<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------
COMMISSION FILE NUMBER 1-9025
VISTA GOLD CORP.
(Exact name of registrant as specified in its charter)
Continued under the laws
of the Yukon Territory (Not Applicable)
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
7961 Shaffer Parkway
Suite 5
Littleton, Colorado 80127
(Address of principal executive offices) (Zip Code)
(720) 981-9551
(Registrant's telephone number, including area code)
-----------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
90,715,040
----------
Common Shares, without par value, outstanding at July 28, 2000
-----------------
<PAGE>
VISTA GOLD CORP.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30,2000
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
(i) Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 3
(ii) Consolidated Statements of Loss for the three and six months ended June 30, 4
2000 and June 30, 1999
(iii) Consolidated Statements of Deficit for the three and six months ended June
30, 2000 and June 30, 1999 4
(iv) Consolidated Statements of Cash Flows for the three
and six months ended June 30, 2000 and June 30, 1999 5
(v) Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 14
ITEM 2. CHANGES IN SECURITIES 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
ITEM 5. OTHER INFORMATION 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
</TABLE>
In this Report, unless otherwise indicated, all dollar amounts are
expressed in United States dollars.
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 December 31
(U.S. DOLLARS IN THOUSANDS) 2000 1999
---------------------------- ------ -----
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 423 $ 2,331
Marketable securities - 77
Accounts receivable 1,781 1,571
Gold inventory - 117
Supplies and other 851 1,187
--------------------------------
Current assets 3,055 5,283
Property, plant and equipment, net 27,198 28,124
Other assets 63 22
--------------------------------
Long-term assets 27,261 28,146
--------------------------------
Total assets $ 30,316 $ 33,429
================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 207 $ 744
Accrued liabilities and other 433 1,086
Current portion of long-term debt - Note 2 508 481
--------------------------------
Current liabilities 1,148 2,311
Long-term debt - Note 2 540 801
Accrued reclamation and closure costs 3,646 4,411
Other liabilities 11 17
--------------------------------
Long-term liabilities 4,197 5,229
--------------------------------
Total liabilities 5,345 7,540
Capital stock, no par value per share:
Preferred - unlimited shares authorized; no shares
outstanding Common - unlimited shares authorized; shares
outstanding:
2000 and 1999 - 90,715,040 121,146 121,146
Deficit (94,693) (93,776)
Currency translation adjustment (1,482) (1,481)
--------------------------------
Total shareholders' equity 24,971 25,889
================================
Total liabilities and shareholders' equity $ 30,316 $ 33,429
================================
</TABLE>
Nature of operations and going concern - Note 1
Commitments and contingencies - Note 3
Approved by the Board of Directors
/s/ DAVID R. SINCLAIR /s/ KEITH STEEVES
----------------------- -----------------------
David R. Sinclair Keith Steeves
Chairman Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
-3-
<PAGE>
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF LOSS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------- -------
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 2000 1999 2000 1999
----------------------------------------------- ----- ----- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Gold sales $ 1,217 $ 4,862 $ 2,615 $ 11,272
Other revenues 23 30 42 55
----------------------------------------------------------
Total revenues 1,240 4,892 2,657 11,327
COSTS AND EXPENSES:
Production costs 795 5,638 1,874 12,169
Depreciation, depletion and amortization 220 1,915 441 3,423
Provision for reclamation and closure costs 6 63 15 92
Operating leases - 44 - 44
Mineral exploration, property evaluation and holding costs 585 652 1,088 1,191
Corporate administration 215 152 459 540
Investor relations 133 154 174 192
Interest expense 32 301 69 571
Loss (gain) on disposal of assets 10 5 (132) 5
Gain on sale of marketable securities - - (280) -
Equity in loss and impairment of Zamora Gold Corp. - 457 - 601
Other expense (income) (1) 2 (134) 21
----------------------------------------------------------
Total costs and expenses 1,995 9,383 3,574 18,849
Net loss before taxes (775) (4,491) (917) (7,522)
Income taxes - - - 14
----------------------------------------------------------
Net loss $ (775) $ (4,491) $ (917) $ (7,536)
=========================================================
Weighted average shares outstanding 90,715,040 90,715,040 90,715,040 90,715,040
--------------------------------------------------------------------------------------------------------------------
Net loss per share $ (0.01) $ (0.05) $ (0.01) $ (0.08)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF DEFICIT
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------- -------
(U.S. DOLLARS IN THOUSANDS) 2000 1999 2000 1999
