0000912057-01-537646.txt : 20011112
0000912057-01-537646.hdr.sgml : 20011112
ACCESSION NUMBER: 0000912057-01-537646
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011105
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: VISTA GOLD CORP
CENTRAL INDEX KEY: 0000783324
STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040]
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-09025
FILM NUMBER: 1774776
BUSINESS ADDRESS:
STREET 1: 7961 SHAFFER PKWY
STREET 2: SUITE 5
CITY: LITTLETOWN
STATE: CO
ZIP: 80127
BUSINESS PHONE: 3036292450
FORMER COMPANY:
FORMER CONFORMED NAME: GRANGES EXPLORATION LTD
DATE OF NAME CHANGE: 19890619
FORMER COMPANY:
FORMER CONFORMED NAME: GRANGES INC
DATE OF NAME CHANGE: 19950602
10-Q
1
a2062415z10-q.txt
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------
COMMISSION FILE NUMBER 1-9025
VISTA GOLD CORP.
(Exact name of registrant as specified in its charter)
Continued under the laws of the Yukon Territory (Not Applicable)
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7961 Shaffer Parkway
Suite 5
Littleton, Colorado 80127
(Address of principal executive offices) (Zip Code)
(720) 981-1185
(Registrant's telephone number, including area code)
------------------------------
Indicate by check mark whether the registrant (1) has 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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
90,715,040
Common Shares, without par value, outstanding at November 5, 2001
------------------------------
VISTA GOLD CORP.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2001
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
(i) Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000 3
(ii) Consolidated Statements of Loss for the three months and the nine months 4
ended September 30, 2001 and September 30, 2000
(iii) Consolidated Statements of Deficit for the three months and nine months ended 4
September 30, 2001 and September 30, 2000
(iv) Consolidated Statements of Cash Flows for the three months and nine months 5
ended September 30, 2001 and September 30, 2000
(v) Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS 12
SIGNATURES 12
EXHIBIT INDEX 13
In this Report, unless otherwise indicated, all dollar amounts are
expressed in United States dollars.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30 DECEMBER 31
(U.S. DOLLARS IN THOUSANDS) 2001 2000
---------------------------- -----------------------------
(Unaudited) (Audited)
ASSETS:
Cash and cash equivalents $ 950 $ 96
Accounts receivable 293 760
Supplies and other 367 464
-----------------------------
Current assets 1,610 1,320
Property, plant and equipment - Note 3 12,929 15,912
-----------------------------
Total assets $ 14,539 $ 17,232
-----------------------------
-----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 52 $ 218
Accrued liabilities and other 305 301
Current portion of long-term debt - Note 4 75 695
------------------------------
Current liabilities 432 1,214
------------------------------
Accrued reclamation and closure costs 3,202 3,339
Other liabilities - 6
-----------------------------
Long-term liabilities 3,202 3,345
-----------------------------
Total liabilities 3,634 4,559
-----------------------------
Capital stock, no par value per share:
Preferred - unlimited shares authorized;
no shares outstanding
Common - unlimited shares authorized; shares outstanding:
2001 and 2000 - 90,715,040 121,146 121,146
Deficit (108,749) (106,985)
Currency translation adjustment (1,492) (1,488)
-----------------------------
Total shareholders' equity 10,905 12,673
-----------------------------
Total liabilities and shareholders' equity $ 14,539 $ 17,232
-----------------------------
-----------------------------
Nature of operations and going concern - Note 2
Commitments and contingencies - Note 5
Approved by the Board of Directors
/s/ RONALD J. MCGREGOR /s/ JOHN CLARK
----------------------- --------------
Ronald J. McGregor John Clark
Director Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
-3-
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF LOSS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------------------------------------------
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 2001 2000 2001 2000
---------------------------------------------- -------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES:
Gold Sales $ 195 $ 696 $ 817 $ 3,312
Other revenues 6 3 20 45
-------------------------------------------------------------
Total revenues 201 699 837 3,357
-------------------------------------------------------------
COSTS AND EXPENSES:
Production costs 150 375 674 2,194
Depreciation, depletion and amortization 47 215 151 655
Provision for reclamation and closure costs - - - 15
Mineral exploration, property evaluation and holding costs 361 336 905 1,481
Corporate administration and investor relations 267 295 899 928
