NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tabular information set out below is in thousands of United States dollars, except as otherwise stated.
1.
Nature of operations
The Corporation evaluates, acquires and explores gold exploration and potential development projects. As such, the Corporation is considered an Exploration Stage Enterprise.
The Corporation's approach to acquisitions of gold projects has generally been to seek projects within political jurisdictions with well established mining, land ownership and tax laws, which have
adequate drilling and geological data to support the completion of a third-party review of the geological data and to complete an estimate of the gold mineralization. In addition, the Corporation
looks for opportunities to improve the value of its gold projects through exploration drilling, and/or re-engineering the operating assumptions underlying previous engineering work.
Beginning
in 2007, the Board of Directors and management have decided to take on a new direction regarding the Corporation's more advanced projects. The more advanced projects will move forward
through advanced and pre-feasibility studies, so production decisions can be made on those projects.
2.
Significant accounting policies
-
(a)
-
Generally accepted accounting principles
The
consolidated financial statements of the Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in Canada. For the purposes of these
financial statements, these principles conform, in all material respects, with generally accepted accounting principles in the United States, except as described in Note 17.
-
(b)
-
Principles of consolidation
The
consolidated financial statements include the accounts of the Corporation and its subsidiaries. All intercompany transactions and balances have been eliminated. The Corporation's subsidiaries and
percentage ownership in these entities as of December 31, 2007 are:
|
|
Ownership
|
Vista Gold U.S., Inc. and its wholly-owned subsidiaries
|
|
100%
|
|
|
Vista California, LLC
|
|
|
|
|
Idaho Gold Resources LLC
|
|
|
Granges Inc. (previously called Granges (Canada) Inc.)
|
|
100%
|
Minera Paredones Amarillos Holding Corp.
|
|
100%
|
|
|
Minera Paredones Amarillos S.A. de C.V.
|
|
|
Vista Gold (Antigua) Corp. and its wholly-owned subsidiary
|
|
100%
|
|
Compania Inversora Vista S.A. and its wholly-owned subsidiaries
|
|
|
|
|
Minera Nueva Vista S.A.
|
|
|
|
|
Compania Exploradora Vistex S.A.
|
|
|
Vista Gold (Barbados) Corp. and its wholly-owned subsidiary
|
|
100%
|
|
Salu Siwa Pty. Ltd and its wholly-owned subsidiary
|
|
|
|
|
PT Masmindo Dwi
|
|
|
Vista Minerals (Barbados) Corp. and its wholly-owned subsidiary
|
|
100%
|
|
Vista Australia Pty Ltd.
|
|
|
-
(c)
-
Use of estimates
The
preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the
reporting period. Significant areas requiring the use of estimates include mine closure and reclamation obligations, useful lives for asset
64
depreciation
purposes, impairment of mineral properties and the calculation of stock-based compensation. Actual results could differ from these estimates.
-
(d)
-
Foreign currency translation
The
Corporation's executive office is located in Littleton, Colorado and the U.S. dollar is the functional currency of the Corporation's business. Accordingly, all amounts in these consolidated
financial statements of the Corporation are expressed in U.S. dollars, unless otherwise stated.
The
accounts of integrated foreign operations are translated using the temporal method. Under this method, monetary assets and liabilities are translated at the year-end rate of exchange,
non-monetary assets and liabilities are translated at the rates prevailing at the respective transaction dates, and revenue and expenses, except for depreciation, are translated at the
average rate of exchange during the year. Translation gains and losses are reflected in the loss for the year.
-
(e)
-
Cash and cash equivalents
Cash
and cash equivalents are considered to include cash on hand, demand balances held with banks, and certificates of deposit all with maturities of three months or less when purchased.
-
(f)
-
Allowance for Accounts Receivable
The
Corporation evaluates the collectability of our accounts receivables based on a combination of factors. In circumstances were we are aware of a specific entity's inability to meet its financial
obligations to us, the Corporation records a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount the Corporation reasonably believes will
be collected.
-
(f)
-
Marketable securities
Effective
January 1, 2007, the Corporation adopted CICA Handbook Sections 1530, "Comprehensive Income", 3855, "Financial InstrumentsRecognition and Measurement" and 3861,
"Financial InstrumentsDisclosure and Presentation." The adoption of these new sections had no impact on the Corporation's financial statements on or before December 31, 2006 as the
sections require adjustments to the carrying value of available-for-sale securities to be recorded within accumulated other comprehensive income on transition. Upon adoption of
these sections, the Corporation made a one-time adjustment to the opening balance, as of January 1, 2007, of accumulated other comprehensive income in the amount of $532.
All
available-for-sale securities are measured at fair-value. Gains and losses associated with these available-for-sale securities will be
separately recorded as unrealized within other comprehensive income until such time the security is disposed of or becomes impaired, at which time any gains or losses will then be realized and
reclassified to the statement of loss.
Upon
adoption of the new "Section 3855Financial Instruments", all regular-way purchases of financial assets are accounted for at trade date. Transaction costs on
financial assets are treated as part of the investment cost.
-
(g)
-
Mineral properties
Mineral
property acquisition costs and exploration expenditures are recorded at cost and are deferred until the viability of the property is determined. No properties have reached the development
stage at this time.
65
General
overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. If a project is put into production, capitalized
costs are depleted on the unit of production basis.
Option
payments and reimbursements received are treated as a recovery of mineral property costs. Option payments are at the discretion of the optionee and accordingly are accounted for on a cash basis
or when receipt is reasonably assured.
Management
of the Corporation regularly reviews the net carrying value of each mineral property. Where information and conditions suggest impairment, estimated future net cash flows from each property
are calculated using estimated future prices, proven and probable reserves and value beyond proven and probable reserves, and operating, capital and reclamation costs on an undiscounted basis. If it
is determined that the future cash flows are less than the carrying value, a write-down to the estimated fair value is made with a charge to loss for the period. Where estimates of future
net cash flows are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.
Management's
estimates of gold prices, recoverable proven and probable reserves, probable outcomes, operating capital and reclamation costs are subject to risks and uncertainties that may affect the
recoverability of mineral property costs. Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur in the near term that
could adversely affect management's estimate of net cash flows expected to be generated and the need for possible asset impairment write-downs.
Although
the Corporation has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Corporation's title. Such properties may be subject to
prior undetected agreements or transfers and title may be affected by such defects.
-
(h)
-
Plant and equipment
Plant
and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging primarily from three to ten years.
Significant expenditures, which increase the life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. Upon sale or retirement of assets, the costs and
related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gains or losses are reflected in operations.
-
(i)
-
Asset retirement obligation and closure costs
The
fair value of a liability for the Corporation's legal obligations associated with the retirement of long-lived assets is recognized in the period in which it is incurred. The
associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset unless the asset has been previously written off, in which case the amount
is expensed.
-
(j)
-
Loss per share
Loss
per share is calculated by dividing the loss for the year by the weighted average number of Common Shares outstanding during the year. The effect of potential issuances of common share
equivalents under options and warrants would be anti-dilutive and therefore, the basic and diluted losses per share are the same.
66
-
(k)
-
Stock-based compensation
The
Corporation records compensation expense on the granting of all stock-based compensation awards, including stock options grants to employees, calculated using the fair-value method.
The Corporation uses the Hull-White Trinomial method of determining the fair value of the option on the date of the grant. When an employee or non-employee is granted stock
options, the fair value of the immediately vested portion is expensed and included within
the stock options balance within equity. As to the options vesting, the fair-value is amortized using the straight-line method over the vesting period and expensed on a monthly
basis. When an employee or non-employee exercises stock options, then the fair-value of the options on the date of the grant is transferred to common stock. When options are
cancelled, the vested fair-value balance of the stock options is transferred to contributed surplus. When stock options are forfeited prior to becoming fully vested, any expense and
fair-value previously recorded are reversed through income. When options expire, the related fair-value is transferred to contributed surplus.
-
(l)
-
Warrants
Warrants
issued as consideration for mineral properties and services rendered are recorded at fair value.
-
(m)
-
Variable Interest Entities
Effective
January 1, 2005, the Corporation adopted Accounting Guidelines AcG-15, Consolidation of Variable Interest Entities, which requires consolidation of entities in which the
Corporation has a controlling financial interest. The Corporation has determined that it has no variable interest entities.
3.
Dispositions and assets held for sale
Completion of the Arrangement involving Vista Gold Corp., Allied Nevada Gold Corp. and the Pescios
The previously announced Arrangement involving the Corporation, Allied Nevada Gold Corp. ("Allied Nevada"), Carl Pescio and Janet Pescio (the "Pescios") pursuant to the
Arrangement and Merger Agreement between the parties dated as of September 22, 2006 as amended (the "Arrangement Agreement"), closed on May 10, 2007. The transaction resulted in
the acquisition by Allied Nevada of the Corporation's Nevada-based properties and the Nevada mineral assets of Carl and Janet Pescio. Of the 38,933,055 shares of Allied Nevada common
stock (the "Allied Nevada Shares") issued as part of the transaction, 12,000,000 were issued to Carl and Janet Pescio as partial consideration for the acquisition of their Nevada mineral
assets and 26,933,055 were issued to the Corporation in accordance with the Arrangement. As part of the transaction, the Corporation's shareholders exchanged each of their old common shares and
received: (i) one Common Share and (ii) a pro rata portion of (A) the number of Allied Nevada Shares received by the Corporation as part of the Arrangement less
(B) the number of Allied Nevada Shares retained by Vista Gold to facilitate payment of any taxes payable in respect of the Arrangement. Accordingly, of the 26,933,055 Allied Nevada
Shares issued to the Corporation, 25,403,207 shares were distributed to shareholders of the Corporation by way of an in-kind dividend with a value of $36,159 and the Corporation
retained 1,529,848 shares to facilitate the payment of any taxes payable by the Corporation in respect of the Arrangement. The Common Shares of the Corporation and the Allied Nevada Shares
began trading on May 10, 2007, on the Toronto Stock Exchange and the American Stock Exchange. Also, under the Arrangement Agreement, the Corporation transferred $25.0 million less the
outstanding receivable of $0.5 million to Allied Nevada.
The
1,529,848 Allied Nevada Shares that the Corporation retained have a book value of $2.19 million, which is the difference between the net assets transferred to Allied Nevada of
$38,343 and the
67
dividend-in-kind
of $36,159 distributed to the Corporation's shareholders. The dividend-in-kind amount of $36,159 was derived from dividing the net
assets by the number of shares received from Allied Nevada to derive a per share amount and then multiplying that amount by the number of shares distributed to the shareholders of the Corporation.