---------------------------- ----- ----- ----- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Deficit, beginning of period $ (93,938) $ (69,121) $ (93,776) $ (66,076)
Net loss (755) (4,491) (917) (7,536)
------------------------------------------------------------------
Deficit, end of period $ (94,693) $ (73,612) $ (94,693) $ (73,612)
==================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
-4-
<PAGE>
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------------------------------------
(U.S. DOLLARS IN THOUSANDS) 2000 1999 2000 1999
--------------------------- ----- ----- ----- ----
------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (755) $ (4,491) $ (917) $ (7,536)
Depreciation, depletion and amortization 220 1,915 441 3,423
Amortization of hedging gains - (1,498) - (1,150)
Provision for reclamation and closure costs 6 63 15 92
Loss (gain) on sale of assets 10 5 (132) 5
Equity in loss and impairment of Zamora Gold Corp. - 457 - 601
Loss (gain) on currency translation (13) 34 - 59
Other non-cash items (4) (3) (6) (5)
------------------------------------------------------------------
(536) (3,518) (599) (4,511)
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Marketable securities - (2) 77 15
Accounts receivable (376) 1,673 (210) (55)
Gold inventory 70 746 117 3,222
Supplies and other 265 2,522 336 2,397
Accounts payable (54) 248 (413) (577)
Accrued liabilities and other (314) 67 (448) (52)
Reclamation and closure costs (298) (399) (690) (935)
------------------------------------------------------------------
(1,243) 1,337 (1,830) (496)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1) (1,244) (117) (1,624)
Proceeds from disposal of assets 137 3 313 86
Investment in and advances to Zamora Gold Corp. - (15) - (30)
Other assets 23 (67) (41) 11
------------------------------------------------------------------
159 (1,323) 155 (1,557)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt - 1,500 - 1,500
Repayment of debt (118) (46) (233) (389)
------------------------------------------------------------------
(118) 1,454 (233) 1,111
Net increase (decrease) in cash and cash equivalents (1,202) 1,468 (1,908) (942)
Cash and cash equivalents, beginning of period 1,625 2,376 2,331 4,786
------------------------------------------------------------------
Cash and cash equivalents, end of period $ 423 $ 3,844 $ 423 $ 3,844
==================================================================
Supplemental cash flow information
Cash paid during the year for:
Interest paid $42 $298 $74 $566
Income taxes paid (recovered) - - - -
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
-5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands unless specified otherwise)
1. NATURE OF OPERATIONS AND GOING CONCERN
(a) NATURE OF OPERATIONS
Vista Gold Corp. (the "Corporation") is engaged in gold mining and related
activities in the United States, Canada, and Latin America, including
exploration, extraction, processing and reclamation. Gold bullion is the
Corporation's principal product, which is a commodity produced throughout the
world.
The consolidated financial statements of Vista Gold Corp. for the six months
ended June 30, 2000 have been prepared in accordance with accounting principles
generally accepted in Canada by the Corporation 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.
(b) GOING CONCERN
These consolidated financial statements have been prepared on the basis of
accounting principles applicable to a going concern that assumes the realization
of assets and the discharge of liabilities in the normal course of business. The
Corporation's consolidated cash balance was $0.4 million as of June 30, 2000. If
the current depressed market for gold prices continues, it may be necessary for
the Corporation to modify its 2000 operating plan to achieve further reductions
in operating and general and administrative expenses.
The Corporation relies on the Hycroft mine as its only current source of
operating cash flows. Mining activities at Hycroft were suspended in 1998. The
Hycroft mine is currently producing gold from ore previously mined and placed on
the leach pads. However, the remaining ounces of gold on the leach pads are
decreasing and as a result, the rate of gold production will continue to
decrease throughout the year 2000. The Corporation is investigating the economic
feasibility of restarting the Hycroft mine and developing the Amayapampa project
in Bolivia, both of which are dependent upon the Corporation's ability to raise
additional capital.
The Corporation's ability to continue as a going concern is dependent upon
obtaining additional capital. Management is actively pursuing additional sources
of capital, including debt financing, the issuance of equity, mergers or joint
ventures with other companies and the sale of property interests or surplus
assets. In the event that management is unable to obtain additional capital,
there is substantial doubt about the ability of the Corporation to continue as a
going concern. These financial statements do not give effect to any adjustments,
which may be necessary should the Corporation be unable to continue as a going
concern.
