Look at their grade and tonnage and what we are proving up. Look at their MC of 90M dollars vs our 60M dollars. By their metric, we should be over $2 per share easily when we confirm 100MT at 3g/t.

Vista Gold's Batman at 60.05 Mt of 1.05 g/t Au P+P

2010-08-19 05:21 ET - News Release

Ms. Connie Martinez reports

VISTA GOLD CORP. ANNOUNCES ESTIMATED MINERAL RESERVES OF TWO MILLION OUNCES AND RESULTS OF A PRELIMINARY FEASIBILITY STUDY AT ITS MT. TODD GOLD PROJECT, NORTHERN TERRITORY, AUSTRALIA

Vista Gold Corp. has released estimated proven and probable mineral reserves of two million ounces and the positive results of a preliminary feasibility study (PFS) for the Batman deposit at the company's wholly owned Mount Todd gold project in Northern Territory, Australia. The PFS was managed by TetraTech MM Inc. of Golden, Colo., which also undertook the resource modelling and estimation, geotechnical, environmental and site reclamation engineering, and design. John Rozelle, PG, manager of TetraTech's mineral resource division and principal geologist, an independent qualified person as defined by Canadian National Instrument 43-101, prepared or supervised the preparation of material on behalf of TetraTech. Thomas Dyer, PE, of Mine Development Associates, an independent qualified person as defined by NI 43-101, prepared or supervised the preparation of material on behalf of Mine Development Associates. Mr. Rozelle and Mr. Dyer prepared or supervised the preparation of the information that forms the basis for the scientific and technical information disclosed herein and have reviewed this press release and have consented to its release. The PFS study will be filed on SEDAR's website in its entirety within 45 days. All dollar amounts in this press release are in U.S. dollars unless otherwise noted. Management plans to review the results of the PFS in a conference call, details of which are shown at the end of the press release.

The PFS base case was evaluated using the three-year trailing average gold (Au) price of $950 per ounce. Mineral reserve estimates and production highlights from the base case can be seen in the relevant table.

                    BASE CASE PRODUCTION HIGHLIGHTS
 (base case reserves and production estimates at $950 per ounce Au)

Proven and probable mineral reserves (at a      60.05 million tonnes at
0.55 g/t Au cut-off)*                           1.05 g/t Au
Contained gold                                  2,026,000 ounces
Life-of-mine production                         1,662,000 ounces
Average annual production (based on 8.86-year   187,500 ounces gold per
mine life)                                      year
                                                22.9 million tonnes per
Mining rate                                     year
Mill throughput rate                            18,500 tonnes per day
Stripping ratio (waste-to-ore ratio)            2.37
Mine life                                       8.86 years

* Elevated cut-off grades were used to constrain the total estimated
  mineral reserve tonnes to the remaining tailings capacity, while
  maximizing return.  In most areas, a cut-off grade of 0.55 g/t Au
  was used.  Select benches in the first two phases of mining used a
  cut-off grade of 0.6 g/t Au.

The PFS was completed using a foreign exchange rate of 85 U.S. cents equals $1 (Australian), and incorporates mid-2010 costs. The relevant table summarizes the base case economic results with a comparison with the base case sensitivity at a gold price of $1,200 per ounce and a foreign exchange rate of 90 U.S. cents equals $1 (Australian).

                 SUMMARY OF BASE CASE ECONOMIC RESULTS

                    $950 per ounce Au           $1,200 per ounce Au
                    and 85 U.S. cents           and 90 U.S. cents
                    equals $1 (Australian)      equals $1 (Australian)                             
Average cash
operating cost
($ per oz Au
produced)                            $476                       $493
Average total
Cash production
costs ($ per oz
Au produced)                         $487                       $507
Preproduction
Capital cost                 $441,258,000               $459,820,000
Sustaining
capital cost                  $32,981,000                $32,981,000
Internal rate of            14.9 per cent              25.4 per cent
return                        before tax,                before tax,
                             9.8 per cent              16.2 per cent
                                after tax                  after tax
Cumulative cash
flow (pretax)                $472,615,000               $848,724,000
Net present
Value at 5-per-cent
discount (pretax)            $210,144,000               $487,156,000

In addition to the base case, Vista also studied a larger 30,000-tonne-per-day case (the sensitivity case) using a gold price of $1,200 per ounce. The operating costs in the sensitivity case were completed to prefeasibility-level standards. The mining capital costs are based on mid-2010 costs, while the process capital costs are based on late 2009 costs. The capital costs for the tailings impoundment are factored from the base case, as were the water treatment and closure costs, and do not meet the standards required for a preliminary feasibility study, however, they are within the level of accuracy for a preliminary assessment. Vista intends to commission TetraTech to undertake further work to optimize and bring the sensitivity case to a preliminary-feasibility level over the next few months. Highlights from the sensitivity case can be seen in the relevant table.

