Mr. Frederick Earnest reports
VISTA GOLD CORP. ANNOUNCES MT. TODD GOLD PROJECT PRELIMINARY FEASIBILITY STUDY AND INCREASE IN RESERVES OF 44% TO 5.9 MILLION OUNCES OF GOLD
Vista Gold Corp. has released the positive results of a new preliminary feasibility study for its Mt. Todd gold project in Northern Territory, Australia. The PFS evaluates two development scenarios including a 50,000-tonne-per-day (tpd) project that develops more of the Mt. Todd resource and generates a larger net present value (NPV) and a smaller and higher-grade 33,000 tpd project that focuses on maximizing return and operating margins. The PFS was authored by Tetra Tech Inc. with Mine Development Associates, Resource Development Inc., Proteus EPCM Engineers (a Tetra Tech company) and Power Engineers Inc.
A conference call and webcast to discuss highlights of the preliminary feasibility study will be held this afternoon at 4:30 p.m. Eastern Time (2:30 p.m. Mountain Time). Call-in details are located at the end of this release.
Highlights of the 50,000 tpd base case include:
- Estimated proven and probable reserves of 5.9 million ounces of gold (223 million tonnes at 0.82 gram per tonne gold (g/t Au) at a cut-off grade of 0.40 g/t Au, an increase of 44 per cent from the company's January, 2011, PFS);
- Average annual production of 369,850 ounces of gold per year over the mine life, including average annual production of 481,316 ounces of gold per year during the first five years of operations;
- Life-of-mine average cash costs of $773 per ounce, including average cash costs of $662 per ounce during the first five years of operations;
- A 13-year operating life;
- Aftertax NPV5 (net present value at 5-per-cent discount) of $591.3-million and IRR (internal rate of return) of 15.9 per cent at $1,450 per ounce gold prices, increasing to $876.6-million and 21.1 per cent, respectively, at $1,600-per-ounce gold prices;
- Initial capital requirements of $1,046-million.
Highlights of the 33,000 tpd alternative case include:
- Estimated proven and probable reserves of 3.56 million ounces of gold (124 million tonnes at 0.90 g/t Au) at a cut-off grade of 0.45 g/t Au;
- Average annual production of 262,826 ounces of gold per year over the mine life, including average annual production of 294,502 ounces of gold per year during the first five years of operations;
- Life-of-mine average cash costs of $684 per ounce, including average cash costs of $676 per ounce during the first five years of operations;
- An 11-year operating life;
- Aftertax NPV5 of $440.2-million and IRR of 16.9 per cent at $1,450-per-ounce gold prices, increasing to $615.6-million and 21.4 per cent, respectively, at $1,600-per-ounce gold prices;
- Initial capital requirements of $761-million.
Frederick H. Earnest, president and chief executive officer of Vista, commented: "The positive results of this PFS continue to demonstrate the quality and scale of the Mt. Todd gold project. By completing the PFS analysis on two separate development scenarios, we are highlighting the flexibility we have in the development of this robust project. We have the option to develop the mine most appropriate at the time a development decision is made. Furthermore, the location of the project relative to local towns and labour markets and the infrastructure investments made by previous owners of this project provide potential construction and operating advantages relative to many gold projects."
Mr. Earnest continued: "During the balance of 2013, we will continue to advance the Mt. Todd gold project. We will be working with the Northern Territory government to address areas vital for the completion of a feasibility study and ultimately for a project development decision. These discussions will be undertaken within the framework of major project status, which the territory has recently accorded Mt. Todd indicating the importance that the territory places on its development. The PFS results allow us to finalize and submit the environmental impact study (EIS) in June. We continue to anticipate environmental approvals for the project around year-end. Because of the advanced state of this study, with most technical work already at feasibility levels, we estimate that a feasibility study would require four months to complete and cost approximately $2.5-million."