These available-for-sale securities have been fair-valued as of December 31, 2007 and have a fair market value of $9.5 million based on the Allied
Nevada share price at that date. The fair market value of these shares is included in marketable securities on the Corporation's Consolidated Balance Sheets and the unrealized gain recorded within
other comprehensive income.
The
aggregate carrying amount of the net assets transferred from the Corporation to Allied Nevada is as follows:
|
|
May 10,
2007
|
|
December 31,
2006
|
|
|
(U.S. dollars in thousands)
|
Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
25,000
|
|
$
|
|
Accounts receivable
|
|
|
7
|
|
|
102
|
Supplies, inventory, prepaids and other
|
|
|
119
|
|
|
121
|
|
|
|
|
|
|
Current assets
|
|
$
|
25,126
|
|
$
|
223
|
Restricted cash
|
|
|
5,385
|
|
|
5,320
|
Mineral propertiesNote 5
|
|
|
9,867
|
|
|
10,196
|
Plant and equipmentNote 6
|
|
|
929
|
|
|
996
|
Reclamation premium costs and other assets
|
|
|
1,839
|
|
|
1,882
|
|
|
|
|
|
|
|
|
18,020
|
|
|
18,394
|
|
|
|
|
|
Total assets related to Arrangement
|
|
$
|
43,146
|
|
$
|
18,617
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
$
|
9
|
Accrued liabilities and other
|
|
|
120
|
|
|
152
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
120
|
|
$
|
161
|
Capital lease obligation
|
|
|
20
|
|
|
23
|
Asset retirement obligation and closure costs
|
|
|
4,663
|
|
|
4,663
|
|
|
|
|
|
Total liabilities related to Arrangement
|
|
$
|
4,803
|
|
$
|
4,847
|
|
|
|
|
|
Net assets related to Arrangement
|
|
$
|
38,343
|
|
$
|
13,770
|
|
|
|
|
|
The
Corporation has allocated corporate overhead income and expenses to Allied Nevada based on the ratio of mineral properties transferred to Allied Nevada. These allocations, along with the actual
income and expenses of the Corporation's subsidiaries that held the assets transferred are listed on the Statements
68
of
Loss as losses from discontinued operations. Losses and cash flows from the Nevada-based properties, included in discontinued operations are as follows:
|
|
May 10,
2007
|
|
December 31,
2006
|
|
December 31,
2005
|
|
Income:
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
305
|
|
$
|
539
|
|
$
|
134
|
|
Gain on disposal of assets
|
|
|
|
|
|
|
|
|
7
|
|
Gain on disposal of marketable securities
|
|
|
62
|
|
|
61
|
|
|
|
|
Other income
|
|
|
2
|
|
|
24
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
$
|
369
|
|
$
|
624
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Exploration, property evaluation and holding cocts
|
|
$
|
(341
|
)
|
$
|
(1,354
|
)
|
$
|
(1,305
|
)
|
Corporate administration and investor relations
|
|
|
(383
|
)
|
|
(1,181
|
)
|
|
|
|
Depreciation and amortization
|
|
|
(70
|
)
|
|
(199
|
)
|
|
(199
|
)
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
(794
|
)
|
|
(2,734
|
)
|
|
(1,504
|
)
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
$
|
(425
|
)
|
$
|
(2,110
|
)
|
$
|
(1,362
|
)
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
(260
|
)
|
$
|
(1,780
|
)
|
$
|
(732
|
)
|
Financing activities
|
|
|
(62
|
)
|
|
(495
|
)
|
|
(5,603
|
)
|
|
|
|
|
|
|
|
|
Net increase/decrease in cash and cash equivalents
|
|
$
|
(322
|
)
|
$
|
(2,275
|
)
|
$
|
(6,335
|
)
|
|
|
|
|
|
|
|
|
Also,
upon completion of the Arrangement, $2,352 in costs associated with the Arrangement previously held as prepaid items were expensed. These costs included legal fees, tax and audit fees,
regulatory
fees, consultant fees and other items related to the completion of the Arrangement that were not eventually reimbursable by Allied Nevada.
Amayapampa
The Corporation acquired the Amayapampa gold project, in Bolivia, in 1996. The project is being held on care and maintenance and holding costs are expensed. On March 13,
2007, the Corporation entered into an agreement with Luzon Minerals Ltd. ("Luzon") to sell the Amayapampa project to Luzon. This agreement replaced all prior agreements between the Corporation
and Luzon, as previously reported, with respect to the Amayapampa project.
On
November 20, 2007, the Corporation announced that Luzon had decided not to exercise its option to acquire its interest in the Amayapampa project, citing Luzon's inability to advance the
project with its current financial and personnel resources. Since the termination of this agreement the Corporation has been actively engaged in locating another buyer for the Amayapampa project and
accepting proposals from other interested companies, and therefore, at year end, it was determined that the Amayapampa project was held for sale. Upon making this determination, the Corporation
assessed the fair market value of the Amayapampa project using economic models incorporating the terms of an arm's length proposal to purchase the Amayapampa project currently under consideration by
the Corporation. The models employed various production scenarios, a weighted-average gold price of $716 per ounce and discount rates of 10% and 15% reflecting management's assessment of
the risks associated with the development.
69
The
average of these calculations indicated a fair market value for the Amayapampa project of $4,813 at December 31, 2007 as compared to the carrying value of $10,326 for the Amayapampa project
which necessitated a write-down to fair market value of $5,513. This write-down has been classified as a loss from discontinued operations as the asset is considered to be held
for sale.
As
of December 31, 2007, the Corporation held the following assets and liabilities relating to Amayapampa for sale:
|
|
December 31,
2007
|
|
December 31,
2006
|
|
|
(U.S. dollars in thousands)
|
Assets:
|
|
|
|
|
|
|
Mineral properties
|
|
$
|
4,813
|
|
$
|
10,326
|
|
|
|
|
|
Total assets held for sale
|
|
$
|
4,813
|
|
$
|
10,326
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
5
|
|
$
|
5
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
5
|
|
$
|
5
|
Other long term liabilities
|
|
|
25
|
|
|
25
|
|
|
|
|
|
Total liabilities held for sale
|
|
$
|
30
|
|
$
|
30
|
|
|
|
|
|
Net assets held for sale
|
|
$
|
4,783
|
|
$
|
10,296
|
|
|
|
|
|
Since
the Amayapampa project is held for sale, the losses associated with the project have been classified as discontinued operations on the Consolidated Statement of Loss and Consolidated Statement
of Cash Flows. Losses and cash flows from Amayapampa, included in discontinued operations are as follows:
|
|
December 31,
2007
|
|
December 31,
2006
|
|
December 31,
2005
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Exploration, property evaluation and holding costs
|
|
$
|
(371
|
)
|
$
|
(140
|
)
|
$
|
(59
|
)
|
Impairment of mineral property
|
|
|
(5,513
|
)
|
|
|
|
|
|
|
Corporate administration, investor relations and other
|
|
|
(10
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
(5,894
|
)
|
|
(142
|
)
|
|
(61
|
)
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
$
|
(5,894
|
)
|
$
|
(142
|
)
|
$
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
|
December 31,
2007
|
|
December 31,
2006
|
|
December 31,
2005
|
|
Operating activities
|
|
$
|
(380
|
)
|
$
|
(142
|
)
|
$
|
(61
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
(85
|
)
|
|
|
|
|
|
|
|
|
Net increase/decrease in cash and cash equivalents
|
|
$
|
(380
|
)
|
$
|
(142
|
)
|
$
|
(146
|
)
|
|
|
|
|
|
|
|
|
70
4.
Marketable securities
|
|
At December 31, 2007
|
|
At December 31, 2006
|
|
|
Cost
|
|
Unrealized
gain/(loss)
|
|
Fair value
|
|
Cost
|
|
Unrealized
gain/(loss)
|
|
Fair value
|
|
|
(U.S. dollars in thousands)
|
Allied Nevada Gold Corp.
|
|
$
|
2,194
|
|
$
|
7,322
|
|
$
|
9,516
|
|
$
|
|
|
$
|
|
|
$
|
|
Esperanza Silver Corp.
|
|
|
10
|
|
|
134
|
|
|
144
|
|
|
16
|
|
|
404
|
|
|
420
|
Luzon Minerals
|
|
|
462
|
|
|
(322
|
)
|
|
140
|
|
|
462
|
|
|
(102
|
)
|
|
360
|
Nevgold Resources Corp.
|
|
|
177
|
|
|
(4
|
)
|
|
173
|
|
|
33
|
|
|
14
|
|
|
47
|
Other
|
|
|
492
|
|
|
417
|
|
|
909
|
|
|
280
|
|
|
216
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,335
|
|
$
|
7,547
|
|
$
|
10,882
|
|
$
|
791
|
|
$
|
532
|
|
$
|
1,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
to January 1, 2007, the Corporation did not recognize unrealized gains or losses on available-for-sale securities within the financial statements. On
January 1, 2007, the Corporation adopted CICA Handbook Sections 1530, "Comprehensive Income" and 3855, "Financial InstrumentsRecognition and Measurement" which resulted in a
one-time adjustment to the opening balance, as of January 1, 2007, of other comprehensive income of $532.
5.