Interest expense 1 25 20 94
Loss (gain) on disposal of assets (37) 30 (77) (102)
Gain on sale of marketable securities - - - (280)
Other expense (income) 32 46 29 (88)
-------------------------------------------------------------
Total costs and expenses 821 1,322 2,601 4,897
-------------------------------------------------------------
Loss before taxes (620) (623) (1,764) (1,540)
Income taxes (recoveries) - (33) - (33)
-------------------------------------------------------------
Net Loss $ (620) $ (590) $ (1,764) $ (1,507)
-------------------------------------------------------------
-------------------------------------------------------------
Weighted average shares outstanding
90,715,040 90,715,040 90,715,040 90,715,040
Net loss per share $ (0.01) $ (0.01) $ (0.02) $ (0.02)
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF DEFICIT
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
----------------------------------------------------------------
(U.S. DOLLARS IN THOUSANDS) 2001 2000 2001 2000
--------------------------- ----------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Deficit, beginning of period $(108,129) $(94,692) $(106,985) $ (93,775)
Net Loss (620) (590) (1,764) (1,507)
----------------------------------------------------------------
Deficit, end of period $(108,749) $(95,282) $(108,749) $ (95,282)
----------------------------------------------------------------
----------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
-4-
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
----------------------------------------------------------------
(U.S. DOLLARS IN THOUSANDS) 2001 2000 2001 2000
--------------------------- ----------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the period $ (620) $ (590) $ (1,764) $ (1,507)
ADJUSTMENTS TO RECONCILE LOSS FOR THE PERIOD TO CASH
PROVIDED BY (USED IN) OPERATIONS:
Depreciation, depletion and amortization 47 214 151 655
Provision for reclamation and closure costs - - - 15
Reclamation and closure costs (62) (162) (137) (852)
Loss (gain) on disposal of assets (37) 30 (77) (102)
Loss (gain) on currency translation (4) (5) (4) (5)
Other non-cash items - (3) (6) (9)
----------------------------------------------------------------
(676) (516) (1,837) (1,805)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Marketable securities - - - 77
Accounts receivable 616 661 467 451
Gold inventory - - - 117
Supplies inventory and prepaid expenses 136 253 97 589
Accounts payable and accrued liabilities 6 (194) (162) (1,055)
----------------------------------------------------------------
Net cash provided by (used in) operating activities 82 204 (1,435) (1,626)
----------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment - - - (112)
Proceeds on disposal of fixed assets and supplies 291 236 2,908 537
Other assets - - - (34)
----------------------------------------------------------------
Net cash provided by (used in) investing activities 291 236 2,908 391
----------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt - (225) (619) (458)
----------------------------------------------------------------
Net cash used in financing activities - (225) (619) (458)
----------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 373 215 854 (1,693)
Cash and cash equivalents, beginning of period 577 423 96 2,331
----------------------------------------------------------------
Cash and cash equivalents, end of period $ 950 $ 638 $ 950 $ 638
----------------------------------------------------------------
----------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
-5-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands unless specified otherwise)
1. General
The consolidated interim financial statements of Vista Gold Corp. (the
"Corporation") for the nine months ended September 30, 2001, have been prepared
by the Corporation without audit and do not include all of the disclosures
required by generally accepted accounting principles in Canada for annual
financial statements. In the opinion of management, all of the adjustments
necessary to fairly present the interim financial information set forth herein
have been made. The results of operations for interim periods are not
necessarily indicative of the operating results of a full year or of future
years. These interim financial statements should be read in conjunction with the
financial statements and related footnotes included in the Corporation's annual
report, filed on form 10-K, for the year ended December 31, 2000. These interim
financial statements follow the same accounting policies and methods of their
application as the most recent annual financial statements.
2. Nature of operations and going concern
(a) NATURE OF OPERATIONS
The Corporation is engaged in gold production in the United States, and gold
exploration activities in the United States, Canada, and Latin America.
