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Vista Gold Announces Updated Preliminary Feasibility Study for the Mt Todd Gold Project with Increased After-Tax NPV5% of $823 Million and IRR of 23.4%

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Vista Gold Announces Updated Preliminary Feasibility Study for the Mt Todd Gold Project with Increased After-Tax NPV5% of $823 Million and IRR of 23.4%

 

 

 

 

 

Vista Gold Corp. (NYSE American:VGZ) (TSX: VGZ) today announced the positive results of an updated preliminary feasibility study for its Mt Todd gold project in Northern Territory, Australia.  The PFS is based on the results of metallurgical optimization test work, a redesign of the fine grinding circuit, construction and ramp-up schedule changes and a comprehensive review of all aspects of the Project, including an independent benchmarking study of key PFS parameters. The process improvements have resulted in improved projected gold recovery and increased estimated gold production at Mt Todd. All dollar amounts stated herein are in United States currency and are expressed as $ unless specified otherwise. References to A$ are to Australian dollars.

 

Highlights of the PFS for a 50,000 tonne per day project include:

 

  • After-tax NPV5% of $823 million and IRR of 23.4% at a $1,350 per ounce gold price and a $0.70=A$1.00 exchange rate (the “Base Case”);
  • After-tax NPV5% of $1.15 billion and IRR of 30.3% at current prices and exchange rates ($1,500 per ounce gold and $0.685=A$1.00 exchange rate);
  • Unchanged proven and probable mineral reserves estimated to be 5.85 million ounces of gold (221.0 million tonnes at 0.82 grams of gold per tonne (“g Au/t”)) at a cut-off grade of 0.40 g Au/t(1);
  • Improved estimated annual production of 413,400 ounces of gold per year over the life of the Project, including estimated average annual production of 495,100 ounces of gold per year during the first five years of commercial operations;
  • Life of mine projected average cash costs of $645 per ounce, including projected average cash costs of $575 per ounce during the first five years of commercial operations (life of mine average all-in sustaining cost (“AISC”) of $746 per ounce, including average AISC of $688 per ounce during the first five years of commercial operations);
  • A projected 13-year mine life; and
  • Estimated initial capital requirements of $826 million.

(1)  See “Cautionary Note to United States Investors” below.

 

Vista’s President and CEO, Frederick H. Earnest, commented, “We believe the PFS has substantially de-risked Mt Todd. The metallurgical programs and process area design changes completed by Vista over the past months have confirmed our belief that Mt Todd can achieve excellent anticipated gold recoveries within an attractive operating cost profile. This work, combined with an independent review of capital and operating costs and development schedules, underpin our confidence that Mt Todd will become a major Australian gold producing project and provide a solid foundation to further advance the Project.”

 

Mr. Earnest continued, “Vista’s management believes the PFS reflects significant value creation through Vista’s optimization and development work.  We believe project economics are strong at assumed long-term gold prices and quite compelling at today’s market conditions. However, we do not believe Vista should develop Mt Todd on its own.  The PFS gives us a solid basis for conversations with prospective development partners who we believe will recognize the value of Mt Todd and provide appropriate reward for Vista shareholders. To preserve the value of Mt Todd, we are prepared to hold the project until a time when the value of the Project appropriately rewards shareholders.”  

 

The PFS was authored by Tetra Tech Inc. (“Tetra Tech”) with Mine Development Associates, Resource Development Inc., Proteus EPCM Engineers (a Tetra Tech Company, “Tetra Tech Proteus”), JDS Energy & Mining, Inc., and POWER Engineers, Inc.

 

Vista’s senior management team is attending the Precious Metals Summit from September 10 to 13, 2019 in Beaver Creek, CO and the Denver Gold Forum from September 16 to 18, 2019 in Denver, CO, and will be available to discuss these results at both conferences. A conference call and webcast to discuss highlights of the PFS will be held Thursday, September 19, 2019 at 2:00 p.m. MDT.  Call-in details are located at the end of this release. 

