Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
(Mark One)
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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|
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For the quarterly period
ended March 31, 2009
|
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OR
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|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Commission
File Number 1-09025
VISTA GOLD CORP.
(Exact
name of registrant as specified in its charter)
Continued under the laws
of the Yukon Territory, Canada
|
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None
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(State or other
jurisdiction of incorporation or organization)
|
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(IRS Employer
Identification No.)
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7961 Shaffer Parkway
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Suite 5
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Littleton, Colorado
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80127
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(Address of principal
executive offices)
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(Zip Code)
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(720) 981-1185
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports); and (2) has
been subject to the filing requirements for the past 90 days:
Yes
x
No
o
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post
such files
).
Yes
No Not applicable
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of large accelerated filer, accelerated filer, and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
|
|
Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting
company
o
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Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act):
Yes
o
No
x
Indicate the number of shares outstanding of
each of the issuers classes of common stock, as of the latest practicable
date: 34,475,829
Common Shares, without par value, outstanding
at May 6, 2009
Table of
Contents
VISTA
GOLD CORP.
(An
Exploration Stage Enterprise)
FORM 10-Q
For
the Quarter Ended March 31, 2009
INDEX
In
this Report, unless otherwise indicated, all dollar amounts are expressed in
United States dollars.
Table of
Contents
PART I FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
VISTA GOLD CORP. (An Exploration
Stage Enterprise)
CONSOLIDATED BALANCE SHEETS -
UNAUDITED
(U.S. dollars in thousands)
|
|
March 31,
2009
|
|
December 31,
2008
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents - Note 7
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|
$
|
10,982
|
|
$
|
13,266
|
|
Marketable securities - Note 4
|
|
9,406
|
|
8,153
|
|
Accounts receivable
|
|
120
|
|
127
|
|
Prepaids and other
|
|
431
|
|
466
|
|
Current assets
|
|
20,939
|
|
22,012
|
|
|
|
|
|
|
|
Mineral properties - Note 5
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|
32,162
|
|
30,407
|
|
Amayapampa disposal consideration - Note 3
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|
4,813
|
|
4,813
|
|
Property, plant and equipment - Note 6
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|
18,690
|
|
18,533
|
|
|
|
55,665
|
|
53,753
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
76,604
|
|
$
|
75,765
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity:
|
|
|
|
|
|
Accounts payable
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|
$
|
177
|
|
$
|
|
|
Accrued liabilities and other
|
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1,403
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|
803
|
|
Current liabilities
|
|
1,580
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|
803
|
|
|
|
|
|
|
|
Convertible notes Note 7
|
|
24,098
|
|
23,496
|
|
Other long-term liabilities
|
|
228
|
|
228
|
|
Total liabilities
|
|
25,906
|
|
24,527
|
|
|
|
|
|
|
|
Capital stock, no par value:
|
|
|
|
|
|
Common - unlimited shares authorized; shares outstanding: 2009 -
34,475,829 and 2008 34,475,829
|
|
225,098
|
|
225,098
|
|
Warrants
|
|
336
|
|
336
|
|
Options - Note 8
|
|
4,717
|
|
4,634
|
|
Contributed surplus Note 9
|
|
1,463
|
|
1,387
|
|
Equity component of convertible notes - Note 7
|
|
6,298
|
|
6,298
|
|
Accumulated other comprehensive income - Note 10
|
|
5,783
|
|
4,602
|
|
Deficit Note 2
|
|
(192,997
|
)
|
(191,117
|
)
|
Total shareholders equity
|
|
50,698
|
|
51,238
|
|
|
|
|
|
|
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Total liabilities and shareholders equity
|
|
$
|
76,604
|
|
$
|
75,765
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|
Subsequent
events Note 15
The
accompanying notes are an integral part of these consolidated financial
statements.
1
Table of Contents
VISTA GOLD CORP. (An Exploration
Stage Enterprise)
CONSOLIDATED
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS - UNAUDITED
|
|
Three Months Ended March 31,
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Cumulative
during
Exploration
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(U.S. dollars in thousands, except share data)
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2009
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2008
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|
Stage
|
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(restated note 2)
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Income:
|
|
|
|
|
|
|
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Interest income
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|
$
|
28
|
|
$
|
109
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|
$
|
2,556
|
|
Other income
|
|
2
|
|
3
|
|
244
|
|
Total other income
|
|
$
|
30
|
|
$
|
112
|
|
$
|
2,800
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
Exploration, property evaluation and holding costs
|
|
$
|
(333
|
)
|
$
|
(246
|
)
|
$
|
(3,171
|
)
|
Corporate administration and investor relations
|
|
(1,012
|
)
|
(1,287
|
)
|
(20,957
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)
|
Costs of Arrangement
|
|
|
|
|
|
(2,901
|
)
|
Depreciation and amortization
|
|
(52
|
)
|
(39
|
)
|
(422
|
)
|
Gain/(loss) on currency translation
|
|
(23
|
)
|
(7
|
)
|
(416
|
)
|
Interest expense
|
|
(579
|
)
|
(184
|
)
|
(2,583
|
)
|
Write-down of marketable securities Note 4
|
|
(112
|
)
|
|
|
(838
|
)
|
Gain/(loss) on disposal of marketable securities
|
|
(7
|
)
|
21
|
|
226
|
|
Total costs and expenses
|
|
(2,118
|
)
|
(1,742
|
)
|
(31,062
|
)
|
Loss from continuing operations before income taxes
|
|
$
|
(2,088
|
)
|
$
|
(1,630
|
)
|
$
|
(28,262
|
)
|
Income tax benefit/(expense)
|
|
208
|
|
(272
|
)
|
1,020
|
|
Loss from continuing operations after income taxes
|
|
$
|
(1,880
|
)
|
$
|
(1,902
|
)
|
$
|
(27,242
|
)
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
$
|
|
|
$
|
(221
|
)
|
$
|
(16,879
|
)
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,880
|
)
|
$
|
(2,123
|
)
|
$
|
(44,121
|
)
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Unrealized fair-value increase/(decrease) of available-for-sale
securities
|
|
1,176
|
|
(1,523
|
)
|
|
|
Realized (gain)/loss on available-for-sale securities
|
|
5
|
|
(18
|
)
|
|
|
|
|
1,181
|
|
(1,541
|
)
|
|
|
Comprehensive loss
|
|
$
|
(699
|
)
|
$
|
(3,664
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
34,475,829
|
|
34,002,312
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share from continuing operations
|
|
$
|
(0.05
|
)
|
$
|
(0.06
|
)
|
|
|
Basic and diluted loss per share
|
|
$
|
(0.05
|
)
|
$
|
(0.06
|
)
|
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
2
Table of
Contents
VISTA
GOLD CORP. (An Exploration Stage Enterprise)
CONSOLIDATED
STATEMENTS OF DEFICIT - UNAUDITED
|
|
Three Months Ended March 31,
|
|
(U.S. dollars in thousands)
|
|
2009
|
|
2008
|
|
|
|
|
|
(restated
- note 2)
|
|
|
|
|
|
|
|
Deficit, beginning of period
|
|
$
|
(191,117
|
)
|
$
|
(181,144
|
)
|
Net loss
|
|
(1,880
|
)
|
(2,123
|
)
|
Deficit, end of period
|
|
$
|
(192,997
|
)
|
$
|
(183,267
|
)
|
The accompanying notes are an integral part of these consolidated
financial statements.
