Vista Gold Corp. Announces Results of a Preliminary Economic Assessment and Increases Estimated Measured and Indicated Resources by 12.8% at Its Mt. Todd Gold Project, Northern Territory, Australia
Three potential operating scenarios were evaluated using a gold price of
The PEA evaluated three operating scenarios. The parameters and pre-tax results are summarized in the following table.
LG Pit Resources Cut-off Internal Net Cash NPV8 @ Shell used in the Grade Rate of Flow US$750 (US$/oz Evaluation (grams Return (US$000's) per Au) (1)(2) gold @ US$750 @ US$750 ounce per per ounce per Gold(3) tonne) Gold(3) ounce Gold(3) Base Case 600 Measured, Indicated & Inferred 0.42 21.6% 646,682 232,894 Case 2 550 Measured & Indicated 0.58 23.1% 485,697 211,916 Case 3 750 Measured, Indicated & Inferred 0.34 20.4% 815,944 302,153 Notes: The Lerchs-Grossman economic pit shells formed the basis for the final pit designs which incorporated pit wall smoothing and ramps. NPV(8) is the pre-tax net present value calculated with an 8% discount rate. The IRR is calculated on a pre-tax basis.
Resource Metric Average Grade Short Tons Average Grade Contained Classification Tonnes (grams/tonne) (x1000) (ounces/ton) Gold (x1000) Ounces (x1000) Measured(1) 52,919 0.91 58,333 0.026 1,543 Indicated(1) 138,020 0.81 152,139 0.024 3,581 Measured & Indicated(1) 190,939 0.84 210,472 0.024 5,125 Inferred(2) 94,008 0.74 103,625 0.022 2,244
TetraTech worked with Resource Development inc. (“RDi”) of
In Pit Mineral Resource Estimation
At the present time, the Mt. Todd gold project contains no CIM definable Mineral Reserves(3) . However, in accordance with accepted standards for a PEA, Measured and Indicated Resources(1) (and in two cases, Inferred Resources(2)) have been used as the basis for the economic evaluation. The Base Case(3) final pit design is based on the
Base Case(3) (US$600 Tonnes Grade Contained Design) (000's) (grams Au per Ounces tonne) Gold(1) Measured Resources(1) 46,528 0.95 1,421,110 Indicated Resources(1) 101,041 0.87 2,826,530 Inferred Resources(2) 14,249 0.73 334,420 Case 2 (US$550 Design) Tonnes Grade Contained (000's) (grams Au per Ounces tonne) Gold(1) Measured Resources(1) 32,908 1.09 1,153,240 Indicated Resources(1) 59,225 1.04 1,980,260 Inferred Resources(2) 1,561 0.78 39,150 Case 3(3) (US$750 Tonnes Grade Contained Design) (000's) (grams Au per Ounces tonne) Gold(1) Measured Resources(1) 56,790 0.87 1,588,480 Indicated Resources(1) 152,060 0.75 3,666,630 Inferred Resources(2) 44,912 070 1,010,770
In both the Base Case(3) and Case 2, the operation has been sized to mine and process 30,000 tonnes of ore per day (nominally 10.5 million tonnes per year). The estimated mine life of Base Case(3) is 15.2 years and 8.9 years for Case 2. In Case 3(3) the operation has been sized to mine and process 60,000 tonnes of ore per day (nominally 21.0 million tonnes per year) and the resulting mine life is 11.9 years. In all three cases the mine schedule and equipment requirements are based on an owner-operated fleet of 141 tonne trucks and 18 m(3) shovels. The mining costs are estimated to be
Total Life of Average Average Average Average Contained Mine Grade - Grade - Gold Gold Ounces Stripping Years 1-3 Life of Production - Production - Ratio (grams Au Mine Years 1-3 Life of Mine (waste : per tonne)(grams Au ounces/year ounces/year ore) per tonne) Base Case(3) 4,526,000 1.9 1.06 0.87 296,700 245,500 Case 2 3,163,000 2.7 1.18 1.05 331,300 291,600 Case 3(3) 6,200,000 1.6 0.87 0.76 486,700 429,700
Since acquiring the Mt. Todd gold project, Vista has been evaluating processing alternatives for the Mt. Todd ore. The metallurgical testing has been aided by a better understanding of the mineralogy of the orebody after two years of exploration drilling in the Batman deposit. An investigation of the sulfide species present in the deposit indicates that pyrite is the predominant sulfide mineral near the surface with chalcocite and chalcopyrite. Near the bottom of the existing pit, pyrite begins to transition to pyrrhotite and the chalcocite is replaced almost entirely by chalcopyrite. At depth, pyrrhotite becomes the dominant sulfide with lesser amounts of pyrite and chalcopyrite. Galena and sphalerite are also present in minor quantities in various parts of the deposit. The transition out of the chalcocitic mineralization in the early part of the project indicates that the quantity of cyanide soluble copper in the deposit is considerably less than previously thought and should not present any long-term processing challenges.