 

Rex Bryan, Ph.D., Amy Hudson, Ph.D., April Hussey, P.E., Chris Johns, P.Eng., Guy Roemer, P.E., Vicki Scharnhorst, P.E., Erik Spiller and Keith Thompson on behalf of Tetra Tech, Thomas Dyer on behalf of Mine Development Associates, Dr. Deepak Malhotra on behalf of Resource Development Inc., Zvon Ponos on behalf of Tetra Tech Proteus, Jessica Monasterio, P.E. on behalf of JDS Energy & Mining, Inc., each an independent Qualified Person as defined by Canadian National Instrument 43-101 – Standards of Disclosure of Mineral Projects (“NI 43-101”), prepared or supervised the preparation of the information that forms the basis for the scientific and technical information disclosed herein and have reviewed this press release and consented to its release.  Dr. Deepak Malhotra has verified the metallurgical testing program and data in respect of the process improvements.  For additional information on data verification, quality assurance and control, key assumptions and other matters relating to the Project, see Vista’s Annual Report Form 10-K as filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml on February 25, 2019.

 

Overview                                                                                                                                                      

An overview of the PFS is presented in the table below. 

 

 

50,000 tpd Base Case Years 1-5 Life of Mine

(13 years)

  Annual
Average
Total Annual
Average
Total
Average Plant Feed Grade (g Au/t) 0.96 0.82
Payable Gold (000’s ozs) 495 2,476 413 5,305
Gold Recovery 92.3% 91.9%
Cash Costs ($/oz) $575 $645
AISC ($/oz) $688 $746
Strip Ratio (waste:ore) 2.65 2.52
Initial Capital (millions) $826
After-tax Payback (production years) 2.9
After-tax NPV5% (millions) $823
IRR (after-tax) 23.4%
Note: Economics presented using $1,350/oz gold and a flat $0.70 : A$1.00 exchange rate and assumes deferral of certain territory tax obligations as well as realization of equipment salvage values at the end of the mine life.

 

Sensitivity Analysis

 

The following table provides additional details of the Project’s after-tax economics at variable gold prices and exchange rate assumptions.

 

 

Foreign

Exchange

($/A$)

Gold Price
$1,200 $1,300 $1,350 $1,400 $1,500
IRR NPV5% IRR NPV5% IRR NPV5% IRR NPV5% IRR NPV5%
0.60 21.7% $686 26.4% $895 28.6% $994 30.8% $1,093 35.0% $1,297
0.65 19.2% $603 23.7% $807 25.9% $911 28.0% $1,011 32.2% $1,209
0.70 16.8% $521 21.2% $718 23.4% $823 25.5% $927 29.6% $1,126
0.75 14.6% $436 18.9% $634 20.9% $733 23.1% $839 27.1% $1,043
0.80 12.5% $351 16.7% $553 18.7% $650 20.7% $749 24.7% $954
  Note: Changes in foreign exchange rates are only applied to operating costs and not applied to either initial or sustaining capital costs.

 

Capital Costs

 

Key capital expenditures for initial and sustaining capital requirements are identified in the following table. 

 

 

Capital Expenditures (000s)

50,000 tpd Base Case

Initial Capital Sustaining Capital
Mining $121,239 $406,347
Process Plant $366,693 $17,027
Project Services $109,204 $72,448
Project Infrastructure $26,220 $0
Site Establishment & Early Works $17,537 $0
Management, Engineering, EPCM Services $82,058 $0
Preproduction Costs $16,121 $0
Contingency $86,641 $40,354
Sub-Total $825,712 $536,176
Asset Sale and Salvage $0 ($139,631)
Total Capital $825,712 $396,545(1)
Total Capital Per Payable ounce gold $156 $75(1)
  Notes: may not add due to rounding.   
  (1)  Net of asset sales.  

 

Operating Costs

 

 

Operating Cost

50,000 tpd Base Case

First 5 Years Life of Mine Cost
  Per tonne
processed
Per ounce Per tonne
processed
Per ounce
Mining $6.51 $233.60 $6.02 $250.90
Processing $7.82 $280.78 $7.88 $328.48
Site General and Administrative $1.07 $38.57 $1.11 $46.43
Jawoyn Royalty $0.38 $13.50 $0.32 $13.50
Water Treatment $0.07 $2.35 $0.08 $3.53
Tailings Management $0.08 $2.71 $0.07 $3.07
Refining Costs $0.09 $3.20 $0.08 $3.22
Power Credit $0.00 $0.00 $-0.10 $-3.99
Total Cash Costs $16.01 $574.71 $15.48 $645.14
  Note: Jawoyn Royalty and refinery costs calculated at $1,350 per ounce gold.  May not add due to rounding.

