<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the period of March 27, 1997 Commission File Number: 1-9025
VISTA GOLD CORP.
(Name of Registrant)
Suite 3000
370 Seventeenth Street
Denver, Colorado 80202
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the SEC
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): Not applicable.
<PAGE> 2
SIGNATURE
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.
Date: March 31, 1997 By: /s/ Roger L. Smith
--------------------------------
Roger L. Smith
Corporate Controller
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ------- ----------------------
<S> <C>
99.1 Vista Gold Corp. 1996 Annual Report to Shareholders.
99.2 Notice of Meeting and Management Information and Proxy Circular,
including an additional letter to shareholders from the President and
Chief Executive Officer.
99.3 Proxy.
99.4 Supplemental Mailing List Return Card.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
1996 ANNUAL REPORT
[PICTURE]
[VISTA GOLD CORP. LOGO]
<PAGE> 2
VISTA GOLD CORP.
WHO IS VISTA GOLD CORP.?
Vista Gold Corp. is a mid-tier gold producer
with substantial reserves and a large portfolio of
advanced development and exploration properties
in North and South America.
------------------------------------------------
VISTA GOLD CORP. WAS FORMED THROUGH THE MERGER
OF GRANGES INC. AND DA CAPO RESOURCES LTD.
------------------------------------------------
[GRANGES INC. LOGO] [VISTA GOLD CORP. LOGO] [DA CAPO RESOURCES LTD. LOGO]
MISSION STATEMENT
The Company's objective is to achieve excellence in operations
and exploration on a basis that is safe and environmentally sound.
The result will be to provide shareholders with enhanced value
for their investment through long-term asset growth.
1996 ANNUAL REPORT
ABOUT THE COVER: Core drilling at the Amayapampa mine on the Bolivian
altiplano.
<PAGE> 3
VISTA GOLD CORP.
1996 ACCOMPLISHMENTS
o Successfully merged Granges Inc. and Da Capo Resources Ltd. to form
Vista Gold Corp.
o Initiated the development of the Brimstone deposit at the Hycroft
mine in Nevada
o Expanded production capacity at the Hycroft mine
o Secured an option to acquire the Guariche mining concessions in
Venezuela
o Expanded exploration efforts in North and South America
FINANCIAL REVIEW:
(U.S. Dollars in thousands)
<TABLE>
<CAPTION>
Financial 1996 1995
--------- ---------
<S> <C> <C>
Revenues $ 36,444 $ 41,294
Net earnings (loss) (11,826) 2,159
Earnings (loss) per share $ (0.21) $ 0.05
Operating cash flow 6,361 7,582
Cash and cash equivalents 8,598 15,210
Working capital 18,669 21,672
Long-term debt NIL nil
Short-term debt NIL nil
Total assets 123,316 64,285
Net assets -- per share $ 1.39 $ 1.40
</TABLE>
<TABLE>
<CAPTION>
Production 1996 1995
--------- ---------
<S> <C> <C>
Gold (ounces) 89,381 101,128
Silver (ounces) 321,315 417,824
</TABLE>
1996 ANNUAL REPORT ONE
<PAGE> 4
VISTA GOLD CORP.
PROPERTY LOCATIONS
NEVADA / VENEZUELA / ECUADOR / BOLIVIA
[MAP]
VISTA GOLD PROPERTIES
TWO 1996 ANNUAL REPORT
<PAGE> 5
VISTA GOLD CORP.
GROWTH PROJECTIONS
GOLD PRODUCTION GROWTH o
------------------------
[GRAPH]
GROWTH PROJECTION IN RESERVES o
-------------------------------
Mid-1996 (1 million ounces)
[GRAPH]
HYCROFT MINE
Mid-1998 (3 million ounces)
[GRAPH]
IMPROVING CASH COST PROFILE o
-----------------------------
[GRAPH]
1996 ANNUAL REPORT THREE
<PAGE> 6
VISTA GOLD CORP.
[PICTURE OF MICHAEL B. RICHINGS]
MICHAEL B. RICHINGS,
PRESIDENT AND CEO
LETTER TO SHAREHOLDERS
DEAR FELLOW SHAREHOLDERS:
IN 1995, THE COMPANY LAID OUT A STRATEGIC PLAN OF GROWTH. BEGINNING IN 1996, WE
COMMENCED THE EVOLUTIONARY PROCESS WHICH IS CHANGING GRANGES FROM A SMALL HIGH
COST GOLD PRODUCER TO VISTA GOLD, A DYNAMIC, AGGRESSIVE, MULTI-MINE, LOW COST
PRODUCER.
The financial results for 1996 reflect primarily the result of the
performance of our Hycroft mine in Nevada. Lower production caused fiscal year
1996 revenues to be $36.4 million as compared to $41.3 million for 1995. This
resulted in a net loss in 1996 of $11.8 million or $0.21 per share. This
compares to net income of $2.2 million or $0.05 per share for 1995, including a
one-time gain of $4.9 million in 1995.
Our production is centered, for the time being, in Nevada. The Hycroft
mine is one of the most efficient mines in the world. However, it is low grade
and, while generating a positive cash flow, is not sufficient to provide the
financial resources for the Company's future growth. Therefore, the Company has
sought out low production cost projects situated in Bolivia and Venezuela. In
addition, we are carrying out a very aggressive exploration program in those
countries and the U.S., Canada, Ecuador and Peru.
Throughout the year, we have built a strong operating and development
management team. This team is led by a new executive member, Ronald (Jock)
McGregor. Jock's strong engineering and operating experience includes the
development of new gold projects in North and South America. In addition, as a
result of the merger with Da Capo, our new Vice Chairman, Ross Beaty, provides
valuable expertise and guidance on exploration matters.
As well as expanding our properties and building our team, this year Vista
relocated the corporate offices from Vancouver to Denver. This brought us
closer to the current and future operations of Vista, which will be directed
towards Latin America and Nevada. This was not, however, a move away from
Vista's 25-year Canadian heritage. Vista will continue to draw upon Canadian
technical, financial and other advisory expertise.
THE MERGER o
In November, the successful merger of Granges Inc. and Da Capo Resources
was the most significant event of our year. The opportunity presented by the
union of these two companies is rapidly being realized, not only in
administrative and operational synergies, but in terms of the possibilities for
the accelerated development of Da Capo's excellent properties.
These Bolivian properties, the Amayapampa and Capa Circa
FOUR 1996 ANNUAL REPORT
<PAGE> 7
VISTA GOLD CORP.
deposits, are located approximately 185 miles (300 km) south of La Paz. They
contain over two million ounces of gold resources. At the time of the merger,
7.8 million tons at 0.07 ounces per ton (2.5 g/t) of proven and probable
mineable reserves were estimated at Amayapampa. We expect to increase the
calculated reserves at Amayapampa in the next few months and, over the course
of 1997, to establish the significant reserves at Capa Circa.
Our timetable for the Bolivian properties calls for completion of the
feasibility study in the second quarter of 1997, with construction starting in
the second half of 1997 and production beginning in 1998. Based on the
preliminary feasibility study, the initial production at Amayapampa is expected
to be 75,000 ounces per year, increasing to 100,000 ounces when Capa Circa
starts approximately one year later. This study also estimated a cash cost in
the range of $140 to $150 per ounce. These developments will have a profound
effect on the Company's profitability. Our combined cash cost in 1998-1999 is
estimated to be $210 per ounce, compared with our costs in 1995 and 1996 of
$272 and $274, respectively. These Bolivian properties hold strong potential
for Vista.
During December, the Bolivian government undertook a policing action at
the Amayapampa and Capa Circa mines. This was initiated after a criminal
element had taken control of both mines. The police encountered armed
resistance and, tragically, lives were lost. The board, management and
employees of Vista were deeply saddened by this loss of life.
Currently, both mines are closed as engineering studies are underway and
the Company has terminated existing labor contracts. We re-hired many of the
miners to work on aspects of the engineering study and on community improvement
projects. The Company has established good relationships with the miners and
Ayllus (indigenous people) and all groups are working together positively.
The Bolivian government has been very supportive of Vista in our endeavors
to develop and build new and modern gold mines at Amayapampa and Capa Circa. We
have found the government officials to be knowledgeable, helpful and
supportive.
EXPLORATION
OPPORTUNITIES o
Completion of the challenging process of obtaining drilling permits for
the Venezuelan Guariche project, for which an option was acquired in 1996 from
L. B. Mining, was successful in March 1997. We received the necessary permits
allowing the Company to commence drilling at the Guariche project in Venezuela.
Upon completion of the drilling program, we expect to confirm the existence of
an estimated 500,000 ounces of gold reserves. We project construction to begin
this year with production in 1998.
Our exploration efforts continue in other parts of Bolivia, Peru, Nevada,
Canada and through our interest in Zamora Gold Corp. in Ecuador. We are
particularly excited with a new gold discovery made in late 1996 at the
Company's, 100 percent owned, Copacabana property in Bolivia. We recognize that
exploration is the high risk end of the mining business, but success in this
area will bring the greatest rewards to a given investment. We have put the
right people into the right areas and their efforts are focused on significant,
potentially low-cost, targets.
1996 ANNUAL REPORT FIVE
<PAGE> 8
VISTA GOLD CORP.
CURRENT PRODUCTION o
Vista's primary North American mining operation is the Hycroft mine in
northwestern Nevada. Total gold production in 1996 of 89,381 ounces was a
disappointment -- below initial projections and down from 1995 production. This
decrease is attributed to lower-than-normal recovery from clay-rich ores in the
first quarter. The second and third quarters' production was on schedule, and
fourth quarter production was eight percent higher than the same period in
1995.
The construction of the new leach pad and processing facilities for the
Brimstone deposit is completed and is expected to be a primary factor in
increased production in 1997. As a result of this expansion, as well as an
improvement in the overall recovery methods, 1997 gold production from the
Hycroft mine is projected to be 115,000 ounces, a 29 percent increase over
1996.
COMMUNITY
RESPONSIBILITY o
Vista's organization-wide goal to maximize shareholder value includes a
commitment to the environment and the communities of which we are part.
Environment and community are inextricably linked. As we move forward with our
new projects, we are committed to take the necessary steps beyond the mandated
regulations to protect the physical environment; to be a responsible citizen of
the community; and to ensure the safety of all employees.
FORWARD STRATEGY o
Our strategy going forward is designed to make Vista a solid, mid-sized gold
mining company within the next few years. A highly efficient operating mine in
Nevada, together with near-term development projects in Bolivia and Venezuela,
and promising exploration targets, have laid the foundation for outstanding
growth.
Growth companies are very dependent on the skill and enthusiasm of their
employees -- we at Vista are most fortunate. On behalf of the board, I would
like to thank all employees; especially those at the Hycroft mine who always
manage to do more with less; and our new team in Bolivia, who is advancing our
plans there with great enthusiasm and efficiency. In addition, I would like to
thank the board for their support during the year and, in particular, our
Chairman, David Sinclair and our new director and Vice Chairman, Ross Beaty,
for their counsel and assistance.
Where 1995 was a year of transition, 1996 was our year to begin to build
the foundations of our future growth. We still have much to do. We will do it
as a team, from our exploration crews in South America to our office staff in
Denver, from new hires to senior management. We will work to create value for
our shareholders while improving the quality of life for all stakeholders --
community members and employees.
Sincerely,
/s/ MICHAEL B. RICHINGS
Michael B. Richings
President and Chief Executive Officer
March 13, 1997
SIX 1996 ANNUAL REPORT
<PAGE> 9
VISTA GOLD CORP.
OPERATIONS REVIEW
HYCROFT MINE - NEVADA
VISTA'S PRIMARY MINING ACTIVITY IS THE HYCROFT MINE, AN OPEN-PIT, HEAP LEACH
OPERATION, LOCATED 60 MILES (97 KM) WEST OF WINNEMUCCA IN NORTHWESTERN NEVADA.
THE MINE IS IN ITS TENTH YEAR OF PRODUCTION AND HAS PRODUCED MORE THAN 800,000
OUNCES OF GOLD TO DATE.
Gold production for 1996 from the Hycroft mine was 89,381 ounces compared
to 101,128 ounces for 1995. As a result of expanded mine production, the ore
placed on the heaps during the year contained 150,000 ounces, expanding the
gold inventory by 22,000 ounces or a 66 percent increase in 1996. The reduced
production from the Hycroft mine was attributed to lower-than-normal recovery
from clay-rich ores in the first quarter. Fourth quarter 1996 gold production
increased to 26,223 ounces from 24,324 ounces for the fourth quarter 1995, an
eight percent increase.
<TABLE>
<CAPTION>
1996 MINERAL INVENTORY
<S> <C>
Tons of Ore 47,000,000
Proven and Probable Reserves
- estimated (oz) 900,000
Average Grade (oz/ton) .019
Strip Ratio 2.1:1
</TABLE>
<TABLE>
<CAPTION>
PRODUCTION
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Annual Gold Production 89,381 101,128 94,868
Annual Silver Production 321,315 417,823 314,756
Direct Cash Cost per ounce $ 274 $ 277 $ 294
Average Gold Price Realized $ 391 $ 387 $ 380
Ore Processed (tons) 13,060,000 9,931,000 9,254,000
Total Excavation (tons) 33,900,000 37,279,000 26,438,000
</TABLE>
HYCROFT MINE AREA MAP o
[MAP]
1996 ANNUAL REPORT SEVEN
<PAGE> 10
VISTA GOLD CORP.
RIGHT: LOADING ORE AT THE HYCROFT MINE
[PICTURE]
Two ore bodies are mined at Hycroft: the Central Fault deposit, active
since 1988; and the Brimstone deposit, located one mile to the east on a
parallel structural zone. Thirteen million tons of ore were mined in 1996
including one million tons mined during the pre-stripping of the new Brimstone
pit. The Brimstone deposit contains almost 900,000 ounces of gold in remaining
reserves of 47.0 million tons. Pre-production stripping at Brimstone is now
complete, and start-up of a new 2,800 gpm Merrill-Crowe recovery plant
commenced in February of 1997. As part of this expansion plan, all four leach
pads have had pumping capacity increased from 6,000 US gallons per minute to
13,800 US gallons per minute.
Crushing of ore from the Central Fault deposit was discontinued in
November, completing the transition to lower cost run-of-mine leaching. Only 26
percent of the ore mined was crushed in 1996, compared to 44 percent in the
prior year. Mining will continue in the Central Fault pit through mid-year
1997.
The expansion of the mining fleet was completed in 1996 with the addition
of a third 23-yard hydraulic shovel and two 150-ton haulage trucks in the
second quarter.
Hycroft is an industry leader in mining efficiency, ranking first among
major Nevada gold mines participating in a recent study comparing mined tonnage
per employee hour. Productivity requires dedication to worker safety. During
1996, the Hycroft mine completed twelve consecutive months without a single
lost work day injury to an employee.
Direct cash cost was $274 per ounce of gold in 1996, down slightly from
$277 in 1995.
Total production for the first two months of 1997 was 17,731 ounces
compared to 9,785 ounces for the same period in 1996, an 80 percent improvement
and an increase over budgeted production. In February 1997, new daily gold
records were established with a single day's production of 501 ounces. The
Company anticipates full year 1997 gold production from the Hycroft mine to be
approximately 115,000 ounces, a 29 percent increase over 1996 production.
EIGHT 1996 ANNUAL REPORT
<PAGE> 11
VISTA GOLD CORP.
DEVELOPMENT
AMAYAPAMPA
DEVELOPMENT -- BOLIVIA
THE AMAYAPAMPA GOLD MINE, SITUATED AT THE ELEVATION OF APPROXIMATELY 13,000
FEET (4,000 M), IS IN BOLIVIA'S ALTIPLANO REGION. THE FINAL FEASIBILITY STUDY
IS UNDERWAY AND SCHEDULED TO BE COMPLETED IN THE FIRST HALF OF 1997.
Construction is scheduled to begin soon thereafter, with production commencing
in 1998. We fully expect to meet or exceed this proposed schedule to have
Amayapampa in production as a modern, environmentally sound operation producing
approximately 75,000 ounces per year. To date, several major banks have
expressed an interest in financing this project.
Subsequent to the November merger, the existing underground mining
operations at Amayapampa were terminated because the mining methods, conditions
of safety and environmental controls were not compatible with modern
international mining company standards. To minimize the socio-economic impact
of the mine closure while project development studies are completed, the
Company voluntarily undertook to keep members of the labor force employed for
project development and community improvement work. A series of community
projects have been initiated which will improve the living conditions in the
local village of Amayapampa. Projects initiated during 1996 include removal of
previously mined tailings from the local rivers, road upgrades, street
electrification, construction of a new school, renovation of the village
church, construction of a sports complex and providing basic sanitation.
We enhanced our management team in Bolivia by bringing in a senior general
manager, David Collins, from an affiliated company in Ecuador, and an
experienced project manager from Iquique, Chile. These individuals, together
with the team already developed by Da Capo, plus the recruitment of some
skilled local individuals, will be a strong foundation for our operations in
Bolivia. Before the completion of the merger, the new project development team
went into high gear to accelerate the development program for Amayapampa. Four
core drill rigs were moved to the site for in-fill drilling, to confirm the
reserve base and increase the reserves in the proven and probable category.
DEVELOPMENT - BOLIVIA
Pre-Feasibility Study Estimates
Estimated Total Development Costs - $65 million
<TABLE>
<CAPTION>
AMAYAPAMPA CAPA CIRCA
MINE MINE
---- ----
<S> <C> <C>
Mining Method OPEN PIT UNDERGROUND
Estimated 1998
Mineable Gold Reserves (oz) 800,000 500,000
Recovery Method GRAVITY, FLOTATION, CARBON-IN-LEACH METHOD
(one processing plant
for both mines)
Production Date 1998 1999
Total Annual Gold Production (oz) 75,000 25,000
Average Grade (oz/ton) 0.07 0.18
(g/t) 2.5 6
Gold Recovery 90% 92%
Direct Cash Cost per ounce $ 145 $ 145
Strip Ratio 3.5:1 n/m
Mineral Mine Life 9 years 9 years
Employees 180 - 200 100 - 120
</TABLE>
1996 ANNUAL REPORT NINE
<PAGE> 12
VISTA GOLD CORP.
AMAYAPAMPA DEVELOPMENT MAP o
[MAP]
The geology at Amayapampa consists of a sequence of folded Ordovician
argillites and shales. A swarm of north-south trending narrow quartz veins with
pyrite has overprinted the sedimentary rocks. The gold occurs in the quartz
veins as coarse native gold and in pyrite within the quartz veins and outside
the veins. This gold-bearing quartz pyrite vein swarm has horizontal width
ranging from 33 to 165 feet (10 to 50 m) and a strike length of at least 1,650
feet (500 m). The vertical dimensions of the deposit are unknown and could be
as high as 1,000 to 1,300 feet (300 to 400 m). Present sampling and drilling
indicate this deposit has a vertical extent of just over 660 feet (200 m).
