Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  
TRANSCRIPT SPONSOR

Vista Gold Corporation (NYSEMKT:VGZ)

Wall Street Analyst Forum

February 14, 2007 2:40 pm ET

Executives

Gerry Scott - President of Wall Street Analyst Forum

Greg Marlier - EVP

Presentation

Gerry Scott

Good afternoon ladies and gentlemen. In our attempt to adhere to the published schedules, particularly for the webcast attendees, who in many cases are sitting near the PC waiting for our presentations to run on time, I would like to go introduce the next company in this afternoon's program. Today has been a combination of industrial and precious metals from copper, to gold, to silver, to uranium, to palladium and a couple of other metals.

The next company that's presenting is Vista Gold Corp. They trade in the American Stock Exchange. They are an international gold mining company that controls 12.9 million ounces of measured and indicated and 5.2 million ounces of inferred gold resources in 13 mineral properties. This strategy continues to provide great leverage and superior share price performance with less risk than other small cap mining companies.

Following a successful completion of the regulatory approval process, Vista plans to place its Nevada properties into a new public company, Allied Nevada Gold Corp. At the same time, it's acquiring the largest privately held mineral property package in Nevada. Vista intends to dividend the shares it receives from the transaction to its shareholders, consistent with the strategy of delivering value to its shareholders.

So, without any further introduction, I'd like to introduce Greg Marlier, Chief Financial Officer, and just ask him to repeat the questions during the Q&A for the benefit of the webcast attendees.

TRANSCRIPT SPONSOR

The Wall Street Analyst Forum, a leading conference host for public corporations to address analysts/portfolio managers and professional investors, sponsors four annual conferences in NYC for large, mid and small-cap companies. Seeking Alpha readers may attend Wall Street Analyst Forum conferences free of charge if you pre-register. See the full conference schedule and attendance information.

Read all Wall Street Analyst Forum conference presentation transcripts here.

To sponsor an investor conference presentation transcript please contact us.

Greg Marlier

Thanks. As noted, we are on the exchange, both the American Exchange and the Toronto Stock Exchange. Right now, I am showing a slide which is the cautionary notes that tell the investors to be cautious, especially when you are looking at Resources, which is the Canadian terminology and reserves, which are an SEC requirement.

We are going to talk about our advanced projects, and quality resources and the great option value that we have in these various properties. Last year, we did quite well with the stock price. Our recent price today was around $8.80. Our 52-week range was from $4.34 to $13.55. We have a market cap of $273 million. Our cash position is quite strong after an equity placement that we did in early November. We currently have $50 million in cash in the bank. We have zero debt. We have 31.4 million outstanding shares and fully diluted 33.9 million.

Vista is a 20-year-old company. We operated properties at high cost in Nevada and in Bolivia with our Amayapampa project up until the late 90s when the gold price went down. We changed our strategy in 2001 as a company. Our new model, we started picking up resources, 43,101 resources that had independent studies on them. Some companies where, it didn't make sense for them to hold on to it at the time when gold price was at $300. A lot of these properties don't come into play until $400 to $500 an ounce. And therefore, we were very good at picking up properties for about $1 to $2 of gold resource ounce during the last five-year period.

We hold the metal in the ground for higher gold prices. We add value by either engineering studies to convert resources to reserves. We are doing strategic drilling on a couple of our properties right now to moving either from the inferred and the measured that indicated or actually pick-up more resource. We just look at opportunities, such as one when we picked up last year with Mount Todd in Australia where opportunities are still out there for some gold resources at low prices.

As you can see from this chart, in January 2002 we had 1.9 million in gold resources and we are picking up these 12 properties that we've done over the last five to six years. We have increased our resource base to 18.1 million ounces of resource.

On our property locations, we have a property in Australia, the Mount Todd project, the Awak Mas project in Indonesia, the Amayapampa project in Bolivia, which is currently under option to loose on minerals. We have two in Mexico; the biggest one being impaired on is Amarillos. We have about six properties in Nevada, one in California, and one in Idaho and that makes up our property package. I will talk about the Nevada properties a little later on.

From this table you can see that we have total measured and indicated resource base of $12.9 million and a inferred resource base of $5.2 million.