Mineral Properties
|
|
December 31, 2007
|
|
December 31, 2006
|
|
|
Cost
|
|
Accumulated
Amortization
and Write-downs
|
|
Net
|
|
Cost
|
|
Accumulated
Amortization
and Write-downs
|
|
Net
|
|
|
(U.S. dollars in thousands)
|
Maverick Springs, United States
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,471
|
|
$
|
|
|
$
|
1,471
|
Mountain View, United States
|
|
|
|
|
|
|
|
|
|
|
|
854
|
|
|
|
|
|
854
|
Wildcat, United States
|
|
|
|
|
|
|
|
|
|
|
|
1,017
|
|
|
|
|
|
1,017
|
Hasbrouck and Three Hills, United States
|
|
|
|
|
|
|
|
|
|
|
|
386
|
|
|
|
|
|
386
|
F.W. Lewis, Inc. Properties, United States
|
|
|
|
|
|
|
|
|
|
|
|
2,968
|
|
|
|
|
|
2,968
|
Hycroft mine, United States
|
|
|
|
|
|
|
|
|
|
|
|
21,917
|
|
|
21,917
|
|
|
|
Hycroft Royalty, United States
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral properties transferred to Allied Nevada Gold Corp.
|
|
|
|
|
|
|
|
|
|
|
|
32,113
|
|
|
21,917
|
|
|
10,196
|
Long Valley, United States
|
|
|
948
|
|
|
|
|
|
948
|
|
|
641
|
|
|
|
|
|
641
|
Yellow Pine, United States
|
|
|
739
|
|
|
|
|
|
739
|
|
|
593
|
|
|
|
|
|
593
|
Paredones Amarillos, Mexico
|
|
|
3,987
|
|
|
|
|
|
3,987
|
|
|
3,218
|
|
|
|
|
|
3,218
|
Guadalupe de los Reyes
|
|
|
1,389
|
|
|
|
|
|
1,389
|
|
|
1,249
|
|
|
|
|
|
1,249
|
Awak Mas, Indonesia
|
|
|
3,269
|
|
|
|
|
|
3,269
|
|
|
2,590
|
|
|
|
|
|
2,590
|
Mt. Todd, Australia
|
|
|
7,330
|
|
|
|
|
|
7,330
|
|
|
2,875
|
|
|
|
|
|
2,875
|
Other
|
|
|
390
|
|
|
|
|
|
390
|
|
|
61
|
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral properties retained by the Corporation
|
|
$
|
18,052
|
|
$
|
|
|
$
|
18,052
|
|
$
|
11,227
|
|
$
|
|
|
$
|
11,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71
|
|
2006
|
|
2007
|
|
|
December 31, net balance
|
|
Acquisition costs
|
|
Option payments
|
|
Exploration & land costs
|
|
Cost recovery
|
|
Write-downs
|
|
Retained by Vista Gold Corp.
|
|
Transferred to Allied Nevada Gold Corp.
|
|
Year to date activity
|
|
December 31, Ending Balance
|
|
|
(U.S. dollars in thousands)
|
Maverick Springs, United States
|
|
$
|
1,471
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(1,471
|
)
|
$
|
(1,471
|
)
|
$
|
|
Mountain View, United States
|
|
|
854
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
(855
|
)
|
|
(854
|
)
|
|
|
Wildcat, United States
|
|
|
1,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,017
|
)
|
|
(1,017
|
)
|
|
|
Hasbrouck and Three Hills, United States
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(386
|
)
|
|
(386
|
)
|
|
|
F.W. Lewis, Inc. Properties, United States
|
|
|
2,968
|
|
|
|
|
|
|
|
|
3
|
|
|
(24
|
)
|
|
|
|
|
(309
|
)
|
|
(2,638
|
)
|
|
(2,968
|
)
|
|
|
Hycroft Royalty, United States
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,500
|
)
|
|
(3,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral properties transferred to Allied Nevada Gold Corp.
|
|
$
|
10,196
|
|
|
|
|
|
|
|
|
4
|
|
|
(24
|
)
|
|
|
|
|
(309
|
)
|
|
(9,867
|
)
|
|
(10,196
|
)
|
|
|
Long Valley, United States
|
|
|
641
|
|
|
|
|
|
250
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307
|
|
|
948
|
Yellow Pine, United States
|
|
|
593
|
|
|
|
|
|
100
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146
|
|
|
739
|
Paredones Amarillos, Mexico
|
|
|
3,218
|
|
|
|
|
|
|
|
|
769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
769
|
|
|
3,987
|
Guadalupe de los Reyes, Mexico
|
|
|
1,249
|
|
|
|
|
|
100
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140
|
|
|
1,389
|
Awak Mas, Indonesia
|
|
|
2,590
|
|
|
|
|
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
679
|
|
|
3,269
|
Mt. Todd, Australia
|
|
|
2,875
|
|
|
|
|
|
|
|
|
4,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,455
|
|
|
7,330
|
Other
|
|
|
61
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
309
|
|
|
|
|
|
330
|
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral properties retained by the Corporation
|
|
$
|
11,227
|
|
$
|
|
|
$
|
450
|
|
$
|
6,066
|
|
$
|
|
|
$
|
|
|
$
|
309
|
|
$
|
|
|
$
|
6,825
|
|
$
|
18,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to the completion of the Arrangement, the F.W. Lewis, Inc. properties included three properties in Colorado. These three properties were retained
by the Corporation and are now owned by Vista Gold U.S. Inc. The carrying value of these three properties was $309.
Measurement Uncertainty
The Corporation believes that the fair value of its mineral properties exceeds the carrying value; however, a write-down in the carrying values of one or more of
the Corporation's properties may be required as a result of evaluation of gold resources and application of an impairment test which is based on estimates of gold resources and gold prices.
-
(a)
-
Long Valley
The
Corporation entered into an option agreement on January 22, 2003, with Standard Industrial Minerals, Inc. ("Standard"), to acquire Standard's 100% interest in the Long Valley gold
project in east central California, for an aggregate purchase price of $750,000 which was paid over a five-year period, with annual payments paid as follows: $100,000 paid on each of
January 15, 2003, 2004, and 2005; $200,000 paid on January 22, 2006, and $250,000 paid on January 22, 2007. Accordingly as of January 2007, the Corporation acquired 100% of
the Long Valley project, which is held through the Corporation's indirect wholly-owned subsidiary, Vista Gold California, LLC. Royal Gold, Inc. has a 1% net smelter returns royalty on
the project.
-
(b)
-
Yellow Pine
On
November 7, 2003, Idaho Gold Resources LLC ("Idaho Gold"), an indirect, wholly-owned subsidiary of the Corporation entered into an Option to Purchase Agreement for a nine year option
to purchase 100% of the Yellow Pine gold project for $1.0 million. Idaho Gold made an option payment of $100,000
72
upon
execution of the agreement, an option payment of $100,000 on each of the first, second, third and fourth anniversary dates of the agreement. The agreement calls for Idaho Gold to make five more
yearly payments of $100,000 on or before each anniversary date of the agreement, for a total option payment price of $1.0 million. If Idaho Gold exercises its option to purchase the project,
all option payments shall be applied as a credit against the purchase price of $1.0 million. Idaho Gold has the right to terminate the agreement at any time without penalty. Eleven of the
seventeen claims are subject to an underlying 5% net smelter returns royalty.
-
(c)
-
Paredones Amarillos
The
Corporation acquired 100% of the Paredones Amarillos gold project in Mexico from Viceroy Resource Corporation on August 29, 2002. The total cost of this project included cash payments of
$786,000 for acquisition and related costs, the issuance of 303,030 equity units with a fair value of $1,212,000 and a cash payment of $320,000 on August 29, 2003.
Certain
concessions on the Paredones Amarillos project are subject to a 2% net profits interest retained by a former owner.
-
(d)
-
Guadalupe de los Reyes
On
August 1, 2003, the Corporation executed an agreement to acquire a 100% interest in the Guadalupe de los Reyes gold project in Sinaloa State, Mexico and a data package associated with the
project and general area, for aggregate consideration of $1.4 million and a 2% net smelter returns royalty. During a due diligence period prior to the signing of the purchase agreement, the
Corporation made payments to the owner totaling $100,000, and upon exercising its option to complete the purchase, paid an additional $200,000. On August 4, 2004, the Corporation issued
138,428 Common Shares valued at $500,000. An additional $500,000 in cash is to be paid in installments of $100,000 on each of the second through sixth anniversaries of the signing of the formal
agreement, with the outstanding balance becoming due upon commencement of commercial production. The Corporation has made the first, second and third $100,000 payments under the agreement. A 2% net
smelter returns royalty is held by the previous owner and may be acquired by the Corporation at any time for $1.0 million.
On
December 19, 2007, the Corporation announced that it and Grandcru Resources Corporation ("Grandcru") had signed an agreement for the Corporation to acquire Grandcru's interest in two
gold/silver mineral properties adjacent to Guadalupe de los Reyes, subject to receipt of all necessary regulatory and other approvals.
Under
the terms of the agreement, the Corporation agreed to (a) pay Grandcru $425,000 less any amounts payable in back taxes on the mining concessions, and pay a private investment group known
as the San Miguel Group $75,000, and (b) issue to Grandcru and the San Miguel Group, in aggregate, common shares of the Corporation with a value of $1,000,000 (amounting to
213,503 Common Shares) on closing. In addition, the Corporation has reached an agreement with Goldcorp Inc. and its Mexican subsidiary, Desarrollos Mineros San Luis, S.A. de C.V.
(together, "San Luis"), and with the San Miguel Group to complete the acquisition of their respective interests in the mining concessions at the same time as the closing occurs with Grandcru. The
Corporation agreed ti pay a 2% net smelter returns royalty on all minerals produced payable to the San Miguel Group on the mining concessions known as the San Miguel Concessions. The Corporation
agreed to pay San Luis a 1% net smelter returns royalty on mining concessions known as the San Luis Concessions and the San Miguel Concessions, and 2% to 3% net smelter returns royalty depending on
the gold price on the Corporation's mining concessions known as the
73
Gaitán
Concessions. Certain of the San Luis Concessions are subject to a pre-existing underlying royalty of 3% net smelter returns royalty payable to Sanluis
Corporación, S.A. de C.V.
-
(e)
-
Awak Mas
On
May 27, 2005, the Corporation completed its acquisition of the Awak Mas gold deposit in Sulawesi, Indonesia, pursuant to the exercise of its option to purchase the deposit for a purchase
price of $1.5 million. Under the terms of the option agreement, the Corporation had a six-month option period in which to conduct due diligence while paying the owners $15,000 per
month. The monthly option payments, as well as costs of up to $150,000 expended to correct any deficiencies in asset standing, were to be credited towards the purchase price. On May 12, 2005,
the Corporation transferred $1.2 million to an escrow account. These funds were released to the ultimate vendors of the Awak Mas deposit, Weston and ORT, upon completion of the final
transaction documents. The amount of $1.2 million represented the $1.5 million purchase price less: the $150,000 deposit that the Corporation previously paid (which included $75,000 in
aggregate option payments); and $150,000 expended by the Corporation to correct deficiencies in asset standing.
-
(f)
-
Mt. Todd
Effective
March 1, 2006, the Corporation and its subsidiary Vista Gold Australia Pty Ltd. entered into agreements with Ferrier Hodgson, the Deed Administrators for Pegasus Gold Australia
Pty Ltd. ("Pegasus"), the government of the Northern Territory of Australia and the Jawoyn Association Aboriginal Corporation ("JAAC") and other parties named therein, subject to regulatory
approvals, to purchase a 100% interest in the Mt. Todd gold mine (also known as the Yimuyn Manjerr gold mine) in
the Northern Territory, Australia. Under these agreements, the Corporation is guarantor of the obligations of its subsidiary Vista Australia.