                     
    SENSITIVITY CASE PRODUCTION ESTIMATES AT $950 PER OUNCE AU
    
In-pit estimated measured and indicated
mineral resources (at a 0.4 g/t           139.18 million tonnes at 
cut-off)                                  0.87 g/t Au
Contained gold                            3,897,000 ounces gold
Life-of-mine production                   3,196,000 ounces gold
Average annual production                 251,600 ounces gold per year
Mining rate                               33.2 million tonnes per year
Mill throughput rate                      30,000 tonnes per day
Stripping ratio (waste-to-ore ratio)      2.03
Mine life                                 12.7 years

               SENSITIVITY CASE ECONOMIC HIGHLIGHTS

                     $950 per ounce Au           $1,200 per ounce Au
                     and 85 U.S. cents           and 90 U.S. cents
                     equals $1 (Australian)      equals $1 (Australian)  
Average cash
operating cost
($ per oz Au
produced)                            $525                       $545
Average total
cash production
costs ($ per oz
Au produced)                         $541                       $563
Preproduction
capital cost                 $646,904,000               $677,113,000
Sustaining
capital cost                 $230,951,000               $230,951,000
Internal rate of            10.1 per cent                21 per cent
return                        before tax,                before tax,
                             6.2 per cent                13 per cent
                                after tax                  after tax
Cumulative cash
flow (pretax)                $513,006,000             $1,219,408,000
Net present
value at 5-per-cent
discount (pretax)            $154,524,000               $631,027,000

Commenting on the positive Mount Todd PFS, Fred Earnest, president and chief operating officer of Vista, stated: "We believe that the comprehensive program of work we have undertaken over the last four years has addressed the technical issues experienced by Pegasus, Mount Todd's prior owner. It is our view that based on our improved understanding of the orebody, together with the selection of a proven milling process and equipment, the proposed reopening of Mount Todd will be technically, operationally and economically attractive at a conservative gold price of $950 per ounce and very attractive at current gold prices. The larger sensitivity case has good economics at current gold prices, and we intend to optimize and upgrade this alternative to a prefeasibility-level study over the next few months. If the proposed work confirms the sensitivity case results, we believe we may be able to double the project's proven and probable mineral reserves estimates to approximately 3.5 million to four million ounces. Additionally, we believe there is significant potential to grow Mount Todd's mineral resource estimates through exploration on the project's 160,878 hectares of exploration tenements."

General

The Mount Todd gold project mine site is located 230 kilometres southeast of the port of Darwin, and 56 km by road north-northeast of the regional centre of Katherine. Katherine and Darwin are connected by a railway and the Stuart Highway. An existing paved road connects the mine site to the Stuart Highway. Vista acquired the project in February, 2006, for approximately $2-million, reaching agreements with Ferrier Hodgson, the Deed Administrators for Pegasus Gold Australia Pty. Ltd., the government of the Northern Territory of Australia and the Jawoyn Association Aboriginal Corp. Pegasus reported investing over $200-million to develop the Mount Todd gold project mine and operated it from 1993 to 1997, when the Mt. Todd gold project was closed as a result of technical difficulties and low gold prices. The mine's plant and most of the equipment were sold in June, 2001, and removed from the mine, but the tailings facility, freshwater storage reservoir, natural gas pipeline (for power generation), and various buildings and useful foundations remain. Since acquiring the project in 2006, Vista has undertaken various studies and programs, including an initial preliminary economic assessment (PEA) issued on Dec. 29, 2006, an updated PEA issued on June 11, 2009, extensive sampling and diamond drilling (over 26,000 metres), an extensive metallurgical test program which included crushing and grinding, flotation and leach testwork, mine design, as well as various preliminary engineering studies and cost estimates.

Mineral resources and reserves estimates

The PFS is based on Vista's updated gold mineral resource estimate for the Batman deposit as of June 11, 2009, which assumed a cut-off grade of 0.4 gram gold per tonne. The resource estimate is detailed in the report "Mt. Todd Gold Project -- Updated Preliminary Economic Assessment Report -- Northern Territory, Australia," dated June 11, 2009, and available on SEDAR's website. The resources can be seen in the relevant table.

Resources         Thousands     Average   Thousands      Average    Thousands of
classification    of metric       grade   of short       grade      contained
                  tonnes          (g/t)   tons           (oz/t)     gold ounces                                                                                                                                

Measured           52,919          0.91    58,333         0.026       1,543
Indicated         138,020          0.81   152,139         0.024       3,581
                  -------          ----   -------         -----       -----
Measured and      190,939          0.84   210,472         0.024       5,125
indicated
Inferred           94,008          0.74   103,625         0.022       2,244

The estimated measured and indicated mineral resources included in the relevant table include 60,049,000 tonnes of proven and probable reserves shown in the table of estimated proven and probable reserves.