Nick Michael and Rex Bryan, on behalf of Tetra Tech, Thomas Dyer, on behalf of Mine Development Associates, Deepak Malhotra, on behalf of Resource Development Inc., and Lachlan Walker, on behalf of Proteus EPCM Engineers, all independent qualified persons as defined by Canadian National Instrument 43-101, prepared or supervised the preparation of 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.
BASE CASE HIGHLIGHTS
Base case (50,000 tpd) Years 1 to 5 Life of mine (13 years)
at $1,450/oz Au Annual Annual
average Total average Total
Average milled grade (g/t) 1.03 0.82
Payable gold (000 oz) 481 2,407 370 4,808
Gold recovery 82.0% 81.5%
Cash costs ($/oz) $662 $773
Strip ratio (waste:ore) 2.5 2.7
Initial capital ($ millions) $1,046
Pretax NPV5 ($ millions) $1,094
Aftertax NPV5 ($ millions) $591
IRR (pretax/after tax) 21.8%/15.9%
Aftertax payback (production years) 3.5
BASE CASE PROJECT ECONOMICS
Aftertax NPV5, in millions Base case (50,000 tpd) gold price per ounce
Forex (U.S./Australian) $1,200 $1,300 $1,400 $1,450 $1,500 $1,600 $1,700 $1,800
$1.10 (U.S.) (loss) ($51.4) $155.9 $352.1 $448.4 $543.8 $734.5 $924.9 $1,114.1
$1.00 (U.S.) $108.1 $304.5 $496.1 $591.3 $686.6 $876.6 $1,065.6 $1,255.1
$0.90 (U.S.) $258.5 $448.3 $638.8 $733.6 $828.3 $1,017.2 $1,206.5 $1,395.9
$0.80 (U.S.) $400.6 $591.0 $780.0 $874.4 $968.9 $1,157.9 $1,347.2 $1,536.1
BASE CASE CAPITAL COSTS
Capital expenditures (millions)
(base case (50,000 tpd)) Initial capital Sustaining capital
Capitalized stripping and dewatering $57 $40
Mobile equipment $139 $151
Process facility $410 -
Tailings $20 $184
Power plant $91 -
Water supply and treatment $19 -
Owners (cost) $203 ($10)
Subtotal $938 $366
Contingency $107 $23
Salvage value (loss) ($124)
Mine closure $1 $94
Total capital $1,046 $359
Total capital per payable ounce gold $218 $75
Base case operating costs
The associated table presents a breakdown of operating costs. The project includes a 76-megawatt gas-fired power plant in the initial capital. The base case project consumes all power generated during the operating life. Self-generated power creates significant savings in operating costs compared with a grid-sourced power solution. During the four years of reclamation and closure, the PFS assumes Vista will continue generating power and will sell that power into the Northern Territory electrical grid, for which there is a known market and indicative purchase rates have been provided by the government-owned utility, Power & Water Corp.
BASE CASE OPERATING COSTS
Operating cost -- base case First five years LOM cost
(50,000 tpd) Per tonne processed Per ounce Per tonne processed Per ounce
Mining $8.18 $302.03 $6.95 $321.88
Processing $8.71 $321.47 $8.78 $406.86
Site general and administrative $0.49 $18.27 $0.50 $22.94
Jawoyn royalty $0.39 $14.50 $0.31 $14.50
Water treatment $0.07 $2.60 $0.07 $3.39
Refining costs $0.09 $3.19 $0.07 $3.19
Power credit - - - -
Total cash costs $17.93 $662.06 $16.68 $772.76
Base case mining and production
The 50,000 tpd base case mine plan contains 209.5 million tonnes of ore mined from the Batman open pit plus 13.4 million tonnes of ore from the existing heap leach pad that is processed through the mill at the end of the mine life. Together, 222.8 million tonnes of ore containing 5,901,000 ounces of gold at an average grade of 0.82 g/t Au are processed over the 13-year operating life. Total gold recovered is expected to be 4,808,000 ounces. Average annual gold production over the life of mine is 369,850 ounces, averaging 481,316 ounces during the first five years of operations, with 580,472 ounces produced in the first year of operations. Commercial production would begin following two years of construction and commissioning.
