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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-9025
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VISTA GOLD CORP.
(Exact Name of Registrant as Specified in its Charter)
CONTINUED UNDER THE LAWS OF THE YUKON TERRITORY NONE
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
SUITE 5
7961 SHAFFER PARKWAY
LITTLETON, COLORADO 80127
(Address of Principal Executive Offices) (Zip Code)
(720) 981-1185
(Registrant's Telephone Number, Including Area Code)
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common shares without par value American Stock Exchange
The Toronto Stock Exchange
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None.
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 THE
FILING REQUIREMENTS FOR THE PAST 90 DAYS: YES /X/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K: /X/
AGGREGATE MARKET VALUE OF OUTSTANDING COMMON SHARES HELD BY NON-AFFILIATES:
As of March 26, 2001, the aggregate market value of outstanding Common Shares of
the registrant held by non-affiliates was approximately $8,164,354.
OUTSTANDING COMMON SHARES:
As of March 26, 2001, 90,715,040 Common Shares of the registrant were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
To the extent herein specifically referenced in Parts III and IV, the Management
Information and Proxy Circular for the registrant's 2001 Annual General Meeting.
See Parts III and IV.
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TABLE OF CONTENTS
PAGE
--------
GLOSSARY.............................. 1
CURRENCY.............................. 3
METRIC CONVERSION TABLE............... 3
UNCERTAINTY OF FORWARD-LOOKING
STATEMENTS.......................... 3
PART I
ITEM 1. BUSINESS...................... 4
Overview............................ 4
Segmented Financial Information..... 4
Corporate Organization Chart........ 5
Significant Developments in 2000.... 5
Refining and Marketing.............. 7
Exploration and Business
Development....................... 8
Property Interests and Mining
Claims............................ 9
Reclamation......................... 9
Government Regulation............... 9
Environmental Regulation............ 10
Competition......................... 10
Employees........................... 10
Risk Factors........................ 10
ITEM 2. PROPERTIES.................... 13
Operations.......................... 13
Hycroft Mine........................ 13
Amayapampa.......................... 17
Capa Circa.......................... 22
Exploration Properties.............. 22
2000 Exploration, Property
Evaluation and Holding
Expenditures...................... 23
2001 Exploration Plan............... 23
ITEM 3. LEGAL PROCEEDINGS............. 23
ITEM 4. SUBMISSION OF MATTERS TO VOTE
OF SECURITY HOLDERS................. 23
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER
MATTERS............................. 24
Price Range of Common Shares........ 24
Dividends........................... 24
Exchange Controls................... 24
Certain Canadian Income Tax
Considerations for Non-Residents
of Canada......................... 24
ITEM 6. SELECTED FINANCIAL DATA....... 25
Selected Financial Data............. 25
United States$/Canadian$ Exchange
Rates............................. 26
PAGE
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ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............... 26
Introduction........................ 26
Results of Operations............... 27
Going Concern....................... 32
Outlook............................. 32
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK....... 33
Commodity Price Risk................ 33
Interest Rate Risk.................. 33
Foreign Currency Exchange Rate
Risk.............................. 34
ITEM 8. CONSOLIDATED FINANCIAL
STATEMENTS AND SUPPLEMENTARY
DATA................................ 34
Management's Responsibility for
Financial Information............. 34
Report of Independent Accountants... 35
Consolidated Financial Statements... 36
Notes to Consolidated Financial
Statements........................ 40
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE................ 54
PART III
ITEM 10. DIRECTORS AND OFFICERS OF
REGISTRANT.......................... 54
Directors........................... 54
Executive Officers.................. 55
Executive and Audit Committees...... 56
ITEM 11. COMPENSATION OF DIRECTORS AND
OFFICERS............................ 56
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.... 57
ITEM 13. CERTAIN RELATIONSHIP AND
RELATED TRANSACTIONS................ 57
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K... 58
Documents Filed as Part of Report... 58
Reports on Form 8-K................. 61
SUPPLEMENTAL INFORMATION.............. 61
SIGNATURES............................ 62
i
GLOSSARY
"ADIT" means a horizontal or nearly horizontal passage driven from the surface
for the working or dewatering of a mine.
"AMALGAMATION" means the amalgamation of Granges and Da Capo effective on
November 1, 1996.
"ASSAY" means to test ores or minerals by chemical or other methods for the
purpose of determining the amount of valuable metals contained.
"BRECCIA" means rock consisting of fragments, more or less angular, in a matrix
of finer-grained material or of cementing material.
"CLAIM" means a mining title giving its holder the right to prospect, explore
for and exploit minerals within a defined area.
"COMMON SHARES" means common shares without par value of Vista Gold.
"COMPUTERSHARE" means Vista Gold's registrar and transfer agent, Computershare
Trust Company of Canada (formerly Montreal Trust Company of Canada).
"CORPORATION" means the consolidated group consisting of Vista Gold Corp. and
its subsidiaries Hycroft Resources & Development, Inc., Hycroft Lewis
Mine, Inc., Vista Gold Holdings Inc., Vista Gold U.S. Inc., Granges Inc., Vista
Gold (Antigua) Corp., Compania Inversora Vista S.A., Minera Nueva Vista S.A.,
Compania Exploradora Vistex S.A., and Mineral Ridge Resources Inc.
"CUT-OFF GRADE" means the minimum grade of ore used to establish reserves.
"DA CAPO" means Da Capo Resources Ltd., a predecessor of Vista Gold.
"DEPOSIT" means an informal term for an accumulation of mineral ores.
"DIAMOND DRILL" means a rotary type of rock drill that cuts a core of rock and
is recovered in long cylindrical sections, two centimeters or more in diameter.
"DORE" means unrefined gold and silver bullion consisting of approximately 90%
precious metals, which will be further refined to almost pure metal.
"FLOTATION" means a process whereby value minerals are separated from waste by
attaching them to air bubbles in a pulp by the use of small amounts of
chemicals.
"GRANGES" means Granges Inc., a predecessor of Vista Gold.
"HEAP LEACH" means a gold extraction method that percolates a cyanide solution
through ore heaped on an impervious pad or base.
"HYCROFT INC." means Hycroft Resources & Development, Inc., an indirect
wholly-owned subsidiary of Vista Gold.
"HYCROFT LEWIS" means Hycroft Lewis Mine, Inc., an indirect wholly-owned
subsidiary of Vista Gold.
"MERRILL-CROWE" means a process for recovering gold from solution by
precipitation with zinc dust.
"MINERALIZATION" means material containing valuable minerals.
"MINERAL RIDGE INC." means Mineral Ridge Resources Inc., an indirect
wholly-owned subsidiary of Vista Gold.
"ORE" means material containing valuable minerals that can be economically
extracted.
1
"OXIDE RESERVE" or "OXIDE RESOURCE" means mineralized rock in which some of the
original minerals have been oxidized. Oxidation tends to make the ore more
porous and permits a more complete permeation of cyanide solutions so that
minute particles of gold in the interior of the minerals will be more readily
dissolved.
"PROBABLE RESERVES" means reserves for which quantity and grade and/or quality
are computed from information similar to that used for proven reserves, but the
sites for inspection, sampling and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower than
that for proven reserves, is high enough to assume continuity between points of
observation.
"PROVEN RESERVES" means reserves for which (a) quantity is computed from
dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or
quality are computed from the results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth, and mineral content of
reserves are well-established.
"RECOVERY" means that portion of the metal contained in the ore that is
successfully extracted by processing, expressed as a percentage.
"RESERVES" or "ORE RESERVES" mean that part of a mineral deposit, which could be
economically and legally extracted or produced at the time of the reserve
determination.
"RESOURCE" or "MINERAL RESOURCE" means a deposit or concentration of minerals
for which there is sampling information and geologic understanding for an
estimate to be made of the contained minerals.
"RUN-OF-MINE" refers to mined ore of a size that can be processed without
further crushing.
"SAMPLING" means selecting a fractional, but representative, part of a mineral
deposit for analysis.
"STOPE" means an underground excavation that is made by removing ore from the
surrounding rock.
"STRIKE", when used as a noun, means the direction, course or bearing of a vein
or rock formation measured on a level surface and, when used as a verb, means to
take such direction, course or bearing.
"STRIKE LENGTH" means the longest horizontal dimension of an orebody or zone of
mineralization.
"STRIPPING RATIO" means the ratio between waste and ore in an open pit mine.
"SULFIDE" means a compound of sulfur and some other element.
"TAILINGS" means material rejected from a mill after most of the valuable
minerals have been extracted.
"TRENCHING" means prospecting in which subsurface strata are exposed by digging
pits across the strike of a lode.
"VEIN" means a fissure, fault or crack in a rock filled by minerals that have
traveled upwards from some deep source.
"VISTA GOLD" means Vista Gold Corp.
"VOLCANICLASTIC" means derived by ejection of volcanic material from a volcanic
vent.
"WASTE" means rock lacking sufficient grade and/or other characteristics of ore.
"YAMIN" means Sociedad Industrial Yamin Limitada, until February 7, 2000, a
direct wholly-owned subsidiary of Vista Gold.
"ZAMORA" means Zamora Gold Corp.
2
CURRENCY
Unless otherwise specified, all dollar amounts in this report are expressed in
United States dollars.
The exchange rate at the end of each of the five years to December 31, 2000, and
the average, the high and the low rates of exchange for each year in that five
year period, are set forth in "Item 6. Selected Financial Data--United States
$/Canadian $ Exchange Rates". These exchange rates are expressed as the amount
of United States funds equivalent to one Canadian dollar, being the noon buying
rates in New York City for cable transfers in Canadian dollars, as certified for
customs purposes by the Federal Reserve Bank of New York. On March 26, 2001,
this noon buying rate was $1.5545 (Cdn.$1.00 equals U.S.$0.6433).
METRIC CONVERSION TABLE
TO CONVERT IMPERIAL MEASUREMENT UNITS TO METRIC MEASUREMENT UNITS MULTIPLY BY
- ------------------------------------- --------------------------- -----------
Acres................................... Hectares................................ 0.4047
Feet.................................... Meters.................................. 0.3048
Miles................................... Kilometers.............................. 1.6093
Tons (short)............................ Tonnes.................................. 0.9071
Gallons................................. Liters.................................. 3.7850
Ounces (troy)........................... Grams................................... 31.103
Ounces (troy) per ton (short)........... Grams per tonne......................... 34.286
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This document, including any documents that are incorporated by reference as set
forth on the face page under "Documents incorporated by reference", contains
forwarding-looking statements concerning, among other things, projected annual
gold production, mineral resources, proven or probable reserves and cash
operating costs. Such statements are typically punctuated by words or phrases
such as "anticipates", "estimates", "projects", "foresees", "management
believes", "believes" and words or phrases of similar import. Such statements
are subject to certain risks, uncertainties or assumptions. If one or more of
these risks or uncertainties materialize, or if underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. Important factors that could cause actual results to differ
materially from those in such forward-looking statements are identified in this
document under "Item 1. Business--Risk Factors". Vista Gold assumes no
obligation to update these forward-looking statements to reflect actual results,
changes in assumptions, or changes in other factors affecting such statements.
3
PART I
ITEM 1. BUSINESS.
OVERVIEW
The Corporation is engaged, directly and through joint ventures, in the
exploration for and the acquisition, development and operation of mineral
properties in North and South America. Since 1971, the Corporation and its
predecessor companies have held participating interests in seven mines, four of
which were discovered by the Corporation. The Corporation has also operated five
of the seven mines.
During 2000, the Corporation's primary mining operation, the Hycroft mine in
Nevada remained shut down pending improved gold prices. However, the Hycroft
mine continued to be the principal source of earnings because gold and
by-product silver continued to be produced from ore previously placed on the
heaps. See "Item 2. Properties--Hycroft Mine". In 1998, the Corporation acquired
100% of the shares of Mineral Ridge Inc., the entity that owns the Mineral Ridge
mine, a gold property located in Nevada. During 1999, Mineral Ridge Inc., sought
protection under the U.S. Bankruptcy Code in order to begin the process of a
permanent cessation of all mining activities. By the end of 2000, the court
appointed trustee had sold all the assets of Mineral Ridge Inc. and in
January 2001, the bankruptcy case was dismissed. See "Item 3. Legal
Proceedings". The Corporation owns the Amayapampa gold property in Bolivia for
which a feasibility study was completed in 1997 and a revised feasibility study
was completed in the first quarter of 2000. The Corporation's Capa Circa gold
property in Bolivia was sold on February 7, 2000. See "Item 2.
Properties--Amayapampa and Capa Circa Properties". The Corporation has
approximately 12 additional mineral properties in North and South America
covering approximately 123,500 acres (50,000 hectares) in various stages of
evaluation. Vista Gold owns a 26% equity interest in Zamora, a Canadian mineral
exploration company with interests in mineral concessions in southern Ecuador.
See "Item 2. Properties--Exploration Properties--Ecuador". As at March 26, 2001,
the Corporation has 17 full-time employees.
The Corporation derives all of its current revenues from the sale of gold
extracted from the Hycroft mine. In fiscal 1998, 1999 and 2000, revenues from
sales of gold were $37 million, $19 million and $4 million, respectively.
Vista Gold was originally incorporated on November 28, 1983 under the name
"Granges Exploration Ltd.". In November 1983, Granges Exploration Ltd. acquired
all the mining interests of Granges AB in Canada. On June 28, 1985, Granges
Exploration Ltd. and Pecos Resources Ltd. amalgamated under the name "Granges
Exploration Ltd." and on June 9, 1989, Granges Exploration Ltd. changed its name
to "Granges Inc.". On May 1, 1995, Granges and Hycroft Resources & Development
Corporation were amalgamated under the name "Granges Inc.". Effective
November 1, 1996, Granges and Da Capo Resources Ltd. amalgamated under the name
"Vista Gold Corp.". Effective December 19, 1997, Vista Gold was continued from
British Columbia to the Yukon Territory, Canada under the BUSINESS CORPORATIONS
ACT (Yukon Territory).
The current addresses, telephone and facsimile numbers of the offices of Vista
Gold are:
EXECUTIVE OFFICE REGISTERED AND RECORDS OFFICE
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Suite 5 - 7961 Shaffer Parkway 200 - 204 Lambert Street
Littleton, Colorado, USA Whitehorse, Yukon Territory, Canada
80127 Y1A 3T2
Telephone: (720) 981-1185 Telephone: (867) 667-7600
Facsimile: (720) 981-1186 Facsimile: (867) 667-7885
SEGMENTED FINANCIAL INFORMATION
The Corporation operates in the mining industry in Canada, the United States and
Latin America. For information on the Corporation's sales, earnings from
operations and identifiable assets by geographic
4
area see note 10 to the consolidated financial statements for the year ended
December 31, 2000 under "Item 8. Consolidated Financial Statements and
Supplementary Data--Notes to Consolidated Financial Statements".
CORPORATE ORGANIZATION CHART
The name, place of incorporation, continuance or organization, and percent of
voting securities owned or controlled by Vista Gold as of December 31, 2000 for
each subsidiary of Vista Gold is set out below.
[LOGO]
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(1) The Corporation is in the process of dissolving Mineral Ridge
Resources Inc.
SIGNIFICANT DEVELOPMENTS IN 2000
HYCROFT MINE
In 2000, the Hycroft mine produced 13,493 ounces of gold and 38,418 ounces of
silver. The Corporation suspended mining activities in December 1998 as a result
of low gold prices. Production of gold from ore stockpiled on the heap leach
pads during previous years is expected to continue in 2001. Gold production for
2001 is expected to be in excess of 3,000 ounces.
During 1999 and the early part of 2000, Vista Gold completed a new study of the
ore reserves in the Brimstone deposit, the largest ore resource at the Hycroft
Mine. Proven and probable minable reserves contained in the planned Brimstone
Pit contain 23,791,000 tons (21,581,000 tonnes) of ore with an average gold
content of 0.020 ounces per ton (0.69 grams per tonne). Ore reserve calculations
were based upon a gold price of US$300 per ounce and an economic cut-off grade
equivalent to 0.007 ounces of gold per ton of ore (0.24 grams per tonne).
Metallurgical recovery of gold from run-of-mine leaching of the Brimstone ore is
projected to be 57% and the planned pit would have a stripping ratio
of 1.2-to-1.
5
The planned pit contains an additional 2,349,000 tons (2,130,778 tonnes) of
material classified as inferred resource containing an estimated 41,535 ounces
of gold (average grade--0.018 ounces per ton (0.62 grams per tonne).
Ore reserves and resources were estimated under the direction of Mr. Warren
Bates, International Exploration Manager, and have been independently reviewed
by Mineral Resources Development, Inc. ("MRDI"). The definition of "ore reserve"
employed by Vista Gold is consistent with USGS Circular 831 and meets the
standard for "probable mining reserve" under National Instrument 43-101 of the
Canadian Securities Administrators. Stated inferred resources are equivalent to
"inferred mineral resources" under National Instrument 43-101 of the Canadian
Securities Administrators.
MINERAL RIDGE MINE
On December 10, 1999, Mineral Ridge Inc., the wholly-owned subsidiary of Vista
Gold, that holds the Corporation's investment in the Mineral Ridge Mine,
voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
Gold production at the Mineral Ridge mine failed to meet expectations.
Initially, mechanical difficulties inhibited production efforts, and as mining
operations continued in the latter half of the year, the grade of the ore mined
was less than that estimated in the ore reserve calculations. After reviewing
the reserves with Independent Mining Consultants, Inc., an independent
consultant, it was concluded that significant ore deficiencies in the future,
compared with the original reserve estimates, were probable. The reduced gold
production and ore reserves caused by the ore deficiencies together with low
gold prices, resulted in the mine failing to meet its required cash-flow targets
under Mineral Ridge Inc.'s loan agreement with Dresdner Bank AG. Although
alternatives were considered, none were considered to be viable, and a
protective bankruptcy filing was made.
Early in 2000, the court appointed a Chapter 11 trustee and later in 2000, the
trustee completed the court approved sale of the assets of Mineral Ridge Inc. In
January 2001, the Chapter 11 case for Mineral Ridge Inc. was dismissed and the
Corporation is in the process of dissolving Mineral Ridge Inc. in accordance
with the applicable state corporation's code.
AMAYAPAMPA AND CAPA CIRCA PROPERTIES
In early 2000, a new feasibility study was completed for the Amayapampa
property. The results of this study indicate that a gold price of $325 per ounce
will be required for construction and development to commence and at this price,
the project is expected to generate an after tax internal rate of return of 20%.
In February 2000, an agreement was signed between six ministries in the
government of Bolivia and the Corporation, which provides for the immediate
refund of value added taxes and custom duties that would be paid by the
Corporation during the construction period. These refunds are expected to total
approximately $2.0 million, and while the Corporation would be entitled to the
refunds over time anyway, the acceleration of these refunds would increase the
project cash flows during construction. With low gold prices continuing
throughout 2000, all the workers at Amayapampa were laid-off in April. However,
the Corporation continued to provide limited community assistance during 2000,
which included providing six teachers and a nurse and allowing restricted access
to the old underground workings to some of the ex-miners.
In February 2000, the Corporation sold Yamin, the company that owns the Capa
Circa mine, to a miners co-operative. The Corporation believes that
mineralization at Capa Circa is limited to narrow veins and that there are no
proven reserves. As a result, the Corporation believes that is better suited to
small scale underground mining.
EXPLORATION
Year 2000 exploration efforts were focused around the Corporation's Hycroft mine
property in Nevada. Planned drilling has been deferred due to the depressed gold
market, but a continuing program of
6
mapping, sampling and compilation of data collected during the mining of the
Brimstone deposit has generated a number of promising targets for new ore
development. These include the "Snyder zone", a silicified breccia zone with a
strike length of 2,000 feet (610 meters) containing anomalous gold and silver
values (0.004 to 0.031 gold ounces per ton), located immediately south-west of
the Brimstone pit.