2. LONG-TERM DEBT
In April 1999, Hycroft Resources & Development, Inc. ("Hycroft"), a wholly-owned
subsidiary of the Corporation, entered into a debt agreement with Finova Capital
Corporation through which Hycroft received $1.5 million in cash. The interest
rate on the loan is 10.61 percent and the loan is collateralized by certain
mobile equipment assets at Hycroft. The repayment terms of the loan require 36
equal monthly installments, which commenced in May 1999. As of June 30, 2000,
Hycroft had repaid $0.5 million of the debt, and the current portion of the
Hycroft long-term debt was $0.5 million.
3. COMMITMENTS AND CONTINGENCIES
As part of its gold hedging program, the Corporation enters into agreements with
major financial institutions to deliver gold. Realization under these agreements
is dependent upon the ability of those financial institutions to perform in
accordance with the terms of the agreements. At June 30, 2000, the Corporation
had no outstanding hedging contracts or other hedging commitments.
-6-
<PAGE>
4. GEOGRAPHIC AND SEGMENT INFORMATION
The Corporation operates in the gold mining industry in the United States, and
has exploration and development properties in Canada and Latin America. Its
major product and only identifiable segment is gold, and all gold revenues and
operating costs are derived in the United States.
PROPERTY, PLANT AND EQUIPMENT, NET, BY GEOGRAPHIC REGION
<TABLE>
<CAPTION>
JUNE 30 December 31
2000 1999
(Unaudited) (Audited)
--------------- ------------
<S> <C> <C>
U.S. $ 6,166 $ 6,870
Latin America 21,032 21,254
--------------------------------
Total property, plant and equipment, net $ 27,198 $ 28,124
================================
</TABLE>
5. 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 corporate law, the Corporation underwent a capital reduction
in connection with the amalgamation of Granges Inc. (predecessor of the
Corporation) 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.
(b) Under Canadian GAAP, the amalgamation of Granges and Hycroft was treated in
a manner similar to a pooling of interests. Under U.S. GAAP, the
amalgamation did not meet the conditions for a pooling of interest.
Accordingly, the transaction is treated as a purchase under U.S. GAAP, with
the excess of purchase price over the net book value of Hycroft's net
assets allocated to mineral properties.
(c) In 1995, the United States Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("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 their fair values whenever an
impairment review indicates that the carrying value cannot be recovered on
an undiscounted cash flow basis.
In 1996, under U.S. GAAP, the carrying value of the Hycroft mine, including
the excess of proceeds over the net book value from (b) above, exceeded the
undiscounted cash flow. Accordingly, the Hycroft mine carrying value was
written down to fair value using the discounted cash flow method following
U.S. GAAP.
(d) In 1997, the carrying values of certain long-lived assets exceeded their
respective undiscounted cash flows. Following Canadian GAAP, the carrying
values were written down using the undiscounted cash flow method. Under
U.S. GAAP, as discussed in (c) above, the carrying values were written down
to their fair values using the discounted cash flow method, giving rise to
a difference in the amounts written down.
Amortization of the remaining carrying values in subsequent periods
following Canadian GAAP must be reduced to reflect the difference in the
amounts written down following U.S. GAAP.
(e) Under U.S. GAAP, items such as foreign exchange gains and losses and
unrealized gains and losses on marketable securities are required to be
shown separately in the derivation of comprehensive income.
-7-
<PAGE>
The significant differences in the consolidated statements of earnings (loss)
relative to U.S. GAAP were as follows:
CONSOLIDATED STATEMENTS OF LOSS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
JUNE 30 JUNE 30
------- -------
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 2000 1999 2000 1999
----------------------------------------------- ----- ----- ----- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net loss - Canadian GAAP $ (755) $ (4,491) $ (917) $ (7,536)
Amortization reduction (d) 17 169 99 498
Other comprehensive income (e) - 168 - 22
------------------------ ---------------------------
Net loss - U.S. GAAP (738) (4,154) (818) (7,016)
Other comprehensive income (e) - (168) - (22)
------------------------ ---------------------------
Comprehensive loss - U.S. GAAP $ (738) $ (4,322) $ (818) $ (7,038)
======================== ===========================
Basic loss per share - U.S. GAAP $ (0.01) $ (0.05) $ (0.01) $ (0.08)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
The significant differences in the consolidated balance sheets relative to U.S.
GAAP were:
CONSOLIDATED BALANCE SHEETS
<TABLE>
JUNE 30, 2000 DECEMBER 31, 1999
PER CDN. PER U.S. PER CDN. PER U.S.
