Vista Gold to buy gold-processing tools for Paredones
2008-01-08 07:26 ET - News Release
Ms. Connie Martinez reports
VISTA GOLD CORP. ANNOUNCES SIGNING OF AGREEMENT TO PURCHASE EQUIPMENT FOR ASSESSMENT OF ITS LONG VALLEY GOLD PROJECT, CALIFORNIA
Vista Gold Corp., further to the company's news issued in Stockwatch dated Jan. 2, 2008, has entered into a formal agreement with A.M. King Industries Inc. and Del Norte Company Ltd., a wholly owned subsidiary of A.M. King, to purchase gold-processing equipment to be used at Vista's Paredones Amarillos project in Baja California Sur, Mexico. As previously announced in Stockwatch, the total purchase price is approximately $16-million (U.S.), of which approximately $8-million (U.S.) was paid on signing of the purchase agreement. Vista is currently considering various bridge loan or convertible debt alternatives with proceeds to be used for the purchase of the equipment and for other expenditures relating to the development of the Paredones Amarillos project, thus allowing the company to use current cash for other business purposes. As reported in Vista's news issued in Stockwatch dated June 21, 2007, the total capital requirements for the project were estimated in a June, 2007, prefeasibility study to be $110-million (U.S.). This cost may change as Vista completes the definitive studies that are in progress as a result of various scope changes, including an increase in estimated gold production to the range of 130,000 to 150,000 ounces per year, the incorporation of used equipment and the impact of inflation.
Vista has released the results from a preliminary assessment for Vista's Long Valley project, Mono county, California, by Mine Development Associates (MDA), of Reno, Nev., in accordance with Canadian National Instrument 43-101 standards under the direction of Neil Prenn, an independent qualified person. This preliminary assessment entitled, "Technical Report, Preliminary Economic Assessment, Long Valley Project, Mono County, California," is expected to be filed on SEDAR by Vista on or about Jan. 9, 2008.
In 2003, MDA issued mineral resources estimates for the Long Valley project in a report entitled, "Technical Report, Long Valley Project, Mono County, California, USA," dated Feb. 20, 2003, prepared in compliance with National Instrument 43-101 standards, the results of which were previously reported by Vista in news issued in Stockwatch dated Jan. 23, 2003. Based on the February, 2003, report, the estimated gold resources for the Long Valley project, reported at a cut-off grade of 0.01 ounce of gold per ton were (note: totals may not add due to rounding):
Short tons Grade Contained gold
(000s) (Au oz/ton) ounces
Measured resources (1) 26,597 0.017 452,500
Indicated resources (1) 41,679 0.018 758,700
Total measured and
indicated resources (1) 68,276 0.018 1,211,100
(1) Cautionary note to United States investors concerning estimates
of measured and indicated resources: This table uses the terms
"measured resources" and "indicated resources." The company
advises United States investors that while these terms
are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does
not recognize them. United States investors are cautioned
not to assume that any part or all of mineral deposits in
these categories will ever be converted into reserves.
Short tons Grade Contained gold
(000s) (Au oz/ton) ounces
Inferred resources (2) 32,914 0.017 571,500
(2) Cautionary note to United States investors concerning estimates
of inferred resources: This table uses the term "inferred
resources." The company advises United States investors that
while this term is recognized and required by Canadian regulations,
the United States Securities and Exchange Commission does
not recognize it. "Inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources
may not form the basis of a feasibility study or prefeasibility
studies, except in rare cases. United States investors are cautioned
not to assume that any part or all of an inferred resource exists
or is economically or legally minable.