Mapping in the South end of the Central Fault Pit has revealed that quartz
veins, carrying gold grades higher than typical ore grades from that pit, are
exposed in the current pit floor. Re-logging of the cuttings from holes drilled
in prior years has confirmed that two veins, with true widths varying from 5 to
25 feet (1.5 to 7.6 meters), extend over a strike length of at least 2,000 feet
(610 meters) in the hanging wall of the Central Fault.
REFINING AND MARKETING
The Hycroft mine produces dore, which is processed by Metalor USA Refining
Corporation in North Attleboro, Massachusetts. Gold and silver can be sold on
numerous markets throughout the world, and the market price is readily
ascertainable. Alternate refiners for silver and gold produced from the Hycroft
mine are available if necessary. As a result of the large number of available
gold and silver purchasers, the Corporation is not dependent upon the sale to
any one customer of either its gold or silver.
GOLD AND SILVER SALES
The profitability of gold and silver mining is directly related to the market
price of the metal compared with the cost of production. The following is a
brief description of factors affecting, and historical trends in the market
prices of gold and silver, which account for most of the Corporation's revenue.
A description of the Corporation's hedging and forward sales philosophy also
follows.
The Corporation's results are dependent on the price of gold. Gold prices
fluctuate and are affected by numerous factors, including, but not limited to,
expectations with respect to the rate of inflation, exchange rates
(specifically, the U.S. dollar relative to other currencies), interest rates,
global and regional political and economic circumstances and governmental
policies, including those with respect to gold holdings by central banks. The
demand for and supply of gold affect gold prices, but not necessarily in the
same manner as demand and supply affect the prices of other commodities. The
supply of gold consists of a combination of new mine production and existing
stocks of bullion and fabricated gold held by governments, public and private
financial institutions, industrial organizations and private individuals. The
demand for gold primarily consists of jewelry and investments. Additionally,
hedging activities by producers, consumers, financial institutions and
individuals can affect gold supply and demand. Gold can be readily sold on
numerous markets throughout the world and its market value can be ascertained at
any particular time. As a result, the Corporation is not dependent upon any one
customer for the sale of its product.
The price of silver, while related somewhat to the price of and affected to some
extent by the same factors as gold, is more subject to normal supply and demand
factors than the price of gold. Silver has a wide range of industrial uses on
the demand side and is subject to both mine production and substantial secondary
supply from scrap and dishoarding on the supply side. Silver inventories held by
metal exchanges remained high during the 1980s and 1990s and lower industrial
and consumer demand and relatively high interest rates continued to depress the
price of silver during much of that period.
7
The following table sets out the annual high and low gold prices per troy ounce
in the London bullion market in United States dollars for the years indicated:
HIGH LOW
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2000................................................... $313 $264
1999................................................... 326 253
1998................................................... 313 273
1997................................................... 367 283
1996................................................... 415 367
On December 28, 2000, the afternoon fixing price of gold on the London bullion
market was $274.45 per ounce.
The following table sets out the annual high and low silver price per ounce
(Handy & Harman New York Prices) in United States dollars for the years
indicated:
HIGH LOW
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2000.................................................. $5.45 $4.57
1999.................................................. 5.77 4.91
1998.................................................. 7.31 4.72
1997.................................................. 6.21 4.18
1996.................................................. 5.79 4.67
On December 28, 2000, the Handy & Harman price for silver was
$4.595 per ounce.
HEDGING AND METAL SALES
The Corporation may from time to time protect against falling gold prices
through forward sales of future production. Under this hedging process, the sale
price of gold to be delivered at a future date is fixed at the time the forward
sale is made, thus eliminating the effect of any future gold price fluctuations.
Revenue from these forward sales is recognized when the gold is due to be
delivered. At December 31, 2000, the Corporation had no forward sales
commitments. Vista Gold's Board of Directors regularly reviews the Corporation's
forward sales arrangements. The level of future forward sales will depend in
part upon the Corporation's assessment of gold market conditions at the relevant
time.
EXPLORATION AND BUSINESS DEVELOPMENT
The Corporation's exploration and business development activities are focused on
gold. In the United States, the Corporation has an exploration project at the
Hycroft mine located in Nevada. In Bolivia, the Amayapampa properties represent
both development and exploration projects.
The Corporation's exploration activities headquarters are in Littleton,
Colorado, with one district exploration office in La Paz, Bolivia. The
exploration department has a permanent staff of one geologist. Consultants and
contract personnel are used for specific projects and tasks.
The 2000 exploration program was focused at the Hycroft mine where a mapping and
sampling program is ongoing and a revised ore reserve estimate was completed.
During 2001, the Corporation intends to spend $1.3 million on exploration if the
necessary funding is obtained. The majority of the exploration expenditures will
be made in Nevada at the Hycroft mine. The Corporation will continue to evaluate
other opportunities.
8
PROPERTY INTERESTS AND MINING CLAIMS
In the United States, most of the Corporation's exploration activities are
conducted in the state of Nevada. Mineral interests may be owned in Nevada by
(i) the United States, (ii) the state of Nevada, or (iii) private parties. Where
prospective mineral properties are owned by private parties, or by the state,
some type of property acquisition agreement is necessary in order for the
Corporation to explore or develop such property. Generally, these agreements
take the form of long term mineral leases under which the Corporation acquires
the right to explore and develop the property in exchange for periodic cash
payments during the exploration and development phase and a royalty, usually
expressed as a percentage of gross production or net profits derived from the
leased properties if and when mines on the properties are brought into
production. Other forms of acquisition agreements are exploration agreements
coupled with options to purchase and joint venture agreements. Where prospective
mineral properties are held by the United States, mineral rights may be acquired
through the location of unpatented mineral claims upon unappropriated federal
land. If the statutory requirements for the location of a mining claim are met,
the locator obtains a valid possessory right to develop and produce minerals
from the claim. The right can be freely transferred and, provided that the
locator is able to prove the discovery of locatable minerals on the claims, is
protected against appropriation by the government without just compensation. The
claim locator also acquires the right to obtain a patent or fee title to his
claim from the federal government upon compliance with certain additional
procedures.
Mining claims are subject to the same risk of defective title that is common to
all real property interests. Additionally, mining claims are self-initiated and
self-maintained and therefore, possess some unique vulnerabilities not
associated with other types of property interests. It is impossible to ascertain
the validity of unpatented mining claims solely from an examination of the
public real estate records and, therefore, it can be difficult or impossible to
confirm that all of the requisite steps have been followed for location and
maintenance of a claim. If the validity of a patented mining claim is challenged
by the Bureau of Land Management or Forest Service on the grounds that
mineralization has not been demonstrated, the claimant has the burden of proving
the present economic feasibility of mining minerals located thereon. Such a
challenge might be raised when a patent application is submitted or when the
government seeks to include the land in an area to be dedicated to another use.
RECLAMATION
Although reclamation is conducted concurrently with mining whenever feasible,
the Corporation generally is required to mitigate long-term environmental
impacts by stabilizing, contouring, resloping, and revegetating various portions
of a site after mining and mineral processing operations are completed. These
reclamation efforts are conducted in accordance with detailed plans, which have
been reviewed and approved by the appropriate regulatory agencies.
Management estimates the remaining reclamation costs for the Hycroft mine to be
$2.9 million. These costs have been charged to earnings over the life of the
mine and the provision as of December 31, 2000 was $3.1 million. An amended
Crofoot/Lewis Mine Reclamation Plan that included the new Brimstone deposit was
submitted to the Nevada Bureau of Land Management (the "BLM") in March 1994. In
April 1995, the BLM approved the plan and a surety bond in the amount of
$5.1 million was posted to secure reclamation obligations under the plan.
GOVERNMENT REGULATION
Mining operations and exploration activities are subject to various national,
state, provincial and local laws and regulations in the United States, Bolivia,
Canada and other jurisdictions, which govern prospecting, development, mining,
production, exports, taxes, labor standards, occupational health, waste
disposal, protection of the environment, mine safety, hazardous substances and
other matters. The Corporation has obtained or has pending applications for
those licenses, permits or other authorizations currently required to conduct
its operations. The Corporation believes that it is in compliance in all
material respects with
9
applicable mining, health, safety and environmental statutes and the regulations
passed thereunder in the United States, Canada, Bolivia and the other
jurisdictions in which the Corporation operates. There are no current orders or
directions with respect to the foregoing laws and regulations.
ENVIRONMENTAL REGULATION
The Corporation's mining operations and exploration activities are subject to
various federal, state and local laws and regulations governing protection of
the environment. These laws are continually changing and, as a general matter,
are becoming more restrictive. The Corporation's policy is to conduct business
in a way that safeguards public health and the environment. The Corporation
believes that its operations are conducted in material compliance with
applicable laws and regulations.
Changes to current local, state or federal laws and regulations in the
jurisdictions where the Corporation operates could require additional capital
expenditures and increased operating and/or reclamation costs. Although the
Corporation is unable to predict what additional legislation, if any, might be
proposed or enacted, additional regulatory requirements could render certain
mining operations uneconomic.
During 2000, there were no material environmental incidents or non-compliance
with any applicable environmental regulations.
COMPETITION
The Corporation competes with other mining companies in connection with the
acquisition of gold and other precious metals properties. There is noteworthy
and increasing competition for the limited number of gold acquisition
opportunities, some of which is with other companies having substantially
greater financial resources than the Corporation. As a result, the Corporation
may eventually be unable to acquire attractive gold mining properties. The
Corporation believes no single company has sufficient market power to affect the
price or supply of gold in the world market.
EMPLOYEES
As at December 31, 2000, the Corporation had 17 full-time employees, of which
seven were employed at the Hycroft mine, five were employed at the Amayapampa
properties, one was employed in exploration activities in Littleton, Colorado
and four were employed at Vista Gold's executive office (other than in
exploration activities). The Hycroft mine has never experienced a loss of
production due to a work stoppage. The Corporation considers its relations with
its employees to be satisfactory.
RISK FACTORS
FLUCTUATING PRICES
The Corporation's revenues are expected to be, in large part, derived from the
mining and sale of gold and other precious metals or interests related thereto.
The price of those commodities has fluctuated widely, and is affected by
numerous factors beyond the control of the Corporation, including international,
economic and political trends, expectations of inflation, currency exchange
fluctuations, central bank activities, interest rates, global or regional
consumption patterns (such as the development of gold coin programs),
speculative activities and increased production due to new mine developments and
improved mining and production methods. The effect of these factors on the price
of precious metals, and therefore the economic viability of any of the
Corporation's projects, cannot accurately be predicted.
EXPLORATION AND DEVELOPMENT
All of the mineral properties, which the Corporation owns, other than the
Hycroft mine, are in the exploration and development stages. Mineral exploration
and development involves a high degree of risk and few properties, which are
explored, are ultimately developed into producing mines. There is no assurance
that the Corporation's mineral exploration and development activities will
result in any
10
discoveries of commercial bodies of ore. The long-term profitability of the
Corporation's operations will be in part directly related to the cost and
success of its exploration programs, which may be affected by a number of
factors beyond the control of the Corporation.
Substantial expenditures are required to establish ore reserves through drilling
and analysis, to develop metallurgical processes to extract metal from the ore
and, in the case of new properties, to develop the mining and processing
facilities and infrastructure at any site chosen for mining. Although
substantial benefits may be derived from the discovery of a major mineralized
deposit, no assurance can be given that minerals will be discovered in
sufficient quantities to justify commercial operations or that the funds
required for development can be obtained on a timely basis.
OPERATING HAZARDS AND RISKS
Mineral exploration involves many risks that even a combination of experience,
knowledge and careful evaluation may not be able to overcome. Operations in
which the Corporation has direct or indirect interests will be subject to all
the hazards and risks normally incidental to exploration, development and
production of gold and other metals, any of which could result in work
stoppages, damage to property and possible environmental damage. Although the
Corporation has obtained liability insurance in an amount that they consider
adequate, the nature of these risks is such that liabilities might exceed policy
limits, the liabilities and hazards might not be insurable, or the Corporation
might elect not to insure itself against such liabilities due to high premium
costs or other reasons, in which event, the Corporation could incur significant
costs that could have a material adverse effect upon its financial condition.
MINORITY INTEREST IN PROPERTIES
Third parties hold minority interests in certain of the Corporation's
properties. Under Bolivian law, a minority interest in a mining concession is an
undivided interest in that concession and the holder of such a minority interest
may take action to restrict all exploration and development of the mining
concessions by the holder of the majority interest if such exploration and
development is conducted without the minority owner's permission. Furthermore,
if the majority and minority parties wish to separate their interests, but are
unable to agree as to the method of division or purchase of the property, the
parties must file a request for division before a Bolivian civil court.
CALCULATION OF RESERVES AND GOLD RECOVERY
There is a degree of uncertainty attributable to the calculation of reserves and
corresponding grades being mined or dedicated to future production. Until
reserves are actually mined and processed, the quantity of ore and grades must
be considered as an estimate only. In addition, the quantity of reserves and ore
may vary depending on metal prices. Any material change in the quantity of
reserves, mineralization, grade or stripping ratio may affect the economic
viability of the Corporation's properties. In addition, there can be no
assurance that gold recoveries or other metal recoveries in small-scale
laboratory tests will be duplicated in larger scale tests under on-site
conditions or during production.
ENVIRONMENTAL FACTORS
All phases of the Corporation's operations are subject to environmental
regulation. Environmental legislation is evolving in a manner which will require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect the Corporation's
operations.
11
COMPETITION AND AGREEMENTS WITH OTHER PARTIES
The mining industry is intensely competitive in all of its phases, and the
Corporation competes with many companies possessing greater financial resources
and technical facilities than themselves. Competition in the mining business
could adversely affect the Corporation's ability to acquire suitable producing
properties or prospects for mineral exploration in the future.
CONFLICTS OF INTEREST
Certain directors of the Corporation are officers and/or directors of, or are
associated with other natural resource companies that acquire interests in
mineral properties. Such associations may give rise to conflicts of interest
from time to time. In the event that any such conflict of interest arises, a
director who has such a conflict will disclose the conflict to a meeting of the
directors of the company in question and will abstain from voting for or against
approval of any matter in which such director may have a conflict. In
appropriate cases, the company in question will establish a special committee of
independent directors to review a matter in which several directors, or
management, may have a conflict. In accordance with the laws of the Yukon
Territory, the directors of all companies are required to act honestly, in good
faith and in the best interests of a company for which they serve as a director.
TITLE TO ASSETS
Although the Corporation has reviewed and is satisfied with the title for all
mineral properties in which it has a material interest, there is no guarantee
that title to such concessions will not be challenged or impugned.
POLITICAL AND ECONOMIC INSTABILITY IN SOUTH AMERICA
Certain of the Corporation's exploration and development interests are in
Bolivia and Ecuador. As a result, the Corporation may be affected by risks
associated with political or economic instability in those countries. The risks
include, but are not limited to: military repression, extreme fluctuations in
currency exchange rates, labor instability or militancy, mineral title
irregularities and high rates of inflation. Changes in mining or investment
policies or shifts in political attitude in the aforementioned countries may
adversely affect the Corporation's business. Operations may be affected in
varying degrees by government regulation with respect to restrictions on
production, price controls, export controls, income taxes, expropriation of
property, maintenance of claims, environmental legislation, land use, land
claims of local people, water use and mine safety. The effect of these factors
cannot be accurately predicted.
FOREIGN CURRENCY
The Corporation's operations throughout North and South America render the
Corporation subject to foreign currency fluctuations, which may materially
affect financial position and results. The Corporation does not engage in
currency hedging to offset any risk of currency fluctuations.
CASH RESOURCES AND LIQUIDITY
The Corporation believes that it has sufficient financial resources to continue
producing gold from previously mined ore at the Hycroft mine. However, 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.
There can be no assurance that additional financing will be available at all or
on acceptable terms and, if additional financing is not available, the
Corporation may have to substantially reduce or cease its operations. The
Corporation is actively investigating various alternatives, including debt
financing, the issuance of equity, mergers with other companies and the sale of
property interests.
12
ITEM 2. PROPERTIES.
OPERATIONS
Detailed information is contained herein with respect to the Hycroft mine and
the Amayapampa properties. Vista Gold holds the Hycroft mine through its
wholly-owned subsidiaries, Vista Gold Holdings Inc., Hycroft Resources
Development, Inc. and Hycroft Lewis Mine Inc. Vista Gold holds the Bolivian
properties through its wholly-owned subsidiaries, Vista Gold (Antigua) Corp.,
Compania Inversora Vista S.A., Minera Nueva Vista S.A., and Compania Exploradora
Vistex S.A. Estimates of reserves and production herein are subject to the
effect of changes in metal prices and to the risks inherent in mining and
processing operations.
HYCROFT MINE
The Hycroft mine and related facilities are located 54 miles (86 kilometers)
west of Winnemucca, Nevada. The mine is an open-pit, heap leaching operation
that produces gold and by-product silver. In 1983, the Lewis Mine commenced
operation as a small heap-leach gold mine. The Corporation acquired the Lewis
mine in early 1987 and completed construction of the adjacent Crofoot mine
project in April 1988. In early 1989, the two mines were consolidated into a
single operation under an ore purchase agreement, with ore from both properties
processed through the larger and more efficient Crofoot plant. Hycroft Inc.
began stripping at the new Brimstone pit, located one mile to the east of the
existing Central Fault pit, in April 1996 and commenced construction of a new
3 million-square-foot (280,000 square meter) leach pad and a 2,800
gallon-per-minute (10,598 liter-per-minute) leach solution processing plant in
the summer of the same year. Ore from the Brimstone pit was hauled to the new
leach pad beginning in September 1996 and the Brimstone plant commenced
operation in February 1997. Mining operations at the Hycroft mine were suspended
in December 1998.
Gold production, from continued leaching and rinsing of the leach pads,
continued in 1999 and 2000, and is expected to continue in 2001. In 2000, the
Hycroft mine produced 13,493 ounces of gold and 38,418 ounces of silver. Hycroft
mine gold production for 2001 is expected to be in excess of 3,000 ounces. The
Corporation will continue to pursue sources of funding or strategic alliances
with other companies that will lead to the restart of operations. Reclamation
will proceed in areas that will not be disturbed by future operations.
DESCRIPTION OF PROPERTIES
The Crofoot and Lewis properties together comprise approximately 12,230 (4,950
hectares). The Crofoot property, originally held under two leases, covers
approximately 3,544 acres (1,434 hectares). The Lewis property, which virtually
surrounds the Crofoot property, is held through a lease that covers
approximately 8,686 acres (3,515 hectares). The mine is accessible by road and
has access to adequate supplies of water and power. The major mining facilities
consist of four leach pads, two Merrill-Crowe gold-silver recovery plants, two
carbon plants and associated maintenance and support facilities.
GEOLOGY AND HISTORY
The Hycroft mine is located on the western flank of the Kamma Mountains. The
deposit is hosted in a volcanic eruptive breccia and conglomerates associated
with the Tertiary Kamma Mountain volcanics. The volcanics are mainly acidic to
intermediate tuffs, flows and coarse volcaniclastic rocks. Fragments of these
units dominate the clasts in the eruptive breccia. Volcanic rocks have been
block-faulted by dominant north-trending structures, which have affected the
distribution of alteration and mineralization. The Central Fault and East Fault
control the distribution of mineralization and subsequent oxidation. A
post-mineral range-front fault separates the orebody from the adjacent
Pleistocene Lahontan Lake sediments in the Black Rock Desert. The geological
events have created a physical setting ideally suited to the open-pit,
heap-leach mining operation at the Hycroft mine. The heap leach method is widely
used in
13
the southwestern United States and allows the economical treatment of oxidized
low-grade ore deposits in large volumes.
The known gold mineralization within the Crofoot and Lewis properties extends
for a distance of three miles (4.8 kilometers) in a north-south direction by 1.5
miles (2.5 kilometers) in an east-west direction. Mineralization extends to a
depth of less than 330 feet (100 meters) in the outcropping to near-outcropping
portion of the deposit on the northwest side to over 990 feet (300 meters) in
the Brimstone deposit in the east. Not all the mineralization is oxidized and
the depth of oxide ore varies considerably over the area of mineralization. The
determination of whether mineralization can be mined economically is dependent
on the grade of mineralization, the depth of overburden and the degree of
oxidation.
