Vista Gold Corp.
Q4 2020 Earnings Call Transcript

Published: 1 Mar 2021

[Operator:]

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. As a reminder, this conference is being recorded, today, as of Monday, March 1, 2021. It is now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Please go ahead, Ma'am.

[Pamela Solly:]

Thank you, Eduardo, and good day, everyone. Thank you for joining the Vista Gold 2020 financial results and corporate update conference call. I'm Pamela Solly, Vice President of Investor Relations. On the call today is Fred Ernest, President and Chief Executive Officer; and Doug Tobler, Chief Financial Officer.

[Fred Ernest:]

Thank you, Pam. And thank you, everyone, for joining us on the call today. We're extremely pleased to achieve many of our 2020 corporate objectives, in spite of the challenges presented by the COVID-19 pandemic. Before summarizing our 2020 highlights, I'd like to begin by addressing the impacts of the ongoing COVID-19 pandemic. The health and well-being of our employees, and the communities in which we live and work continues to be a priority for our company. Our corporate activities continue with the executive team working remotely and on a limited in-office basis. Until the pandemic subsides, video conferencing has replaced corporate travel and in-conference or in-person conference participation. In the Northern Territory of Australia COVID-19 cases are almost nil and control measures have been significantly relaxed. Now, Todd continues to operate on an approved COVID-19 management and mitigation plan that is presently less restrictive. To-date, our workforce in both the U.S. and Australia remain healthy. During 2020, we achieved strong financial performance, as we executed and delivered on our initiatives to strengthen our balance sheet, identified opportunities to advance and bring greater value to our Mt Todd gold project, maintained our social license strong and commenced exploration opportunities, targeting resource growth adjacent to the Batman deposit. I'll discuss these topics in greater detail later in the call. But I will now turn the time over to Doug Tobler, our CFO, for a review of our financial results for the year ended December 31, 2020.

[Doug Tobler:]

Thank you, Fred, and thanks for those on the call listening today. I'll start today by discussing the strength of our balance sheet at December 31, 2020. Overall, we had a very solid year and achieved our goal as Fred said. We successfully realized sufficient proceeds from our non-core assets to fully cover our 2020 expenditures, build our cash position and importantly, win dilution.

[Fred Ernest:]

Thank you, Doug. I'll begin with a review of our 2020 achievements and then provide an outlook for the remainder of the year. As part of our 2020 objectives, we diligently focus on strengthening our balance sheet through the successful monetization of non-core assets, and a disciplined approach to managing our costs and capital spending. As Doug has stated, we ended the year with a $0.2 million of cash and positioned the company to generate additional cash of up to $4.6 million during 2021, of which $1.1 million was received in January. We are very pleased to have zero debt. Looking at opportunities to advance and bring greater value to Mt Todd, we are focused on advancing the Mt Todd project and seeing a greater portion of project value reflected in our share price and market cap. With this end in mind, we have advanced or commenced several initiatives. First, an update on the mine management plan. We are pleased to have effectively worked with the Northern Territory Division of Mines and the newly formed Northern Territory Department of Industry, Tourism and Trade, of which the Department of Mines is part to advance the review and approval of the Mt Todd Mine Management Plan, also referred to as the MMP. It is our understanding that the NT government is finalizing its review and we believe that the MMP will be approved in the very near future. With regards to exploration, we initiated the drilling program to test the continuity of mineralization, extending north from the Batman deposit, which includes holes across the mineralized structure, as far as 500-metres north of the last modeled mineralization. Today, we have reported assay results for holes one through four, and we'll be reporting results of the next three holes in the coming weeks. We're very excited about the results of the program, and are adding a second drill to extend and accelerate the program. Our water management program achieved significant results in 2020. Through continued dewatering, the water level in the Batman pit was lowered by 23-metres in 2020, and we expect the Batman pit to be effectively dewatered by mid-2021, representing an important milestone for the project and future development decisions. Also, in 2020, the company updated its project sensitivity analysis based on the sustained higher gold prices. Mt Todd demonstrated significant project level leverage to the gold price. And as shown in the updated sensitivity analysis, for every $100 increase in the gold price, after tax net present value at a 5% discount rate increases approximately $200 million. We also initiated internal evaluations related to higher gold prices.