Mine Development Associates used the June, 2009, resource model to develop an open-pit mine design, including intermediate pit plans and production schedules.

The mineral reserve estimates prepared and reported by Mine Development Associates, under the supervision of Mr. Dyer, and using the June, 2009, resource model at a gold price of $950 per ounce of gold and cut-off grade of 0.55 gram gold per tonne are summarized in the relevant table.

              MOUNT TODD PROVEN & PROBABLE RESERVE ESTIMATE

Reserve             Thousands  Average   Thousands      Average      Thousands
classification      of metric  grade     of short       grade        of contained
                    tonnes       g/t     tons           oz/t         gold ounces

Proven              24,458      1.09     26,960         0.032          854
Probable            35,591      1.02     39,232         0.030        1,172
                    ------      ----     ------         -----        -----
Proven and
probable            60,049      1.05     66,192         0.031        2,026

Capital and operating cost estimate

Estimated life-of-mine average total cash production costs are projected to be $487 per ounce, with the highest costs occurring in the first five years of the project. The latter half of the project life benefits from decreases in the required stripping. Preproduction capital costs including contingency, owner's costs and working capital are estimated to be $441-million and sustaining capital over the life of the mine is estimated to be $33-million. Postoperation reclamation costs are not included in the total capital costs, but are included in the cash flow analyses and return on investment calculations.

Mining

Vista plans to extract ore from the mine using conventional open-pit mining equipment and techniques. A waste mining fleet consisting of 180-tonne trucks and 21-cubic-metre shovels has been selected to complement the 140-tonne truck and loader ore mining fleet. The company would be the owner and operator of the mining fleets and expects to enter into maintenance and repair contracts for the major mining equipment. In the base case, ore will be mined in three pit development phases over a period of 8.86 years. Waste rock will be placed in a single waste dump and concurrent reclamation is planned for the lower benches of the dump.

Processing

Following an extensive review of the plant performance data from previous operators, it was clear to Vista that there were a number of key reasons why these operations were unsuccessful. As a result, Vista undertook mineralogical and metallurgical studies to fully understand the type of ore that would be treated over the life of the proposed mine. This was followed by laboratory test programs that evaluated the metallurgical process, proposed equipment and the expected performance and cost parameters. Vista believes that principal reasons that led to the previous operational failure were:

• Ore hardness -- the plant built by the previous operator was poorly designed to handle the hard ore and failed to produce a satisfactory product or achieve design capacity. Vista tested and determined the expected ore hardness and then evaluated various combinations of equipment. The best combination of equipment involved primary and secondary crushing, tertiary crushing employing high-pressure grinding rolls (HPGR), followed by a large ball mill. The use of HPGR is expected to result in a product which significantly improves the efficiency of the grinding circuit. For the base case, the circuit is very simple, with a large primary gyratory crusher, a secondary cone crusher, a single HPGR unit and a single ball mill. HPGR technology is currently being successfully used by Newmont Mining Corp. at Australia's largest gold mine, the 20-million-ounce Boddington mine in Western Australia. The circuit has been designed to reflect the results of leach tests that indicate that the optimum grind size should be 80 per cent passing 100 mesh, coarser than used in previous operations.
• Metallurgy -- a number of metallurgical problems were encountered in the past, mostly related to copper minerals in the ore. Vista's test program focused first on understanding the form and distribution of the copper minerals in the orebody, and then on the best metallurgical approach to deal with the copper. In the mineralogical review it became apparent that the form of the copper minerals changes with depth. In the upper part of the orebody, mostly mined out by previous operators, the copper existed mainly as secondary copper minerals such as chalcocite, bornite and covellite; these minerals are very soluble in cyanide, which greatly increased the expense of leaching. The remaining ore contains mainly primary copper minerals like chalcopyrite, which generally has a very minor effect on leaching and cyanide consumption. The tests Vista undertook on representative samples of the ore to be mined showed that whole ore leaching combined with a carbon-in-pulp recovery circuit yields acceptable recoveries of 82 per cent.

The proposed plant for the base case will have a design capacity of 18,500 tonnes per day and has been designed to be simple, efficient and easy to maintain. The proposed flow sheet indicates that following grinding, the slurried ore will be sized by cyclones, thickened, preaerated and then leached in tanks prior to recovery in a hybrid carbon-in-pulp circuit. Gold will be stripped from the carbon and precipitated in an electrowinning cell prior to refining into dore bars. The tailings would be detoxified using the SO2/air process, and deposited in the existing tailings impoundment facility.

Further contributing to lower costs, the proposed project will self generate power using low-cost natural gas, which can be supplied to the site via the existing natural gas pipeline. The project also includes plans to produce lime from nearby limestone deposits, thereby significantly reducing the supply cost for this reagent.