In 1992, Hycroft Inc. exercised its options to convert its leasehold interests
in the Crofoot property into a 100% ownership interest in the patented mining
claims, a 100% possessory interest in the unpatented claims and a 100% interest
in the incidental rights thereto, all subject to 4% net profits royalties and
excluding rights to sulfur. No royalty payments were made in 1995, 1994 and 1993
because minimum royalty payments made prior to 1993 aggregating $2.8 million
were available for credit against the royalty obligations. The Crofoot
lease/purchase agreement was amended in 1996 to provide for minimum advance
royalty payments of $120,000 on January 1 of each year in which mining occurs.
An additional $120,000 payment is due if ore production exceeds 5.0 million tons
from the Crofoot property in any calendar year. All advance royalty payments are
available as credit against the 4% net profit royalty. The aggregate acquisition
cost to Hycroft Inc. was $6,881,481 and was financed by the issuance of Common
Shares and the assumption of certain debts associated with the Lewis mine.
The leasehold interest in the Lewis property extends until January 1, 2013 or
for so long thereafter as Hycroft Lewis continues to conduct commercial mining
operations on the property. The Lewis lease provides for the payment to the
lessor of a 5% net smelter return royalty on gold production. The royalty
increases for ore grades above 0.05 ounce per ton and is offset by annual
advance minimum royalties. The Corporation has the right to commingle the ore
from the Lewis property with ore from the adjoining Crofoot property under an
agreement with the lessor of the Lewis property.
The ore mined to date from the Brimstone deposit, which lies partially on the
Crofoot property and partially on the Lewis property, was processed on both the
Brimstone leach pad and the Crofoot leach pad. The allocation of metal produced
from the commingled Crofoot and Lewis ores is calculated using methods
consistent with industry standards. The same method will be employed during 2001
and in the future if mining is resumed.
MINING AND PROCESSING
During 2000, no ore was excavated at the Hycroft mine. Waste stripping was
suspended in January 1998 and ore mining was suspended in December 1998.
Until November 1996, higher-grade ore was crushed prior to treatment on the
leach pads. From November 1996 to December 1998, all ore was hauled directly to
the leach pads without crushing. Dilute alkaline cyanide solution is pumped from
a pond to the heap surface and distributed evenly over the crushed and
run-of-mine ore through a network of pipes and irrigation sprinklers or drip
emitters. The solution percolates down through the layers of ore, preferentially
leaching gold and silver from the rock. This pregnant solution, containing
dissolved gold and silver, flows along the surface of the impervious leach pad
to a collection ditch from which it drains into one of two pregnant solution
ponds. The low-grade solutions are recirculated to the heaps to increase the
amount of gold in the solution, and the high-grade solution is pumped directly
to the recovery plant where the gold and silver are extracted. The process is a
zero-discharge closed circuit.
14
The Crofoot recovery plant can process up to 3,000 gallons-per-minute (11,355
liters-per-minute) of solution from leach pads 1, 2, 3 and 5 (18,000 tons of
solution per day) and the Brimstone recovery plant can process up to 2,800
gallons-per-minute (10,600 liters-per-minute) of solution from the Brimstone
leach pad (also referred to as pad 4). This process includes filtering to remove
particulates, de-aeration to remove dissolved oxygen and introduction of small
quantities of zinc dust. The dissolved gold and silver precipitate out of the
solution onto the zinc particles which are then removed by a second stage of
filtration. The barren solution is returned to the leaching circuit. The
precipitate is treated to remove and collect mercury for sale, then mixed with
fluxes and smelted to yield a dore bar. Dore bars are shipped offsite for
refining and sale. Metalor USA Refining Corporation refines gold and silver
production from the Hycroft mine. Alternate refiners are available if necessary.
Early in 2000 Hycroft purchased two used carbon adsorption plants; one with a
nominal capacity of 500 gallons per minute and the other with a capacity of
1,500 gallons per minute. These plants are used to concentrate gold from leach
solutions by adsorbing it onto activated carbon. Typically at Hycroft the carbon
will load to around 100 ounces of gold per ton of carbon. Periodically a batch
of the carbon is removed and shipped to Metals Research, an independent company
in Idaho, which strips the gold off of the carbon, and produces a dore bar which
is then shipped to Metalor for refining and sale. The Crofoot/ Merrill-Crowe
plant was closed down in April 2000, and all of the gold production since April
was via the 1,500 gpm carbon plant. The Brimstone/Merrill-Crowe plant was shut
down at the end of October 2000 and all production from that time has been from
the 500 gpm carbon plant. The Merrill-Crowe plants are available for restart
once mining restarts, and the amount of gold, the volume of solutions and the
reagent levels return to normal production levels. In the mean time, however,
the carbon plants are the preferred method for continuing gold production as
they function well with the current lower and variable flow rates, with the
lower precious metals values in solution and with the lower reagent values in
the solution.
ORE RESERVES
Gold production from the Brimstone deposit at the Hycroft mine has consistently
exceeded projections, and during 1999 and 2000, the Corporation conducted a
$0.6 million exploration program to determine the reasons for the excess gold
production, and to re-estimate the grade and tons of the remaining reserves left
in the Brimstone deposit. MRDI, an independent consultant was retained to assist
with the evaluation and to provide an independent review of the recalculated
mineable reserves. During the period 1996 through 1998, gold mined from the
north end of the Brimstone deposit exceeded planned production by 47,090 ounces,
or 26%. The excess gold production was a result of mining 13% more ore tons at a
12% higher average grade than predicted in the exploration reserve model.
To evaluate the potential for a similar favorable variance in the remaining
Brimstone resource, nine diamond drill holes for a total of 4,870 feet (1,484
meters) and 11 reverse-circulation drill holes for a total of 5,540 feet (1,689
meters) were completed in the unmined southern portion of the Brimstone deposit.
Seventeen of the 20 holes were twin holes, which were used to establish an
adjustment (upgrade) factor for the remaining Brimstone resource. Working with
MRDI engineers, a gold-grade enhancement of 25% was estimated.
Based upon a reserve model developed by MRDI, Vista Gold has completed a new
study of the ore reserves in the Brimstone deposit. Proven and probable minable
reserves contained in the planned Brimstone Pit contain 23,791,000 tons
(21,581,000 tonnes) of ore with an average gold content of 0.020 ounces per ton
(0.069 grams per tonne). Ore reserve calculations were based upon a gold price
of US$300 per ounce and an economic cut-off grade equivalent to 0.007 ounces
(0.024 grams per tonne) of gold per ton of ore. Metallurgical recovery of gold
from run-of-mine leaching of the Brimstone ore is projected to be 57% and the
planned pit would have a stripping ratio of 1.2-to-1.
The planned pit contains an additional 2,349,000 tons (2,130,778 tonnes) of
material classified as inferred resource containing an estimated 41,982 ounces
of gold (average grade--0.018 ounces per ton (0.062
15
grams per tonne). Ore reserves were estimated under the direction of Mr. Warren
Bates, International Exploration Manager, and have been independently reviewed
by MRDI. The definition of "ore reserve" employed by Vista Gold is consistent
with USGS Circular 831 and meets the standard for "Probable Mining Reserve"
under National Instrument 43-101 of the Canadian Securities Administrators.
Stated inferred resources are equivalent to "inferred mineral resources" under
Canadian National Instrument 43-101.
OPERATING STATISTICS
Operating statistics for the Hycroft mine for the period 1996 to 2000 were as
follows:
YEARS ENDED DECEMBER 31
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Ore and waste material mined (000's of tons)...... Nil Nil 10,127 37,531 36,882
Strip ratio....................................... Nil Nil 0.42 2.53 1.8
Ore processed (000's of tons)(1).................. Nil Nil 7,117 10,629 13,060
Ore grade (oz. gold/ton).......................... N/A N/A 0.018 0.020 0.018
Ounces of gold produced........................... 13,493 40,075 112,685 117,378 89,381
Cash operating costs ($/oz. of gold)(2)........... $183 $277 $229 $261 $359
- ------------------------
(1) Ore processed means ore placed on pads but not necessarily leached during
the year.
(2) Cash operating costs is composed of all direct mining expenses including
inventory changes, refining and transportation costs, less by-product silver
credits.
Gold production for 2000 was down significantly from 1999. The decreased gold
production was due to the suspension of mining activities at the Hycroft mine in
December 1998 and the continued depletion by leaching and rinsing of gold
contained in the heaps. All 2000 gold production was from ore that had been
mined in previous years.
MINE SITE EXPLORATION
At the Hycroft mine in Nevada, nine diamond drill holes for 4,870 feet (1,485
meters) and 11 reverse-circulation drill holes for 5,540 feet (1,690 meters)
were completed in the unmined southern portion of the Brimstone deposit in 1999.
Seventeen of the 20 holes were twin holes, which were used to establish an
upgrade factor for the remaining Brimstone resource. The upgrade program was
necessary in light of the fact that historical gold production from the
Brimstone deposit was 26% greater than predicted from the 1995 ore reserves.
Over 525 reverse-circulation drill holes were re-logged in the Albert and
Brimstone area, a new geologic model was built, and the current assay and
geologic files were audited and re-entered into a new database.
There is significant potential to extend the oxide mineralization to the south,
along strike, at both the Central Fault and Brimstone deposits, but the greatest
upside lies in the largely unexplored sulfide mineralization below the Brimstone
deposit, as well as higher grade intercepts along the Central Fault.
Current resources at Brimstone are limited to the oxide cap of an apparently
large but previously unexplored gold-bearing sulfide system. Two diamond drill
holes, drilled in 1996 and earlier, have intercepted mineralized sulfides
averaging 0.023 ounces per ton gold and 0.5 ounces per ton silver over intervals
exceeding 500 feet (153 meters) in thickness. In 1996, the Corporation also
intercepted 30 feet (nine meters) of gold mineralization in drill hole 95-2728.
This intercept assayed 0.155 ounces per ton gold at a true depth of 310 feet (94
meters) below surface. The hole terminated in this mineralization, so the true
width of the mineralization is unknown. Vista Gold intends to investigate these
targets when market conditions improve and funding is available.
16
AMAYAPAMPA
AMAYAPAMPA PROPERTY
SUMMARY
The Amayapampa property consists of 24 mining concessions covering 805 hectares
(1,989 acres) plus an additional 6,800 hectares (16,803 acres) in regional
exploration and exploitation concessions. The Corporation is in the process of
refiling the concessions as required by the new mining law. The deposit is
approximately 600 meters (1,970 feet) in strike length, 30 to 70 meters (98 to
230 feet) in width, and extends to over 200 meters (656 feet) in depth. Gold
occurs free and associated with sulfides in a structural zone in which quartz
veins were emplaced then sheared prior to introduction of sulfides and gold
mineralizing solutions. Prior to the Amalgamation, CEM (as defined below under
"Ownership") mined the Amayapampa deposit using primarily open-stope methods at
a rate of approximately 220 tons (200 tonnes) of ore per day, and processed the
ore in two mills on site. See "Ownership" and "History" below.
Approval of the permit to construct and operate, called the DECLATORIA DE
IMPACTO AMBIENTAL, under Article 24 of the Environmental Law was received on
May 6, 1998. This permit was based on a 3,300-tonne-per-day (3,638-ton-per-day)
ore processing project, and if financing arrangements for the project are
obtained, the Corporation will request a modification of the permit to allow
operation at the lower production rate.
In the fall of 1999, with gold prices rising above $300 per ounce, an update and
additional optimization of the feasibility study was begun. It was completed in
the first quarter of 2000. Based on a gold price of $300 per ounce, the proven
and probable reserves at Amayapampa were calculated by Mine Reserve
Associates, Inc., an independent consultant, 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. Gold production during
the first five years of operations is estimated to average approximately 47,400
ounces per year. The initial capital costs are estimated to be about
$25 million, including contingency and necessary working capital. Average
operating costs are estimated to be $7.99 per tonne ($7.25 per ton) of ore for a
total cash cost of $168 per gold ounce. The Corporation is examining various
development and production scenarios, and believes that a gold price of $325 per
ounce will be required for construction and development to commence. At a gold
price of $325 per ounce, the project is expected to generate an after-tax
internal rate of return of 20%.
In February 2000, the Corporation signed an agreement with the government of
Bolivia, which provides for the timely refund of value-added taxes and customs
duties that would be paid by the Corporation once the construction period
starts. These refunds will be used to pay for certain improvements to
infrastructure that are required by the project and will also benefit the
inhabitants of the area. The Corporation would be entitled to a refund of these
taxes and duties over time anyway, but the agreement accelerates the refund. The
acceleration of these refunds will help the project's cash flows during
construction. The refunds are expected to total approximately $2.0 million.
LOCATION AND ACCESS
The Amayapampa property is located 300 kilometers (186 miles) southeast of La
Paz in the Chayanta Municipality, Bustillos Province, Department of Potosi, in
southwestern Bolivia (Latitude: 18 DEG.34.5"S, Longitude: 66 DEG.22.4"W). Access
is via 268 kilometers (167 miles) of paved road from La Paz to Machacamarca near
Oruro, followed by 100 kilometers (62 miles) of gravel road to Lagunillas, then
14 kilometers (nine miles) of dirt road to Amayapampa. Total driving time is
about six hours. Charter air service is available to Uncia, 35 kilometers (22
miles) from the project.
The Amayapampa property is situated within the moderately rugged Eastern
Cordilleran region of Bolivia with elevations at the property varying from 3,750
meters to 4,100 meters (12,300 to 13,450 feet) above sea
17
level. The area is generally arid with a defined rainy season during the summer
months of November through April. There is little or no precipitation during the
rest of the year.
OWNERSHIP
On April 28, 1994, Da Capo entered into an agreement with Mr. David Anthony
O'Connor of Casilla 11314, La Paz, Bolivia and La Compania Minera Altoro S.R.L.
("Altoro") of Casilla 11314, La Paz, Bolivia, both parties at arm's length to Da
Capo, which was amended by agreements dated June 10, 1994 and July 15, 1994 (the
"Altoro/O'Connor Agreement"), pursuant to which Mr. O'Connor and Altoro assigned
to Da Capo:
(a) Altoro's exclusive right and option to acquire a 51% interest in eight
mining concessions that constitute a part of the Amayapampa property (and
a further option to acquire an additional 19% interest in such
concessions), pursuant to an option agreement dated March 22, 1994 (the
"Amayapampa Option") between Altoro and Raul Garafulic Gutierrez ("R.
Garafulic") of Ave. Argentina No. 2057, Casilla 9285, La Paz, Bolivia and
Compania Exploradora de Minas S.A. ("CEM", and collectively with R.
Garafulic, the "Amayapampa Vendors") of Calle San Salvador 1421, Casilla
4962, La Paz, Bolivia. The Amayapampa Vendors are both parties at arm's
length to Da Capo;
(b) Mr. O'Connor's exclusive right and option to acquire the Capa Circa
property pursuant to an option agreement dated January 12, 1994 (the
"Yamin Option Agreement") between Mr. O'Connor and Yamin. See "Capa Circa
Property--Ownership"; and
(c) a 100% interest in the Santa Isabel Property, for which an exploration
concession application had been made on behalf of Altoro.
As consideration for the assignment of the above interests, Da Capo issued a
total of 1,000,000 Da Capo common shares to Mr. O'Connor between June 30, 1994
and April 16, 1996.
On February 5, 1996, Da Capo exercised the Amayapampa Option and acquired a 51%
interest in the eight mining concessions that constitute a part of the
Amayapampa property in consideration for: (i) the cancellation of a loan in the
amount of $2,425,000 which had been previously made by Da Capo to R. Garafulic
on December 22, 1994; and (ii) payment of $75,000 by Da Capo to R. Garafulic
between March 22, 1994 and September 22, 1994.
On March 8, 1996, Da Capo entered into an agreement (the "Amayapampa Acquisition
Agreement") with the Amayapampa Vendors to acquire the following interests in
the Amayapampa property:
(a) R. Garafulic's remaining 24% interest in two mining concessions (the
Gran Porvenir and Chayentena concessions) that are part of the Amayapampa
property;
(b) R. Garafulic's 49% interest in six mining concessions that are part of
the Amayapampa property; and
(c) CEM's 100% interest in 16 mining concessions that are part of the
Amayapampa property.
In consideration for these interests, Da Capo:
(a) issued 1,000,000 special warrants (the "Amayapampa Special Warrants"),
each exercisable to acquire one Da Capo Common Share without further
payment, to a nominee of the Amayapampa Vendors on April 11, 1996; and
(b) made a non-recourse, interest-free loan of $3.24 million (the
"Amayapampa Loan") to a nominee of the Amayapampa Vendors on April 11,
1996.
The Amayapampa Loan was secured by an assignment of all proceeds from the sale
of any of 1,000,000 Da Capo common shares held by such nominee. The Amayapampa
Loan was canceled on April 29, 1996 upon
18
the sale of such Da Capo common shares and Cdn.$4,355,000 received from the
proceeds of such sale on or before May 7, 1996.
After being acquired by the Amayapampa Vendors, the Amayapampa Special Warrants
were transferred to third parties at arm's length to Da Capo in transactions
exempt from prospectus requirements under the relevant securities legislation.
On August 14, 1996, Da Capo issued 1,000,000 Da Capo common shares without
payment of any additional consideration upon the deemed exercise of the
Amayapampa Special Warrants.
All of Da Capo's interests in the Amayapampa property were transferred into the
name of its subsidiary, Yamin, on April 11, 1996. As a result of the
Amalgamation with Da Capo, Vista Gold acquired the Amayapampa property. During
1999 and subsequent to December 31, 1999 Yamin transferred these interests to
Minera Nueva Vista.
Ms. Elizabeth Mirabel, a resident of Bolivia at arm's length to Vista Gold, held
the remaining 25% interest in the Gran Porvenir and Chayentena mining
concessions, which constitute 603 hectares (1,488 acres) of the Amayapampa
property. On June 28, 1996, Da Capo and Ms. Mirabel entered into a lease
agreement (the "Lease") under which Ms. Mirabel granted a lease for her 25%
interest in the two mining concessions in favor of Da Capo for a term of ten
years commencing July 10, 1996 and renewable for an additional ten year term.
During the first two years of the Lease, Da Capo will pay Ms. Mirabel $7,000 per
month, and $10,000 per month for the subsequent eight years.
On May 23, 1997, Ms. Mirabel transferred ownership of the La Chayantena and Gran
Porvenir mining concessions to Mr. Agustin Melgarejo Zuleta.
On March 1, 2000, Minera Nueva Vista S.A. and Mr. Agustin Melgarejo signed a
"Lease with option to purchase" agreement for the 25% interest of Gran Porvenir
and La Chayanena mining concessions, which supercedes the Leasing agreement of
June 28, 1996 with Ms. Mirabel. The new lease agreement requires the payment of
$2,000 per month for the first three years increasing to $10,000 per month in
March 2003. The agreement expires in March 2006. At any time, Minera Nueva
Vista S.A. may exercise the purchase option for $800,000.
A legal dispute in Bolivia, in which a Mr. Estanislao Radic brought legal
proceedings in the lower penal court in Bolivia against Raul Garafulic, resulted
in comments in the Bolivian press questioning the validity of the Corporation's
ownership of the Amayapampa property. In May 1998, a judge in the Bolivian penal
court found that there was no justifiable case. In June 1998, a judge of the
Superior Court of the District of Potosi dismissed the appeal of the case and
indicated that there could be no further appeals on the matter in the Bolivian
penal courts. In 1999, Radic filed a lawsuit against Garafulic in civil court,
but the Corporation does not anticipate that the outcome will have any impact on
its title to the Amayapampa property. See "Item 3. Legal Proceedings".
