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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 May 21, 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
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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.
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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: May 21, 1998 By: /s/ Roger L. Smith
---------------------------
Roger L. Smith
Vice President of Finance
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
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<S> <C>
99.1a Vista Gold Corp. First Quarter Report 1998 - Letter to Shareholders
99.1b Vista Gold Corp. First Quarter Report 1998 - Financial Statements
99.1c Vista Gold Corp. First Quarter Report 1998 - Notes to Financial Statements
</TABLE>
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FIRST QUARTER REPORT - 1998
DEAR FELLOW SHAREHOLDERS:
[VISTA GOLD CORP. LOGO]
Despite depressed gold prices, the Company had an excellent first quarter as the
Hycroft mine achieved record gold production. Early this year, measures were
taken to reduce costs and improve the Company's cash position, and as a result
of these successful efforts, the Company realized net earnings of $2.2 million,
or $0.02 per share for the first quarter of 1998, as compared to net losses of
$0.7 million, or $0.01 per share for the first quarter of 1997.
At the Hycroft mine, a record 35,017 ounces of gold were produced during the
current quarter, as compared to 30,135 for the same period in 1997. The
increased gold production resulted in part from higher than expected ore grades
and production volumes from the Brimstone pit. In January 1998, the Company made
plans to control costs and temporarily reduced mining activities at the mine. As
a result, the mine was able to decrease its cash operating cost per ounce. For
the quarter ended March 31, 1998, the cash operating cost per ounce was $207, a
decrease of $66, or 24 percent, from 1997.
Also in January 1998 while gold prices were at 18-year lows, the Company
liquidated its forward position in the gold futures market and generated $9.5
million in cash. The transaction enabled the Company to improve its cash and
working capital position. Proceeds from the liquidation were used to reduce the
Company's current bank debt and accounts payable by $4.5 million and $3.6
million, respectively. Including the cash proceeds from the transaction, the
Company generated $11.3 million in cash from operating activities during the
first quarter of 1998.
As of March 31, 1998, the Company's cash balance was $2.9 million, an increase
of $1.1 million from December 31, 1997. The improved cash position, together
with higher Brimstone ore grades and production volumes, has allowed the Company
to review its mining plans and defer the suspension of ore mining until August
1998 from the previously scheduled May 1998 suspension. As a result, estimated
1998 gold production from the Hycroft mine has been increased from 95,000 to
105,000 ounces.
Presently, gold production from inventoried ore at the Hycroft mine is planned
to continue through 1999 and into 2000. However, bulk sampling of ore from the
Brimstone pit and other technical studies are in progress. Hycroft's engineers
are reviewing the longer term implications of the favorable ore grade and
tonnage variances, including the possibility of further extensions to the mine
plan.
At the Amayapampa and Capa Circa projects in Bolivia, carrying costs to maintain
the projects have been reduced consistent with the Company's plans to start
development when gold prices return to levels above $325 per ounce. The Company
is currently conducting additional work on the underground Capa Circa mine to
identify additional sources of higher grade ore, which could be processed at the
nearby, proposed Amayapampa plant. The combination of the two operations enhance
the project's estimated financial returns, making financing more attractive at
lower gold prices.
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At the Guariche project in Venezuela, the Company terminated the option
agreement with L.B. Mining Co. on May 6, 1998, because the economic terms were
unacceptable in today's gold market. The Company is continuing discussions with
L. B. Mining Co. to reach an agreement more consistent with current gold prices.
Subsequent to March 31, 1998, Zamora Gold corp. ("Zamora") announced it had
signed an agreement to acquire various property interests in Ecuador from a
major Ecuadorian mineral exploration company. Vista presently owns 48.7 percent
of the outstanding common shares of Zamora. As a condition of the transaction,
Zamora will issue 39.5 million common shares to the Ecuadorian company for the
acquisition of the property interests and an additional 6.5 million common
shares to Vista in settlement of debts owed by Zamora to Vista. After completing
the transaction, which is subject to regulatory and shareholder approvals, 25.5
percent of the outstanding common shares of Zamora will be held by Vista.
The acquisition will further consolidate the major properties held by Zamora,
including the Mina Real and Nambija 1 concessions, in the highly prospective
Nambija gold belt in Southern Ecuador. Additional exploration is planned and, at
the same time, joint venture opportunities will be pursued for the porphyry
copper development on the Mina Real properties.
On May 7, 1998, the Company signed an agreement with Claude Resources Inc. to
sell the subsidiary that owns the Tartan Lake gold mine assets near Flin Flon,
Manitoba. The purchase price was payable in approximately 1.0 million shares of
Claude Resources common stock. Through a subsequent arrangement, the Company has
agreed to sell the Claude Resources shares in May 1998 for approximately U.S.
$1.5 million, further improving the Company's cash position.
Vista Gold is well positioned to endure the continuing depression in the gold
markets. The Company's cash position is adequate and should improve even at
today's low gold prices. The steps we have taken have proven to be appropriate
for the current gold price environment, although we are planning for, but not
relying on, more favorable gold prices. Until then, the Company is actively
reviewing its operations, and seeking appropriate acquisitions in light of
today's economics. As we explore additional opportunities to strengthen the
Company and enhance shareholder value, our outlook is positive.
/s/ Michael B. Richings
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Mike B. Richings
President and Chief Executive Officer
May 21, 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 Michael B. Richings, President and CEO
at (303) 629-2450 or (888) 629-2450.
