VISTA GOLD CORP - Quarter Report: 2016 September (Form 10-Q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

FORM 10-Q

 

 

For the transition period from              to

          

Commission file number: 001-9025

 

   

 

VISTA GOLD CORP.

 (Exact Name of Registrant as Specified in its Charter)

 

 

(720) 981-1185

(Registrant’s Telephone Number, including Area Code)

 

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒No □

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☒No □

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

      Large Accelerated Filer □  Accelerated Filer □  Non-Accelerated Filer □Smaller Reporting Company  ☒



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes □ No ☒    

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 97,786,608 common shares, without par value, outstanding as of October 24, 2016.

 

 

VISTA GOLD CORP. 

(An Exploration Stage Enterprise) 

FORM 10-Q 

For the Quarter Ended September 30, 2016 

INDEX  

 

 

 

 

 

 

PART I

 

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

 

VISTA GOLD CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in U.S. dollars and in thousands, except shares)

 

 

Approved by the Board of Directors

The accompanying notes are an integral part of these consolidated financial statements.

 

 

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)

(Dollar amounts in U.S. dollars and in thousands, except share and per share data)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollar amounts in U.S. dollars and in thousands)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

VISTA GOLD CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in U.S. dollars and in thousands)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

1. Nature of Operations and Basis of Presentation

 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Company,” “we,” “our,” or “us”) operate in the gold mining industry. We are focused on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements, option agreements, leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration.  We look for opportunities to improve the value of our gold projects through exploration drilling and/or technical studies focused on optimizing previous engineering work. 

 

Our principal asset is our flagship Mt Todd gold project (“Mt Todd”) in Northern Territory, Australia where we are concluding test work to optimize the process flowsheet, seeking approval of our final environmental authorization and commencing an update of our preliminary feasibility study. We also hold 4.4% of the outstanding common shares in the capital of Midas Gold Corp. (“Midas Gold Shares”), non-core projects in Mexico and the United States, and royalty interests in Indonesia. 

 

The interim Condensed Consolidated Financial Statements (“interim statements”) of the Company are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with the Company’s Consolidated Financial Statements for the year ended December 31, 2015 as filed on February 26, 2016 on Form 10-K. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by United States generally accepted accounting principles have been condensed or omitted. 

 

References to C$ refer to Canadian currency, A$ to Australian currency and $ to United States currency.

 

2. Recent Accounting Pronouncements

 

Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (Accounting Standard Update 2016-09)

 

In March 2016, the Financial Accounting Standards Board issued guidance related to accounting for stock-based compensation which is intended to improve the accounting for employee share-based payments and which affects all organizations that issue share-based payment awards to their employees.  Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.  For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. We do not expect to early adopt this guidance and do not believe that the adoption of this guidance will have a material impact on our financial statements.

 

3. Short-term and Other Investments

 

Short-term investments

 

As of September 30, 2016 and December 31, 2015, the amortized cost basis of our short-term investments was $23,476 and $11,990, respectively. The amortized cost basis approximates fair value at September 30, 2016 and December 31, 2015. Short-term investments at September 30, 2016 are comprised of U.S. government treasury bills and/or notes, while short-term investments at December 31, 2015 were comprised of U.S. government and Australian treasury bills and/or notes, all of which have maturity dates greater than 90 days but less than one year. 

 

Other investments - Midas Gold Shares 

 

During March 2015, we sold 8,000,000 Midas Gold Shares, at a price of C$0.46 ($0.36) per Midas Gold Share, for net proceeds of $2,772. We currently own 7,802,615 Midas Gold Shares or approximately 4.4% of the Midas Gold Shares outstanding, on a non-dilutive basis.

 

Upon initial recognition of our investment in the Midas Gold Shares, we elected to apply the fair value option, and as such, the investment is recorded at fair value in the Condensed Consolidated Balance Sheets. Subsequent changes in fair value are recorded in the Condensed Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss) in the period in which they occur. 