HISTORY
The Amayapampa district was initially mined on a very small scale by indigenous
peoples prior to the arrival of the Spanish conquistadors and small-scale mining
continued during the Spanish colonial period into modern times. Prior to the
Amalgamation, CEM mined the Amayapampa deposit using primarily open-stope
methods at a rate of about 220 tons (200 tonnes) of ore per day and processed
the ore in two mills on site. At that time, the Amayapampa mine was one of the
largest producing underground gold mines in Bolivia and consisted of 32 levels
of underground development. Upper level, generally oxidized ore was removed via
the upper Virtus Adit (4,100 meters/13,450 feet elevation) and trucked to the
Porvenir mill, while lower sulfide ore was dropped by ore passes to the
850-meter-(2,790-foot-) long Virquicocha Adit (3,970 meters/13,025 feet
elevation) and taken out by electric locomotives to the Virquicocha mill. At
both mills, gold was recovered via amalgam plates and gravity tables. The lower
mill included a flotation
19
circuit to upgrade the pyrite concentrate. Approximately 150 people worked at
the mine and lived locally at the village of Amayapampa and at other small camps
near the mine.
Since the Amalgamation, mining has ceased and the old mills removed as per an
agreement with the previous owner. The Corporation kept the miners employed in
exploration, development and socio-economic projects during the period when the
original feasibility study was being prepared. During 1999, the workforce was
inactive, but was paid a subsistence allowance to promote good will and maintain
social stability in the region. With low gold prices continuing into 2000, this
subsistence allowance was discontinued in April 2000 and the Amayapampa workers
were laid off. The Corporation continues to provide community assistance by
providing teachers and a nurse and by allowing restricted access to the old
underground workings to some of the ex-miners.
GEOLOGY
The Amayapampa property is located along the east flank of a north-south
trending regional anticline near the top of the Ordovician sequence. The
Amayapampa deposit underlies a north-northwest trending ridge approximately 0.5
kilometers (0.3 miles) east of the town of Amayapampa. The deposit is defined by
about 48 diamond drill holes; 96 reverse-circulation drill holes; and 315
underground channel samples totaling 5,360 meters (17,585 feet) from more than
200 accessible cross-cuts in 43 different levels and sub-levels extending over a
vertical distance of 208 meters (682 feet). The deposit is approximately
600 meters (1,969 feet) in strike length, 30 to 70 meters (98 to 230 feet) in
width and has an overall dip of the mineralized envelope of 80 to 90 degrees
west. The depth extent of continuous mineralization is in excess of 200 meters
(656 feet) to about the 3,900-meter (12,795-foot) elevation, although some
mineralization is present below this depth.
Da Capo channel, core drill and reverse-circulation drill hole samples were
analyzed at Bondar-Clegg Laboratories in Oruro, Bolivia, with check samples
analyzed at Chemex Laboratories in Vancouver, British Columbia. Because of the
coarse gold particles and concerns about nugget effect, all samples were
processed using the Hammer Mill Process (similar to a metallic screen assay). In
addition to check assaying, Vista Gold has continued to use Bondar-Clegg and the
Hammer Mill Process to analyze its samples, and in addition, has had an on-going
check assay program in place for samples generated by Vista Gold's exploration
and development program. Approximately 225 random assay pulps were check-assayed
by three laboratories (American Assay Laboratory in Reno, Nevada, Cone
Geochemical Inc. in Lakewood, Colorado, and Rocky Mountain Geochemical in Salt
Lake City, Utah) and compared to original pulp assays with generally good
agreement. Approximately 600 reverse-circulation drill hole sample splits from
the Da Capo program were assayed and used to verify assays obtained from the
original reverse-circulation sample splits. Sample splits are duplicate samples
taken at the drill rig at the time of drilling. Sample splits show good
correlation with original samples with some dispersion expected for this type of
deposit. Check assays show that assaying precision meets industry standards.
The host rocks are composed of black shales, sandstones, and siltstones, which
were weakly metamorphosed to argillites, quartzites, and siltites, respectively.
Bedding dips are steep at 60 to 80 degrees west, with the east limb of the
anticline being overturned and thus, also dipping steeply west.
The mineralized envelope is best described as a structural zone, within which
were emplaced quartz vein sets along a preferential pre-quartz-vein fracture
direction and post-quartz-vein faults and shears which were probably the
conduits for gold-bearing fluids.
Most faults, shears and fractures are north-northeast to north-northwest
trending and steeply dipping, both east and west, at 60 to 90 degrees. Quartz
veins predominantly dip east. Locally, within the zone of mineralization, flat,
thrust-like faults are present, which have offset quartz veins to a minor
extent. These flat faults, commonly west-dipping at 40 to 45 degrees, are not
generally mappable outside of the main structural zone, which hosts the gold
mineralization. A west dipping, 45-degree fault projects into the pit
20
on the northeast side of the deposit and was intersected by two vertical,
geotechnical core holes. The base of mineralization may also be slightly offset
by a similar west-dipping, 45-degree fault.
Oxidation effects are pervasive from the surface to depths of 20 to 30 meters
(66 to 98 feet), with only partial oxidization below those depths. Hydrothermal
alteration effects evident in fresh rock are minor, and occur as coarse sericite
(muscovite) in thin (2 to 5 millimeter/0.08 to 0.20 inch) selvages along some
quartz veins. In addition, chlorite is present in and adjacent to some quartz
veins, but this presence may be a product of low-grade metamorphism. Alteration
effects are minimal overall, except for surface oxidization.
Mineralization is composed of quartz veins and sulfides and both constitute a
visual guide to ore. Quartz veins, actually pre-gold, are a locus for later gold
mineralization. Quartz veins are typically a few centimeters to 0.5 meters (two
feet) in width and commonly occur as sub-parallel vein sets. The strike extent
can be 50 to 75 meters (164 to 246 feet) or more for any one vein or vein set,
but the dip extent is not as well established and probably ranges up to 20 to 30
meters (66 to 98 feet). Multiple vein sets are present in the overall
mineralized envelope and veins commonly pinch and swell along strike and down
dip.
Sulfide mineralization entered the multiple fractures to deposit predominantly
pyrite within and adjacent to quartz veins, as sulfide veinlets in the host
rocks and as clots of coarse sulfides and disseminations of sulfide grains along
fractures in the black argillites. Locally, sulfide disseminations are more
prevalent in the quartzite/siltite interbeds than in the argillites. The total
sulfide concentration for the overall mineralized zone is estimated at 3 to 5%.
Petrographic examination of the sulfide mineralization shows pyrite to dominate
at plus 95% of the total sulfides; arsenopyrite is also present, as are minor
amounts of chalcopyrite, galena, sphalerite, stibnite and tetrahedrite. Gold is
present as free gold in association with pyrite, on fractures within pyrite and
attached to the surface of pyrite and is often visible as discrete grains on
fractures in quartz and argillite. Gold grains exhibit a large size-range, with
much of the gold being relatively coarse at 40 to 180 microns. All gold grains
display irregular shapes with large surface areas. No gold was noted to be
encapsulated in either quartz or sulfide. The content of gold grains was
verified as over 97% gold by scanning-electron-microprobe analysis.
EXPLORATION
In 2000, no exploration was undertaken at Amayapampa.
District-scale exploration potential exists for defining styles of gold
mineralization similar to Amayapampa, which could be developed as satellite ore
bodies. Specific targets on the Corporation's properties include an untested
surface geochemical target at Irpa Irpa, and raw exploration targets elsewhere
within a 10-kilometre (six-mile) radius of Amayapampa.
UPDATED FEASIBILITY STUDY
The Corporation began updating and optimizing the feasibility study on the
Amayapampa property in the fall of 1999 and completed this work during the first
quarter of 2000. Based on a gold price of $300 per ounce, the proven and
probable reserves at Amayapampa were calculated by Mine Reserve
Associates, Inc., an independent consultant, 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. These reserves are
consistent with the definition of Proven and Probable ore reserves under USGS
Circular 831 and are classified as Probable Minable Reserves under Canadian
Instrument 43-101. 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
optimized study includes the same flow sheet consisting of a gravity and
carbon-in-leach circuit with a projected metallurgical recovery of 84% and
operating at a rate of 2,330 tonnes (2,563 tons) of ore per day.
21
Gold production the first five years of operations is estimated at approximately
47,400 ounces per year. The initial capital costs are estimated to be about
$25 million, including contingency and necessary working capital. Average
operating costs are estimated to be $7.99 per tonne ($7.25 per ton) of ore for a
total cash cost of $168 per gold ounce.
The Corporation is investigating means of obtaining financing in order to move
the project into design and construction. Approval of the permit to construct
and operate, called the DECLATORIA DE IMPACTO AMBIENTAL, under Article 24 of the
Environmental Law was received on May 6, 1998. This permit was based on a
3,300-tonne- (3,638-ton-) per-day ore processing project, and if financing
arrangements for the project are obtained, the corporation will request a
modification of the permit to allow operation at the lower production rate.
CAPA CIRCA
The Capa Circa property, which was owned by the Corporation's wholly-owned
subsidiary Yamin, consists of four partly overlapping mining concessions
covering 117 hectares (289 acres). Mineralization on the Capa Circa property is
similar to that of the Amayapampa deposit, but consists of discrete veins within
a mineralized zone approximately 150 meters (490 feet) wide that can be traced
for about 600 meters (1,970 feet) along strike. Because mineralization is
limited to narrow veins, suited for small-scale underground mining, and there
are no estimated mineable reserves, the decision was made to sell Capa Circa to
a miners' cooperative. This sale was completed on February 7, 2000, through the
sale of Yamin which owns the Capa Circa Mine. The terms of the sale agreement
included approximately $300,000 in cash payments to Vista Gold, the assumption
of Yamin debts and a production royalty.
EXPLORATION PROPERTIES
UNITED STATES
The only exploration performed by the Corporation in the United States was at
the Hycroft mine. See "Item 2. Properties--Hycroft Mine--Mine Site Exploration".
ECUADOR
Vista Gold currently owns 26% of Zamora. Compania Minera Gribipe S.A.
("Gribipe"), an Ecuadorian mineral exploration company controls and currently
owns 58.2% of Zamora. Gribipe is one of the largest mineral exploration
companies in Ecuador and has been involved in a number of important exploration
projects in Ecuador.
CANADA
The Corporation holds interests in two properties in Canada, which continue to
be explored by joint venture partners. They are the Manville project in Ontario
and the Isle project in Manitoba. Falconbridge Limited performed initial drill
testing on the Manville project and Phelps Dodge Corp. performed initial drill
testing on the Isle project.
22
2000 EXPLORATION, PROPERTY EVALUATION AND HOLDING EXPENDITURES
In the last two completed financial years, the Corporation incurred expenditures
of the following approximate dollar amounts on exploration and holding costs:
DESCRIPTION 2000 1999
- ----------- -------- --------
(IN MILLIONS)
Mineral exploration, property evaluation and holding cost... $1.1 $2.0
Hycroft (mine-site)......................................... 0.8 0.6
Mineral Ridge............................................... -- 0.2
---- ----
Totals...................................................... $1.9 $2.8
==== ====
2001 EXPLORATION PLAN
The 2001 exploration program will be limited by the amount of funds that the
Corporation can obtain and make available for this purpose, which in turn will
be a function of gold price and market conditions.
The exploration focus in 2001 will be the Hycroft mine. The Corporation has
prepared a plan for follow-up drilling on the targets derived from work
performed during 2000. This program would investigate oxide and high-grade
sulphide mineralization continuing to the south from known mineralization.
Approximately $400,000 is required for the initial program and this would be
followed up with a second program costing $900,000, if and when funding is
available.
ITEM 3. 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
"Item 2. Properties--Mineral Ridge Mine".
Early in 2000, a trustee was appointed by the court to dispose of the assets of
Mineral Ridge Inc. At the end of 2000, all assets of Mineral Ridge Inc. had been
disposed of and the Mineral Ridge Inc. Chapter 11 case was dismissed. Mineral
Ridge Inc. will be dissolved in accordance with the applicable state
corporations code.
On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed
an action in the United States District Court against Vista Gold, Vista Gold
Holdings, Inc., Stockscape.com Technologies, Inc., Cornucopia Resources, Inc.,
Red Mountain Resources, Inc. and Touchstone Resources, Inc. This action involves
a General Contract of Indemnity in connection with the posting of a reclamation
bond for mining activities by Mineral Ridge Inc. at Silver Peak, Nevada. In the
action, USF&G seeks to compel all of the defendants to post additional
collateral for the bond in the total amount of $793,583. Neither Vista Gold nor
Vista Gold Holdings, Inc. was a party to the General Contract of Indemnity and
have denied any liability in connection therewith. In November 2000, the parties
stipulated to an agreed upon discovery plan and scheduling order. The maximum
potential exposure to the Corporation is the additional collateral requested in
the amount of $793,583, together with the attorneys fees and costs related to
defense of the action. Other defendants, if found to be jointly liable could
reduce the amount for which the Corporation has exposure.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, by Vista Gold during the quarter ended
December 31, 2000.
23
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
PRICE RANGE OF COMMON SHARES
The Common Shares of Vista Gold are listed on the American Stock Exchange and
The Toronto Stock Exchange under the symbol VGZ. The following table sets out
the reported high and low sale prices on the American Stock Exchange and on The
Toronto Stock Exchange for the periods indicated as reported by the exchanges:
AMERICAN STOCK THE TORONTO STOCK
EXCHANGE (US$) EXCHANGE (CDN$)
------------------------ ------------------------
HIGH LOW HIGH LOW
-------- -------- -------- --------
1999 1st quarter................................... 0.19 0.13 0.25 0.20
2nd quarter................................... 0.22 0.13 0.28 0.21
3rd quarter................................... 0.22 0.13 0.25 0.18
4th quarter................................... 0.22 0.09 0.30 0.13
2000 1st quarter................................... 0.16 0.09 0.22 0.13
2nd quarter................................... 0.13 0.09 0.16 0.13
3rd quarter................................... 0.11 0.06 0.18 0.10
4th quarter................................... 0.25 0.03 0.14 0.04
On March 26, 2001, the last reported sale price of the Common Shares of Vista
Gold on the American Stock Exchange was $0.09 and on The Toronto Stock Exchange
was Cdn$0.14. As at March 26, 2001, there were 90,715,040 Common Shares issued
and outstanding, and Vista Gold had 900 shareholders of record.
DIVIDENDS
Vista Gold has never paid dividends. While any future dividends will be
determined by the directors of Vista Gold after consideration of the earnings
and financial condition of Vista Gold and other relevant factors, it is
currently expected that available cash resources will be utilized in connection
with the ongoing exploration and development programs of the Corporation.
EXCHANGE CONTROLS
There are no governmental laws, decrees or regulations in Canada that restrict
the export or import of capital, including foreign exchange controls, or that
affect the remittance of dividends, interest or other payments to non-resident
holders of the securities of Vista Gold, other than a Canadian withholding tax.
See "Item 5. Certain Canadian Income Tax Considerations for Non-Residents of
Canada".
CERTAIN CANADIAN INCOME TAX CONSIDERATIONS FOR NON-RESIDENTS OF CANADA
Canadian withholding tax at a rate of 25% (subject to reduction under the
provisions of any relevant tax treaty) will be payable on dividends paid to a
holder of Common Shares who is not resident in Canada. The rate of withholding
tax applicable to dividends paid on the Common Shares to a resident of the
United States who beneficially holds such Common Shares would generally be
reduced to 15% or, if the non-resident holder is a corporation that owns at
least 10% of the Common Shares, to 5%. It is the Canada Customs and Revenue
Agency's present published policy that entities (including certain limited
liability companies) that are treated as being fiscally transparent for United
States federal income tax purposes will not qualify as residents of the United
States under the provisions of the Canada-United States Income Tax Convention.
24
Upon a disposition or deemed disposition of Common Shares, a capital gain (or
loss) will generally be realized by a non-resident holder to the extent that the
proceeds of disposition are greater (or less) than the aggregate of the adjusted
cost base of the Common Shares to the non-resident holder thereof immediately
before the disposition and any reasonable costs of disposition. Capital gains
realized on a disposition of Common Shares by a non-resident shareholder will
not be subject to Canadian tax unless the non-resident holder and/or persons
with whom the non-resident holder did not deal at arm's length, at any time
within the five-year period before the disposition, owned or had an option to
acquire 25% or more of the issued Common Shares of any class or series of Common
Shares of Vista Gold. Under the Canada-United States Income Tax Convention, a
resident of the United States who does not carry on a business from a permanent
establishment or fixed base in Canada and who realizes a capital gain on the
disposition of Common Shares that is otherwise subject to tax in Canada, will be
exempt from Canadian income tax. It is the Canada Customs and Revenue Agency's
present published policy that entities (including certain limited liability
companies) that are treated as being fiscally transparent for United States
federal income tax purposes will not qualify as residents of the United States
under the provisions of the Canada-United States Income Tax Convention.
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED FINANCIAL DATA
The selected financial data in Table I have been derived from the consolidated
financial statements of the Corporation, which have been prepared in accordance
with accounting principles generally accepted in Canada. The selected financial
data should be read in conjunction with those financial statements and the notes
thereto. See "Item 8. Consolidated Financial Statements and Supplementary Data".
TABLE I
YEARS ENDED DECEMBER 31
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS
Gold sales................................. $ 3,757 $ 19,496 $ 37,083 $ 40,123 $ 34,847
Net earnings (loss) before write-downs..... (2,283) (11,481) (1,640) (5,292) (11,826)
Net earnings (loss)........................ (13,209) (27,700) (1,640) (54,019) (11,826)
Net earnings (loss) per share.............. (0.15) (0.31) (0.02) (0.61) (0.21)
AT DECEMBER 31
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
FINANCIAL POSITION
Working capital(1)............................ $ 106 $ 2,972 $10,282 $ (237) $ 18,702
Total assets.................................. 17,232 33,429 80,878 79,028 123,316
Long-term debt and other non-current
liabilities................................. 3,345 5,229 19,629 4,568 3,929
Shareholders' equity.......................... 12,673 25,889 53,530 55,075 109,173
- ------------------------
(1) Including current portion of long-term debt of $695--2000; $481--1999;
$2,372--1998; and $13,000--1997.
Had the consolidated financial statements of the Corporation been prepared in
accordance with accounting principles generally accepted in the United States,
certain selected financial data would have been reported as shown in Table II.
25
TABLE II
YEARS ENDED DECEMBER 31
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS
Net earnings (loss)......................... $(20,978) $(13,716) $ 1,561 $(71,643) $(35,187)
Basic and diluted earnings (loss) per
share..................................... (0.23) (0.15) 0.02 (0.80) (0.62)
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
FINANCIAL POSITION
Total assets................................... $9,364 $33,330 $66,551 $61,500 $123,316
Shareholders' equity........................... 4,805 25,646 39,203 37,546 109,172
See note 12 to the consolidated financial statements for the year ended
December 31, 2000 under "Item 8. Consolidated Financial Statements and
Supplementary Data--Notes to Consolidated Financial Statements".
UNITED STATES$/CANADIAN$ EXCHANGE RATES (1)(3)
AT DECEMBER 31
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
As at December 31.............................. $0.6669 $0.6925 $0.6504 $0.6999 $0.7301
Average(2)..................................... 0.6725 0.6730 0.6740 0.7220 0.7331
High........................................... 0.6969 0.6925 0.7105 0.7487 0.7515
Low............................................ 0.6410 0.6535 0.6341 0.6945 0.7215
- ------------------------
(1) Exchange rates are expressed as the amount of United States funds equivalent
to one Canadian dollar, being the noon buying rates in New York City for
cable transfers in Canadian dollars, as certified for customs purposes by
the Federal Reserve Bank of New York.
(2) The yearly average rate means the average of the exchange rates on the last
day of each month during a year.
(3) On March 26, 2001, the noon buying rate as quoted by the Federal Reserve
Bank of New York was 1.5545 (Cdn.$1.00 equals U.S.$0.6433).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
INTRODUCTION
This discussion should be read in conjunction with the consolidated financial
statements of the Corporation for the three years ended December 31, 2000 and
the related notes thereto, which have been prepared in accordance with generally
accepted accounting principles ("GAAP") in Canada. Differences from United
States GAAP are described in note 12 to the consolidated financial statements.
