Vista Gold(VGZ) - 2018 Q4 - Annual Report

Front Matter Cautionary Note Regarding Mineral Resource and Reserve Estimates This section highlights differences between Canadian and U.S. standards for mineral resource and reserve reporting, cautioning investors on unrecognized terms and differing definitions - The definitions for "mineral reserve", "proven mineral reserve", and "probable mineral reserve" under Canadian NI 43-101 differ from the definitions in SEC Industry Guide 7[8] - Terms such as "mineral resource", "measured mineral resource", "indicated mineral resource", and "inferred mineral resource" are required by NI 43-101 but are not defined terms under SEC Industry Guide 7 and are normally not permitted in SEC filings[9] - Investors are cautioned not to assume that inferred mineral resources will ever be converted into reserves, as they have a great amount of uncertainty regarding their existence and economic feasibility[9] Glossary This section defines numerous technical terms related to geology, mining, and mineral processing, ensuring clarity for specialized industry terminology - The glossary defines key mining and geological terms used in the report, such as "assay", "heap leach", "mineral resource", and "proven reserves"[12][13][27] Note Regarding Forward-Looking Statements This section outlines forward-looking statements regarding future operations and strategy, detailing significant risks that could cause actual results to differ - Forward-looking statements cover operational plans for the Mt Todd project, including the belief that the PFS demonstrates a robust project and intentions to complete further metallurgical programs[70] - Business-related forward-looking statements include plans to advance Mt Todd, expectations of its economic impact, and the belief that existing working capital is sufficient for planned costs and programs[73] - The company identifies key risk factors that could affect forward-looking statements, including operating risks (e.g., feasibility study results, permitting), financial risks (e.g., gold price fluctuations, capital raising), and industry risks (e.g., inherent hazards of mining, regulatory changes)[78][80][81] PART I Item 1. Business Vista Gold Corp. focuses on evaluating and advancing gold projects, with its flagship Mt Todd project in Australia being the largest undeveloped gold project - The company's primary focus is on the evaluation, acquisition, exploration, and advancement of gold projects, with the aim of eventual production or value-adding strategic transactions[84] - The flagship asset is the 100% owned Mt Todd gold project in Northern Territory, Australia, noted as the largest undeveloped gold project in Australia[85] - As of December 31, 2018, the company had 14 full-time employees and operates in a single reportable segment focused on exploration activities principally in Australia[88][89] - The Northern Territory Government is responsible for the reclamation of pre-existing environmental conditions at Mt Todd until Vista provides notice of its intent to take over the site, which is not expected until a production decision is made and financing is secured[91] Gold Price History ($/oz) | Year | High ($/oz) | Low ($/oz) | Average ($/oz) | | :--- | :--- | :--- | :--- | | 2014 | 1,385 | 1,142 | 1,266 | | 2015 | 1,296 | 1,049 | 1,160 | | 2016 | 1,366 | 1,077 | 1,251 | | 2017 | 1,346 | 1,151 | 1,257 | | 2018 | 1,355 | 1,178 | 1,269 | Item 1A. Risk Factors This section details significant operating, financial, business, and industry risks, including project feasibility, gold price volatility, and environmental regulations - Operating Risks: The company's future profitability is highly dependent on the economic feasibility of the Mt Todd project, which requires substantial capital investment, successful permitting, and management of significant reclamation obligations[104][105][106] - Financial and Business Risks: The company's asset value and ability to raise capital are substantially dependent on the volatile price of gold. The company has a history of losses, does not expect to pay dividends in the near term, and faces intense competition in the mining industry[120][122][126] - Industry Risks: The estimation of mineral reserves and resources is an imprecise process subject to uncertainty. The mining industry is also subject to increasingly stringent environmental, health, and safety laws, and potential regulations related to climate change could increase operating costs[134][136][138] - The company believes it was classified as a Passive Foreign Investment Company (PFIC) for the 2018 tax year, which could have adverse U.S. federal income tax consequences for U.S. shareholders[131] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments - None[142] Item 2. Properties This section details the company's mineral properties, primarily the Mt Todd gold project in Australia, including