 

The following table summarizes our investment in Midas Gold Shares as of September 30, 2016 and December 31, 2015.

 

 

 

 

4. Mineral Properties

 

Guadalupe de los Reyes Gold/Silver Project, Sinaloa, Mexico

 

During April 2014, Minera Gold Stake S.A. de C.V., Vista’s wholly-owned subsidiary, entered into a definitive option agreement (the “Option Agreement”) to option a 70% interest in the Guadalupe de los Reyes gold/silver project in Sinaloa, Mexico to Great Panther Silver Limited (formerly Cangold Limited) (“Great Panther”) for consideration of $5,000 in payments over a three-year period. On February 25, 2016, Vista received notification from Great Panther that it was terminating the Option Agreement.  Pursuant to the terms of the Option Agreement, Vista retained the $996 already paid by Great Panther ($500 received in 2014 and $496 net of legal costs received in March 2015) and 100% of the Guadalupe de los Reyes gold/silver project.

Los Cardones

 

In October 2013, we sold our 100% debt and equity participation in the Los Cardones gold project located in Baja California Sur, Mexico (“Los Cardones Sale”) to Invecture Group, S.A. de C.V. (“Invecture”) and RPG Structured Finance S.a.r.l. (together, the “Purchasers”) for a total of $13,000 ($7,000 of which was paid in October 2013 and $6,000 of which was originally payable in January 2014 (the “Subsequent Payment”) subject to the Purchasers’ option to elect to not make the Subsequent Payment.  In 2014, the due date for the Subsequent Payment was extended to January 30, 2015 for additional consideration of $500.  In October 2014, Invecture announced that the Los Cardones gold project had been suspended because the conditions for its development were not favorable at that time, which introduced substantial doubt that the Subsequent Payment would be made.  After making this announcement, there were no apparent significant favorable changes to incentivize Invecture to lift the suspension. In January 2015, we agreed to amend the payment terms (the “Amendment”) of the Los Cardones Sale. Under the Amendment, the Company received a payment of $2,994 net of legal costs from the Purchasers as the final payment for 100% of the Company’s interest in the project.  This resulted in a realized gain of $1,958.

 

Utah Claims

 

During the first quarter of 2016, we sold our unpatented mining claims located in Utah for $150 and a 2% net smelter return royalty (“NSR”) on any future production from said claims. This resulted in a realized gain of $150. 

 

5. Plant and Equipment

 

 

 

6. Common Shares

 

Public Offering, August 2016

 

During August 2016, we closed a public offering of 12,362,500 units (the “Units”), which included 1,612,500 Units issued pursuant to the full exercise of the underwriters’ over-allotment option, for net proceeds of $15,883 (the “2016 Offering”).  Each Unit consisted of one common share in the capital of the Company (“Common Share”) and one-half of one Common Share purchase warrant (each full warrant, a “2016 Warrant”). A total of 6,514,625 2016 Warrants were issued, including 333,375 broker warrants issued to the underwriters. Each 2016 Warrant entitles the holder thereof to purchase one Common Share at a price of $1.92 per Common Share (subject to adjustment in certain circumstances) and is exercisable for a period of 36 months from the closing of the 2016 Offering. The 2016 Warrants, which are classified as equity, had a fair value of $3,320 at the time of the 2016 Offering. The fair value of warrants issued during the nine months ended September 30, 2016 was estimated at the grant date using the Black-Scholes option pricing model using the following assumptions: 1) expected volatility of 89%, 2) risk-free rate of 0.86%, 3) expected life of 3 years, and 4) stock price on the issue date of $1.13 per Common Share.