BASE CASE ANNUAL PRODUCTION
Year Ore mined Waste mined Strip ratio Milled ore Milled grade Contained Mill production
(kt) (kt) (W:O) (kt) (g/t) (koz) (koz)
-1 11,764 24,761 2.1 - - - -
1 28,101 33,803 1.2 17,799 1.24 708 580
2 20,983 55,290 2.6 17,750 0.92 525 430
3 23,941 78,227 3.3 17,750 1.07 613 502
4 18,285 71,608 3.9 17,750 0.82 471 386
5 29,066 58,329 2.0 17,799 1.08 620 508
6 7,561 71,279 9.4 17,750 0.71 408 334
7 4,777 54,405 11.4 17,750 0.55 312 256
8 7,078 45,482 6.4 17,750 0.53 301 247
9 10,700 38,710 3.6 17,799 0.57 325 266
10 24,331 27,864 1.1 17,750 0.83 473 388
11 22,861 2,592 0.1 17,750 1.14 653 535
12 - - - 17,750 0.57 324 258
13 - - - 9,659 0.54 168 117
Total 209,451 562,349 2.7 222,805 0.82 5,901 4,808
MT. TODD GOLD PROJECT RESERVES, BASE CASE (50,000 TPD)
(0.40 g/t Au cut-off and $1,360 per ounce gold)
Batman deposit Heap leach pad Quigleys deposit Total
Cont. Cont. Cont. Cont.
Tonnes Grade oz Tonnes Grade oz Tonnes Grade oz Tonnes Grade oz
(000) (g/t) (000) (000) (g/t) (000) (000) (g/t) (000) (000) (g/t) (000)
Proven 72,495 0.88 2,057 - - - - - - 72,495 0.88 2,057
Probable 136,955 0.82 3,612 13,354 0.54 232 - - - 150,309 0.80 3,844
Proven and
probable 209,451 0.84 5,669 13,354 0.54 232 - - - 222,805 0.82 5,901
MT. TODD GOLD PROJECT RESOURCES
Batman deposit Heap leach pad Quigleys deposit Total
Cont. Cont. Cont. Cont.
Tonnes Grade oz Tonnes Grade oz Tonnes Grade oz Tonnes Grade oz
(000) (g/t) (000) (000) (g/t) (000) (000) (g/t) (000) (000) (g/t) (000)
Measured 77,793 0.88 2,193 - - - 571 0.98 18 78,364 0.88 2,211
Indicated 201,792 0.80 5,209 13,354 0.54 232 6,868 0.82 18 1222,014 0.79 5,622
Measured and
indicated 279,585 0.82 7,401 13,354 0.54 232 7,439 0.83 199 300,378 0.81 7,832
Inferred 72,458 0.74 1,729 - - - 11,767 0.85 320 84,225 0.76 2,049
Alternative case presented in PFS study
In addition to the 50,000 tpd base case, the PFS also evaluated a smaller, higher-grade project as an alternative case. Key differences between the base case and the alternative case include: 33,000 tpd milling facility versus a 50,000 tpd facility in the base case with associated lower mining rates and a smaller mining fleet; and reserve pit shell of $925 per ounce versus $1,360 per ounce in the base case and the application of a higher cut-off grade (0.45 g/t Au versus 0.40 g/t Au).
