Full Year 2023 Vista Gold Corp Earnings Call
Good day, ladies and gentlemen, welcome to Vista, Gold's 2020 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 this time.
Our disciplines are asked to press star one to register for a question for assistance during the call. Please press Star zero on your Touchtone phone as a reminder, at this conference is being recorded today is much.
It's Monday March 18, 2024. It is now my pleasure to introduce <unk> Vice President of Investor Relations. Thank you. Please go ahead.
Thank you and good day.
Everyone. Thank you for joining the fiscal 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 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 risks and other important factors that could cause actual results to differ materially from those in our forward looking statements and the cautionary note regarding estimates of minutes of mineral resources and mineral reserves I'll now.
I'll call now I'll turn the call over to Fred earnest.
Thank you Pam.
And thank you everyone for joining us on the call today.
I begin with our 2023 achievements.
I'd like to take this opportunity to acknowledge the many con.
So Mr. Randy.
Who recently passed away.
Andy served as a director of our company since 2004 and chaired several board committees during his tenure.
Randy was a gentleman a friend.
Randy and his passion for Vista gold will be remembered and mills.
As we turn to our 2023 results.
I'm pleased to report that during 2023, we succeeded in efficiently managing our cash.
And strengthened our balance sheet by completing a 20 million dollar royalty transaction with Wheaton precious metals to date, we have received the first two installment payments totaling $10 million.
And expect to receive the final $10 million installment prior to the end of the second quarter.
In addition to completing the royalty we completed an internal scoping study to evaluate smaller scale stage development alternatives at Mt. Todd.
Continued to process.
The process to refresh our board of directors and extended our agreement with the Northern territory government pertaining to Mt. Todd through December 31, 2029.
The option for a three year extension.
We continue to work with CIBC capital markets to identify and advance interest in Mt. Todd and are focused on achieving a transaction that maximizes shareholder value. We saw increased interest in Mt. Todd during the latter part of 2023, including new interest in our plans to advance an alternate.
The development strategy.
We are committed to the health and safety of our employees and to environmental stewardship at Mt. Todd.
We achieved zero lost time incidents in 2023 and the site has now reached 860 consecutive accident free days.
We've had a very good start to 2024 with the commencement of a drilling program.
Ongoing evaluations of staged.
Stage development strategies for Mt, Todd and.
The completion of an updated feasibility study.
The feasibility in this case.
At a gold price of $2100 and a 66%.
Foreign exchange rates, which are reflective of current market conditions.
The after tax NPV NPV at a 5% discount rate for the project is $188 billion U S. In the eye.
<unk> 29, 6%.
I will discuss these topics along with our other 2023 results in greater detail later in the call.
But I will now turn the time over to Doug Tobler for a review of our financial results for the quarter ended December 31 2023.
Thank you Fred and for those on the call today. Thank you for joining us and your interest.
As you May know, we filed our most recent Form 10-K last week I would encourage you to review this document for additional information on the topics presented today.
I'll start today with a recap of our year over year results of operations.
<unk> reported a net loss of $6 6 million.
For 2023 compared to a net loss of $4 9 million for 2022.
This year's net loss increased by $1 $7 million because in 2022, we reported a $2 $9 million gain on the final disposition of our interest in the <unk> project located in Indonesia, and we had no similar gain during 2023.
Otherwise our 2023 operating expenses decreased by $1 5 million to $6 8 million.
Of this 1 billion and a half dollar decrease in operating expenses about $1 $3 million related to Mt. Todd. This decrease for Mt. Todd resulted from US completing many of the work programs internally during 2023 compared to 2022, when we had several outside consultants and contractors.
<unk> working on the 2022 feasibility study and wrapping up the drilling campaign, we also reduced our recurring holding costs for Mt, Todd by about $250000 or 8%.
The balance of the reduction in operating expenses related to corporate administration costs here, we saw a $300000 decrease during 2023 compared to 2022, which was also an 8% reduction year over year.
To wrap up my comments regarding our results of operations I'd like to summarize our efforts over the past two years to reduce our recurring spending.
For 2022, we reported a 15% reduction in our recurring expenses compared to our original 2022 plan than in 2023.
Realized an additional 8% both for Mt, Todd holding costs and corporate administration costs.
In the context of a 10% increase in the U S. CPI over this two year period, we're extremely pleased with this result.
Maintaining a low expenditure profile will continue to be an important part of our funding strategy as we move forward.
Now moving onto our financial position, we enter 2023 with cash of $6 $1 million.
And we continue to have no debt.
During 2023, we took steps to strengthen our balance sheet as part of our objective to maintain adequate liquidity and minimize dilution as we advance our primary objective to maximize returns to our shareholders.