 

Warrants

 

Warrant activity is summarized in the following table:

 

 

Stock-Based Compensation

 

Under our Stock Option Plan (the “Plan”) and our Long-Term Equity Incentive Plan (the “LTIP”), we may grant options and/or restricted stock units (“RSUs”) or restricted stock awards to our directors, officers, employees and consultants.  The combined maximum number of Common Shares that may be reserved for issuance under the Plan and the LTIP is a variable number equal to 10% of the issued and outstanding Common Shares on a non-diluted basis.  Options and RSUs under the Plan and LTIP, respectively, are granted from time to time at the discretion of the Board of Directors of the Company (“Board”), with vesting periods and other terms as determined by the Board.  Stock-based

compensation expense for the three and nine months ended September 30, 2016 and 2015 is as follows: 

 

 

As of September 30, 2016, stock options and RSUs had unrecognized compensation expense of $49 and $740, respectively, which is expected to be recognized over a weighted average period of 1.39 and 1.55 years, respectively.   

 

Stock Options

 

A summary of options under the Plan as of September 30, 2016 is set forth in the following table:

 

 

A summary of our unvested stock options as of September 30, 2016 is set forth in the following table:

 

 

The fair value of stock options granted during the nine months ended September 30, 2016 was estimated at the grant date using the Black-Scholes option pricing model using the following assumptions:

 

 

 

Restricted Stock Units

 

The following table summarizes the RSUs outstanding under the LTIP as of September 30, 2016:

 

 

A portion of the RSU awards vest on a fixed future date provided the recipient continues to be affiliated with Vista on that date.  Other RSU awards vest subject to certain performance and market criteria, including the accomplishment of certain corporate objectives and the Company’s share price performance.  The minimum vesting period for RSUs is one year.  

 

7. Commitments and Contingencies

 

Our exploration and development activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. As such, the future expenditures that may be required for compliance with these laws and regulations cannot be predicted. We conduct our operations to minimize effects on the environment and believe our operations are in compliance with applicable laws and regulations in all material respects.

 

Under our agreement with the Jawoyn Association Aboriginal Corporation (the  “JAAC”), we must offer the JAAC the opportunity to establish a joint venture with Vista holding a 90% participating interest and the JAAC holding a 10% participating interest in the Mt Todd mining licenses. In addition, the JAAC will be entitled to an annual cash payment, or payment in kind, equal to 1% of the value of the annual gold production from the current mining licenses, and a 1% NSR on other metals, subject to a minimum payment of A$50 per year.

 

During November 2015, we entered into a two-year lease agreement to store our used mill equipment.  Monthly rent for the term of the lease is C$18 ($13).

 

8. Fair Value Accounting

The following table sets forth the Company’s assets measured at fair value by level within the fair value hierarchy. As required by accounting guidance, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

 

 

 

Our marketable securities and investment in Midas Gold Shares are classified as Level 1 of the fair value hierarchy as they are valued at quoted market prices in an active market.  Marketable securities are included in other current assets on the Condensed Consolidated Balance Sheets for each period presented.

 

The mill equipment is classified as Level 3 of the fair value hierarchy as its value at December 31, 2015 was based on a third party assessment of the projected sale value less costs to sell giving full consideration to current market conditions and an orderly sale process. As of September 30, 2016, the used mill equipment is not classified as held for sale for accounting purposes and there is no indication that the carrying value of the used mill equipment may not be recoverable, consequently no fair value assessment is required for the period ended September 30, 2016.  The mill equipment is included in plant and equipment on the Condensed Consolidated Balance Sheets for each period presented.

 

There have been no transfers between levels in 2016, nor have there been any changes in valuation techniques.

 

9. Geographic and Segment Information

 

The Company has one reportable operating segment, consisting of evaluation, acquisition, and exploration activities.  We evaluate, acquire, explore and advance gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions.  These activities are focused principally in Australia and North America. We reported no revenues during the three and nine months ended September 30, 2016 and 2015.  Geographic location of mineral properties and plant and equipment is provided in Notes 4 and 5, respectively.

 

10. Research and Development Grant

 

The Company received Research & Development (“R&D”) Tax Incentive refunds, net of costs to prepare and file, paid under the Australian Government’s R&D Tax Incentive Program, a program designed to encourage industry to engage in R&D activities that benefit Australia.  These refunds are related to costs we incurred during the 2014, 2013 and 2012 fiscal years for qualifying R&D programs. The R&D tax incentive program is a self-assessment process, and as such, the Australian Government has the right to audit the qualifying programs and expenditures for a period of four years.  