The Corporation's results are dependent on the price of gold. Gold prices
fluctuate and are affected by numerous factors, including, expectations with
respect to the rate of inflation, currency exchange rates, interest rates,
global and regional political and economic circumstances and governmental
policies, including those with respect to gold holdings by central banks. The
demand for and supply of gold affect gold prices, but not necessarily in the
same manner as demand and supply affect the prices of other commodities. The
supply of gold consists of a combination of new mine production and existing
stocks of bullion and fabricated gold held by governments, public and private
financial institutions, industrial organizations and private individuals. The
demand for gold is primarily driven by its use in jewelry and investment.
Additionally, hedging activities by producers, consumers, financial institutions
and individuals can affect gold supply and demand. Gold can be readily sold on
numerous markets throughout the world and its market value can be ascertained at
any particular time. As a result, the Corporation is not dependent on any one
customer for the sale of its product.
(b) GOING CONCERN
These consolidated financial statements have been prepared on the basis of
accounting principles applicable to a going concern that assume the realization
of assets and the discharge of liabilities in the normal course of business. The
Corporation's consolidated cash balance was $0.9 million and working capital was
$1.2 million as of September 30, 2001. Management estimates total consolidated
net cash expenditures of $0.6 million through the remainder of 2001, including
$75,000 in debt repayments, with an estimated December 31, 2001 cash balance of
$0.3 million, assuming no additional financing is obtained.
Management continues to pursue cost-cutting measures and is actively pursuing
additional sources of capital, including debt financing, the issuance of equity,
mergers with other companies, and the sale of property interests and other
assets. Management estimates that the Corporation will have sufficient cash
resources to continue its current level of activity through the end of March
2002 if no additional financing is obtained. The Hycroft mine is the
Corporation's principal source of operating cash flows. Mining activities at
Hycroft were suspended in 1998. The Hycroft mine is currently producing gold
from previously mined ore on the leach pads, a process that will continue
through 2001. However, the amount of recoverable gold remaining in the leach
pads is decreasing and as a result, the rate of gold production will continue to
decrease throughout 2001.
The recoverability of the carrying values of the Hycroft mine and the Amayapampa
project is dependant upon the successful start-up of operations at these sites.
The Corporation is investigating the economic feasibility of restarting the
Hycroft mine and developing the Amayapampa project in Bolivia. The plans to
restart the Hycroft mine and develop the Amayapampa project will depend on
management's ability to raise additional capital for these purposes. Although
management has been successful in raising such capital in the past, there can be
no assurance that it will be able to do so in the future. Because of these
uncertainties, there is substantial doubt about the ability of
-6-
the Corporation to continue as a going concern. These financial statements do
not give effect to any adjustments, which may be necessary should the
Corporation be unable to continue as a going concern.
3. Property, plant and equipment
Property, plant and equipment is comprised of the following:
SEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
ACCUMULATED ACCUMULATED
DEPRECIATION, DEPRECIATION,
AMORTIZATION AND AMORTIZATION AND
COST WRITE-DOWNS NET COST WRITE-DOWNS NET
-------------------------------------------------------------------------------------------
Hycroft Mine $ 53,421 $51,369 $ 2,052 $ 60,953 $ 55,974 $ 4,979
Bolivian mineral properties 58,077 47,338 10,739 58,029 47,260 10,769
Corporate assets 466 328 138 467 303 164
-------------------------------------------------------------------------------------------
$111,964 $99,035 $12,929 $119,449 $103,537 $15,912
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
DISPOSAL OF ASSETS
Hycroft mining equipment, with an aggregate original cost of $7.5 million and
net book value of $2.8 million, has been sold for $2.9 million during the first
nine months of 2001.
4. Current portion of long-term debt
The Corporation has a $75,000 term note, bearing 4.5% interest, which is due
November 30, 2001.
In January 2001, the $0.6 million term loan, which was collateralized by certain
mobile assets of the Hycroft mine was repaid from the proceeds of the sale of
mining equipment.
5. Commitments and contingencies
On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed
an action in the United States District Court against Vista Gold Corp., Vista
Gold Holdings, Inc., Stockscape.com Technologies, Inc., Cornucopia Resources,
Inc., Red Mountain Resources, Inc. and Touchstone Resources, Inc. This action
involves a General Contract of Indemnity in connection with the posting of a
reclamation bond for mining activities by Mineral Ridge Inc., the Corporation's
wholly owned subsidiary that holds the investment in the Mineral Ridge mine, at
Silver Peak, Nevada. In the action, USF&G seeks to compel all of the defendants
to post additional collateral for the bond in the total amount of $793,583.