Infrastructure

As a previously operated project, the Mount Todd gold project site has existing infrastructure, which includes: a freshwater storage reservoir with sufficient capacity to sustain the proposed operation, paved access roads, concrete foundations for some of the crushing circuit, a natural gas pipeline and an electrical power line. Power will be generated on-site using a gas-turbine generator, which is included in the project capital. The power plant is designed to have excess capacity to meet higher loads during large equipment starting up. Excess power during operations will be sold into the grid, further reducing expected costs. During the nine-year postclosure period, Vista intends to continue operating the natural gas turbine power generating plant. Revenues derived from selling power to the grid during this period are expected to finance all of the reclamation activities.

Environmental

Both the base case and sensitivity case include engineering designs for the closure of the mine site following cessation of production. The closure plan was designed to meet all requirements for long-term reclamation of the site, and cost estimates include provisions for monitoring required under applicable law.

Economic analysis

The base case economic analysis was completed using the three-year trailing average gold price of $950 per ounce and a foreign exchange rate of 85 U.S. cents equals $1 (Australian). Vista has also completed sensitivity analyses calculated at gold prices of $1,000, $1,100, $1,200 and $1,500 per ounce. The $1,200 and $1,500 sensitivity analyses incorporate the current foreign exchange rate of 90 U.S. cents equals $1 (Australian). Estimated before and after tax economic results, showing the internal rate of return (IRR) and net present value at a 5-per-cent discount rate, cumulative cash flow and sensitivity to changes in gold price are shown in the relevant tables.

                     BEFORE TAX ECONOMIC RESULTS
       
Gold price scenario          Before tax      Before tax          Before tax
                            IRR (%) NPV5%   (thousands           cumulative 
                                             of dollars)         cash flow
                                                                (thousands
                                                                 of dollars)

Base case  $950 gold price       14.9 %     $210,144              $472,615
         $1,000 gold price       17.5 %     $272,260              $554,865
         $1,100 gold price       22.6 %     $396,494              $719,366
         $1,200 gold price       25.4 %     $487,156              $848,724
         $1,500 gold price       39.3 %     $859,856            $1,342,227

                         AFTER TAX ECONOMIC RESULTS

Gold price scenario              Before tax      Before tax          Before tax
                                IRR (%) NPV5%   (thousands           cumulative 
                                                 of dollars)         cash flow
                                                                    (thousands
                                                                      of dollars)

Base case      $950 gold price       9.8 %       $71,127              $252,490
             $1,000 gold price      11.4 %      $100,497              $207,598
             $1,100 gold price      14.5 %      $158,192              $359,190
             $1,200 gold price      16.2 %      $198,827              $418,218
             $1,500 gold price      23.9 %      $359,612              $624,317

Mike Richings, executive chairman and chief executive officer of Vista, added the followings comments: "We are very pleased with the results of the Mount Todd gold project PFS. We believe we have demonstrated that development of the Mount Todd gold project can generate value that is a multiple of Vista's current market capitalization for a project we acquired for less than $3-million. This once again underscores the benefits of Vista's historic value-based acquisition strategy to acquire discovered gold projects and to hold them for higher gold prices. In 2007, we created significant value for our shareholders through the spinout of Allied Nevada Gold Corp. and we are once again posed to take advantage of high current gold prices to generate additional value for shareholders through development or execution of other strategic alternatives for the Mount Todd gold project."

Exploration potential

Vista controls a large land package (160,878 hectares) of exploration tenements surrounding the Mount Todd gold project. As previously announced by the company, Vista's geologists have identified four new exploration targets at the Mount Todd gold project that are now being followed up on through additional sampling and testing. Of note, at the target identified as MSTS-4, rock chip sampling, in an area with limited exposure, returned a 25 g/t gold sample from a small outcrop of fault breccia. Further sampling returned 23 g/t and 7.7 g/t gold assays in vein and breccias located 15 metres and 50 metres, respectively, north of the original sample. Due to the sparse outcrop, the orientation and thickness of the mineralized zone is not currently known. A soil sampling program over the area has recently been completed on a 20-metre grid. The survey returned a strong coherent gold anomaly approximately 400 metres in diameter with coincident anomalous base metals and arsenic. The company plans to conduct diamond core drilling in the area of this target later this year.

Management conference call

A conference call with management to review the Mount Todd gold project preliminary feasibility results is scheduled on Monday, Aug. 23, 2010, at 4 p.m. Eastern Time.

Toll-free in North America: 1-866-443-4188

International: 1-416-849-6196

This call will be archived and available at the company's website after Sept. 13, 2010. Audio replay will be available for three weeks by calling in North America to 1-866-245-6755, passcode 59130.

If you are unable to access the audio or phone-in on the day of the conference call, please feel free to e-mail questions to Connie Martinez, manager, investor relations, at connie@vistagold.com, and the company will try to address these questions prior to or during the conference call.

We seek Safe Harbor.