ALTERNATIVE CASE HIGHLIGHTS
Years 1 to 5 LOM (11 years)
Alternative case (33,000 tpd) Annual Annual
(at $1,450/oz Au) average Total average Total
Average milled grade (g/t) 0.95 0.90
Payable gold (000 oz) 295 1,473 263 2,891
Gold recovery 82.0% 81.2%
Cash costs ($/oz) $676 $684
Strip ratio (waste:ore) 2.1 2.0
Initial capital ($ millions) $761
Pretax NPV5 ($ millions) $777
Aftertax NPV5 ($ millions) $440
IRR (pretax/after tax) 22.1%/16.9%
Aftertax payback (production years) 3.2
ALTERNATIVE CASE PROJECT ECONOMICS
Aftertax NPV5
(in millions) Alternative case (33,000 tpd) gold price per ounce
Forex (U.S./Australian) $1,200 $1,300 $1,400 $1,450 $1,500 $1,600 $1,700 $1,800
$1.10 (U.S.) $58.5 $187.2 $305.1 $363.2 $421.5 $538.2 $655.5 $773.2
$1.00 (U.S.) $146.4 $265.6 $381.9 $440.2 $498.5 $615.6 $733.2 $850.9
$0.90 (U.S.) $225.6 $342.4 $458.8 $517.1 $575.8 $693.2 $810.9 $928.6
$0.80 (U.S.) $303.0 $419.3 $535.9 $594.6 $653.2 $770.9 $888.6 $1,006.3
ALTERNATIVE CASE CAPITAL COSTS
Capital expenditures Alternative case (33,000 tpd)
(in millions) Initial capital Sustaining capital
Capitalized stripping and dewatering $24 $38
Mobile equipment $77 $73
Process facility $310 -
Tailings $19 $86
Power plant $64 -
Water supply $11 -
Owners (cost) $175 ($14)
Subtotal $680 $183
Contingency $80 $11
Salvage value (loss) - ($77)
Mine closure $1 $94
Total capital $761 $211
Total capital per payable ounce gold $263 $73
Alternative case operating costs
The associated table presents a breakdown of operating costs. The alternative case project includes a 58-megawatt gas-fired power plant in initial capital. During the operating life, the power plant generates excess power and Vista has assumed a power credit against operating costs. Additionally, during the four years of reclamation and closure, Vista intends to generate and sell power into the Northern Territory electrical grid, for which there is a known market and indicative purchase rates have been provided by the government-owned Power & Water Corp.
ALTERNATIVE CASE OPERATING COSTS
Operating cost First five years LOM cost
(alternative case (33,000 tpd)) Per tonne processed Per ounce Per tonne processed Per ounce
Mining $6.55 $260.99 $5.49 $234.75
Processing $9.37 $373.32 $9.51 $406.86
Site general and administrative $0.74 $29.42 $0.74 $31.63
Jawoyn royalty $0.36 $14.50 $0.34 $14.50
Water treatment $0.08 $3.17 $0.08 $3.55
Refining costs $0.08 $3.19 $0.07 $3.19
Power credit (loss) ($0.23) ($8.97) ($0.23) ($10.05)
Total cash costs $16.97 $675.61 $15.99 $684.43
Alternative case mining and production
The 33,000 tpd alternative case mine plan contains 110.4 million tonnes of ore mined from the Batman open pit plus 13.4 million tonnes of ore from the existing heap leach pad that is processed through the mill at the end of the mine life. Together, 123.7 million tonnes of ore containing 3,562,000 ounces of gold at an average grade of 0.90 g/t Au are processed over the 11-year operating life. Total gold recovered is expected to be 2,891,000 ounces. Average annual gold production over the life of mine is 262,826 ounces, averaging 294,502 ounces during the first five years of operations, with 417,166 ounces produced in the first year of operations. Commercial production would begin following two years of construction and commissioning.