Neither Vista Gold Corp. nor Vista Gold Holdings, Inc. was a party to the
General Contract of Indemnity and both have denied any liability in connection
therewith.
In November 2000, the parties stipulated to an agreed upon discovery plan and
scheduling order. On March 12, 2001 Stockscape.com Technologies, Inc.,
Cornucopia Resources, Inc., and Red Mountain Resources, Inc. (collectively
"Stockscape defendants") filed a cross-claim against the Corporation relating to
the same issues but referring to the Share Purchase and Sale Agreement between
Cornucopia Resources Ltd. and Vista Gold Corp. In July 2001, USF&G filed for a
summary judgment requesting the court to compel the Stockscape defendants to
post $902,819 in additional collateral. The increase from $793,583 accounts for
additional expenses incurred by USF&G. At the same time, the Stockscape
defendants moved for partial summary judgment on cross-claim against the
Corporation. The maximum potential exposure to the Corporation is the additional
collateral requested in the amount of $902,819 together with the attorneys' fees
and costs related to the defense of the action. Other defendants, if found to be
jointly liable, could reduce the amount for which the Corporation has exposure.
-7-
6. Geographic and segment information
The Corporation is engaged in gold production in the United States, and gold
exploration activities in the United States, Canada, and Latin America. Its
major product and only identifiable segment is gold, and all gold revenues and
operating costs are derived in the United States.
7. Differences between Canadian and United States generally accepted
accounting principles
The Corporation prepares its financial statements in accordance with accounting
principles generally accepted in Canada. These differ in some respects from
those in the United States. The effect of these GAAP differences on the
consolidated statements of loss were as follows:
CONSOLIDATED STATEMENTS OF LOSS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------------------------------------------------
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 2001 2000 2001 2000
---------------------------------------------- -------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net loss- Canadian GAAP $ (620) $ (590) $ (1,764) $ (1,507)
Amortization reduction - - - 99
Revenue recognition 44 - 81 -
Cumulative impact of adopting SAB 101 - - - (59)
-------------------------------------------------------------------
Net loss-U.S. GAAP $ (576) $ (590) $ (1,683) $ (1,467)
-------------------------------------------------------------------
Comprehensive loss-U.S.GAAP $ (576) $ (590) $ (1,683) $ (1,467)
-------------------------------------------------------------------
-------------------------------------------------------------------
Basic loss per share- U.S. GAAP $ (0.01) $ (0.01) $ (0.02) $ (0.02)
--------------------------------------------------------------------------------------------------------------------
The Corporation recognizes revenue upon adsorption of gold onto carbon. US GAAP
under SAB 101, the revenue recognition standard effective January 1, 2000,
requires that revenue not be recorded before title is passed.
The effect of GAAP differences on the consolidated balance sheets were as
follows:
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2001 DECEMBER 31, 2000
-----------------------------------------------------------------------
PER CDN. CDN./U.S. PER U.S. PER CDN. CDN./U.S. PER U.S.
GAAP ADJ. GAAP GAAP ADJ. GAAP
-----------------------------------------------------------------------
(Unaudited) (Audited)
Current assets $ 1,610 $ (29) $ 1,581 $ 1,320 $ (231) $ 1,089
Property, plant and equipment 12,929 (7,637) 5,292 15,912 (7,637) 8,275
Common shares 121,146 76,754 197,900 121,146 76,754 197,900
Contributed surplus - 2,786 2,786 - 2,786 2,786
Deficit (108,749) (87,327) (196,076) (106,985) (87,408) (194,393)
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(U.S. dollars in thousands, unless specified otherwise)
RESULTS OF OPERATIONS
The Hycroft mine remains the principal source of earnings and operating cash
flows. In December 1998, mining activities were suspended at the Hycroft mine.
