Vista Gold Corp. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Amounts are U.S. dollars in thousands, except per-share data. Vista is an exploration-stage gold company focused on advancing projects and strategic transactions; it generates no revenue from mining operations. Its flagship asset is the 100%-owned Mt Todd project in Australia.
Financial results and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Net income (loss) | $(753) | $1,902 | $(3,852) | $(1,598) |
| Basic loss per share | $(0.01) | $0.01 income | $(0.04) | $(0.02) |
| Operating income (loss) | $(829) | $720 | $(3,906) | $(1,616) |
| Exploration, evaluation and holding costs | $1,986 | $960 | $3,737 | $1,908 |
The company reported no revenue, so conventional revenue margins are not meaningful. Results included a $2,100 gain in 2021 from final payments for the sale of Los Reyes, versus a $2,568 gain in 2020 from partial cancellation of Awak Mas royalties. These transaction gains did not represent operating revenue.
- Cash and liquidity: Cash and cash equivalents were $6,262 at June 30, 2021, down from $7,762 at year-end 2020. Working capital was $5,471, including $248 of deferred option gain that management says will not require future working capital. Current assets were $7,143 and current liabilities were $1,672.
- Cash flow: Six-month operating cash use was $4,788, compared with $3,266 in 2020. Investing provided $2,622, principally from Los Reyes and Awak Mas payments and the disposition of short-term investments. Financing provided $666, including ATM share-sale proceeds.
- Debt and equity: The company reported no debt. Total liabilities were $1,933 and shareholders’ equity was $13,058 at June 30. There were 104.91 million shares outstanding at quarter-end.
- Assets: Total assets were $14,991, compared with $17,230 at December 31, 2020. Mineral properties were $2,146; plant and equipment, including used mill equipment listed for sale, was $5,678.
Changes and notable items
- Q2 shifted from $1,902 of prior-year net income to a $753 loss; the six-month net loss widened from $1,598 to $3,852. The 2020 comparison included investment gains, while 2021 exploration and holding costs increased substantially.
- Exploration costs rose due to Mt Todd drilling and related staffing; first-half costs also reflected higher power costs to pump about 1.7 gigalitres of water and a stronger Australian dollar.
- Vista received the final $1,000 Los Reyes payment in June, completing $2,100 of 2021 payments and ending its remaining interest in that project. Awak Mas extension fees of $180 were received in Q2 and deferred; a third party may pay a further $2,500 by January 31, 2022 to cancel remaining royalties.
- On July 12, 2021, after quarter-end, Vista completed a public offering of 12,272,730 units at $1.10 each for approximately $13,500 gross proceeds, before costs. Each unit included one share and half a warrant; warrants are exercisable at $1.25 for 36 months. Net proceeds are not stated clearly in the filing text. The ATM program was suspended in July.
Outlook, projects and risks
- Management expects existing working capital and the July offering proceeds, together with potential future non-dilutive financing, to fund planned corporate expenses and project holding costs for at least 12 months. This is a forward-looking estimate, not a guarantee.
- Management intends to use offering proceeds for Mt Todd drilling, engineering and a feasibility study, and to support its effort to secure a development partner. Estimated remaining program costs are approximately $1,500 for drilling and $3,500 for the feasibility study; both are planned for completion in Q1 2022.
- Mt Todd’s Mining Management Plan and other major operating and environmental permits were approved. The company reported 16 of 18 planned drill holes completed, with mineralization intersected in each completed hole. Vista had not yet established Mt Todd mineral resources or reserves under SEC Regulation S-K 1300; a compliant feasibility study and technical report summary were in progress.
- Management favors a development partner to reduce the standalone project’s funding, dilution and development risks. There is no assurance Vista will secure a partner on acceptable terms, or at all.
- COVID-19-related Australian travel restrictions delayed partnering efforts and may continue to affect project timelines and access to financing. Other key risks include exploration and feasibility uncertainty, gold and currency fluctuations, environmental and reclamation obligations, and the need for future capital. Vista disclosed a $240 environmental liability provision and expects to remain a PFIC for U.S. tax purposes.
Important facts for investors to verify
- Net proceeds from the July offering, resulting share and warrant dilution, and the company’s post-offering cash runway.
- Feasibility-study timing, cost, economic assumptions and delivery of S-K 1300-compliant resource and reserve disclosures.
- Progress toward a Mt Todd development partnership and any terms that affect Vista’s retained ownership, financing needs or future dilution.
- Whether the Awak Mas counterparty makes the remaining $2,500 payment by January 31, 2022, or Vista retains the royalty interests.
- Actual exploration spending, operating cash use and the company’s ability to monetize non-core assets and fund ongoing activities.