Drilling is also planned to test the extensions of the ore reserve to the north
and south.
An independent mining engineering consulting group has been retained to
review all of the existing geologic data and prepare a mineral reserves
estimate and mine plan.
A large number of metallurgical samples were gathered and shipped to the
United States for additional metallurgical testing. While these tests are
ongoing, indications are that a substantial portion of the gold is amenable to
recovery by gravity concentration, while the remainder, which is associated
with sulfides, easily concentrates using flotation. The floatation concentrates
are amenable to leaching and extraction using the carbon-in-leach (CIL)
process. A process plant incorporating comminution, gravity concentration,
flotation and CIL will most likely be used at Amayapampa.
Baseline environmental studies have been underway since September, and the
first environmental scoping documents were submitted to the government
environmental agencies in early 1997. An international environmental and
geo-technical company has been contracted to execute this work, together with
local consultants, particularly in the areas of archeology and socio-economic
issues.
Project infrastructure studies and improvements have been carried out in
1996, including upgrading the access road, the installation of a new camp and
improved communications. Power, transportation, communications and water supply
studies are currently underway. Groundwater is scarce in the region so surface
water that is impounded during the rainy sea son can provide an adequate water
source for the mine operations.
TEN 1996 ANNUAL REPORT
<PAGE> 13
VISTA GOLD CORP.
[PICTURE]
LEFT: OVERLOOKING THE VILLAGE OF AMAYAPAMPA
Studies are currently underway to site the water dam. All infrastructure
improvements, such as communications, roads, power and water storage, will also
be beneficial to the local communities.
Early in 1997, an experienced engineering company was hired to design the
process plant and surface facilities. This will complete all the components
needed for the final feasibility study of Amayapampa.
CAPA CIRCA CROSS SECTION o
[MAP]
CAPA CIRCA o
Capa Circa, located approximately 6 miles (10 km) south of the Amayapampa
mine, was also purchased by Da Capo in early 1996. This project is less
advanced than Amayapampa but has significant potential. A series of parallel,
north-striking and steep-dipping veins are in a 330-foot (100 m) wide envelope.
The veins have been intersected over 1,950 feet (600 m) of strike length.
Preliminary metallurgical and petrographic studies indicate that Capa Circa ore
should behave in a similar fashion to the ore at Amayapampa. Our initial
studies suggest that Capa Circa can be efficiently mined using underground
methods and transporting the ore to the processing plant at Amayapampa. A mill
was operated at Capa Circa, which removed most of the gravity recoverable gold
from the small amount of ore that was processed. The remainder of the gold,
which is associated with sulfide, was lost in the tailings and discharged into
a nearby creek. In late 1996, the Company dismantled the mill to prevent
further pollution of the creek.
We were not able to start development work on this project during 1996,
but an underground drilling and sampling program is planned for the second half
of 1997 to establish a basis for initial underground reserves. Present work,
including diamond drilling and underground channel sampling, indicate that the
veins have gold values in the 0.12 to 0.23 ounces per ton (4.0 to 8.0 g/t)
range, with widths of approximately 3 to 13 feet (1 to 4 m).
1996 ANNUAL REPORT ELEVEN
<PAGE> 14
VISTA GOLD CORP.
DEVELOPMENT/EXPLORATION
GUARICHE -- VENEZUELA
IN 1996, THE COMPANY ENTERED INTO AN AGREEMENT TO EXPLORE THE GUARICHE PROJECT
LOCATED IN BOLIVAR STATE, VENEZUELA.
The agreement is an option to purchase a 100 percent interest in the project
following a five-month exploration program designed to prove a minimum of
500,000 ounces of gold in the project.
The Guariche project has seen a partial exploration program of surface
trenching, auger sampling, and diamond drilling. An estimated resource of
570,000 ounces exists on the property to date. This resource was developed by
extensive surface trenching and sampling of both auger and diamond drilling. A
preliminary feasibility study indicated economic development, which will
involve an open pit mine with a gravity and leaching mill producing
approximately 75,000 ounces of gold per year. The exploration program is
designed to firm up these reserves in a five month period.
The diamond drill program will be a three-phase, 16,400-foot (5,000 m)
staged program. Vista can withdraw from the project after $500,000 in
expenditures. The Company's intentions in staging the exploration program is to
maximize return on the exploration dollars.
The terrain in the area consists of rolling hills to flat savannah and
jungle underlaid by saprolite, a weathering product of tropical regions. The
saprolite, overlying the deposit is enriched containing higher gold grades than
the average.
Except for surface weathering, the rock types, alteration, and
mineralization style at Guariche are typical of large deposits found in well
known Canadian gold camps such as Timmins and Kirkland Lake and Australian
regions such as Kalgoorlie. In March 1997, the Company received the necessary
permits to commence drilling. The drill program should begin in late March.
If the option to purchase is exercised, the Guariche transaction involves
the payment of $10 million cash and $5 million in Vista Gold stock. If an
additional 500,000 ounces of gold is proven within two years, there will be an
additional payment of $15 million of which $5 million can be in Vista stock at
the seller's option.
The climate for mining investments in Venezuela is improving with proposed
reforms to the mining act, taxation laws and exploration permitting
requirements.
GUARICHE PROJECT, VENEZUELA o
[MAP]
TWELVE 1996 ANNUAL REPORT
<PAGE> 15
VISTA GOLD CORP.
EXPLORATION REVIEW
THE COMPANY HAS CONTINUED ITS EXPLORATION EFFORTS IN LATIN AMERICA AND THE
GREAT BASIN GEOLOGIC PROVINCE OF THE UNITED STATES. FOR CERTAIN EXPLORATION
TARGETS IN THE COMPANY'S PORTFOLIO, VISTA GOLD HAS INITIATED THE SEARCH FOR
JOINT VENTURE PARTNERS IN BOTH THE UNITED STATES AND LATIN AMERICA. THE COMPANY
HAS EXPLORATION OFFICES IN LA PAZ, BOLIVIA; RENO, NEVADA; LIMA, PERU; AND
QUITO, ECUADOR.
UNITED STATES
EXPLORATION o
The focus of the U.S. program is the Great Basin region of Nevada, one of
the most prolific gold producing regions of the world. We directed our
attention only to targets that have the potential to host deposits that contain
at least 1.0 million ounces of gold.
VAN NORMAN PROJECT
Elko County, Nevada
This project is located in northeastern Nevada, approximately 55 miles (88
km) north of the city of Elko. Vista Gold has the opportunity to earn an
undivided 50 percent interest from Uranerz in mineral rights covering
approximately 2,500 acres (1,011 ha) by expending $500,000 on exploration of
the property over a three-year period. Vista Gold is the operator during the
exploration phase, and Uranerz has the right to be the operator during the
production phase.
The project area lies within the Jerritt Canyon mining district, one of
the larger sediment-hosted (Carlin-type) gold districts in Nevada. The district
has had prior production of more than 4.0 million ounces and current reserves
of 3.5 million ounces.
A drill program consisting of five holes, totaling 3,930 feet (1,180 m) of
drilling, commenced during the winter of 1996 and encountered significant gold
mineralization and alteration in favorable rocks of the Roberts Mountain and
Hanson Creek formations. This is a geologic setting identical to the productive
portion of the Jerritt Canyon area. Drilling and other geologic activities will
continue during the 1997 field season.
HYCROFT MINE
Winnemucca, Nevada
The Hycroft mine is situated in the northwest portion of Nevada, and is
the site of the Company's current mining operation. Geochemical and geophysical
surveys prompted the expansion of Hycroft's land position around the mine in
1996.
Exploration at the Hycroft mine was mainly directed toward increasing the
heap leachable oxide reserves. The oxide exploration efforts resulted in the
partial definition of a significant oxide gold resource along the Albert Fault
Zone. This resource is uneconomic at current gold prices. A diamond drill hole
was drilled to obtain additional metallurgical samples of a potentially
significant low grade sulfide hosted gold resource beneath the Brimstone oxide
reserve. Additional metallurgical and exploration work will be required to
evaluate the economic viability of this resource.
In addition to the low grade sulfide resource, the potential exists for
small, high grade pods of ore similar to the Rosebud deposit which is located
five miles (8 km) in a similar geological setting. The Rosebud deposit, 0.4
ounces gold per ton (13.7 g/t), is currently being developed by a major mining
company. Due to the costs associated with the drilling for these small,
1996 ANNUAL REPORT THIRTEEN
<PAGE> 16
VISTA GOLD CORP.
EXPLORATION PROJECTS, BOLIVIA o
[MAP]
high grade targets, a joint venture partner is being sought to help develop
this potential.
GOLD BAR PROJECT
Eureka, Nevada
In January 1997, the Company signed an agreement with Atlas Corporation to
terminate the joint venture on the Gold Bar claim near Eureka, Nevada. An
initial discovery was made by Vista Gold on the property. The nature of the
joint venture agreement and limited size of the discovery, made chances of
success for Vista minimal and the decision was made to withdraw from the joint
venture.
CANADA o
In Canada, three mineral properties are being explored with $400,000 of
funding provided by joint venture partners. They are the Blackwater-Davidson
property in British Columbia (a copper-gold play), the Manville project in
Ontario, and the Island Lake gold project in Manitoba. The Company has divested
its interest in the Mishi project in Ontario.
BOLIVIA o
The most promising new development in Vista Gold's exploration portfolio
was the acquisition of Da Capo Resources Ltd.'s Bolivian gold properties. The
asset package includes the Amayapampa, Capa Circa, Iroco, Irpa Irpa and
Copacabana gold properties.
COPACABANA
Bolivia
This area is in southwestern Bolivia. The project shows similarities to
the Amayapampa project. An initial geochemical survey indicated the possibility
of a large deposit. The survey showed a 500-foot (150 m) by 2,000-foot (600 m)
long soil geochemical anomaly.
After an initial mapping program was completed, a reverse circulation
drill program was conducted. Of the seven holes completed, six had significant
gold intercepts. The drilling indicated that the possibility of both bulk
tonnage and high grade vein mineralization exists on this property. The best
results from drill hole RC3 had 0.41 ounces per ton (13.97 g/t) over 39 feet
(12 m).
A trenching and mapping program is planned for this property, followed by
further diamond and reverse circulation drilling programs. This project is an
excellent early stage exploration target with the potential to be another
Amayapampa-type deposit.
IROCO
Bolivia
The Iroco project is a gold project adjacent to one of Bolivia's largest
silver mines at Oruro. The Company has an option to earn a 100 percent
interest. Although no resource has been outlined as yet, drill hole results as
high as 0.16 ounces per ton (5.5 g/t) over 180 feet (55 m) have been obtained.
Currently, the drilling is testing down strike from the producing San
Antonio mine and along trend from Cameco's Huayna Potosi area.
ECUADOR o
Through its 41 percent holding in Zamora Gold Corp., Vista Gold carried
out an exploration program
FOURTEEN 1996 ANNUAL REPORT
<PAGE> 17
VISTA GOLD CORP.
in Ecuador in 1996. The program consisted of a regional stream sediment program
follow-up, diamond drilling of gold prospects on the Mina Real concession,
surface trenching of gold and copper prospects on Mina Real, and trenching and
sampling of a number of gold targets resulting from the regional stream
sediment follow-up.
Surface trenching, mapping and sampling revealed the presence of two large
porphyry copper stockwork zones at Mina Real. These are the Tumi and David
stockworks located in the central and northwest portions of the Mina Real
concessions. They are large mineralized systems. The Tumi stockwork is at least
1.2 miles (2.0 km) by 0.6 miles (1.0 km) in surface area. The David stockwork
has at least 2 miles (1.2 km) of north-south extent, with an as yet unknown
east-west width.
These are significant finds, but the investment requirement for
evaluation, development and construction are very significant and can generally
only be borne by the largest of mining companies. Therefore, we are searching
to find a suitable joint venture partner to explore the porphyry copper deposit
mineralization at the Mina Real, Ruminahui and Titi concessions. The Mina Real,
Ruminahui and Titi concessions are 12,500, 6,700, and 7,200 acres (5,066,
2,726, and 2,921 ha), respectively.
The 1997 program will concentrate on assessing the gold potential on
Zamora's Campanillas concession. This concession has had two operating gold
mines within its boundaries, the Campanillas mine and the Cambana mine. In the
southern area of the Zamora land package, a prospecting and sampling program
will assess the yet untested potential area south of Mina Real.
Zamora expects to spend $1.3 million on gold exploration on concessions
outside Mina Real and to attract at least $1 million in joint venture
expenditures for its Mina Real concession.
PERU o
Vista Gold has established an office in Lima, Peru to obtain mineral
properties with gold potential. The program in 1996 has been reconnaissance and
sampling of projects throughout Peru. Through its association with Minera San
Nicholas, Vista has increased its exposure to potentially attractive
exploration projects.
NAMBIJA GOLD BELT, ECUADOR o
[MAP]
1996 ANNUAL REPORT FIFTEEN
<PAGE> 18
VISTA GOLD CORP.
WITH THE EXCEPTION OF
HISTORICAL INFORMATION......
this annual report contains forward looking statements concerning among other
things, projected annual gold production, mineralization or mineral resources,
proven and probable or mineable reserves and cash operating costs.
Such statements are typically punctuated or described by words or phrases
such as "anticipated", "estimate", "projects", "foresee", "management
believes", "Vista believes", "growth projections" and words or phrases of
similar import. Such statements are subject to certain risks, uncertainties or
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those which are anticipated, estimated or projected. Important
factors that could cause actual results to differ materially from those in the
foregoing forward-looking statements may include, but are not limited to:
fluctuating precious metals prices; hazards and risks normally incidental to
exploration, development and production of minerals; foreign minority interest
in mineral properties, claims or concessions; uncertainty associated with the
calculation of reserves, grade and production; environmental factors;
competition and agreements with other parties; cash flow; legal challenges to
title to assets; political and economic instability in South America; and
foreign currency fluctuations. Vista Gold Corp. assumes no obligation to update
these forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such statements.
SIXTEEN 1996 ANNUAL REPORT
<PAGE> 19
VISTA GOLD CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION o
This discussion should be read in conjunction with the consolidated financial
statements of the Company for the three years ended December 31, 1996 and the
related notes thereto, which have been prepared in accordance with generally
accepted accounting principles (GAAP) in Canada. Differences from United States
GAAP are described in note 17 to the consolidated financial statements.
The Company had one mine in operation during 1996 and 1995. The Hycroft
(formerly Crofoot/Lewis) mine in Nevada began gold production in 1987 and is
the Company's only operating mine at the present time. The Company sold its 29
percent interest in the Trout Lake mine in Manitoba to its co-venturer and mine
operator Hudson Bay Mining and Smelting Co., Ltd. effective March 31, 1994. The
Trout Lake mine produced copper, zinc, gold and silver since 1982. The Company
also owns the Tartan Lake gold mine in Manitoba at which operations have been
suspended since 1989.
1996 was a year of significant change for the Company, beginning with the
amalgamation of Granges Inc. and Da Capo Resources Ltd. on November 1, 1996 to
form Vista Gold Corp. The transaction was accounted for as a purchase and the
results of operations have been consolidated from November 1, 1996. Full
details of the amalgamation are provided in note 1 and note 6 of the
consolidated financial statements.
RESULTS OF OPERATIONS o
1996 COMPARED WITH 1995
Net loss for 1996 was $11.8 million compared to net earnings of $2.2 million in
1995. The 1996 earnings include gains of $0.5 million from the sale of mineral
properties and $0.3 million from the sale of investments, while the 1995
earnings included similar gains of $4.9 million and $1.2 million, respectively.
Excluding these gains, results were losses of $12.6 million for 1996 and $3.9
million for 1995. The loss for 1996 was attributable to lower production,
increased amortization of deferred stripping, and an increase in the recorded
loss from its equity investee.
Revenues of $36.4 million for 1996 decreased by 12 percent from 1995.
Production at the mine was as follows:
<TABLE>
1996 1995
------- -------
(ounces)
<S> <C> <C>
Gold 89,381 101,128
Silver 321,315 417,824
</TABLE>
Gold production during 1996 decreased 12 percent, or 11,747 ounces from 1995.
The decrease in gold production
1996 ANNUAL REPORT SEVENTEEN
<PAGE> 20
VISTA GOLD CORP.
was attributable to lower-than-normal recovery from a clay-rich ore section
combined with delayed recovery from a significant volume of run-of-mine ore
where solution application was delayed. Mining in the clay-rich area was
completed in the first quarter, with subsequent ore production levels returning
to normal. However, record ore production during the third and fourth quarters
exceeded the mine's solution pumping capacity, which resulted in a 66 percent
increase in gold inventory to 55,000 ounces. The Company has obtained the
requisite environmental permits and has increased the pumping capacity to
alleviate this problem. Gross realized price per ounce of gold was $391 in 1996
and $387 in 1995.
Operating costs for the Company decreased $3.6 million, or 11 percent, from
1995. The decrease from 1995 is primarily due to two factors. Firstly, the
total waste and ore mined (excluding capitalized waste) was 12 percent less
than the comparable tonnage mined in 1995, representing approximately $2.2
million of the cost reduction. The remainder of the decrease in operating costs
is due to 73 percent of total ore in 1996 being uncrushed run-of-mine ore as
compared with 55 percent in 1995. Direct cash operating cost per ounce was
US$274 in 1996, compared with US$277 in 1995.
Depreciation, depletion and provision for future reclamation and mine closure
was 43 percent higher than 1995, due to a 30 percent increase in ore production
as well as the addition of new mining equipment in mid-1996. The 1996
amortization of deferred stripping increased $5.5 million from 1995 due to a
lower-than-average strip ratio. The strip ratio in 1996 was lower than the
life-of-mine average strip ratio and resulted in the amortization, or
expensing, of deferred costs associated with mining this material.
Mineral exploration expenses of $4.1 million were essentially unchanged from
1995. The level of exploration spending is consistent with the Company's shift
into precious metals and the aggressive exploration programs put in place in
1995 to find additional sources of production. During the year, the Company
concentrated its exploration program on the United States and Latin America.
Corporate administrative expenses increased slightly to $2.5 million from $2.4
million in 1995. Interest income decreased 50 percent as a result of the
Company's lower average cash balances. Other expense decreased $1.0 million
from 1995 to $0.3 million because 1995 included non-recurring costs related to
the exit from base metals and relocation of corporate office to Denver
effective January 1, 1996.
Gain on sale of mineral properties and marketable securities represents three
transactions in the year, which in aggregate produced net sales proceeds of
$1.0 million realizing a gain of $0.8 million.