The top seven properties that I show on this list, Mount Todd, Paredones Amarillos, Yellow Pine, Awak Mas, Long Valley, Amayapampa, and Guadalupe de los Reyes is going to stay with Vista Gold Corp after we do a spin-out of our Allied Nevada Corporation, which will pickup our Nevada assets which I will discuss a little latter.

I will go to the first project. This is the Mount Todd project at south of Darwin in North Central Australia. We acquired it here in May of last year for $2.1 million. It has 3.3 million ounces of gold resource. This is the old Pegasus property, where they spend $200 million to $240 million when they were operating in the late 90s. This is the property that got Pegasus, if you will, took the [back toe]. Unfortunately, the prices went down in the late 90s, the operation had a hard metal. The metallurgy was tough with the copper and so it went into receivership. So, we actually bought this out of receivership from the Northern Territory Government for $2.1 million in cash and stock. We are also in an arrangement with the Jawoyn, which is a local aboriginal sect.

This particular property, currently we will be drilling this summer to bring in a lot of the inferred up into the measured and indicated. As you can see, we will have no reclamation responsibility on this property until we actually go into production. So, that remains with the government.

We had a study completed as of December 2006 of 43-101. You can see from the data here on this particular map, the blue square is where the current operation is and the current drilling has been accomplished. The yellow, is the potential that we have. So, there is a lot of upward potential in the drilling of Mount Todd.

Unidentified Audience Member

Is there seismic or anything like that?

Greg Marlier

We have some really good technical data from Pegasus that we have. We are changing basically our metallurgical sheets around and our flow sheets to treat the coup that was one of the big problems with that property. But we don't have any seismic --

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

We have not looked at it yet.

Unidentified Audience Member

No data.

Greg Marlier

No, it's not a trend. But we don't have any data on that right now.

The second project is a Paredones Amarillos, which is in the Baja. It's near the town of La Paz. We picked this up from Viceroy, via Echo Bay. We acquired it for $2 million in cash to come up with 2 million ounce of resource. Echo Bay, it has been over $35 million bringing these resources into play. They also did quite a bit of permeating and other flow sheets on the water and we are currently doing a project on this. We are going to look at the water treatment on how we are going to treat this to make this more effective.

Unidentified Audience Member

What's the infrastructure out there?

Greg Marlier

It'd be a surface mine. We would have to be treated, open pit mine. Some of the things that we have brought into play, which I will get into a little bit, there is a tailings pond and some for the water treatment was marked down about 50%. The tailings area will be reduced by 90%. You will see this in the later slide when we get into it.

We actually have reserves on this property also besides resources. We have 1.6 million ounces of reserve. A study that we did in September 2005 shows a 13-year life, 11,000 ton per day plant, initial capital of $98 million, operating cost of 292 and gold price of 550 would have a return on our investment of 24% and a net cash flow discount at a 5% of $249 million.

Unidentified Audience Member

What about the plant?

Greg Marlier

We would have to build the plant.

Unidentified Audience Member

Okay.

Greg Marlier

Yes, all this stuff would have to be infrastructure that we put in.

The Yellow Pine project up in Idaho, we purchased this for 1 million. Once again, it had 3 million ounces of gold resource, 2.2 million of measured and indicated, 0.8 million inferred. Obviously there have been substantial expenditures also made on this property by various companies such as Dakota, Hecla and Santa Fe.

One of the preliminary assessments that we did in December of last year was once again run this at a 10-year life with 8,600 ton per day plant, 190 ounces of gold per year with a capital cost of 170. The total cash cost would be US 402. The reason that this cash cost is so high is that we wouldn't have cyanide on site. We would take the cons and treat them in Nevada. So, the transportation costs would be pretty high on this particular property. But it does generate a net cash flow of $266 million at a $6.30 gold price.

In March of 2005, we picked up the Awak Mas project in Indonesia. PT Masmindo, this is the company name. Masmindo Mining did a lot of work on this particular property along with other companies. Once again for the $1.5 million price, we picked up about 1.9 million resource of which 1.7 is measured and indicated and 0.2 inferred. Previous owners, once again has been over $40 million invested in this property.

