Vista Gold Corp. (NYSE American and TSX: VGZ) (“Vista” or the
“Company”) today announced results of an independent benchmarking
study (the “Study”) of the 2019 updated preliminary feasibility
study for the Mt Todd Gold Project (“Mt Todd” or the “Project”) in
the Northern Territory, Australia (the “2019 PFS”).
In the second quarter 2019, Vista engaged GR
Engineering Services Limited (“GRES”) of Perth, Australia to
complete an independent review of capital and operating costs, and
construction, commissioning and ramp-up schedules as presented in
the 2019 PFS. The objective of the Study was to assess the capital
and operating costs, and schedules presented in the 2019 PFS
compared to actual capital and operating costs being experienced by
current, similar size operations. The findings were positive and
provide greater assurance that the Company’s inputs and assumptions
are reasonable and that the schedules are practical.
Frederick H. Earnest, President and Chief
Executive Officer of Vista, stated, “Concurrent with completing the
2019 PFS, we engaged GRES as an independent contractor to review
and compare our estimated costs and schedules. Based on the
preliminary findings of the Study, we worked with various
consultants to further evaluate the interim results and, in some
areas, we revised our plans and estimates. This analysis and review
are an indication of our commitment to ensuring that our Project
designs, schedules and economic analyses are reasonable and
appropriate.”
Mining – Summary of Capital and Operating
Expenditures
Mining Plus (“MP”) was engaged by GRES to
perform a benchmark study for the mining costs of the Project. A
comparison of the 2019 PFS unit mining equipment costs to recent
equipment purchase prices from original equipment manufacturer
(“OEM”) representatives in Australia, with consideration of
delivery costs to the Northern Territory, is summarized in the
table below.
Based on this analysis, MP concluded that on a
weighted average basis, the Mt Todd capital costs as quoted in the
2019 PFS were slightly higher than the costs currently being quoted
by Australian OEMs and that total mining capex as reflected in the
2019 PFS was a good estimate.
CAPEX Comparison - Mt Todd as a % of Average Unit
Cost |
Mining CAPEX Area |
Mt Todd % of Average Data Set Unit Cost |
Units |
Large Drills (i.e. Atlas Copco PV235) |
97 |
% |
16 |
Small Drills (i.e. 165mm Rotary Blast Hole Drills) |
76 |
% |
2 |
Hydraulic Shovel (28m3 - i.e. PC 5500 |
104 |
% |
4 |
Front End Loader (18m3 - i.e. Cat 994) |
94 |
% |
2 |
Haul Truck (220t - i.e. Cat 793) |
109 |
% |
41 |
Large Dozer (Cat D11) |
102 |
% |
1 |
Small Dozer (Cat D9) |
100 |
% |
4 |
Motor Grader (4.9m - i.e. Cat 16H) |
89 |
% |
4 |
Water Truck (i.e. Cat 777 with 70kl tank) |
97 |
% |
2 |
Rubber Tired Dozer (i.e. Cat 834H) |
72 |
% |
3 |
AVERAGE (weighted based on fleet numbers and
capital) |
104 |
% |
|
|
|
|
|
The table below compares the 2019 PFS mining
costs per tonne (“t”) to the average benchmarked mining costs per
tonne in each operating cost area of the mine.
OPEX Comparison - Mt Todd as a % of Average
US$/t |
Mining OPEX Area |
Mt Todd % of Average US$/T |
Drilling |
97 |
% |
Blasting |
85 |
% |
Loading |
116 |
% |
Hauling |
181 |
% |
Average (weighted based on total project cost for main work
areas of drilling, blasting, loading and hauling) |
140 |
% |
|
|
|
Based on the above data, MP determined the mine
operating costs as shown in the 2019 PFS were potentially over
estimated compared to other Australian mining operations. MP also
noted that although the benchmarking population could have been
larger, the 2019 PFS estimates appeared reasonable for this level
of study.