In undertaking the preliminary assessment described in the 2008 report, MDA considered the economic and technical parameters associated with development of the mineral resources within the restraints imposed by the state of California's mining regulations that include a provision that all mined materials not removed from the property be replaced within the perimeter of the excavation. The preliminary assessment evaluated the potential economics of the project assuming that the mineral resources were mined using open-pit mining methods and processed using heap-leach technology. The preliminary assessment contemplates mining activities conducted by the owner using purchased equipment. The study included a process flowsheet based on metallurgical testing conducted over the past 10 years under the supervision of previous owners and consisting of cyanide shake leach assays on pulps, bottleroll tests on drill cuttings from numerous reverse-circulation holes and long-term column tests on bulk samples from surface samples and core samples. The metallurgical test work and flowsheet were reviewed and approved for this study by Resource Development Inc. of Wheat Ridge, Col. The flowsheet proposes a lined heap-leach pad to be loaded at a rate of four million tons per year of material in 30-foot-high lifts. The material would be crushed to a nominal three-inch size and agglomerated with lime and cement prior to placing on the heap-leach pad. Following application of cyanide leach solutions, the gold would be recovered in carbon columns from which it would be stripped and a gold dore would be produced by electrowinning. After the pit material has been mined, the remaining waste materials would be backfilled into the pit along with the detoxified heap material.
Using a gold cut-off grade of 0.007 ounce per ton, the estimated gold resources within a designed pit as described in the 2008 report are shown in the following table.
PRELIMINARY ASSESSMENT STUDY
Gold resources within a designed pit
(above a 0.007 opt Au cut-off grade)
Class Mineral Gold Contained Total Total Stripping
tons grade gold waste tons ratio
(000s)(Au oz/ton) (oz) tons (000s) (w:o)
(000s)
Measured resources (1) 15,112 0.018 265,600 NA
Indicated resources (1) 15,880 0.023 358,100 NA
Total measured and
indicated resources (1) 30,992 0.020 623,700 NA
Inferred resources (2) 2,467 0.033 61,100 NA
29,208 62,668 0.87
(1) Cautionary note to United States investors concerning estimates
of measured and indicated resources: This table uses the terms
"measured resources" and "indicated resources." The company
advises United States investors that while these terms
are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does
not recognize them. United States investors are cautioned
not to assume that any part or all of mineral deposits in
these categories will ever be converted into reserves.
(2) Cautionary note to United States investors concerning estimates
of inferred resources: This table uses the term "inferred
resources." The company advises United States investors that
while this term is recognized and required by Canadian regulations,
the United States Securities and Exchange Commission does
not recognize it. "Inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources
may not form the basis of a feasibility study or prefeasibility
studies, except in rare cases. United States investors are cautioned
not to assume that any part or all of an inferred resource exists
or is economically or legally minable.
In the preliminary assessment, MDA estimated start-up capital at $58.8-million (U.S.) and total project capital at $61.8-million (U.S.). Operating costs including mine closure and heap detoxification are estimated per ton of material mined and processed on a heap leach as follows: mining, $3.54 (U.S.) per ton; processing, $1.96 (U.S.) per ton; cyanide destruction, 25 U.S. cents per ton; and general and administrative costs and royalties, 89 U.S. per ton. Total operating costs are estimated at $6.64 (U.S.) per ton of heap-leach material mined and processed, which equates to $415 (U.S.) per ounce of gold recovered. An estimated 535,300 ounces of gold would be produced over an eight-year mine life.
MDA used a base-case gold price of $550 (U.S.) per ounce, with sensitivity analyses completed at higher and lower gold prices. The positive pretax result estimates are shown in the following table, and indicate that the project could be potentially economically viable at gold prices of $550 (U.S.) per ounce and above. Additional work is required to determine the economic viability of the project.
Gold price Net present value at 5% Internal rate of return
(U.S.$/oz) discount rate
(US$ millions)
$550 $6.6 12.3%
$600 $25.7 25.5%
$650 $44.7 35.9%
$700 $63.8 45.4%
$750 $82.9 54.4%
$800 $101.9 63.2%
The "preliminary assessment" is preliminary in nature and includes inferred mineral resources (7 per cent inferred and 93 per cent measured and indicated) that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Fred Earnest, Vista's president and chief operating officer, commented: "At the moment, Vista is primarily concentrating on the development of its Paredones Amarillos project in Mexico and the evaluation of the potentially larger Mt. Todd project in Australia, and has no immediate plans to develop the Long Valley project. The results of this preliminary assessment are encouraging, indicating that at current gold prices, extraction of the mineral resources in a manner consistent with the mining laws of the state of California could generate substantial value. We are encouraged by the results, especially considering that in 2003 we acquired the Long Valley project for $750,000 (U.S.) and a 1-per-cent net smelter royalty."
We seek Safe Harbor.