3
Table of Contents
VISTA
GOLD CORP. (An Exploration Stage Enterprise)
CONSOLIDATED
STATEMENTS OF CASH FLOWS - UNAUDITED
|
|
Three Months Ended March 31,
|
|
Cumulative
during
Exploration
|
|
(U.S. dollars in thousands)
|
|
2009
|
|
2008
|
|
Stage
|
|
|
|
|
|
(restated Note 2)
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Loss for the period - continuing operations
|
|
$
|
(1,880
|
)
|
$
|
(1,902
|
)
|
$
|
(27,242
|
)
|
|
|
|
|
|
|
|
|
Adjustments to reconcile loss for the period to
cash provided by / (used in) operations:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
52
|
|
39
|
|
445
|
|
Stock-based compensation
|
|
125
|
|
296
|
|
5,944
|
|
(Gain)/loss on disposal of marketable securities
|
|
7
|
|
(21
|
)
|
(488
|
)
|
Future income tax (benefit)/expense
|
|
(208
|
)
|
272
|
|
(1,020
|
)
|
Accretion of convertible notes
|
|
260
|
|
81
|
|
1,098
|
|
Accrued interest
|
|
319
|
|
104
|
|
1,487
|
|
Write-down of marketable securities
|
|
112
|
|
|
|
838
|
|
Other non-cash items
|
|
|
|
|
|
1,660
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
7
|
|
(5
|
)
|
(518
|
)
|
Interest paid
|
|
|
|
|
|
(2,342
|
)
|
Prepaids and other
|
|
35
|
|
43
|
|
(251
|
)
|
Accounts payable, accrued liabilities and other
|
|
(11
|
)
|
(114
|
)
|
(892
|
)
|
Net cash used in operating activities
|
|
(1,182
|
)
|
(1,207
|
)
|
(21,281
|
)
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Acquisition of marketable securities
|
|
|
|
(26
|
)
|
(1,026
|
)
|
Proceeds from sale of marketable securities
|
|
18
|
|
58
|
|
1,107
|
|
Additions to mineral properties, net of cost recoveries - Note 5
|
|
(911
|
)
|
(1,385
|
)
|
(21,301
|
)
|
Acquisition of mineral property
|
|
|
|
(452
|
)
|
(3,332
|
)
|
Additions to plant and equipment - Note 6
|
|
(209
|
)
|
(16,308
|
)
|
(18,851
|
)
|
Proceeds on disposal of plant and equipment
|
|
|
|
|
|
52
|
|
Cash transferred to Allied Nevada Gold Corp., net of receivable
|
|
|
|
|
|
(24,517
|
)
|
Net cash used in investing activities
|
|
(1,102
|
)
|
(18,113
|
)
|
(67,868
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Net proceeds from equity financings
|
|
|
|
|
|
54,409
|
|
Proceeds from exercise of warrants
|
|
|
|
2,941
|
|
39,020
|
|
Proceeds from exercise of stock options
|
|
|
|
69
|
|
2,794
|
|
Issuance of convertible notes, net of issuance costs - Note 7
|
|
|
|
28,534
|
|
28,345
|
|
Prepaid transaction costs
|
|
|
|
|
|
(1,841
|
)
|
Net cash provided by financing activities
|
|
|
|
31,544
|
|
122,727
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents - continuing
operations
|
|
(2,284
|
)
|
12,224
|
|
33,578
|
|
Net decrease in cash and cash equivalents - discontinued operations
|
|
|
|
(221
|
)
|
(23,270
|
)
|
Net increase/(decrease) in cash and cash
equivalents
|
|
(2,284
|
)
|
12,003
|
|
10,308
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
13,266
|
|
16,686
|
|
674
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
10,982
|
|
$
|
28,689
|
|
$
|
10,982
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information - Note 12
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
4
Table of Contents
VISTA GOLD CORP. (AN EXPLORATION STAGE ENTERPRISE)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(U.S.
dollars unless specified otherwise)
1.
General
The
consolidated interim financial statements of Vista Gold Corp. (an Exploration
Stage Enterprise) (the Corporation), as of March 31, 2009
have been prepared by the Corporation without audit
and do not include all of the disclosures required by generally accepted
accounting principles in Canada for annual financial statements. As described
in Note 14, generally accepted accounting principles in Canada differ in
certain material respects from generally accepted accounting principles in the
United States. In the opinion of
management, all of the adjustments necessary to fairly present the interim
financial information set forth herein have been made. These adjustments are of a normal and
recurring nature. The results of operations for interim periods are not
necessarily indicative of the operating results of a full year or of future
years. These interim financial
statements should be read in conjunction with the financial statements and
related footnotes included in the Corporations Annual Report on Form 10-K
for the year ended December 31, 2008, as amended.
2.
Nature of operations and changes
in accounting policies
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 Corporations 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 reengineering the operating
assumptions underlying previous engineering work.
In
2007, the Board of Directors and management reevaluated the corporate strategy
regarding the development of the Corporations more advanced projects. As a result of this reevaluation, the
Corporation has begun moving its more advanced projects through advanced and
pre-feasibility studies in preparation for mine development so that production
decisions can be made on those projects.