During 2000, 1999 and 1998, the Corporation's primary mining operation and
principal source of earnings was the Hycroft mine in Nevada, which began gold
production in 1987. In December 1998, mining activities were suspended at the
Hycroft mine. Gold processing and recovery continued from previously mined ore
in 1999 and 2000 and is expected to continue in 2001, with gold production for
2001 estimated to be in excess of 3,000 ounces.
26
On December 10, 1999, Mineral Ridge Inc., a wholly-owned subsidiary of the
Corporation, voluntarily filed for protection under the U.S. Bankruptcy Code
after the Mineral Ridge mine failed to meet minimum cash flow levels required
under Mineral Ridge Inc.'s loan with Dresdner Bank due to ore reserve
deficiencies and low gold prices. The loan was not guaranteed by, and the lender
has no recourse to, the Corporation. The Corporation recognized no revenue,
production or operating expenses at Mineral Ridge Inc. in the year 2000.
RESULTS OF OPERATIONS
2000 COMPARED WITH 1999
The 2000 net loss was $13.2 million as compared to the 1999 net loss of
$27.7 million. The 2000 net loss included a $10.9 million write-down of mineral
properties and other assets and a $0.3 million gain from sale of assets and
marketable securities. In 1999, the net loss included a $16.2 million write down
of mineral properties. Excluding the write-down of mineral properties and
disposal of assets, the 2000 net loss of $2.3 million decreased $9.2 million
from the 1999 loss of $11.5 million. The $9.2 million decrease in net losses in
2000 was due to substantially lower operating costs partially offset by lower
gold revenues, both of which reflect the Corporation's lower gold production and
operating levels in 2000 as compared to 1999.
The Corporation's average gross realized price declined in 2000 reflecting the
absence of any benefit from forward sales. Gold sales of $3.8 million in 2000
decreased $15.7 million, or 81%, from $19.5 million in 1999. The decrease in
gold sales was primarily because of lower gold production combined with the
lower average gold price realized by the Corporation.
2000 1999
-------- --------
Average gross realized price............................... $ 278 $ 298
Average spot price......................................... $ 279 $ 279
Gold sales (000s).......................................... $3,757 $19,496
Gold production (ounces)................................... 13,493 65,468
Gold production decreased 51,975 ounces from 65,468 in 1999 to 13,493 ounces in
2000. The decrease in gold production was attributable to the closure of the
Mineral Ridge Mine in 1999 and the progressive depletion of recoverable gold in
the leach pads at the Hycroft Mine. Gold production from the two mines was as
follows.
2000 1999
-------- --------
(OUNCES)
Hycroft mine................................................ 13,493 40,075
Mineral Ridge mine.......................................... -- 25,393
------ ------
Total gold production..................................... 13,493 65,468
====== ======
There was no ore mined at the Hycroft mine in 2000. All gold production from the
Hycroft mine was from previously mined ore.
Operating costs from mining operations decreased $18.0 million from
$20.6 million in 1999 to $2.6 million in 2000. Mining, processing and other
costs accounted for $4.3 million, $9.0 million and $4.7 million of the decrease
in operating costs, respectfully. The decrease was primarily due to the closure
of the Mineral Ridge Mine, and the progressive reduction of leach solution
volume processed at the Hycroft Mine, with related reductions in manpower and in
the consumption of reagents and electric power.
27
Operating costs at the two mines were as follows.
2000 1999
-------- --------
(IN THOUSANDS)
Hycroft mine............................................... $2,560 $11,307
Mineral Ridge mine......................................... -- 9,271
------ -------
Total operating costs.................................... $2,560 $20,578
====== =======
The cash operating cost per ounce at the two mines was as follows.
1999 1998
-------- --------
(PER OUNCE)
Hycroft mine................................................ $183 $277
Mineral Ridge mine.......................................... -- 358
---- ----
Cash operating costs...................................... $183 $309
==== ====
Mining costs in 2000 were zero due to the closure of the Mineral Ridge Mine in
1999 and the prior suspension of mining activity at the Hycroft Mine in 1998.
Processing costs, including changes in inventory, decreased $9.0 million in 2000
due to the closure of the Mineral Ridge Mine in 1999 and the progressive
reduction in the volume of leach solution processed at the Hycroft mine during
the year. The Corporation processed no newly mined ore in the year 2000.
Processing activities at the Hycroft Mine continued throughout the year as
previously mined ore was treated for gold extraction.
Other operating costs including mine administration, refining and freight costs,
and silver credits decreased $4.7 million in 2000. Excluding silver credits,
other operating costs decreased $5.5 million reflecting the closure of the
Mineral Ridge Mine in 1999 and a reduced operating level at the Hycroft Mine.
However, lower silver production and sales offset $0.8 million of the decrease.
Depreciation, depletion and amortization (DD&A) in 2000 of $0.9 million
decreased $3.5 million from $4.4 million in 1999. At the Hycroft mine, DD&A
decreased $1.4 million and was a result of the write-down of certain depreciable
assets in the prior year and the sale of assets including crushing and conveying
equipment during the year. DD&A at the Mineral Ridge mine decreased
$2.1 million to nil as a result of the bankruptcy of Mineral Ridge Inc. in 1999.
The Corporation did not have any major equipment leases.
Mineral exploration, property evaluation and holding costs were $1.9 million in
2000 as compared to $2.8 million in 1999. The 2000 costs included $0.7 million
in holding costs for the Corporation's Bolivian properties as compared to
$1.7 million in 1999. The Corporation incurred these holding costs while
maintaining and protecting its property interests in Bolivia. Also included in
the 2000 costs were $0.8 million for exploration and evaluation work and holding
costs at the Hycroft mine, and $0.4 million of other exploration and evaluation
expenditures.
Corporate administration and investor relations costs were $1.2 million in 2000,
unchanged from 1999. 2000 expenses included approximately $0.2 million of
one-time expenses related to the closing of Mineral Ridge Inc. and merger and
acquisition studies.
Interest expense in 2000 was $0.1 million as compared to $1.1 million in 1999,
reflecting the Corporation's lower average debt balance during the year. The
decrease in the average debt balance was directly related to the bankruptcy of
Mineral Ridge Inc. and paying down of debt at the Hycroft Mine.
In 2000, the gain on the sale of assets and marketable securities was
$0.3 million. There was no similar gain or loss from the disposal of assets
in 1999.
28
Other income received in 2000 included insurance settlements totaling
$0.2 million. There was no similar settlement in 1999.
Management regularly reviews the carrying values of its long-lived assets and
investments. These evaluations indicated that the carrying values of certain
properties and investments were overstated at December 31, 2000 and,
accordingly, were written down to estimated recoverable amounts. Based upon
management's evaluation, $10.9 million was written down in 2000, of this,
$10.6 million was related to the Bolivian mineral properties and other Bolivian
assets and $0.3 million was related to Hycroft equipment. $16.2 million was
written down in 1999, including Bolivian mineral properties--$13.2 million;
Mineral Ridge mine net assets--$2.9 million; and Zamora accounts
receivable--$0.1 million. Additionally in 1999, the Corporation wrote off its
remaining investment of $0.6 million in Zamora, reflecting its decreased levels
of ownership and control.
Income tax in 2000 was a $33,000 refund of Canadian Income tax, as compared to
nil in 1999.
1999 COMPARED WITH 1998
The 1999 net loss was $27.7 million as compared to the 1998 net loss of
$1.6 million. The 1999 net loss included a $16.2 million write-down of mineral
properties. There was no similar write-down in 1998. The 1998 net loss included
a one-time gain on the liquidation of gold futures of $3.2 million and a
$0.8 million gain from the disposal of assets, while there were no similar gains
in 1999. Excluding the write-down of mineral properties and the gains from the
liquidation of gold futures and disposal of assets, the 1999 net loss of
$11.4 million increased $5.8 million from the 1998 loss of $5.6 million. The
$5.8 million increase in net losses in 1999 was due to substantially lower gold
revenues partially offset by lower operating costs, both of which reflect the
Corporation's lower gold production and operating levels in 1999 as compared
to 1998.
The Corporation's average gross realized price continued to decline in 1999
reflecting the lower average spot price of gold for 1999. Gold sales of
$19.5 million in 1999 decreased $17.6 million, or 48%, from $37.1 million in
1998. The decrease in gold sales was primarily due to lower gold production
combined with the lower average gold prices realized by the Corporation.
1999 1998
-------- --------
Average gross realized price.............................. $ 298 $ 329
Average spot price........................................ $ 279 $ 294
Gold sales (000s)......................................... $19,496 $37,083
Gold production (ounces).................................. 65,468 112,838
Gold production decreased 47,370 ounces from 112,838 in 1998 to 65,468 ounces in
1999. The decrease in gold production was attributable to the suspension of
mining activities at the Hycroft mine in 1998, which was partially offset by the
start up of mining activities at the Mineral Ridge mine in 1999. Gold production
from the two mines was as follows.
1999 1998
-------- --------
(OUNCES)
Hycroft mine............................................... 40,075 112,685
Mineral Ridge mine......................................... 25,393 153
------ -------
Total gold production.................................... 65,468 112,838
====== =======
There was no ore mined at the Hycroft mine in 1999. All gold production from the
Hycroft mine was from previously mined ore. At the Mineral Ridge mine,
1.1 million tons of ore were mined in 1999, as compared to 0.1 million tons of
ore in 1998. The average grade of the ore mined in 1999 was 0.05 ounces of gold
per ton. During the initial mining and processing start up activities at Mineral
Ridge Inc., various mechanical
29
problems were encountered. These problems, primarily in the crushing plant,
inhibited the mine's ability to place ore onto the heaps for leaching and gold
extraction. As the mine continued to operate in 1999, the mechanical problems
were addressed and crusher production improved in the third quarter of 1999 to
an average of 100,000 tons per month, which was in line with Corporation's
projections. However, the mine then began to experience ore deficiencies during
mining operations, as compared to original ore reserve estimates, and gold
production failed to meet expectations.
Operating costs from mining operations decreased $6.4 million from
$27.0 million in 1998 to $20.6 million in 1999. Mining, processing and other
costs accounted for $5.2 million, $1.1 million and $0.1 million of the decrease
in operating costs, respectfully. The decrease was primarily due to the
elimination of mining activities at the Hycroft mine, which was partially offset
by the commencement of mining activities at the Mineral Ridge mine.
Operating costs at the two mines were as follows.
1999 1998
-------- --------
(IN THOUSANDS)
Hycroft mine.............................................. $11,307 $26,257
Mineral Ridge mine........................................ 9,271 752
------- -------
Total operating costs................................... $20,578 $27,009
======= =======
The cash operating cost per ounce at the two mines was as follows.
1999 1998
-------- --------
(PER OUNCE)
Hycroft mine................................................ $277 $229
Mineral Ridge mine.......................................... 358 --(1)
---- ----
Total operating costs..................................... $309 $235
==== ====
- ------------------------
(1) The cash operating costs at the Mineral Ridge mine for the two months ended
December 31, 1998 have been omitted because the mine was in the initial
start-up phase and, accordingly, it is not possible to accurately determine
the true cash operating costs.
Mining costs in 1999 decreased $5.2 million as a result of mining fewer tons at
a lower average cost per ton. Total tons mined, including waste tons, decreased
to 6.4 million tons in 1999 from 10.4 million tons in 1998. The average cost per
ton mined decreased to $0.70 in 1999, as compared to $0.80 in 1998. In 1998,
inefficiencies associated with the reduction in mining activities at the Hycroft
mine resulted in a higher average mining cost per ton. In 1999, there was no
mining at the Hycroft mine and all mining activities occurred at the Mineral
Ridge mine.
Processing costs, including changes in inventory, decreased $1.1 million in 1999
as a result of treating fewer tons of ore as compared to 1998. Ore tons
processed decreased to 1.0 million tons in 1999 from 7.2 million tons in 1998.
At the Hycroft mine, while no additional ore was placed on the heaps in 1999,
processing activities still continued throughout the year as previously mined
ore was treated for gold extraction. Processing activities at the Mineral Ridge
mine included placing and treating 1.0 million tons of ore in 1999.
Other operating costs including mine administration, refining and freight costs,
and silver credits decreased $0.1 million in 1999. Excluding silver credits,
other operating costs decreased $0.5 million reflecting the efficiencies of
combining the administrative functions of the two mines and the Corporation's
efforts to minimize costs. However, lower silver production and sales offset
$0.4 million of the $0.5 million decrease.
30
DD&A in 1999 of $4.4 million decreased $1.9 million from $6.3 million in 1998.
At the Hycroft mine, DD&A decreased $3.8 million and was directly related to the
suspension of mining activities in 1998. DD&A at the Mineral Ridge mine
increased $1.9 million reflecting the start up of mining activities in 1999.
The provision for reclamation and closure costs of $0.2 million in 1999
decreased significantly from $2.4 million in 1998. In 1998, the higher provision
compensated for the revised Hycroft mine plan, which called for the reduction
and subsequent suspension of mining activities in December 1998. In 1999, the
provision of $0.2 million was solely from the Mineral Ridge mine.
Operating lease costs in 1999 decreased to $44,000 as compared to $1.1 million
in 1998. During 1998, the leases on several large pieces of mobile mining
equipment terminated and the equipment was purchased at the end of the leases.
During 1999, the Corporation did not have any major equipment leases.
Mineral exploration, property evaluation and holding costs were $2.8 million in
1999 as compared to $2.6 million in 1998. The 1999 costs included $1.7 million
in holding costs for the Corporation's Bolivian properties as compared to
$2.0 million in 1998. The Corporation incurred these holding costs while
maintaining and protecting its property interests in Bolivia. Also included in
the 1999 costs were $0.6 million for exploration and evaluation work at the
Hycroft mine, $0.2 million for exploration at the Mineral Ridge mine, and
$0.3 million of other exploration and evaluation expenditures.
Corporate administration and investor relations decreased $0.3 million in 1999
to $1.2 million as the Corporation continued to reduce its overhead and
administrative costs.
Interest expense in 1999 was $1.1 million as compared to $0.7 million in 1998,
reflecting the Corporation's higher average debt balance during the year. The
increase in the average debt balance was directly related to the additional debt
of Mineral Ridge Inc.
In 1998, the gain on the disposal of assets was $0.8 million and primarily
consisted of the sales of surplus mining equipment from the Hycroft mine and the
sale of the Corporation's non-producing Tartan mine in Canada. There was no
similar gain or loss from the disposal of assets in 1999.
Management regularly reviews the carrying values of its long-lived assets and
investments. These evaluations indicated that the carrying values of certain
properties and investments were overstated and, accordingly, were written down.
Based upon management's evaluation, $16.2 million was written down in 1999,
including Bolivian mineral properties--$13.2 million; Mineral Ridge mine net
assets--$2.9 million; and Zamora accounts receivable--$0.1 million.
Additionally, the Corporation wrote off its remaining investment of
$0.6 million in Zamora, reflecting its decreased levels of ownership and
control. There were no similar write-downs in 1998.
Income tax expense in 1999 was nil as compared to $0.2 million in 1998. The 1998
income tax expense was primarily the result of U.S. alternative minimum taxes,
which limited the Corporation's ability to utilize existing loss carry forwards.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's consolidated cash balance at December 31, 2000 was
$0.1 million, a decrease of $2.2 million from the end of the previous year.
During 2000, operating activities consumed $2.8 million, as follows.
2000
--------------
(IN THOUSANDS)
Hycroft mine................................................ $ 407
Bolivian properties......................................... 631
Corporate activities........................................ 1,688
------
Net operating activities.................................... $2,726
31
The Hycroft mine consumed $0.4 million in operating activities net of
$1.0 million for reclamation costs. Before reclamation, the mine generated
$0.6 million of cash. In December 1998, mining activities were suspended at the
Hycroft mine. Gold processing and gold recovery continued in 2000 from
previously mined ore. The mine produced 13,493 ounces in 2000, at a cash
operating cost of $183 per ounce.
Bolivian and corporate activities required $0.6 million and $1.7 million in
cash, respectively. During 2000, the Corporation held and maintained its
Bolivian properties, and at the same time steps were undertaken to minimize
future property holding costs. The Corporation continues to investigate
alternatives to reduce its corporate overhead.
Investing activities provided $1.2 million in 2000 mainly from the sale of
Hycroft crushing and conveying equipment and spare parts. The Corporation made
no material capital expenditures in 2000.
In 2000, financing activities used $0.6 million to reduce the long-term
equipment loan from Finova Inc.
RECLAMATION AND ENVIRONMENTAL COSTS
Management estimates the current reclamation and closure costs for the
Corporation's Hycroft mine to be $2.9 million. These costs have been charged to
earnings over the life of the mine and the provision for reclamation as of
December 31, 2000 is $3.1 million.
In April 1995, the Nevada Bureau of Land Management ("BLM") approved an amended
Hycroft mine reclamation plan that included the Brimstone deposit, and an
uncollateralized surety bond in the amount of $5.1 million was posted to secure
reclamation obligations under the plan.
REGULATORY COMPLIANCE AND OTHER MATTERS
During 2000, there were no material environmental incidents or non-compliance
with any applicable environmental regulations.
GOING CONCERN
The Corporation's consolidated cash balance and working capital balance were
both $0.1 million as of December 31, 2000. $2.6 million has been realized from
the sale of mining equipment in the first quarter of 2001. Management estimates
consolidated total cash expenditures of $2.4 million for 2001, including debt
repayments of $0.7 million with an estimated December 31, 2001 cash balance of
$0.3 million. Management continues to pursue cost-cutting measures and is
actively pursuing additional sources of capital, including debt financing, the
issuance of equity, mergers with other companies, and the sale of property
interests and other assets. Management estimates that the Corporation will have
sufficient cash resources to continue its current level of activity through to
the end of March 2002.
The Corporation relies on the Hycroft mine as its only current source of
operating cash flows. Mining activities at Hycroft were suspended in 1998.
During 2000, Hycroft produced gold from previously mined ore on the leach pads,
a process that will continue through 2001. However, Hycroft's remaining gold
inventory is decreasing and, therefore, gold production will continue to
decrease throughout the year 2001. The Corporation is investigating the economic
feasibility of restarting the Hycroft mine and developing the Amayapampa project
in Bolivia. The Corporation's ability to restart the Hycroft mine and develop
the Amayapampa project is dependent upon its ability to raise additional
capital.
OUTLOOK
Following a brief rally in February 2000 and a minor readjustment in June, the
price of gold has continued to remain low, finishing the year at approximately
$270 per ounce.
Amayapampa cannot be developed economically at current gold prices. The
resumption of mining at Hycroft, although economic at current gold prices, would
attract more favorable financing terms and yield a greatly improved return for
shareholders at a gold price over $300. The Corporation is reluctant to deplete
its valuable gold resources before ensuring a higher return on the necessary
investment. Hycroft
32
continues to produce gold at higher than anticipated rates and will continue to
produce gold into 2001. Gold production, however, is dropping and management
expects to produce about 3,000 ounces in 2001.
To enhance the Corporation's gold resource position, management has rigorously
re-evaluated the Brimstone reserve at the Hycroft mine under the scrutiny of an
independent consulting firm and continues to systematically re-log drill hole
data and compile all existing exploration data for the Hycroft property. This
exercise together with some additional field-work, by the Corporation's in-house
geologist, has identified several areas on the property for additional
exploration as well as firming up drill targets to add additional oxide reserves
and explore for high-grade feeder zones. The Corporation will be in a position,
if funding is available, to restart operations immediately if the price of gold
recovers above $300 per ounce or to start a comprehensive drilling program to
expand the reserve.