GAAP ADJ. GAAP GAAP ADJ. GAAP
---------- ---------- --------- ---------- ---------- ---------
(Unaudited) (Audited)
<S> <C> <C> <C> <C> <C> <C>
Current assets $ 3,055 $ - $ 3,055 $ 5,283 $ - $ 5,283
Property, plant and equipment (d) 27,261 (244) 27,017 28,146 (343) 27,803
--------------------------------- ---------------------------------
$ 30,316 $ (244) $ 30,072 $ 33,429 $ (343) $ 33,086
================================= =================================
Current liabilities $ 1,148 $ - $ 1,148 $ 2,311 $ - $ 2,311
Long-term debt 551 - 551 801 - 801
Provision for reclamation and
future closure costs 3,646 - 3,646 4,428 - 4,428
--------------------------------- ---------------------------------
5,345 - 5,345 7,540 - 7,540
Common shares (a, b) 121,146 76,754 197,900 121,146 76,754 197,900
Contributed surplus (a) - 2,786 2,786 - 2,786 2,786
Retained deficit (a, b, c, d) (94,693) (79,640) (174,333) (93,776) (79,739) (173,515)
Accumulated comprehensive income - (143) (143) - (144) (144)
Currency translation adjustment (1,482) - (1,482) (1,481) - (1,481)
--------------------------------- ---------------------------------
$ 31,866 $ (244) $ 30,072 $ 33,429 $ (343) $ 33,086
================================= =================================
</TABLE>
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(U.S. dollars in thousands, unless specified otherwise)
This discussion should be read in conjunction with the consolidated financial
statements of Vista Gold Corp. (the "Corporation") for the six months ended June
30, 2000 and 1999 and the notes thereto, which have been prepared in accordance
with accounting principles generally accepted in Canada without audit.
INTRODUCTION
During the six months ended June 30, 2000, the Corporation had one gold
producing mine located in Nevada and one development project located in Bolivia.
At the Hycroft mine in Nevada, mining activities were suspended in December 1998
because of the continued depression in gold prices. Gold processing and recovery
at the Hycroft mine will continue during 2000 and into 2001 from ore previously
mined and placed on the leach pads. Hycroft mine gold production for 2000 is
estimated to be approximately 12,000 ounces.
In Bolivia, a feasibility study on the Amayapampa project was recently
completed. The Corporation has been in discussions with various lenders
regarding the debt-financing component for the project and is exploring
alternatives to complete the total financing package.
In 1998, the Corporation acquired the Mineral Ridge mine, a gold property also
located in Nevada. In 1999, after efforts to recommence mining and processing
activities at the Mineral Ridge mine were unsuccessful, the Mineral Ridge mine
applied for protection under the U.S. Bankruptcy Code in order to begin the
process of a permanent cessation of all mining activities. Accordingly,
effective December 1999, the Corporation ceased consolidating its investment in
Mineral Ridge Resources Inc.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 VS. THREE MONTHS ENDED JUNE 30, 1999
Net losses for the three months ended June 30, 2000 were $0.8 million as
compared to net losses of $4.5 million for the same period in 1999. The primary
reasons for the decrease in net losses were the lower levels of activity at the
Hycroft mine and the discontinuance of operations at the Mineral Ridge mine,
which had significant start up expenses in 1999 and is no longer being
consolidated.
Gold sales of $1.2 million for the three months ended June 30, 2000 decreased
$3.6 million from the same period in 1999. The decrease in gold sales was
directly related to gold production, which decreased 13,800 ounces from 1999.
The decrease in gold production was partially offset by a $19 increase in the
average gross price realized per ounce of gold sold. Gold production and gold
prices were as follows:
<TABLE>
<CAPTION>
Three Months Ended
JUNE 30
-------
2000 1999
---- ----
<S> <C> <C>
Hycroft mine gold production (ounces) 4,212 10,104
Mineral Ridge mine gold production (ounces) - 7,908
----- ------
4,212 18,012
Average gross realized price per ounce $ 289 $ 270
Average spot price per ounce $ 280 $ 274
</TABLE>
At the Hycroft mine, the decrease in gold production was attributable to the
suspension of mining activities in December 1998. All subsequent Hycroft gold
production has been, and will be, from ore previously mined and placed on the
leach pads. As the mine continues to produce gold, the remaining ounces on the
leach pads will decrease. During this process, the rate of gold production will
decline until the recoverable gold ounces on the leach pads have been produced.