Although
the Corporation has reviewed and is satisfied with the title for all mineral
properties in which it has a material interest, there is no guarantee that
title to such concessions will not be challenged or impugned.
Changes
in accounting policies
Effective
September 30, 2008, the Corporation adopted the Emerging Issues Committee
Abstract 172 (EIC 172), Income Statement Presentation of a Tax Loss
Carryforward Recognized Following an Unrealized Gain in Other Comprehensive
Income. EIC 172 provides guidance on
whether the tax benefit from the recognition of previously unrecognized tax
loss carryforwards consequent to the recording of unrealized gains in other
comprehensive income, such as unrealized gains on available-for-sale financial
assets, should be recognized in net income or in other comprehensive
income. EIC 172 should be applied
retrospectively, with restatement of prior periods from January 1, 2007,
the date of adoption of the Canadian Institute of Chartered Accountants (CICA) Section 3855, Financial Instruments
Recognition and Measurement.
The
adoption of EIC 172 resulted in a reclassification of $1,132,000 of income tax
recovery from the accumulated other comprehensive income balance to the
accumulated deficit as of December 31, 2007. It also increased the Corporations
three-month loss for the period ended March 31, 2008 by $272,000.
In February 2008,
the CICA issued Section 3064, Goodwill and Intangible Assets, which
replaces Section 3062, Goodwill and Intangible Assets, and results
in a withdrawal of CICA Section 3450, Research and Development
Costs, and amendments to Accounting Guideline (AcG) 11, Enterprises in the
Development Stage, and CICA Section 1000, Financial Statement Concepts.
The standard intends to reduce the differences with International Financial
Reporting Standards (IFRS) in the accounting for intangible assets and
results in closer alignment with U.S. GAAP. Under current Canadian
standards, more items are recognized as assets than under IFRS or U.S. GAAP.
The objectives of CICA Section 3064 are to reinforce the principle-based
approach to the recognition of assets only in accordance with the definition of
an asset and the criteria for asset recognition; and clarify the application of
the concept of matching revenues and expenses such that the current practice of
recognizing assets that do not meet the definition and recognition criteria are
eliminated. This standard will be effective for fiscal years beginning on or
after October 1, 2008. The Corporation has determined there is no impact
on its current financial statements.
5
Table of Contents
3.
Amayapampa disposal consideration
On April 7, 2008, the Corporation entered into an agreement to
dispose of its wholly-owned subsidiary Vista Gold (Antigua) Corp. (Vista Gold
Antigua) to Republic Gold Limited (Republic). Vista Gold Antigua indirectly
held the Corporations interest in the Amayapampa gold project in Bolivia.
Under the terms of the transaction, Republic agreed to pay to the Corporation,
$3.0 million in three payments of $1.0 million. The first of these payments
will be due and payable upon the start of Commercial Production (as defined in
the purchase and sale agreement) at Amayapampa followed by $1.0 million
payments on each of the first and second anniversaries of the start of
commercial production. In addition,
Republic agreed to pay to the Corporation a net smelter return royalty (NSR)
on the gold produced by or on behalf of Republic from the Amayapampa project in
varying percentages depending on the price of gold per ounce. When gold is
between $500.01 and $650.00 per ounce, a 2% NSR is payable, when the price of
gold is between $650.01 and $750.00 per ounce, a 3% NSR is payable, and when
the price of gold is $750.01 per ounce and above, an NSR of 3.5% is payable.
The NSR is capped at 720,000 gold equivalent ounces and no NSR payments are due
to the Corporation if the gold price is below $500 per ounce. The fair value of the consideration received
upon the disposal of the Amayapampa project has been calculated as of March 31,
2009 using probability weighted cash flow scenarios and assumptions including
future gold prices, estimated gold production and the timing of commencement of
commercial production. These inputs in
the income approach valuation model used by the Corporation are considered to
be level three unobservable inputs as defined by SFAS No. 157, Fair Value
Measurements. These are the Corporations
own assumptions based on managements best estimates and the best information
available at the time.
4. Marketable
securities
|
|
At March 31, 2009
|
|
At December 31, 2008
|
|
(U.S. dollars in thousands)
|
|
Cost
|
|
Unrealized
gain/(loss)
|
|
Fair value
|
|
Cost
|
|
Unrealized
gain/(loss)
|
|
Fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied Nevada Gold Corp. Note 15
|
|
$
|
2,194
|
|
$
|
6,756
|
|
$
|
8,950
|
|
$
|
2,194
|
|
$
|
5,547
|
|
$
|
7,741
|
|
Esperanza Silver Corp.
|
|
10
|
|
40
|
|
50
|
|
10
|
|
35
|
|
45
|
|
Luzon Minerals Ltd.
|
|
12
|
|
12
|
|
24
|
|
12
|
|
|
|
12
|
|
Nevgold Resources Corp.
|
|
44
|
|
9
|
|
53
|
|
44
|
|
|
|
44
|
|
Other marketable securities
|
|
343
|
|
(14
|
)
|
329
|
|
480
|
|
(169
|
)
|
311
|
|
|
|
$
|
2,603
|
|
$
|
6,803
|
|
$
|
9,406
|
|
$
|
2,740
|
|
$
|
5,413
|
|
$
|
8,153
|
|
At March 31, 2009, the Corporation determined that
certain of its securities had become impaired.
The write-down of $112,000, less a tax benefit of $16,000, has been
included on our Statement of Consolidated Loss.
The Corporation evaluated the remaining securities for impairment, but
concluded that any decline in value was temporary due to the short amount of
time that the securitys fair market value was under cost.
5.