 

Mining and Production

 

The mine plan contemplates that 221.0 million tonnes of ore containing an estimated 5.85 million ounces of gold at an average grade of 0.82 g Au/t to be processed over the 13-year operating life of the Project.  Total recovered gold is expected to be 5.3 million ounces.  Average annual gold production over the life of the Project is expected to be 413,400 ounces, averaging 495,100 ounces during the first five years of commercial operations, with 608,600 ounces produced in the first year of commercial operation. Commercial production is anticipated to begin after two years of construction and six months of commissioning and ramp-up.

 

The table below highlights the PFS production schedule.

 

 

Years Ore Mined
(kt)
Waste Mined
(kt)
Strip
Ratio
(W:O)
Milled Ore
(kt)
Milled
Grade
(g/t)
Contained
Ounces
(kozs)
Mill
Production
(kozs)
-1 2,859 8,802 3.08
1 16,138 10,498 0.65 12,461 1.17 469 430
2 15,613 47,536 3.04 17,750 0.85 482 438
3 24,495 32,880 1.34 17,799 1.04 593 541
4 15,586 76,531 4.91 17,750 0.70 399 360
5 29,852 58,085 1.95 17,750 1.10 629 574
6 8,984 87,011 9.69 17,750 0.78 446 404
7 7,178 68,218 9.50 17,799 0.52 298 264
8 13,482 56,598 4.20 17,750 0.61 297 266
9 18,750 42,935 2.29 17,750 0.70 397 358
10 28,653 29,747 1.04 17,750 0.93 528 481
11 25,970 4,148 0.16 17,799 1.18 674 618
12 127 0 0 17,750 0.65 371 334
13 15,805 0.52 265 237
Total 207,687 522,990 2.52 221,041 0.82 5,848 5,305
Note: May not add due to rounding.  Total milled ore includes material from the heap leach pad that is planned to be processed at the end of the mine life.  

 

Project Mineral Resources and Reserves

 

The table below presents the estimated mineral resources and reserves for the Project.  The effective date of the Batman and Quigleys deposits mineral resource estimates is January 24, 2018.  The effective date of the heap leach mineral resource estimate is July 9, 2014. 

 

 

Mt. Todd Gold Project Mineral Reserves – 50,000 tpd, 0.40 g Au/t cut-off and $1,250 per ounce gold
 
  Batman Deposit Heap Leach Pad Quigleys Deposit Total
  Tonnes (000s) Grade (g/t) Contained Ounces (000s) Tonnes (000s) Grade (g/t) Contained Ounces (000s) Tonnes (000s) Grade (g/t) Contained Ounces (000s) Tonnes (000s) Grade (g/t) Contained Ounces (000s)
Proven 72,672 0.88 2,057 72,672 0.88 2,057
Probable 135,015 0.82 3,559 13,354 0.54 232 148,369 0.79 3,791
Proven & Probable 207,687 0.84 5,616 13,354 0.54 232 221,041 0.82 5,848
 
Mt. Todd Gold Project Mineral Resources
 
  Batman Deposit Heap Leach Pad Quigleys Deposit Total
  Tonnes (000s) Grade (g/t) Contained Ounces (000s) Tonnes (000s) Grade (g/t) Contained Ounces (000s) Tonnes (000s) Grade (g/t) Contained Ounces (000s) Tonnes (000s) Grade (g/t) Contained Ounces (000s)
Measured 77,725 0.88 2,191 457 1.27 19 78,182 0.88 2,210
Indicated 200,112 0.80 5,169 13,354 0.54 232 5,743 1.12 207 219,209 0.80 5,608
Measured & Indicated 277,837 0.82 7,360 13,354 0.54 232 6,200 1.13 225 297,391 0.82 7,818
Inferred 61,323 0.72 1,421 1,600 0.84 43 62,923 0.72 1,464
Note: Measured & indicated mineral resources include proven and probable mineral reserves.  Batman and Quigleys mineral resources are quoted at a 0.40g Au/t cut-off grade.  Heap Leach mineral resources are the average grade of the heap, no cut-off grade applied.  Economic analysis conducted only on proven and probable mineral reserves.  Rex Bryan of Tetra Tech is the Qualified Person responsible for the geologic mineral resource estimates.  Thomas Dyer of Mine Development Associates is the Qualified Person responsible for developing mineral reserves for the Batman deposit.  Dr. Deepak Malhotra of Resource Development Inc. is the Qualified Person responsible for the metallurgical data and program, and for developing mineral reserves for the heap leach.  See “Cautionary Note to United States Investors” below.  