-9-
<PAGE>
Production costs decreased $4.8 million to $0.8 million for the three months
ended June 30, 2000. Significant cost reductions resulted from the suspension
of mining activities at the Hycroft and Mineral Ridge mines. Production costs
were as follows:
<TABLE>
<CAPTION>
Three Months Ended
JUNE 30
-------
2000 1999
---- ----
<S> <C> <C>
Hycroft mine production costs $ 795 $ 2,200
Mineral Ridge mine operating costs - 3,438
----- -------
$ 795 $ 5,638
</TABLE>
At the Hycroft mine, mining activities were suspended in December 1998, and as a
result, there were no mining costs during the three months ended June 30, 2000.
Processing and other operating costs decreased significantly during this period
reflecting reduced levels of operating activities and lower gold production.
During the quarter ended June 30, 2000, the cash operating cost per ounce was
$186 as compared to $307 for the same period in 1999.
Depreciation, depletion and amortization ("DD&A") for the second quarter of 2000
decreased significantly from the same period in 1999. At the Hycroft mine, a
significant portion of the property, plant and equipment was amortized using the
units of production method of depreciation based on proven and probable
reserves. Those assets have been fully amortized and as a result, DD&A at the
mine is minimal.
The provision for reclamation and closure costs for the three months ended June
30, 2000 was nominal and relatively unchanged from 1999. At the Hycroft mine,
reclamation and closure costs were fully accrued in 1998 and no further
provisions are anticipated, except for nominal amounts related to ongoing
severance accruals.
Mineral exploration, property evaluation and holding costs for the three months
ended March 31, 2000 of $0.6 million were relatively unchanged from the same
period in 1999. The costs for the quarter ended June 30, 2000 included $0.3
million in holding costs for the Corporation's Bolivian properties, $0.2 million
in exploration expenditures at the Hycroft mine and $0.1 million in other
exploration and evaluation expenditures.
Corporate administration and investor relations expenditures were relatively
unchanged from the second quarter of 1999. Interest expense decreased from $0.3
million in the second quarter of 1999 to $32,000 in the second quarter of 2000,
reflecting the Corporation's lower average debt balance.
SIX MONTHS ENDED JUNE 30, 2000 VS. SIX MONTHS ENDED JUNE 30, 1999
Net losses for the six months ended June 30, 2000 were $0.9 million as compared
to net losses of $7.5 million for the same period in 1999. The primary reasons
for the decrease in net losses were the lower levels of activity at the Hycroft
mine and the discontinuance of operations at the Mineral Ridge mine, which had
significant start up expenses in 1999 and is no longer being consolidated.
Gold sales of $2.6 million for the six months ended June 30, 2000 decreased $8.7
million from the same period in 1999. The decrease in gold sales was directly
related to gold production, which decreased 28,133 ounces from 1999, and a $16
decrease in the average gross price realized per ounce of gold sold, which
included substantial hedging gains in 1999. Gold production and gold prices were
as follows:
<TABLE>
<CAPTION>
Six Months Ended
JUNE 30
-------
2000 1999
---- ----
<S> <C> <C>
Hycroft mine gold production (ounces) 9,139 25,874
Mineral Ridge mine gold production (ounces) - 11,398
----- ------
9,139 37,272
Average gross realized price per ounce $ 286 $ 302
Average spot price per ounce $ 285 $ 280
</TABLE>
-10-
<PAGE>
At the Hycroft mine, the decrease in gold production was attributable to the
suspension of mining activities in December 1998. All subsequent Hycroft gold
production has been, and will be, from ore previously mined and placed on the
leach pads. As the mine continues to produce gold, the remaining ounces on the
leach pads will decrease. During this process, the rate of gold production will
decline until the recoverable gold ounces on the leach pads have been produced.
Production costs decreased $10.3 million to $1.9 million for the six months
ended June 30, 2000. Significant cost reductions resulted from the suspension
of mining activities at the Hycroft and Mineral Ridge mines. Production costs
were as follows:
<TABLE>
<CAPTION>
Six Months Ended
JUNE 30
-------
2000 1999
---- ----
<S> <C> <C>
Hycroft mine production costs $ 1,874 $ 7,426
Mineral Ridge mine operating costs - 4,743
------- --------
$ 1,874 $ 12,169
======= ========
</TABLE>
At the Hycroft mine, mining activities were suspended in December 1998, and as a
result, there were no mining costs during the six months ended June 30, 2000.
Processing and other operating costs decreased significantly during this period
reflecting reduced levels of operating activities and lower gold production.
