Vista Gold Corp. Announces Spin-Off of Its Nevada Assets and Concurrent Acquisition of Nevada Assets Held by the Pescio Group
11 Juli 2006 - 1:58AM
PR Newswire (US)
DENVER, July 10 /PRNewswire-FirstCall/ -- Vista Gold Corp.
(AMEX:VGZ) Toronto is pleased to announce that it has entered into
a binding letter of intent with Carl and Janet Pescio, Greg
Hryhorchuk and Robert Lipsett (together, the "Pescio Group"),
pursuant to which, Vista will spin off its existing Nevada
properties into a new publicly-listed company ("Newco") that will,
concurrently with the spin-off, acquire the Nevada mining
properties of the Pescio Group. The transaction will be completed
by way of a court-approved plan of arrangement under the Business
Corporations Act (Yukon). Vista management believes that the
combined properties of Vista and the Pescio Group would represent
one of the largest exploration packages ever assembled in Nevada
with approximately 190,000 acres of prospective patented and
unpatented mining claims. The transaction is subject to, among
other things, court, shareholder and regulatory approvals. Details
of the Transaction Under the transaction, Vista's shareholders will
exchange their current common shares of Vista for common shares of
Newco and new common shares of Vista. The effect of the transaction
on existing outstanding options and warrants to acquire shares of
Vista will be described in the information circular for the special
meeting of shareholders to approve the transaction. Completion of
the transaction is subject to a number of conditions including: (a)
completion of due diligence by all parties; (b) the execution and
delivery of a definitive agreement by all parties; (c) receipt of
all required court, shareholder, regulatory and third party
approvals; (d) receipt of approval by the board of directors of
Vista and its independent committee; and (e) certain other
customary conditions. In addition, in order to fund the cash
consideration to the Pescio Group (as described below) and its
ongoing business, it is anticipated that Newco will raise at least
US$40 million through a private placement equity financing which
will close concurrently with the completion of the transaction
described above. Under the terms of the proposed transaction,
approximately 60% of the total consideration payable by Newco in
respect of the asset acquisitions would be paid to Vista or its
security holders and approximately 40% would be paid to the Pescio
Group. The consideration payable to Vista and its security holders
will consist of securities of Newco. The consideration payable to
the Pescio Group will consist of shares of Newco and US$15 million
in cash. Vista has retained Sprott Securities Inc. of Toronto,
Ontario, an independent investment banking firm, to provide it with
a fairness opinion in respect of the proposed transaction. The
parties are working towards completing a definitive agreement after
which, Vista expects to deliver to shareholders an information
circular, which will fully describe the proposed transaction, in
connection with a special meeting of shareholders which will be
held to approve the transaction. If all conditions are satisfied or
waived, the parties expect closing of the transaction to occur by
mid September 2006. The Pescio Group's Properties The Pescio Group
is the underlying landowner and royalty holder on 53 mineral
properties in north central Nevada covering approximately 139,000
acres. Over a fifteen-year period, geologist Carl Pescio assembled
the property portfolio, approximately one-half of which is in the
principal Nevada gold trends of Carlin, Cortez and Battle Mountain.
All of the properties are optioned to junior and major companies
and the Pescio Group's retained royalty interest averages 3.6% on
the properties. The Pescio Group's retained royalty interests
realized US$1.6 million in advance minimum royalty revenues in 2005
and according to the option agreements, the advance minimum royalty
payments are scheduled to increase in the future. Vista understands
that: technical reports compliant with Canadian National Instrument
43-101 have been completed for 25 of these properties, including
two properties for which gold resource estimates conforming to NI
43-101 standards have been completed and one property for which
historical gold resource estimates have been completed. Further
details regarding these properties will be contained in the
information circular for the special meeting of shareholders to be
held to approve the proposed transaction. Vista's Nevada Properties
As previously announced, including the Hycroft Mine, Vista owns six
properties in Nevada with measured and indicated gold resources
totaling 3.3 million ounces plus inferred gold resources totaling
1.6 million ounces. The Hycroft Mine is positioned to resume
production at current gold prices. As a result of Vista's
acquisition of F.W. Lewis, Inc. in December 2005, Vista also
controls 53 exploration properties in Nevada of which three
properties are farmed out for exploration under options to
purchase. The three options to purchase currently provide Vista
with income of approximately US$53,000 per year. Vista's 59 Nevada
properties total approximately 51,000 acres of patented and
unpatented mining claims. Rationale for the Transaction Vista
believes that the current market price of its securities does not
adequately reflect the underlying value of its Nevada properties.
By spinning these Nevada assets off into Newco and adding the
Nevada-based assets of the Pescio Group to create a single,
Nevada-focused gold company, Vista believes that its shareholders
will be more likely to realize the value of those underlying assets
over time. Newco's business plan will involve using the best
available management and geologic talent to expand existing
discoveries, with the initial priority and emphasis to be placed on
the evaluation of the deeper, high-grade potential at Hycroft and
to generate drill-ready targets for substantial exploration
programs. Development of the existing Hycroft reserve may be
deferred until the drill program and evaluation of the potentially
larger resource are completed. A management team comprised of
Nevada-experienced exploration geologists and personnel together
with a well-proven group of experienced and committed directors,
including Carl Pescio, are being assembled to direct the activities
of Newco. Over the next few weeks, Vista will provide shareholders
and investors with more comprehensive information on the
properties, plans, management and board of Newco. Mike Richings,
Vista President and CEO commented: "The package of properties
assembled by Carl Pescio cannot be replicated. The option
agreements with the advance minimum royalty payments will generate
future revenues, while significant exploration programs are
undertaken. We believe that the steps we are taking to put Mr.