 

Project Description

 

Gold mineralization in the Batman Deposit at the Project occurs in sheeted veins within silicified greywackes/shales/siltstones.  The Batman deposit strikes north-northeast and dips steeply to the east.  Higher grade zones of the deposit plunge to the south.  The core zone is approximately 200-250 meters wide and 1.5 kilometers long, with several hanging wall structures providing additional width to the deposit.  Mineralization is open at depth as well as along strike, although the intensity of mineralization weakens to the north and south along strike.

 

The Project is designed to be a conventional, owner-operated, open-pit mining operation that will utilize large-scale mining equipment in a drill/blast/load/haul operation.  Ore is planned to be processed in a comminution circuit consisting of a gyratory crusher, two cone crushers, two high pressure grinding roll crushers, and primary grinding by two ball mills and secondary grinding by 10 FLSmidth VXP mills.  Vista plans to recover gold in a conventional carbon-in-pulp recovery circuit.

 

Metallurgy, Processing and Infrastructure

 

Vista has completed extensive metallurgic test work that was announced in press releases dated August 2, 2018, January 9, 2019, April 8, 2019, May 29, 2019, and August 13, 2019. 

 

Vista’s recent metallurgic test programs confirmed: (1) the efficiency of ore sorting across a broad range of head grades and the natural concentration of gold in the screen undersize material prior to sorting; (2) the efficiency of fine grinding and improved gold leach recoveries at an 80% passing grind size of 40 microns; and (3) the selection of FLSmidth VXP mill as the preferred fine-grinding mill.

 

Benchmarking

 

Vista retained GR Engineering Services of Perth, Australia to undertake a benchmarking study to assess the appropriateness of capital and operating cost estimates, construction and ramp-up schedules, owner’s costs and key components of the Project, such as power supply.  Vista has given thorough consideration to this study, resulting in important changes to the costs and schedule of the Project.

 

Opportunities for Adding Value

 

In addition to the mineral reserves at the Batman Deposit, we estimate measured and indicated resources of 1.7 million ounces gold (70.2 million tonnes at 0.77 g Au/t) and inferred resources of 1.4 million ounces gold (61.3 million tonnes at 0.72 g Au/t). A portion of the inferred resources are contained within the existing pit design and are currently included in the mine plan as waste material. Additional resources are predominantly at depth and lateral along strike. Potential to convert part of the mineral resources to reserves represents an opportunity to improve existing LOM economics and extend mine life.

 

The Company also has known mineral resources at the Quigleys Deposit, which is close to the planned processing plant. The estimated grade of the Quigleys Deposit is higher than the estimated average grade of the Batman Deposit and could provide a source of higher-grade feed in the mid years of the Project when higher stripping is encountered and the average grade of feed to the plant is expected to decrease. Additional drilling and metallurgical testing are required to develop mine plans and ultimately convert part of the Quigleys resource to proven or probable reserves.

 

Growth through exploration represents additional opportunity to add value at Mt Todd. Both the Batman Deposit and Quigleys Deposit remain open. In addition, Vista controls over 1,100 sq. km of contiguous exploration licenses at the southeast end of the Pine Creek Mining District. Various gold targets have been identified through early-stage, grass roots exploration programs along the Cullen-Australis and Batman-Driffield structural corridors, the latter of which is the host to the Batman Deposit. To-date, Vista’s exploration efforts have primarily focused on the Batman Deposit.

 

The PFS uses a natural gas price derived from east coast gas pricing.  The Company believes that there would be a significant opportunity to achieve a lower gas price upon commitment to a long-term gas delivery contract. This belief is in part based on local expectations of significantly increased gas reserves in the Beetaloo Basin south of the Mt Todd project. The Company is also considering additional optimization of the power plant.

 

Detailed Report

 

An NI 43-101 compliant technical report will be filed on SEDAR and EDGAR within 45 days of the date hereof and will be available on our website at that time.  As part of the sensitivity analysis of the Project, Vista intends to complete and present the results of an alternate 33,000 tpd project as part of the technical report.

 

About Vista Gold Corp.

 

The Company is a well-funded gold project developer. Our principal asset is our flagship Mt Todd gold project in Northern Territory, Australia.  Mt Todd is the largest known undeveloped gold project in Australia.

 

Posted September 10, 2019

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