In Bolivia, holding costs have been reduced by the sale of Yamin and Capa Circa
to a worker's co-operative and by the elimination of the stand-by work force at
Amayapampa. Development of Amayapampa will require initial capital of
$25 million and a gold price of around $325 per ounce. Again, this project is
dependent on a higher gold price and in the meantime the Corporation continues
to explore every avenue to maintain the asset at minimum cost until the gold
price improves.
At the corporate level, management has reduced staff, moved into more economic
office space and continues to explore all avenues to ensure the future of Vista
Gold and to protect and enhance shareholder value. In the first quarter of 2001,
four haul trucks and a shovel from the Hycroft mine were sold to provide an
additional $2.6 million in operating capital, without shareholder dilution. This
will allow the Corporation to continue on the present course into 2002, and
continue to pursue merger or acquisition opportunities and promote company
growth.
ITEM 7A. 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 refining and reclamation. Gold bullion
is the Corporation's principal product. Changes in the price of gold could
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, 2000 under "Item 8. Consolidated Financial Statements and
Supplementary Data--Notes to Consolidated Financial Statements".
Using current 2001 estimates of production, a $10 change in the gold price would
result in a corresponding change in net income and cash flows of approximately
$30,000.
The Corporation occasionally utilizes derivative commodity instruments for
purposes other than trading purposes 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 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. Also, 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 at the then market price. At December 31, 2000, the
Corporation's had no outstanding forward sales contracts.
INTEREST RATE RISK
At December 31, 2000, the Corporation had a $75,000 term note bearing a fixed
rate of interest at 4.5%. 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.
33
FOREIGN CURRENCY EXCHANGE RATE RISK
The price of gold is denominated in U.S. dollars, and all of the Corporation's
revenues and a majority of its expenses are incurred in U.S. dollars. As a
result, management does not believe that the Corporation is exposed to any
noteworthy foreign currency exchange rate risk and the Corporation does not
utilize market risk sensitive instruments to manage its exposure to this risk.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION
To the Shareholders of Vista Gold Corp.
The consolidated financial statements are the responsibility of the Board of
Directors and management. The consolidated financial statements have been
prepared by management based on information available through February 23, 2001,
and are in accordance with accounting principles generally accepted in Canada.
A system of internal accounting and administrative controls is maintained by
management in order to provide reasonable assurance that financial information
is accurate and reliable, and that the Corporation's assets are safeguarded.
Limitations exist in all cost-effective systems of internal controls. The
Corporation's systems have been designed to provide reasonable but not absolute
assurance that financial records are adequate to allow for the completion of
reliable financial information and the safeguarding of its assets.
The Corporation believes that the systems are adequate to achieve the stated
objectives. Regular testing of these systems is employed to ensure continued
effectiveness of the controls, and actions are taken when necessary to correct
deficiencies when they are identified.
The Audit Committee of the Board of Directors is comprised of four outside
directors, and meets regularly with management and the independent auditors to
ensure that management is maintaining adequate internal controls and systems and
to approve the annual and quarterly consolidated financial statements of the
Corporation. The committee also reviews the audit plan of the independent
auditors and discusses the results of their audit and their report prior to
submitting the consolidated financial statements to the Board of Directors for
approval.
The consolidated financial statements have been audited by
PricewaterhouseCoopers LLP, Chartered Accountants, who are appointed by the
shareholders. The auditors' report outlines the scope of their examination and
their opinion on the consolidated financial statements.
/s/ DAVID R. SINCLAIR /s/ ROBERT L. FOLEN
---------------------------- ----------------------------
David R. Sinclair Robert L. Folen
Chairman of the Board Vice President Finance
34
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Vista Gold Corp.
We have audited the consolidated balance sheets of Vista Gold Corp. as of
December 31, 2000 and 1999 and the consolidated statements of loss, deficit and
cash flows for the years ended December 31, 2000, 1999 and 1998. These
consolidated financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada and the United States of America. Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Corporation as of
December 31, 2000 and 1999, and the consolidated results of its operations and
cash flows for the years ended December 31, 2000, 1999 and 1998 in accordance
with Canadian generally accepted accounting principles.
/s/ PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Vancouver, British Columbia, Canada
February 23, 2001
Comments by the Auditors for U.S. Readers on Canada-U.S. Reporting Difference
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Corporation's ability to continue as a going concern such as those described
in Note 1 of the consolidated financial statements. Our report to the
shareholders dated February 23, 2001, is expressed in accordance with Canadian
reporting standards, which do not permit a reference to such conditions and
events in the auditors' report when these are adequately disclosed in the
financial statements.
/s/ PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Vancouver, British Columbia, Canada
February 23, 2001
35
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31
----------------------------
2000 1999
----------- ----------
(U.S. DOLLARS IN THOUSANDS)
ASSETS:
Cash and cash equivalents................................... $ 96 $ 2,297
Marketable securities....................................... -- 77
Accounts receivable......................................... 760 1,571
Gold inventory in process................................... -- 117
Supplies inventory and prepaid expenses..................... 464 1,221
--------- --------
Current assets.............................................. 1,320 5,283
--------- --------
Property, plant and equipment--Note 3....................... 15,912 28,124
Other assets................................................ -- 22
--------- --------
15,912 28,146
--------- --------
Total assets................................................ $ 17,232 $ 33,429
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable............................................ $ 218 $ 744
Accrued liabilities and other............................... 301 1,086
Current portion of long-term debt--Note 4................... 695 481
--------- --------
Current liabilities......................................... 1,214 2,311
--------- --------
Long-term debt--Note 4...................................... -- 801
Accrued reclamation and closure costs--Note 5............... 3,339 4,411
Other liabilities........................................... 6 17
--------- --------
3,345 5,229
--------- --------
Total liabilities........................................... 4,559 7,540
--------- --------
SHAREHOLDERS' EQUITY:
Capital stock, no par value per share--Note 6:
Preferred--unlimited shares authorized; no shares
outstanding
Common--unlimited shares authorized; shares outstanding:
2000 and 1999--90,715,040............................... 121,146 121,146
Deficit..................................................... (106,985) (93,776)
Currency translation adjustment............................. (1,488) (1,481)
--------- --------
Total shareholders' equity.................................. 12,673 25,889
--------- --------
Total liabilities and shareholders' equity.................. $ 17,232 $ 33,429
========= ========
Nature of operations and going concern--Note 1
Commitments and contingencies--Note 7
Subsequent events--Note 13
Approved by the Board of Directors
/s/ DAVID R. SINCLAIR /s/ PETER WALTON
-------------------------- --------------------------
David R. Sinclair Peter Walton
Chairman Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
36
CONSOLIDATED STATEMENTS OF LOSS
YEARS ENDED DECEMBER 31
-----------------------------------------------
2000 1999 1998
------------- ------------- -------------
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
REVENUES:
Gold sales............................................ $ 3,757 $ 19,496 $ 37,083
Other revenues........................................ 48 109 3,350
---------- ---------- ----------
Total revenues........................................ 3,805 19,605 40,433
---------- ---------- ----------
COSTS AND EXPENSES:
Mining operations..................................... 2,560 20,578 27,009
Depreciation, depletion and amortization.............. 867 4,421 6,270
Provision for reclamation and closure costs........... -- 232 2,442
Operating leases...................................... -- 44 1,094
Mineral exploration, property evaluation and holding
costs............................................... 1,875 2,802 2,596
Corporate administration.............................. 1,046 926 1,278
Investor relations.................................... 198 257 209
Interest expense...................................... 114 1,146 660
Loss (gain) on disposal of assets..................... (41) 5 (775)
Gain on sale of marketable securities................. (280) -- --
Equity in loss and impairment of Zamora Gold Corp..... -- 601 427
Other (income) expense................................ (218) 74 692
Write-down of mineral properties and other
assets--Note 3...................................... 10,926 16,219 --
---------- ---------- ----------
Total costs and expenses.............................. 17,047 47,305 41,902
---------- ---------- ----------
Loss before income taxes.............................. (13,242) (27,700) (1,469)
Income taxes--Note 9.................................. (33) -- 171
---------- ---------- ----------
Loss for the year..................................... $ (13,209) $ (27,700) $ (1,640)
========== ========== ==========
Weighted average shares outstanding................... 90,715,040 90,715,040 89,456,478
- -------------------------------------------------------------------------------------------------------
Loss per share........................................ $ (0.15) $ (0.31) $ (0.02)
- -------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
37
CONSOLIDATED STATEMENTS OF DEFICIT
YEARS ENDED DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------
(U.S. DOLLARS IN THOUSANDS)
Deficit, beginning of year.................................. $ 93,776 $66,076 $64,437
Loss for the year........................................... 13,209 27,700 1,640
-------- ------- -------
Deficit, end of year........................................ $106,985 $93,776 $66,076
======== ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
38
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------
(U.S. DOLLARS IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the year........................................... $(13,209) $(27,700) $ (1,640)
ADJUSTMENTS TO RECONCILE LOSS FOR THE YEAR TO CASH PROVIDED
BY (USED IN) OPERATIONS:
Depreciation, depletion and amortization.................... 867 4,421 6,270
Amortization of deferred stripping.......................... -- -- 1,169
Deferral (recognition) of hedging gains..................... -- (1,150) 1,426
Provision for reclamation and closure costs................. -- 232 2,442
Reclamation and closure costs............................... (982) (1,800) (592)
Loss (gain) on disposal of assets........................... (41) 5 (775)
Gain on disposal of marketable securities................... (280) -- --
Equity in loss and impairment of Zamora Gold Corp........... -- 601 427
Loss (gain) on currency translation......................... (7) 59 (181)
Write-down of mineral properties............................ 10,926 16,219 --
Other non-cash items........................................ -- (11) (5)
-------- -------- --------
(2,726) (9,124) 8,541
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Marketable securities....................................... -- 13 42
Accounts receivable......................................... 461 1,723 (1,759)
Gold inventory.............................................. 117 3,397 5,399
Realization of hedging gains acquired....................... -- 3,041 --
Supplies inventory and prepaid expenses..................... 391 (133) 452
Accounts payable............................................ (526) (294) (2,047)
Accrued liabilities and other............................... (513) (370) (141)
-------- -------- --------
Net cash provided by (used in) operating activities......... (2,796) (1,747) 10,487
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment.................. (7) (1,917) (4,552)
Acquisition of Mineral Ridge Inc............................ -- -- 4,639
Proceeds on disposal of fixed assets and supplies........... 810 86 5,758
Proceeds on disposal of marketable securities............... 357 -- --
Investment in and advances to Zamora Gold Corp.............. -- (30) (141)
Other assets................................................ 22 139 (204)
-------- -------- --------
Net cash provided by (used in) investing activities......... 1,182 (1,722) 5,500
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt........................................... (587) (520) (13,000)
Proceeds from debt.......................................... -- 1,500 --
-------- -------- --------
Net cash provided by (used in) financing activities......... (587) 980 (13,000)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (2,201) (2,489) 2,987
Cash and cash equivalents, beginning of year................ 2,297 4,786 1,799
-------- -------- --------
Cash and cash equivalents, end of year...................... $ 96 $ 2,297 $ 4,786
======== ======== ========
Supplemental cash flow disclosure--Note 8
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
1. NATURE OF OPERATIONS AND GOING CONCERN
(a) NATURE OF OPERATIONS
Vista Gold Corp. (Vista Gold) is engaged in gold mining in the United States,
and gold exploration activities in the United States, Canada and Latin America.
The Corporation's results are dependent on the price of gold. Gold prices
fluctuate and are affected by numerous factors, including, expectations with
respect to the rate of inflation, exchange rates, interest rates, global and
regional political and economic circumstances and governmental policies,
including those with respect to gold holdings by central banks. The demand for
and supply of gold affect gold prices, but not necessarily in the same manner as
demand and supply affect the prices of other commodities. The supply of gold
consists of a combination of new mine production and existing stocks of bullion
and fabricated gold held by governments, public and private financial
institutions, industrial organizations and private individuals. The demand for
gold primarily consists of jewelry and investments. Additionally, hedging
activities by producers, consumers, financial institutions and individuals can
affect gold supply and demand. Gold can be readily sold on numerous markets
throughout the world and its market value can be ascertained at any particular
time. As a result, the Corporation is not dependent on any one customer for the
sale of its product.
(b) GOING CONCERN
These consolidated financial statements have been prepared on the basis of
accounting principles applicable to a going concern and assumes the realization
of assets and the discharge of liabilities in the normal course of business. The
Corporation's consolidated cash balance and working capital were both
$0.1 million as of December 31, 2000. $2.6 million has been realized from the
sale of mining equipment, in the first quarter of 2001 (Note 13). Management
estimates consolidated total cash expenditures of $2.4 million for 2001,
including debt repayments of $0.7 million with an estimated December 31, 2001
cash balance of $0.3 million. Management continues to pursue cost-cutting
measures and is actively pursuing additional sources of capital, including debt
financing, the issuance of equity, mergers with other companies, and the sale of
property interests and other assets. Management estimates that the Corporation
will have sufficient cash resources to continue its current level of activity
through to the end of March 2002.
The Corporation relies on the Hycroft mine as its only current source of
operating cash flows. Mining activities at Hycroft were suspended in 1998.
During 2000, the Hycroft mine produced gold from previously mined ore on the
leach pads, a process that will continue through 2001. However, the amount of
recoverable gold remaining in the leach pads is decreasing and, therefore, gold
production will continue to decrease throughout the year 2001. The Corporation
is investigating the economic feasibility of restarting the Hycroft mine and
developing the Amayapampa project in Bolivia. The plans to restart the Hycroft
mine and develop the Amayapampa project will depend on management's ability to
raise additional capital for these purposes. While management has been
successful in raising such capital in the past, there can be no assurance that
it will be able to do so in the future. Because of these uncertainties, there is
substantial doubt about the ability of the Corporation to continue as a going
concern beyond March of 2002. 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.
40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The consolidated financial statements of the Corporation and its subsidiaries
have been prepared in accordance with accounting principles generally accepted
in Canada. These principles differ in certain material respects from those
accounting principles generally accepted in the United States. The differences
are described in note 12.
(b) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Vista Gold and its
subsidiaries. Vista Gold's subsidiaries and its percentage ownership in these
entities as of December 31, 2000 are:
OWNERSHIP
---------
Vista Gold Holdings Inc. and its wholly-owned
subsidiaries.............................................. 100%
Hycroft Resources & Development, Inc. and its wholly-owned
subsidiary Hycroft Lewis Mine, Inc.
Mineral Ridge Resources Inc.(1)
Vista Gold U.S. Inc.
Granges Inc. (previously called Granges (Canada) Inc.)...... 100%
Vista Gold (Antigua) Corp. and its wholly-owned
subsidiary................................................ 100%
Compania Inversora Vista S.A. and its wholly-owned
subsidiaries
Minera Nueva Vista S.A.
Compania Exploradora Vistex S.A.
The Corporation sold its wholly owned subsidiary Sociedad
Industrial Yamin Limitada (Yamin) on February 7, 2000.
- ------------------------
(1) In 1999, Mineral Ridge Resources Inc. voluntarily filed for protection under
the U.S. Bankruptcy Code. Accordingly, effective 1999 the Corporation ceased
consolidating the investment in Mineral Ridge Resources Inc.
(c) USE OF ESTIMATES
The preparation of consolidated financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the consolidated financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those reported.
(d) FOREIGN CURRENCY TRANSLATION
Sales revenues and a significant portion of the Corporation's expenses are
denominated in U.S. dollars. The focus of the Corporation is increasingly on
international operating activities and the Corporation's executive office is
located in Littleton, Colorado. The U.S. dollar is the principal currency of the
Corporation's business. Accordingly, the consolidated financial statements of
the Corporation are expressed in U.S. dollars.
41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The accounts of self-sustaining foreign operations are translated using the
current rate method. Under this method, assets and liabilities are translated at
the rate of exchange on the balance sheet date, and revenue and expenses at the
average rate of exchange during the period. Exchange gains and losses are
deferred and shown as a currency translation adjustment in shareholders' equity
until transferred to earnings when the net investment in the foreign operation
is reduced or settled.
Foreign currency denominated monetary items of the Corporation, excluding its
foreign operations, are translated at the year-end exchange rate. Exchange gains
and losses on these items are recognized in earnings in the year they arise.
(e) REVENUE RECOGNITION
Since ceasing mining operations at the Hycroft mine, the Corporation recognizes
revenue upon adsorption of gold onto carbon.
(f) MINERAL EXPLORATION
Exploration expenditures on mineral properties are expensed when incurred.
Holding costs to maintain a property on a stand-by basis are charged to expense
as incurred.
(g) CASH EQUIVALENTS
Cash equivalents are represented by investments in short-term investment funds
consisting of highly liquid debt instruments such as certificates of deposit,
commercial paper, and money market accounts purchased with an original maturity
date of less than three months. The Corporation's policy is to invest cash in
conservative, highly rated instruments and limit the amount of credit exposure
to any one institution.
(h) MARKETABLE SECURITIES
Marketable securities are carried at the lower of cost and market value.
(i) INVENTORIES
Gold inventory is valued at the lower of average cost and net realizable value.
The direct cash costs associated with ore placed in stockpiles and on leach pads
are inventoried and charged to operations as the contained gold is recovered.
Based upon actual metal recoveries, ore grades and operating plans, management
continuously evaluates and refines estimates in determining the carrying values
of costs associated with gold inventories. Although all gold estimated to be
recoverable from the leach pads had been recovered, as of December 31, 2000, the
leach pads continue to produce gold. Gold production from the leach pads is
expected to continue throughout the year 2001.
Supply inventories are valued at the lower of average cost and net replacement
value.
(j) PROPERTY, PLANT AND EQUIPMENT
(i) Developed mineral properties
Property acquisition and development costs are carried at cost less
accumulated amortization and write-downs. Amortization is provided on the
units-of-production method based on proven and
42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
probable reserves. Holding costs to maintain a property on a stand-by basis
are charged to expense as incurred.
Management reviews the carrying value of the Corporation's interest in each
property quarterly and, where necessary, these properties are written down
to their estimated recoverable amount determined on an undiscounted basis.
Management's estimates of gold price, recoverable proven and probable
reserves, operating, capital and reclamation costs are subject to risks and
uncertainties affecting the recoverability of the Corporation's investment
in property, plant and equipment. Although management has made its best
estimate of these factors based on current conditions, it is possible that
changes could occur in the near term that could adversely affect
management's estimate of net cash flows expected to be generated from its
operating properties and the need for possible asset impairment write-downs.
(ii) Plant and equipment
Plant and equipment are recorded at cost and depreciated using the
units-of-production method or the straight-line method over their estimated
useful lives. The cost of normal maintenance and repairs is charged to
expense as incurred. Significant expenditures, which increase the life of an
asset, are capitalized and depreciated over the remaining estimated useful
life of the asset. Upon sale or retirement of assets, the costs and related
accumulated depreciation or amortization are eliminated from the respective
accounts and any resulting gains or losses are reflected in operations.
(k) PROVISION FOR FUTURE RECLAMATION AND CLOSURE COSTS
All of the Corporation's operations are subject to reclamation, site restoration
and closure requirements. Costs related to ongoing site restoration programs are
expensed when incurred. A provision for mine closure and site restoration costs
is charged to earnings over the lives of the mines on a units-of-production
basis. The Corporation calculates its estimates of the ultimate reclamation
liability based on current laws and regulations and the expected future costs to
be incurred in reclaiming, restoring and closing its operating mine sites. It is
possible that the Corporation's estimate of its ultimate reclamation, site
restoration and closure liability could change in the near term due to possible
changes in laws and regulations and changes in cost estimates.
(l) ESTIMATES OF PROVEN AND PROBABLE RESERVES
Management's calculation of proven and probable reserves is based upon
engineering and geological estimates and financial estimates including gold
prices and operating costs. The Corporation depreciates some of its assets and
accrues for reclamation on a units-of-production basis over proven and probable
reserves. Changes in geological interpretations of the Corporation's ore bodies
and changes in gold prices and operating costs may change the Corporation's
estimate of proven and probable reserves. It is possible that the Corporation's
estimate of proven and probable reserves could change in the near term and could
result in revised charges for depreciation and reclamation in future reporting
periods.
