Vista Gold Corp. (AMEX:VGZ) Q4 2023 Earnings Call Transcript

Vista Gold Corp. (AMEX:VGZ) Q4 2023 Earnings Call Transcript March 18, 2024

Vista Gold Corp. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, ladies and gentlemen. Welcome to Vista Gold’s 2023 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. [Operator Instructions] As a reminder, this conference is being recorded today is Monday, March 18, 2024. It is now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Thank you. Please go ahead.

Pamela Solly: Thank you, Ina, and good day, everyone. Thank you for joining the Vista Gold 2023 Financial Results and Corporate Update Conference Call. I’m Pamela Solly, Vice President of Investor Relations. On the call today are 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 mineral resources and mineral reserves.

I’ll now turn the call over to Fred Earnest.

Fred Earnest: Thank you, Pam, and thank you, everyone, for joining us on the call today. Before I begin with our 2023 achievements, I would like to take this opportunity to acknowledge the contributions of Mr. Randy Eppler, who recently passed away. Randy served as a Director of our company since 2004 and chaired several Board committees during his tenure. Randy was a gentleman, a friend and a consummate professional who brought a wealth of knowledge and experience to Vista’s Board of Directors. Randy and his passion for Vista Gold will be remembered and missed. As we turn to our 2023 results, I’m pleased to report that, during 2023, we succeeded in efficiently managing our cash and strengthen our balance sheet by completing a $20 million royalty transaction between Wheaton Precious Metals.

Today we have received 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 de-process to refresh our Board of Directors and extended our agreement with the Northern Territory Government pertaining Mt. Todd through December 31, 2029 with the option for a three year extension. We continued 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 alternative development strategy.

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Q&A Session

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 stage development strategies for Mt. Todd and the completion of an updated feasibility study. The feasibility in this case that at a gold price of $2,100 and a $0.66 foreign exchange rate, which are reflective of current market conditions, the after-tax NPV at a 5% discount rate for the project is $1.88 billion and the IRR is 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.

Doug Tobler: 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. Vista 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 decrease 2022 reported a $2.9 million gain on the final disposition of our interest in the Awak Mas 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 $1.5 million decrease in operating expenses, about $1.3 million related to Mt. Todd. This decrease from Mt. Todd resulted from us completing many of the work programs internally during 2023 compared to 2022 when we have several outside consultants and contractors working on 2022 feasibility study and wrapping up the drilling campaign. We also reduced our recurring holding costs for Mt. Todd by about $250,000 or 8%. The balance of the reduction in operating expenses related to corporate and administration costs. Here, we saw a $300,000 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 have reported a 15% reduction in our recurring expenses compared to our original 2022 plan. Then in 2023, we have realized an additional 8%, both for Mt. Todd holding costs and corporate administration costs. In the context of 10% increase in the U.S. CPI over this two year period, we are 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 on to our financial position. We ended 2023 with cash of $6.1 million and we continued 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 Cayman Co, which is an affiliate of Wheaton Precious Metals Corp. Vista granted Wheaton a 1% gross revenue royalty on Mt. Todd in exchange for $20 million. We received the 1st 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 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 Mt. Todd. These studies will target a significantly lower capital cost and operating costs close to those estimated in the Mt. 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.

Fred Earnest: 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 strengthen our balance sheet, but confirms the strength, credibility and value of our world-class Mt. Todd asset. We look forward to working with Wheaton as we continue to de-risk and advance Mt. Todd. In March of 2023, we announced the completion of internal scoping study which we evaluated the technical and economic merits of smaller scale development alternatives from Mt Todd. The results were very encouraging and demonstrated the potential for significant lower initial capital costs, while preserving the opportunity for subsequent expansion or stage development.

The scoping study indicates that a nominal 5 million tonne per year project or 15,000 tonnes per day could be designed and constructed with an initial capital expenditure of less than $350 million, including contract mining and annual production in the range of 150,000 to 200,000 ounces of gold per year. Operating cost analyses, 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. On May 25th, 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 31st, 2029 and gives us the option for an additional three year extension.

We believe the amended agreement demonstrates the clear commitment by the NT Governance 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 increase mining investment in the territory. Most notably, the report emphasized 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 2.5% 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.