During the six months ended June 30, 2000, the cash operating cost per ounce was
$203 as compared to $320 for the same period in 1999.
Depreciation, depletion and amortization ("DD&A") for the first six months of
2000 decreased significantly from the same period in 1999. At the Hycroft mine,
a significant portion of the property, plant and equipment was amortized using
the units of production method of depreciation based on proven and probable
reserves. Those assets have been fully amortized and as a result, DD&A at the
mine is minimal.
The provision for reclamation and closure costs for the six months ended June
30, 2000 was nominal and relatively unchanged from 1999. At the Hycroft mine,
reclamation and closure costs were fully accrued in 1998 and no further
provisions are anticipated, except for nominal amounts related to ongoing
severance accruals.
Mineral exploration, property evaluation and holding costs for the six months
ended June 30, 2000 of $1.1 million were relatively unchanged from the same
period in 1999. The costs for the six months ended June 30, 2000 included $0.5
million in holding costs for the Corporation's Bolivian properties, $0.4 million
in exploration expenditures at the Hycroft mine and $0.2 million in other
exploration and evaluation expenditures.
Corporate administration and investor relations expenditures were decreased 16
percent to $0.6 million for the first six months of 2000, reflecting the
Corporation's efforts to minimize overhead expenses. Interest expense decreased
from $0.6 million for the six months ended June 30, 1999 to a $0.1 million for
the same period in 2000, reflecting the Corporation's lower average debt
balance.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's consolidated cash balance on June 30, 2000 was $0.4 million, a
decrease of $1.9 million from December 31, 1999. Operating activities used $1.8
million, investing activities provided $0.1 million and financing activities
used $0.2 million of cash.
At the Hycroft mine, operating activities for the first six months of 2000
generated $0.4 million of cash, before reclamation expenditures and changes in
non-cash working capital, which used $1.2 million. The Corporation's Bolivian
holding costs and corporate overhead costs each required $0.5 million during the
first quarter of 2000. Net cash used for operating activities during the first
six months of 2000 was as follows:
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<PAGE>
<TABLE>
<CAPTION>
2000
----
<S> <C>
Hycroft mine $ (756)
Bolivian holding costs (510)
Corporate administration and investor relations (564)
--------
$(1,830)
</TABLE>
Net investing activities during the first six months of 2000 were nominal.
Proceeds received from the sale of surplus mining equipment at the Hycroft mine
were $0.3 million and the amount spent on additions to property, plant and
equipment and other assets during the period was $0.2 million. The net cash flow
from investing activities was $0.1 million during the six months ended June 30,
2000.
In April 1999, the Hycroft mine entered into a debt agreement with Finova
Capital Corporation through which Hycroft received $1.5 million in cash. The
interest rate on the loan is 10.61 percent and the loan is collateralized by
certain mobile equipment assets at the Hycroft mine. The repayment terms of the
loan require 36 equal monthly installments, which commenced in May 1999, and the
Hycroft mine repaid $0.2 million of the outstanding debt balance during the
first six months of 2000.
RECLAMATION AND ENVIRONMENTAL COSTS
Management estimates the reclamation and closure costs for the Corporation's
Hycroft mine to be $3.6 million. These costs were charged to earnings over the
life of the mining activity and the provision to date is $3.6 million. In April
1995, the Nevada Bureau of Land Management ("BLM") approved an amended Hycroft
mine reclamation plan that included the Brimstone deposit, and a surety bond in
the amount of $5.1 million was posted to secure reclamation obligations under
the plan. During the first six months of 2000, the Corporation incurred $0.7
million in reclamation and closure-related expenditures at the Hycroft mine.
REGULATORY COMPLIANCE AND OTHER MATTERS
During the first six months of 2000, there were no material environmental
incidents or non-compliance events with any applicable environmental or other
regulations.
GOING CONCERN
The Corporation's consolidated cash balance was $0.4 million as of June 30,
2000. If the current depressed market for gold prices continues, it may be
necessary for the Corporation to modify its 2000 operating plan to achieve
further reductions in operating and general and administrative expenses.
The Corporation relies on the Hycroft mine as its only current source of
operating cash flows. Mining activities at Hycroft were suspended in 1998. The
Hycroft mine is currently producing gold from ore previously mined and placed on
the leach pads. However, the remaining ounces of gold on the leach pads are
decreasing and as a result, the rate of gold production will continue to
decrease throughout the year 2000. The Corporation is investigating the economic
feasibility of restarting the Hycroft mine and developing the Amayapampa project
in Bolivia, both of which are dependent upon the Corporation's ability to raise
additional capital.