1995 COMPARED WITH 1994
Net earnings for 1995 were $2.1 million compared to $5.1 million in 1994. The
1995 earnings include gains of $4.9 million from the sale of mineral properties
and $1.2 million from the sale of investments, while the 1994 earnings include
a gain of $9.2 million from the sale of the Company's interest in the Trout
Lake mine in March of
EIGHTEEN 1996 ANNUAL REPORT
<PAGE> 21
VISTA GOLD CORP.
that year. Excluding these gains, results were losses of $3.9 million and $4.1
million for 1995 and 1994 respectively. Results for 1995 improved primarily
because of increased production and higher gold prices.
Revenue for 1995 increased by four percent over 1994, with revenue by operation
as follows:
<TABLE>
1995 1994
------- -------
<S> <C> <C>
Hycroft $41,294 $37,485
Trout Lake -- 2,386
------- -------
$41,294 $39,871
======= =======
</TABLE>
Revenue from Hycroft increased ten percent from 1994 because of a combination
of increased gold and silver production and an increased realized price per
ounce of gold. Production at the mine was as follows:
<TABLE>
1995 1994
------- -------
(ounces)
<S> <C> <C>
Gold 101,128 94,868
Silver 417,823 314,756
</TABLE>
This increased production is the result of a 13 percent increase in the amount
of ore mined and processed in the year over 1994 which resulted from the
addition of new, more efficient mining equipment in late 1994. Although total
ore tons increased, this increase was offset in part by a higher proportion of
lower grade uncrushed run-of-mine ore. Run-of-mine ore accounted for 56 percent
of tons processed in 1995 and 36 percent in 1994, resulting in a decrease in
the average grade of gold per ton processed from 1994. The net effect of the
increase in tonnage and the lower average grade was a seven percent increase in
gold production. Gross realized price per ounce of gold was US$387 in 1995 and
US$380 in 1994.
Operating costs for the Company increased four percent over 1994, with costs by
operation as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Hycroft $33,712 $30,092
Trout Lake -- 2,211
$33,712 $32,303
</TABLE>
Operating costs at Hycroft increased 12 percent from 1994, attributable to the
following:
<TABLE>
($ millions)
<S> <C>
increase in total tons mined 11.6
decrease in costs per ton mined (7.7)
</TABLE>
Total tons mined increased 41 percent, from 26.4 million tons in 1994 to 37.3
million tons in 1995. Part of this increase was due to the decision made in
late 1994 to increase the production rate of the mine and the associated
addition of a larger, more efficient fleet of mining equipment. The remainder
is due to an increase in the strip ratio in the areas mined in 1995 (2.72:1 in
1995 compared to 1.98:1 in 1994). The costs associated with this additional
stripping have been deferred in accordance with the Company's policy. The
decrease in cost per ton mined is due in part to the efficiencies from the new
fleet of mining equipment, as well as to the reduction in processing costs from
a higher proportion of uncrushed run-of-mine ore, as discussed above. Direct
cash operating cost per ounce was US$277, compared to US$259 in 1994.
1996 ANNUAL REPORT NINETEEN
<PAGE> 22
VISTA GOLD CORP.
Depreciation, depletion and provision for future reclamation and mine closure
was 56 percent higher than 1994, due to the increase in ore production, as well
as the substantial addition of new mining equipment in December 1994. The
decrease in amortization of deferred stripping is due to the higher strip ratio
in 1995, as discussed above. The strip ratio in 1995 was higher than the
life-of-mine average strip ratio and resulted in additional deferral of costs
associated with mining this material. The 1994 strip ratio was below the
life-of-mine average and resulted in expensing of previously deferred costs.
Mineral exploration expenses increased four percent in 1995, continuing the
three-year trend of increases in exploration spending. The increased spending
is consistent with the Company's shift into precious metals and the aggressive
exploration programs put in place in 1995 to find additional sources of
production. During 1995, the Company opened an exploration office in Reno,
Nevada, from which it performs its exploration activities in the western United
States and Mexico. In addition, the Company began substantial exploration work
in South America.
Corporate administrative expenses decreased eight percent from 1994 because of
management's efforts to reduce the Company's overhead costs and reductions in
costs as a result of the amalgamation of the Company and Hycroft. Interest
income decreased 11 percent solely because of $139,000 in financing fees. Other
expense increased by $0.7 million in 1995 largely because of the Company's exit
from base metals and its relocation to Denver, as described above.
Gain on sale of mineral properties and marketable securities represents three
transactions in 1995. In June 1995, the Company sold 200,000 shares of
International Curator Resources Inc. for net proceeds of $0.9 million. These
shares were carried on the books at cost, and the sale resulted in a gain of
$0.8 million. In September 1995, the Company sold all of its remaining base
metal properties in Manitoba and Saskatchewan to Aur Resources Inc. for
1,250,000 shares of Aur and a royalty equal to two percent of future net
smelter returns from the properties, subject to Aur's right to purchase one
half of the royalty for $0.7 million. The shares were allocated a value equal
to the closing price of Aur on the Toronto Stock Exchange on the day prior to
the announcement of the sale, and no value was allocated to the royalty for
accounting purposes. This transaction resulted in a gain of $4.9 million. In
December 1995, the Company sold the Aur shares for net proceeds of $5.3 million
and realized a further gain of $0.4 million.
The reduction in income taxes relates directly to the increased exploration
activity in the western United States. Income taxes in 1995 and 1994 were
directly attributable to the Company's subsidiary, Granges (U.S.) Inc.,
utilizing all of its available tax carry forwards and being taxable. Subsequent
exploration activity in the western United States was sufficient to make the
Company's subsidiary non-taxable.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated cash balance at December 31, 1996 was $8.6 million,
a reduction of $6.6 million from the end of the prior year. Cash receipts from
the issue of shares for special warrants and options totalling
TWENTY 1996 ANNUAL REPORT
<PAGE> 23
VISTA GOLD CORP.
$17.8 million and cash receipts from the sale of mineral properties, equipment
and investments totalling $1.0 million were offset by Hycroft capital
expenditures totalling $20.8 million primarily for the Brimstone project.
Acquisition costs associated with Da Capo Resources Ltd. amounted to $1.0
million. The remainder of the decrease in the Company's cash balance is
attributable to the build up of gold inventories offset by other changes in
working capital and cash generated from operations totalling $3.6 million.
The Company anticipates approximately US$5.3 million in reclamation and
severance costs over the life of the mine, primarily in 1998 through 2001,
which will be funded by cash flow from operations.
Subsequent to year end, the Company, through its subsidiary, Hycroft Resources
& Development, Inc., arranged a $13 million revolving credit facility which is
described in note 16 to the consolidated financial statements. The proceeds
from the facility will be used to fund ongoing 1997 exploration and operations
expenditures including the feasibility study of the Amayapampa project in
Bolivia. The Amayapampa project was acquired through the amalgamation of
Granges Inc. and Da Capo Resources Ltd., which is discussed below and in note 1
to the consolidated financial statements.
The acquisition and development of the Guariche project in Venezuela and the
development of the Bolivian project are estimated to cost $100 million. It is
expected that these requirements will be funded through a combination of cash
from operations, the Company's existing cash reserves, and future equity and
debt financings.
OUTLOOK o
Management's outlook for future growth of the Company is through the
development of new gold mines, which the Company owns or has an option to
purchase. In addition, the Company continues to search for additional precious
metal reserves, primarily in the form of producing or near-production
properties, for acquisition in North America and Latin America. The Company
also maintains aggressive exploration programs in North and South America that
are carried out from its regional and corporate offices in Peru, Nevada, and
Colorado.
The Company merged with Da Capo Resources Ltd. effective November 1, 1996 and
acquired two development-stage gold properties in addition to excellent
exploration properties in Bolivia. The Company is conducting a final
feasibility study on the Amayapampa and Capa Circa properties and expects to
complete project financing and commence construction by mid-1997 with
production startup expected by mid-1998. These two mines are expected to
produce 100,000 ounces per year in 1999. The Hycroft mine is also expected to
increase gold production to 112,000 ounces in 1997, resulting from the startup
of production from the new Brimstone pit combined with increased cyanide
solution pumping capacity.
On February 29, 1996, the Company entered into a Letter of Intent to enter into
an Option Agreement with L.B. Mining Company to acquire the Guariche gold
project in southeastern Venezuela. The Company undertook a pre-feasibility
study of the gold resource. The study indicated that potentially a 70-100,000
ounce-per-year mine development of the deposit was feasible. If drilling
1996 ANNUAL REPORT TWENTY-ONE
<PAGE> 24
VISTA GOLD CORP.
confirms the reserves, Vista will schedule the deposit for production in 1999.
On June 7, 1996, the Company completed its due diligence and negotiated the
final terms of the option agreement with L.B. Mining Co. The terms of the
executed definitive option agreement provide that the consideration for the
option is $275,000 payable as to $125,000 upon receipt of the necessary mining
concessions for the property and $150,000 upon receipt of exploration permits
and upon the Company being satisfied there are no remaining overriding
interests in the property. If these requirements are satisfied, then the
Company will be required to incur minimum exploration expenditures on the
property of $350,000 over a period of five months.
If drilling and technical studies completed during the option period satisfy
the Company that the property contains a minimum proven and probable mineable
reserve of 500,000 ounces of gold, the Company intends, but will not be
obligated, to exercise the option to purchase the property for $15 million
payable as to $5 million in 2,047,938 common shares of the Company ($2.44 per
share) and the balance in cash. Subject to certain conditions, the Company may
be required to pay for additional proven and probable minable reserves in
excess of the 500,000 ounce minimum.
RECLAMATION AND ENVIRONMENTAL COSTS
The reclamation and closure costs for the Company's mines are estimated by
management as follows:
<TABLE>
<S> <C>
Hycroft mine $5.1 million
Tartan Lake mine 0.7 million
-------------
$5.8 million
</TABLE>
These costs are charged to earnings over the life of the mine and the provision
to date is $3.9 million. As part of the terms of the sale of the Company's
interest in the Trout Lake mine, Hudson Bay Mining and Smelting Co., Ltd. has
assumed all environmental liabilities arising from past or future activities of
that mine.
An amended Hycroft Mine Reclamation Plan that included the Brimstone deposit
was approved by the Nevada Bureau of Land Management (BLM), and a surety bond
in the amount of US$5.1 million was posted to secure reclamation obligations
under the plan.
In February 1996, the Company received the required permits for the
construction of the plant, pads and ponds associated with the Brimstone
deposit. The Brimstone mine development, leach pad and plant construction is
complete. All necessary mining equipment is on site, and production from
Brimstone commenced in early 1997.
REGULATORY COMPLIANCE AND OTHER MATTERS
During 1996 there were no material environmental incidents or non-compliance
with any applicable environmental regulations.
TWENTY-TWO 1996 ANNUAL REPORT
<PAGE> 25
VISTA GOLD CORP.
MANAGEMENT'S RESPONSIBILITY
FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Vista Gold Corp.
have been prepared by and are the responsibility of the Company's management.
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada and contain estimates based
on management's judgment. Internal control systems are maintained by management
to provide reasonable assurance that assets are safeguarded and financial
information is reliable.
The Audit Committee of the Board of Directors is composed of
non-management directors. It meets regularly with the Company's management and
auditors and reviews internal control and financial reporting matters to ensure
that management is properly discharging its responsibilities before submitting
the consolidated financial statements to the Board of Directors for approval.
The Company's auditors, Coopers & Lybrand, have examined these
consolidated financial statements and their report follows.
/s/ MICHAEL B. RICHINGS
Michael B. Richings
President and Chief Executive Officer
/s/ A.J. ALI, C.A.
A.J. Ali, C.A.
Vice President Finance and Chief Financial Officer
1996 ANNUAL REPORT TWENTY-THREE
<PAGE> 26
VISTA GOLD CORP.
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF VISTA GOLD CORP.,
We have audited the consolidated balance sheets of Vista Gold Corp. as at
December 31, 1996 and 1995 and the consolidated statements of earnings (loss),
retained earnings (deficit) and changes in cash resources for each of the three
years in the period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1996 and 1995, and the results of its operations and the changes in its cash
resources for each of the three years in the period ended December 31, 1996 in
accordance with generally accepted accounting principles. As required by the
British Columbia Company Act, we report that, in our opinion, these principles
have been applied on a consistent basis.
/s/ COOPERS & LYBRAND
Coopers & Lybrand
Chartered Accountants
Vancouver, Canada
March 12, 1997
TWENTY-FOUR 1996 ANNUAL REPORT
<PAGE> 27
VISTA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
<TABLE>
December 31 1996 1995
--------- ---------
ASSETS o
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 8,598 $ 15,210
Marketable securities (Market Value -- $213) 213 179
Accounts receivable and prepaid expenses (Note 3) 3,286 2,382
Inventories (Note 4) 16,819 10,140
--------- ---------
28,916 27,911
Investment in Zamora Gold Corp. (Note 5) 2,981 4,323
Property, Plant, and Equipment -- net (Note 6) 91,419 32,051
--------- ---------
$ 123,316 $ 64,285
========= =========
LIABILITIES o
Current Liabilities
Accounts payable and accrued liabilities (Note 7) $ 10,247 $ 6,239
--------- ---------
10,247 6,239
Provisions for Future Reclamation and Closure Costs 3,897 3,409
--------- ---------
14,144 9,648
--------- ---------
SHAREHOLDERS' EQUITY o
Common Shares, without par value (Note 8)
(issued 1996 -- 89,020,405 shares; 1995 -- 46,042,911 shares) 120,745 54,190
Retained Earnings (Deficit) (10,417) 1,409
Currency Translation Adjustment (1,156) (962)
--------- ---------
109,172 54,637
--------- ---------
$ 123,316 $ 64,285
========= =========
</TABLE>
Commitments and Contingencies (Notes 6, 9)
APPROVED BY THE BOARD
/S/ DAVID R. SINCLAIR /S/ PETER WALTON
David R. Sinclair Peter Walton
Chairman of the Board Director
The accompanying notes are an integral part of these consolidated financial
statements.
1996 ANNUAL REPORT TWENTY-FIVE
<PAGE> 28
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(U.S. Dollars in thousands, except share data)
<TABLE>
Year ended December 31 1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES o $ 36,444 $ 41,294 $ 39,871
------------ ------------ ------------
EXPENSES o
Operating costs 30,083 33,712 32,303
Depreciation, depletion, and provision for
future reclamation and closure costs 5,859 4,094 2,632
Amortization of deferred stripping 5,727 223 3,110
------------ ------------ ------------
41,669 38,029 38,045
------------ ------------ ------------
RESULTS OF MINING OPERATIONS o (5,225) 3,265 1,826
------------ ------------ ------------
Mineral exploration and property evaluation 4,167 4,139 3,972
Corporate administrative 2,554 2,425 2,630
Interest income -- net (698) (1,390) (1,562)
Other expense 259 1,298 578
Gain on sale of mineral properties
and investments (850) (6,075) (9,207)
Equity in loss of Zamora Gold Corp. 1,342 516 --
------------ ------------ ------------
6,774 913 (3,589)
------------ ------------ ------------
EARNINGS (LOSS) BEFORE INCOME TAXES o (11,999) 2,352 5,415
------------ ------------ ------------
Current Income Taxes (Note 10) (173) 193 299
------------ ------------ ------------
NET EARNINGS (LOSS) o $ (11,826) $ 2,159 $ 5,116
------------ ------------ ------------
Earnings (loss) Per Share $ (0.21) $ 0.05 $ 0.15
------------ ------------ ------------
Weighted Average Shares Outstanding 56,309,941 42,074,356 34,164,260
============ ============ ============
</TABLE>
CONSOLIDATED STATEMENTS
OF RETAINED EARNINGS (DEFICIT)
(U.S. Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31 1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Retained Earnings (deficit), Beginning of Year --
as previously reported $ 1,409 $ (55,275) $ (60,391)
Prior period adjustment (Note 11) -- (188) (188)
--------- --------- ---------
Retained Earnings (deficit), Beginning of Year --
restated 1,409 (55,463) (60,579)
Amalgamation costs (Note 12) -- (1,223) --
Capital reduction (Note 8) -- 55,936 --
--------- --------- ---------
1,409 (750) (60,579)
Net earnings (loss) (11,826) 2,159 5,116
--------- --------- ---------
Retained Earnings (deficit), End of Year $ (10,417) $ 1,409 $ (55,463)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
TWENTY-SIX 1996 ANNUAL REPORT
<PAGE> 29
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN CASH RESOURCES
(U.S. Dollars in thousands)
<TABLE>
Year Ended December 31 1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES o
Net Earnings (loss) $ (11,826) $ 2,159 $ 5,116
Items not involving Cash
Depreciation and depletion 5,170 3,555 1,977
Amortization of deferred stripping 5,727 223 3,110
Provision for future reclamation
and closure costs 689 539 655
Deferred revenue recognized -- -- (419)
Gain on sale of mineral properties,
equipment and investments (850) (6,075) (9,271)
Equity in loss of Zamora Gold Corp. 1,342 516 --
--------- --------- ---------
252 917 1,168
Currency Translation Adjustment (369) (441) (1)
Change in Working Capital, excluding Cash
and Cash Equivalents (Note 13) (3,609) (8,779) 8,202
--------- --------- ---------
(3,726) (8,303) 9,369
--------- --------- ---------
INVESTING ACTIVITIES o
Acquisition of Da Capo Resources Ltd.
including acquisition costs (49,682) -- --
Property, Plant, and Equipment Additions (20,271) (4,440) (14,014)
Deferred Stripping Costs (512) (5,235) (1,465)
Proceeds from Sale of Mineral Properties,
Equipment and Investments 1,024 11,073 23,759
Investments -- (9,691) --
--------- --------- ---------
(69,441) (8,293) 8,280
--------- --------- ---------
FINANCING ACTIVITIES o
Issue of Shares for Acquisition of Da Capo
Resources Ltd. (Note 6) 48,730 -- --
Issue of Shares for Special Warrants Exercised 17,308 -- --
Issue of Shares for Options and other 517 258 21
Equipment Note Proceeds (payments) -- net -- (275) (377)
Amalgamation Costs -- (1,222) --
Bank Loan Advances (repayments) -- -- (3,805)
--------- --------- ---------
66,555 (1,239) (4,161)
--------- --------- ---------
Increase (decrease) in Cash and Cash Equivalents (6,612) (17,835) 13,488
Cash and Cash Equivalents, Beginning of Year 15,210 33,045 19,557
--------- --------- ---------
Cash and Cash Equivalents, End of Year $ 8,598 $ 15,210 $ 33,045
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1996 ANNUAL REPORT TWENTY-SEVEN
<PAGE> 30
VISTA GOLD CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular information in thousands of United States dollars, except share data)
1. NATURE OF OPERATIONS
A) Vista Gold Corp. (the "Company")
Vista Gold Corp., formerly Granges Inc. (see B below) is engaged in gold
mining and related activities in the United States, Canada, and Latin America,
including exploration, extraction, processing, refining and reclamation. Gold
bullion is the Company's principal product, which is a commodity produced
primarily in South Africa, the United States, Canada, Australia, and Latin
America.