Processing – Summary of Capital and Operating Expenditures
GRES analyzed the most appropriate completed,
comparable projects to assess processing capital and operating cost
estimates. Aust Gold (an unnamed project), the Rainy River mines in
Canada, and the Ahafo and Akyem operations in Ghana (all of which
are approximately half the capacity of Mt Todd) were used in the
capital cost comparison. Other reference points included
feasibility study results published by large scale mineral
processing projects in similar locations and regions interpreted by
GRES, and GRES’ internal database of equipment and bulk commodity
supply prices.
Converted to USD at 1AUD=0.7USD |
Aust GoldFS |
Aust Gold |
Rainy River FS |
Rainy River1 |
Mt Todd 2019 PFS |
Millions of Tonnes Per Annum Plant Capacity |
|
7.5 |
|
8.2 |
|
7.7 |
|
7.7 |
|
17.75 |
Total Reported Capex, US$ |
$ |
372 |
$ |
435 |
$ |
644 |
$ |
904 |
$ |
826 |
Process Plant & Associated Infrastructure |
$ |
131 |
$ |
152 |
$ |
219 |
– 2 |
$ |
367 |
Scope Change |
– 2 |
$ |
21 |
$ |
35 |
– 2 |
$ |
6 |
Infrastructure & Water |
$ |
58 |
$ |
58 |
– 2 |
– 2 |
$ |
46 |
Mine Development 3 |
$ |
27 |
$ |
27 |
$ |
28 |
– 2 |
$ |
121 |
Power Supply |
$ |
15 |
$ |
15 |
$ |
7 |
– 2 |
$ |
82 |
Site Civils |
$ |
6 |
$ |
6 |
$ |
82 |
– 2 |
$ |
19 |
Engineering and Contractor Indirects |
$ |
63 |
$ |
63 |
$ |
74 |
– 2 |
$ |
82 |
Owner & Pre-Production |
$ |
36 |
$ |
36 |
$ |
147 2 |
– 2 |
$ |
16 4 |
Spares |
$ |
5 |
$ |
5 |
– 2 |
Contingency |
$ |
32 |
$ |
53 |
$ |
51 |
– 2 |
$ |
87 |
Existing Infrastructure5 |
– 2 |
– 2 |
– 2 |
– 2 |
$ |
70 |
USD |
Aust GoldFS |
Aust Gold |
Rainy River FS |
Rainy River1 |
Mt Todd 2019 PFS |
Millions of Tonnes Per Annum Plant Capacity |
|
7.5 |
|
8.2 |
|
7.7 |
7.7 |
|
17.75 |
Process Plant & Associated Infrastructure ($M) |
$ |
131 |
$ |
152 |
$ |
219 |
– 2 |
$ |
367 |
US$ per Tonne Per Annum Plant Capacity |
$ |
17 |
$ |
19 |
$ |
28 |
– 2 |
$ |
21 |
|
|
|
|
|
|
|
|
|
|
1 Rainy River experienced substantial overruns
due to a change to the tailings and water dam designs and
associated capex.2 Breakdown data unavailable.3 Mt Todd initial
mine capital costs include capitalized pre-stripping required in
the existing pit to recommence production versus other operations
that started as greenfield sites.4 Initial fills and spares are
included in the Mt Todd initial mill capex.5 Conservative value was
given to the existing infrastructure at Mt Todd to make it
comparable to other projects that were required to construct
similar infrastructure. This value is not included in the Mt Todd
Total Reported Capex, rather it is reported for information and
comparative purposes only.
The Study demonstrated that the processing
capital costs shown in the 2019 PFS were in the middle of the range
on a US$ per tonne per annum plant capacity basis, with low and
high areas of the estimate balancing out. The review identified
areas where additional work should be completed as part of future
technical studies.
The Mt Todd piping, electrical and
instrumentation costs continue to be factored estimates that will
require the completion of feasibility-level engineering design
work. Owner’s costs are a function of the project management system
selected and the Company’s choice may be different in a future
technical report. Power Engineers completed the power generation
plant design and cost estimates for the 2019 PFS and continues to
work with Vista to optimize the power generation facility’s size
and connection to the existing power grid.