Mineral properties
|
|
2008
|
|
2009
|
|
(U.S. dollars in thousands)
|
|
December 31,
balance
|
|
Acquisition
costs
|
|
Option
payments
|
|
Exploration &
land costs
|
|
Capitalized
interest
|
|
Year to date
activity
|
|
March
31, ending
balance
|
|
Long Valley, United States
|
|
960
|
|
|
|
|
|
1
|
|
|
|
1
|
|
961
|
|
Yellow Pine, United States
|
|
878
|
|
|
|
|
|
|
|
|
|
|
|
878
|
|
Paredones Amarillos, Mexico
|
|
9,237
|
|
|
|
|
|
477
|
|
763
|
|
1,240
|
|
10,477
|
|
Guadalupe de los Reyes,
Mexico
|
|
3,136
|
|
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
3,125
|
|
Awak Mas, Indonesia
|
|
3,757
|
|
|
|
|
|
46
|
|
|
|
46
|
|
3,803
|
|
Mt. Todd, Australia
|
|
11,967
|
|
|
|
|
|
429
|
|
|
|
429
|
|
12,396
|
|
Other
|
|
472
|
|
|
|
50
|
|
|
|
|
|
50
|
|
522
|
|
|
|
$
|
30,407
|
|
$
|
|
|
$
|
50
|
|
$
|
942
|
|
$
|
763
|
|
$
|
1,755
|
|
$
|
32,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The recoverability of the carrying values of the
Corporations mineral properties is dependent upon the successful start-up and
commercial production from, or sale, or lease, of these properties and upon
economic reserves being discovered or developed on the properties. Development and/or start-up of any of these
projects will depend, among other things, on managements ability to raise
additional capital for these purposes.
Although the Corporation has been successful in raising such capital in
the past, there can be no assurance that it will be able to do so in the
future.
6
Table of Contents
The Corporation has determined that no impairment
provision is required. A write-down in
the carrying values of one or more of the Corporations mineral properties may
be required in the future as a result of events and circumstances, such as the
Corporations inability to obtain all the necessary permits, resulting in an
evaluation of gold resources and the application of an impairment test which is
based on estimates of gold resources and gold prices.
6. Property,
plant and equipment
|
|
March 31, 2009
|
|
December 31, 2008
|
|
(U.S. dollars in thousands)
|
|
Cost
|
|
Accumulated
Depreciation
and
Write-downs
|
|
Net
|
|
Cost
|
|
Accumulated
Depreciation and
Write-downs
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paredones Amarillos, Mexico
|
|
18,070
|
|
16
|
|
18,054
|
|
18,006
|
|
12
|
|
17,994
|
|
Awak Mas, Indonesia
|
|
117
|
|
74
|
|
43
|
|
116
|
|
70
|
|
46
|
|
Mt. Todd, Australia
|
|
724
|
|
198
|
|
526
|
|
584
|
|
170
|
|
414
|
|
Corporate, United States
|
|
258
|
|
191
|
|
67
|
|
252
|
|
173
|
|
79
|
|
|
|
$
|
19,169
|
|
$
|
479
|
|
$
|
18,690
|
|
$
|
18,958
|
|
$
|
425
|
|
$
|
18,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.
Brokered
private placement of convertible notes
On March 4, 2008,
the Corporation completed 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 are
secured only by the assets at the Paredones Amarillos gold project. The Notes mature at face value on March 4,
2011 (the Maturity Date). The Notes
pay interest of 10% per annum. Interest is payable each year in two
installments on June 15 and December 15, and the principal is payable
on the Maturity Date.
The Notes are convertible
at the holders or issuers discretion in accordance with the terms of the
Notes. The holder can convert all or
part of the debt at any time prior to the Maturity Date or the business day
immediately preceding the Redemption Date at a price of $6.00 per common share,
subject to adjustment in certain circumstances.
The Redemption Date represents the date that the Notes will be redeemed
in the event that the Corporation redeems the Notes.
The Corporation can
convert all, but not part, of the Notes after March 4, 2009 if the
weighted-average price of the Corporations common shares as quoted on the NYSE
AMEX (AMEX) has been equal to or greater than $9.00 per share for 15
consecutive trading days. The notice of
conversion must occur within 10 days of any such 15-day period and the share
price must be equal to or greater than $9.00 on the date the notice is
delivered. The conversion price was
originally $6.00 per common share and is subject to adjustments in certain
circumstances.
Pursuant to the terms of
the Notes, on March 4, 2009, the conversion price of the Notes was
automatically adjusted from $6.00 per share to $4.80 per share. As a result of the adjustment, 6.25 million
Common Shares are issuable upon conversion of the Notes. Prior to the adjustment, 5 million Common
Shares were issuable upon the conversion of the Notes.
The
Notes have been accounted for in accordance with EIC 164, Convertible and
other Debt Instruments with Embedded Derivatives. Under EIC 164, the fair value of the
conversion feature is recorded as equity.
The issuance date fair value of the conversion feature was estimated to
be $6.8 million and was classified as the equity component of convertible notes
with the residual balance of $23.2 million being recorded as the fair value of
the Corporations obligation to make principal and interest payments and has
been classified as long-term debt. The
fees totaling $1,988,000 related to the issuance of the Notes have been
allocated pro-rata between debt issuance costs of $1,531,000 and equity
issuance costs of $457,000.
The
Corporation capitalizes interest and accretion based on expenditures on
qualifying assets. As of March 31,
2009, the Corporation had qualifying expenditures of approximately $17.1
million related to the equipment purchase for the Paredones Amarillos project.
The Corporation has used approximately
$24.5 million for ongoing operations at the Paredones Amarillos project. This includes approximately $17.1 million
towards
the purchase of gold processing equipment to be used at the Paredones
Amarillos project. The remaining $5.6
million raised from the private placement, is restricted for, and will be used
for ongoing development at the Paredones Amarillos project.
A
reconciliation of the carrying value of the long-term liability portion of the
Notes is as follows:
Principal amount of the Notes
|
|
$
|
30,000
|
|
Issuance costs allocated to long-term liabilities
|
|
(1,531
|
)
|
Conversion feature allocated to equity
|
|
(6,755
|
)
|
Carrying value of the Notes upon issuance
|
|
21,714
|
|
Accretion expense
|
|
2,384
|
|
Carrying value of the Notes at March 31, 2009
|
|
$
|
24,098
|
|
7
Table of Contents
8. Options to purchase Common Shares
The fair value of stock
options granted during the three-month period ended March 31, 2009, to
employees and directors was estimated at the grant date using the Hull-White
trinomial lattice option pricing model, using the following weighted average
assumptions:
|
|
March 31, 2009
|
|
March 31, 2008
|
|
|
|
|
|
|
|
Expected volatility
|
|
76.42
|
%
|
N/A
|
|
Risk-free interest rate
|
|
1.80
|
%
|
N/A
|
|
Expected lives (years)
|
|
5
|
|
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 Corporations
common shares. Changes in the subjective
input assumptions can materially affect the fair value estimate. 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.