As
part of the agreements, the Corporation agreed to pay Pegasus, AU$1.0 million ($739,600) and receive a transfer of the mineral leases and certain mine assets; and pay the Northern
Territory's costs of management and operation of the Mt. Todd site up to a maximum of approximately AU$375,000 (approximately $277,500) during the first year of the term (initial term is five years,
subject to extensions), and assume site management and pay management and operation costs in following years. Additionally, the Corporation agreed to issue common shares with a value of
CDN$1.0 million (amounting to 177,053 common shares) to the JAAC as consideration for the JAAC entering into the agreement and for rent for the use of the surface overlying the mineral
leases until a decision is reached to begin production. Other agreement terms provide that the Corporation will undertake a technical and economic review of the mine and possibly form one or more
joint ventures with the JAAC. In June 2006, the transactions contemplated under the agreements were completed and effective, with funds held in escrow released to the ultimate vendors and the
common shares issued to the JAAC.
74
6.
Plant and Equipment
|
|
December 31, 2007
|
|
December 31, 2006
|
|
|
Cost
|
|
Accumulated Depreciation
and Write-downs
|
|
Net
|
|
Cost
|
|
Accumulated Depreciation
and Write-downs
|
|
Net
|
|
|
(U.S. dollars in thousands)
|
Hycroft mine, United States
|
|
$
|
11,949
|
|
$
|
11,036
|
|
$
|
913
|
|
$
|
11,949
|
|
$
|
10,969
|
|
$
|
980
|
F.W. Lewis, Inc. Properties, United States
|
|
|
31
|
|
|
15
|
|
|
16
|
|
|
31
|
|
|
15
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PP&E transferred to Allied Nevada Gold Corp.
|
|
|
11,980
|
|
|
11,051
|
|
|
929
|
|
|
11,980
|
|
|
10,984
|
|
|
996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awak Mas, Indonesia
|
|
|
98
|
|
|
43
|
|
|
55
|
|
|
96
|
|
|
24
|
|
|
72
|
Mt. Todd, Australia
|
|
|
397
|
|
|
54
|
|
|
343
|
|
|
30
|
|
|
2
|
|
|
28
|
Paredones Amarillos, Mexico
|
|
|
33
|
|
|
2
|
|
|
31
|
|
|
|
|
|
|
|
|
|
Corporate, United States
|
|
|
455
|
|
|
417
|
|
|
38
|
|
|
429
|
|
|
395
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PP&E retained by the Corporation
|
|
$
|
983
|
|
$
|
516
|
|
$
|
467
|
|
$
|
555
|
|
$
|
421
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
7.
Capital stock
Common Shares issued and outstanding
|
|
Number of
shares issued
|
|
Capital stock
($000's)
|
As of December 31, 2004
|
|
17,961,590
|
|
$
|
149,747
|
Private placement September 2005, net
(f)
|
|
2,168,812
|
|
|
6,763
|
Warrants exercised from February 2003 private placement
(a)
|
|
73,000
|
|
|
286
|
Warrants exercised from February-March 2002 private placement
(b)
|
|
309,002
|
|
|
464
|
Stock options exercised, for cashNote 9
|
|
7,858
|
|
|
25
|
Shares issued for acquistion of gold properties, net
(c)
|
|
250,000
|
|
|
1,217
|
Shares issued for services
(d)
|
|
15,000
|
|
|
73
|
|
|
|
|
|
|
Issued during 2005
|
|
2,823,672
|
|
|
8,828
|
|
|
|
|
|
As of December 31, 2005
|
|
20,785,262
|
|
$
|
158,575
|
Private placement February 2006, net
(g)
|
|
649,684
|
|
|
3,184
|
Public offering November 2006, net
(h)
|
|
3,668,100
|
|
|
28,852
|
Warrants exercised from February-March 2002 private placement
(b)
|
|
1,500,631
|
|
|
2,251
|
Warrants exercised from February 2003 private placement
(a)
|
|
947,000
|
|
|
3,982
|
Warrants exercised from September 2004 private placement
(e)
|
|
1,953,956
|
|
|
9,281
|
Warrants exercised from September 2005 private placement
(f)
|
|
1,763,812
|
|
|
7,231
|
Exercise of stock options, cashNote 9
|
|
219,125
|
|
|
808
|
Exercise of stock options, fair valueNote 9
|
|
|
|
|
469
|
Shares issued for acquisition of gold properties
(c)
|
|
177,053
|
|
|
877
|
Shares issued for services
(d)
|
|
10,000
|
|
|
108
|
|
|
|
|
|
|
Issued during 2006
|
|
10,889,361
|
|
|
57,043
|
|
|
|
|
|
As of December 31, 2006
|
|
31,674,623
|
|
$
|
215,618
|
Warrants exercised from February-March 2002 private placement
(b)
|
|
97,465
|
|
|
146
|
Warrants exercised from September 2005 private placement, cash
(f)
|
|
980,385
|
|
|
2,533
|
Warrants exercised from September 2005 private placement, fair value
|
|
|
|
|
401
|
Warrants exercised from February 2006 private placement
(g)
|
|
262,280
|
|
|
930
|
Exercise of stock options, cashNote 9
|
|
243,153
|
|
|
715
|
Exercise of stock options, fair valueNote 9
|
|
|
|
|
429
|
|
|
|
|
|
|
Issued during 2007
|
|
1,583,283
|
|
|
5,154
|
|
|
|
|
|
As of December 31, 2007
|
|
33,257,906
|
|
$
|
220,772
|
|
|
|
|
|
(a) Warrants exercised from February 2003 private placement
During the twelve months ended December 31, 2006 and 2005, 947,000 and 73,000 of the warrants issued in the February 2003 private placement have been exercised
for total gross proceeds of $3,982,600 and $286,160 (Note 8).
On
May 1, 2006, the Corporation announced that, in accordance with the terms of its outstanding common share purchase warrants (the "February 2003 Warrants"), it had elected to
accelerate the expiry date of all such currently outstanding Warrants since the "Acceleration Event" described in the applicable warrant indentures had occurred.
76
The
Acceleration Event occurred on April 26, 2006 because the closing price of the Corporation's common shares on the American Stock Exchange exceeded 150% of the current exercise price of the
warrants ($4.28) for the 15 consecutive trading days prior to that date.
The
new expiry date for the February 2003 Warrants was May 17, 2006. Of the February 2003 Warrants, 751,000 were outstanding as of the date of acceleration, exercisable at
$4.28 per share of which all were exercised prior to the May 17, 2006 expiry date. Gross proceeds to the Corporation for the exercise of the 751,000 warrants were $3,214,280.
(b) Warrants exercised from February-March 2002 private placement
During the twelve months ended December 31, 2007, 2006 and 2005, 97,465, 1,500,631 and 309,002 of the warrants issued in the February-March 2002 private placement
have been exercised for total gross proceeds of $146,198, $2,250,947 and $463,503, respectively (Note 8).
(c) Common Shares issued for acquisition of gold properties, net
On December 19, 2007, the Corporation agreed to issue Common Shares with a value of $1,000,000 to Grandcru Resources Corporation and a private investor group known as
the San Miguel Group, as partial consideration for the Corporation's acquisition of Grandcru's interest in two gold/silver mineral properties adjacent to the Corporation's Guadalupe de los Reyes
property. Accordingly, an aggregate 213,503 Common Shares of the Corporation were issued on closing of the transaction on January 24, 2008 (Note 5(d)).
On
June 29, 2006, the Corporation issued 177,053 Common Shares valued at $877,466, to the JAAC as consideration for the JAAC entering into the purchase agreement of the Mt. Todd gold
mine and for rent for the use of the surface overlying the mineral leases until a decision is reached to begin production (Note 5(f)).
On
December 9, 2005, the Corporation agreed to issue 250,000 Common Shares valued at $1,217,500 as partial payment towards the purchase of an option to purchase the outstanding shares of
F.W. Lewis, Inc.
(d) Common Shares issued for services, net
Pursuant to an agreement executed May 5, 2006, with Quest Capital Corp. ("Quest"), Quest agreed to provide advisory services to the Corporation for a monthly fee of
$10,000 and 10,000 Common Shares of the Corporation. The 10,000 Common Shares were issued on October 10, 2006 and were valued at $10.76 per Common Share for total consideration
of $107,600.
On
December 7, 2005, the Corporation entered into a non-binding term sheet for a bridge credit facility (the "facility") with Quest. A non-refundable loan fee of
15,000 Common Shares valued at $73,050 in the capital of the Corporation was payable for providing the facility. In January 2006, the Corporation decided not to proceed with
this facility.
(e) Warrants exercised from September 2004 private placement
During the twelve months ended December 31, 2006, 1,953,956 warrants issued in the September 2004 private placement were exercised for gross proceeds
of $9,281,291.
77
On
May 1, 2006, the Corporation announced that, in accordance with the terms of its outstanding common share purchase warrants (the "September 2004 Warrants") issued under a
Warrant Indenture dated September 29, 2004, it had elected to accelerate the expiry date of all such currently outstanding September 2004 Warrants since the "Acceleration Event"
described in the applicable warrant indentures had occurred.
The
new expiry date of the September 2004 Warrants was May 19, 2006. Of the September 2004 Warrants, 1,720,740 were outstanding as of the date of acceleration, exercisable
at $4.75 per share of which 1,708,240 warrants were exercised prior to the May 19, 2006 expiry date and 12,500 warrants expired. Gross proceeds to the Corporation from the
exercise of the 1,708,240 warrants were $8,114,140.
(f) Warrants exercised from September 2005 private placement
On September 23, 2005, the Corporation completed a private placement financing in which it sold and issued a total of 2,168,812 units, at a price of $3.60 per
unit for aggregate gross proceeds of $7,807,723. Net cash proceeds to the Corporation after a finder's fee of $468,463, costs to register the shares of
$69,146, and legal expenses of $106,279 were approximately $7,163,835. Net proceeds after non-cash cost of broker warrants of $401,241 were approximately $6,762,594. Each unit consisted of
one Common Share and one warrant to acquire an additional Common Share of Vista Gold at an exercise price of $4.10. Upon completion of the Arrangement, the number of shares to be issued in connection
with the outstanding warrants was adjusted so that each warrant entitled the holder thereof upon exercise to receive 1.904 common shares per warrant (see Note 8).
During
the twelve months ended December 31, 2007 and 2006, 980,385 and 1,763,812 Common Shares were issued upon exercise of the September 2005 private placement warrants for gross
proceeds of $2,533,312 and $7,231,629, respectively.