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2016, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties and assumptions.  Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors.  See section heading “Note Regarding Forward-Looking Statements” below.

 

All dollar amounts stated herein are in U.S. dollars in thousands, except per share amounts and currency exchange rates unless specified otherwise. References to C$ refer to Canadian currency, A$ to Australian currency and $ to United States currency.

 

Overview

 

Vista Gold Corp. and its subsidiaries (collectively, “Vista,” the “Company,” “we,” “our,” or “us”) are engaged in the gold mining industry. We are focused on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements, option agreements, leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration.  We look for opportunities to improve the value of our gold projects through exploration drilling and/or technical studies focused on optimizing previous engineering work. 

 

Our principal asset is our flagship Mt Todd gold project (“Mt Todd”) in Northern Territory, Australia where we are concluding test work to optimize the process flowsheet, seeking approval of our final environmental authorization and commencing an update of our preliminary feasibility study. We also hold 4.4% of the outstanding common shares in the capital of Midas Gold Corp. (“Midas Gold Shares”), non-core projects in Mexico and the United States, and royalty interests in Indonesia.

 

Outlook

 

With the completion of our equity financing in August 2016, we believe we are well funded.  We believe we have sufficient funding to: (a) continue to selectively optimize; and (b) add value to Mt Todd and to complete all of the critical milestones, including permitting, necessary to advance the Mt Todd project to the point of a development decision. A development decision at Mt Todd will depend on several factors, principally a sustainable acceptable gold price, favorable outlook for the AUD:USD exchange rate and completion of a positive feasibility study and availability of financing.  

 

In the interim we plan to continue the strict cost control programs that we introduced in 2013. We expect our fixed costs (those cash expenditures necessary to ensure that we preserve our property rights and meet all of our safety, regulatory and environmental responsibilities) to continue to average $1,400 to $1,600 per quarter for the foreseeable future. In addition, we expect to complete selected discretionary programs that are expected to add value to the Mt Todd gold project.      

 

The continuing long-term viability of the Company is dependent upon our ability to secure additional financing and ultimately to generate future profits from operations. In the longer term, we expect to fund programs through a variety of means, including the sale of non-core assets, the issuance of equity, project debt and possibly other sources. The underlying value and recoverability of the amounts shown as mineral properties and plant and equipment in our Condensed Consolidated Balance Sheets are dependent on our ability to fund development that could lead to profitable production, or to generate sufficient proceeds from the disposition of these assets.

 

Results from Operations

 

Summary

 

As a result of our strict cost management policies, together with the realization of Research and Development (“R&D”) grants and funds raised through our recent equity financing, the Company continues to believe that it is well funded and able to execute selected strategic discretionary programs.

 

Consolidated net income/(loss) for the three months ended September 30, 2016 and 2015 was $(2,083) and $536 or $(0.02) and $0.01 per share, respectively.  Consolidated net income/(loss) for the nine months ended September 30, 2016 and 2015 was $(1,160) and $3,178 or $(0.01) and $0.04 per share, respectively.  The principal components of these year-over-year changes are discussed below.

 

Exploration, property evaluation and holding costs

 

Exploration, property evaluation and holding costs were $1,168 and $1,306 during the three months ended September 30, 2016 and 2015, respectively, and $2,979 and $3,265 during the nine months ended September 30, 2016 and 2015, respectively. These costs are predominantly associated with Mt Todd. Fixed costs in 2016 (those cash expenditures necessary to ensure that we preserve our property rights and meet all of our safety, regulatory and environmental responsibilities) and on an Australian dollar basis, are substantially unchanged from 2015. Minor 2016 cost reductions were driven by the weaker Australian dollar.