The Corporation's ability to continue as a going concern is dependent upon
obtaining additional capital. Management is actively pursuing additional sources
of capital, including debt financing, the issuance of equity, mergers or joint
ventures with other companies and the sale of property interests or surplus
assets. In the event that management is unable to obtain additional capital,
there is substantial doubt about the ability of the Corporation to continue as a
going concern.
OUTLOOK
At the Hycroft mine, gold production from ore previously mined and placed on the
leach pads is expected to be 12,000 ounces for the year. During 1999 and the
first six months of 2000, Hycroft mine gold production consistently exceeded
expectations. As a result, the Corporation conducted studies and a drilling
program to determine the extent of the remaining Brimstone gold resource. The
Corporation retained Mineral Resources Development, Inc. ("MRDI") to re-estimate
the currently defined gold resources in the Brimstone deposit and to audit the
mineable reserves calculated by the Corporation based upon the MRDI resource
model. MRDI calculated a total resource of 56.0 million tons grading 0.0184
ounces per ton with 1,032,000 contained ounces of gold and 9,374,000 contained
ounces of silver.
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<PAGE>
Based upon this resource, the Corporation designed two possible pits to develop
the mineral resources. MRDI audited the work performed by the Corporation and
confirmed that the estimates of proven and probable reserves and mineral
resources are reasonable and were estimated in accordance with industry
standards.
Based on the larger of the two possible pits, the Corporation completed a
feasibility-level financial analysis of the incremental benefit of restarting
the run-of-mine heap-leaching operation at Hycroft. The analysis showed that the
project would produce approximately 350,000 ounces of gold over a seven-year
period at an average cash cost of $204 per ounce of gold and generate an
after-tax internal rate of return of 34 percent at a $300 per ounce gold price.
Provided that the Corporation can obtain additional capital, mining operations
at the Hycroft mine's Brimstone deposit could be restarted.
In addition to the defined mineral resources in the Brimstone pit, the
Corporation's exploration and review work has identified eight areas at Hycroft
that are either drilled or partially drilled, which it estimates would yield an
additional 14.9 million tons at 0.017 ounces per ton gold, containing 250,000
ounces of mineral resources with additional drilling. The Corporation has also
identified a significant geochemical anomaly in an area to the east of the
Brimstone pit that was previously thought to contain no mineralization. This
area, which is approximately 2,200 feet long by 700 feet wide is about half the
length of the original Brimstone deposit and is in an area immediately east of
what was thought to be a bounding geologic fault. This anomaly is significantly
stronger than any other area on the Hycroft property and could be indicative of
higher-grade mineralization. The same geochemical program also points to other
areas previously unexplored, which may contain more oxide mineralization.
In Bolivia, the Corporation completed a feasibility study on the Amayapampa
project. Based on a gold price of $300 per ounce, the proven and probable
reserves at Amayapampa are calculated to be 9.3 million tonnes (10.2 million
tons) grading 1.76 grams per tonne (0.051 ounces per ton) including dilution,
containing 526,000 ounces of gold. Within this reserve, an optimized plan at a
gold price of $325 per ounce will generate an after-tax internal rate of return
of 20%. The initial capital costs are estimated to be $25.0 million, including
working capital and a 20% contingency. The Corporation has been in discussions
with various lenders regarding the debt-financing component for the project and
is exploring alternatives to complete the total financing package. However, in
light of the continued low gold prices, the Corporation has taken many steps to
reduce the cost of its activities and holding costs in Bolivia while preserving
its property interests in the Amayapampa project.
Management is attempting to further reduce its corporate overhead costs and
minimize discretionary expenditures in an effort to preserve capital. Recently,
the Corporation began the process of relocating its corporate administration
office to a more efficient and less costly location. The Corporation believes
that it's current cash on hand together with estimated revenues from the sale of
gold production from ore previously mined and placed on the leach pads at the
Hycroft mine will be sufficient to fund ongoing operating activities and
maintain its properties for the next 10 to 12 months beyond which, if the
Corporation is unable to raise additional capital or the gold price does not
improve significantly, the Corporation will have to examine other alternatives
including the disposal of surplus assets at the Hycroft mine. Management
believes the Corporation could raise sufficient funds from the sale of surplus
assets to repay its remaining indebtedness related to the Hycroft mine of
approximately $1.0 million and continue to fund its ongoing activities and
maintain its properties until mid-2002. The Corporation will have to raise
additional funds from external sources in order to restart mining activities at
the Hycroft mine or begin construction and development activities at the
Amayapampa project in Bolivia. Accordingly, the Corporation is actively
investigating various alternatives, including debt financing, the issuance of
equity, mergers with other companies, and the sale or joint venture of property
interests. During 2000, the Corporation's activities will focus on corporate
strategies to advance its two development projects and improve its financial
position.