Last year we did a drilling program for $500,000 to $600,000 and it confirmed the results that have been put on this particular project in the past. We are currently starting a pre-feasibility study here. Basically, we have a contract of work with the Indonesian Government. This is the seventh CoW. It's called the contract of work. We will be doing that pre-feasibility work this spring and summer. Once again, the resource estimate is in progress from the drilling program last year, and the study will start in February.

Unidentified Audience Member

Is there anywhere near Newmont's environmental problem?

Greg Marlier

No, no, Sulawesi, it's sort of formed like a horseshoe and Newmont's property is at the North of horseshoe if you will and were back on the bottom left side of the horseshoe more of a mountainous terrain and where they were near a bay.

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

Yeah, that's something that obviously we are looking into during our feasibility study taking all that into account. But it's geographically a little different situation and what Newmont adds. We are leveraged to the gold price. We consider ourselves a continuous option on the gold price. This chart reflects from January '02 to January '07, the price of our stock, which has outperformed the American gold bugs, the XAU and the HUI. We had quite up-tick in July of last year up to about $13.55 high, a lot of that had to do right about the timing of, obviously the gold price was sort of settling in. But more so, we had announced our spin-off of our Nevada projects and Nevada assets which I'll give into here shortly.

When we look at from more strategy and the model is to either sell these properties for cash on equity position, royalties like Amayapampa project. We have a combination of those three. We will look at joint ventures on some of these properties as time goes on and then we do spin-offs like we are currently doing on our Nevada assets. The Vista rationale behind the spin-off in Nevada, you have to recall that Vista's model. It's not an operation. It's not a junior exploration company.

In December of '05, we picked up one of the proms we have with our high cost mines, which is fully permitted and fully bonded has about 600,000 ounces of oxide still to be produced. There was a 10% net smelter royalty on anything over 0.14 ounce per ton. So in December of '05, we bought the F.W. Lewis royalty, which came along with 50 Nevada properties that he had accumulated over 20 to 30 years. Once again, fairly grassroots, not much work done on, didn't fit our model.

The Hycroft mine, we know we want to get a backend into operation, that didn't fit our model. So we came up with the scenario to do a spin-off of these assets into a new publicly traded company with a whole new management team and a whole new Board of Directors. Along with that came another set of properties, which we started negotiating with Carl Pescio, where he also had about 50 properties in Nevada that were a little bit higher than the grassroots, some on their grassroots. But they do have advancement and royalties on, and that in fact has a stream of about 3 million on his property coming in this year on advanced minimum royalties. So, the deal at the end of the day, we had a fairness opinion where we made up 60% of the company and the Pescio properties made up about 40% and that came after 22.5 million shares for us at $5 a share and the Pescio Group is going to get 12 million shares plus $15 million cash.

In early November, through our parent, Vista Gold Corp., we raised gross about $32 million, net $29 million, of which we are going to push $25 million of that down into Allied Nevada Gold at $5 a share gives us an additional 5 million shares. So, at the end of the day, we are up 27.5 million shares, Pescio will have 12 million shares. We will holdback about a million shares for corporate taxes, US tax liability and Canadian liability and dividend out, the remaining 26.5 whatever that number might be, or approximately 0.85 shares of the new company for each share of Vista Gold that you hold.

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

Yeah, I have a chart here, little latter on we will show you the map of Nevada and how the makeup is of that. As I just discussed, we are estimating a $5 per share. In this new company we will have 6.5 million of Measured, Indicated and Inferred. Once again with us pushing down the $25 million, $15 million to Pescio, it will leave $10 million on working capital for the new company along with their stream of advanced minimum royalties.

We are going to have a top quality Board and Management Team and we really think it's a great opportunity to get the Hycroft mine back into production. The other thing that brings into play with Hycroft is that, currently Hycroft was a heap-leach oxide body. With that royalty of 10%, no one has gone down at depth to really take a look at the potential at Hycroft in the sulfides and a lot of people believe there is quite a bit of potential at that.