A summary of option activity under the
Corporations Stock Option Plan as of March 31, 2009, and changes during
the three-month period then ended is set forth in the following table:
|
|
Number of
Shares Issuable
upon Option
Exercise
|
|
Weighted-
Average
Exercise Price
($ USD)
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic Value
($ 000)
|
|
Outstanding - December 31, 2008
|
|
2,184,747
|
|
$
|
4.39
|
|
3.55
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
50,000
|
|
2.15
|
|
|
|
|
|
Expired
|
|
(18,968
|
)
|
3.35
|
|
|
|
|
|
Cancelled
|
|
(7,500
|
)
|
4.13
|
|
|
|
|
|
Forfeited
|
|
(2,500
|
)
|
3.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding - March 31, 2009
|
|
2,205,779
|
|
$
|
4.35
|
|
3.37
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable March 31, 2009
|
|
1,768,279
|
|
$
|
4.63
|
|
3.11
|
|
$
|
2
|
|
A summary of the fair-value changes
included in options within Shareholders Equity as of March 31, 2009 is
set forth in the following table:
|
|
Fair Value
($ 000s)
|
|
As of December 31, 2008
|
|
$
|
4,634
|
|
|
|
|
|
Expensed
|
|
100
|
|
Capitalized as mineral properties
|
|
34
|
|
Granted
|
|
27
|
|
Expired
|
|
(62
|
)
|
Cancelled
|
|
(14
|
)
|
Forfeited
|
|
(2
|
)
|
|
|
|
|
As of March 31, 2009
|
|
$
|
4,717
|
|
The total number of options outstanding at
the end of the quarter is 2,205,779 with exercise prices ranging from
approximately $1.69 to $7.45 and remaining lives of 0.10 to 4.99 years. The total number of options outstanding
represents 6.4% of issued capital.
A summary of the status of the
Corporations unvested stock options as of March 31, 2009, is set forth
below:
8
Table of Contents
|
|
Number of
Shares Issuable
upon Option
Exercise
|
|
Weighted-
Average Grant
Date Fair
Value ($ USD)
|
|
Unvested - December 31, 2008
|
|
415,000
|
|
$
|
1.49
|
|
|
|
|
|
|
|
Granted
|
|
25,000
|
|
1.06
|
|
Forfeited
|
|
(2,500
|
)
|
1.30
|
|
|
|
|
|
|
|
Unvested - March 31, 2009
|
|
437,500
|
|
$
|
1.30
|
|
As of March 31, 2009, there was
$226,539 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 0.4 years.
9. Contributed surplus
|
|
March 31,
|
|
December 31,
|
|
|
|
2009
|
|
2008
|
|
Balance, beginning of year
|
|
$
|
1,387
|
|
$
|
253
|
|
Cancelled optionsNote 8
|
|
14
|
|
341
|
|
Expired optionsNote 8
|
|
62
|
|
262
|
|
Expired warrants
|
|
|
|
531
|
|
Balance, end of year
|
|
$
|
1,463
|
|
$
|
1,387
|
|
10. Accumulated other comprehensive income
A reconciliation of the amounts
contained in accumulated other comprehensive income is as follows:
|
|
Accumulated other
comprehensive income,
before tax ($000s)
|
|
Accumulated other
comprehensive income,
net of tax ($000s)
|
|
As of December 31, 2008
|
|
$
|
5,413
|
|
$
|
4,602
|
|
Increases to fair market value during the period
|
|
1,383
|
|
1,176
|
|
Increases due to realization of loss
|
|
7
|
|
5
|
|
As of March 31, 2009
|
|
$
|
6,803
|
|
$
|
5,783
|
|
11. Financial instruments
Financial
assets and financial liabilities are classified into one of five
categories: held-to-maturity,
available-for-sale, held-for-trading, loans and receivables and other financial
liabilities.
All
financial instruments classified as available-for-sale or held-for-trading are
subsequently measured at fair value.
Changes in the fair value of financial instruments designated as
held-for-trading are charged or credited to the statement of loss for the
relevant period, while changes in the fair value of financial instruments
designated as available-for-sale, excluding impairments, are charged or
credited to other comprehensive income until the instrument is realized. All other financial assets and liabilities
are accounted for at cost or at amortized cost depending upon the nature of the
instrument. After their initial fair
value measurement, they are measured at amortized cost using the effective
interest rate method.
Financial Assets
The
carrying amounts and fair values of financial assets are as follows:
|
|
|
|
March 31, 2009
|
|
December 31, 2008
|
|
U.S. dollars in thousands
|
|
Category
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Cash and cash equivalents
|
|
Held-for-trading
|
|
$
|
10,982
|
|
$
|
10,982
|
|
$
|
13,266
|
|
$
|
13,266
|
|
Accounts receivable (1)
|
|
Loans
and receivables
|
|
120
|
|
120
|
|
127
|
|
127
|
|
Amayapampa disposal
consideration
|
|
Held-for-trading
|
|
4,813
|
|
4,813
|
|
4,813
|
|
4,813
|
|
Marketable securities (2)
|
|
Available-for-sale
|
|
9,406
|
|
9,406
|
|
8,153
|
|
8,153
|
|
Total financial assets
|
|
|
|
$
|
25,321
|
|
$
|
25,321
|
|
$
|
26,359
|
|
$
|
26,359
|
|
9
Table of Contents
(1) Carrying amount is a reasonable
approximation of fair value.
(2) The fair value represents quoted
market prices in an active market.
Financial
liabilities
The
carrying amounts and fair values of financial liabilities are as follows:
|
|
|
|
March 31, 2009
|
|
December 31, 2008
|
|
U.S. dollars in thousands
|
|
Category
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Accounts payable and
accrued liabilities (1)
|
|
Other
financial liabilities
|
|
$
|
1,403
|
|
$
|
1,403
|
|
$
|
803
|
|
$
|
803
|
|
Other long-term
liabilities
|
|
Other
financial liabilities
|
|
228
|
|
228
|
|
225
|
|
228
|
|
Convertible notes (2)
|
|
Other
financial liabilities
|
|
26,642
|
|
24,098
|
|
25,896
|
|
23,496
|
|
Total financial assets
|
|
|
|
$
|
28,273
|
|
$
|
25,729
|
|
$
|
26,924
|
|
$
|
24,527
|
|
(1) Carrying amount is a reasonable
approximation of fair value.