43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) HEDGING
The Corporation may from time to time protect against falling gold prices
through forward sales of future production. Revenue from these forward sales is
recognized when the gold is due to be delivered. At December 31, 2000, the
Corporation had no forward sales commitments.
(n) LOSS PER SHARE
Loss per share is calculated by dividing the loss for the year by the weighted
average number of common shares outstanding during the year. Fully diluted loss
per share is not disclosed as the inclusion of common share equivalents would be
anti-dilutive.
(o) FINANCIAL INSTRUMENTS
The recorded value of the Corporation's cash and cash equivalents, accounts
receivable and accounts payable approximate their fair values due to the
relatively short periods to maturity. The fair value of long term-debt is
disclosed in Note 4.
(p) STOCK BASED COMPENSATION
The Corporation has a stock-based compensation plan, which is described in
note 6. No compensation expense is recognized for the plan when stock or stock
options are issued to employees. Any consideration paid by employees on the
exercise of stock options or the purchase of stock is credited to share capital.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is comprised of the following:
2000 1999
----------------------------------- -----------------------------------
ACCUMULATED ACCUMULATED
DEPRECIATION, DEPRECIATION,
AMORTIZATION AMORTIZATION
AND AND
COST WRITE-DOWNS NET COST WRITE-DOWNS NET
-------- ------------- -------- -------- ------------- --------
Hycroft mine................... $ 60,953 $ 55,974 $ 4,979 $ 63,083 $56,418 $ 6,665
Bolivian mineral properties.... 58,029 47,260 10,769 60,561 39,307 21,254
Corporate assets............... 467 303 164 482 277 205
-------- -------- ------- -------- ------- -------
$119,449 $103,537 $15,912 $124,126 $96,002 $28,124
======== ======== ======= ======== ======= =======
WRITE-DOWN OF MINERAL PROPERTIES
Management regularly performs property evaluations to assess the recoverability
of the carrying value of its mining properties and investments and other
long-lived assets. In 2000, the Corporation based its evaluation of the
recoverability of the carrying value of its mining properties upon a gold price
of U.S. $300 per ounce (1999 U.S. $325 per ounce).
44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
These evaluations indicated that the carrying values of the following properties
were in excess of their estimated net recoverable amounts and accordingly were
written down by $10.9 million in 2000 and by $16.2 million in 1999 as follows:
2000 1999 1998
-------- -------- --------
Bolivian mineral properties................................. $10,607 $13,248 --
Hycroft mine equipment...................................... 319 -- --
Zamora accounts receivable.................................. -- 111 --
Mineral Ridge mine net assets............................... -- $ 2,860 $ --
------- ------- -------
$10,926 $16,219 $ --
======= ======= =======
DISPOSAL OF ASSETS
During 2000, Hycroft mining equipment with an original cost of $2.1 million and
a net book value of $0.5 million, was sold for $0.5 million. During 2000, the
Corporation disposed of its Bolivian subsidiary Yamin and realized a gain on
disposal of $0.1 million.
ROYALTIES
The Crofoot property at the Hycroft mine is subject to a 4% net profit royalty.
During 2000 and 1999, there was no mining activity and as a result the
Corporation did not pay any Crofoot royalties. In 1998, the Corporation paid
royalty payments of $240,000 per year.
The Lewis property at the Hycroft mine is subject to a 5% net smelter royalty.
During 2000, only nominal minimum royalties were required in relation to this
property. During 1999 and 1998 royalties paid were $123,000 and $344,000
respectively.
4. LONG TERM DEBT
During 2000, the Corporation repaid $0.6 million under the terms of a
$1.3 million term loan, which was collateralized by certain mobile assets of the
Hycroft mine. The loan bears 10.61% interest and is repayable in monthly
installments of $49,000 terminating April 2002. In January 2001, the loan was
repaid from the proceeds of the sale of mining equipment and has therefore been
classified as short term (Note 13). The Corporation also has a $75,000 term
note, bearing 4.5% interest, which is due October 31, 2001.
5. ACCRUED RECLAMATION AND CLOSURE COSTS
At December 31, 2000, the Corporation's future reclamation and mine closure
costs are estimated to be $3.1 million, $2.9 million of which comprises
environmental reclamation costs at the Hycroft mine. The remainder comprises
mainly severance and other mine closure costs.
Estimated reclamation and mine closure costs are determined using management's
best estimates of the scope and the cost of required activities. These estimates
may change, based on future changes in operations, regulatory requirements or
costs to complete the reclamation activity. Reclamation and closure costs are
charged to earnings over the life of the mine on a units-of-production basis.
The aggregate
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
5. ACCRUED RECLAMATION AND CLOSURE COSTS (CONTINUED)
obligation accrued to December 31, 2000, net of the actual cost of reclamation
activities performed to December 31, 2000, is $3.3 million (1999:
$4.4 million).
6. CAPITAL STOCK
Common Shares issued and outstanding:
NUMBER OF SHARES AMOUNT
---------------- -----------
At December 31, 2000, 1999 and 1998......................... 90,715,040 $121,146
COMMON SHARE OPTIONS
Under the Vista Gold's Stock Option Plan (the "Plan"), Vista Gold may grant
options to directors, officers and employees of the Corporation or its
subsidiaries for up to 4,500,000 Common Shares. Under the Plan, the exercise
price of each option shall not be less than the market price of the
Corporation's stock on the date of grant, and an option's maximum term is
10 years or such other shorter term as stipulated in a stock option agreement
between the Corporation and the optionee. Options and vesting periods under the
Plan are granted from time to time at the discretion of the Board of Directors.
At December 31, 2000, 1,758,333 Common Shares were reserved for issuance under
options granted to directors, officers and management employees. These options
expire as follows:
YEAR OF EXPIRATION NUMBER OF OPTIONS
- ------------------ -----------------
2001... 10,000
2004... 5,715
2005... 302,143
2006... 419,761
2007... 460,714
2008... 185,000
2009... 100,000
2010... 275,000
---------
Total.. 1,758,333
The following tables summarize information about stock options under the Plan:
2000 1999 1998
------------------------- ------------------------- -------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
(000)'S (CDN.$) (000)'S (CDN.$) (000)'S (CDN.$)
-------- -------------- -------- -------------- -------- --------------
Outstanding--beginning of year... 2,308 $0.237 2,270 $1.630 2,937 $1.61
Cancelled........................ -- -- (2,270) 1.630 -- --
Granted.......................... 275 0.07 2,500 0.237 125 0.20
Forfeited........................ (825) 0.235 (192) 0.235 (792) 1.43
----- ------ ------ ------ ----- -----
Outstanding--end of year......... 1,758 $0.212 2,308 $0.237 2,270 $1.63
===== ====== ====== ====== ===== =====
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
6. CAPITAL STOCK (CONTINUED)
OPTIONS OUTSTANDING
- ------------------------------------------------------------------------------------------------------------
NUMBER WEIGHTED- WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING AT AVERAGE AVERAGE EXERCISABLE AT AVERAGE
EXERCISE PRICES DEC. 31, 2000 REMAINING EXERCISE PRICE DEC. 31, 2000 EXERCISE PRICE
(CDN.$) (000)'S CONTRACTUAL LIFE (CDN.$) (000)'S (CDN.$)
- --------------------- -------------- ---------------- -------------- -------------- --------------
$0.07 275 10 years $ 0.07 275 $ .07
$0.235 - 0.25.. 1,483 6.5 years $0.238 1,382 $0.253
----- ------ ----- ------
1,758 $0.212 1,657 $0.223
===== ====== ===== ======
7. COMMITMENTS AND CONTINGENCIES
(a) On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G")
filed an action in the United States District Court against Vista Gold,
Vista Gold Holdings, Inc., Stockscape.com Technologies, Inc., Cornucopia
Resources, Inc., Red Mountain Resources, Inc. and Touchstone
Resources, Inc. This action involves a General Contract of Indemnity in
connection with the posting of a reclamation bond for mining activities by
Mineral Ridge Inc. at Silver Peak, Nevada. In the action, USF&G seeks to
compel all of the defendants to post additional collateral for the bond in
the total amount of $793,583. Neither Vista Gold nor Vista Gold
Holdings, Inc. was a party to the General Contract of Indemnity and both
have denied any liability in connection therewith.
In November 2000, the parties stipulated to an agreed upon discovery plan
and scheduling order. The maximum potential exposure to the Corporation is
the additional collateral requested in the amount of $793,583, together with
the attorneys' fees and costs related to the defense of the action. Other
defendants, if found to be jointly liable, could reduce the amount for which
the Corporation has exposure.
8. SUPPLEMENTAL CASH FLOW DISCLOSURE
2000 1999 1998
-------- -------- --------
Cash paid (received) during the year for:
Interest.................................................... $114 $1,146 $451
Income taxes................................................ (33) 196 --
47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
9. INCOME TAXES
A reconciliation of the combined Canadian federal and provincial income taxes at
statutory rates and the Corporation's effective income tax expenses (recovery)
is as follows:
2000 1999 1998
-------- -------- --------
Income taxes at statutory rates............................. $ (5,959) $(12,440) $ (661)
Increase (decrease) in taxes from:
Permanent differences..................................... (149) (84) (125)
U.S. Alternative Minimum Tax.............................. -- -- 141
Differences in foreign tax rates.......................... 2,214 1,592 (77)
Prior year's losses of a subsidiary applied for tax
purposes................................................ -- -- (1,685)
Benefit of losses not recognized.......................... 3,894 10,932 2,548
Large Corporations Tax.................................... (33) -- 30
-------- -------- -------
$ (33) $ -- $ 171
======== ======== =======
The significant components of the Corporation's future tax assets are as
follows:
2000
--------
Future income tax assets
Excess tax value over carrying value of property, plant
and equipment........................................... 9,649
Operating loss carryforward............................... 15,672
Accrued reclamation provision............................. 1,111
--------
26,432
Valuation allowance for future tax assets................... (26,432)
--------
Total....................................................... --
========
The Corporation has incurred income tax losses in prior periods of
$42.2 million, which may be carried forward and applied against future taxable
income when earned.
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
9. INCOME TAXES (CONTINUED)
The losses expire as follows:
CANADA UNITED STATES TOTAL
-------- ------------- --------
2001........................................................ $ 742 $ 1,295 $ 2,037
2002........................................................ 454 1,358 1,812
2003........................................................ 428 5,418 5,846
2004........................................................ 1,763 1,373 3,136
2005........................................................ 7,981 -- 7,981
2006........................................................ 655 -- 655
2007........................................................ 495 -- 495
2008........................................................ -- 388 388
2009........................................................ -- 11 11
2010........................................................ -- 5,106 5,106
2011........................................................ -- 9,415 9,415
2019........................................................ -- 5,301 5,301
------- ------- -------
$12,518 $29,665 $42,183
======= ======= =======
10. RETIREMENT PLANS
The Corporation sponsors a qualified tax-deferred savings plan in accordance
with the provisions of Section 401(k) of the U.S. Internal Revenue Service code,
which is available to permanent U.S. employees. The Corporation makes
contributions of up to 4% of eligible employees' salaries. The Corporation's
contributions were as follows: 2000--$56,000; 1999--$126,000; and
1998--$179,000.
49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
11. SEGMENT INFORMATION
The Corporation operates in the gold mining industry in the United States, and
has exploration and development properties in the United States, 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.
2000 1999 1998
-------- -------- --------
Gold revenues
U.S....................................................... $3,757 $19,496 $37,083
Operating (loss) profit(1)
U.S....................................................... $ 330 $(5,779) $ 268
- ------------------------
(1) Includes gold revenues less mining operations, depreciation, depletion and
amortization, provision for reclamation and closure costs, and operating
leases.
2000 1999 1998
-------- -------- --------
Assets by geographic region
Canada.................................................... $ 57 $ 406 $ 973
U.S....................................................... 6,321 11,329 44,594
Latin America............................................. 10,854 21,694 35,311
------- ------- -------
$17,232 $33,429 $80,878
======= ======= =======
12. 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 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) In 1999 and 2000 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, 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.
(c) 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.
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONTINUED)
(d) The Corporation recognizes revenue upon adsorption of gold onto carbon.
US GAAP under SAB 101, the revenue recognition standard introduced
effective January 1, 2000, requires that revenue not be recorded before
title is passed.
The significant differences in the consolidated statements of loss relative to
U.S. GAAP were as follows:
YEAR ENDED DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------
Loss for the year--Canadian GAAP............................ $(13,209) $(27,700) $(1,640)
Impairment of mineral properties (b)........................ (7,637) 13,248 --
Amortization reduction (b).................................. 99 736 3,201
Revenue Recognition (d)..................................... (172) -- --
Cumulative impact of adopting SAB 101 (d)................... (59) -- --
-------- -------- -------
Earnings (loss) for the year before comprehensive income
adjustments............................................... (20,978) (13,716) 1,561
Unrealised (gains) losses on marketable securities (c)...... 144 (21) (132)
-------- -------- -------
Comprehensive income (loss)................................. $(20,834) $(13,737) $ 1,429
======== ======== =======
Earnings (loss) per share before adoption of SAB 101........ $ (0.23) $ (0.15) $ (0.02)
======== ======== =======
Earnings (loss) per share before comprehensive income
adjustments............................................... $ (0.23) $ (0.15) $ (0.02)
======== ======== =======
The significant differences in the balance sheets as at December 31, 2000 and
1999 relative to U.S. GAAP were:
2000 1999
--------------------------------- --------------------------------
PER CDN. CDN./U.S. PER U.S. PER CDN. CDN./U.S. PER U.S.
GAAP ADJ. GAAP GAAP ADJ. GAAP
--------- --------- --------- -------- --------- ---------
Current assets................. $ 1,320 $ (231) $ 1,089 $ 5,283 $ -- $ 5,283
Property, plant and equipment
(b).......................... 15,912 (7,637) 8,275 28,146 (99) (28,047)
Common shares (a).............. 121,146 76,754 197,900 121,146 76,754 197,900
Contributed surplus (a)........ -- 2,786 2,786 -- 2,786 2,786
Deficit (a, b, d).............. (106,985) (87,408) (194,393) (93,776) (79,639) (173,415)
Other comprehensive income..... -- -- -- -- (144) (144)
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONTINUED)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY UNDER U.S. GAAP
NUMBER OF CUMULATIVE OTHER
COMMON SHARE CONTRIBUTED TRANSLATION COMPREHENSIVE
SHARES CAPITAL SURPLUS ADJUSTMENT DEFICIT INCOME
---------- -------- ----------- ----------- --------- -------------
Balance at December 31,
1997..................... 89,152,540 197,624 2,786 (1,360) (161,260) 9
Shares issued on
acquisition of Mineral
Ridge Inc. (Notes 1 and
3)....................... 1,562,500 276 -- -- -- --
Currency translation
adjustment............... -- -- -- (180) -- --
Comprehensive income (c)... -- -- -- -- -- (132)
Earnings................... -- -- -- -- 1,561 --
---------- -------- ------ ------- --------- -----
Balance at December 31,
1998..................... 90,715,040 197,900 2,786 (1,540) (159,699) (123)
Currency translation
adjustment............... -- -- -- 59 -- --
Comprehensive income (c)... -- -- -- -- -- (21)
Net Loss................... -- -- -- -- (13,716) --
---------- -------- ------ ------- --------- -----
Balance at December 31,
1999..................... 90,715,040 197,900 2,786 (1,481) (173,415) (144)
Currency translation
adjustment............... -- -- -- (7) -- --
Comprehensive income (c)... -- -- -- -- -- 144
Net Loss................... -- -- -- -- (20,978) --
---------- -------- ------ ------- --------- -----
Balance at December 31,
2000..................... 90,715,040 $197,900 $2,786 $(1,488) $(194,393) $ 0
========== ======== ====== ======= ========= =====
STOCK BASED COMPENSATION PLANS
The Corporation applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its plans in its U.S. GAAP presentations. If
compensation cost for the Corporation's stock-based compensation plans had been
determined based on the fair value at the grant dates for awards under the plans
consistent with the method described in SFAS No. 123, the Corporation's
consolidated net loss and loss per share under U.S. GAAP would have been
increased to the pro forma amounts indicated below:
2000 1999 1998
-------- -------- --------
Net earnings (loss) under U.S. GAAP................. As reported $(20,978) $(13,716) $1,561
Pro forma (20,993) (14,077) 1,229
Loss per share under U.S. GAAP...................... As reported (0.23) (0.15) 0.02
Pro forma (0.23) (0.16) 0.02
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS,
EXCEPT SHARE DATA.
12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONTINUED)
The fair value of each option grant is estimated on the date of grant for all
plans using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in 2000, 1999 and 1998:
2000 1999 1998
-------------- --------- ---------
Expected volatility.................................... 61.9% 61.9% 61.9%
Risk-free interest rate................................ 5.09% to 5.74% 4.81% 5.46%
Expected lives......................................... 2 years 4.5 years 4.5 years
Dividend yield......................................... 0% 0% 0%
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for all fiscal years
commencing after June 15, 2000. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. At
December 31, 2000, the Corporation did not have any derivative instruments or
hedging activities.
13. SUBSEQUENT EVENTS
In January 2001, the Corporation realized net proceeds of $1.8 million from the
sale of four haul trucks from the Hycroft mine, of which $0.6 million was used
to retire a long-term equipment loan (note 4).
In March 2001, the Corporation sold a hydraulic shovel for net proceeds of
$0.8 million.
53
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT.
DIRECTORS
The directors of Vista Gold are elected each year at the annual general meeting
of shareholders and hold office until their successors are elected or appointed.
The present directors of Vista Gold, together with the location of their
residences, age, length of service and business experience, are described below.
NAME, RESIDENCE, PRINCIPAL OCCUPATION,
POSITION AND AGE DIRECTOR SINCE BUSINESS OR EMPLOYMENT
- ---------------- ------------------ ----------------------------------------------
DAVID R. SINCLAIR.............. May 1, 1995 Chartered Accountant; Corporate Director;
Nanoose Bay, British Columbia Director, Cominco Ltd., a mining company.
DIRECTOR AND CHAIRMAN
Age - 71
ROSS J. BEATY.................. November 12, 1996 Geologist; Chairman of Pan American Silver
Vancouver, British Columbia Corp., a mining company, 1994 to present;
DIRECTOR AND VICE CHAIRMAN formerly, President of Equinox
Age - 49 Resources Ltd., a mining company.
RONALD J. MCGREGOR............. May 19, 1999 President and Chief Executive Officer from
Littleton, Colorado September 2000 to present; Vice President,
DIRECTOR Development and Operations of the Corporation
Age - 53 from July 1, 1996 to September 8, 2000;
Metallurgist, Vice President, Project
Development of Cambior USA Inc., a mining
company, from 1991 to 1996. Vice President,
Project Development of Westmont Mining Inc.
from 1984 to 1991.
MICHAEL B. RICHINGS............ May 1, 1995 Mining engineer; formerly, President and Chief
Littleton, Colorado Executive Officer of the Corporation from
DIRECTOR June 1995 to September 2000; formerly,
Age - 56 President of Atlas Corporation, a mining
company, from January 1995 to May 1995; Group
Executive and President of Lac Minerals Ltd.
South America, a mining company, from 1993 to
1995; Vice President of Operations of Atlas
Corporation from 1990 to 1992.
54
NAME, RESIDENCE, PRINCIPAL OCCUPATION,
POSITION AND AGE DIRECTOR SINCE BUSINESS OR EMPLOYMENT
- ---------------- ------------------ ----------------------------------------------
C. THOMAS OGRYZLO.............. March 8, 1996 President and Chief Executive Officer Canatec
Toronto, Ontario Development Corporation, a resource management
DIRECTOR and development company; Previously from
Age - 61 March 8, 1996, President and Chief Executive
Officer of Black Hawk Mining Inc. and its
subsidiary, Triton Mining Corporation. Both
companies are gold producers; formerly,
President of Kilborn SNC-Lavalin Inc.; and
President of the Kilborn Group of Companies,
providing engineering and construction
services.