(g) Warrants exercised from February 2006 private placement
On February 2, 2006, the Corporation completed a non-brokered private placement financing in which it sold and issued a total of 649,684 units
(the "Units"), at a price of $5.05 per Unit for aggregate gross proceeds of $3,280,904. Net cash proceeds to the Corporation after costs of $66,112 for subsequent registration for resale under
the Securities Act of the shares issued in the private placement and the shares issuable upon exercise of the warrants, and legal expenses of $30,719, were $3,184,073. Each Unit consisted of one
Common Share and one Common Share purchase warrant entitling the holder to acquire an additional Common Share of Vista Gold at an exercise price of $6.00 for a period of two years from the date of
issue. Upon completion of the Arrangement, the number of shares to be issued in connection with the outstanding warrants was adjusted so that each warrant entitled the holder thereof upon exercise to
receive 1.894 common shares per warrant (see Note 8).
During
the twelve months ended December 31, 2007, 262,280 Common Shares were issued upon exercise of the February 2006 private placement warrants for gross proceeds
of $930,000.
(h) Public Offering November 2006, net
On November 7, 2006, the Corporation completed a public offering of 3,668,100 of its Common Shares at a price to the public of $8.50 per share for aggregate gross
proceeds of $31,178,850. Net cash proceeds to the Corporation after payment of agents' fees of $1,706,943 and other offering expenses of $89,178 were
78
$29,382,729.
Net proceeds after non-cash costs of $530,819 for agents' warrants were $28,851,910. All of the shares were offered on a best efforts agency basis pursuant to an effective
shelf registration statement previously filed with the U.S. Securities and Exchange Commission. The Corporation had also previously filed a base shelf prospectus with the securities regulatory
authorities in the provinces of British Columbia, Alberta, Manitoba and Ontario, Canada in connection with the public offering.
A
commission of $1,558,943 (representing 5% of gross proceeds) was paid to one of two agents to the Corporation in conjunction with the public offering. The Corporation also issued, as additional
consideration to the agents, compensation warrants entitling the agents to purchase an aggregate of 183,405 Common Shares of the Corporation at a price of $8.50 for a period of two years
following the closing date. Upon completion of the Arrangement, the number of shares to be issued in connection with the outstanding warrants of each of the two agents was adjusted to so that each
warrant will entitle the holder thereof upon exercise to receive 1.925 common shares per warrant for one agent and 1.928 common shares per warrant for the other agent.
79
8.
Warrants
Further to Note 7, warrants granted and outstanding are summarized in the following table:
|
|
Warrants granted
(1)
(2)
|
|
Valuation ($000's)
|
|
Warrants exercised
|
|
Warrants expired
|
|
Warrants outstanding
|
|
Weighted average exercise prices (U.S. $)
|
|
Expiry date
|
|
Weighted average remaining life (yrs)
|
As of December 31, 2004
|
|
8,990,135
|
|
111
|
|
(3,775,919
|
)
|
(197,740
|
)
|
5,016,476
|
|
|
3.28
|
|
|
|
|
Private placement February-March 2002
|
|
|
|
|
|
(309,002
|
)
|
|
|
(309,002
|
)
|
|
1.50
|
|
FebMar-07
|
|
1.2
|
Private placement February 2003
|
|
|
|
|
|
(73,000
|
)
|
|
|
(73,000
|
)
|
|
3.92
|
|
Feb-07
|
|
1.2
|
Warrants Expired
|
|
|
|
(111
|
)
|
|
|
(122,923
|
)
|
(122,923
|
)
|
|
5.08
|
|
Aug-05
|
|
|
Private placement September 2005
|
|
2,168,812
|
|
|
|
|
|
|
|
2,168,812
|
|
|
4.10
|
|
Sep-06
|
|
0.7
|
Broker warrants September 2005
|
|
216,881
|
|
401
|
|
|
|
|
|
216,881
|
|
|
4.10
|
|
Sep-07
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2005
|
|
2,385,693
|
|
290
|
|
(382,002
|
)
|
(122,923
|
)
|
1,880,768
|
|
|
1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2005
|
|
11,375,828
|
|
401
|
|
(4,157,921
|
)
|
(320,663
|
)
|
6,897,244
|
|
$
|
3.66
|
|
|
|
|
Private placement February 2006
|
|
649,684
|
|
|
|
|
|
|
|
649,684
|
|
|
6.00
|
|
Feb-08
|
|
1.1
|
Public offering broker warrants November 2006
|
|
183,405
|
|
531
|
|
|
|
|
|
183,405
|
|
|
8.50
|
|
Nov-08
|
|
1.9
|
Private placement February-March 2002
|
|
|
|
|
|
(1,500,631
|
)
|
|
|
(1,500,631
|
)
|
|
1.50
|
|
FebMar-07
|
|
0.2
|
Private placement February 2003
|
|
|
|
|
|
(947,000
|
)
|
|
|
(947,000
|
)
|
|
4.28
|
|
Feb-07
|
|
|
Private placement September 2004
|
|
|
|
|
|
(1,953,956
|
)
|
(12,500
|
)
|
(1,966,456
|
)
|
|
4.75
|
|
Sep-06
|
|
|
Private placement September 2005
|
|
|
|
|
|
(1,763,812
|
)
|
|
|
(1,763,812
|
)
|
|
4.10
|
|
Sep-07
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2006
|
|
833,089
|
|
531
|
|
(6,165,399
|
)
|
(12,500
|
)
|
(5,344,810
|
)
|
|
3.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006
|
|
12,208,917
|
|
932
|
|
(10,323,320
|
)
|
(333,163
|
)
|
1,552,434
|
|
$
|
4.82
|
|
|
|
|
Private placement February-March 2002
|
|
|
|
|
|
(97,465
|
)
|
|
|
(97,465
|
)
|
|
1.50
|
|
FebMar-07
|
|
|
Private placement September 2005
|
|
|
|
(401
|
)
|
(617,881
|
)
|
(4,000
|
)
|
(621,881
|
)
|
|
4.10
|
|
Sep-07
|
|
|
Private placement February 2006
|
|
|
|
|
|
(155,000
|
)
|
|
|
(155,000
|
)
|
|
6.00
|
|
Feb-08
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2007
|
|
|
|
(401
|
)
|
(870,346
|
)
|
(4,000
|
)
|
(874,346
|
)
|
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007
|
|
12,208,917
|
|
531
|
|
(11,193,666
|
)
|
(337,163
|
)
|
678,088
|
|
$
|
6.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Each
warrant entitles the holder to purchase common shares as adjusted in accordance with the warrant terms pursuant to the Plan of Arrangement.
-
(2)
-
The
value of all warrants issued in conjunction with private placements is allocated to common stock upon exercise.
Immediately prior to the completion of the Arrangement on May 10, 2007 (see Note 3), there were 1,203,088 outstanding warrants
entitling holders to purchase one Common Share per warrant. Of the aforementioned outstanding warrants, 405,000 were issued as part of the September 2005 private placement,
614,684 were issued as part of the February 2006 private placement and an aggregate 183,405 were issued as payment to two agents in connection with the Corporation's
November 2006 public equity financing. Upon completion of the Arrangement, the number of shares to be issued in connection
80
with
the outstanding warrants was adjusted so that each warrant entitles the holder thereof upon exercise to receive the following number of shares per warrant: 1.904 Common Shares per warrant
for the September 2005 private placement warrants, 1.894 Common Shares per warrant for the February 2006 private placement warrants, 1.925 Common Shares per warrant for
119,213 of the broker warrants and 1.928 Common Shares per warrant for the remaining 64,192 broker warrants.
On
September 23, 2007, the remaining 4,000 warrants issued in conjunction with the September 2005 private placement expired.
During
the year 2005, all of the 122,923 warrants issued on October 7, 2003 for the acquisition of Maverick Springs and Mountain View expired on October 7, 2005. The recorded
fair-value from the expiration of these warrants of $111,000 has been reclassified to contributed surplus.
9.
Stock Options
Under the Corporation's Stock Option Plan (the "Plan"), the Corporation may grant options to directors, officers, employees and consultants of the Corporation. The
maximum number of Common Shares of the Corporation that may be reserved for issuance under the Plan is a variable number equal to 10% of the issued and outstanding Common Shares on a
non-diluted basis. Under the Plan, the exercise price of each option shall not be less than the market price of the Corporation's stock on the date preceding the date of grant, and an
option's maximum term is 10 years or such other shorter term as stipulated in a stock option agreement between the Corporation and the optionee. Options under the Plan are granted from time to
time at the discretion of the Board of Directors, with vesting periods and other terms as determined by the Board.
The
fair value of stock options granted to employees and directors was estimated at the grant date using the Hull-White trinomial lattice option pricing model beginning in 2007 (prior
years the fair-value was estimated using the Black-Scholes method), using the following weighted average assumptions:
|
|
Years Ended December 31,
|
|
|
2007
|
|
2006
|
|
2005
|
Expected volatility
|
|
53%60%
|
|
60%
|
|
80%
|
Risk-free interest rate
|
|
3.32%4.6%
|
|
4.55%4.91%
|
|
3.51%3.95%
|
Expected lives (years)
|
|
35 years
|
|
5 years
|
|
5 years
|
Dividend yield
|
|
N/A
|
|
N/A
|
|
N/A
|
Option
pricing models require the input of highly subjective assumptions including the expected price volatility. Expected price volatility is based on the historical volatility of the Corporation's
stock. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore,
the existing models do not necessarily provide a reliable measure of the fair value of the Corporation's stock options. The expected term of the options granted is derived from the output of the
option pricing model and represents the period of time that the options granted are expected to be outstanding. The risk-free rate for the periods within the contractual term of the option
is based on the U.S. Treasury yield curve in effect at the date of grant.