Mineralis Pty Ltd (“Mineralis”), an Australian
mineral processing consultant, was engaged to assist with the
review of processing costs. The Detour Lake, Canadian Malartic and
Rainy River Mines in Canada, the Gruyere Project in Australia and
another smaller operation were used in the analysis. The comparison
between processing costs for the benchmarked gold projects and the
2019 PFS unit operating costs is presented below. The XE.com
foreign exchange rate averages for the 90-day period prior to
August 5, 2019 of US$0.70/AUD (equivalent to the 2019 PFS exchange
rate) and US$0.75/CAD have been used for conversion to USD.
Project |
Process OPEX USD/t |
|
Source |
Mt Todd - 50,000 tpd Au Plant |
$ |
7.88 |
|
VCGMTP01E_TEM_50ktpd_014jm-Updated 50,000 tpd
case |
Detour Lake - 55,000 tpd Au Plant |
$ |
6.48 |
|
2018 Life of Mine Plan, Average 2019 to 2023 |
Rainy River - 22,000 tpd Au Plant |
$ |
7.12 |
|
Rainy River NI-43-101 Report Final July 25, 2018 |
Malartic - 55,000 tpd Au Plant |
$ |
6.06 |
|
Malartic - Agnico Eagle + Yamana 30-09-2014 |
Gruyere - 22,000 tpd Au Plant |
$ |
10.95 |
|
Gold Road Resources - Gruyere Project Report 15-11-16 |
Project 1 - 15,000 Au-Ag Plant |
$ |
8.66 |
|
Operations Review Document |
|
|
|
|
|
The Mt Todd processing cost of US$7.88/t milled
was above similar scale gold plants at Detour Lake and Malartic,
which use primary and secondary crushing followed by
semi-autogenous ball mill comminution circuits. Mineralis suggests
that with the HPGR crushers in the comminution circuit, the ore
sorting plant, and project location, the Mt Todd 50,000 tpd total
process operating cost would likely be above the benchmarked
operations, particularly in the early years.
Commissioning and Start Up
Due to the number of unit operations and
conveyors, transfer points, and wear areas in the crushing and HPGR
circuits, and the large number of tanks in the CIP leaching and
adsorption circuit, the authors of the Study identified the
materials handling, crushing, ore sorting and grinding areas as
potential areas of risk for Mt Todd during ramp-up.
The Company has extensively evaluated the
comminution and materials handling areas of the Project and
incorporated design considerations to address potential
commissioning and start up risks. As part of the 2019 PFS, the
Company also increased the construction and startup schedule from
24 to 30 months. In the 2019 PFS and in previous studies Vista used
a design philosophy that has increased the size of the primary
crusher, secondary crushers, and HPGR crushers to the next size
larger than the equipment manufacturers recommendation. Similarly,
in the sorting and fine grinding areas, an extra unit has been
included in the design to ensure additional capacity is available
if needed. That is, the manufacturer recommended four XRT sorters
and five were included in the design. The same is true for the
laser sorters and VXP mills. The associated material handling units
were also sized for the larger units. Vista believes that this will
significantly decrease potential risks during commissioning and
start up and plans to undertake additional material handling design
reviews as a part of future engineering.
Mt Todd Benchmarking Study
For further information on the results of the
Study, please see the report entitled “Mt Todd Gold Project
Independent Benchmarking Study dated February 20, 2020, which is
available on Vista’s website under “Mt Todd – Technical
Reports.”
Technical Report on Mt Todd
For further information on the Mt Todd Gold
Project, see the Technical Report entitled “NI 43-101 Technical
Report Mt Todd Gold Project 50,000 tpd Preliminary Feasibility
Study Northern Territory, Australia” with an effective date of
September 10, 2019 and an issue date of October 7, 2019, which is
available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov, as
well as on Vista’s website at “Mt Todd – Technical Report.”