(303) 629-2450 -voice 370 Seventeenth Street - Suite 3000 - Denver, CO 80202
(303) 629-2499 - fax
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VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
(U.S. dollars in thousands, except share data) 1998 1997
---------------------------------------------- ---- ----
(unaudited)
<S> <C> <C>
Revenues:
Gold sales $ 10,971 $ 10,666
Interest income 30 95
--------------------------------
11,001 10,761
--------------------------------
Costs and expenses:
Mining operations 7,365 8,404
Depreciation, depletion and amortization 2,323 1,642
Provision for reclamation and closure costs 1,006 156
Operating leases 605 669
Mineral exploration and property evaluation 171 433
Corporate administration 389 641
Investor relations 72 96
Interest expense 112 77
Loss (gain) on disposal of assets (9) (841)
Loss (gain) on liquidation of gold futures (3,217)
Equity in loss and impairment of Zamora Gold Corp. 298
Other expense (income) (2) (123)
--------------------------------
8,815 11,452
--------------------------------
Earnings (loss) before taxes 2,186 (691)
Income taxes (recovery) 7
================================
Net earnings (loss) $ 2,179 $ (691)
================================
Weighted average shares outstanding 89,152,540 89,020,405
- ------------------------------------------------------------------------------------------------------
Earnings (loss) per share $ 0.02 $ (0.01)
- ------------------------------------------------------------------------------------------------------
</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
March 31
--------
(U.S. dollars in thousands) 1998 1997
--------------------------- ---- ----
(unaudited)
<S> <C> <C>
Retained earnings (deficit), beginning of period ($64,437) ($10,418)
Net earnings (loss) 2,179 (691)
-------------------------------
Retained earnings (deficit), end of period ($62,258) ($11,109)
===============================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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VISTA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 December 31
(U.S. dollars in thousands) 1998 1997
--------------------------- ---- ----
(unaudited) (audited)
<S> <C> <C>
Assets:
Cash and cash equivalents $2,932 $1,799
Marketable securities 132
Accounts receivable 4,338 2,199
Gold inventory 12,666 12,717
Supplies and other 2,157 2,301
-----------------------------------
Current assets 22,093 19,148
-----------------------------------
Property, plant and equipment, net 56,291 58,638
Investment in Zamora Gold Corp. 857 857
Other assets 107 385
-----------------------------------
Long-term assets 57,255 59,880
-----------------------------------
-----------------------------------
Total assets $79,348 $79,028
===================================
Liabilities and Shareholders' Equity:
Accounts payable $2,590 $4,472
Accrued liabilities and other 1,075 1,913
Deferred hedging gains 4,849
Bank debt 8,300 13,000
-----------------------------------
Current liabilities 16,814 19,385
-----------------------------------
Accrued reclamation and closure costs 5,226 4,534
Other liabilities 34 34
-----------------------------------
Long-term liabilities 5,260 4,568
-----------------------------------
-----------------------------------
Total liabilities 22,074 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) (62,258) (64,436)
Currency translation adjustment (1,338) (1,359)
-----------------------------------
Total shareholders' equity 57,274 55,075
-----------------------------------
-----------------------------------
Total liabilities and shareholders' equity $79,348 $79,028
===================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
(U.S. dollars in thousands) 1998 1997
--------------------------- ---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $2,179 ($691)
Adjustments to reconcile net earnings (loss) to net cash provided
by (used in) operations:
Depreciation, depletion and amortization 2,323 1,642
Amortization of deferred stripping 702 814
Deferral (amortization) of hedging gains 4,849 (120)
Amortization of deferred hedging costs 276
Provision for reclamation and closure costs 1,006 156
(Gain) loss on sale of assets (9) (841)
Equity in loss and impairment of Zamora Gold Corp. 298
(Gain) loss on currency translation 21 (130)
-------------------------------
11,347 1,128
Changes in operating assets and liabilities:
Marketable sercurities 132 35
Accounts receivable (2,138) (2,469)
Gold inventory 51 1,295
Supplies and other 144 457
Accounts payable (1,882) (3,524)
Accrued liabilities and other (840) (108)
Reclamation and closure costs (314) (178)
-------------------------------
Net cash provided by (used in) operating activities 6,500 (3,364)
-------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (777) (3,975)
Additions to deferred stripping (2,155)
Proceeds from disposal of assets 108 959
Other assets 2
-------------------------------
Net cash provided by (used in) investing activities (667) (5,171)
-------------------------------
Cash flows from financing activities:
Proceeds from (repayment of) short-term debt (4,700)
Proceeds from (repayment of) long-term debt 11,000
-------------------------------
Net cash provided by (used in) financing activities (4,700) 11,000
-------------------------------
Net increase (decrease) in cash and cash equivalents 1,133 2,465
Cash and cash equivalents, beginning of period 1,799 8,598
-------------------------------
Cash and cash equivalents, end of period $2,932 $11,063
===============================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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VISTA GOLD CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 three months ended March 31, 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. 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
with the balance deferred to subsequent periods. During the quarter ended March
31, 1998, $1.2 million in deferred hedging gains was amortized and at March 31,
1998, the remaining unamortized balance of deferred hedging gains was $4.8
million.
Waste-rock mining was then halted and in August 1998, the Company plans to
suspend ore mining. Gold recovery and processing will continue from mined and
inventoried ore through 1999 and into 2000.
As a result of these measures, the Company has 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 March 31, 1998, there
were 64,500 hedged ounces outstanding. The repayment terms have been amended and
call for the Company to completely retire the debt during 1998. During the first
quarter of 1998, the Company paid $4.7 million and reduced the $13.0 million
debt to $8.3 million.
3. 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 $0.5 million in 1998, at which time the
leases terminate. Letters of credit totalling $0.6 million (1997-$0.7 million)
have been provided as collateral under these mine equipment operating leases.
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