Pescio's land holdings together with Vista's assets in Nevada will
increase the total value of the investment shareholders have made
in Vista. If the transaction is completed, Vista shareholders will
own shares in both Vista and Newco and we believe both companies
will be more likely to be fully valued by the market than if all
the properties were held together in one company." "Vista, with its
strong balance sheet, will continue to focus on increasing and
adding value to our excellent portfolio of properties. Remaining in
Vista will be seven properties containing a total of 9.7 million
ounces of gold in measured and indicated resources with an
additional 3.6 million ounces of gold in inferred resources. These
include two properties which are well advanced: Paredones Amarillos
in Baja California Sur, Mexico, with 1.6 million ounces of gold of
contained reserves with an estimated cash operating cost of $292
per gold ounce; and Mt. Todd in the Northern Territory, Australia,
which contains a total of 1.8 million ounces of gold in measured
and indicated resources and 1.5 million ounces of gold in inferred
resources. Vista is currently undertaking an update of the permits
and infrastructure requirements at Paredones Amarillos and
preliminary economic and technical studies on Mt. Todd." "I look
forward to presenting our shareholders and investors the details of
our plans in the near future, and introducing Newco's
well-qualified management and board team which we are assembling to
execute the plan." About Vista Gold Corp. Vista Gold Corp., based
in Littleton, Colorado, evaluates and acquires gold projects with
defined gold resources. Additional exploration and technical
studies are undertaken to maximize the value of the projects for
eventual development. The Corporation's holdings include the
Maverick Springs, Mountain View, Hasbrouck, Three Hills, Wildcat
projects, the F.W. Lewis, Inc. properties and the Hycroft mine, all
in Nevada, the Long Valley project in California, the Yellow Pine
project in Idaho, the Paredones Amarillos and Guadalupe de Los
Reyes projects in Mexico, the Mt. Todd project in Australia, the
Amayapampa project in Bolivia and the Awak Mas project in
Indonesia. Cautionary Notes to U.S. Investors Concerning Reserve
and Resource Estimates The estimates of mineral reserves shown in
this press release have been prepared in accordance with Canadian
National Instrument 43-101. The definitions of proven and probable
reserves used in NI 43-101 differ from the definitions in SEC
Industry Guide 7. Accordingly, the disclosure of mineral reserves
herein may not be comparable to information from U.S. companies
subject to the SEC's reporting and disclosure requirements. This
press release uses the term "measured and indicated resources". We
advise U.S. investors that while this term is recognized and
required by Canadian regulations, the U.S. Securities and Exchange
Commission does not recognize it. U.S. investors are cautioned not
to assume that any part or all of mineral deposits in this category
will ever be converted into reserves. This press release also uses
the term "inferred resources". We advise U.S. investors that while
this term is recognized and required by Canadian regulations, the
U.S. 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. U.S. investors are
cautioned not to assume that any part or all of an inferred
resource exists or is economically or legally minable.
Forward-Looking Statements This press release contains
forward-looking statements within the meaning of the U.S.
Securities Act of 1933 and U.S. Securities Exchange Act of 1934.
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 future business strategy,
competitive strengths, goals, expansion and growth of Vista's or
Newco's businesses, operations, plans and other such matters are
forward-looking statements. When used in this press release, the
words "estimate," "plan," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify
forward-looking statements. The statements made in this press
release about the anticipated impact the contemplated transaction
described herein may have on the operations of Vista or Newco, as
well as the benefits expected to result from the contemplated
transaction, are forward-looking statements. Other forward-looking
statements include but are not limited to those with respect to
future financings, reserve and resource estimates and production
costs. These statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Vista and Newco, including
anticipated consequences of the contemplated transaction described
herein, to be materially different from any future risks,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others,
risks that Vista's or Newco's acquisition, exploration and property
advancement efforts will not be successful; risks relating to
fluctuations in the price of gold; the inherently hazardous nature
of mining-related activities; uncertainties concerning reserve and
resource estimates; potential effects on Vista's or Newco's
operations of environmental regulations in the countries in which
they operate; and uncertainty of being able to raise capital on
favorable terms, as well as those factors discussed in the
Corporation's latest Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission. Although Vista has attempted to
identify important factors that could cause actual results to
differ materially from those described in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate as actual results
and future events could differ materially from those anticipated in
such statements. Vista assumes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. For further information, please contact
Greg Marlier at (720) 981-1185, or visit the Vista Gold Corp.
website at http://www.vistagold.com/ DATASOURCE: Vista Gold Corp.
CONTACT: Greg Marlier of Vista Gold Corp., +1-720-981-1185 Web
site: http://www.vistagold.com/
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