Currently, gold is recovered from previously mined ore that had been placed on
the heap leach pads.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------------------------------------------------
HYCROFT MINE 2001 2000 2001 2000
-------------------------------------------------------------------
Gold ounces produced 580 2,691 2,924 11,830
Average revenue per ounce produced $336 $259 $280 $280
Cash operating cost per ounce $228 $137 $213 $183
The reduction in gold production reflects the expected gradual decrease in
recoverable gold in the Hycroft mine heap leach pads. Accordingly, gold revenues
of $0.2 million for the three months ended September 30, 2001 decreased $0.5
million from the same period in 2000. Similarly, gold revenues of $0.8 million
for the nine months ended September 30, 2001 have decreased $2.5 million from
the same period in 2000.
Cash operating costs at the Hycroft mine totaled $0.2 million ($228 per ounce of
gold produced) for the three months ended September 30, 2001, compared to total
cash operating costs of $0.4 million ($137 per ounce of gold produced), for the
same period in 2000. For the nine months ended September 30, 2001, cash
operating costs at the Hycroft mine totaled $0.7 million ($213 per ounce of gold
produced), compared to total cash operating costs of $2.2 million ($183 per
ounce of gold produced), for the same period in 2000. The reduction in total
spending is a direct result of the decreasing level of activity at the Hycroft
mine; the increased cost per ounce results from the relatively lower level of
production in 2001.
Depreciation, depletion and amortization ("DD&A") for the three months ended
September 30, 2001 totaled $47,000 compared to $0.2 million in the same period
in 2000. DD&A for the nine months ended September 30, 2001 totaled $0.2 million
compared to $0.7 million in the same period in 2000. A significant portion of
the property, plant and equipment at the Hycroft mine has been fully
depreciated.
Mineral exploration, property evaluation and holdings costs totaled $0.4 million
for the three months ended September 30, 2001, and $0.9 million for the nine
months ended September 30, 2001 compared with $0.3 million and $1.5 million
respectively, for the same periods in 2000. 2001 costs reflect a reduction in
expenditures in Bolivia and in discretionary spending.
2001 corporate administration and investor relation costs remain similar to 2000
costs.
Net loss for the three months ended September 30, 2001 was $0.6 million, similar
to a net loss of $0.6 million for the same period in 2000. Net loss for the nine
months ended September 30, 2001 was $1.8 million, compared to a net loss of $1.5
million for the same period in 2000. The primary reason for the increase in net
loss was the lower gold production, offset partially by lower operating costs
and lower mineral exploration, property evaluation and holding costs.
Operating activities provided net cash of $0.1 million for the three months
ended September 30, 2001, compared to $0.2 million for the same period in 2000.
Net cash used in operating activities for the nine months ended September 30,
2001 was $1.4 million, $0.2 million less than the $1.6 million used in operating
activities for the same period in 2000. The reduction in cash used in operations
reflects the lower levels of activity at the Hycroft mine. During the three
months ended September 30, 2001, $0.3 million was provided from the sale of idle
mining equipment at the Hycroft mine. For the nine months ended September 30,
2001, $2.9 million net cash was provided from the sale of idle mining equipment
at the Hycroft mine.
-9-
FINANCIAL CONDITION
The Corporation's consolidated cash balance as of September 30, 2001, was $0.9
million compared to $0.1 million at December 31, 2000 and working capital was
$1.2 million as of September 30, 2001 compared to $0.1 million at December 31,
2000. This improvement is mainly a result of selling some idle Hycroft mining
equipment for $2.9 million net cash, and repayment of a $0.6 million equipment
loan. Management estimates total net cash requirements of $0.6 million through
the remainder of 2001, including $75,000 in debt repayments, with an estimated
December 31, 2001 cash balance of $0.3 million, assuming no additional financing
is obtained.
Management continues to pursue cost-cutting measures and is actively pursuing
additional sources of capital, including debt financing, the issuance of equity,
mergers with other companies, and the sale of property interests and other
assets. Management estimates that if no additional capital is raised, the
Corporation will have sufficient cash resources to continue its current level of
activity through the end of March 2002.
GOING CONCERN
The Hycroft mine is the Corporation's principal source of operating cash flows.