81
A
summary of option activity under the Plan as of December 31, 2007, and changes during the period then ended is set forth in the following table:
|
|
Number of Shares
|
|
Weighted Average Exercise Price
(U.S. $)
|
|
Weighted- Average Remaining Contractual Term
|
|
Average Intrinsic Value ($000's)
|
Outstanding December 31, 2004
|
|
883,483
|
|
$
|
3.72
|
|
3.83
|
|
$
|
306
|
ExercisableDecember 31, 2004
|
|
549,483
|
|
$
|
3.48
|
|
3.24
|
|
$
|
295
|
|
|
|
|
|
|
|
|
|
Granted
|
|
85,000
|
|
|
4.14
|
|
|
|
|
|
Exercised
|
|
(7,858
|
)
|
|
3.21
|
|
|
|
|
|
Forfeited
|
|
(5,000
|
)
|
|
4.19
|
|
|
|
|
|
Expired
|
|
(5,000
|
)
|
|
4.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OustandingDecember 31, 2005
|
|
950,625
|
|
$
|
3.76
|
|
4.00
|
|
$
|
1,243
|
ExercisableDecember 31, 2005
|
|
908,125
|
|
$
|
3.74
|
|
3.91
|
|
$
|
1,209
|
|
|
|
|
|
|
|
|
|
Granted
|
|
230,000
|
|
|
9.34
|
|
|
|
|
|
Exercised
|
|
(219,125
|
)
|
|
3.69
|
|
|
|
|
|
Forfeited
|
|
(7,500
|
)
|
|
4.29
|
|
|
|
|
|
Expired
|
|
(10,000
|
)
|
|
3.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingDecember 31, 2006
|
|
944,000
|
|
$
|
5.13
|
|
2.57
|
|
$
|
3,500
|
ExercisableDecember 31, 2006
|
|
819,000
|
|
$
|
4.49
|
|
2.25
|
|
$
|
3,483
|
|
|
|
|
|
|
|
|
|
Granted
|
|
990,000
|
|
|
5.42
|
|
|
|
|
|
Exercised
|
|
(243,153
|
)
|
|
2.94
|
|
|
|
|
|
Expired
|
|
(12,857
|
)
|
|
4.10
|
|
|
|
|
|
Modification under Arrangement
|
|
(47,777
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingDecember 31, 2007
|
|
1,630,213
|
|
$
|
4.99
|
|
3.44
|
|
$
|
1,112
|
|
|
|
|
|
|
|
|
|
ExercisableDecember 31, 2007
|
|
1,116,241
|
|
$
|
4.76
|
|
3.12
|
|
$
|
975
|
|
|
|
|
|
|
|
|
|
82
A
summary of the movements included in options within Shareholders' Equity as of December 31, 2007, and during the periods then ended is set forth in the following table:
|
|
Fair Value
($000's)
|
|
As of December 31, 2004
|
|
$
|
1,538
|
|
|
|
|
|
Granted
|
|
$
|
117
|
|
Forfeited
|
|
|
(4
|
)
|
Expired
|
|
|
(14
|
)
|
Expensed
|
|
|
302
|
|
|
|
|
|
As of December 31, 2005
|
|
$
|
1,939
|
|
|
|
|
|
Granted
|
|
|
534
|
|
Exercised
|
|
|
(469
|
)
|
Forfeited
|
|
|
(21
|
)
|
Expired
|
|
|
(5
|
)
|
Expensed
|
|
|
261
|
|
|
|
|
|
As of December 31, 2006
|
|
$
|
2,239
|
|
|
|
|
|
Granted
|
|
|
1,221
|
|
Exercised
|
|
|
(429
|
)
|
Expensed
|
|
|
793
|
|
|
|
|
|
As of December 31, 2007
|
|
$
|
3,824
|
|
|
|
|
|
In
conjunction with the closing of the Arrangement, under an anti-dilution provision contained within the Plan, the Corporation modified all outstanding option agreements. The
anti-dilution provision allows for the Corporation to equalize options in the event of an equity restructuring. As part of the Arrangement, option holders exchanged their Vista options
held immediately prior to the closing for new options of both Vista and Allied Nevada. The number and price of the new options was based on, among other things, the intrinsic value of the options
immediately preceding the closing of the Arrangement. Therefore, an option holder's intrinsic value of the combined options was the same before and following the closing of the Arrangement. Since the
options were modified under the anti-dilution provision, the Corporation is not required to record any incremental expense associated with the new Vista options.
The
total number of options outstanding at December 31, 2007 is 1,630,213 with exercise prices ranging from approximately $2.15 to $7.89 and remaining lives of 0.75 to 4.95 years.
The total number of options outstanding represents 4.6% of issued capital.
Compensation
expense with a fair value of $792,527 was recognized during the twelve months ended December 31, 2007, for options previously granted and vesting over time. During the twelve month
periods in 2006 and 2005, compensation expense with fair values of $261,673 and $302,280, respectively, was recognized for options previously granted and vesting over time.
Under
the Plan, 990,000 stock options, of which 940,000 will vest over a period of two years (470,000 in each year) and 50,000 will vest over a period of six months
(25,000 immediately and 25,000 at the end of six months), were granted to employees, directors and consultants of the Corporation during the twelve
83
months
ended December 31, 2007. The fair value of the 495,000 options immediately vested has been recorded as a non-cash compensation expense of $1,221,141. The
weighted-average grant date fair value of the 990,000 options granted during the twelve months ended December 31, 2007 was $2.51.
Under
the Plan, 230,000 stock options, of which 60,000 will vest over a period of three years (20,000 in each year) and 170,000 will vest over a period of two years
(85,000 in each year), were granted to
employees and directors of the Corporation during the twelve months ended December 31, 2006. The fair value of the 105,000 options immediately vested has been recorded as a
non-cash compensation expense of $534,230. The weighted-average grant date fair value of the 230,000 options granted during the twelve months ended December 31, 2006
was $5.20.
Under
the Plan, 85,000 stock options vesting over a period of two years (42,500 in each year) were granted to employees of the Corporation during the twelve months ended
December 31, 2005. The fair value of the 42,500 options immediately vested has been recorded as a non-cash compensation expense of $116,967. The weighted-average grant date
fair value of the 85,000 options granted during the twelve months ended December 31, 2005 was $2.75.
During
the respective twelve months ended December 31, 2007, 2006 and 2005, 243,153, 219,125 and 7,858 options, respectively were exercised with aggregate intrinsic values of $505,720,
$1,083,193 and $14,659, respectively.
A
summary of the status of the Corporation's unvested stock options as of December 31, 2007, and changes during the period then ended, is set forth below:
|
|
Number
of Shares
|
|
Weighted-
Average Grant Date Fair Value
(U.S. $)
|
UnvestedDecember 31, 2004
|
|
334,000
|
|
$
|
2.77
|
Granted
|
|
42,500
|
|
|
2.75
|
Vested
|
|
(329,000
|
)
|
|
2.77
|
Forfeited
|
|
(5,000
|
)
|
|
2.77
|
|
|
|
|
|
UnvestedDecember 31, 2005
|
|
42,500
|
|
$
|
2.75
|
Granted
|
|
125,000
|
|
|
5.22
|
Vested
|
|
(35,000
|
)
|
|
2.73
|
Forfeited
|
|
(7,500
|
)
|
|
3.98
|
|
|
|
|
|
UnvestedDecember 31, 2006
|
|
125,000
|
|
$
|
5.22
|
Granted
|
|
450,000
|
|
|
2.51
|
Vested
|
|
(99,848
|
)
|
|
5.56
|
Modification under Arrangement
|
|
(6,180
|
)
|
|
|
|
|
|
|
|
UnvestedDecember 31, 2007
|
|
513,972
|
|
$
|
2.64
|
|
|
|
|
|
84
As
of December 31, 2007, there was $878,118 of unrecognized compensation expense related to the unvested portion of options outstanding. This expense is expected to be recognized over a
weighted-average period of 0.9 years.
10.
Accumulated other comprehensive income
A reconciliation of the amounts contained in accumulated other comprehensive income is as follows:
|
|
Accumulated other
comprehensive income
($000's)
|
|
As of December 31, 2006
|
|
$
|
|
|
Adjustment for CICA 3855 adoption
|
|
|
532
|
|
Increases to fair market value during period
|
|
|
7,173
|
|
Decreases due to realization of gain
|
|
|
(158
|
)
|
|
|
|
|
As of December 31, 2007
|
|
$
|
7,547
|
|
|
|
|
|
Effective
January 1, 2007, the Corporation adopted CICA Handbook Sections 1530, "Comprehensive Income" and 3855, "Financial InstrumentsRecognition and Measurement." The
adoption of these new sections had no impact on the Corporation's financial statements on or before December 31, 2006 as the sections require adjustments to the carrying value of
available-for-sale securities to be recorded within accumulated other comprehensive income on transition. Upon adoption of these sections, the Corporation made a
one-time adjustment to the opening balance, as of January 1, 2007, of accumulated other comprehensive income in the amount of $532, as noted in the above schedule.
11.
Commitments and contingencies
On December 19, 2007, the Corporation announced that it and Grandcru Resources Corporation ("Grandcru") had signed an agreement for the Corporation to acquire Grandcru's
interest in two gold/silver mineral properties adjacent to Guadalupe de los Reyes, subject to receipt of all necessary regulatory and other approvals.
Under
the terms of the agreement, the Corporation agreed to (a) pay Grandcru $425,000 less any amounts payable in back taxes on the mining concessions, and pay a private investment group known
as the San Miguel Group $75,000, and (b) issue to Grandcru and the San Miguel Group, in aggregate, common shares of the Corporation with a value of $1,000,000 (amounting to
213,503 Common Shares) on closing. In addition, the Corporation reached an agreement with Goldcorp Inc. and its Mexican subsidiary, Desarrollos Mineros San Luis, S.A. de C.V.
(together, "San Luis"), and with the San Miguel Group to complete the acquisition of their respective interests in the mining concessions at the same time as the closing occurs with Grandcru. These
amounts were paid upon closing of the transaction in January 2008.
12.
Financial instruments
The recorded value of the Corporation's cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities and other, approximate their
fair-market values due to the relatively short periods to maturity.
85
13.
Supplemental cash flow disclosure and material non-cash transactions
As of December 31, 2007, 2006 and 2005 all of the Corporation's cash was held in liquid bank deposits.
|
|
Non-cash consideration
given/(received)
during 2007
|
|
Material non-cash transactions ($000's)
|
|
Equity units
|
|
Investing and financing activities:
|
|
|
|
|
|
Dividend-in-kindNote 3
|
|
$
|
36,159
|
|
|
Allied Nevada Gold Corp.Note 3
|
|
|
(38,343
|
)
|
|
McBride
|
|
|
(100
|
)
|
|
|
|
|
|
|
Non-cash consideration
given/(received)
during 2006
|
|
Material non-cash transactions ($000's)
|
|
Equity units
|
|
Investing and financing activities:
|
|
|
|
|
|
Mt. Todd gold mineNote 5(f)
|
|
$
|
877
|
|
|
Agent warrantsNote 7(h)
|
|
|
531
|
|
|
Quest Capital Corp.Note 7(d)
|
|
|
108
|
|
|
McBride
|
|
|
(33
|
)
|
|
|
|
|
|
|
Non-cash consideration
given/(received)
during 2005
|
|
Material non-cash transactions ($000's)
|
|
Equity units
|
|
Investing and financing activities:
|
|
|
|
|
|
F.W. Lewis, Inc.
|
|
$
|
1,218
|
|
|
Broker warrantsNote 7(f)
|
|
|
401
|
|
|
Quest Capital Corp.Note 7(d)
|
|
|
73
|
|
|
Amayapampa
|
|
|
(320
|
)
|
|
|
|
|
86
14.