(2) The carrying value
of the convertible notes is being accreted to their maturity value over their
expected life using the effective interest rate method.
Financial
instrument risk exposure and risk management
The
Corporation is exposed in varying degrees to a variety of financial instrument
related risks. Management approves and
monitors the risk management processes.
The types of risk exposure and the way in which such exposure is managed
is provided as follows:
Credit risk
The
Corporations credit risk is primarily attributable to its cash and cash
equivalents. The Corporation monitors
its cash and cash equivalents in order to limit its exposure to credit
risk. The Corporation does not have any
financial assets that are invested in asset-backed commercial paper.
Liquidity risk
The
Corporations objective is that there is sufficient capital in order to meet
short term business requirements, after taking into account the Corporations
holdings of cash and cash equivalents and cash flows from financing activities. The Corporations cash and cash equivalents
are held in interest bearing liquid savings accounts.
Market risk
The
significant market risk exposure to which the Corporation is exposed is
interest rate risk. The Corporations
policy is to invest cash at floating rates of interest in short-term highly
liquid cash savings accounts in order to maintain liquidity. Fluctuations in interest therefore have
little impact on the value of cash equivalents and short term investments. With respect to financial liabilities, the
convertible notes are not subject to interest rate risk because they bear
interest at a fixed rate and are not subject to fluctuations in interest.
12. Supplemental cash flow information
There were no significant non-cash
transactions during the three-month period ended March 31, 2009.
Significant non-cash transactions
during the three-month period ended March 31, 2008 included the
Corporations issuance of 213,503 Common Shares as partial compensation for the
acquisition of interests in various mineral properties adjacent to the
Corporations Guadalupe de los Reyes project in Mexico as well as the issuance
of 200,000 Common Share purchase warrants to Casimir Capital LP as partial
compensation for serving as agent for the Corporations private placement of
the Notes.
13. Geographic and segment information
The Corporation
evaluates, acquires and explores gold exploration and potential development
projects. These activities are focused
principally in Mexico, Australia, North America and Indonesia. The Corporation
reported no revenues in the three-month period ended March 31, 2009, or
for the same period in 2008. Geographic
segmentation of mineral properties and plant and equipment is provided in Notes
5 and 6.
10
Table of Contents
14. Differences between Canadian and
United States generally accepted accounting principles
The Corporation prepares its financial statements in accordance with
accounting principles generally accepted in Canada, which differ in some
respects from those in the United States.
The significant 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)
In accordance with U.S.
GAAP, exploration, mineral property evaluation and holding costs are expensed
as incurred. When proven and probable
reserves are determined for a property and a bankable feasibility study is
completed, then subsequent development costs on the property would be
capitalized. Total capitalized cost of
such properties is measured periodically for recoverability of carrying value
under SFAS No. 144. Under Canadian
GAAP, all such costs are permitted to be capitalized.
(b)
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 estimated costs of amalgamation. Under U.S. corporate law,
no such transaction is available and accordingly is not allowed under U.S.
GAAP.
(c)
In accordance with U.S. GAAP (SFAS No. 123R), the
fair value of all options granted after January 1, 2006 is calculated at
the date of grant and expensed over the expected vesting period. On transition to this new standard, the
unvested portion of options granted to employees before January 1, 2006 is
expensed over the remaining vesting period using the fair value on the date of
grant. Prior to January 1, 2006,
the Corporation did not record any compensation cost on the granting of stock
options to employees and directors as the exercise price was equal to or
greater than the market price at the date of grants for U.S. GAAP purposes
under APB Opinion No. 25. SFAS No. 123R
essentially aligns U.S. GAAP with Canadian GAAP for accounting for stock-based
compensation.
(d)
In accordance with
U.S. GAAP, the entire amount of convertible debt is classified as a
liability and recorded at fair value on the date of issuance. Under Canadian
GAAP, the fair value of the conversion feature of the convertible debt is
classified as equity and the residual balance is classified as a liability.
Under Canadian GAAP a portion of the debt issuance costs were allocated to
equity. Under U.S. GAAP all issuance costs were allocated to debt. The
liability portion is accreted each period in amounts which will increase the
liability to its full face amount of the convertible instrument as of the
maturity date.
(e)
In accordance with
U.S. GAAP (SFAS No. 109), the reversal of a valuation allowance
which is directly related to the gain or loss of available-for-sale securities,
when a Corporation has no expectations of taxable income in future periods, is
recorded in other comprehensive income/(loss). Under Canadian GAAP, the Corporation
adopted EIC 172, effective September 30, 2008. This standard requires the
recognition of the tax benefit or loss of previously unrecognized tax loss
carryforwards associated with the unrealized holding gains and losses of
available-for-sale securities to be recognized in net income or net loss. This
abstract required retrospective restatement of all prior periods beginning with
January 1, 2007. The adoption of EIC 172 resulted in a future income
tax expense being recorded as part of the Corporations Net Loss, whereas under
SFAS 109 the future income tax expense would be recorded as part of the
Corporations Comprehensive Loss.
