Vista Gold (TSX:VGZ) - Smaller-Scale Strategy to Enhance Economics

Company Interviews

Interview with Frederick H. Earnest, President & CEO of Vista Gold

Recording date: 12th June 2024

Vista Gold Corp. (TSX:VGZ) presents a compelling opportunity for investors seeking exposure to a large-scale gold project with significant upside potential. The company's flagship asset, the Mt Todd gold project in Australia's Northern Territory, hosts 7 million ounces of proven and probable reserves within a larger 9.4 million ounce resource package.

Originally envisioned as a 50,000 tonne per day (tpd) operation, Vista has demonstrated agility in adapting to market conditions by optimizing its development approach. The company is now evaluating a smaller-scale 15,000 tpd project with a reduced capex of less than $350 million. This revised strategy aims to expedite the path to production, lower financing hurdles, and expand the pool of potential strategic partners.

Despite the reduced throughput, a 15,000 tpd operation would still yield impressive production of 150,000 to 200,000 ounces of gold per year over an initial 40-year mine life. Vista is conducting targeted drilling to further enhance the project, focusing on defining a higher-grade starter pit and optimizing metallurgy.

One of Mt Todd's key advantages is its advanced permitting status. Major environmental approvals and operating permits are already in place, significantly de-risking the project and shortening the development timeline. Vista has also invested significant effort in building strong relationships with key stakeholders, including local aboriginal groups and the government, ensuring broad support for the project.

With a solid cash position and additional funds expected from a royalty agreement, Vista is well-funded to complete a feasibility study on the optimized project scale. The company is also evaluating multiple financing options, including potential support from the Northern Australia Infrastructure Fund.

Mt Todd's existing infrastructure, including roads, power, and a tailings storage facility, further enhances its appeal. The brownfield nature of the site enables a streamlined construction process and rapid ramp-up to production, with first gold pour achievable within 12 to 18 months of securing financing.

Australia's Northern Territory offers a stable, mining-friendly jurisdiction, and recent changes to the royalty regime have further improved Mt Todd's economics. The shift from a profit-based royalty to an ad valorem system has effectively halved the project's royalty obligation, demonstrating the government's support for the mining industry.

As gold producers grapple with depleting reserves, development-stage projects like Mt Todd are poised to attract increased interest. Vista Gold's proactive approach in optimizing the project scale, advancing permitting, and engaging with stakeholders positions the company to capitalize on this trend and unlock significant value for shareholders.

With a large, long-life gold resource, a clear path to production, and a supportive jurisdiction, Vista Gold offers investors a compelling opportunity to gain exposure to the long-term value of gold. As the company advances Mt Todd towards development, it is well-positioned to re-rate and deliver significant returns.

View Vista Gold's company profile: https://www.cruxinvestor.com/companies/vista-gold-corporation

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