Mining activities at Hycroft were suspended in 1998. The Hycroft mine is
currently producing gold from previously mined ore on the leach pads, a process
that will continue through the end of 2001. However, the amount of recoverable
gold remaining in the leach pads is decreasing and as a result, the rate of gold
production will decrease throughout 2001. The recoverability of the carrying
values of the Hycroft mine and the Amayapampa project is dependant upon the
successful start-up of operations at these sites. The Corporation is
investigating the economic feasibility of restarting the Hycroft mine and
developing the Amayapampa project in Bolivia. The plans to restart the Hycroft
mine and develop the Amayapampa project will depend on management's ability to
raise additional capital for these purposes. Although management has been
successful in raising such capital in the past, there can be no assurance that
it will be able to do so in the future. Because of these uncertainties, there is
substantial doubt about the ability of the Corporation to continue as a going
concern.
OUTLOOK
At the Hycroft mine, gold production continues to exceed expectations and the
overall recovery from the Brimstone heap is now over 79 percent of cyanide
soluble gold compared to previous estimates of 75 percent. Re-circulation of
solutions and gold recovery will continue through 2001. In addition to the 2,924
ounces of gold recovered in the first nine months of 2001, management expects to
recover 250 ounces of gold through the remainder of the year.
The Corporation continues to operate in a standby mode, keeping costs to a
minimum, pending sustained improvement in gold prices. There is good potential
to add oxide reserves and discover high-grade zones at Hycroft. Exploration
drilling requires additional expenditures and management continues to explore
all avenues to find the necessary funding. Hycroft is a large epithermal gold
system with multiple targets for high-grade mineralization making it a very
valuable asset. It remains one of the most under-explored systems in Nevada.
In Bolivia, the Amayapampa project is on standby and costs are being kept to a
minimum. The proven and probable reserves at Amayapampa contain over 500,000
ounces of gold, but the Corporation believes that a gold price of $325 per ounce
will be required before the project can be financed and developed.
-10-
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as described below, the Corporation is not aware of any material pending
or threatened litigation or of any proceedings known to be contemplated by
governmental authorities which is, or would be, likely to have a material
adverse effect upon the Corporation or its operations, taken as a whole.
On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed
an action in the United States District Court against Vista Gold Corp., Vista
Gold Holdings, Inc., Stockscape.com Technologies, Inc., Cornucopia Resources,
Inc., Red Mountain Resources, Inc. and Touchstone Resources, Inc. This action
involves a General Contract of Indemnity in connection with the posting of a
reclamation bond for mining activities by Mineral Ridge Inc., the Corporation's
wholly owned subsidiary that holds the investment in the Mineral Ridge mine, at
Silver Peak, Nevada. In the action, USF&G seeks to compel all of the defendants
to post additional collateral for the bond in the total amount of $793,583.
Neither Vista Gold Corp. nor Vista Gold Holdings, Inc. was a party to the
General Contract of Indemnity and both have denied any liability in connection
therewith.
In November 2000, the parties stipulated to an agreed upon discovery plan and
scheduling order. On March 12, 2001 Stockscape.com Technologies, Inc.,
Cornucopia Resources, Inc., and Red Mountain Resources, Inc. (collectively
"Stockscape defendants") filed a cross-claim against the Corporation relating to
the same issues but referring to the Share Purchase and Sale Agreement between
Cornucopia Resources Ltd. and Vista Gold Corp. In July 2001, USF&G filed for a
summary judgment requesting the court to compel the Stockscape defendants to
post $902,819 in additional collateral. The increase from $793,583 accounts for
additional expenses incurred by USF&G. At the same time, the Stockscape
defendants moved for partial summary judgment on cross-claim against the
Corporation. The maximum potential exposure to the Corporation is the additional
collateral requested in the amount of $902,819 together with the attorneys' fees
and costs related to the defense of the action. Other defendants, if found to be
jointly liable, could reduce the amount for which the Corporation has exposure.