Vista’s metallurgical test programs have successfully focused on two critical areas of the process flowsheet, namely: crushing/grinding and gold recovery. Several significant advancements have resulted in reductions in operating costs without reducing gold recoveries. Studies completed to date have indicated that the Mt. Todd ore will be amenable to processing using high pressure grinding roll (“HPGR”) technology. The test work to date has determined that a gold recovery of 82% can likely be achieved in a whole ore leach circuit with a grind circuit product of 80% passing 100 mesh (“P(80) 100″). Testwork completed by RDi and Polysius indicate that a crushing/grinding circuit with three stages of crushing followed by high pressure grinding rolls and grinding in ball mills will have an 18.1 kilowatt-hour per tonne ore power requirement. This is a 46% reduction in power requirements compared to the previously contemplated conventional crushing, SAG mill/ball mill circuit with an 80% passing 200 mesh product. We expect that the process circuit will include cyanide detoxification prior to tailings handling. The processing costs are estimated to be
As a result of the relatively coarse grind employed in the leaching circuit (P(80) 100) and subsequent product size, Vista has evaluated filtration and the use of a dry-stack tailings storage system. A preliminary evaluation indicates that the technology may be economically implemented at Mt. Todd. Employing dry-stack tailings results in a significant reduction in capital costs compared to a conventional tailings storage facility and a small increase in operating costs. We expect that the material will be compacted and the side slopes will be armored with rock and revegetated to minimize erosion. The tailings de-watering and stacking costs are estimated to be
Water Management and Acid Rock Drainage
Vista has implemented a water management program to handle surface run-off and acid rock drainage (“ARD”) from the existing, unreclaimed waste dump and heap leach. Vista expects to commission a lime treatment plant in June as part of a planned improvement in the water management program. Vista plans to encapsulate the existing facilities and in a similar manner isolate waste with an ARD potential prior to closure. A passive treatment system will be evaluated as part of the closure planning.
The Mt. Todd mine site is 230 km southeast of the port of Darwin and 56 km by road north-northeast of the regional center of Katherine. Katherine and Darwin are connected to Darwin by a railroad and the Stuart Highway. An existing paved road connects the mine site to the Stuart Highway. The site’s existing electric power facilities are sufficient for current and expected construction requirements. During project operation, Vista expects to use natural gas-fired generators as the source of project power and we have included them in the capital and operating cost estimates. An existing raw water dam and reservoir is expected to provide water for the process requirements.
The operating costs have been developed based on current conditions in Northern Territory,
Base Case 2 Case Case(3) 3(3) Mining (US$/tonne material mined) $1.34 $1.23 $1.26 Mining (US$/tonne material processed) $3.84 $4.59 $3.25 Milling (US$/tonne material processed) $5.75 $5.75 $5.32 Tailings De-watering (US$/tonne material processed) $0.23 $0.23 $0.23 Tailings Dry-Stacking (US$/tonne material processed) $0.13 $0.13 $0.13 Environmental (US$/tonne material processed) $0.05 $0.05 $0.05 G&A (US$/tonne material processed) $0.44 $0.44 $0.44 Total Operating Costs (US$/tonne material processed) $10.44 $11.19 $9.42
The mining capital equipment costs area based on budgetary quotes for the first quarter 2009. RDi obtained quotes for the major mill components. Capital costs for the remainder of the process area were estimated based on accepted factors. In Case 3, the same sized mining equipment was used even though the mining rate doubled. Vista views this as an opportunity for future improvement in the project. The process equipment capital costs for the 60,000 tonne per day mill were factored from the 30,000 tonne per day mill in the base case. A 20% contingency factor was applied to all capital costs and is included in the estimate.
The cash flow analysis results for the three cases evaluated in the PEA are summarized in the following table.
Net Cash Pre-Tax Internal Flow NPV8 Rate of Life of Pay-back (US$000's) @ (US$000's) @ Return @ Mine Period US$750 per US$750 per US$750 per (years) (years) ounce Gold ounce Gold ounce Gold Base Case(3) 15.2 3.0 $646,682 $232,894 21.6% Case 2 8.9 3.8 $485,697 $211,916 23.1% Case 3(3) 11.9 3.3 $815,944 $302,153 20.4% Pre- Life- Cash Operating Capital Total Gold Production of-Mine Cost Cost Production Capital Capital (US$/ (US$/ (ounces) (US$000's) (US$000's) ounce Au) ounce Au) Base Case(3) 3,732,000 $323,142 $417,787 $453 $112 Case 2 2,595,000 $339,846 $380,496 $404 $147 Case 3(3) 5,114,000 $494,477 $567,392 $467 $110
The PEA includes an analysis of project sensitivity to changes in gold price, capital costs and operating costs. The following table summarizes the results of the sensitivity analysis for the Base Case.
