- Vista Gold (NYSEAM:VGZ, TSX:VGZ) has released an updated feasibility study for its Mt Todd project in Australia.
- The redesigned plan reduces initial capex and focuses on grade to improve efficiency and buildability.
- CEO Fred Earnest joins Capital Compass to discuss development options: a JV, sale, or self-build.
In this episode, we’re looking at Vista Gold (NYSEAM:VGZ, TSX:VGZ) and its flagship Mt Todd Project in Australia’s northern territory. The company has just released an updated feasibility study that resizes the project, aiming to make it more efficient and buildable in today’s market.
Now, the key question is, what’s the best path forward? Does Vista bring in a joint venture partner, sell the company, or build the mine themselves?
Fred Earnest, President and CEO of Vista Gold, joined Ricki to unpack this study and walk through these options.
Ricki: So, Fred, for anyone new to Vista Gold, can you start with a quick overview of Mt Todd and what the updated feasibility study means for the project?
Fred: Mt Todd is the is the second largest undeveloped gold project in Australia with 10.6 million ounces of total resource, 9.1 million ounces of M & I. It’s the largest undeveloped gold project, not in the hands of a producer in Australia.
And this new feasibility study is a complete rethink of how to develop the project that previously we were entirely dependent on a joint venture to develop a very large project with a large CapEx. And this new study unlocks the potential for us to joint venture it with a much smaller company or to even build it ourselves.
Ricki: So, you’ve spoken about resizing Mt Todd. What were the main drivers behind that shift and how does it position the project better in the current environment?
Fred: We made the decision a little over a year ago to reevaluate Mt Todd to prioritize lower CapEx and to prioritize grade over tons. And so that resulted in us raising the cutoff grade, which I know that is counter-intuitive to many companies today with the rising gold price.
But we’ve adopted the philosophy that grade pays, tons cost, and that’s to get the project built. The smaller scale obviously allows us to have a much smaller CapEx, and we’ve reduced the initial CapEx by 59 per cent.
We’ve also brought in a whole new team of consultants and engineers, almost all of them Australia based with the idea of designing and building a project that is very much like what other Australian companies build and to take advantage of the incredible wealth of experience that exists in the Australian mining space.
So, when I say this is a rethink of the project, it’s just a redesign on many levels whether you want to say a paradigm shift or turning a new page, starting with a clean sheet of paper. That’s what we’ve accomplished. And I’m very, very happy with the results of this study.
Ricki: So, with all of that in mind then, looking ahead, Fred, you’ve outlined three possible routes, a joint venture, a company sale, or building the mine yourselves. So how are you weighing those options and what factors will guide that decision?
Fred: That’s the big question right now, Ricki and we are evaluating those options. Certainly the rising gold price has increased the value of the project and made developing ourselves more attractive than it was when we first announced the study.
We continue to work with and to hold conversations with companies that may be interested in either a corporate or a transaction or a joint venture.
But in this market everything is being considered, and we will continue to act with discipline and as we seek to create the most value for our shareholders, both in the short term and the long term.
Ricki: Okay. And so finally then, with all that in mind, what can investors look forward to in the near term as you move Mt Todd toward development?
Fred: Well, certainly investors should be very mindful of the value of the project in this gold market. We’ve gone from a study value at $2,500 gold price of $1.1 billion with roughly a 28 per cent IRR to at today’s gold price a value of almost $3.1 billion and an IRR of almost 58 per cent.
And I believe that we have a very clear path to having all of the authorizations in the next 6 to 12 months. Obviously, there won’t be announcements in the short term, but know that that’s happening. And then be particularly mindful after the first of the year with regards to some form of indication as to which path it is that we’re pursuing.
And that announcement could take a number of different forms and people need to be very alert and attentive to that.
Ricki: Well, Fred, thanks so much for joining us and sharing the latest on Vista Gold.
For more information, visit vistagold.com.
This article is disseminated in partnership with Vista Gold (NYSEAM:VGZ, TSX:VGZ). It is intended to inform investors and should not be taken as a recommendation or financial advice. Stockhouse does not provide investment advice or recommendations. All investment decisions should be made based on your own research and consultation with a registered investment professional. The issuer is solely responsible for the accuracy of the information contained herein. For full disclaimer information, please click here.