KEITH E. STEEVES............... September 29, 1995 Chartered Accountant; Consultant; Director of
Richmond, British Columbia Teck Corporation and Cross Lake
DIRECTOR Minerals Ltd., mining companies; formerly,
Age - 68 Senior Vice President, Commercial of Teck
Corporation, a mining company.
ALAN G. THOMPSON............... December 1, 1989 Businessman; President and Chief Executive
West Vancouver, Officer of A.G.T. Financial Corporation, an
British Columbia investment company.
DIRECTOR
Age - 73
PETER WALTON................... May 24, 1989 Self-employed business consultant.
West Vancouver,
British Columbia
DIRECTOR
Age - 71
None of the above directors has entered into any arrangement or understanding
with any other person pursuant to which he was or is to be elected as a director
of Vista Gold or a nominee of any other person, except as disclosed herein.
EXECUTIVE OFFICERS
The executive officers of Vista Gold are appointed by and hold office at the
pleasure of the Board of Directors of Vista Gold. The executive officers of
Vista Gold during 2000, together with their age, length of service and business
experience, are described below.
NAME, POSITION AND AGE HELD OFFICE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------------------------------
RONALD J. MCGREGOR............. September 8, 2000 President and Chief Executive Officer of Vista
PRESIDENT, CHIEF EXECUTIVE Gold from September 8, 2000 to present; Vice
OFFICER AND DIRECTOR President Development and Operations for Vista
Age - 53 Gold from July 1, 1996 to September 8, 2000;
Vice President Project Development, Cambior
USA Inc., a mining company.
55
NAME, POSITION AND AGE HELD OFFICE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------------------------------
ROBERT L. FOLEN................ September 15, 2000 Vice President Finance of Vista Gold from
VICE PRESIDENT FINANCE September 15, 2000 to present. Accounting
Age - 49 Manager of Hycroft Resources and
Development Inc. and Mineral Ridge
Resources Inc., from October 1998 to
September 2000; Accounting Manager of Hayden
Hill Mine, Sleeper Mine, and Wind Mountain
Mine for Amax Gold Inc., from December 1994 to
September 1998.
MICHAEL B. RICHINGS............ June 1, 1995 President and Chief Executive Officer of Vista
DIRECTOR AND FORMER PRESIDENT Gold from June 1995 to September 8, 2000;
AND CHIEF EXECUTIVE OFFICER. Mining engineer; President of Atlas
RESIGNED AS PRESIDENT AND CHIEF Corporation, a mining company, from
EXECUTIVE OFFICER AS OF January 1995 to May 1995; Group Executive and
SEPTEMBER 8, 2000 President of Lac Minerals Ltd. South America,
Age - 56 a mining company, from 1993 to 1995; Vice
President of Operations of Atlas Corporation
from 1990 to 1992.
ROGER L. SMITH................. March 6, 1998 Vice President Finance of Vista Gold from
FORMER VICE PRESIDENT FINANCE March 1998 to September 15, 2000; Corporate
(RESIGNED AS OF SEPTEMBER 15, Controller of Vista Gold from December 1995 to
2000) March 1998; Vice President Finance of Ramrod
Age - 43 Gold (U.S.A.) Inc., a mining company, from
May 1994 to December 1995; Vice President
Finance of Westmont Gold Inc., a mining
company from July 1991 to May 1994.
WILLIAM F. SIRETT.............. January 1, 1996 Lawyer; Partner, Borden Ladner Gervais LLP, a
SECRETARY law firm.
Age - 50
None of the above executive officers has entered into any arrangement or
understanding with any other person pursuant to which he was or is to be elected
as an executive officer of Vista Gold or a nominee of any other person.
EXECUTIVE AND AUDIT COMMITTEES
Vista Gold does not have an executive committee. Vista Gold is required to have
an audit committee under section 173 of the BUSINESS CORPORATIONS ACT (Yukon
Territory). Vista Gold's audit committee consists of the following directors:
David R. Sinclair, Keith E. Steeves, Peter Walton and Alan G. Thompson.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS.
During the financial year ended December 31, 2000, the aggregate cash
compensation paid by the Corporation to all directors and officers of Vista
Gold, as a group was $464,732. This sum includes compensation paid to executive
officers pursuant to the cash incentive plan and retirement savings plan
described below.
Information specified in this Item for individually named directors and officers
is incorporated by reference from pages 6 to 14 of the Management Information
and Proxy Circular prepared in connection
56
with Vista Gold's Annual General Meeting to be held on May 18, 2001, filed with
the Securities and Exchange Commission concurrently with the filing of this
report.
Pursuant to the terms of the Corporation's incentive policy adopted by the
Corporation in 1989 or certain employment contracts, executive officers and
senior employees of the Corporation are eligible to receive incentive payments.
The Corporation did not make any incentive payments to executive officers or
senior employees under this plan in 2000. Any incentive payments are awarded at
the discretion of the Board of Directors based on recommendations from the
compensation committee. There is no established formula utilized in determining
these incentive payments. The award of incentive payments is motivated by the
Corporation's desire to reward past services rendered to the Corporation and to
provide an incentive for continued service to the Corporation. Incentive
payments to be made during 2001, which may include amounts related to
performance during a portion of 2000, have not yet been determined. The
Corporation has not made any restricted stock awards during the last three
fiscal years.
During the fiscal year ended December 31, 2000, the Corporation set aside or
accrued a total of $13,246 to provide pension, retirement or similar benefits
for directors or officers of Vista Gold pursuant to plans provided or
contributed to by the Corporation. As a part of the aggregate cash compensation
disclosed above, the Corporation sponsors a qualified tax-deferred savings plan
in accordance with the provisions of section 401(k) of the United States
Internal Revenue Service Code which is available to permanent United
States-based employees. Under the terms of this plan, the Corporation makes
contributions of up to 4% of eligible employees' salaries. In addition, the
Corporation contributes between 2% and 4% of permanent Canadian-based employees'
salaries, including executive officers, depending on length of service and to a
maximum of Cdn.$3,500 per year, to the individual's registered retirement
savings plan. There are no other such plans to which the Corporation made any
contribution in relation to its directors or officers in 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information specified in this Item for individually named directors and officers
is incorporated by reference from pages 3 to 5 and 12 to 13 of the Management
Information and Proxy Circular prepared in connection with Vista Gold's Annual
General Meeting to be held on May 18, 2001, filed with the Securities and
Exchange Commission concurrently with the filing of this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 2000, there have been no transactions, or series of similar transactions,
or any currently proposed transactions or series of similar transactions, to
which Vista Gold or any of its subsidiaries was or is a party in which the
amount involved exceeds $60,000 and in which any director or executive officer,
any nominee for election as a director, any security holder known to the
Corporation to own of record or beneficially more than 5% of the Corporation's
Common Shares, any member of the immediate family of any of the foregoing
persons, had or will have a direct or indirect material interest.
During 2000, there were and are no relationships regarding directors or nominees
for director as stipulated by this item and no director or executive officer,
nominee for election as a director, any member of their immediate family or any
corporation or organization in which any of them, directly or indirectly,
beneficially owns 10% or more of any class of equity securities was indebted to
Vista Gold.
57
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
DOCUMENTS FILED AS PART OF REPORT
FINANCIAL STATEMENTS
The following consolidated financial statements of the Corporation are filed as
part of this report:
1. Report of Independent Accountants dated February 23, 2001.
2. Consolidated Balance Sheets--At December 31, 2000 and 1999.
3. Consolidated Statements of Loss--Years ended December 31, 2000, 1999, and
1998.
4. Consolidated Statements of Deficit--Years ended December 31, 2000, 1999,
1998.
5. Consolidated Statements of Cash Flows--Years ended December 31, 2000, 1999,
and 1998.
6. Notes to Consolidated Financial Statements.
See "Item 8. Consolidated Financial Statements and Supplementary Data".
FINANCIAL STATEMENT SCHEDULES
No financial statement schedules are filed as part of this report because such
schedules are not applicable or the required information is shown in the
consolidated financial statements or notes thereto. See "Item 8. Consolidated
Financial Statements and Supplementary Data".
EXHIBITS
The following exhibits are filed as part of this report:
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
3.01 Articles of Continuation filed as Exhibit 2.01 to the
Form 20-F for the period ended December 31, 1997 and
incorporated herein by reference (File No. 1-9025)
3.02 By-Law No. 1 of Vista Gold filed as Exhibit 2.01 to the
Form 20-F for the period ended December 31, 1997 and
incorporated herein by reference (File No. 1-9025)
3.03 Share Certificate of Vista Gold (File No. 1-9025)
3.04 Amended By-Law No. 1 of Vista Gold (File No.1-9025)
10.01 Lease and Option dated July 1, 1985 between Henry C.
Crofoot, trustee, and Hycroft Resources--Development Inc.
(Crofoot Patented Claims), as amended, filed as
Exhibit 10.8 to Granges' Registration Statement on
Form S-1, as amended, and incorporated herein by reference
(File No. 33-17974)
10.02 Lease and Option dated July 1, 1985, between Henry C.
Crofoot, trustee, and Hycroft Resources--Development Inc.
(Crofoot Unpatented Claims), as amended, filed as
Exhibit 10.9 to Granges' Registration Statement on
Form S-1, as amended, and incorporated herein by reference
(File No. 33-17974)
10.03 Lewis Mine Lease and Assignment Agreement included in the
Assignment of Mining Lease dated January 23, 1987 among
Standard Slag Company, Hycroft Lewis, Hycroft Resources
Corporation and Granges, filed as Exhibit 10.7 to Granges'
Registration Statement on Form S-1, as amended, and
incorporated herein by reference (File No. 33-17974)
58
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
10.04 Amendment Agreement dated January 14, 1988, among Henry C.
Crofoot et al and Hycroft Resources--Development Inc. filed
as Exhibit 10.13 to Granges' Annual Report on Form 10-K for
the fiscal year ended December 31, 1988, as amended, and
incorporated herein by reference (File No. 1-9025)
10.05 Lewis Hycroft Agreement dated January 10, 1989, among Frank
W. Lewis, Hycroft Lewis and Hycroft
Resources--Development Inc. filed as Exhibit 10.16 to
Granges' Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, as amended, and incorporated herein
by reference (File No. 1-9025)
10.06 Second Amendment Agreement dated March 3, 1989, among Henry
C. Crofoot et al and Hycroft Resources--Development Inc.
filed as Exhibit 10.24 to the Form 20-F/A for the year ended
December 31, 1994 and incorporated herein by reference (File
No. 1-9025)
10.07 Second Lewis-Hycroft Agreement dated March 15, 1991 among
Frank W. Lewis, Granges, Hycroft
Resources--Development Inc. and Hycroft Lewis filed as
Exhibit 10.20 to the Form 20-F/A for the year ended
December 31, 1994 and incorporated herein by reference (File
No. 1-9025)
10.08 Third Amendment Agreement dated August 16, 1991 among Henry
C. Crofoot et al, Hycroft Resources & Development Inc. and
Blackrock Properties, Inc. filed as Exhibit 10.25 to the
Form 20-F/A for the year ended December 31, 1994 and
incorporated herein by reference (File No. 1-9025)
10.09 Agreement dated May 13, 1994 between Granges and Atlas
Corporation filed as Exhibit 2.01 to the Form 20-F for the
period ended December 31, 1994 and incorporated herein by
reference (File No.1-9025)
10.10 Purchase and Sale Agreement dated June 24, 1994 between
Granges and Hudson Bay Mining and Smelting Co., Limited
filed as Exhibit 10.10 to the Form 20-F/A for the year ended
December 31, 1994 and incorporated herein by reference
(File No. 1-9025)
10.11 Amalgamation Agreement dated February 24, 1995 between
Granges and Hycroft Inc. included in the Joint Management
Information Circular of Granges and Hycroft Inc. filed as
Exhibit 20.1 to the Form 8-K dated May 1, 1995 and
incorporated herein by reference (File No. 1-9025)
10.12 Agreement dated February 24, 1995 between Granges and Atlas
Corporation filed as Exhibit 2.03 to the Form 20-F for the
period ended December 31, 1994 and incorporated herein by
reference (File No. 1-9025)
10.13 Employment Agreement dated June 1, 1995 between Granges and
Michael B. Richings filed as Exhibit 10(i) to the Form 10-Q
for the quarterly period ended June 30, 1995 and
incorporated herein by reference (File No. 1-9025)
10.14 Private Placement Subscription Agreement dated August 25,
1995 between Granges and Zamora filed as Exhibit 10.10 to
the Form 20-F/A for the year ended December 31, 1994 and
incorporated herein by reference (File No. 1-9025)
10.15 Letter of Intent between Granges and Atlas Corporation dated
as of October 4, 1995 to enter into an Exploration Joint
Venture Agreement filed as Exhibit 10.14 to the
Form 20-F/A for the year ended December 31, 1994 and
incorporated herein by reference (File No. 1-9025)
59
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
10.16 Registration Agreement between Granges and Atlas Corporation
dated as of November 10, 1995 filed as Exhibit 10.12 to the
Form 20-F/A for the year ended December 31, 1994 and
incorporated herein by reference (File No. 1-9025)
10.17 Indemnification Agreement between Granges and Atlas
Corporation dated as of November 10, 1995 filed as
Exhibit 10.13 to the Form 20-F/A for the year ended
December 31, 1994 and incorporated herein by reference (File
No. 1-9025)
10.18 Commitment letter dated November 14, 1995 between Granges
and Deutsche Bank AG filed as Exhibit 10.09 to the
Form 20-F/A for the year ended December 31, 1994 and
incorporated herein by reference (File No. 1-9025)
10.19 Exploration and Purchase Option Agreement effective June 7,
1996 between Granges and L.B. Mining filed as Exhibit 2.01
to the Form 20-F for the year ended December 31, 1997 and
incorporated herein by reference (File No. 1-9025)
10.20 Special Warrant Indenture dated June 7, 1996 between Granges
and Montreal Trust filed as Exhibit 2.02 to the Form 20-F
for the year ended December 31, 1997 and incorporated herein
by reference (File No. 1-9025)
10.21 Warrant Indenture dated June 7, 1996 between Granges and
Montreal Trust filed as Exhibit 2.03 to the Form 20-F for
the year ended December 31, 1997 and incorporated herein by
reference (File No. 1-9025)
10.22 Stock Option Plan of Vista Gold dated November 1996 (File
No. 1-9025)
10.23 Supplemental Warrant Indenture made as of November 1, 1996
between Vista Gold and Montreal Trust with respect to the
Warrant Indenture dated April 25, 1996 between Granges and
Montreal Trust filed as Exhibit 1.01 to the Form 20-F for
the year ended December 31, 1997 and incorporated herein by
reference (File No. 1-9025)
10.24 Supplemental Warrant Indenture made as of November 1, 1996
between Vista Gold and Montreal Trust with respect to the
Warrant Indenture dated June 7, 1996 between Granges and
Montreal Trust filed as Exhibit 1.02 to the Form 20-F for
the year ended December 31, 1997 and incorporated herein by
reference (File No. 1-9025)
10.25 Establishment of Operating Credit Facility dated
November 22, 1996 from The Bank of Nova Scotia to Vista Gold
and accepted by Vista Gold on November 26, 1996 filed as
Exhibit 2.05 to the Form 20-F for the year ended
December 31, 1997 and incorporated herein by reference (File
No. 1-9025)
10.26 Termination Agreement dated January 10, 1997 between Granges
(U.S.) Inc. and Atlas filed as Exhibit 1.03 to the
Form 20-F for the year ended December 31, 1997 and
incorporated herein by reference (File No. 1-9025)
10.27 Credit Agreement dated as of February 20, 1997 between The
Bank of Nova Scotia and Hycroft Inc. filed as Exhibit 2.06
to the Form 20-F for the year ended December 31, 1997 and
incorporated herein by reference (File No. 1-9025)
10.28 Guaranty dated as of February 20, 1997 by Vista Gold in
favor of The Bank of Nova Scotia filed as Exhibit 2.07 to
the Form 20-F for the year ended December 31, 1997 and
incorporated herein by reference (File No. 1-9025)
60
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
10.29 Amendment No. 1 dated as of September 30, 1997 between The
Bank of Nova Scotia and Hycroft Inc. Credit Agreement dated
as of February 20, 1997 between The Bank of Nova Scotia and
Hycroft Inc. filed as Exhibit 1.01 to the Form 20-F for the
year ended December 31, 1998 and incorporated herein by
reference (File No. 1-9025)
10.30 Letter Agreement of Private Placement dated April 24, 1998
between Zamora and Gribipe and Amendment dated June 1, 1998
to Letter Agreement of Private Placement Agreement dated
April 24, 1998 (File No. 1-9025)
10.31 Share Purchase Agreement dated October 21, 1998 among
Cornucopia Resources Ltd., Cornucopia Resources Inc., Vista
Gold Holdings Inc. and Vista Gold (File No. 1-9025)
10.32 Restated and Amended Loan Agreement dated as of October 21,
1998 between Mineral Ridge Inc. and Dresdner Bank AG,
New York and Grand Cayman Branches (File No. 1-9025)
10.33 Stock Option Plan of Vista Gold dated November 1996 as
amended in November 1998 (File No. 1-9025)
10.34 Loan and Security Agreement dated as of April 12, 1999
between Hycroft Resources & Development, Inc. and Finova
Capital Corporation. (File No. 1-9025)
10.35 Voluntary Petition under Chapter 11 of the U.S. Bankruptcy
Code dated December 10, 1999 filed by Mineral Ridge
Resources Inc. (File No. 1-9025)
10.36 Sale Agreement dated January 31, 2000 on one hand between
David O'Connor and Vista Gold and on the other hand Empresa
Minera Multiple Capacirca.
10.37 Employment Agreement dated September 8, 2000 between Vista
Gold and Ronald J. McGregor.
11.01 Statement of Computation of Per Share Earnings of Vista Gold
24.01 Powers of Attorney
REPORTS ON FORM 8-K
The following reports were filed under cover of Form 8-K during the quarter
ended December 31, 2000:
1. Report dated November 8, 2000 regarding the Corporation's results for the
quarter ended September 30, 2000.
SUPPLEMENTAL INFORMATION
Additional information, including directors' and officers' remuneration and
indebtedness, principal holders of the Corporation's securities, options to
purchase securities and interests of insiders in material transactions, where
applicable, is contained in the Management Proxy and Information Circular for
the annual general meeting of shareholders held on May 18, 2001.
61
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 26, 2001 By: /s/ RONALD J. MCGREGOR
------------------------------------------
Ronald J. McGregor
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated:
Dated: March 26, 2001 By: /s/ RONALD J. MCGREGOR
------------------------------------------
Ronald J. McGregor
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: March 26, 2001 By: /s/ ROBERT L. FOLEN
------------------------------------------
Robert L. Folen
VICE PRESIDENT FINANCE
62
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
SIGNATURE CAPACITY DATE
--------- -------- ----
*
------------------------------------------- Chairman of the Board and March 26, 2001
David R. Sinclair Director
*
------------------------------------------- Vice-Chairman of the Board and March 26, 2001
Ross J. Beaty Director
/s/ RONALD J. MCGREGOR
------------------------------------------- President and Chief Executive March 26, 2001
Ronald J. McGregor Officer and Director
*
------------------------------------------- Director March 26, 2001
C. Thomas Ogryzlo
*
------------------------------------------- Director March 26, 2001
Michael B. Richings
*
------------------------------------------- Director March 26, 2001
Alan G. Thompson
*
------------------------------------------- Director March 26, 2001
Peter Walton
*
------------------------------------------- Director March 26, 2001
Keith Steeves
* On his own behalf and pursuant to a Power of Attorney dated March 26, 2001,
the undersigned by signing his name hereby signs this report in the name and
on behalf of the foregoing directors.
/s/ RONALD J. MCGREGOR
-------------------------------------------
Ronald J. McGregor
63