In December 2023, we entered into a royalty agreement with Wheaton precious metals came in co which is an affiliate of Wheaton precious metals Corp District granted a 1% gross revenue royalty on Mt. Todd in exchange for $20 million we.
We received the first installment of $3 million in December 2023, and the next $7 million in February of this year.
The remaining royalty proceeds of $10 million are expected to receive be received by the end of the second quarter of 2024.
By completing this royalty Vista now has the financial resources in place to complete the drilling program that started earlier this year and then follow on with studies of an initially smaller scale project at Mount Todd. These studies will target a significantly lower capital cost and operating cost close to those estimated.
In the Mount Todd feasibility study that we announced last week Fred will talk more about this opportunity later in today's call.
That concludes my remarks for today I'll now turn the call back to Fred.
Thank you Doug.
I'll now discuss our 2023 achievements and then provide an update on 2024.
First the completion of the $20 million royalty with Wheaton not only strengthened our balance sheet, but confirms the strength credibility and value of our world class Mount Todd asset.
We look forward to working with Wheaton as we continued to Derisk and advance Mt. Todd.
In March of 2023, we announced the completion of an internal scoping study in which we evaluated the technical and economic merits of smaller scale development alternatives for Mt. Todd.
The results were very encouraging and demonstrated the potential for significantly lower initial capital costs, while preserving the opportunity for subsequent expansion per stage development.
The scoping study indicates that a nominal 5 million ton per year project.
15000 tons per day could.
Could be designed and constructed with an initial capital expenditure of less than $350 million U S.
Including contract mining.
And annual production in the range of 150 to 200000 ounces of gold per year.
Operating cost analysis, which account for contract mining the loss of certain economies of scale and adjustments for inflation.
Suggest that all in sustaining costs would remain very competitive in today's environment.
Okay.
On May 25th of 2023, we signed an amendment to our agreement with the Northern territory of Australia, which was set to expire at the end of the year.
Which extended the term of the agreement to December 31, 2029, and gives us the option for an additional three year extension.
We believe the amended agreement demonstrates the clear commitment by the NT government and their desire to achieve shared goals and objectives.
As you may be aware last year, the northern territory mineral development Task Force presented its report outlining recommendations to enhance the importance of the mining industry and increased mining investment.
The territory.
Most notably the report emphasizes the importance of 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%.
We have been part of the public consultation and review process for new legislation.
And expect the NT government to announce the new royalty regime in the coming months.
As the new royalty regime is implemented we expect Vista and the Mt Todd to benefit in several ways.
Turning to the present year.
In March earlier this month, we published our inaugural environmental social and governance report.
This report provides transparency and outlines progress on our ESG performance in 2023.
And goals and key objectives for the coming year.
We recognize the importance of conducting our business in a responsible and sustainable manner and we are fully committed to aligning our business practices with current and evolving ESG principles to ensure the long term success and positive impact of our operations.
We continue to maintain strong working relationships with the Joe and people and the leaders of the jaw want Association Aboriginal Corporation.
We also continue to work with leaders and stakeholders in the Katherine area and more broadly in the northern territory as well as the NT government.
I am pleased that our social license is firmly in place and strongly supported.
We remain committed to responsible environmental management protecting heritage sites and developing Mt. Todd in a way and at the time that maximizes the benefit for our shareholders and stakeholders in the northern territory.
Last week.
We announced the results of an updated feasibility study for the Mt. Todd project.
The updated feasibility study reflects changes in project economics that have occurred since the previous feasibility study was filed.
February of 2022.
Material capital and operating cost components have been updated with new quotes obtained in the first quarter of 2024.
The updated study also reflects the current outlook for the long term gold price and foreign exchange rates.
And the recently announced royalty.
Mt, Todd mineral resources, and mineral reserves mine plans gold recoveries in gold production schedules remain unchanged.
Project Economics.
Are approximately the same or slightly better than reported two years ago.
Inclusive of cost increases that affected the entire gold mining sector.
We are pleased that Mt. Todd's value is confirmed at the given foreign exchange rates and conservative gold price selected.
A few highlights of the updated feasibility study include.
At an 1800 dollar gold price and a 69 foreign exchange rate.
After tax net present value at a 5% discount rate is estimated to be 113 billion.
Up $131 5 million from the previous study.
And the IRR is estimated to be 24% down 0.2% from the previous study.
Average cash costs are estimated to be $913 per ounce, which is up $96 per ounce from the previous study.
Average all in sustaining costs are estimated to be $1034 per ounce.
$104.
From the previous study and Thats on a life of mine basis.
Using a gold price of $2100.
Little less than todays gold price and a 66% foreign exchange rate, which is slightly more than today's foreign exchange rates the company belief.
And we believe that these numbers are more reflective of current market conditions. The after tax net present value at a 5% discount rate of the project is estimated to be $1 $88 billion. That's U S dollars and the IRR is estimated to be 29, 6%.