John Rozelle, Vista’s Senior Vice President, a
Qualified Person as defined by National Instrument 43-101 –
Standards of Disclosure for Mineral Projects, has approved the
information in this press release.
About Vista Gold Corp.
The Company is a gold project developer. The
Company’s principal asset is its flagship Mt Todd gold project in
Northern Territory, Australia. Mt Todd is the largest undeveloped
gold project in Australia.
For further information, please contact the
Company at (720) 981-1185.
Forward Looking Statements
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 we expect or anticipate
will or may occur in the future, including such things as the
projected economics of the Mt Todd gold project in the 2019 PFS,
including the estimates of capital costs and mining and processing
operating costs at Mt Todd in the 2019 PFS and the Study, mining
schedules as presented in the 2019 PFS and Study, Mt Todd cost
estimates relative to benchmarked operations, the Company’s
evaluation of commissioning and start-up risks and the
effectiveness of efforts to decrease such risks and other similar
statements are forward-looking statements and forward-looking
information. The material factors and assumptions used to develop
the forward-looking statements and forward-looking information
contained in this press release include the following: no change to
laws or regulations impacting mine development or mining
activities, our approved business plans, mineral resource and
reserve estimates and results of preliminary economic assessments,
preliminary feasibility studies and feasibility studies on our
projects, if any, our experience with regulators, our experience
and knowledge of the Australian mining industry, benchmarked
operations being similar to planned operations at Mt Todd
and the price of gold. 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 the Company 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 and reserve
estimates, uncertainty as to the Company’s future operating costs
and ability to raise capital; risks relating to cost increases for
capital and operating costs; 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; potential effects on our operations of
environmental regulations in the countries in which the Company
operates; risks due to legal proceedings; risks relating to
political and economic instability in certain countries in which
the Company operates; uncertainty as to the results of bulk
metallurgical test work; and uncertainty as to completion of
critical milestones for Mt Todd; as well as those factors discussed
under the headings “Note Regarding Forward-Looking Statements” and
“Risk Factors” in the Company’s latest Annual Report on Form 10-K
as filed on February 26, 2020 and other documents filed with the
U.S. Securities and Exchange Commission and Canadian securities
regulatory authorities. Although we have attempted to identify
important factors that could cause actual results to differ
materially from those described in forward-looking statements and
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. Except as
required by law, we assume no obligation to publicly update any
forward-looking statements or forward-looking information; whether
as a result of new information, future events or otherwise.
Cautionary Note to United States
Investors
The United States Securities and Exchange
Commission (“SEC”) limits disclosure for U.S. reporting purposes to
mineral deposits that a company can economically and legally
extract or produce. The 2019 PFS referenced in this press release
uses the terms “Proven reserves” and “Probable reserves”.
Reserve estimates contained in the 2019 PFS are made pursuant
to NI 43-101 standards in Canada and do not represent reserves
under the standards of the SEC’s Industry Guide 7 and may not
constitute reserves under the SEC’s newly adopted disclosure rules
to modernize mineral property disclosure requirements, which became
effective February 25, 2019 and will be applicable to the Company
in its annual report for the fiscal year ending December 31, 2021.
Under the currently applicable 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 all
necessary permits and government approvals must be filed with the
appropriate governmental authority. Additionally, the 2019 PFS uses
the terms “Measured resources”, “Indicated resources”, and
“Measured & Indicated resources”. We advise U.S. investors that
while these terms are Canadian mining terms as defined in
accordance with NI 43-101, such terms are not recognized under SEC
Industry Guide 7 and normally are not permitted to be used in
reports and registration statements filed with the SEC. Mineral
resources described in the 2019 PFS have a great amount of
uncertainty as to their economic and legal feasibility. 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.
“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 any or all part of an
Inferred resource will ever be upgraded to a higher category.
U.S. Investors are cautioned not to assume that any part or
all of mineral deposits in these categories will ever be converted
into SEC Industry Guide 7 reserves.
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