 

Corporate administration

 

Corporate administration costs were $581 and $832 during the three months ended September 30, 2016 and 2015, respectively, and $2,319 and $2,674 during the nine months ended September 30, 2016 and 2015, respectively.  Corporate fixed cash costs were substantially unchanged year over year.  Cost reductions in 2016 were primarily driven by a decrease in non-cash stock-based compensation.

 

Non-operating income and expenses  

 

Gain/(loss) on other investments

 

Gain/(loss) on other investments was $(234) and $(624) for the three months ended September 30, 2016 and 2015, respectively, and $3,586 and $(1,674) for the nine months ended September 30, 2016 and 2015, respectively.  These amounts are the result of changes in fair value of our Midas Gold Shares.  The 2015 loss includes a realized loss of $348 on the sale of 8,000,000 Midas Gold Shares. 

 

Research and development grant

 

During the nine months ended September 30, 2016 and 2015, the Company received $744 and $10,220, respectively, net of costs to prepare and file, from the Australian Government related to R&D activities at Mt Todd.  These refunds are related to costs we incurred during the 2014, 2013 and 2012 fiscal years for qualifying R&D programs. Future grants, if any, are expected to be significantly lower than those received in 2016 and 2015.

 

Financial Position, Liquidity and Capital Resources

 

Operating activities

 

Net cash provided by/(used) in operating activities was $(4,124) and $4,741 for the nine months ended September 30, 2016 and 2015, respectively.  Cash used in 2016 is net of grants totaling $744 from the Government of Australia related to R&D expenditures we incurred in 2014.  Cash provided in 2015 includes grants totaling $10,220 from the Government of Australia related to R&D expenditures we incurred in 2013 and 2012. Other factors that contributed to the year-over-year change are those discussed in “Results from Operations” above. 

 

Investing activities

 

Net cash of $11,371 for the nine months ended September 30, 2016 was primarily utilized for the net purchase of short-term investments.

 

Net cash of $5,587, after the purchase of short-term investments of $11,880, for the nine months ended September 30, 2015 was provided from proceeds received from the sale of the Los Cardones gold project of $2,994 net of legal costs, the Option Agreement (as defined under the heading Guadalupe de Los Reyes Gold/Silver Project, Sinaloa, Mexico of $496, and the sale of 8,000,000 Midas Gold Shares for net proceeds of $2,772. 

 

Financing activities

 

Net cash of $15,898 was primarily provided by the 2016 Offering, defined below. There were no financing transactions during 2015.

 

Liquidity and capital resources

 

Cash flows generated during the nine months ended September 30, 2016 included net proceeds of $15,883 from the 2016 Offering and the receipt of grants totaling $744, net of costs to prepare and file, from the Government of Australia related to the R&D Tax Incentive for qualifying R&D expenditures we incurred in 2014.  Our cash and short-term investments as of September 30, 2016 increased to $24,781 from $12,892 as at December 31, 2015; and our net working capital increased to $30,076 as at September 30, 2016 from $14,399 as at December 31, 2015 due to the transactions described.

 

During August 2016, we closed a public offering of 12,362,500 units (the “Units”), which included 1,612,500 Units issued pursuant to the full exercise of the underwriters’ over-allotment option, for net proceeds of $15,898 (the “2016 Offering”).  Each Unit consisted of one common share in the capital of the Company (“Common Share”) and one-half of one Common Share purchase warrant (each full warrant, a “2016 Warrant”).  Each 2016 Warrant entitles the holder thereof to purchase one Common Share at a price of $1.92 per Common Share (subject to adjustment in certain circumstances) and is exercisable for a period of 36 months from the closing of the 2016 Offering.   

 

For additional discussion on our liquidity and outlook see the discussion under “Outlook” above.

 

Fair Value Accounting

The following table sets forth the Company’s assets measured at fair value by level within the fair value hierarchy. As required by accounting guidance, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

 

 

 

 

Our marketable securities and investment in Midas Gold Shares are classified as Level 1 of the fair value hierarchy as they are valued at quoted market prices in an active market.  Marketable securities are included in other current assets on the Condensed Consolidated Balance Sheets for each period presented.