The Company's results are impacted by the price of gold. Gold prices
fluctuate and are affected by numerous factors, including, but not limited to,
expectations with respect to the rate of inflation, exchange rates
(specifically, the U.S. dollar relative to other currencies), interest rates,
global and regional political and economic crises and governmental policies
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 consists
of jewelry and investment demand, as well as consumer and speculator hedging
activities. Gold can be readily sold on numerous markets throughout the world
and its market value can be readily ascertained at any particular time. As a
result, the Company is not dependent upon any one customer for the sale of its
product.
B) Acquisition of Da Capo Resources Ltd.
On July 31, 1996, the boards of directors of Granges Inc. ("Granges") and
Da Capo Resources Ltd. ("Da Capo") unanimously approved the amalgamation of the
two companies to form a new gold mining company ("Vista Gold Corp."), subject
to shareholder, court, and regulatory approval; entering into a definitive
amalgamation agreement; and satisfactory completion of due diligence by Granges
and Da Capo by August 6, 1996.
The Supreme Court of British Columbia approved the amalgamation, effective
November 1, 1996 under the name "Vista Gold Corp." Under the terms of the
agreement, each holder of Granges shares received one Vista Gold Corp. share
for each Granges share, and each holder of Da Capo shares received two Vista
Gold Corp. shares for each Da Capo share. Vista Gold Corp. is owned 66.25
percent by Granges shareholders and 33.75 percent by Da Capo shareholders on a
fully diluted basis.
2. SIGNIFICANT ACCOUNTING POLICIES
A) Generally Accepted Accounting Principles
The consolidated financial statements of the Company and its subsidiaries
have been prepared in accordance with accounting principles generally accepted
in Canada. These principles differ in certain material respects from those
accounting principles generally accepted in the United States. The differences
are described in note 17.
B) Principles of Consolidation
The consolidated financial statements include the accounts of the Company,
its subsidiaries and its proportionate share of the assets, liabilities,
revenues and expenses of its unincorporated joint venture. The Company's
subsidiaries and its percentage ownership in these entities as at December 31,
1996 are:
<TABLE>
<CAPTION>
Ownership
---------
<S> <C>
Vista Gold Holdings Inc. and its
wholly owned subsidiaries 100%
Hycroft Resources & Development, Inc.
and its wholly owned subsidiary
Hycroft Lewis Mine, Inc.
Granges (U.S.) Inc. and its wholly owned
subsidiary Granges (Arizona) Inc.
Granges (Canada) Inc. (previously called
493744 Ontario Limited) 100%
Sociedad Industrial Minera Yamin Ltda
("Yamin") 100%
</TABLE>
C) Use of Estimates
The preparation of consolidated financial statements in accordance with
generally accepted accounting principles
TWENTY-EIGHT 1996 ANNUAL REPORT
<PAGE> 31
VISTA GOLD CORP.
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of the consolidated financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ
from those reported.
D) Foreign Currency Translation
The consolidated financial statements of the Company have been
historically expressed in Canadian (Cdn) dollars. As a result of sales revenues
and a significant portion of expenses being denominated in United States (U.S.)
dollars, the sale of exploration properties in Canada, the increasing
international focus of the Company's operating activities, and the relocation
of the Company's executive office to Denver, the U.S. dollar has become the
principal currency of the Company's business. Accordingly, the U.S. dollar has
been adopted as the reporting currency for the consolidated financial
statements of the Company, effective January 1, 1996. The comparative
information for the 1995 and 1994 financial statements has been translated into
U.S. dollars at the December 31, 1995 year end at a rate of one U.S. dollar to
Cdn $1.3652.
Self-sustaining foreign operations are translated using the current rate
method. Under this method, assets and liabilities are translated at the rate of
exchange on the balance sheet date, and revenue and expenses at the average
rate of exchange during the period. Exchange gains and losses are deferred and
shown as a currency translation adjustment in shareholders' equity until
transferred to earnings when the net investment in the foreign operation is
reduced.
Integrated foreign operations are translated using the temporal method.
Under this method, monetary assets and liabilities are translated at the rate
of exchange in effect at the balance sheet date and non-monetary assets and
liabilities are translated at historical exchange rates, unless such items are
carried at market, in which case they are translated at the exchange rate in
effect at the balance sheet date. Revenues and expenses are translated at the
rate of exchange in effect on the dates that they occur and depreciation and
amortization of assets translated at historical rate are translated at the same
exchange rates as the assets to which they relate. Exchange gains and losses
are included in the determination of net income for the current period.
Foreign currency denominated monetary items of the Company, excluding its
foreign operations, are translated at the year-end exchange rate. Exchange
gains and losses on these items are recognized in earnings in the year they
arise.
E) Revenue Recognition
Sales are recorded as soon as the product is considered available for
sale. Gains and losses on forward sales and option contracts are deferred until
the related production is sold.
F) Mineral Exploration
Acquisition and exploration expenditures on mineral properties are
expensed when incurred until such time as the property indicates the potential
of being developed into a mine, and thereafter the expenditures are
capitalized. Previously capitalized expenditures are expensed if the project is
determined to be uneconomic.
G) Cash Equivalents
Cash equivalents are represented by investments in short-term investment
funds consisting of highly liquid debt instruments such as certificates of
deposit, commercial paper, and money market accounts purchased with an original
maturity date of less than three months. The Company's policy is to invest cash
in conservative, highly rated instruments and limit the amount of credit
exposure to any one institution.
H) Marketable Securities
Marketable securities are carried at the lower of cost or market value.
I) Inventories
Product inventory is valued at the lower of average cost or net realizable
value. The direct cash costs associated with ore on the leach pads are
inventoried and charged to operations as the contained gold is recovered. Based
upon actual metal recoveries, ore grades and operating plans, management
continuously evaluates and refines estimates in determining the carrying values
of costs associated with ore under leach. It is possible that in the near term,
estimates of recoverable ore, grade, and gold price
1996 ANNUAL REPORT TWENTY-NINE
<PAGE> 32
VISTA GOLD CORP.
2. SIGNIFICANT ACCOUNTING POLICIES (CONT.)
could change causing the Company to revise the value of its heap leach
inventory.
Parts and supplies are valued at the lower of average cost or net
replacement value.
J) Property, Plant and Equipment
(I) DEVELOPED MINERAL PROPERTIES
Property acquisition and development costs are carried at cost less
accumulated amortization and write downs. Amortization is provided on the
unit-of-production method based on proven and probable reserves. Management
reviews quarterly the carrying value of the Company's interest in each
property and, where necessary, these properties are written down to their
estimated recoverable amount determined on a non-discounted basis.
Management's estimate of gold price, recoverable proven and probable
reserves, operating, capital and reclamation costs are subject to risks and
uncertainties affecting the recoverability of the Company's investment in
property, plant and equipment. Although management has made its best estimate
of these factors based on current conditions, it is possible that changes
could occur in the near term that could adversely affect management's
estimate of net cash flows expected to be generated from its operating
properties and the need for possible asset impairment write downs.
(II) PLANT AND EQUIPMENT
Plant and equipment are recorded at cost and depreciated using the units of
production method or the straight-line method over their estimated useful
lives.
(III) DEFERRED STRIPPING
During production, mining costs associated with waste rock removal are
deferred and charged to operations on the basis of the average strip ratio for
the life of the mine. The average strip ratio is calculated as a ratio of the
tons of waste expected to be mined to the tons of ore estimated to be mined.
Although management has made its best estimate of these factors based on
current conditions, it is possible that changes could occur in the near term
that could adversely affect management's estimate of ore and waste in proven
and probable reserves and the need for a change in the amortization rate of
deferred stripping cost.
K) Provision for Future Reclamation and Closure Costs
All of the Company's operations are subject to reclamation, site
restoration and closure requirements. Costs related to ongoing site restoration
programs are expensed when incurred. A provision for mine closure and site
restoration costs is charged to earnings over the lives of the mines on a
unit-of-production basis. The Company calculates its estimates of the ultimate
reclamation liability based on current laws and regulations and the expected
future costs to be incurred in reclaiming, restoring and closing its operating
mine sites. It is possible that the Company's estimate of its ultimate
reclamation liability could change in the near term due to possible changes in
laws and regulation and changes in cost estimates.
L) Estimates of Proven and Probable Reserves
Management's calculation of proven and probable reserves is based upon
engineering and geological estimates and financial estimates including gold
prices and operating costs. The Company depreciates some of its assets and
accrues for reclamation on a unit-of-production basis over proven and probable
reserves. Changes in geological interpretations of the Company's ore bodies and
changes in gold prices and operating costs may change the Company's estimate of
proven and probable reserves. It is possible that the Company's estimate of
proven and probable reserves could change in the near term and could result in
revised charges for depreciation and reclamation in future reporting periods.
3. ACCOUNTS RECEIVABLE
AND PREPAID EXPENSES
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Accounts receivable $ 2,361 $ 1,626
Prepaid expenses 925 756
--------- ---------
$ 3,286 $ 2,382
</TABLE>
THIRTY 1996 ANNUAL REPORT
<PAGE> 33
VISTA GOLD CORP.
4. INVENTORIES
<TABLE>
1996 1995
--------- ---------
<S> <C> <C>
Product inventory $ 14,314 $ 7,715
Parts and supplies 2,505 2,425
--------- ---------
$ 16,819 $ 10,140
========= =========
</TABLE>
5. INVESTMENT IN ZAMORA GOLD CORP.
In October 1995, the Company completed a private placement with Zamora
Gold Corp. (Zamora) for the issuance of 8,000,000 units at US$0.60 per unit.
Each unit consists of one common share of Zamora and one common share purchase
warrant entitling Granges to purchase one common share for US$0.75 until
October 4, 1997. The Company's 8,000,000 shares represent 41 percent of the
issued and outstanding shares of Zamora and the investment is accounted for
using the equity method with the investment balance as follows.
<TABLE>
<S> <C>
Total initial investment including expenses $4,839
Equity loss in 1995 (516)
------
Balance at December 31, 1995 4,323
Equity loss in 1996 (1,342)
------
Balance at December 31, 1996 $2,981
======
</TABLE>
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprises of the following:
<TABLE>
Property Metals Produced Acquired/Commenced Production
- ----------------------------------------------------------------------------------------------------------------------------
Hycroft mine gold, silver Lewis 1987, Crofoot 1988
Tartan mine suspended 1989 1987
1996 1995
---------------------------------------------------------------------------------------
Accumulated Accumulated
Depreciation, Depreciation,
Depletion, Depletion,
Amortization Amortization
and and
Cost Write downs Net Cost Write downs Net
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Producing Mines
Hycroft mine (A) $ 84,200 $ 46,674 $ 37,526 $ 64,692 $ 41,217 $ 23,475
Deferred stripping costs 10,025 9,040 985 9,513 3,312 6,201
Non-Producing Mine
Tartan Lake mine 3,855 1,969 1,886 3,870 1,977 1,893
Bolivian mineral
properties (B) 50,475 -- 50,475 -- -- --
Corporate Assets 939 392 547 744 262 482
------------ ------------ ------------ ------------ ------------ ------------
$ 149,494 $ 58,075 $ 91,419 $ 78,819 $ 46,768 $ 32,051
============ ============ ============ ============ ============ ============
</TABLE>
1996 ANNUAL REPORT THIRTY-ONE
<PAGE> 34
VISTA GOLD CORP.
6. PROPERTY, PLANT AND EQUIPMENT (CONT.)
A) Royalties
The Crofoot property at the Hycroft mine is subject to four percent net
profits royalties. No royalty payments were made in 1995, 1994 and 1993 because
minimum royalty payments made prior to 1993 aggregating $2.8 million were
available for credit towards the royalty obligations. Effective 1996, the
Company agreed to apply this credit to reduce the maximum cumulative royalties
payable of $10 million and to pay minimum royalty payments of $240,000 per
year.
The Lewis property at the Hycroft mine is subject to a five percent net
smelter royalty. During 1996, 1995 and 1994, only nominal minimum royalties
were required in relation to this property.
B) Bolivian Mineral Properties
As a result of the acquisition of Da Capo Resources Ltd. (Note 1), the
Company acquired mineral properties in Bolivia which have been recorded using
the purchase method of accounting and the results of operations have been
consolidated from November 1, 1996. The Company's interest in the net assets
acquired at assigned values are as follows:
<TABLE>
<S> <C>
Cash $ 1,198
Current assets 131
Property, plant and equipment 218
Mineral properties 48,284
Current liabilities (1,101)
--------
Shares issued for purchase of
Da Capo Resources Ltd. $ 48,730
========
</TABLE>
7. ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Accounts payable $ 7,582 $ 3,514
Accrued liabilities 2,665 2,725
--------- ---------
$ 10,247 $ 6,239
========= =========
</TABLE>
Accounts payable at December 31, 1996 included $3.4 million to purchase mining
equipment which was paid in early 1997.
8. SHARE CAPITAL
A) Authorized share capital comprises 2,500,000,000 (1995 - 750,000,000) common
shares without par value and 500,000,000 (1995 - 750,000,000) preferred shares
without par value.
B) Common Shares Issued and Outstanding:
<TABLE>
<CAPTION>
Number of Shares Amount
---------------- ---------
<S> <C> <C>
At December 31, 1994 34,177,000 $ 107,110
Issued upon exercise
of stock options 147,500 229
Issued pursuant to
Hycroft amalgamation
(Note 12) 11,718,411 --
Capital reduction (C) -- (53,149)
---------- ----------
At December 31, 1995 46,042,911 54,190
Issued upon exercise of
stock options 468,750 517
Issued upon exercise of
special warrants (E) 9,699,800 17,308
Issued pursuant to Da Capo
purchase (Note 1, 6) 32,808,944 48,730
---------- ----------
At December 31, 1996 89,020,405 $ 120,745
========== ==========
</TABLE>
C) Capital Reduction
At the March 30, 1995 extraordinary meeting, the shareholders of the
Company approved a special resolution to reduce the capital of the Company.
Under this resolution the share capital and contributed surplus were reduced by
$53.1 million and $2.8 million, respectively, with a corresponding decrease to
the accumulated deficit of approximately $56.0 million. The effect of this
capital reduction was to eliminate the consolidated accumulated deficit of the
Company as of December 31, 1994 after giving effect to the estimated costs of
the amalgamation. This deficit was caused primarily by prior write downs of
mining assets.
D) Common Share Options
At December 31, 1996, 2,540,000 common shares were reserved for issuance
under options granted to directors, officers and management employees. These
options expire as follows: 1997 - 700,000; 1999 - 100,000; 2001 - 20,000; 2003
- - 20,000; 2004 - 25,000; 2005 - 830,000; 2006 - 845,000.
THIRTY-TWO 1996 ANNUAL REPORT
<PAGE> 35
VISTA GOLD CORP.
<TABLE>
<CAPTION>
Cdn $
Share Options Option Price
------------- --------------
<S> <C> <C> <C>
At December 31, 1994 740,000 $1.45 to $3.30
Granted in 1995 905,000 $2.25 to $2.78
Exercised in 1995 (147,500) $1.45 to $2.28
Expired in 1995 (227,500) $2.28 to $2.70
---------
At December 31, 1995 1,270,000 $1.45 to $2.78
Granted in 1996 845,000 $1.83 to $3.05
Exercised in 1996 (468,750) $1.05 to $2.85
Expired in 1996 (226,250) $1.45 to $2.70
Granted pursuant to
Da Capo acquisition
(Note 1, 6) 1,120,000 $1.05 to $1.50
---------
At December 31, 1996 2,540,000 $1.45 to $2.78
=========
</TABLE>
During 1995, options to purchase 35,000 shares at Cdn$ 3.30 per share were
repriced to Cdn$2.78 per share.
E) Special Warrants
On April 25, 1996, a private placement of 9,699,800 Special Warrants was
completed at a price of Cdn$2.60 per unit for gross proceeds of Cdn$25,219,480
(US$18,505,367). Each Special Warrant is exercisable into one common share and
one half of one common share purchase warrant of the Company for no additional
consideration. Each whole common share purchase warrant is exercisable into one
common share of the Company at a price of Cdn$3.00 per share until October 31,
1997.
On July 3, 1996, the Company filed a final short form prospectus with the
securities commissions in British Columbia and Ontario relating to the private
placement. The funds held in escrow were released to the Company on July 8,
1996. Net proceeds received were Cdn$23,684,564 (US$17,308,329).
On July 10, 1996, all of the 9,699,800 outstanding special warrants were
exercised, and 9,699,800 common shares in the capital of the Company and
4,849,900 common share purchase warrants were issued to the holders of the
special warrants.
9. COMMITMENTS AND CONTINGENCIES
The Company is committed to U.S. dollar payments under certain operating
leases for mining equipment. Future payments under these leases in each of the
next five years and in the aggregate are:
<TABLE>
<S> <C>
1997 $ 1,998
1998 1,054
1999 --
-------
$ 3,052
=======
</TABLE>
Letters of credit totalling $0.9 million (1995-$2.8 million) have been
provided as collateral under these mine equipment operating leases.
10. INCOME TAXES
A reconciliation of the combined Canadian federal and provincial income
taxes at statutory rates and the Company's effective income tax expenses is as
follows:
<TABLE>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Income taxes at
statutory rates $ (3,524) $ 1,045 $ 2,470
Increase (decrease) in
taxes from:
Permanent differences (34) (133) (149)
Timing differences 2,613 (1,204) (1,888)
Recovery of prior
years' taxes (25) (66) (91)
U.S. Alternative
Minimum Tax (188) 188 --
Differences in
foreign tax rates 945 314 (130)
Large
Corporations tax 40 49 87
--------- --------- ---------
Income taxes per
statements of earnings $ (173) $ 193 $ 299
========= ========= =========
</TABLE>
1996 ANNUAL REPORT THIRTY-THREE
<PAGE> 36
VISTA GOLD CORP.