The significant
differences in the consolidated statements of loss and comprehensive loss
relative to U.S. GAAP were:
11
Table of Contents
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE
LOSS
-
UNAUDITED
|
|
Three Months Ended March 31,
|
|
Cumulative
during
Exploration
|
|
(U.S. dollars in thousands, except share data)
|
|
2009
|
|
2008
|
|
Stage
|
|
Net loss Canadian GAAP
|
|
$
|
(1,880
|
)
|
$
|
(2,123
|
)
|
$
|
(44,121
|
)
|
Exploration, property evaluation and holding costs - continuing
operations
(a)
|
|
(942
|
)
|
(1,482
|
)
|
(14,125
|
)
|
Exploration, property evaluation and holding costs - discontinued
operations
(a)
|
|
|
|
|
|
4,016
|
|
Accretion on convertible
notes
(d)
|
|
260
|
|
|
|
1,097
|
|
Amortization of debt issuance costs
(d)
|
|
(62
|
)
|
|
|
(287
|
)
|
Future income tax (benefit)/expense
(e)
|
|
(208
|
)
|
272
|
|
(1,020
|
)
|
Financing costs
|
|
|
|
|
|
(222
|
)
|
Stock-based compensation expense
(c)
|
|
|
|
|
|
2,251
|
|
Beneficial conversion feature
|
|
|
|
|
|
(2,774
|
)
|
Net loss U.S. GAAP
|
|
(2,832
|
)
|
(3,333
|
)
|
(55,185
|
)
|
Unrealized gain/(loss) on marketable
securities
(e)
|
|
1,390
|
|
(1,813
|
)
|
(782
|
)
|
Comprehensive loss U.S. GAAP
|
|
$
|
(1,442
|
)
|
$
|
(5,146
|
)
|
$
|
(55,967
|
)
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share U.S. GAAP
|
|
$
|
(0.08
|
)
|
$
|
(0.10
|
)
|
|
|
12
Table of
Contents
The
significant differences in the consolidated statements of cash flows relative
to U.S. GAAP were:
CONSOLIDATED
STATEMENTS OF CASH FLOWS - UNAUDITED
|
|
Three Months Ended March 31,
|
|
Cumulative
during
Exploration
|
|
(U.S. dollars in thousands)
|
|
2009
|
|
2008
|
|
Stage
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities, Canadian GAAP
|
|
$
|
(1,182
|
)
|
$
|
(1,207
|
)
|
$
|
(21,281
|
)
|
Additions to mineral properties, net
(a)
|
|
(877
|
)
|
(1,347
|
)
|
(15,653
|
)
|
Cash flows from operating activities, U.S. GAAP
|
|
(2,059
|
)
|
(2,554
|
)
|
(36,934
|
)
|
|
|
|
|
|
|
|
|
Cash flows from investing activities, Canadian GAAP
|
|
(1,102
|
)
|
(18,113
|
)
|
(67,868
|
)
|
Additions to mineral properties, net
(a)
|
|
877
|
|
1,347
|
|
15,653
|
|
Cash flows from investing activities, U.S. GAAP
|
|
(225
|
)
|
(16,766
|
)
|
(52,215
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities, Canadian GAAP
|
|
|
|
31,544
|
|
122,727
|
|
Cash flows from financing activities, U.S. GAAP
|
|
|
|
31,544
|
|
122,727
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents - continuing
operations
|
|
(2,284
|
)
|
12,224
|
|
33,578
|
|
Net increase/(decrease) in cash and cash equivalents - discontinued
operations
|
|
|
|
(221
|
)
|
(23,270
|
)
|
|
|
(2,284
|
)
|
12,003
|
|
10,308
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
13,266
|
|
16,686
|
|
674
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
10,982
|
|
$
|
28,689
|
|
$
|
10,982
|
|
13
Table of Contents
The significant differences in the consolidated balance sheets as at March 31,
2009, and December 31, 2008, relative to U.S. GAAP were:
CONSOLIDATED BALANCE SHEETS - UNAUDITED
|
|
March 31, 2009
|
|
December 31, 2008
|
|
(U.S. $000s)
|
|
Per Cdn.
GAAP
|
|
Cdn./U.S.
Adj.
|
|
Per U.S.
GAAP
|
|
Per Cdn.
GAAP
|
|
Cdn./U.S.
Adj.
|
|
Per U.S.
GAAP
|
|
Current assets
|
|
$
|
20,939
|
|
$
|
|
|
$
|
20,939
|
|
$
|
22,012
|
|
$
|
|
|
$
|
22,012
|
|
Property, plant and equipment
(a)
|
|
50,852
|
|
(21,634
|
)
|
29,218
|
|
48,940
|
|
(20,433
|
)
|
28,507
|
|
Other assets
|
|
4,813
|
|
|
|
4,813
|
|
4,813
|
|
|
|
4,813
|
|
Total assets
|
|
$
|
76,604
|
|
$
|
(21,634
|
)
|
$
|
54,970
|
|
$
|
75,765
|
|
$
|
(20,433
|
)
|
$
|
55,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
1,580
|
|
|
|
1,580
|
|
803
|
|
|
|
803
|
|
Convertible notes
(d)
|
|
24,098
|
|
4,537
|
|
28,635
|
|
23,496
|
|
4,995
|
|
28,491
|
|
Other long-term liabilities
|
|
228
|
|
|
|
228
|
|
228
|
|
|
|
228
|
|
Total liabilities
|
|
25,906
|
|
4,537
|
|
30,443
|
|
24,527
|
|
4,995
|
|
29,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
(b),(c)
|
|
225,098
|
|
75,282
|
|
300,380
|
|
225,098
|
|
75,282
|
|
300,380
|
|
Special warrants
|
|
|
|
222
|
|
222
|
|
|
|
222
|
|
222
|
|
Warrants and options
(c)
|
|
5,053
|
|
(242
|
)
|
4,811
|
|
4,970
|
|
(304
|
)
|
4,666
|
|
Contributed surplus
(b),(c)
|
|
1,463
|
|
5,203
|
|
6,666
|
|
1,387
|
|
5,265
|
|
6,652
|
|
Equity component of convertible notes
(d)
|
|
6,298
|
|
(6,298
|
)
|
|
|
6,298
|
|
(6,298
|
)
|
|
|
Other comprehensive income
(e)
|
|
5,783
|
|
1,110
|
|
6,893
|
|
4,602
|
|
901
|
|
5,503
|
|
Deficit
(a),
(b),(c),(e)
|
|
(192,997
|
)
|
(101,448
|
)
|
(294,445
|
)
|
(191,117
|
)
|
(100,496
|
)
|
(291,613
|
)
|
Total shareholders equity
|
|
50,698
|
|
(26,171
|
)
|
24,527
|
|
51,238
|
|
(25,428
|
)
|
25,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities & shareholders equity
|
|
$
|
76,604
|
|
$
|
(21,634
|
)
|
$
|
54,970
|
|
$
|
75,765
|
|
$
|
(20,433
|
)
|
$
|
55,332
|
|
In
March 2008, the FASB issued Statement No. 161, Disclosures about
Derivative Instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand
their effects on an entitys financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Corporation has determined this standard had no impact on its
consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements. SFAS No. 160
establishes new accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary (minority interest) is
an ownership interest in the consolidated entity that should be reported as
equity in the Consolidated Financial Statements and separate from the parent
companys equity. Among other requirements, this standard requires consolidated
net income to be reported at amounts that include the amounts attributable to
both the parent and the noncontrolling interest. It also requires disclosure,
on the face of the Consolidated Statement of Loss, of the amounts of
consolidated net loss attributable to the parent and to the noncontrolling
interest. This statement became effective for the Corporation on January 1,
2009. As of March 31, 2009, the Corporation did not have any minority
interests.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (SFAS No. 141(R)). 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,
any non-controlling 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 had no business
combinations during the quarter ended March 31, 2009, therefore this
standard had no impact on our consolidated financial statements.
