Todd that is reflective of the gold production profile long operating life excellent gold recovery favorable operating costs robust project economics as demonstrated by the completed feasibility study and the fact that we hold all major permits.
For a more comprehensive review.
The work completed by vis on the Mt. Todd project I refer you to our corporate website, which can be found.
At Www Dot Vista Gold Dot Com, we believe that Vista gold represents an exceptional investment opportunity in that current prices represent a tremendous opportunity to establish a position or increase once holding in Vista gold.
We will now respond to any questions from the participants on this call.
Okay.
Ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press star followed by the number one on your Touchstone sorry about that.
<unk> followed by the number one if you would like to advise our request. Please press star followed by the number too.
Your first question comes from the line of Heiko.
H C. Wainwright. Please go ahead.
Hello, Fred and team can you hear me okay.
We can good morning Heiko.
Excellent good morning, Amit.
So it's already afternoon, but yeah, well good morning to you guys. Nonetheless.
A sentence in your release really piqued my interest and you sort of hinted at it earlier on this call, but maybe just a little bit more clarification I mean, this hold up the NT government is moving towards implementation.
Implementation implementing some recommendations with the royalty regime to make it more competitive this.
When looking at our peers.
Can you provide some color on their undertakings, where you expect to see some ideas for timelines, maybe some investment goals and then if you aren't really go out there may be some sorts of Norway.
Subsidies, you might be able to see or get other sweeteners for people investing in the areas.
That kind of stuff I think would be very helpful to the listeners on this call and myself.
That's a great question Heiko.
<unk>.
The mineral development Task Force report identified.
<unk> identified a number of areas where the <unk>.
<unk> needs to make some significant strides in being competitive as we indicated the royalty regime is one.
In may embarked on a public consultation process.
That consultation process closes tomorrow.
Towards the end of the first quarter of next year, possibly even into the end of the second quarter before.
There is legislation that is set for for approval.
Nonetheless, we view this as very very positive.
But right now.
Yes.
The royalty rates and it's.
It's almost more like a severance tax is in the northern territory is.
Easily double what many of.
The other leading mining jurisdictions charge and so the territory.
Yes.
As through this task force and I'm very pleased to see this this is a conversation that's been ongoing between vis then.
And the department of mines and Treasury for a number of years, we've been we've been raising this issue, but I am pleased that they're taking the steps to <unk>.
Finally address what is a very significant issue for for the mining industry and now they recognize that it's an important issue for for the territory if they want to attract.
Greater mining investment.
The objective.
Overall, the territory has a goal of growing the economy of the northern territory to a level of $40 billion by by 2030.
And.
And their view mining investment in new mining projects it.
It will be an important.
Part of.
That that effort.
The.
It appears based on the recommendations of the task force that.
They're going to.
They are seeking not only to incentivize the development of new mines, but also value adding upgrade to mineral.
Mineral products within their territory as well with.
With regards to subsidies and other things.
Really not included in the recommendations of the task Force. However.
I think it's fair to say an informed everyone that.
The Australian government has created something called the <unk>.
The Northern Australia infrastructure fund.
Is that it.
It has been.
It is now on its second fund and.
As more amply originally that was aimed at increasing our investments in infrastructure.
In meetings with.
People at the fund.
Second the second part of the fund is including mining as part of the development of key activities across Northern Australia, and so there will be there will be money that will be available at very competitive rates.
Compared to conventional financing and we believe that Mt, Todd who will qualify for that at the appropriate time.
Doug I don't know if theres anything else that you might add in response to <unk> question.
Heiko just to frame the discussions around the anti royalty.
Obviously, we don't know where the land they've been very straightforward, saying they want to become more competitive.
But in terms of the opportunity for Vista and at Mt. Todd.
If you go back and look at our 2022 feasibility study, which we ran at $600 gold price. So that would be considered very conservative further studies coming out today.
The <unk> royalty that we modeled into that was almost $700 million. So if you start to factor in any type of meaningful reduction in the royalty rate by the government.
There is a very substantial impact available for Vista, if they get into that competitive range. So that's just a framework for it.