Initial capital requirements of the project are now estimated to be $1.03 billion.
Which is up $138 million from the previous study.
This continued in this we continue to use in these numbers reflect the use of third party.
Owner, operator of the power plant.
Right.
Moving on earlier this year, we also appointed Mike Sylvester as director of Vista Gold and a member of our health safety environment and social responsibility Committee.
Mr. Sylvester has a successful mining executive with over 45 years of international and domestic industry experience with major mid tier in junior companies.
He retired in November 2022 from his position as senior Vice President Americas that Kinross Gold Corp.
Mike well rounded technical expertise corporate leadership roles and international experience will be valuable as we pursue strategic opportunities for Vista and its Mt. Todd Gold project.
We continue to work with CIBC capital markets to identify and advance interest in Mt Todd and.
And our focus on achieving a transaction that maximizes shareholder value.
Management expects to host.
To continue to host site visits and respond to inquiries from engaged parties.
Our evaluation of a smaller scale stage development strategy for Mt. Todd complements the work that we're doing with CIBC.
And increases Optionality.
We remain focused on recognizing value for shareholders through the completion of the REIT transaction, one that realizes a greater portion of the intrinsic value of Mt. Todd.
And provides ample opportunity for <unk>.
Future additional value recognition.
In January we commenced the drill program expected to total $6 to 7000 meters with the focus to add shallow gold resources at the north end of the Batman deposit.
We believe that if we are able to convert gold resources. The gold reserves in this area that it would add value to mountain taught by proving improving cash flow.
As a result of more constant production profile.
<unk> stripping.
And increase mine life for all development scenarios.
We expect to report initial results of the program in the coming weeks.
The drilling is expected to have an all in cost of approximately $2 million.
And to be completed by the end of the year.
As part of our evaluation of a stage development strategy for Mt. Todd.
We plan to leverage the results of the drilling program.
All of our prior technical studies by advancing evaluations of smaller scale stage development scenarios.
Previous studies demonstrated the opportunities significantly lower the initial capex.
To maintain high margins and deliver attractive economic returns.
We believe that alternative development strategies offer valuable optionality as we focus on creating shareholder value and attracting investor interest in Mt. Todd.
Our scope of technical studies will be defined after initial drilling results are evaluated.
Now in conclusion.
The Mount Todd Gold project is one of the largest and most advanced undeveloped gold projects in Australia.
With 7 million ounces of proven and probable reserves mountain trucks Mt. Todd controls for Vista control surface Mount Todd project, the second largest reserve package in Australia.
In addition to its size Mount Todd provides a number of other advantages for investors and for those interested in a potential transaction.
Mt. Todd is ideally located in the northern territory of Australia, and extremely stable and mining friendly jurisdiction.
The existing project infrastructure the Mt. Todd provides 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.
Our technical programs focus on Derisking, the project and incorporating designs that are capital efficient with low operating costs.
We believe the proposed changes to the empty 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 and one of the most attractive development stage 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 cost robust project economics as demonstrated by the complete feasibility study.
And the fact that we hold all approvals for.
We hold approvals for all major permits.
For a more comprehensive review of the work completed by based on 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 in that current prices represent a tremendous opportunity to establish a position.
Our increase one's holdings in Vista gold.
We will now respond to any questions from participants on this call.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star.
Followed by the one on your telephone keypad.
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Once again that is start in one just a question.
There are no questions at this time Mr. <unk>. Please proceed.
Very well thank you Ina.
Thanks to all of you who have taken time to join US on this call. This afternoon.
In summary, we're very pleased with that.
The accomplishments of last year.
The execution of the royalty agreement with Wheaton precious metals has given us the resources to be able to.
Maintain and continue the course that we have selected a course that we believe will add value.
We're very pleased with the results of the the updated feasibility study.
And note that it provides confirmation of our belief that Mt. Todd is a robust project.
Capable of withstanding many many changes and that we've seen in the world in the last two years.
We feel that this is an exciting time for the project drilling is ongoing and as indicated in the coming weeks, we expect to announce results of the first several several drill holes.
That we're doing and have contemplated for evaluating <unk>.
Smaller scale stage development strategies for advancing Mt. Todd.
Very exciting and I believe that they will attract additional interest in the project and in the company. We remain very focused on achieving a transaction and realization of devaluation that is more reflective of the intrinsic value of the project.
We appreciate the time that each of you have given us. This afternoon, we hope that today's.
The call has been informative.
We invite you to seriously consider.
The opportunity presented.
Presented by an investment in Vista gold.
We think that there is a tremendous value creation opportunity here and we would love for each of you who are on the call today to be part of that.
With that I. Thank you for your time in which each of you a very pleasant afternoon.
Thank you. This concludes today's call. Thank you for participating you may all disconnect.
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