its 2018 PFS results and permitting status Mt Todd Gold Project, Northern Territory, Australia The Mt Todd project's 2018 PFS details Base and Alternate Cases, projecting a Base Case after-tax NPV5% of $679 million and IRR of 20.5%, with major environmental permits secured Mt Todd Preliminary Feasibility Study Summary | Scenario | Throughput | Proven & Probable Reserves (Moz Au) | Avg. Annual Production (oz Au) | LoM Cash Costs ($/oz) | Initial Capital ($M) | After-Tax NPV5% ($M) | After-Tax IRR (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Base Case | 50,000 tpd | 5.85 | 381,211 | $645 | $839 | $679 | 20.5% | | Alternate Case | 33,000 tpd | 3.56 | 273,000 | $593 | $641 | $418 | 17.8% | Mt Todd Mineral Reserve and Resource Estimates | Resource Category | Tonnes (000s) | Grade (g Au/t) | Contained Ounces (000s) | | :--- | :--- | :--- | :--- | | Proven & Probable Reserves (Base Case) | 221,041 | 0.82 | 5,848 | | Measured & Indicated Resources | 297,391 | 0.82 | 7,818 | | Inferred Resources | 62,923 | 0.72 | 1,464 | - The project has received its major environmental approvals, including the Environmental Impact Statement (EIS) in 2014 and the federal EPBC authorization in January 2018. The Mine Management Plan (MMP) was submitted in November 2018[257][258][259] - Metallurgical testing in 2018 suggests gold recoveries could exceed 90%, compared to the 86.4% assumed in the PFS, which could significantly improve project economics[266] Guadalupe de los Reyes Gold/Silver Project, Sinaloa, Mexico Vista optioned its Guadalupe de los Reyes project to Minera Alamos for $6.0 million in payments and royalties, retaining a back-in right for underground mining - Vista granted Minera Alamos an option to acquire 100% of the GdlR Project for total payments of $6.0 million[269] - Vista will retain a Net Smelter Return (NSR) royalty of 1-2% on open-pit production (capped at $2.0 million) and a perpetual 1-2% NSR on underground production[269] - The due date for the second $1.5 million option payment was extended by six months to April 23, 2019, in exchange for an additional $150 in cash and interest payments[273] Item 3. Legal Proceedings The company is not aware of any material pending or contemplated legal proceedings - The company is not aware of any material pending litigation or proceedings contemplated by governmental authorities[275] Item 4. Mine Safety Disclosures No mine safety disclosures are required for 2018 as the company had no U.S. properties subject to MSHA regulation - During fiscal year 2018, the company had no properties in the United States and was not subject to MSHA regulation, therefore no disclosure is required under Section 1503(a) of the Dodd-Frank Act[277] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section details the market for Vista's NYSE American-listed common shares, including historical prices, dividend policy, equity compensation, and tax considerations Quarterly Stock Prices ($) | Period | High ($) | Low ($) | | :--- | :--- | :--- | | 2017 | | | | Q1 | 1.24 | 0.90 | | Q2 | 1.11 | 0.81 | | Q3 | 0.92 | 0.63 | | Q4 | 0.83 | 0.60 | | 2018 | | | | Q1 | 0.87 | 0.69 | | Q2 | 0.78 | 0.66 | | Q3 | 0.72 | 0.45 | | Q4 | 0.60 | 0.37 | - The company has never paid cash dividends and does not expect to in the foreseeable future[281] - As of December 31, 2018, there were 2,321,819 securities to be issued upon exercise of outstanding options and rights, with 7,704,997 securities remaining available for future grants under equity compensation plans[283] - In December 2018, the company settled 502,500 options through cash buyouts totaling $61 thousand, representing an average price of $0.12 per underlying share[301] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This MD&A reviews 2018 financial performance, showing a net loss decrease to $8.7 million and $13.2 million in working capital, with sufficient funds for planned activities Financial Highlights (in thousands) | Metric | 2018 (in thousands) | 2017 (in thousands) | | :--- | :--- | :--- | | Consolidated Net Loss | $8,714 | $12,035 | | Net Loss Per Share | $0.09 | $0.12 | | Working Capital (Year-End) | $13,198 | $19,057 | - Exploration, property evaluation, and holding costs decreased to $4.8 million in 2018 from $6.9 million in 2017, mainly due to lower discretionary spending on the Mt Todd PFS update[309][310] - A non-cash impairment charge of $1.0 million was recorded in 2018 for used mill equipment due to unsuccessful sales efforts and poor market conditions[314] - The company recorded a gain on other investments (Midas Gold Shares) of $1.7 million in 2018, compared to a loss of $1.2 million in 2017, due to changes in fair value[316] - The company has an at-the-market (ATM) offering agreement in place, allowing it to sell up to $10.0 million in common stock, though no sales had been made under the program as of December 31, 2018[324] Item 8. Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements for 2018 and 2017, including management's report on effective internal controls and unqualified audit reports from independent public accounting firms - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2018[354] - The independent registered public accounting firm, Plante & Moran, PLLC, issued an unqualified opinion on both the financial statements and the effectiveness of internal control over financial reporting for 2018[357][358] Consolidated Financial Statements The consolidated financial statements show total assets of $22.1 million in 2018, a net loss of $8.7 million, and $8.6 million net cash used in operating activities Consolidated Balance Sheet (in thousands) | Balance Sheet (in thousands) | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Total Current Assets | $14,070 | $21,115 | | Total Assets | $22,126 | $31,141 | | Total Current Liabilities | $872 | $2,058 | | Total Shareholders' Equity | $21,254 | $29,083 | Consolidated Income Statement (in thousands) | Income Statement (in thousands) | Year Ended Dec 31, 2018 | Year Ended Dec 31, 2017 | | :--- | :--- | :--- | | Total Operating Expense | $(10,858) | $(10,755) | | Total Non-operating Income/(Expense) | $2,144 | $(1,280) | | Net Loss | $(8,714) | $(12,035) | Consolidated Cash Flow Statement (in thousands) | Cash Flow (in thousands) | Year Ended Dec 31, 2018 | Year Ended Dec 31, 2017 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(8,567) | $(8,801) | | Net Cash Provided by Investing Activities | $8,304 | $8,592 | | Net Cash Used in Financing Activities | $(97) | $(264) | Notes to Consolidated Financial Statements These notes detail accounting policies, investment valuations, mineral properties, stock-based compensation, and income tax information, including a $1.0 million impairment charge - The fair value of the company's investment in Midas Gold Shares increased to $5.46 million at year-end 2018 from $3.75 million at year-end 2017[403] - The carrying value of mineral properties was $2.42 million as of Dec 31, 2018, primarily consisting of the Mt Todd project ($2.15 million)[404] - A $1.0 million impairment charge was recorded on used mill equipment, reducing its carrying value to $5.5 million[411] - The company has significant tax loss carryforwards, primarily in Canada ($47.0 million) and the U.S. ($20.8 million), but has a valuation allowance of $56.7 million against its deferred tax assets due to uncertainty of realization[437][438][439] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, financial disclosure, or auditing scope - None[447] Item 9A. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2018, with no material changes identified - The CEO and CFO concluded that as of December 31, 2018, the company's disclosure controls and procedures were effective[448] - There were no changes in internal control over financial reporting during the fourth quarter of 2018 that materially affected, or are reasonably likely to materially affect, internal controls[451] Item 9B. Other Information The company reports no other information to disclose for this item - None[452] PART III Item 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2019 Proxy Statement - Information concerning directors, executive officers, and corporate governance is incorporated by reference from the 2019 Proxy Statement[454] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the 2019 Proxy Statement - Information relating to executive compensation is incorporated by reference from the Proxy Statement[456] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership and equity compensation plans is incorporated by reference from the 2019 Proxy Statement - Information on security ownership and equity compensation plans is incorporated by reference from the Proxy Statement[457] Item 13. Certain Relationships and Related Transactions Information regarding certain relationships and related party transactions is incorporated by reference from the 2019 Proxy Statement - Information concerning this item is incorporated by reference from the Proxy Statement[458] Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the 2019 Proxy Statement - Information concerning principal accountant fees and services is incorporated by reference from the Proxy Statement[459] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists exhibits filed with the Form 10-K report, including financial statements, corporate articles, material contracts, and certifications - The Consolidated Financial Statements of the Company are filed as part of this report under Item 8[461] - A list of exhibits is provided, including the company's articles, material agreements such as the Mt Todd agreement and the Guadalupe de los Reyes option agreement, and various consents and certifications[463] Item 16. Form 10-K Summary The company reports that there is no summary for this item - None[466]