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<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
COMMODITY PRICE RISK
The Corporation is engaged in gold mining and related activities, including
exploration, extraction, processing and reclamation. Gold bullion is the
Corporation's principal product. Changes in the price of gold could
significantly affect the Corporation's profitability and cash flows. Gold prices
may fluctuate widely from time to time. For a description of factors that affect
gold prices, see note 1(a) to the consolidated financial statements for the year
ended December 31, 1999 filed under "Form 10-K, Item 8. Consolidated Financial
Statements and Supplementary Data - Notes to Consolidated Financial Statements".
Using current 2000 estimates of production at an estimated average gold price of
$300 per ounce and management's estimate of expected operating expenses, a $10
change in the gold price would result in an increase or decrease of
approximately $0.1 million in net income and cash flows.
The Corporation occasionally utilizes derivative commodity instruments to manage
the Corporation's exposure to the risks associated with fluctuations in the
price of gold by protecting the selling price of a portion of its production.
The commodity instruments are not used for trading purposes. The market risk of
these commodity instruments to the Corporation's cash flow is related to the
possible failure of all counterparties to honor their contractual obligations.
Precious metals contracts between the Corporation and various counterparties
involve the requirement that the Corporation deliver gold to the counterparty at
agreed-upon prices. If the counterparty is unable to fulfill its purchase
obligations, there is no guarantee that the Corporation will be able to receive
the agreed-upon sales price in the open market. If the Corporation is unable to
produce sufficient gold to meet its hedging contract obligations, it may be
obligated to purchase such gold in the open market. For further information
regarding the Corporation's hedging program, see note 3 to the consolidated
financial statements for the six months ended June 30, 2000 under "Item 1.
Financial Statements - Notes to Consolidated Financial Statements".
At June 30, 2000, the Corporation had no outstanding hedging contracts or other
hedging commitments.
INTEREST RATE RISK
At June 30, 2000, the interest rate on the Corporation's long-term debt was
10.61%. The interest rate on this debt is fixed. Management does not believe
that the Corporation is exposed to major interest rate risk and the Corporation
does not utilize market risk sensitive instruments to manage its exposure to
this risk.
FOREIGN CURRENCY EXCHANGE RATE RISK
The price of gold is denominated in U.S. dollars, and all of the Corporation's
revenues and a significant majority of its expenses are incurred in U.S.
dollars. As a result, management does not believe that the Corporation is
exposed to significant foreign currency exchange rate risk and the Corporation
does not utilize market risk sensitive instruments to manage its exposure to
this risk.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as described below, the Corporation is not aware of any material pending
or threatened litigation or of any proceedings known to be contemplated by
governmental authorities which is, or would be, likely to have a material
adverse effect upon the Corporation or its operations, taken as a whole.
On December 10, 1999, Mineral Ridge Inc., a wholly owned subsidiary of Vista
Gold, voluntarily filed for protection under the U.S. Bankruptcy Code. See "Form
10-K, Item 2. Properties - Mineral Ridge Mine" for the year ended December 31,
1999.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.01 Statement re: Computation of per Share Earnings.
27.01 Financial Data Schedule.
99.01 Second Quarter 2000 Report to Shareholders
(b) Reports on Form 8-K
The following documents were filed under cover of Form 8-K
during the quarter ended June 30, 2000:
1. Report dated May 8, 2000 regarding the Corporation's
results for the three months ended March 31, 2000.
2. Report dated June 19, 2000 regarding the new ore reserve
model at the Hycroft mine Brimstone deposit.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISTA GOLD CORP.
(Registrant)
Date: July 28, 2000 By: /s/ MICHAEL B. RICHINGS
-------------------------
Michael B. Richings
President and Chief Executive Officer
Date: July 28, 2000 By: /s/ ROGER L. SMITH
-------------------------
Roger L. Smith
Vice President Finance
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
-------------- ----------- ----
<S> <C> <C>
11.01 Computation of per Share Earnings 17
27.01 Financial Data Schedule 18
99.01 Second Quarter 2000 Report to Shareholders 19
</TABLE>
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