Income taxes
(a) A
reconciliation of the combined Canadian federal and provincial income taxes at statutory rates and the Corporation's effective income tax expenses (recovery) is as follows:
|
|
Years ended December 31,
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
Income taxed at statutory rates
|
|
$
|
(2,680
|
)
|
$
|
(1,418
|
)
|
$
|
(1,706
|
)
|
Increase (decrease) in taxes from:
|
|
|
|
|
|
|
|
|
|
|
|
Permanent differences
|
|
|
1,670
|
|
|
(21
|
)
|
|
2
|
|
|
Differences in foreign tax rates
|
|
|
71
|
|
|
6
|
|
|
97
|
|
|
Effect of foreign exchange
|
|
|
(2,099
|
)
|
|
|
|
|
|
|
|
Change in effective tax rate
|
|
|
1,314
|
|
|
987
|
|
|
|
|
|
Benefit of losses not recognized
|
|
|
2,781
|
|
|
677
|
|
|
1,607
|
|
|
Prior Year provision to actual adjustments and other
|
|
|
1,011
|
|
|
(231
|
)
|
|
|
|
|
Temporary differences spun off to Allied Nevada
|
|
|
9,720
|
|
|
|
|
|
|
|
|
Reduction in valuation allowance due to spin off
|
|
|
(9,591
|
)
|
|
|
|
|
|
|
|
Temporary differences recognized through discontinued operations and OCI
|
|
|
(2,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
(b) Future
income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The significant components of the company's future tax assets as at December 31 are as follows:
|
|
December 31,
|
|
Future income tax assets
|
|
|
2007
|
|
2006
|
|
Excess tax basis over book basis of property, plant and equipment
|
|
$
|
9,246
|
|
$
|
6,801
|
|
Operating loss carryforwards
|
|
|
5,743
|
|
|
14,688
|
|
Capital loss carryforwards
|
|
|
2,309
|
|
|
297
|
|
Other
|
|
|
1,266
|
|
|
1,391
|
|
Accrued reclamation
|
|
|
|
|
|
1,632
|
|
|
|
|
|
|
|
Total future tax assets
|
|
|
18,564
|
|
|
24,809
|
|
Valuation allowance for future tax assets
|
|
|
(17,413
|
)
|
|
(24,809
|
)
|
|
|
|
|
|
|
|
|
|
1,152
|
|
|
|
|
Future income tax liabilities
|
|
|
|
|
|
|
|
Marketable securities
|
|
|
1,152
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
87
(c) The
Corporation has available income tax losses of approximately $17.0 million, which may be carried forward and applied against future taxable income when earned.
The
losses expire as follows:
|
|
Canada
|
|
United States
|
|
Total
|
2008
|
|
|
669
|
|
|
|
|
|
669
|
2009
|
|
|
712
|
|
|
|
|
|
712
|
2010
|
|
|
729
|
|
|
|
|
|
729
|
2014
|
|
|
773
|
|
|
|
|
|
773
|
2015
|
|
|
947
|
|
|
|
|
|
947
|
2019
|
|
|
|
|
|
519
|
|
|
519
|
2020
|
|
|
|
|
|
783
|
|
|
783
|
2021
|
|
|
|
|
|
778
|
|
|
778
|
2022
|
|
|
|
|
|
748
|
|
|
748
|
2023
|
|
|
|
|
|
691
|
|
|
691
|
2024
|
|
|
|
|
|
2,082
|
|
|
2,082
|
2025
|
|
|
|
|
|
2,362
|
|
|
2,362
|
2026
|
|
|
1,095
|
|
|
1,214
|
|
|
2,309
|
2027
|
|
|
1,051
|
|
|
1,867
|
|
|
2,918
|
|
|
|
|
|
|
|
|
|
$
|
5,976
|
|
$
|
11,044
|
|
$
|
17,020
|
|
|
|
|
|
|
|
15.
Retirement plan
The Corporation sponsors a qualified tax-deferred savings plan in accordance with the provisions of Section 401(k) of the U.S. Internal Revenue Code,
which is available to permanent U.S. employees. The Corporation makes contributions of up to 4% of eligible employees' salaries. The Corporation's contributions were as follows:
2007$38,418, 2006$32,161; and 2005$29,051.
16.
Segment information
The Corporation evaluates, acquires and explores gold exploration and potential development projects. These activities are focused principally in North America, South America,
Australia and Indonesia. The Corporation reported no revenues in 2007, 2006 and 2005. Geographic segmentation of mineral properties and plant and equipment is provided in Notes 5 and 6.
17.
Differences between Canadian and United States generally accepted accounting principles
The significant measurement differences between generally accepted accounting principles ("GAAP") in Canada and in the United States, as they relate to these financial
statements are as follows:
-
(a)
-
Under
Canadian corporate law, the Corporation underwent a capital reduction in connection with the amalgamation of Granges, Inc. ("Granges") and Hycroft Resources &
Development, Inc. whereby share capital and contributed surplus were reduced to eliminate the consolidated accumulated deficit of Granges as of December 31, 1994, after giving effect to
the
88
89
The
significant measurement differences in the consolidated statements of loss relative to U.S. GAAP were:
Consolidated Statements of Loss
|
|
Years ended December 31,
|
|
|
|
|
|
Cumulative during Exploration Stage
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
(U.S. dollars in thousands, except share data)
|
|
Net lossCanadian GAAP
|
|
$
|
(14,201
|
)
|
$
|
(4,171
|
)
|
$
|
(4,584
|
)
|
$
|
(33,400
|
)
|
Exploration, property evaluation and holding costscontinuing operations
(e)
|
|
|
(6,375
|
)
|
|
(2,280
|
)
|
|
(1,126
|
)
|
|
(4,780
|
)
|
Exploration, property evaluation and holding costsdiscontinued operations
(e)
|
|
|
5,509
|
|
|
(355
|
)
|
|
(58
|
)
|
|
4,016
|
|
Financing costs
|
|
|
|
|
|
|
|
|
|
|
|
(222
|
)
|
Stock-based compensation expense
(f)
|
|
|
|
|
|
(4
|
)
|
|
415
|
|
|
2,251
|
|
Beneficial conversion feature
(d)
|
|
|
|
|
|
|
|
|
|
|
|
(2,774
|
)
|
|
|
|
|
|
|
|
|
|
|
Net lossU.S. GAAP
|
|
|
(15,067
|
)
|
|
(6,810
|
)
|
|
(5,353
|
)
|
|
(31,612
|
)
|
Unrealized gain on marketable securities
(c)
|
|
|
7,096
|
|
|
445
|
|
|
22
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
Comprehensive lossU.S. GAAP
|
|
$
|
(7,971
|
)
|
$
|
(6,365
|
)
|
$
|
(5,331
|
)
|
$
|
(31,650
|
)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per shareU.S. GAAP
|
|
$
|
(0.47
|
)
|
$
|
(0.24
|
)
|
$
|
(0.28
|
)
|
|
|
|
90
The
significant measurement differences in the consolidated balance sheets as at December 31, 2007 and 2006 relative to U.S. GAAP were:
Consolidated Balance Sheets
|
|
December 31, 2007
|
|
December 31, 2006
|
|
|
|
Per Cdn.
GAAP
|
|
Cdn./U.S.
Adj.
|
|
Per U.S.
GAAP
|
|
Per Cdn.
GAAP
|
|
Cdn./U.S.
Adj.
|
|
Per U.S.
GAAP
|
|
|
|
(U.S. $000's)
|
|
Current assets
(c)
|
|
$
|
27,948
|
|
|
|
|
$
|
27,948
|
|
$
|
50,420
|
|
$
|
541
|
|
$
|
50,961
|
|
Property, plant and equipment
(e)
|
|
|
18,519
|
|
|
(11,339
|
)
|
|
7,180
|
|
|
11,361
|
|
|
(4,964
|
)
|
|
6,397
|
|
Other assets
|
|
|
66
|
|
|
|
|
|
66
|
|
|
2,007
|
|
|
|
|
|
2,007
|
|
Assets held for sale
(b,e)
|
|
|
4,813
|
|
|
(2,124
|
)
|
|
2,689
|
|
|
28,943
|
|
|
(8,941
|
)
|
|
20,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
51,346
|
|
$
|
(13,463
|
)
|
$
|
37,883
|
|
$
|
92,731
|
|
$
|
(13,364
|
)
|
$
|
79,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
664
|
|
|
|
|
|
664
|
|
|
727
|
|
|
|
|
|
727
|
|
Liabilities held for sale
|
|
|
30
|
|
|
|
|
|
30
|
|
|
4,877
|
|
|
|
|
|
4,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
694
|
|
|
|
|
|
694
|
|
|
5,604
|
|
|
|
|
|
5,604
|
|
Capital stock
(a,f)
|
|
|
220,772
|
|
|
75,364
|
|
|
296,136
|
|
|
215,618
|
|
|
75,793
|
|
|
291,411
|
|
Special warrants
(d)
|
|
|
|
|
|
222
|
|
|
222
|
|
|
|
|
|
222
|
|
|
222
|
|
Warrants and options
(f)
|
|
|
4,355
|
|
|
(647
|
)
|
|
3,708
|
|
|
3,171
|
|
|
(1,076
|
)
|
|
2,095
|
|
Contributed surplus
(a,f)
|
|
|
253
|
|
|
5,526
|
|
|
5,779
|
|
|
253
|
|
|
5,526
|
|
|
5,779
|
|
Other comprehensive income
(c)
|
|
|
7,547
|
|
|
90
|
|
|
7,637
|
|
|
|
|
|
541
|
|
|
541
|
|
Deficit
(a,b,c,e,f)
|
|
|
(182,275
|
)
|
|
(94,018
|
)
|
|
(276,293
|
)
|
|
(131,915
|
)
|
|
(94,370
|
)
|
|
(226,285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
50,652
|
|
|
(13,463
|
)
|
|
37,189
|
|
|
87,127
|
|
|
(13,364
|
)
|
|
73,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities & shareholders' equity
|
|
$
|
51,346
|
|
$
|
(13,463
|
)
|
$
|
37,883
|
|
$
|
92,731
|
|
$
|
(13,364
|
)
|
$
|
79,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91
17.