[Operator:]

Thank you. We'll now take our first question from Jake Sekelsky at Alliance Global Partners. Please go ahead.

[Jake Sekelsky:]

Hey, guys. Thanks for taking my questions.

[Fred Ernest:]

Good morning, Jake.

[Jake Sekelsky:]

Thanks. Following up on Doug's comments on the balance sheet, what are your expectations around the timing of the remaining $3.5-ish million in payments that you're set to receive?

[Doug Tobler:]

Sure. So the one I'm about to speak to is an option agreement, it would be $2.5 million, and that would come during Q2. And then potentially another $1 million would come in Q3. So that'd be $3.5 million and we already received $1.1 million.

[Jake Sekelsky:]

Got it. Okay. So Q2 and Q3.

[Doug Tobler:]

Yes.

[Jake Sekelsky:]

And then, shifting to exploration. Fred, you mentioned that you added a second drill rig. Is that more to accelerate the existing program? Or should we view this as an expansion of the initially planned exploration activities?

[Fred Ernest:]

It's actually both. The results that we've seen so far, the intersection of the projected mineralized zones north of the Batman deposit have been very encouraging. We want to be able to get results back faster and make decisions with regards to where to drill next in a more efficient manner. And as a result, we've added the second rig. And so, it will be both, an expansion to the program, we're going to be drilling more meters, we're going to be drilling more sections, trying to string together and closer spacing, the continuity of the extension of the mineralization. But also, because we want to drill more sections, we want to be able to generate results more quickly, and hence the decision that we've made to bring in a second drill.

[Jake Sekelsky:]

Okay. That's helpful. And then lastly, just on permitting, and I know you're expecting the MMP shortly. Once that's in hand, are there any other permits that are needed or the project fully shovel ready at that point?

[Fred Ernest:]

Alright. That will be the last major permit for the project. There will be a number of other minor permits. We will require an explosives use permit. There will be individual construction permits. But the pathway to getting all of the other permits is very short, and in many cases, only involves presenting designs plans, paying fees and receiving the appropriate approvals. So this is a very significant milestone one that we've been working on, really since the latter part of 2018, and it will be a tremendous milestone in advancing the project.

[Jake Sekelsky:]

Got it. Okay. That's all for me. Thanks again.

[Fred Ernest:]

Thanks for being on the call this morning, Jake.

[Operator:]

We'll take our next question from Heiko Ihle at H.C. Wainwright. Please go ahead.

[Heiko Ihle:]

Hey, there. Good morning. Nice to see you guys outperforming the index last year. Let's talk a little bit more about drilling, with a question with Jake earlier. With the second rig, what's the cost? I assume the availability is secured. And if you could maybe just provide or touch more color than you did earlier on the planned outcome of the drilling?

[Fred Ernest:]

Yes. So, right now we're anticipating increasing the budget from what we had for last year to something on the order of $1.2 million to $2 million for additional drilling. The planned outcome of the drilling is as those who are familiar with our corporate presentation, there's the Batman deposit is located at the southern end of a structural corridor, that's known to host mineralization trending from the southwest to the northeast, across the boundaries of the mining license, from the Batman deposit on the southwest end to the Quigleys deposit on the Northeast. For many years, we thought that there were a number of very localized gold occurrences between these two deposits, we now believe that the mineralization is much more continuous. And the purpose of the drilling that we started last fall was to test more on the level of proof of concept to validate the work that our geologists had done in mapping, and trying to better understand the geology and the structural domain that hosts the gold. Based on the drilling that we've completed, we have a high degree of confidence that there's significantly greater continuity of the mineralization between these two deposits. And the purpose of the drilling program is to try to identify both the continuity and to locate the major structures that host the mineralization that hosts the gold at the Batman deposit, i.e., the quartz and calcite veining with the sulfides in the appropriate structural domain. And so, we believe that ultimately, that the work that we're doing right now will lay the foundation for an increase in resources, ultimately with significantly more drilling, an increase in reserves, and an extension on the life of the Mt Todd project. So, Heiko, you'll appreciate that these are all very exciting things, and we hope that as we're able to announce the results of the last four holes in the original program in the coming weeks that the market will understand our enthusiasm for the results, thus far, and why we made the decision to go forward with another drill.