10. INCOME TAXES (CONT.)
The Company has incurred income tax losses in prior periods of $16.9
million, which may be carried forward and applied against future taxable income
when earned. No benefit in respect of these losses has been recorded in these
accounts. The losses expire as follows:
<TABLE>
<CAPTION>
United
Canada States Total
------- ------- -------
<S> <C> <C> <C>
2000 $ 177 $ -- $ 177
2001 812 1,295 2,107
2002 892 1,358 2,250
2003 -- 5,418 5,418
2004 -- 1,373 1,373
2008 -- 435 435
2009 -- 11 11
2010 -- 5,122 5,122
------- ------- -------
$ 1,881 $15,012 $16,893
======= ======= =======
</TABLE>
11. PRIOR PERIOD ADJUSTMENT
During 1995, the Company received notification from the Manitoba
Department of Finance of proposed assessments for the years 1983 to 1993 under
the Mining Tax Act and for the period March 1, 1989 to December 31, 1994 under
the Retail Sales Tax Act. The Company, subsequent to the end of the year,
arrived at a settlement with the Department under which the total taxes and
interest payable under both Acts amounted to $242,000 (Cdn$330,000), with
$89,000 (Cdn$120,000) previously paid. This settlement has been treated as a
prior period adjustment and the effect has been to increase mineral properties
by $54,000, increase accounts payable by $154,000 at December 31, 1995, and by
$242,000 at December 31, 1994 and to reduce retained earnings by $188,000 at
December 31, 1994.
12. AMALGAMATION OF GRANGES INC.
AND HYCROFT RESOURCES
& DEVELOPMENT CORPORATION.
On March 30, 1995, the shareholders of Granges Inc. (Granges) and its 50.5
percent owned subsidiary, Hycroft Resources & Development Corporation
(Hycroft), approved the amalgamation of the two companies, effective May 1,
1995 under the name Granges Inc. (Amalco).
Under the terms of the amalgamation, the outstanding common shares of each
of Granges and Hycroft were exchanged or cancelled on the following basis:
a) each issued and outstanding common share of Granges was exchanged for one
common share of Amalco;
b) each issued and outstanding common share of Hycroft, except for those common
shares registered in the name of Granges or its affiliates, was exchanged for
0.88 of a common share of Amalco;
c) each issued and outstanding common share of Hycroft that was registered in
the name of Granges or its affiliates was cancelled; and
d) each authorized but unissued common share of Granges and each authorized but
unissued common share of Hycroft was cancelled.
No fractional shares of Amalco were issued and the number of shares
received by a Hycroft shareholder was rounded down to the nearest whole number
of shares of Amalco, if such a shareholder were otherwise entitled to receive a
fraction of a share of Amalco. Immediately after the amalgamation, shareholders
of Granges beneficially owned 34,214,500 common shares of Amalco and
shareholders of Hycroft beneficially owned 11,718,411 common shares of Amalco,
representing 74.5 percent and 25.5 percent of the issued and outstanding common
shares of Amalco, respectively.
As Granges already controlled Hycroft, the amalgamation was treated in a
manner similar to a pooling of interest. Accordingly, the 1995 results of
Amalco represent the consolidated results of Granges for the four months ended
April 30, 1995 and the consolidated results of Amalco for the eight months
ended December 31, 1995, with all comparative figures being the consolidated
results of Granges.
$1.2 million of costs to carry out the amalgamation have been treated as a
capital transaction and charged directly to the deficit on the date of
amalgamation.
THIRTY-FOUR 1996 ANNUAL REPORT
<PAGE> 37
VISTA GOLD CORP.
13. CHANGES IN WORKING CAPITAL,
EXCLUDING CASH AND CASH EQUIVALENTS
<TABLE>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Accounts receivable
and prepaid
expenses $ (904) $ (352) $ 2,071
Marketable Securities (34) 61 22
Inventories (6,679) 135 (3,680)
Accounts payable and
accrued liabilities 4,008 (8,623) 9,789
------- ------- -------
$(3,609) $(8,779) $ 8,202
======= ======= =======
</TABLE>
14. RETIREMENT PLANS
The Company sponsors a qualified tax deferred savings plan in accordance
with the provision of Section 401(K) of the U.S. Internal Revenue Service code,
which is available to permanent U.S. employees. The Company makes contributions
of up to four percent of eligible employee's salaries. The Company's
contribution in 1996 was $323,000 (1995 - $113,000).
15. SEGMENTED INFORMATION
The Company operates in the mining industry in Canada and the United
States, and has exploration and development properties in Latin America. Its
major product is gold, and prior to 1995, it also produced copper and zinc.
Geographic segments are presented below.
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Sales
Canada $ -- $ -- $ 2,386
U.S 36,444 41,294 37,485
Latin America -- -- --
--------- --------- ---------
$ 36,444 $ 41,294 $ 39,871
========= ========= =========
Results of Mining Operations
Canada $ -- $ -- $ (349)
U.S (5,225) 3,305 2,215
Latin America -- -- --
--------- --------- ---------
$ (5,225) $ 3,305 $ 1,866
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Identifiable assets
Canada $ 12,348 $ 28,966
U.S 59,672 35,319
Latin America 51,296 --
--------- ---------
$ 123,316 $ 64,285
</TABLE>
16. SUBSEQUENT EVENT
Subsequent to the end of the year, the Company, through its subsidiary,
Hycroft Resources & Development Inc., arranged a $13 million revolving credit
facility which bears interest at 1.5 percent above LIBOR. Withdrawals under the
credit facility are limited to 80 percent of recoverable gold inventory at the
Hycroft mine and are collateralized by the assets of Hycroft and a guarantee of
the parent company. The borrowings under the facility are repayable after two
years. The facility is renewable for two renewal periods of one year each.
17. DIFFERENCES BETWEEN CANADIAN AND
UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The significant differences between generally accepted accounting
principles (GAAP) in Canada and in the United States are as follows:
A) Under Canadian GAAP, the amalgamation of Granges and Hycroft was treated in
a manner similar to a pooling of interest. Under U.S. GAAP, the amalgamation
does not meet the conditions for pooling of interest. Accordingly, the
transaction is treated as a purchase under U.S. GAAP with the excess of
proceeds over the net book value of Hycroft's net assets allocated to mineral
properties.
B) Under Canadian corporate law, the Company underwent a capital reduction in
connection with the amalgamation of Granges and Hycroft whereby share capital
and contributed surplus were reduced to eliminate the consolidated accumulated
deficit of Granges as of December 31, 1994, after giving effect to the
estimated costs of the amalgamation. Under U.S. corporate law, no such
transaction is available and accordingly is not allowed under U.S. GAAP.
C) Under Canadian GAAP, corporate income taxes are accounted for using the
deferral method of income tax allocation. Under U.S. GAAP, corporate income
taxes are accounted for using the liability method of income tax allocation.
The Company has recorded no tax expense under either Canadian or U.S. GAAP due
to cumulative net losses incurred by the Company. Additionally, any deferred
tax assets resulting from cumulative net losses under U.S. GAAP would be offset
by a valuation allowance.
1996 ANNUAL REPORT THIRTY-FIVE
<PAGE> 38
VISTA GOLD CORP.
17. DIFFERENCES BETWEEN CANADIAN AND UNITED
STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONT.)
With regard to the purchase of Da Capo, under U.S. GAAP, the excess of
purchase price over net book value acquired would be tax affected giving rise
to a credit to deferred income taxes and a debit to mineral properties. This
would result in a corresponding reduction in the valuation allowance with the
resulting credit being allocated against mineral properties.
D) In 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," effective for fiscal years beginning after December
15, 1995. SFAS No. 121 requires that long-lived assets and associated
intangibles be written down to fair value whenever an impairment review
indicates that the carrying value cannot be recovered on an undiscounted cash
flow basis. Under U.S. GAAP, the carrying value of the Hycroft mine, including
the excess of proceeds over the net book value from (A) above, does not exceed
the undiscounted cash flow. Accordingly, the Hycroft mine carrying value is
being written down to fair value using the discounted cash method following
U.S. GAAP.
E) In 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation," effective for fiscal years beginning after December 15, 1995.
This standard established a fair value method for accounting for stock-based
compensation plans either through recognition or disclosure. Management elected
the disclosure option under the standard and therefore, adoption does not give
rise to any U.S./Canadian GAAP differences in either the balance sheet or
income statement.
The significant differences in the consolidated statements of earnings and
deficit relative to U.S. GAAP were as follows:
<TABLE>
<CAPTION>
Year ended December 31
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Net earnings
following
Canadian GAAP $ (11,826) $ 2,159 $ 5,116
Depletion and
impairment of
mineral
properties (A, D) (23,269) (2,658) --
Other items (170) (209) (26)
--------- --------- ---------
Net earnings (loss),
following
U.S. GAAP (35,265) (708) 5,090
Deficit, beginning
of year following
U.S. GAAP (54,692) (53,984) (59,074)
--------- --------- ---------
Deficit, end of
year following
U.S. GAAP $ (89,957) $ (54,692) $ (53,984)
========= ========= =========
Primary earnings
(loss) per share $ (0.63) $ (0.01) $ 0.15
========= ========= =========
</TABLE>
The significant differences in the balance sheet as at December 31, 1996
relative to U.S. GAAP were:
<TABLE>
<CAPTION>
Per Cdn. Cdn./U.S. Per U.S.
GAAP Adj. GAAP
--------- --------- ---------
<S> <C> <C> <C>
Current assets $ 28,916 $ 28,916
Investments 2,981 2,981
Property, plant
and equipment 91,419 -- 91,419
--------- --------- ---------
$ 123,316 $ -- $ 123,316
========= ========= =========
Current liabilities 10,247 10,247
Provision for
reclamation and
future closure costs 3,897 3,897
--------- --------- ---------
14,144 14,144
Common shares 120,745 76,754 A,B 197,499
Contributed surplus -- 2,786 B 2,786
Retained earnings
(deficit) (10,417) (79,540)A,B,D (89,957)
Currency translation
adjustment (1,156) (1,156)
--------- --------- ---------
$ 123,316 $ -- $ 123,316
========= ========= =========
</TABLE>
THIRTY-SIX 1996 ANNUAL REPORT
<PAGE> 39
VISTA GOLD CORP.
Cash flows for the Company under Canadian GAAP are presented in the
consolidated statement of changes in cash resources. Under Canadian GAAP all
financing and investment activities are presented on the face of the statement.
Under U.S. GAAP only cash transactions are presented, with non-cash
transactions disclosed separately. The purchase of Da Capo Resources Ltd. (Note
1, 6) was a non-cash transaction. Accordingly, under U.S. GAAP, the non-cash
portion ($48,730,000) of the acquisition of, and issue of shares for, Da Capo
Resources Ltd. would not be included in the statement. The 1995 gain on the
sale of the Company's base metal properties was a non-cash transaction.
Accordingly, under U.S. GAAP, the proceeds from the sale of mineral properties
and marketable securities and the purchase of investments would both be reduced
by $4,921,000, the value of the non-cash transaction.
Supplemental Disclosures of Cash Flow Information
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash paid during
the year for:
Interest $ -- $ 149 $ 115
Income taxes -- 193 305
</TABLE>
1996 ANNUAL REPORT THIRTY-SEVEN
<PAGE> 40
VISTA GOLD CORP.
1996 o
On November 1, 1996, Vista Gold Corp. was formed from the merger of
Granges Inc. and Da Capo Resources Ltd. The common stock for Vista Gold Corp.
is traded on the American Stock Exchange and the Toronto Stock Exchange under
the symbol VGZ. The first trading day for Vista Gold was November 8, 1996. At
that time Granges Inc. and Da Capo Resources ceased trading as separate
companies.
As a result of the merger, Granges Inc. shareholders received one share of
Vista Gold for each share of Granges. Shareholders of Da Capo Resources
received two shares of Vista Gold for each share of Da Capo.
The following tables set out the trading ranges as indicated by the
exchanges.
VISTA GOLD CORP. o
<TABLE>
<CAPTION>
American Toronto
Stock Exchange Stock Exchange
(US$) (Cdn$)
-----------------------------------------------
High Low Close High Low Close
-----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4TH QUARTER
11/8-12/31 1 9/16 1 3/16 1 3/8 1.99 1.55 1.85
</TABLE>
On March 7, 1997, the last reported sales price of the common shares of
Vista Gold Corp. on the American Stock Exchange was US$1.00 and on the Toronto
Stock Exchange was Cdn$1.38. As of December 31, 1996 there were 89,020,405
common shares issued and outstanding.
GRANGES INC. o
<TABLE>
<CAPTION>
American Toronto
Stock Exchange Stock Exchange
(US$) (Cdn$)
--------------------------------------------------
High Low Close High Low Close
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4TH QUARTER
10/1-11/7 1 9/16 1 5/16 1 3/8 2.05 1.76 1.84
3RD QUARTER
7/1-9/30 1 15/16 1 1/14 1 1/2 2.60 1.75 2.06
2ND QUARTER
4/1-6/30 2 3/16 1 7/16 1 7/16 2.90 1.90 1.90
1ST QUARTER
1/1-3/31 2 3/4 1 5/8 2 1/8 3.75 2.25 2.85
</TABLE>
DA CAPO RESOURCES LTD. o
<TABLE>
<CAPTION>
Vancouver
Stock Exchange
(Cdn$)
-----------------
High Low
-----------------
<C> <C> <C>
4TH QUARTER
10/1-11/7 3.85 3.20
3RD QUARTER
7/1-9/30 4.65 3.60
2ND QUARTER
4/1-6/30 4.80 3.65
1ST QUARTER
1/1-3/31 4.50 2.43
</TABLE>
SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION o
(U.S. Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Full Year
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Revenues $ 6,669 $ 9,739 $ 9,654 $ 10,382 $ 36,444
Earnings (loss) from mining operations (61) (1,730) (2,245) (1,189) (5,225)
Net earnings (loss) (1,966) (2,931) (3,585) (3,344) (11,826)
Earnings (loss) per share $ (0.04) $ (0.06) $ (0.07) $ (0.04) $ (0.21)
1995
Revenues $ 11,702 $ 10,026 $ 10,095 $ 9,471 $ 41,294
Earnings (loss) from mining operations 1,997 600 927 (259) 3,265
Net earnings (loss) 1,050 160 4,233 (3,284) 2,159
Earnings (loss) per share $ 0.03 $ 0.00 $ 0.09 $ (0.07) $ 0.05
</TABLE>
METRIC CONVERSION TABLE o
<TABLE>
<CAPTION>
To convert imperial
measurement units To Metric Measure Units Multiply by
- -----------------------------------------------------------------
<S> <C> <C>
Acres Hectares 0.4047
Feet Meters 0.3048
Miles Kilometers 1.6093
Ounces (troy) Grams 31.103
Tons (short) Tonnes 0.9071
</TABLE>
TABLE OF ABBREVIATIONS o
<TABLE>
<S> <C>
CIL ................... carbon-in-leach
ft ................... feet
gpm ................... U.S. gallons per minute
g/t ................... grams/tonne
ha ................... hectare
km ................... kilometer
m ................... meter
oz ................... ounce
oz/ton ................... ounces per ton
</TABLE>
THIRTY-EIGHT 1996 ANNUAL REPORT
<PAGE> 41
VISTA GOLD CORP.
GLOSSARY o
ADIT: a horizontal or nearly horizontal passage driven from the surface for the
working or unwatering of a mine.
BRECCIA: rock consisting of fragments, more or less angular, in a matrix of
finer-grained material or of cementing material.
CARBON-IN-LEACH: A metallurgical process for the recovery of gold, whereby
carbon is added to the leaching step to adsorb gold from the leach
solution.
CLAIM: mining title giving its holder the right to prospect, explore for, and
exploit minerals within a defined area.
COMMINUTION: a collective term for size reduction processes such as crushing
and grinding.
COMPANY: the consolidated group consisting of Vista and its subsidiaries.
CRUSHING: the breaking of blocks of solid rock into smaller pieces.
CUT-OFF-GRADE: the minimum grade of ore used to establish reserves.
DEPOSIT: An informal term for an accumulation of mineral ores.
DIAMOND DRILL: A rotary type of rock drill that cuts a core of rock and is
recovered in long cylindrical sections, two centimeters or more in
diameter.
DORE BAR: an unrefined gold and silver bullion bar consisting of approximately
90% precious metals which will be further refined to almost pure metal.
EN ECHELON: parallel structural features such as veins or faults that are
offset like the edges of shingles on a roof when viewed from the side.
FIRE ASSAY: the assaying of metallic ores, usually gold and silver, by methods
requiring melting of the ore in a furnace.
FLOTATION: a process whereby value minerals are separated from waste by
attaching them to air bubbles in a pulp by the use of small amounts of
chemicals.
FOOTWALL: the rock or wall below mineralization.
GRANGES: Granges Inc.
GRAVITY CONCENTRATION: the process of separating valuable minerals from gangue
minerals by exploiting the difference in density of the two.
HANGINGWALL: the rock or wall on the upper side of mineralization.
HEAP LEACH: a gold extraction method, to percolate leach solution through
crushed ore heaped on an impervious pad.
HYCROFT INC.: Hycroft Resources & Development Inc., a wholly-owned subsidiary
of Vista Gold Corp.
MASSIVE SULPHIDES: continuous body of compounds of sulphur in which iron, zinc,
lead, and copper minerals predominate over host rock minerals.
MERILL-CROWE: process for recovering gold from solution by precipitation with
zinc dust.
MINERALIZATION: material containing valuable minerals.
ORE: material containing valuable minerals which can be economically extracted.
OXIDE RESERVE/RESOURCE: mineralized rock in which some of the original minerals
have been oxidized. Oxidation tends to make the ore more porous and
permits a more complete permeation of cyanide solutions so that minute
particles of gold in the interior of the minerals will be more readily
dissolved.
PROBABLE RESERVES: reserves for which quantity and grade and/or quality are
computed from information similar to that used for proven reserves, but
the sites for inspection, sampling, and measurement are farther apart or
are otherwise less adequately spaced. The degrees of assurance, although
lower than that for proven reserves, is high enough to assume continuity
between points of observation.
PROVEN RESERVES: reserves for which (a) quantity is computed from dimensions
revealed in outcrops, trenches, workings, or drill holes; grade and/or
quality are computed from the results of detailed sampling and (b) the
sites for inspection, sampling and measurement are spaced so closely and
the geologic character is so well defined that size, shape, depth, and
mineral content of reserves are well established.
RECOVERY: that portion of the metal contained in the ore that is successfully
extracted by processing, expressed as a percentage.
RESERVES/ORE RESERVES: that part of a mineral deposit which can be economically
and legally extracted or produced at the time of the reserves
determination.
RESOURCE/MINERAL RESOURCE: a deposit or concentration of minerals for which
there is sampling information and geologic understanding for an estimate
to be made of the contained minerals.
RUN-OF-MINE: refers to ore at the size that it is mined without further
crushing.
SAMPLING: selecting a fractional, but representative part of a mineral deposit
for analysis.
SAVANNAH: a flat, treeless, tropical or subtropical grassland.
SEDIMENTARY ROCKS: secondary rocks formed from material derived from other
rocks laid down under water.
STOCKWORK: a close network of veinlets often associated with an igneous stock
or its wallrocks.
STOPE: an underground excavation that is made by removing ore from the
surrounding rock.
STRIKE: when used as a noun, means the direction, course, or bearing of a vein
or rock formation measured on a level surface, and, when used as a verb,
means to take such direction, course, or bearing.
STRIKE LENGTH: the longest horizontal dimension of an ore body or zone of
mineralization.
STRINGER SULPHIDES: network of small non-persistent veins of sulphide minerals.
STRIPPING RATIO: ratio between waste and ore in an open pit mine.
SULFIDE: a compound of sulfur and some other element.
TAILINGS: material rejected from a mill after most of the valuable minerals
have been extracted.
TRENCHING: prospecting in which subsurface strata are exposed by digging pits
across the strike of a lode.
VOLCANICLASTIC: means derived by ejection of volcanic material from a volcanic
vent.
VEIN: a fissure, fault or crack in a rock filled by minerals that have traveled
upwards from some deep source.
WASTE: rock lacking sufficient grade and/or other characteristics of ore.
1996 ANNUAL REPORT THIRTY-NINE
<PAGE> 42
VISTA GOLD CORP.
BOARD OF DIRECTORS o
- --------------------
David R. Sinclair(1),(2)
Vancouver, British Columbia, Chairman of the Board
Ross J. Beaty
Vancouver, British Columbia, Vice Chairman of the Board
Michael B. Richings
Denver, Colorado
William M. Calhoun(3)
Silverton, Idaho
James H. Dunnett
Vancouver, British Columbia
C. Thomas Ogryzlo(2)
Toronto, Ontario
Keith E. Steeves(1)
Vancouver, British Columbia
Alan G. Thompson(1),(2),(3)
Vancouver, British Columbia
Peter Walton(1)
West Vancouver, British Columbia
CORPORATE OFFICERS o
- --------------------
Michael B. Richings
President and Chief Executive Officer
A. J. Ali
Vice President Finance and Chief Financial Officer
Ronald J. McGregor
Vice President Development and Operations
William F. Sirett
Corporate Secretary
(1) Audit Committee Member
(2) Compensation Committee Member
(3) Corporate Governance Committee Member
VISTA GOLD CORP.
OFFICES AND KEY PERSONNEL o
- ---------------------------
EXECUTIVE OFFICE
Vista Gold Corp.
370 17th Street, Suite 3000
Denver, Colorado USA 80202
(303) 629-2450 (888) 629-2450 - toll free
(303) 629-2499 - fax
Michael B. Richings, President and Chief Executive Officer
A. J. Ali, Vice President Finance and Chief Financial Officer
Warren Bates, International Exploration Manager
Karla J. Kimrey, Director of Investor Relations
Ronald J. McGregor, Vice President Development and Operations
INTERNET ADDRESS
http://www.vistagold.com
REGISTERED OFFICE
VISTA GOLD CORP.
900 Waterfront Centre, 200 Burrard Street
P.O. Box 48600
Vancouver, British Columbia
Canada V7X 1T2
HYCROFT RESOURCES & DEVELOPMENT INC.
P.O. Box 3030, Drawer "M"
Winnemucca, Nevada USA 89446
(702) 623-5260 (702) 623-0215 - fax
Hank Lesinski, General Manager
VISTA GOLD CORP.
Avda. General Ballivian, #999
Esquina Calle 17
Calacoto, La Paz
Bolivia
591-2-796-236 591-2-798-480 - fax
David Collins, General Manager
ZAMORA GOLD CORP.
Joaquin Pinto 521 y Amazonas, piso 8
Quito, Ecuador
593-2-529-812 593-2-569-024 - fax
Jorge Guzman, Comcumay, S.A.
EXPLORATION OFFICE o
- ---------------------
VISTA GOLD CORP.
350 South Rock Boulevard, Suite E
Reno, Nevada USA 89502
(702) 856-2722 (702) 856-1186 -- fax
TRANSFER AGENT AND REGISTRAR o
- ---------------------------------
MONTREAL TRUST COMPANY OF CANADA
510 Burrard Street
Vancouver, British Columbia Canada V6C 3B9
(604) 661-0222
MONTREAL TRUST COMPANY OF CANADA
66 Temperance Street
Toronto, Ontario, Canada M5H 1Y7
CO-TRANSFER AGENT o
- -------------------
THE BANK OF NOVA SCOTIA
Trust Company of New York
One Liberty Plaza
New York, New York USA 10006
AUDITORS o
- ----------
COOPERS & LYBRAND
1111 West Hastings Street
Vancouver, British Columbia Canada V6E 3R2
SOLICITORS o
- ------------
LADNER DOWNS
900 Waterfront Centre, 200 Burrard Street
P.O. Box 48600
Vancouver, British Columbia Canada V7X 1T2
BANKERS o
- ---------
THE BANK OF NOVA SCOTIA
650 West Georgia Street, Suite 2300
P.O. Box 11501
Vancouver, British Columbia Canada V6B 4N7
FORTY 1996 ANNUAL REPORT
<PAGE> 43
VISTA GOLD CORP.
FINANCIAL COMMUNITY INQUIRIES o
--------------------------------
VISTA GOLD CORP.
Symbol: VGZ
Listed: Toronto Stock Exchange
American Stock Exchange
Please direct investor relations inquiries to:
KARLA J. KIMREY
Director of Investor Relations
Vista Gold Corp.
370 17th Street, Suite 3000
Denver, Colorado USA 80202
(303) 629-2450
(888) 629-2450 -- toll-free
(303) 629-2499 -- fax
Internet Address: http://www.vistagold.com
ANNUAL GENERAL MEETING o
------------------------
Wednesday, April 30, 1997
11:00 a.m. (PDT)
Hyatt Regency - Vancouver
Cypress Room
Vancouver, British Columbia
1996 ANNUAL REPORT
<PAGE> 44
[VISTA GOLD CORP. LOGO]
EXECUTIVE OFFICE
SUITE 3000
370 17TH STREET
DENVER, COLORADO USA 80202
PHONE (303) 629-2450
FAX (303) 629-2499
HTTP://WWW.VISTAGOLD.COM
<PAGE> 1
EXHIBIT 99.2
VISTA GOLD CORP.
NOTICE OF MEETING
AND
MANAGEMENT INFORMATION
AND
PROXY CIRCULAR
for the
Annual General Meeting
to be held on
Wednesday, April 30, 1997
<PAGE> 2
March 25, 1997
Dear Shareholder:
It is my pleasure to invite you to attend the Company's annual general
meeting of shareholders. The meeting will be held on Wednesday, April 30, 1997
at 11:00 a.m., Vancouver time, in the Cypress Room of the Hyatt Regency Hotel,
655 Burrard Street, Vancouver, British Columbia.
If you are unable to attend the meeting in person, please complete,
date, sign and return the enclosed form of proxy to ensure that your vote is
counted.
The formal Notice of Meeting, Management Information and Proxy
Circular, and form of proxy for the annual general meeting are all enclosed.
These documents contain important information and I encourage you to read them
carefully.
Yours truly,
/s/ Michael B. Richings
Michael B. Richings
President and Chief Executive Officer
<PAGE> 3
VISTA GOLD CORP.
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN THAT an annual general meeting (the "Meeting")
of the members ("shareholders") of Vista Gold Corp. (the "Company") will be
held in the Cypress Room at the Hyatt Regency Hotel, 655 Burrard Street,
Vancouver, British Columbia on Wednesday, April 30, 1997, at 11:00 a.m.,
Vancouver time, for the following purposes:
1. To receive the annual report to the shareholders and the
consolidated financial statements of the Company together with
the auditor's report thereon for the fiscal year ended
December 31, 1996.
2. To consider and, if thought appropriate, to pass an ordinary
resolution reducing the number of directors from nine to
eight.
3. To elect directors to hold office until the next annual
general meeting.
4. To appoint Coopers & Lybrand, Chartered Accountants, as
auditor to hold office until the next annual general meeting
at a remuneration to be fixed by the directors.
5. To consider, and if thought appropriate, to pass an ordinary
resolution approving the subscription for common shares of the
Company by certain executive officers and senior employees of
the Company as part of the annual incentive payment awarded by
the Board of Directors of the Company.
6. To transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
Accompanying this Notice of Meeting are (i) a Management Information
and Proxy Circular, (ii) a form of proxy and notes thereto, and (iii) a reply
card for use by shareholders who wish to receive the Company's interim
financial statements.
If you are a registered shareholder of the Company and are unable to
attend the Meeting in person, please date and execute the accompanying form of
proxy for the Meeting and deposit it with Montreal Trust Company of Canada at
Montreal Trust Centre, 510 Burrard Street, Vancouver, British Columbia, V6C
3B9, Attention: Proxy Department, no later than 11:00 a.m., Vancouver time, on
Monday, April 28, 1997, or no less than 48 hours (excluding Saturdays, Sundays
and holidays) before any adjournment of the Meeting.
If you are a non-registered shareholder of the Company and receive
these materials through your broker or through another intermediary, please
complete and return the materials in accordance with instructions provided to
you by your broker or such other intermediary.
This Notice of Meeting, the Management Information and Proxy Circular,
the form of proxy and notes thereto for the Meeting, and the reply card are
first being sent to shareholders of the Company on or about March 27, 1997.
DATED at Vancouver, British Columbia, this 25th day of March, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ William F. Sirett
William F. Sirett
Secretary
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
LETTER TO SHAREHOLDERS
NOTICE OF MEETING
MANAGEMENT INFORMATION AND PROXY CIRCULAR . . . . . . . . . . . . . . . . . . . . . . . . . 1
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Appointment of Proxyholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Revocation of Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Voting of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Exercise of Discretion by Proxyholders . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Securities Entitled to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Quorum and Votes Necessary to Pass Resolutions . . . . . . . . . . . . . . . . . . . . . . 3
Particulars of Matters to be Acted Upon . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Appointment of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subscription for Common Shares by Senior Management . . . . . . . . . . . . . . . . . . . 5
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Mandate of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Composition of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Independent Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Board of Directors Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Decisions Requiring Prior Approval of the Board of Directors . . . . . . . . . . . . . . . 7
Recruitment of New Directors and Assessment of the Board of Directors' Performance . . . . 7
Expectations of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Pension and Retirement Savings Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Termination of Employment, Change in Responsibilities and Employment Contracts . . . . . 12
Report of the Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Indebtedness of Directors and Senior Officers . . . . . . . . . . . . . . . . . . . . . . 15
Interest of Management and Others in Material Transactions . . . . . . . . . . . . . . . 16
Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Interest of Certain Persons in Matters to be Acted Upon . . . . . . . . . . . . . . . . . 16
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Information Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Board of Director Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SCHEDULE "A" - RESOLUTION FIXING NUMBER OF DIRECTORS . . . . . . . . . . . . . . . . . . 17
SCHEDULE "B" - RESOLUTION AUTHORIZING SUBSCRIPTION FOR COMMON SHARES . . . . . . . . . . 17
</TABLE>
-i-
<PAGE> 5
MANAGEMENT INFORMATION AND PROXY CIRCULAR
THIS MANAGEMENT INFORMATION AND PROXY CIRCULAR ("INFORMATION
CIRCULAR") IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT
OF VISTA GOLD CORP. (THE "COMPANY") OF PROXIES TO BE VOTED AT THE ANNUAL
GENERAL MEETING (THE "MEETING") OF THE MEMBERS ("SHAREHOLDERS") OF THE COMPANY
TO BE HELD IN THE CYPRESS ROOM AT THE HYATT REGENCY HOTEL, 655 BURRARD STREET,
VANCOUVER, BRITISH COLUMBIA ON WEDNESDAY, APRIL 30, 1997, AT 11:00 A.M.,
VANCOUVER TIME, FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF
MEETING.
It is anticipated that this Information Circular and the accompanying
form of proxy will be first mailed to the shareholders of the Company on or
about March 27, 1997. Unless otherwise stated, the information contained in
this Information Circular is given as at March 15, 1997. The executive office
of the Company is located at Suite 3000, 370 Seventeenth Street, Denver,
Colorado 80202 and its telephone number is (303) 629-2450. The registered and
records office of the Company is located at 900 Waterfront Centre, 200 Burrard
Street, P.O. Box 48600, Vancouver, British Columbia, V7X 1T2.
Advance notice of the Meeting was published in The Province newspaper
on March 6, 1997.
SOLICITATION OF PROXIES
The solicitation for proxies will be conducted by mail and may be
supplemented by telephone or other personal contact to be made, without special
compensation, by officers and employees of the Company. THE COMPANY MAY RETAIN
OTHER PERSONS OR COMPANIES TO SOLICIT PROXIES ON BEHALF OF MANAGEMENT, IN WHICH
EVENT THE CUSTOMARY FEES FOR SUCH SERVICES WILL BE PAID. THE COST OF THE
SOLICITATION WILL BE BORNE BY THE COMPANY.
APPOINTMENT OF PROXYHOLDER
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY FOR THE MEETING ARE
DIRECTORS OR OFFICERS OF THE COMPANY AND ARE NOMINEES OF MANAGEMENT. A
SHAREHOLDER HAS THE RIGHT TO APPOINT SOME OTHER PERSON, WHO NEED NOT BE A
SHAREHOLDER, TO REPRESENT SUCH SHAREHOLDER AT THE MEETING BY STRIKING OUT THE
NAMES OF THE PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY AND BY
INSERTING THAT OTHER PERSON'S NAME IN THE BLANK SPACE PROVIDED. IF A
SHAREHOLDER APPOINTS ONE OF THE PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF
PROXY AS A NOMINEE AND DOES NOT DIRECT THE SAID NOMINEE TO VOTE EITHER FOR OR
AGAINST OR WITHHOLD FROM VOTING ON A MATTER OR MATTERS WITH RESPECT TO WHICH AN
OPPORTUNITY TO SPECIFY HOW THE COMMON SHARES ("COMMON SHARES") IN THE CAPITAL
OF THE COMPANY REGISTERED IN THE NAME OF SUCH SHAREHOLDER SHALL BE VOTED, THE
PROXY SHALL BE VOTED IN FAVOUR OF SUCH MATTER OR MATTERS.
The instrument appointing a proxyholder must be in writing and signed
by the shareholder, or such shareholder's attorney authorized in writing, or if
the shareholder is a corporation, by a duly authorized officer, or attorney, of
the corporation. An instrument of proxy will only be valid if it is duly
completed, signed, dated and received at the office of the Company's registrar
and transfer agent, Montreal Trust Company of Canada at Montreal Trust Centre,
510 Burrard Street, Vancouver, British Columbia, V6C 3B9, Attention: Proxy
Department before 11:00 a.m., Vancouver time, on Monday, April 28, 1997, or no
later than 48 hours (excluding Saturdays, Sundays and holidays) before any
adjournments thereof, unless the Chairman of the Meeting elects to exercise his
discretion to accept proxies received subsequently.
-1-
<PAGE> 6
REVOCATION OF PROXY
A shareholder may revoke a proxy by delivering an instrument in
writing executed by such shareholder or by the shareholder's attorney
authorized in writing or, where the shareholder is a corporation, by a duly
authorized officer or attorney of the corporation, either to the registered
office of the Company at any time up to and including the last business day
preceding the day of the Meeting or any adjournment thereof, or with the
Chairman of the Meeting on the day of the Meeting or any adjournment thereof,
before any vote in respect of which the proxy is to be used shall have been
taken or in any other manner permitted by law.
VOTING OF PROXIES
A shareholder may direct the matter in which his or her Common Shares
are to be voted or withheld from voting in accordance with the instructions of
the shareholder by marking the form of proxy accordingly. If the instructions
in a proxy given to management are certain, the Common Shares represented by
that proxy will be voted on any poll and where a choice has been specified in
the proxy, the Common Shares will be voted on any poll in accordance with the
specifications so made. WHERE NO CHOICE IS SO SPECIFIED WITH RESPECT TO ANY
RESOLUTION OR IN THE ABSENCE OF CERTAIN INSTRUCTIONS, THE COMMON SHARES
REPRESENTED BY A PROXY GIVEN TO MANAGEMENT WILL BE VOTED IN FAVOUR OF THE
RESOLUTION. IF MORE THAN ONE DIRECTION IS MADE WITH RESPECT TO ANY RESOLUTION,
SUCH COMMON SHARES WILL SIMILARLY BE VOTED IN FAVOUR OF THE RESOLUTION.
EXERCISE OF DISCRETION BY PROXYHOLDERS
The enclosed form of proxy when properly completed and delivered and
not revoked confers discretionary authority upon the proxyholders named therein
with respect to amendments or variations of matters identified in the
accompanying Notice of Meeting and other matters not so identified which may
properly be brought before the Meeting. At the date of this Information
Circular, the management of the Company knows of no such amendments, variations
or other matters to come before the Meeting. If any other matter comes before
the Meeting, the persons named in the proxy will vote in accordance with their
judgment on such matter.
SECURITIES ENTITLED TO VOTE
The authorized share capital of the Company is 3,000,000,000 shares
divided into 2,500,000,000 Common Shares without par value, of which 89,020,405
Common Shares are issued and outstanding and 500,000,000 preferred shares
without par value, none of which are issued. The Board of Directors of the
Company has fixed the close of business on March 25, 1997 as the record date
for the purpose of determining the shareholders entitled to receive notice of
the Meeting, but the failure of any shareholder to receive notice of the
Meeting does not deprive such shareholder of the entitlement to vote at the
Meeting.
Every shareholder who is present in person and entitled to vote at the
Meeting shall have one vote on a show of hands and on a poll shall have one
vote for each Common Share of which the shareholder is the registered holder
and such shareholder may exercise such vote either in person or by proxyholder.
-2-
<PAGE> 7
PRINCIPAL SHAREHOLDERS
Atlas Corporation beneficially owns, directly or indirectly, 8,393,826
Common Shares of the Company, which represents 9.4% of the Company's
outstanding Common Shares.
Ross J. Beaty beneficially owns, directly or indirectly, 6,994,616
Common Shares, which represents 7.9% of the outstanding Common Shares.
QUORUM AND VOTES NECESSARY TO PASS RESOLUTIONS
Under the Company's Articles, the quorum for the transaction of
business at the Meeting consists of two shareholders, or two proxyholders
representing shareholders.
PARTICULARS OF MATTERS TO BE ACTED UPON
NUMBER OF DIRECTORS
The present number of directors of the Company is nine. Management
proposes to seek the approval of the shareholders at the Meeting, by ordinary
resolution, to reduce the number of directors from nine to eight. The full
text of the ordinary resolution fixing the number of directors is attached to
this Information Circular as Schedule "A". IN THE ABSENCE OF INSTRUCTIONS TO
THE CONTRARY, THE ENCLOSED FORM OF PROXY WILL BE VOTED IN FAVOUR OF THE
ORDINARY RESOLUTION TO FIX THE NUMBER OF DIRECTORS AT EIGHT.
ELECTION OF DIRECTORS
The directors of the Company are elected at each annual general
meeting and hold office until the close of the next annual general meeting or
until their successors are duly elected or appointed. Management proposes to
nominate each of the following eight persons for election as a director of the
Company. Proxies cannot be voted for a greater number of persons than the
number of nominees named. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE
ENCLOSED FORM OF PROXY WILL BE VOTED FOR THE NOMINEES LISTED BELOW. All of the
proposed nominees are presently or were in 1996 directors of the Company.
Pursuant to an agreement dated May 13, 1994, as amended by a
subsequent agreement dated February 24, 1995 (collectively, the "Atlas
Agreement"), Atlas is entitled to representation on the Board of Directors of
the Company in proportion with its shareholdings in the Company. In accordance
with the Atlas Agreement, one of the proposed directors, C. Thomas Ogryzlo, is
a nominee of Atlas and the remainder are nominees of management.
Information concerning the eight nominees, as furnished by them
individually, is set forth below.
-3-
<PAGE> 8
<TABLE>
<CAPTION>
NAME, RESIDENCE PRINCIPAL OCCUPATION, BUSINESS NUMBER OF
AND POSITION OR EMPLOYMENT (1) DIRECTOR SINCE SHARES HELD
- --------------------------- ------------------------------------ ------------------ -----------
<S> <C> <C> <C>
ROSS J. BEATY (4) Geologist; Chairman of Pan American November 12, 1996 6,994,616
Vancouver, British Columbia Silver Corp., a mining company, 1994
Vice Chairman and Director to present; prior thereto, President
of Equinox Resources Ltd., a mining
company.
WILLIAM CALHOUN (4) Mining Engineer and Geologist; Chief May 1, 1995 nil
Silverton, Idaho Executive Officer of William Calhoun,
Director Inc., mining consultants.
C. THOMAS OGRYZLO (3) Mechanical Engineer; Chairman of March 8, 1996 nil
Toronto, Ontario Kilborn SNC-Lavalin Inc., an
Director engineering group; formerly, President
of the Kilborn Group of Companies.
MICHAEL B. RICHINGS Mining Engineer; formerly, President May 1, 1995 20,000
Littleton, Colorado of Atlas Corporation, a mining
Director company.
DAVID R. SINCLAIR (2) (3) Chartered Accountant; Corporate May 1, 1995 10,000
Nanoose Bay, British Columbia Director.
Chairman and Director
KEITH STEEVES (2) Self-employed business consultant; September 29, 1995 2,000
Richmond, British Columbia formerly, Senior Vice President,
Director Commercial of Teck Corporation, a
mining company.
ALAN G. THOMPSON (2) (3) (4) Businessman; President and Chief December 1, 1989 10,000
West Vancouver, British Columbia Executive Officer of A.G.T. Financial
Director Corporation, an investment company.
PETER WALTON (2) Self-employed business consultant. May 24, 1989 nil
West Vancouver, British Columbia
Director
</TABLE>
- ----------------------------
(1) Includes occupations for the five preceding years.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) Member of Corporate Governance Committee.
The information as to the municipality of residence, principal
occupation and number of Common Shares owned by the nominees listed in the
above table is not within the knowledge of the management of the Company and
has been furnished by the individual appointees as at March 15, 1997.
-4-
<PAGE> 9
APPOINTMENT OF AUDITORS
Unless otherwise instructed, the proxies given pursuant to this
solicitation will be voted for the re-appointment of Coopers & Lybrand,
Chartered Accountants, of Vancouver, British Columbia as the auditor of the
Company to hold office until the close of the next annual general meeting of
the Company or until a successor is appointed. It is proposed that the
remuneration to be paid to the auditor be fixed by the Board of Directors.
Coopers & Lybrand were first appointed the auditor of the Company on June 28,
1985.
SUBSCRIPTION FOR COMMON SHARES BY SENIOR MANAGEMENT
Pursuant to the terms of the Company's incentive policy established by
the Company in 1989 and certain employment contracts, executive officers and
senior employees of the Company are eligible to receive incentive payments.
These payments are awarded annually at the discretion of the Board of Directors
based on recommendations from the Compensation Committee. The award of
incentive payments is motivated by the Company's desire to reward past services
rendered to the Company and to provide an incentive for continued service to
the Company.
Based on the recommendation of the Compensation Committee, the Board
of Directors has approved incentive payments totalling US$74,300 (CDN$99,562)
to four executive officers and senior employees (collectively, the
"Employees"). Subject to regulatory approval, these incentive payments are
conditional upon each Employee agreeing to use one-half of his respective
incentive payment to subscribe for Common Shares from treasury at a price equal
to the closing price of the Common Shares on The Toronto Stock Exchange on the
trading date prior to the date the incentive payment was approved by the Board
of Directors. The subscription for Common Shares in this manner will result in
the issuance to the Employees of a total of 32,135 Common Shares at a price of
CDN$1.55 per Common Share (the closing price on The Toronto Stock Exchange on
February 4, 1997). The details of the proposed issuance of Common Shares are
set out below:
<TABLE>
<CAPTION>
NUMBER OF PRICE
NAME POSITION SHARES PER SHARE
- ------------------- ----------------------------- --------- ---------
<S> <C> <C> <C>
MICHAEL B. RICHINGS President and Chief Executive 12,967 $1.55
Officer
A.J. ALI Vice President Finance and 8,429 $1.55
Chief Financial Officer
RONALD J. MCGREGOR Vice President Operations and 6,051 $1.55
Development
WARREN BATES International Exploration 4,688 $1.55
Manager
</TABLE>
The Toronto Stock Exchange has conditionally approved the issuance of
the Common Shares as described above, subject to, among other things, approval
at the Meeting by a majority of the votes cast by shareholders who vote in
person or by proxy at the Meeting, excluding shareholders who are insiders or
associates of insiders of the Company within the meaning of Canadian securities
legislation.
-5-
<PAGE> 10
Accordingly, at the Meeting shareholders of the Company will be asked
to consider and, if thought appropriate, to pass an ordinary resolution
approving the subscription for Common Shares by the executive officers and
senior employees as described above. The full text of such ordinary resolution
is attached to this Information Circular as Schedule "B".
CORPORATE GOVERNANCE
MANDATE OF THE BOARD OF DIRECTORS
Pursuant to the Company Act (British Columbia), the Board of Directors
is required to manage or supervise the management of the affairs and business
of the Company. The Board of Directors has adopted a written mandate which
defines its stewardship responsibilities in light of this statutory obligation.
The Board of Directors' principal responsibilities are to supervise and
evaluate management, to oversee the conduct of the business, to set policies
appropriate for the business and to approve corporate strategies and goals.
The mandate and responsibilities of the Board of Directors are to be carried
out in a manner consistent with the fundamental objective of protecting and
enhancing the value of the Company and providing ongoing benefit to the
shareholders.
COMPOSITION OF THE BOARD OF DIRECTORS
The present Board of Directors consists of nine directors, eight of
whom, David R. Sinclair, Ross J. Beaty, William Calhoun, James H. Dunnett,
Alan G. Thompson, C. Thomas Ogryzlo, Peter Walton and Keith Steeves, qualify as
unrelated directors who are independent of management and free from any
interest or business relationship which could, or could be perceived to,
materially interfere with their ability to act in the best interest of the
Company. Michael B. Richings qualifies as a related director because of his
management position with the Company. Two directors, William Calhoun and Peter
Walton, have undertaken minor consulting work for the Company. The Corporate
Governance Committee of the Board of Directors has determined that the nature
of this work does not impair the ability of either director to act with a view
to the best interest of the Company and, accordingly, both directors have been
determined to be unrelated directors who are independent of management.
The current composition of the Board of Directors is in compliance
with the guidelines for corporate governance adopted by The Toronto Stock
Exchange, which recommend that the board of directors of every corporation
should be constituted with a majority of individuals who qualify as unrelated
directors.
The Company does not have a significant shareholder with the ability
to exercise a majority of the votes for the election of the Board of Directors.
INDEPENDENT BOARD OF DIRECTORS
The Chairman of the Board of Directors is not a member of management
of the Company.
The Board of Directors believes that adequate structures and processes
are in place to facilitate the functioning of the Board of Directors
independently of the Company's management. The Audit Committee, the
Compensation Committee and the Corporate Governance Committee are entirely
composed of directors who are unrelated to the Company's management.
-6-
<PAGE> 11
BOARD OF DIRECTORS COMMITTEES
The Board of Directors has established three committees, the Audit
Committee, the Compensation Committee and the Corporate Governance Committee.
Audit Committee
The Audit Committee is composed of four directors, David R. Sinclair,
Keith Steeves, Peter Walton and Alan G. Thompson, all of whom are unrelated
directors who are independent of management. The Audit Committee reviews
annual and quarterly financial statements and oversees the annual audit
process, internal accounting controls and the resolution of issues identified
by the Company's external auditor.
Compensation Committee
The Compensation Committee is comprised of three directors, David R.
Sinclair, Alan G. Thompson and Thomas Ogryzlo, all of whom are unrelated
directors who are independent of management. The Compensation Committee
reviews and makes recommendations to the Board of Directors in respect of the
compensation levels for the executive officers of the Company.
Corporate Governance Committee
The Corporate Governance Committee consists of three directors, Alan
G. Thompson, Ross J. Beaty and William Calhoun, all of whom are unrelated
directors who are independent of management of the Company. The Corporate
Governance Committee reviews the Company's governance activities and policies
and reviews proposed nominees for the Board of Directors prior to approval by
the Board of Directors.
DECISIONS REQUIRING PRIOR APPROVAL OF THE BOARD OF DIRECTORS
The Board of Directors has delegated the day to day management of the
business and affairs of the Company to the President and Chief Executive
Officer, subject to compliance with capital plans approved from time to time by
the Board of Directors.
RECRUITMENT OF NEW DIRECTORS AND ASSESSMENT OF THE BOARD OF DIRECTORS'
PERFORMANCE
The Corporate Governance Committee, which is required to meet at least
once each year, is required to identify, review the qualifications of and
recommend to the Board of Directors possible nominees for the Board of
Directors to be proposed in management's Information Circular for election or
re-election at each annual meeting of the Company and to identify, review the
qualifications of and recommend to the Board of Directors possible candidates
to fill vacancies on the Board of Directors between annual meetings.
Under an agreement between the Company and Atlas Corporation, which
owns approximately 9.4% of the outstanding Common Shares of the Company, Atlas
is entitled to propose one nominee to the Board of Directors in proportion to
its shareholding. See "Principal Shareholders". Based on the size of the
Board proposed to be fixed at the Meeting, which is eight directors, Atlas will
be entitled to propose one nominee to the Board of Directors.
-7-
<PAGE> 12
EXPECTATIONS OF MANAGEMENT
The Board of Directors expects management of the Company to conduct
the business and affairs of the Company in accordance with the Company's
ongoing strategic plan and to meet or surpass the annual and long-term goals of
the Company set by the Board of Directors in consultation with management. As
a part of its annual strategic planning process, the Board of Directors
specifies its expectations of management both over the next financial year and
in the context of the Company's long-term goals. The Board of Directors will
review management's progress in meeting these expectations at Board of
Directors' meetings held at least every quarter.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains a summary of the compensation paid to, or
earned by, the Company's current President and Chief Executive Officer, and the
executive officers of the Company who received in their capacity as officers of
the Company and any of its subsidiaries, in excess of CDN$100,000
(collectively, the "Named Executive Officers") for each of the Company's three
most recently completed financial years ended December 31, 1996, 1995 and 1994.
All currency figures under the heading "Summary Compensation Table" are in
United States dollars.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
NUMBER OF
COMMON SHARES ALL OTHER
OTHER ANNUAL UNDER OPTIONS COMPEN-
NAME AND SALARY BONUS COMPENSATION(1)(3) GRANTED (2) SATION(3)
PRINCIPAL POSITION YEAR (US$) (US$) (US$) (#) (US$)
- ------------------------- ---- ------- ------ ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
MICHAEL B. RICHINGS(4) 1996 200,000 22,419 nil 50,000 5,333
President and 1995 154,363 30,000 nil 250,000 5,286
Chief Executive Officer 1994 n/a n/a n/a n/a n/a
- -----------------------------------------------------------------------------------------------------------------
AMJAD J. ALI(5) 1996 130,000 4,767 nil nil 5,200
Vice President Finance 1995 95,343 9,534 nil 80,000 1,907
and Chief Financial 1994 95,343 8,801 nil nil 1,907
Officer
- -----------------------------------------------------------------------------------------------------------------
PAUL WRIGHT 1996 57,756 4,711 187,305 60,000 1,711
Former Vice President 1995 39,626 nil nil nil 106,117(6)
Mining and Project 1994 n/a n/a n/a n/a n/a
Development
- -----------------------------------------------------------------------------------------------------------------
RONALD J. McGREGOR(7) 1996 70,000 nil nil nil 1,400
Vice President 1995 n/a n/a n/a n/a n/a
Operations and 1994 n/a n/a n/a n/a n/a
Development
</TABLE>
- ---------------------------
(1) Perquisites and other personal benefits for the most recently completed
financial year do not exceed the lesser of $50,000 and 10% of the total
annual salary and bonus for any of the Named Executive Officers unless
otherwise noted.
(2) All securities under option are for Common Shares of the Company. No
stock appreciation rights ("SARs") are outstanding.
-8-
<PAGE> 13
(3) Represents the Company's contribution under the Company's Retirement
Savings Plan, except where otherwise indicated. The executive officers of
the Company participate in this plan on the same basis as all other
employees of the Company. See "Pensions and Retirement Savings Plans".
(4) Mr. Richings was appointed President and Chief Executive Officer of the
Company on June 1, 1995.
(5) Mr. Ali became permanently employed by the Company in April 1993 and was
appointed Vice President Finance on May 12, 1993 and was appointed Chief
Financial Officer on December 13, 1995.
(6) Compensation received by Mr. Wright for services rendered in his capacity
as General Manager, Hycroft Mine of Hycroft Resources & Development
Corporation from 1992. Mr. Wright became Vice President Mining and
Project Development on May 1, 1995. Mr. Wright ceased to be Vice
President Operations and Development on May 30, 1996.
(7) Mr. McGregor became Vice President Mining and Project Development on June
1, 1996.
The total aggregate remuneration paid by the Company and its
subsidiaries to the directors and senior officers as a group, excluding the
Named Executive Officers, during the financial year ended December 31, 1996 was
US$131,867.
LONG-TERM INCENTIVE PLAN
The Company does not presently have a long-term incentive plan for its
Named Executive Officers.
STOCK OPTIONS
The Company has established a stock option plan (the "Stock Option
Plan") which provides for grants to directors, officers, employees and
consultants of the Company, or its subsidiaries, of options to purchase up to a
maximum of 4,500,000 of the issued and outstanding Common Shares from time to
time, provided that no more than 5% of the issued and outstanding Common Shares
may from time to time be reserved for issuance pursuant to the exercise of
stock options granted to any one individual. Effective upon the amalgamation
of Granges Inc. and Da Capo Resources Ltd. on November 1, 1996, the Company as
the amalgamated entity adopted the Stock Option Plan of Granges Inc. Under the
Stock Option Plan, options may be exercised by the payment in cash of the
option exercise price to the Company. All options are subject to the terms and
conditions of an option agreement entered into by the Company and each
participant at the time an option is granted.
The Stock Option Plan is administered by the Board of Directors which
has full and final discretion to determine: (i) the total number of optioned
shares to be made available under the Stock Option Plan; (ii) the directors
(who are full-time employees), officers, employees and consultants of the
Company who are eligible to receive stock options under the Stock Option Plan
("Optionees"); (iii) the time when and the price at which stock options will be
granted; (iv) the time when and the price at which stock options may be
exercised; and (v) the conditions and restrictions on the exercise of options.
Pursuant to the terms of the Stock Option Plan, the exercise price must not be
less than the closing price of the Common Shares on The Toronto Stock Exchange
on the day preceding the date of grant. Options become exercisable only after
they vest in accordance with the respective stock option agreement and must
expire no later than ten years from the date of grant.
Under the terms of the Stock Option Plan, directors who are not
full-time employees of the Company automatically receive options to purchase
50,000 Common Shares upon becoming a director, with such options vesting and
becoming exercisable as to 25% on the date of grant and 25% on each of the
first, second and third anniversaries.
If an Optionee ceases to be an officer or employee of the Company, or
its subsidiaries, as a result of termination for cause, all unexercised options
will immediately terminate. If an Optionee ceases to be a director, officer or
employee of the Company, or its subsidiaries, or ceases to be a consultant to
the
-9-
<PAGE> 14
Company, for any reason other than termination for cause, the Optionee shall
have the right to exercise his or her options at any time up to but not after
the earlier of 30 days from the date of ceasing to be a director, officer,
employee or consultant, or the expiry date. In the event of death of an
Optionee, the legal representatives of such Optionee have the right to exercise
the options at any time up to but not after the earlier of 90 days from the
date of death, or the expiry date.
Options granted under the Stock Option Plan are non-transferable and
non-assignable other than on the death of a Participant. An Optionee has no
rights whatsoever as a shareholder in respect of unexercised options.
Stock Option Grants
The following table sets forth a summary of stock options granted to
the Named Executive Officers under the Stock Option Plan during the financial
year ended December 31, 1996. All stock options are for Common Shares of the
Company. No stock appreciation rights ("SARs") are outstanding, and it is
currently intended that none be issued. All currency figures under the heading
"Stock Option Grants" are in Canadian dollars.
OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL MARKET
NUMBER OF OPTIONS VALUE OF SECURITIES
SECURITIES GRANTED TO UNDERLYING OPTIONS
UNDER EMPLOYEES IN EXERCISE OR ON THE DATE OF
OPTION FINANCIAL YEAR BASE PRICE GRANT EXPIRATION
NAME (#) (%) (CDN$/SECURITY) (CDN$/SECURITY)(1) DATE
- ---------------------- ---------- -------------- --------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Michael B. Richings 50,000 6.0 1.83 91,500 October 31, 2006
Amjad J. Ali nil nil nil nil nil
Paul Wright nil nil nil nil nil
Ronald J. McGregor 100,000 12.0 2.75 275,000 June 1, 2006
</TABLE>
- -----------------------
(1) The market value of the Common Shares on the date of grant of the
options is the closing price per share at which the Common Shares were traded
on The Toronto Stock Exchange on the day preceding the date of grant.
Aggregated Option Exercises and Value of Unexercised Options
The following table sets forth a summary of the exercise of options by
the Named Executive Officers during the financial year ended December 31, 1996
and the value at December 31, 1996 of unexercised in-the-money options held by
the Named Executive Officers. No SARs are outstanding. All currency figures
under the heading "Aggregated Option Exercises and Value of Unexercised
Options" are in Canadian dollars.
-10-
<PAGE> 15
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
AND FINANCIAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY
OPTIONS AT FINANCIAL
UNEXERCISED OPTIONS AT YEAR-END
SECURITIES AGGREGATE FINANCIAL YEAR-END EXERCISABLE/
ACQUIRED VALUE REALIZED EXERCISABLE/ UNEXERCISABLE(1)
ON EXERCISE (CDN$) UNEXERCISABLE (CDN$)
NAME (#) (#)
- --------------------- ----------- -------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Michael B. Richings nil nil 137,500/162,500 254,375/300,625
Amjad J. Ali nil nil 60,000/40,000 111,000/74,000
Paul Wright nil nil nil/nil nil/nil
Ronald J. McGregor nil nil 25,000/75,000 46,250/138,750
</TABLE>
- ----------------------------
(1) Based on the closing trading price of the Common Shares on The Toronto
Stock Exchange on the last trading day of the financial year, being $1.85.
None of the options held by the Named Executive Officers were repriced
downward during the financial year ended December 31, 1996.
PENSION AND RETIREMENT SAVINGS PLANS
The Company sponsors a quantified tax-deferred savings plan in
accordance with the provisions of section 401(K) of the U.S. Internal Revenue
Service Code which is available to permanent U.S.-based employees. Under the
terms of this plan, the Company makes contributions of up to 4% of eligible
employees' salaries.
The Company also sponsors a retirement savings plan which is available
to permanent Canadian-based employees. Under the terms of this plan, the
Company is required to contribute between 2% and 4% of the employee's salary,
depending on length of service, to a maximum of CDN$3,500 per year and provided
that the employee also makes the minimum required contribution, as follows:
<TABLE>
<CAPTION>
COMPANY'S EMPLOYEE'S
CONTRIBUTION CONTRIBUTION
TERM OF EMPLOYMENT % OF SALARY % OF SALARY
- -------------------- --------------- ---------------
<S> <C> <C>
3 years or less 2.0% 2.0%
3-4 years 3.0% 2.0%
4-5 years 3.5% 2.0%
5 years or more 4.0% 2.0%
</TABLE>
The retirement savings funds for each employee are deposited in the employee's
registered retirement savings plan ("RRSP") as defined in Canadian income tax
legislation and are held by a trustee. The amounts contributable to an RRSP
and the withdrawal and taxation of RRSP funds both before and after retirement
are governed by Canadian income tax legislation. If funds are withdrawn by the
employee from his or her RRSP, the employee ceases to qualify for contributions
by the Company for a period of two years.
-11-
<PAGE> 16
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS
All of the Named Executive Officers of the Company have been engaged
under employment contracts. Each of these contracts provides for base salary,
annual discretionary incentive bonus, four weeks' vacation time and various
minor perquisites. The contracts between the Company and the Named Executive
Officers, other than the President and Chief Executive Officer, are for an
unlimited term, provide for performance bonuses in accordance with the
Company's incentive policy, may be terminated by the Company or the Named
Executive Officer upon 30 days written notice, and provide for severance
benefits described below.
The contract between the Company and Michael B. Richings, the
President and Chief Executive Officer, is for an unlimited term, provides for
an annual bonus of up to 30% of his base salary at the sole discretion of the
Board of Directors and provides for a severance benefit described below. Under
the terms of this contract, the employment of Mr. Richings may be terminated
by the Company without cause, provided that it continues to pay his base salary
for a period of 12 months (or makes a lump sum payment equal to 12 months of
his base salary), and by Mr. Richings upon 60 days notice to the Company. In
addition, in the event that Mr. Richings suffers an injury or illness that
renders him permanently incapable of substantially performing his duties under
this contract, the Company may terminate Mr. Richings' employment, provided
that it continues to pay his base salary and other employee benefits for a
period of one year following notice of such termination.
As at March 15, 1997, the Company has arrangements with three of the
Named Executive Officers under which each is entitled to receive severance
benefits based upon his monthly salary in the event of termination of his
employment other than for cause. The aggregate compensation paid or payable to
the three Named Executive Officers under this arrangement is US$506,582, and
the amount payable to each Named Executive Officer is as follows:
<TABLE>
<S> <C>
Michael B. Richings US$182,415
Amjad J. Ali US$184,167
Ronald J. McGregor US$140,000
</TABLE>
The fourth Named Executive Officer, Paul Wright, received a severance
payment upon termination of his employment of US$187,305.
Other than as described above, the Company has no plan or arrangement
in respect of compensation received or that may be received by Named Executive
Officers to compensate such officers in the event of the termination of
employment, resignation, retirement , change of control of the Company or in
the event of a change in responsibilities following a change of control.
REPORT OF THE COMPENSATION COMMITTEE
Composition of the Compensation Committee
The Company has a Compensation Committee comprised of the following
directors: David R. Sinclair, Alan G. Thompson and Ross J. Beaty. None of the
members of the Compensation Committee is or have been an executive officer or
employee of the Company or any of its subsidiaries or affiliates.
-12-
<PAGE> 17
Report
It is the responsibility of the Compensation Committee to review and
recommend compensation policies and programs to the Company as well as salary
and benefit levels for its executives. The committee makes recommendations to
the Board of Directors which gives final approval on compensation matters.
During 1996, the compensation committee met two times.
The Company's compensation policies and programs are designed to be
competitive with similar mining companies and to recognize and reward executive
performance consistent with the success of the Company's business. These
policies and programs are intended to attract and retain capable and
experienced people.
In addition to industry comparables, the Compensation Committee
considers a variety of factors when determining both compensation policies and
programs and individual compensation levels. These factors include the
long-range interests of the Company and its shareholders, overall financial and
operating performance of the Company and the committee's assessment of each
executive's individual performance and contribution toward meeting corporate
objectives. Superior performance is recognized through the Company's incentive
policy.
The total compensation plan for executive officers is comprised of
three components: base salary, an incentive payment and stock options. As a
general rule for establishing base salaries, the Compensation Committee reviews
competitive market data for each of the executive positions and determines
placement at an appropriate level in a range. Compensation levels are
typically negotiated with the candidate for the position prior to his or her
final selection as an executive officer. The compensation range for executives
normally moves annually to reflect external factors such as inflation.
The Company's incentive policy generally allows executive officers and
management personnel to earn an incentive payment to a maximum of 15% of his or
her base salary, two-thirds of which is based upon individual performance and
one-third of which is based upon the performance of the Company. All executive
officers and management personnel participate in this policy, except the
President and Chief Executive Officer. By contract, he is entitled to earn a
bonus of up to 30% of his base salary. Following the end of each fiscal year,
the Compensation Committee makes a recommendation to the Board of Directors as
to the appropriate incentive payment for the executive officers and management
personnel. No specific performance criteria or objectives are utilized by the
Compensation Committee or the Board of Directors in making their
determinations. In 1996, incentive payments totalling US$74,300 were paid to
four executive officers and senior employees, subject to one-half of the
payment being reinvested in Common Shares through a subscription from treasury.
See "Subscription for Common Shares by Senior Management".
The third element in the total compensation plan is the Stock Option
Plan. This plan is intended to emphasize management's commitment to growth of
the Company and enhancement of shareholders' wealth through, for example,
improvements in net earnings and share price increments. In the past the
Company placed less reliance on stock options as management incentives in
comparison to other companies in the mining industry, principally because of
the relative undervaluation of the Company's stock and other factors which were
perceived to have interfered with normal market performance of its shares. A
review of the stock option element of executive and management compensation was
undertaken in 1994 and, in August 1994, the Board of Directors adopted the
recommendations of the Compensation Committee with respect to exercising its
discretion in granting options under the Stock
-13-
<PAGE> 18
Option Plan. These recommendations, which were designed to improve the value
of the plan as an incentive to management and to encourage long-term service,
are as follows:
(a) participation under the Stock Option Plan will continue to be
restricted to senior staff;
(b) the initial grant of options will continue to be upon
commencement of permanent employment, will be at a level
commensurate with the seniority of the position and will be in
accordance with current industry standards;
(c) consideration will be given to subsequent grants on an ad hoc
basis dependent upon corporate and individual performance and
up to a maximum level commensurate with the seniority of the
position; and
(d) each new grant will have a maximum term of ten years as
required under the Stock Option Plan, but with one quarter of
the options exercisable at the date of grant and the remaining
three quarters in equal instalments over the succeeding three
years.
Submitted on behalf of the Compensation Committee
DAVID R. SINCLAIR
ALAN G. THOMPSON
C. THOMAS OGRYZLO
-14-
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return on its Common Shares with the
cumulative total return of the TSE 300 Stock Index, assuming the reinvestment
of dividends, for the last five financial years:
[GRAPH]
COMPENSATION OF DIRECTORS
During the financial year ended December 31, 1996, directors of the
Company received a fee of CDN$12,000 per annum payable monthly in equal
instalments, plus a fee of CDN$600 per meeting of the Board of Directors or any
committee thereof (CDN$500 for telephone meetings). The Chairman of the Board
of Directors received an additional fee of CDN$24,000 per annum but did not
receive fees for meetings of committees of the Board of Directors. The Company
also reimbursed directors for out-of-pocket expenses related to their
attendance at meetings. No additional amounts were paid or are payable to
directors of the Company for committee participation or special assignments.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
None of the directors or senior officers of the Company, nor any
individual who was at any time during the most recently completed financial
year a director or senior officer of the Company, or any associates or
affiliates of the foregoing persons is indebted to the Company.
-15-
<PAGE> 20
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
No proposed nominee for election as director, nor any director or
senior officer of the Company who has served in such capacity since the
beginning of the last financial year or any shareholder holding of record or
beneficially, directly or indirectly, more than 10 percent of the issued Common
Shares of the Company, or any of their respective associates or affiliates, had
any material interest, directly or indirectly, in any transaction with the
Company, or in any proposed transaction, within the past three years, except as
otherwise disclosed herein. See "Principal Shareholders".
MANAGEMENT CONTRACTS
There are no management functions of the Company which are to any
substantial degree performed by persons other than the directors or senior
officers of the Company.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as disclosed herein, no person who has been a director or
officer of the Company at any time since the beginning of the last financial
year or any proposed nominee for election as director, nor any associate or
affiliate of such person, has an interest in the matters to be acted upon at
the Meeting.
OTHER MATTERS
Management of the Company knows of no other matters which will be
brought before the Meeting other than those set forth in the Notice of Meeting.
Should any other matters properly come before the Meeting, the Common Shares
represented by the proxies solicited hereby will be voted on those matters in
accordance with the best judgment of the persons voting such proxies.
INFORMATION AVAILABLE
EACH PERSON TO WHOM A COPY OF THIS INFORMATION CIRCULAR IS DELIVERED
WHO MAKES A WRITTEN REQUEST TO THE COMPANY WILL BE SENT WITHOUT A CHARGE A COPY
OF THE ANNUAL REPORT ON FORM 20-F, INCLUDING FINANCIAL STATEMENTS AND THE
FINANCIAL STATEMENT SCHEDULES FOR THE MOST RECENT FISCAL YEAR. WRITTEN
REQUESTS MUST BE MADE DIRECTLY TO THE COMPANY.
BOARD OF DIRECTOR APPROVAL
The undersigned hereby certifies that the contents and sending of this
Management Information and Proxy Circular to the shareholders of the Company
have been approved by the Board of Directors.
DATED at Vancouver, British Columbia, this 25th day of March, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ WILLIAM F. SIRETT
---------------------------------------
William F. Sirett
Secretary
-16-
<PAGE> 21
SCHEDULE "A"
- RESOLUTION FIXING NUMBER OF DIRECTORS -
BE IT RESOLVED as an Ordinary Resolution that the number of directors of the
Company be fixed at eight directors.
SCHEDULE "B"
- RESOLUTION AUTHORIZING SUBSCRIPTION FOR COMMON SHARES -
BE IT RESOLVED as an Ordinary Resolution that:
1. the subscription for a total of 32,135 Common Shares by four executive
officers and senior employees of the Company be authorized and
approved; and
2. any officer of the Company is authorized to do all acts and things, to
execute under the common seal of the Company or otherwise and to
deliver all agreements documents and instruments, to give all notices
and to deliver, file and distribute all documents and information
which such officer determines to be necessary or desirable in
connection with or to give effect to and carry out the foregoing
resolution.
-17-
<PAGE> 1
EXHIBIT 99.3
VISTA GOLD CORP.
PROXY
ANNUAL GENERAL MEETING
APRIL 30, 1997
AT THE HOUR OF 11:00 A.M., VANCOUVER TIME
THIS PROXY IS SOLICITED BY MANAGEMENT OF THE COMPANY
The undersigned member of Vista Gold Corp. (the "Company") hereby appoints
Michael B. Richings, or failing him A.J. Ali, or failing either of them
_____________________ as the proxyholder for and on behalf of the undersigned
to attend, act and vote for and on behalf of the undersigned at the annual
general meeting (the "Meeting") of the members of the Company to be held on
Wednesday, April 30, 1997 and at any adjournments thereof, to the same extent
and with the same powers as if the undersigned were present at the said
meeting, or any adjournments thereof, and the persons named are specifically
directed to vote as indicated below.
I direct my proxy to vote as follows:
<TABLE>
<S> <C> <C>
1. To approve an ordinary resolution reducing the number of directors of
the Company from nine to eight.
FOR [ ] AGAINST [ ]
2. To elect the following persons as directors of the Company until the
next annual general meeting:
Ross J. Beaty FOR [ ] WITHHOLD [ ]
William Calhoun FOR [ ] WITHHOLD [ ]
C. Thomas Ogryzlo FOR [ ] WITHHOLD [ ]
Michael B. Richings FOR [ ] WITHHOLD [ ]
David R. Sinclair FOR [ ] WITHHOLD [ ]
Keith Steeves FOR [ ] WITHHOLD [ ]
Alan G. Thompson FOR [ ] WITHHOLD [ ]
Peter Walton FOR [ ] WITHHOLD [ ]
3. To appoint Coopers & Lybrand, Chartered Accountants, as auditor of the
Company until the next annual general meeting and authorize the
directors to fix the remuneration to be paid to the auditor.
FOR [ ] WITHHOLD [ ]
4. To approve an ordinary resolution approving the subscription for
common shares of the Company by certain executive officers and senior
employees of the Company.
FOR [ ] AGAINST [ ]
</TABLE>
EXECUTED on the _____ day of __________________, 1997.
_____________________________ ____________________________
Signature of Member Number of Common Shares Held
____________________________________________________________________
Name of Member (please print clearly)
____________________________________________________________________
Address
____________________________________________________________________
City/Province
PROXY INSTRUCTIONS
1. The common shares represented by this proxy will, on any poll, be
voted as the member may have specified by marking an "X" in the spaces provided
for that purpose. IF NO CHOICE IS SPECIFIED AND EITHER OF MICHAEL B. RICHINGS
OR A.J. ALI IS APPOINTED AS PROXYHOLDER, THE COMMON SHARES WILL BE VOTED AS IF
THE MEMBER HAD SPECIFIED AN AFFIRMATIVE VOTE.
2. THE MEMBER MAY APPOINT AS PROXYHOLDER SOMEONE OTHER THAN THE PERSONS
NAMED IN THIS PROXY BY STRIKING OUT THEIR NAMES AND INSERTING IN THE BLANK
SPACE PROVIDED THE NAME OF THE PERSON HE OR SHE WISHES TO ATTEND AND ACT AS
PROXYHOLDER. THAT PERSON NEED NOT BE A MEMBER OF THE COMPANY. IF THE
INSTRUCTIONS BY THE MEMBER ON THIS PROXY ARE CERTAIN, THE COMMON SHARES
REPRESENTED BY THE PROXY WILL BE VOTED ON ANY POLL, AND WHERE THE MEMBER
SPECIFIES A CHOICE WITH RESPECT TO ANY MATTER TO BE ACTED ON, THE COMMON SHARES
WILL BE VOTED ON ANY POLL IN ACCORDANCE WITH THE SPECIFICATIONS SO MADE.
3. THIS PROXY ALSO CONFERS A DISCRETIONARY AUTHORITY TO VOTE THE SHARES
WITH RESPECT TO:
A) AMENDMENTS OR VARIATIONS OF MATTERS IDENTIFIED IN THE NOTICE OF
MEETING; AND
B) OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING,
BUT ONLY IF MANAGMENT HAS NOT BEEN MADE AWARE, A REASONABLE TIME PRIOR TO THIS
SOLICITATION, THAT THE AMENDMENTS, VARIATIONS OR OTHER MATTERS ARE TO BE
PRESENTED FOR ACTION AT THE MEETING. No matters other than those stated in the
attached notice are, at present, known to be considered at the Meeting but, if
such matters should arise, proxies will be voted in accordance with the
instructions of the member voting by proxy.
4. This proxy may not be valid unless it is dated and signed by the
member or by his or her attorney duly authorized in writing or, in the case of
a corporation, is executed under its corporate seal or by an officer or
officers or attorney for the corporation duly authorized. If this proxy is
executed by an attorney for an individual member or joint member or by an
officer or officers or attorney of a corporate member not under its corporate
seal, the instrument so empowering the officer or officers or the attorney, as
the case may be, or a notarial copy thereof, should accompany the proxy.
5. This proxy may not be used at the Meeting unless its is deposited at
the office of Montreal Trust Company of Canada at Montreal Trust Centre, Suite
410, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9, Attention: Proxy
Department before 11:00 a.m., Vancouver time, on Monday, April 28, 1997, or no
later than 48 hours, excluding Saturdays, Sundays and holidays, before any
adjournment of the Meeting. The Chairman of the Meeting has the discretion to
accept proxies filed subsequently.
<PAGE> 1
EXHIBIT 99.4
VISTA GOLD CORP.
SUPPLEMENTAL MAILING LIST RETURN CARD
National Policy No. 41 adopted by Canadian Securities
Regulators allows an exemption to Vista Gold Corp. (the "Company") from
sending unaudited interim financial statements to shareholders. If you wish to
receive the Company's unaudited interim financial statements, you must complete
this form and forward it, either with your proxy or separately, to our transfer
agents:
MONTREAL TRUST
510 BURRARD STREET
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
Please note that both registered and non-registered shareholders should return
the form; registered shareholders will not automatically receive unaudited
interim financial statements. (Registered shareholders are those with shares
registered in their name; non-registered shareholders have their shares
registered in an agent, broker, or bank's name).
______________________________________________________________________________
Please put my name on your Supplemental Mailing list to receive unaudited
interim financial statements of Vista Gold Corp.
______________________________________________________________________________
(First Name and Surname)
______________________________________________________________________________
(Number and Street)
______________________________________________________________________________
(City) (Province) (Postal Code)
Signature: ________________________________ ________________________
(Signature of Shareholder) (Date)