Differences between Canadian and United States generally accepted accounting principles (continued)
The significant measurement differences in the consolidated statements of cash flows relative to U.S. GAAP were:
Consolidated Statements of Cash Flows
|
|
Years ended December 31,
|
|
|
|
|
|
Cumulative during Exploration Stage
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
|
(U.S. dollars in thousands)
|
|
Cash flows from operating activities, Canadian GAAP
|
|
$
|
(4,285
|
)
|
$
|
(1,508
|
)
|
$
|
(2,586
|
)
|
$
|
(12,461
|
)
|
Additions to mineral properties, net (e)
|
|
|
(394
|
)
|
|
(2,635
|
)
|
|
(1,184
|
)
|
|
(6,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities, U.S. GAAP
|
|
|
(4,679
|
)
|
|
(4,143
|
)
|
|
(3,770
|
)
|
|
(18,974
|
)
|
Cash flows from investing activities, Canadian GAAP
|
|
|
(31,349
|
)
|
|
(3,682
|
)
|
|
(2,760
|
)
|
|
(39,853
|
)
|
Additions to mineral properties, net (e)
|
|
|
394
|
|
|
2,635
|
|
|
1,184
|
|
|
6,513
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities, U.S. GAAP
|
|
|
(30,955
|
)
|
|
(1,047
|
)
|
|
(1,576
|
)
|
|
(33,340
|
)
|
Cash flows from financing activities, Canadian GAAP
|
|
|
4,324
|
|
|
54,279
|
|
|
7,938
|
|
|
91,302
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities, U.S. GAAP
|
|
|
4,324
|
|
|
54,279
|
|
|
7,938
|
|
|
91,302
|
|
Increase/(decrease) in cash and cash equivalents continuing operations
|
|
|
(31,310
|
)
|
|
49,089
|
|
|
2,592
|
|
|
38,988
|
|
Increase/(decrease) in cash and cash equivalents discontinued operations
|
|
|
(702
|
)
|
|
(2,418
|
)
|
|
(6,481
|
)
|
|
(22,976
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
48,698
|
|
|
2,027
|
|
|
5,916
|
|
|
674
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
16,686
|
|
$
|
48,698
|
|
$
|
2,027
|
|
$
|
16,686
|
|
|
|
|
|
|
|
|
|
|
|
92
Statement of Changes in Shareholders' Equity under U.S. GAAP
(U.S. $000's)
|
|
Capital stock
|
|
Special warrants
|
|
Warrants and options
|
|
Contributed surplus
|
|
Deficit
|
|
Other comprehensive income (loss)
|
|
Total shareholders' equity
|
|
Balance at December 31, 2004
|
|
$
|
226,009
|
|
$
|
222
|
|
$
|
480
|
|
$
|
5,668
|
|
$
|
(214,122
|
)
|
$
|
74
|
|
$
|
18,331
|
|
Issued during the year (Note 7)
|
|
|
8,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,828
|
|
Warrants and options
|
|
|
|
|
|
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
290
|
|
Contributed surplus
|
|
|
|
|
|
|
|
|
|
|
|
111
|
|
|
|
|
|
|
|
|
111
|
|
Other comprehensive loss
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
22
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,353
|
)
|
|
|
|
|
(5,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
$
|
234,837
|
|
$
|
222
|
|
$
|
770
|
|
$
|
5,779
|
|
$
|
(219,475
|
)
|
$
|
96
|
|
$
|
22,229
|
|
Issued during the year (Note 7)
|
|
|
56,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,574
|
|
Warrants and options
|
|
|
|
|
|
|
|
|
1,325
|
|
|
|
|
|
|
|
|
|
|
|
1,325
|
|
Contributed surplus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
445
|
|
|
445
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,810
|
)
|
|
|
|
|
(6,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
$
|
291,411
|
|
$
|
222
|
|
$
|
2,095
|
|
$
|
5,779
|
|
$
|
(226,285
|
)
|
$
|
541
|
|
$
|
73,763
|
|
Issued during the year (Note 7)
|
|
|
4,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,725
|
|
Warrants and options
|
|
|
|
|
|
|
|
|
1,613
|
|
|
|
|
|
|
|
|
|
|
|
1,613
|
|
Contributed surplus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,096
|
|
|
7,096
|
|
Dividend-in-kind
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,941
|
)
|
|
|
|
|
(34,941
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,067
|
)
|
|
|
|
|
(15,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
296,136
|
|
$
|
222
|
|
$
|
3,708
|
|
$
|
5,779
|
|
$
|
(276,293
|
)
|
$
|
7,637
|
|
$
|
37,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On January 1, 2007, the Corporation adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" (FIN 48). FIN 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on
derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.
As
a result of the implementation of FIN 48, the Corporation has no material unrecognized tax benefits to report.
At
December 31, 2007, the ultimate deductibility of the majority of tax positions is highly certain. However, there may be uncertainty about the timing of such deductibility. Because of the
impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate or defer
the recognition of the expenses.
The
Corporation's policy is to recognize interest and penalties, if any, related to uncertain tax positions in general and administrative expenses. No interest and penalties related to uncertain tax
positions were accrued at December 31, 2007.
Impact of recently issued accounting standards
In February 2007, the FASB issued Statement of Financial Accounting Standard ("SFAS") No. 159, "The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an Amendment of FASB Statement No. 115." SFAS No. 159 provides companies with an option to measure, at specified election
93
dates,
financial instruments and certain other items at fair value that are not currently measured at fair value. For those items for which the fair value option is elected, unrealized gains and
losses will be recognized in earnings for each subsequent reporting period. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar types of assets and liabilities. This standard is effective for years beginning after November 15, 2007. The
Corporation is currently evaluating the impact of this standard on its financial statements.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combination". SFAS No. 141 (R) establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and noncontrolling interest in the acquiree and the goodwill acquired.
SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141(R) is
effective for fiscal years beginning after December 15, 2008. The Corporation is currently evaluating the impact of this standard on its financial statements.
In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This standard defines fair value, establishes a fair value hierarchy to be used in generally accepted
accounting principles and expands disclosures about fair value measurements. Although this standard does not require any new fair value measurements, the application could change current practice. In
December 2007, the FASB issued SFAS 157-b, which provided for a one-year deferral of the implementation of SFAS 157 for non-financial assets and liabilities. However, SFAS 157 is
still required to be adopted effective January 1, 2008 for financial assets and liabilities that are carried at fair value. The Corporation is currently evaluating the impact of this standard
on its financials.
18.
Related party transactions
Completion of the Arrangement
As previously reported (Note 3), on September 22, 2006, the Corporation entered into an Arrangement and Merger Agreement (the "Arrangement Agreement") with
Carl Pescio, Janet Pescio and Allied Nevada pursuant to which the parties agreed to undertake a transaction that would result in the transfer of the Corporation's Nevada-based mining properties and
related assets to Allied Nevada and the Pescios' transfer to Allied Nevada of their interests in certain Nevada-based mining properties and related assets, all to be carried out pursuant to an
arrangement under the provisions of the
Business Corporations Act
(Yukon Territory) (the "Arrangement"). Completion of the transaction occurred
on May 10, 2007.
Prior
to the completion of the Arrangement, the immediate cash needs of Allied Nevada were met by loans from the Corporation pursuant to the Arrangement Agreement, which provided that, prior to the
date of completion, the Corporation could loan money to its wholly-owned subsidiary that would hold the Corporation's Nevada assets prior to the closing, namely Vista Gold Holdings Inc., in
amounts sufficient to undertake certain activities for the benefit of the business that Allied Nevada would operate after the completion of the transaction and to enable Allied Nevada to commence
operations immediately after the completion of the transaction. These loans bore interest at the rate of 6% per annum and all principal and
94
interest
owing by Vista Gold Holdings Inc. to the Corporation in respect of such loans, aggregating $483,000, was paid in full at the time of completion of the Arrangement.
Since
the completion of the Arrangement, the Corporation no longer has any related party transactions with Allied Nevada.
19.
Subsequent Events
Agreement to purchase equipment for the Paredones Amarillos project
On January 7, 2008 the Corporation entered into an agreement with A.M. King Industries, Inc. ("A.M. King") and Del Norte Company Ltd., a wholly
owned subsidiary of A.M. King, to purchase gold processing equipment to be used at the Corporation's Paredones Amarillos project. The aggregate purchase price is approximately
$16.0 million, of which approximately $8.0 million was paid on signing of the purchase agreement. The remaining $8.0 million is payable in two installments based on an equipment
delivery schedule with respective paremeters targeted to occur in February and March 2008. The purchase price includes the cost of relocating the equipment to Edmonton, Alberta, Canada. From
this point, the Corporation will arrange for reconditioning and transportation of the equipment to Paredones Amarillos. The equipment includes a 10,000 tonne per day semi-autogenous
(SAG) grinding mill, two ball mills, gyratory crusher and a shorthead cone crusher, along with other related components, spare parts and other process plant equipment.
Completion of acquisition of properties adjacent to the Guadalupe de los Reyes Project
On January 24, 2008, the Corporation announced the completion of the acquisition of interests in various mineral properties adjacent to the Corporation's Guadalupe de
los Reyes project in Mexico (see Note 5(d)). The consideration paid by the Corporation for the acquisition of these interests included cash payments totaling $452,000 and the issuance of
a total of 213,503 Common Shares of the Corporation, to various parties.
Brokered Private Placement of Convertible Notes
On March 7, 2008, the Corporation announced the closing of a private placement in which the Corporation issued and sold $30 million in aggregate principal amount
of senior secured convertible notes (the "Notes"). The Notes will be convertible into Common Shares of the Corporation at any time at the option of the holder at a conversion price of $6.00 per
share, subject to adjustment in certain circumstances, including if the Corporation's Common Shares are trading on the AMEX at less than $5.00 on the first anniversary of the date of issuance of the
Notes, or if the Corporation issues Common Shares, or securities convertible into common shares, at a price of less than $6.00 during the term of the Notes, subject to a minimum conversion price
of $4.80.
The
Notes will bear interest from the date of issuance at a rate of 10% per annum (calculated and payable semi-annually in arrears) and will mature 3 years from the date of issuance
(or on the earlier occurrence of an event of default). The Corporation's obligations under the Notes will be guaranteed by Minera
95
Paredones
Amarillos S.A. de C.V., and the guarantee will be secured by the personal property and real property associated with the Paredones Amarillos project.
The
Corporation can prepay the outstanding principal and accrued interest at any time after one year from the date the Notes are issued, upon payment of one year's additional interest.
As
compensation to Casimir Capital L.P., which served as the agent (the "Agent") in respect of the offering of the Notes, the Corporation paid to the Agent a cash fee of
$1.2 million, being 4% of the gross proceeds of the offering, and issued to the Agent 200,000 common share purchase warrants, being 4% of number of Common Shares issuable upon the
conversion of the Notes sold in the offering, assuming a conversion price of $6.00. Each such Agent's warrant will be exercisable for one common share for $6.00 per share until three years following
the date of issuance.
96