NPV8 - Base Case Gold Price of US$750/ounce (US$ millions) -20% -10% Base Case +10% +20% Gold Price ($43.7) $94.6 $232.9 $371.2 $509.5 Capital Cost $299.6 $266.3 $232.9 $199.5 $166.1 Operating Cost $397.4 $315.1 $232.9 $150.6 $68.4 Base Case Sensitivity to Various Gold Prices (US$ millions) Gold Price (US$/oz Au) US$650 US$750 US$850 US$950 US$1050 NPV8 $48.5 $232.9 $417.3 $601.7 $786.1 Internal Rate of Return 11.3% 21.6% 30.1% 37.7% 44.7% Note: NPV8 and IRR are calculated on a pre-tax basis.
Discussion and Planning
As previously announced, work on the pre-feasibility study is underway including additional high pressure grinding roll testing at JKTech Pty Ltd. in
For further information of the Mt. Todd gold project please see our technical report available on SEDAR entitled “MT. TODD GOLD PROJECT, Gold Resource Update, Northern Territory, Australia” and dated
Update on Paredones Amarillos Project
Vista continues to work through the permitting process at the Paredones Amarillos project, located in
About Vista Gold Corp.
Since 2001, Vista has acquired a number of gold projects with the expectation that higher gold prices would increase their value. Vista has undertaken programs to advance the Paredones Amarillos project, located in
(1) Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources: This press release uses the terms “Measured Resources”, “Indicated Resources” and “Measured & Indicated Resources.” We advise U.S. investors that while these terms are defined in and required by Canadian regulations, these terms are not defined terms under the U.S. Securities and Exchange Commission (“SEC”) Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit measures. The term “contained gold ounces” used in this press release is not permitted under the rules of the SEC. U.S. 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 U.S. Investors concerning estimates of Inferred Resources: This press release uses the term “inferred resources”. We advise U.S. investors that while this term is defined in and required by Canadian regulations, this term is not a defined term under SEC Industry Guide 7 and is normally not permitted to be used in reports and registration statements filed with the SEC. “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. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit measures. The term “contained gold ounces” used in this press release is not permitted under the rules of the SEC. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally minable.
(3) Cautionary Note concerning economic analysis that include Inferred Resources: Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. This PEA is preliminary in nature and it includes Inferred Resources 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 PEA will be realized.
(4) Cautionary Note to U.S. Investors concerning estimates of Reserves: This press release uses the term “Mineral Reserve”. We advise U.S. investors that while this term is defined in and required by Canadian regulations, such definitions differ from the definitions in the SEC Industry Guide. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
This press release contains forward-looking statements within the meaning of the U.S. Securities Act of 1933, as amended, and U.S. Securities Exchange Act of 1934, as amended, and forward-looking information within the meaning of Canadian securities laws. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Vista expects or anticipates will or may occur in the future, including such things as the economic analysis, estimates of mineral resources, the conversion of inferred resources to measured and indicated resources, the conversion of mineral resources to mineral reserves, life of mine estimates, the potential for gold resources in the Batman deposit and other targets within the Mt. Todd project, the waste-to-ore ratio at Mt. Todd, the successful completion of a metallurgical testing program at Mt. Todd, the beginning of a Mt. Todd pre-feasibility study, future gold prices, future U.S.-to-Australian dollar exchange rates, the improved efficiencies of high pressure grinding roll technology, favorable effects of Mt. Todd project economics and Vista’s ability to add value in a cost-effective manner the estimated operating and capital costs and the cash flow analysis and sensitivity analysis in the Mt. Todd Preliminary Economic Assessment, anticipated processing and tailings management and other such matters are forward-looking statements and forward-looking information. When used in this press release, the words “optimistic”, “potential”, “indicate”, “expect”, “intend”, “hopes,” “believe,” “may,” “will,” “if, “anticipate” and similar expressions are intended to identify forward-looking statements and forward-looking information. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Vista to be materially different from any future results, performance or achievements expressed or implied by such statements. Such factors include, among others, uncertainty of resource estimates, estimates of results based on such resource estimates; risks relating to completing metallurgical testing and scheduling for pre-feasibility studies; risks relating to cost increases for capital and operating costs including cost of power; risks relating to delays at the Mt. Todd Project; risks of shortages and fluctuating costs of equipment or supplies; risks relating to fluctuations in the price of gold; the inherently hazardous nature of mining-related activities; uncertainties concerning resource estimates; potential effects on Vista’s operations of environmental regulations in the countries in which it operates; risks due to legal proceedings; risks relating to political and economic instability in certain countries in which it operates; risks related to repayment of debt; risks related to increased leverage and uncertainty of being able to raise capital on favorable terms or at all; as well as those factors discussed under the headings “Uncertainty of Forward-Looking Statements” and “Risk Factors” in Vista’s latest Annual Report on Form 10-K as filed on
Without limiting the foregoing, this press release uses terms that comply with reporting standards in
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SOURCE Vista Gold Corp.