A legal dispute was initiated in Bolivia by a Mr. Estanislao Radic ("Radic") who
brought legal proceedings in the lower penal court against Mr. Raul Garafulic
("Garafulic") and the Corporation, questioning the validity of the Garafulic's
ownership of the Amayapampa property. Garafulic sold Amayapampa to a wholly
owned subsidiary of the Corporation. In May 1998, a judge in the Bolivian penal
court found there was no justifiable case. In June 1998, a judge of the superior
court of the district of Potosi dismissed the appeal of the case and indicated
that there could be no further appeals on the matter in the Bolivian penal
courts. In 1999, this time in civil court, Radic filed a second lawsuit against
Garafulic, in Potosi, and Garafulic filed a civil lawsuit for damages against
Radic in La Paz. Garafulic appealed to the Court to have both cases combined
under the jurisdiction of a judge in La Paz. Finally, in January 2001, the Court
decreed that the lawsuits should be combined and heard in Potosi. The
Corporation never has and does not now have direct ownership of the disputed
property and is therefore uncertain as to why it was a named defendant in this
lawsuit. The court in Potosi agreed with this assessment and annulled the case
in June 2001. An appeal may be possible but the Corporation does not anticipate
that there will be any material adverse impact on the Corporation or the value
of its holdings in Bolivia.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
-11-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.01 Third Quarter 2001 Report to Shareholders
(b) Reports on Form 8-K
The following documents were filed under cover of Form 8-K
during the quarter ended September 30, 2001
1. Report dated August 9, 2001 regarding the
Corporation's second quarter 2001 results and
reassaying results at the Hycroft mine.
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This document, including any documents that are incorporated by reference,
contains forward-looking statements concerning, among other things, projected
annual gold production, mineral resources, proven or probable reserves and cash
operating costs. Such statements are typically punctuated by words or phrases
such as "anticipates", "estimates", "projects", "foresees", "management
believes", "believes" and words or phrases of similar import. Such statements
are subject to certain risks, uncertainties or assumptions. If one or more of
these risks or uncertainties materialize, or if underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. Important factors that could cause actual results to differ
materially from those in such forward-looking statements are identified in the
Corporation's form 10-K under "Item 1. Business-Risk Factors". The Corporation
assumes no obligation to update these forward-looking statements to reflect
actual results, changes in assumptions, or changes in factors affecting such
statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISTA GOLD CORP.
(Registrant)
Date: November 5, 2001 By: /s/ RONALD J. MCGREGOR
-------------------------------------
Ronald J. McGregor
President and Chief Executive Officer
Date: November 5, 2001 By: /s/ JOHN F. ENGELE
-------------------------------------
John F. Engele
Vice President Finance
-12-
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- ------------
99.01 Third Quarter 2001 Report to Shareholders
-13-
EX-99.01
3
a2062415zex-99_01.txt
EXHIBIT 99.01
EXHIBIT 99.01
[VISTA GOLD CORP. LOGO]
THIRD QUARTER REPORT - 2001
DEAR FELLOW SHAREHOLDERS:
This letter is a forum to discuss the performance of our company during the 3rd
quarter but the tragedy that unfolded on September 11th, profoundly altered how
we go about our lives. I believe it would be remiss of me not to acknowledge the
tremendous sense of sadness we feel for those people directly affected by these
unspeakable acts of terrorism.
In early October the Denver Gold Show which is attended by Gold companies
representing over 70% of the world's gold production and analysts, many of which
are based in New York, was held on schedule. Our presentation, the first of the
three-day event was well received. (A copy of this presentation is posted on our
website at www.vistagold.com)
The fundamentals for gold continue to be encouraging, with support in the
$275.00 an ounce range firming despite aggressive economic stimuli by government
and the Federal Reserve Bank strong dollar policy.
At the end of the second quarter, I introduced a chart that illustrated the 2001
year-to-date improvement in value of VGZ relative to the DJIA, the NASDAQ, the
S&P 500 and the XAU gold index. Following is an update of this chart to the end
of the third quarter (note: the DJIA and the NASDAQ data have not been included
this time as there is little discernible difference, given the scale of this
graph, between the S&P 500 and the DJIA and the NASDAQ).