This particular mine produced 1 million ounces of gold, 2 million ounces of silver up until the late 90s. It still has 1.1 million ounce of gold resource, 663 ounces of gold reserve. Like I indicated, it's fully permitted, fully bonded and ready to go. The other nice part of it is that we have a reclamation cash reserve in place of $5.2 million and an insurance premium for overruns on any type of reclamation from the past. So, all of our past liability has gone basically for whoever picks up this property.

Now, once again doing a cash flow on this, $18 million to $20 million in capital on a 550 gold price should get about a 70% internal rate of return and a net cash flow of $66 million.

Here is the map that you were wanting to take a look at. The properties that we have listed here, which makes up the 259 square miles is the Carl Pescio Group. The dots in pink indicate the Pescio Group. The green dots indicate the Advanced Projects that we have put in as assets into this particular new company. As you can see on the green dots, they are located up, obviously the Hycroft property, but we had Mountain View, Wildcat, Maverick Springs, which is a joint venture with Silver Standard and Hasbrouck, Three Hills down around Tonopah.

The pink, as you can see, on the Pescio dots, pretty much here on trend. So, there is a lot of work to be done on this particular project. As I said, there is 259 square miles, also its 160,000 acres of patented and unpatented mining claims, which makes us the third biggest landowner behind Newmont and Barrick in Nevada. So, pretty nice parcel of properties.

Unidentified Audience Member

Is that on the Carlin Trend or both?

Greg Marlier

Yes, both. A lot of these properties are --

Unidentified Audience Member

They come down right down through here with the Getchell Trend, Sleeper Trend, the Carlin trend, through Battle Mountain.

Greg Marlier

Yeah, Battle Mountain. So you see our orange dots here are more scattered across on the trend.

Unidentified Audience Member

And where is (inaudible)?

Greg Marlier

He is also right in about the middle there.

Unidentified Audience Member

Okay. He just tenders the three of the four companies that he is about to buy.

Greg Marlier

Okay. This is on of our main theories of putting these properties together. Obviously, Nevada being behind is the third biggest world producers of [steak]. So, we really feel we are in the right area code. Putting these properties together in a package that were similar to what he did with US Gold.

At the end of the spin-off, as I stated earlier Allied Nevada has about 6.5 million of gold resource, the top five properties were assets of Vista Gold, that being Hycroft, Hasbrouck, Three Hills, Maverick Springs, Mountain View, Wildcat and then couple of Carl's Group had the Pony Creek and Cobb Creek in the inferred area.

So, what does this look like for us going forward as a parent company Vista Gold Corp? Obviously, our Nevada properties have left. However, out of the 18.1 million ounces, we will retain 13.2 million ounces on four major projects that I discussed earlier, that being Mount Todd, Awak Mas, Paredones, Yellow Pine.

We are going to continue to add value to the company through strategic acquisitions. We still feel as we are out picked, we picked up Mount Todd in May of last year realizing we’ve been negotiating for about a year, but the price has gone up at that time. We still feel there are properties out there that we can pick up.

After we push the $25 million down into Allied Nevada, we will still have a very strong cash position. We will be at $20 million to $25 million in cash. There are seven employees in the company, very low G&A, and holding cost, so very well positioned from a cash standpoint. We feel that this spin-off which added value to our Vista Gold shareholders through the Allied Nevada Gold spin-off.

Taking a look at the value per share if you take the numbers that I had presented earlier on the major projects such as Paredones, Mount Todd, the Amayapampa field , Yellow Pine, and the remaining measured and indicated resources put in a price of $15, $20, to $25. On this particular chart, I am showing various values for these properties at $550 gold, $650, gold and $750 gold. And as you can see the value per share fully diluted at $550 will be around $15 a share, $650.33 a share, and $750.51 a share. So we still feel there is quite a bit of room for our valuation to go up for Vista Gold Corp.

What are we going to do in the short term? Well, we are going to complete this Allied Nevada spin-off. We had shareholder approval on mid-November. We had the Yukon Territory. Supreme Court approve the plan of arrangement at the end of November. We are currently in the last hurdle which is with the SEC on the Form-10. As we stated in our December 22nd press release, we feel that we are going to have this deal completed by the end of the first quarter and we still feel that way.