[Heiko Ihle:]

Completely, completely different question. Very helpful, by the way. Thank you. The Jawoyn, are you seeing the community relations are unchanged following your amended agreement that was done three months ago, pretty much to the day, right? I mean, it was announced November 30, if I remember right. Are they slightly more positive for the company? Is it unchanged? What are you hearing through the grape line?

[Fred Ernest:]

Our relationship with the Jawoyn Aboriginal people is excellent. The modernization of the agreement was an initiative that we started, and they jumped in with some things that they wanted to achieve. One of the parts of that agreement was the formation of a Leaders Forum. And we held our first Leaders Forum meeting a couple of weeks ago, the Jawoyn are very excited about the opportunity to work more closely with us more formally, as we execute on our goals and on our objectives of being an industry leader with regards to the protection of cultural heritage sites. We work very closely with them, we pay them a monthly consulting fee right now to make, to help us identify and make sure that we know where these sites are, and we don't disturb any of them, we treat them with the appropriate care and respect. But we're working with them to develop a policy and to refine our procedures for how we're going to treat these. Of note, we had a visit from the Northern Territory Minister of Mines, a couple of weeks ago. And unbeknownst to us prior to visiting the Mt Todd site, she visited Wurmbrand Aboriginal Community, which is a community within the Jawoyn people. And she reported that she was very surprised to find the people of the community, the elders there, very supportive of the development of the Mt Todd project, and commented that that was and start contrast to what she has observed when she's visited the Aboriginal people around other mine sites. And so she was very complimentary of the work that we've done to engage with them, the Jawoyn Aboriginal people. Lastly of note, we're very proud of the fact that over half of our workforce at Mt Todd is Aboriginal. And we expect to continue to provide employment opportunities for the Aboriginal people as we develop the project.

[Heiko Ihle:]

Very helpful. Thank you so much for your comprehensive answer, as always. And stay safe.

[Fred Ernest:]

Thanks, Heiko. Have a great day.

[Fred Ernest:]

Are there any other questions?

[Operator:]

It appears we do not have any more questions. I'll turn it back to you, Fred.

[Fred Ernest:]

Very well. Well, we appreciate everyone's time this morning, this afternoon, as the case may be, wherever you are. We had a very successful year in 2020, and we expect to follow that with another exceptional year in 2021. We have a lot of work cut out for us. And we're very excited about where the company is positioned. As I indicated with regards to the prospects of finding a potential partner. The impact of the pandemic has resulted and is taking longer than we expected. But bear in mind that we are focused on three things. The first being, recognizing the intrinsic value of Mt Todd and appropriately rewarding shareholders with value creation. Second, preserving maximum ownership for our shareholders. And third, minimizing future dilution. Those continue to be our priorities as we seek a partner. We continue to believe that this is the best way to create value. We're very excited about the exploration work and the potential that this is creating. And we encourage you to stay tuned and be watchful for updates and exploration results. Last of all, as the questions have been asked, please be mindful that we believe that we are very close to receiving the approval of Mine Management Plan. And with that, the project will then hold or Vista will then hold all of the major permits environmental and operating for the development of the project. We're not aware of very many other developers in our space and certainly none others of the size that the Mt Todd project is, who have achieved this point of permitting success. This represents a significant de-risking of the project, and we're very pleased with the results of our hard work over the last number of years. Again, we thank you. We hope that you'll continue to follow Mt Todd, and that you'll talk about what you've heard on the call today with your friends and associates, and encourage them to learn more about Vista Gold, as well. Again, thank you for your time. And we wish all of you a very pleasant day.

[Operator:]

This concludes today’s call. Thank you for your participation. You may now disconnect.