VGZ XAU S&P 500
--- --- -------
Date VGZ price VGZ delta XAU price XAU delta S&P price S&P delta
31-Dec 0.0469 51.41 1320.28
1-Jan 0.0469 0% 49.23 -4% 1298.35 -2%
8-Jan 0.0625 33% 48.89 -5% 1318.55 0%
15-Jan 0.0625 33% 48.92 -5% 1342.54 2%
22-Jan 0.0625 33% 48.51 -6% 1354.95 3%
29-Jan 0.07 49% 48.88 -5% 1349.47 2%
5-Feb 0.09 92% 46.66 -9% 1314.76 0%
12-Feb 0.08 71% 47.38 -8% 1301.53 -1%
19-Feb 0.08 71% 50.23 -2% 1245.86 -6%
26-Feb 0.11 135% 52.35 2% 1234.18 -7%
5-Mar 0.11 135% 55.01 7% 1233.42 -7%
12-Mar 0.11 135% 48.37 -6% 1150.53 -13%
19-Mar 0.09 92% 48.89 -5% 1139.83 -14%
26-Mar 0.09 92% 47.57 -7% 1160.33 -12%
2-Apr 0.09 92% 50.41 -2% 1128.43 -15%
9-Apr 0.08 71% 51.59 0% 1183.5 -10%
16-Apr 0.07 49% 52.04 1% 1242.98 -6%
23-Apr 0.08 71% 55.76 8% 1253.05 -5%
30-Apr 0.08 71% 54.78 7% 1266.61 -4%
7-May 0.08 71% 58.52 14% 1245.67 -6%
14-May 0.11 135% 65.27 27% 1291.96 -2%
21-May 0.110 135% 60.99 19% 1277.89 -3%
28-May 0.100 113% 58.120 13% 1260.67 -5%
4-Jun 0.110 135% 58.780 14% 1264.960 -4%
11-Jun 0.110 135% 58.370 14% 1214.360 -8%
18-Jun 0.100 113% 55.200 7% 1225.35 -7%
25-Jun 0.100 113% 53.250 4% 1224.380 -7%
2-Jul 0.080 71% 51.790 1% 1190.590 -10%
9-Jul 0.080 71% 53.860 5% 1215.680 -8%
16-Jul 0.080 71% 55.770 8% 1210.850 -8%
23-Jul 0.080 71% 54.600 6% 1205.820 -9%
30-Jul 0.080 71% 52.740 3% 1214.350 -8%
6-Aug 0.080 71% 55.150 7% 1190.160 -10%
13-Aug 0.070 49% 57.560 12% 1161.970 -12%
20-Aug 0.070 49% 58.260 13% 1184.930 -10%
27-Aug 0.080 71% 56.560 10% 1133.580 -14%
3-Sep 0.070 49% 55.030 7% 1085.780 -18%
10-Sep 0.070 49% 55.500 8% 1092.540 -17%
17-Sep 0.080 71% 58.200 13% 965.800 -27%
24-Sep 0.100 113% 57.790 12% 1040.940 -21%
As expected, gold production in the third quarter was 580 ounces, down from 956
ounces in the second quarter. Management estimates an additional 250 ounces of
gold will be recovered through the remainder of the year. The declining gold
production resulted in a $0.6 million ($0.01 per share) loss in the third
quarter of 2001, similar to the loss in the same quarter last year. At the end
of the quarter, the Corporation had $1.2 million in working capital, including
$0.9 million in cash. Management estimates that we will have sufficient capital
to continue the current level of activity through March 2002, assuming no new
capital is obtained. However, we continue to be diligent in our efforts to
conserve working capital and we continue to look for sources of new capital. In
addition, we are aggressively seeking a strategic alliance with another company
that will preserve our share value and asset base and allow the corporation to
move back into an operating mode.
Vista Gold Corp. is an international gold mining, development and exploration
company based in Denver, Colorado. Its holdings include the Hycroft mine in
Nevada, a development project in Bolivia, and exploration projects in North and
South America.
Ronald J. (Jock) McGregor
President and Chief Executive Officer
November 5, 2001
The statements that are not historical facts are forward-looking statements
involving known and unknown risks and uncertainties that could cause actual
results to vary materially from the targeted results. Such risks and
uncertainties include those described in the Company's Form 10-K.
For further information, please contact Investor Relations at (720) 981-1185, or
visit our website at www.vistagold.com.
(720) 981-1185 - VOICE 7961 SHAFFER PARKWAY (720) 981-1186 - FAX
- SUITE 5 - LITTLETON, CO 80127