At Mount Todd, we are going to be doing drilling as I stated this summer. Hopefully adding not only resource but moving some of the inferred into the measured and indicated. We are going to be doing a closer look on a production decision on Paredones Amarillos and just continue to move these projects up the pipeline.

And that's the end of my presentation. Any questions if you do have, I'll gladly answer.

Question-and-Answer Session

Unidentified Audience Member

I have one question here. On a relative basis, you are barely full company market cap-wise. You've got projects in so many different jurisdictions of the world. Describe the possible difficulties just trying to manage assets in so many different verticals and geographic regions.

Greg Marlier

The question was how are we going to strategically manage these various assets with their spread basically in various different jurisdictions and around the world? In October of last year, we hired a fellow named Fred Earnest, who is going to be our Senior Vice President of Project Development. And he has already made quite an impact down at Mount Todd putting together the drilling program by hiring four local people, a manager at that particular location for the drilling program. Bob Perry, who is our VP, Explorations, is down there as we speak overlooking that particular joint project.

We did the same thing with Awak Mas. We have a local fellow in Jakarta. His name is (inaudible). We do strict budgets that are approved by the Board of Director and he is an overseer of our Awak Mas project. In the case of Amayapampa as I stated that's already under option, so that should be completed here. So, we feel that by bringing in some local people and just really overseeing them and staying strict to our budgets, we can control these assets.

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

Yes. The question was that the loose on the Amayapampa property which has been under option to loose on minerals, a Canadian company here for the last couple of years. We've had several amendments on that. And part of the deal that we had with them was to complete a feasibility study that we’re still trying to finalize. A bankable feasibility study that we can go and they can raise the financing. They started working with a company called Republic out of Australia. And the two of them are right now working pretty much hand-in-hand looking after the Amayapampa project. That is a cash deal also equity and loose on and plus we will retain a 4.5% to 5.5% nets smelter royalty on any production that's produced out of there. So, we are hoping that that will be completed here.

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

Not that I am aware of right now, no. I am a financial guy. I think our geologist and the exploration guys would probably have a --

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

That's right and we have a property over there called Guadalupe de los Reyes which is also on the Mainland.

Unidentified Audience Member

And where that is?

Greg Marlier

That is on the Southwest part of Mexico.

Unidentified Audience Member

[Question Inaudible].

Greg Marlier

I don't.

Unidentified Audience Member

In Guerrero?

Greg Marlier

No, it's not Guerrero. But it's on the far of West Coast about half way down this. It's actually right across from Paredones Amarillos almost on the way to Guerrero.

The Guadalupe de los Reyes, that's right in about here. We have just a land position of display, one of our smaller assets that we have. We are looking at some of the surrounding properties, but nothing has occurred yet.

Unidentified Audience Member

In the Indonesia, the duration (inaudible) for Awak Mas there? Is that tangible?

Greg Marlier

Yeah at this stage, we have had quite cooperation with the Indonesian government. Like I said, we had a contract to work, that we've put together with them. They've been very responsive. So, we feel pretty good at this stage with that particular project, and we are moving along with the government.

Unidentified Audience Member

Now like its just spin-off, that means that Allied Nevada goes into anything out of Nevada state and do business? The state boundary will be the defining by the (inaudible).

Greg Marlier

The question was after the Allied spin-off, all the assets that are pertained to Nevada and their company will stay with Allied and the remaining properties will be with Vista Gold Corp.? And that is correct. We will probably looking elsewhere for assets from a Vista Gold Corp. standpoint.

Any other questions?

Okay. Thank you very much.

TRANSCRIPT SPONSOR

The Wall Street Analyst Forum, a leading conference host for public corporations to address analysts/portfolio managers and professional investors, sponsors four annual conferences in NYC for large, mid and small-cap companies. Seeking Alpha readers may attend Wall Street Analyst Forum conferences free of charge if you pre-register. See the full conference schedule and attendance information.

Read all Wall Street Analyst Forum conference presentation transcripts here.

To sponsor an investor conference presentation transcript please contact us.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Vista Gold: Wall Street Analyst Forum Presentation Transcript
This Transcript
All Transcripts