There are some other smaller funds available with TNT also for.
Employment number of jobs that you create and those types of things.
I would assume that some of those would stay intact or possibly be enhanced through the recommendations of the task force, but those are relatively minor compared to the pool of dollars that we have at <unk>.
That opportunity with respect to the royalty.
Fair enough.
And then just one more it did a bit of math today and I went through your last couple of annual financials.
2021, you spend an average of 986000 per quarter on corporate administration in 2022, and an inflationary environment that went down from $9 42 per quarter.
Last quarter and yet again, another inflationary period, you actually mash increase decrease debt to 878, but if one assumes I'll call it 10% inflation per year, which is probably a fairly.
More real numbers on what the government gives you.
You're essentially cutting by 20%.
Every year or close to it.
And in real terms.
Walk me through how exactly you are doing that and how much more meat is still on the bone so to speak.
Well.
Frankly, heiko, it's been across the board in every aspect.
Labor costs are obviously, the biggest part within the organization.
And we were we were able to trim. Some costs you guys are working a little bit harder, but a lot smarter at Mt. Todd.
We had a little bit of turnover through retirements down there.
And the rest of the team was able to shuffle their the rotation schedule and pick up the load. So that was a big part of it.
We've reduced.
Some of our overhead costs things like just basic office costs, we moved to.
Vista office here in Denver that had been a 20 plus year office, we down scaled and downsized and it's working out just fine for us so.
Pockets of.
25% to $50000 kind of through our entire G&A structure that have come down.
Can we continue that we think theres a few other pockets, but there is always a point, where you're basically starting to become.
Pennywise and pound foolish so.
We see a few more opportunities, but I think the trend that you've described we will.
We will level off what we'd like to do is at least be able to maintain our cost structure now even though we would expect to still see some inflation kind of in that 4% to 6% range over the next 12 months to 18 months. So.
It's been very positive it's been exceptionally helpful in us managing our treasury.
That help.
Very much so and I appreciate the insight Okay. That's all from me I'll get back in queue.
Thank you Heiko.
Thank you for thank you.
Thank you.
Next question comes from the line of Michael the Sierra.
Please go ahead.
Hi can you hear me Hello, Michael Yes, we can hi, Mike.
My question's quite simple I have a.
Question regarding the company value and the share price.
Seems to be a huge disconnect between the two and I just wanted to see if I can get your comments on this especially considering where the gold prices.
Considering the projects in a safe jurisdiction with permits in hand, thank you.
That's.
That's a question that we ask ourselves on a regular basis Michael.
We're not the only ones that are experiencing this severe disconnect in this market is.
It's particularly prevalent amongst developers, we think that one of the big factors It has to do with.
<unk>.
With the market's perception around financing and where that money will come from spin.
Specifically in our case we've.
We have completed a feasibility study for a very large project, we have announced a scoping study for a smaller project, which is much more capital efficient.
But.
Presently there.
I think the biggest source of the disconnect between the real value of the project and the market cap of the company.
Centers on an app.
Our our plans too.
To find a partner rather than develop it ourselves and the market's belief that.
Yeah.
We will ultimately trying to develop it ourself.
And that will result in significant dilution and until we can until we can complete the transaction.
And definitively answer this question and put this issue of whether we build it ourselves to bed.
Through through announcing a transaction I believe that there is there is an overhang on the stock.
Okay.
Thank you so much.
Youre welcome.
Thank you just a reminder, ladies and gentlemen, you said you have a question. Please press star followed by the number one I know potstone sign.
Okay.
Thank you Laura.
Thanks to all of you taking time this morning to join us for this.
This corporate update and conference call.
Sure.
Barry.
Very pleased with the.
Sure.
That will ultimately reward shareholders very handsomely, we invite you to consider an investment in Vista gold and if you need further information please feel free to reach out to Pamela Solly.
And for questions require another member of the team will be happy to get on the call so with that we.
We conclude this update conference call and we thank all of you for your participation and wish you all very pleasant day.
Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Okay.
Okay.