 

The mill equipment is classified as Level 3 of the fair value hierarchy as its value at December 31, 2015 was based on a third party assessment of the projected sale value less costs to sell giving full consideration to current market conditions and an orderly sale process. As of September 30, 2016, the used mill equipment is not classified as held for sale for accounting purposes and there is no indication that the carrying value of the used mill equipment may not be recoverable, consequently no fair value assessment is required for the period ended September 30, 2016.  The mill equipment is included in plant and equipment on the Condensed Consolidated Balance Sheets for each period presented.

 

There have been no transfers between levels in 2016, nor have there been any changes in valuation techniques.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Contractual Obligations

 

During November 2015, we entered into a two-year lease agreement to store our used mill equipment.  Monthly rent for the term of the lease is C$18 ($13).

 

Project Updates

 

Mt Todd Gold Project, Northern Territory, Australia

 

During 2016, we have continued to focus on evaluation and advancement of Mt Todd.  A team of technical experts has completed a review of the key areas of the project, concentrating on metallurgical recovery, process engineering and plant design, pit slope rock mechanics, mine plans and scheduling, and a gas-fired power plant, and we are following up on certain recommendations that may lead to improved project economics. In particular, we are studying two key optimization opportunities: (1) the potential for improvements to the ore processing flow sheet which could improve capital and/or operating costs and could improve process recoveries; and, (2) the potential to outsource power generation, which could result in significantly lower capital costs, but increased operating costs. We expect to have these studies substantially completed by the end of the year.    

 

Following completion of these studies we plan to update the Mt Todd preliminary feasibility study that was originally completed in 2013.  The planned update will reflect the results of optimization studies if material, the current gold price and AUD:FEX exchange rate, and other factors, such as current equipment pricing, labor rates and energy costs.  

 

In the fourth quarter of 2015, we submitted a request for authorization under the Australian Environmental Protection and Biodiversity Conservation Act of 1999 (“EPBC”), as it relates to the Gouldian Finch. The Australian Commonwealth Department of Environment subsequently requested additional information from us as part of their review. We have responded to these initial requests and have recently been advised that further information is required on potential dust impacts on the Gouldian Finch.  We are in active dialog to resolve this request. 

 

Guadalupe de los Reyes Gold/Silver Project, Sinaloa, Mexico

 

During April 2014, Minera Gold Stake S.A. de C.V., Vista’s wholly-owned subsidiary, entered into a definitive option agreement (the “Option Agreement”) to option a 70% interest in the Guadalupe de los Reyes gold/silver project in Sinaloa, Mexico to Great Panther Silver Limited (formerly Cangold Limited) (“Great Panther”) for consideration of $5,000 in payments over a three-year period. On February 25, 2016, Vista received notification from Great Panther that it was terminating the Option Agreement.  Pursuant to the terms of the Option Agreement, Vista retained the $996 already paid by Great Panther ($500 received in 2014 and $496 net of legal costs was received in March 2015) and 100% of the Guadalupe de los Reyes gold/silver project.

 

We do not consider the Guadalupe de los Reyes gold/silver project a material project. We intend to seek partners to advance the project.

Certain U.S. Federal Income Tax Considerations 

Vista has been a “passive foreign investment company” (“PFIC”) as defined under Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, in recent years and expects to continue to be a PFIC in the future. Current and prospective United States shareholders should consult their tax advisors as to the tax consequences of PFIC classification and the U.S. federal tax treatment of PFICs. Additional information on this matter is included in Vista’s Annual Report on Form 10-K for the year ended December 31, 2015, under “Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Certain United States Federal Income Tax Considerations.”

 

Note Regarding Forward-Looking Statements 

 

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information under Canadian securities laws that are intended to be covered by the safe harbor created by such legislation. All statements, other than statements of historical facts, included in this quarterly report on Form 10-Q, our other filings with the SEC and Canadian securities commissions and in press releases and public statements by our officers or representatives that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements and forward-looking information, including, but not limited to, such things as those listed below: