<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 November 30, 1998 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: November 30, 1998 By: /s/ Roger L. Smith
-------------------------------
Roger L. Smith
Vice President of Finance
<PAGE> 3
EXHIBIT INDEX
Exhibit Description of Exhibit
------- ----------------------
99.1a Vista Gold Corp. Third Quarter Report 1998 - Letter to
Shareholders
99.1b Vista Gold Corp. Third Quarter Report 1998 - Financial
Statements
99.1c Vista Gold Corp. Third Quarter Report 1998 - Notes to
Financial Statements
<PAGE> 4
THIRD QUARTER REPORT - 1998
DEAR FELLOW SHAREHOLDERS:
The Company produced 24,578 ounces of gold during the third quarter of 1998,
bringing year-to-date gold production to 94,766 ounces. This compares favorably
to gold production of 90,421 ounces for the nine months ended September 30,
1997.
On July 12, 1998, the Hycroft mine produced its one-millionth ounce of gold. The
Hycroft operation achieved this major production milestone due to the efforts of
the employees. We are very proud of the Hycroft team, which has successfully
demonstrated the Company's ability to run an efficient and low-cost operation
under very difficult conditions.
Disappointing gold prices have persisted, and as a result, the Company has taken
measures to reduce costs and conserve cash. Cost reduction measures included
plans to temporarily suspend mining operations at the Hycroft mine in May 1998.
However, better than expected ore grade allowed mining to continue. Present
plans call for the suspension of mining activities in December 1998. Gold
production for 1998 is currently estimated to be 108,000 ounces. Gold production
from the leach pads will continue through 1999 and into 2000.
The higher rate of gold production for the year, together with measures taken to
control costs, allowed the Hycroft mine to lower its cash operating costs per
ounce. For the quarter ended September 30, 1998, the cash operating cost per
ounce was $248, a decrease of $25 or 9 percent from 1997. For the nine months
ended September 30, 1998, the cash operating cost per ounce was $217, a decrease
of $50 or 19 percent from 1997.
The Company has examined various mine plans that will allow mining activities to
resume when gold prices return to higher levels. In the short-term, the Company
will commence reclamation in areas that will not be affected by future
operations. The Hycroft property is not fully explored and the Company is
pursuing joint venture opportunities to undertake the higher cost exploration
for deeper and potentially higher-grade ore.
As of September 30, 1998, the Company's cash balance was $2.2 million, an
increase of $0.4 million from December 31, 1997. During the first nine months of
1998, the Company paid down $10.5 million of its $13.0 million bank debt from
1997. Subsequent to September 30, 1998, the Company paid the remaining $2.5
million and completely retired the bank debt secured by the assets of the
Hycroft mine. This concluded the Company's remaining obligations under the debt
agreement and allowed the Company to proceed with the acquisition of the Mineral
Ridge mine.
On October 21, 1998, the Company completed the acquisition of Mineral Ridge
Resources Inc. ("MRRI") from Cornucopia Resources Ltd. ("Cornucopia"). MRRI
owned and operated the Mineral Ridge mine located near the town of Silver Peak,
approximately 35 miles southwest of Tonopah, Nevada.
<PAGE> 5
The Mineral Ridge mine was constructed by Cornucopia for a cost of approximately
US$17 million. The project was completed on May 17, 1997 and the first gold was
poured on June 20, 1997. However the project failed to meet commercial
production loan tests and was shutdown in December 1997. The Company completed
an in-depth technical review and will undertake a number of modifications to the
facility prior to the restart of operations to eliminate the problems
experienced by Cornucopia. The improvements include changes to the crushing and
agglomeration circuits, the addition of surge capacity to the crushing plant,
employment of a coarser crusher product size and the introduction of strong
leach solutions during the agglomeration process, all of which the Company
believes will improve the rate of recovery of gold.
As a result of its due diligence study, the Company now estimates the proven and
probable reserves to be 4 million tons at a grade of 0.06 ounces per ton
containing 243,000 ounces of gold. The average estimated cash production costs
will be US$226 per ounce and production is planned to be approximately 55,000
ounces in 1999. Before the end of the year, Vista will commence a program of
drilling designed to convert existing resources to additional mineable reserves.
It is hoped that in this first stage, we can add between 50,000 to 100,000
ounces of new reserves. The Company has also commenced systematic exploration of
the total land package, which it believes will add significant reserves to the
overall project.
At the Amayapampa and Capa Circa projects in Bolivia, the Company has completed
an evaluation of the economics of combining ore from the underground Capa Circa
mine with the nearby Amayapampa project. The study indicates that the
combination of the two properties would enhance the project's estimated
financial returns, making financing more attractive in today's lower gold price
environment. The Company is continuing to investigate the availability of
financing for the project.
To ensure management and key operating personnel have a strong incentive to
enhance the value of Vista Gold, the board of directors approved the
cancellation of all outstanding stock options and the grant of new options that
reflect current conditions, subject to ratification by the shareholders at our
annual general meeting.
With gold prices continuing at depressed levels, the Company reacted positively
by taking measures to enhance gold production and control costs. As a result,
the Hycroft mine had an excellent year as it generated more than $12 million in
cash from operations and completely retired its $13 million bank debt related to
the Hycroft operation. However, mining activities and gold production at Hycroft
cannot be sustained at today's gold prices, and mining operations will be
suspended by mid-December.
<PAGE> 6
The Company has been aggressively seeking opportunities for new growth,
including the acquisition of MRRI. At the Mineral Ridge mine, start-up
activities are proceeding as planned and gold production from new mined ore is
expected to commence early in 1999. Combined gold production from the Hycroft
and Mineral Ridge mines for 1999 is estimated to be in excess of 75,000 ounces.
Our cash position remains adequate and the Company will continue to seek
suitable investment opportunities with the goal of enhancing shareholder value.
/s/ Mike B. Richings
Mike B. Richings
President and Chief Executive Officer
November 25, 1998
The statements that are not historical facts are forward-looking statements
involving known and unknown risks and uncertainties that could cause actual
results to vary materially from the targeted results. Such risks and
uncertainties include those described in the Company's Form 20-F as amended.
For further information, please contact Investor Relations at (303) 629-2450 or
(888) 629-2450.
(303) 629-2450 -voice (303) 629-2499 - fax
370 Seventeenth Street - Suite 3000 - Denver, CO 80202
<PAGE> 7
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
(U.S. dollars in thousands, except share data) 1998 1997 1998 1997
---------------------------------------------- ---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Gold sales $ 7,816 $ 10,130 $ 29,987 $ 31,432
Interest income 14 23 68 219
------------------------------------------------------------
7,830 10,153 30,055 31,651
------------------------------------------------------------
Costs and expenses:
Mining operations 6,270 8,280 21,014 24,423
Depreciation, depletion and amortization 1,148 1,917 5,196 5,101
Provision for reclamation and closure costs 591 203 2,162 520
Operating leases 171 592 1,091 1,746
Mineral exploration and property evaluation 67 540 357 2,012
Corporate administration 369 608 1,022 1,797
Investor relations 20 74 173 300
Interest expense 108 294 410 564
Loss (gain) on disposal of assets (13) 0 (198) (851)
Loss (gain) on liquidation of gold futures 0 0 (3,217) 0
Equity in loss and impairment of Zamora Gold Corp. 0 202 0 660
Other expense (income) 52 75 311 (107)
Write-down of mineral properties 0 33,000 0 33,000
------------------------------------------------------------
8,783 45,785 28,321 69,165
------------------------------------------------------------
Earnings (loss) before taxes (953) (35,632) 1,734 (37,514)
Income taxes 16 69 23 69
------------------------------------------------------------
Net earnings (loss) $ (969) $ (35,701) $ 1,711 $ (37,583)
============================================================
Weighted average shares outstanding 89,152,540 89,152,540 89,152,540 89,083,707
- -----------------------------------------------------------------------------------------------------------------
Earnings (loss) per share $ (0.01) $ (0.40) $ 0.02 $ (0.42)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
(U.S. dollars in thousands) 1998 1997 1998 1997
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Retained earnings (deficit), beginning of period $(61,756) $(12,300) $(64,436) $(10,418)
Net earnings (loss) (969) (35,701) 1,711 (37,583)
--------------------------------------------------
Retained earnings (deficit), end of period $(62,725) $(48,001) $(62,725) $(48,001)
==================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 8
VISTA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31
(U.S. dollars in thousands) 1998 1997
(unaudited) (audited)
Assets:
<S> <C> <C>
Cash and cash equivalents $ 2,180 $ 1,799
Marketable securities 0 132
Accounts receivable 5,192 2,199
Gold inventory 8,513 12,717
Supplies and other 1,273 2,301
------------------------
Current assets 17,158 19,148
------------------------
Property, plant and equipment, net 53,660 58,638
Investment in Zamora Gold Corp. 1,008 857
Other assets 107 385
------------------------
Long-term assets 54,775 59,880
------------------------
------------------------
Total assets $ 71,933 $ 79,028
========================
Liabilities and Shareholders' Equity:
Accounts payable $ 3,029 $ 4,472
Accrued liabilities and other 949 1,913
Deferred hedging gains 2,766 0
Bank debt 2,500 13,000
------------------------
Current liabilities 9,244 19,385
------------------------
Accrued reclamation and closure costs 5,970 4,534
Other liabilities 31 34
------------------------
Long-term liabilities 6,001 4,568
------------------------
------------------------
Total liabilities 15,245 23,953
------------------------
Capital stock, no par value per share:
Preferred - unlimited shares authorized; no shares outstanding
Common - unlimited shares authorized; shares outstanding:
1998 - 89,152,540; 1997 - 89,152,540 120,870 120,870
Retained earnings (deficit) (62,725) (64,436)
Currency translation adjustment (1,457) (1,359)
------------------------
Total shareholders' equity 56,688 55,075
------------------------
------------------------
Total liabilities and shareholders' equity $ 71,933 $ 79,028
========================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 9
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
(U.S. dollars in thousands) 1998 1997 1998 1997
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (969) $(35,701) $ 1,711 $(37,583)
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operations:
Depreciation, depletion and amortization 1,148 1,917 5,196 5,101
Amortization of deferred stripping 0 0 1,169 985
Amortization of debt issue costs 0 119 0 119
Deferral (amortization) of hedging gains (892) (99) 2,766 (387)
Amortization of deferred hedging costs 0 0 276 0
Provision for reclamation and closure costs 591 203 2,162 520
(Gain) loss on sale of assets (13) 0 (198) (851)
Equity in loss and impairment of Zamora Gold Corp. 0 202 0 660
(Gain) loss on currency translation (35) 169 (98) 67
Write-down of mineral properties 0 33,000 0 33,000
Other non-cash items (3) 0 (2) 1
--------------------------------------------
(173) (190) 12,982 1,632
Changes in operating assets and liabilities:
Marketable securities 0 10 132 6
Accounts receivable 896 (676) (2,993) (1,655)
Gold inventory 1,655 (197) 4,204 2,252
Supplies and other 451 67 1,028 786
Accounts payable 1,244 1,662 (1,444) (3,200)
Accrued liabilities and other 199 (127) (963) 1
Reclamation and closure costs (92) (11) (726) (189)
--------------------------------------------
Net cash provided by (used in) operating activities 4,180 538 12,220 (367)
--------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (1,603) (3,377) (4,212) (12,244)
Additions to deferred stripping 0 (700) 0 (4,865)
Proceeds from disposal of assets 682 0 3,023 996
Investment in and advances to Zamora Gold Corp. (152) 0 (152) (520)
Other assets 0 0 2 0
--------------------------------------------
Net cash used in investing activities (1,073) (4,077) (1,339) (16,633)
--------------------------------------------
Cash flows from financing activities:
Proceeds from (repayment of) short-term debt (4,700) 0 (10,500) 0
Proceeds from (repayment of) long-term debt 0 (300) 0 9,300
Proceeds from issuance of common stock 0 37 0 125
--------------------------------------------
Net cash provided by (used in) financing activities (4,700) (263) (10,500) 9,425
--------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,593) (3,802) 381 (7,575)
Cash and cash equivalents, beginning of period 3,773 4,825 1,799 8,598
--------------------------------------------
Cash and cash equivalents, end of period $ 2,180 $ 1,023 $ 2,180 $ 1,023
============================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 10
VISTA GOLD CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(U.S. dollars in thousands unless specified otherwise - unaudited)
1. UNAUDITED INTERIM FINANCIAL INFORMATION
The consolidated financial statements of Vista Gold Corp. (the "Company") for
the nine months ended September 30, 1998 have been prepared by the Company
without audit. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present the interim financial
information set forth herein have been made. The results of operations for
interim periods are not necessarily indicative of the operating results of a
full year or of future years.
2. YEAR 2000
As the year 2000 approaches, there are uncertainties concerning whether computer
systems will properly recognize date-sensitive information when the year changes
to 2000. Systems that do not properly recognize such information could generate
erroneous data or fail.
The Company's computer systems and software are already configured to
accommodate dates beyond the year 2000. The Company believes that the year 2000
will not pose significant operational problems for the Company's computer
systems. However, the Company has not yet completed its assessment of all of its
systems, or the computer systems of third parties with which it deals, and while
it is not possible at this time to assess the effect of a third party's
inability to adequately address year 2000 issues, the Company does not believe
the potential problems associated with year 2000 will have a material effect on
its financial results.
3. BANK DEBT AND HEDGING FACILITIES
In January 1998, the Company took steps to improve its cash flow and liquidated
its forward position in the gold futures market and made plans to temporarily
reduce mining activities at the Hycroft mine.
The liquidation of the Company's gold forward position was completed in January
1998, and generated $9.5 million in cash. Net hedging gains resulting from the
transaction were $9.3 million, of which $3.2 million was recognized immediately
and $6.1 million was deferred to subsequent periods. During the nine months
ended September 30, 1998, $3.3 million in deferred hedging gains was amortized
and as of September 30, 1998, the remaining unamortized deferred hedging gain
balance was $2.8 million.
Waste-rock mining was halted in January 1998 and the Company plans to suspend
ore mining in December 1998. Gold recovery and processing will continue from
inventoried ore through 1999 and into 2000.
<PAGE> 11
As a result of these measures, the Company amended its debt agreement secured by
the assets of the Hycroft mine as follows. The Company hedged 90,000 ounces with
various maturity dates during 1998 at a gold price of no less than $282 per
ounce to ensure a satisfactory cash margin. At September 30, 1998, there were
8,000 hedged ounces outstanding. The repayment terms have been amended and call
for the Company to completely retire the debt during 1998. During the nine
months ended September 30, 1998, the Company paid $10.5 million and reduced the
$13.0 million debt to $2.5 million.
4. SUBSEQUENT EVENTS
Subsequent to September 30, 1998, the Company paid $2.5 million and completely
retired the remaining bank debt secured by the assets of the Hycroft mine. This
concluded the Company's remaining obligations under the amended debt agreement
and allowed the Company to proceed with the acquisition of the Mineral Ridge
mine.
On October 21, 1998, Vista Gold Corp. ("Vista") completed the acquisition of
Mineral Ridge Resources Inc. ("MRRI") from Cornucopia Resources Ltd.
("Cornucopia"). Vista has acquired all of the shares of MRRI in consideration
for 1,562,000 shares of Vista at an aggregate value of US$250,000. Vista
concurrently subscribed on a private placement basis for 2,777,777 shares of
Cornucopia valued at US$250,000.
The Mineral Ridge mine, located near the town of Silver Peak, approximately 35
miles southwest of Tonopah, Nevada, was constructed by Cornucopia for a cost of
approximately US$17 million. The project was completed on May 17, 1997 and the
first gold was poured on June 20, 1997. However the project failed to meet
commercial production loan tests and was shutdown in December 1997. Vista has
completed an in-depth technical review and will undertake a number of
modifications to the facility prior to the restart of operations to eliminate
the problems experienced by Cornucopia. The improvements include changes to the
crushing and agglomeration circuits, the addition of surge capacity to the
crushing plant, employment of a coarser crusher product size and the
introduction of strong leach solutions during the agglomeration process, all of
which Vista believes will improve the rate of recovery of gold.
As a result of its due diligence study, Vista now estimates the proven and
probable reserves to be 4 million tons at a grade of 0.06 ounces per ton
containing 243,000 ounces of gold. The average estimated cash production costs
will be US$226 per ounce and production is planned to be approximately 55,000
ounces in 1999.
As part of the transaction, MRRI has amended its loan agreement with Dresdner
Bank. The amended agreement revised the terms of repayment of the previously
outstanding loan and accrued interest totaling approximately US$13.5 million and
provided additional loans to MRRI totaling US$1.6 million which will be used to
pay amounts owing to other creditors of MRRI. The revised agreement required the
contribution of US$5.0 million of mining equipment to the project by Vista. Net
cash flow from the project will be distributed on the basis of 70 percent to
Dresdner Bank and 30 percent to Vista after deduction of US$800,000 of
management fees payable to Vista over the next two years and rescheduled
principal payments on the additional loans used to repay other creditors. The
interest rate on the loans will be LIBOR plus 2 percent
<PAGE> 12
and the loans will be secured by the assets of MRRI and the US$5 million of
mining equipment contributed by Vista. As part of the agreement with Dresdner,
MRRI liquidated forward gold hedges to provide US$3.5 million, which is to be
used as working capital and to pay for capital improvements on the project.
Vista has also executed an amendment to MRRI's principal royalty agreement with
Mary Mining Company Inc. to modify the net smelter royalties payable from the
current flat rate of 4 percent if the gold price is US$500 or less, to a
graduated scale which increases progressively from 21/2 percent if the gold
price is US$300 or less. In consideration for the modification, Vista has paid
Mary Mining Company US$24,000 in additional advance royalty payments in 1998.