ALTERNATIVE CASE ANNUAL PRODUCTION
Year Ore mined Waste mined Strip ratio Milled ore Milled grade Contained oz Mill production
(kt) (kt) (W:O) (kt) (g/t) (koz) (koz)
-1 3,407 8,483 2.5 - - - -
1 16,872 23,714 1.4 11,747 1.35 509 417
2 12,013 23,611 2.0 11,715 0.86 323 265
3 17,775 22,960 1.3 11,715 1.16 438 359
4 4,921 35,191 7.2 11,715 0.63 237 194
5 10,331 24,062 2.3 11,747 0.77 289 237
6 17,311 23,934 1.4 11,715 1.17 442 361
7 2,681 31,629 11.8 11,715 0.65 245 201
8 8,501 22,889 2.7 11,715 0.73 277 227
9 12,597 6,209 0.5 11,747 0.99 375 308
10 3,964 49 0.0 11,715 0.83 314 244
11 - - - 6,482 0.54 113 79
Total 110,374 222,732 2.0 123,728 0.90 3,562 2,891
Project description
Gold mineralization in the Batman deposit at the project occurs in sheeted veins within silicified greywackes/shales/siltstones. The Batman deposit strikes north-northeast and dips steeply to the east. Higher-grade zones of the deposit plunge to the south. The core zone is approximately 200 to 250 metres wide and 1.5 kilometres long, with several hangingwall structures providing additional width to the orebody. Mineralization is open at depth as well as along strike, although the intensity of mineralization weakens to the north and south along strike.
The project is designed to be a conventional, owner-operated, large open-pit mining operation that will utilize large-scale mining equipment in a blast/load/haul operation. Ore is planned to be processed in a large comminution circuit consisting of a gyratory crusher, two cone crushers, two HPGR crushers and three ball mills as discussed in greater detail below. Vista plans to recover gold in a conventional carbon-in-leach (CIL) recovery circuit.
Metallurgy, processing and infrastructure
Vista has completed extensive, feasibility-level metallurgic testwork that was announced in a separate press release dated May 22, 2013. The technical reports related to this testwork are posted on the Mt. Todd section under the technical reports heading on the company's website.
Vista's metallurgic testwork programs support
- Ore hardness estimates at the Batman deposit that are consistent and do not change at depth;
- The selection of high-pressure grinding roll (HPGR) technology as part of the comminution circuit;
- Estimated gold recovery rates based on optimized grind size and leach conditions;
- The processing of material from the historic heap leach pad at the end of the proposed mine life.
The robust comminution circuit is designed to process material with an average bond work index 5 per cent in excess of actual rock hardness based on the testwork completed. Gold will be recovered through a traditional CIL circuit. Recovery rates are based on the results of 99 variability tests.
Because the project was an operating mine, infrastructure exists that reduces initial capital expenditure and significantly reduces capital risk related to infrastructure construction, which has been a major source of capital overruns in the mining industry over the last decade. Existing mining infrastructure items include: an existing tailings storage facility that will receive two raises and is expected to contain the initial 62 million tonnes of material processed; an existing fresh water storage reservoir that will receive a two-metre dam raise and will harvest stormwater sufficient to provide process water for year-round operations; a natural gas pipeline at site that can supply sufficient natural gas to meet the project's energy requirements and would save considerably on project operating costs compared with grid-supplied power; a paved road to site; current electrical connection to the Northern Territory electric grid; and reduced earthworks costs due to the process plant location being the same as the previous process plant, which has already been cleared and graded.
Other benefits of the Mt. Todd project's Northern Territory location include: the Stuart highway -- the main North/South Highway in the Northern Territory is less than 15 kilometres from the project site; rail line parallel to the Stuart highway; and the regional centre of Katherine (population approximately 12,000) less than 60 kilometres from site and the territory capital of Darwin less than 300 kilometres from site, which has port access. Vista is working with the communities of Katherine and Pine Creek to develop a community-based project as opposed to the more typical fly-in, fly-out project, which is generally more expensive and limits the economic benefits of projects to local communities.
Conference call details
A conference call and webcast to discuss highlights of the preliminary feasibility study will be held this afternoon at 4:30 p.m. Eastern Time (2:30 p.m. Mountain Time). A presentation accompanying the conference call will be made available on the company's website prior to the conference call.
Toll-free in North America: 1-866-443-4188
International: 416-849-6196
This call will be archived and available at the company's website after May 29, 2013. Audio replay will be available for 21 days by calling toll-free in North America: 1-866-245-6755, pass code 494532.
Detailed report
A National Instrument 43-101 technical report will be filed on SEDAR within 45 days and will be available on the company's website at that time.
We seek Safe Harbor.
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