14
Table of Contents
15. Subsequent events
Sale of
Allied Nevada Gold Corp. common shares
On April 3, 2009 the Corporation announced
that it had sold all of its 1,529,848 shares of Allied Nevada Gold Corp. (Allied)
for $9,016,088. These shares had a book
value of $2,194,397 and when sold, resulted in a realized gain of
$6,821,691. In May 2007, the Corporation
completed a transaction that resulted in the formation of Allied and the
transfer of the Corporations Nevada properties to Allied. The Allied shares
sold by the Corporation were retained in connection with this transaction to
facilitate the payment of any taxes payable by the Corporation in respect of
the transaction. The Corporation has
determined that there are no other taxes payable by it in respect of the
transaction and made the decision to sell the Allied shares at the appropriate
time and use the cash for project development requirements.
Filing of short form based shelf prospectus and shelf registration
statement on Form S-3
On
April 17, 2009, the Corporation announced that it filed a preliminary
short form base shelf prospectus with the securities commissions in each
province and territory of Canada (other than Quebec) and a corresponding shelf
registration statement on Form S-3 with the United States Securities and
Exchange Commission (SEC) and on April 27, 2009, the Corporation
announced that it filed a final short form base shelf prospectus (collectively,
the Offering Documents). The
registration statement on Form S-3 was declared effective by the SEC on April 30,
2009. The Offering Documents will allow
the Corporation to make offerings of common shares, debt securities, warrants,
subscription receipts or units for initial aggregate proceeds of up to $200
million during the next 25 months to potential purchasers in each province
and territory of Canada (other than Quebec) and the United States. The Corporation expects that it will need to
fund the initial capital requirements for the construction and development of
its Paredones Amarillos gold project, once necessary permits and approvals have
been received. Although the initial financings
under the Offering Documents are expected to be used for the construction and
development of our existing properties, the proceeds from financings under the
Offering Documents may also be used by the Corporation to fund development of
its other existing or acquired mineral properties, acquisitions, working
capital requirements, repayment of outstanding indebtedness from time-to-time
or for other general corporate purposes.
The Offering Documents provide the Corporation with a flexible and
efficient approach for completing future financings for corporate growth and
development.
15
Table of Contents
ITEM 2. MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Managements Discussion
and Analysis (MD&A) of the consolidated operating results and financial
condition of Vista Gold Corp. (Vista or Vista Gold) for the three-month
period ended March 31, 2009 has been prepared based on information
available to us as of April 17, 2009.
This MD&A should be read in conjunction with the consolidated
financial statements of Vista Gold for the three years ended December 31,
2008 and the related notes thereto, which have been prepared in accordance with
generally accepted accounting principles (GAAP) in Canada. Reference to Note 19 to the consolidated
annual financial statements and Note 14 to the consolidated interim financial statements
for the period ended March 31, 2009 (the Consolidated Financial Statements),
should be made for a discussion of differences between Canadian and United
States GAAP and their effect on the financial statements. All amounts stated herein are in U.S. dollars
in thousands, except per share and per ounce amounts, unless otherwise noted.
Results from Operations
Our consolidated net loss
for the three-month period ended March 31, 2009, was $1,880 or $0.05 per
share compared to a consolidated net loss of $2,123 or $0.06 per share for the
same period in 2008. The decrease in the
consolidated net loss of $243 from the respective prior period is primarily due
to a decrease in the loss from discontinued operations of $221 as there were no
disposals during the 2009 period and a decrease in corporate administration and
investor relations expense of $275.
Also, for the 2009 period, there was a future income tax benefit of $208
compared to a future income tax loss of $272 for the same period during
2008. Offsetting these amounts was an
increase in interest expense of $395, an increase in exploration, property
evaluation and holding costs of $87, an increase in the write-down of
marketable securities of $112 and a decrease in interest income of $81.
Exploration, property evaluation
and holding costs
Exploration, property
evaluation and holding costs were $333 for the three-month period ended March 31,
2009, approximately level with $246 for the same period in 2008. There were no
significant variances as we continue to move our projects towards development
decisions.
Corporate administration and
investor relations
Corporate administration and
investor relations costs decreased to $1,012 during the three-month period
ended March 31, 2009, compared with $1,287 for the same period in 2008.
The decrease of $275 was primarily due to a decrease in stock-based
compensation expense of $171 compared to the prior period. This decrease is primarily due to a decrease
in the number of options granted during the prior year and vesting over time as
well as an increase in the stock-based compensation amount being capitalized as
mineral properties. Also, audit, tax and
Sarbanes-Oxley compliance fees decreased by $87 from the 2008 period as we work
with our auditors and outside consultants to reduce these fees.
Depreciation and amortization
Depreciation and
amortization expense increased to $52 during the three-month period ended March 31,
2009 compared to $39 for the same period in 2008. The increase of $13 from the respective prior
period is mostly due to capital expenditures at both the Mt. Todd gold project
and the Paredones Amarillos gold project during 2008 and 2009 that have begun
to be depreciated.
Interest expense
Interest expense increased
to $579 during the three-month period ended March 31, 2009 compared to
$184 for the same period in 2008. This
increase is because the senior secured convertible notes (the Notes) were
issued on March 4, 2008 and therefore only 27 days of interest were
recorded for the 2008 period. Of the
2009 amount, $259 is attributable to the accretion of the debt discount and
$320 is attributable to interest expense.
These amounts are approximately 43% of the full interest expense
associated with the issuance of the Notes.
We capitalized the remaining 57% as additions to mineral properties in
accordance with SFAS No. 34 and our accounting policy.
Other income and expense
Loss on disposal of
marketable securities
There was a loss of $7 on
the disposal of marketable securities for the three-month period ended March 31,
2009, compared to a gain of $21 for the same period in 2008. The loss for the 2009 period resulted from
the sale of securities that had a book value of $24 and the gain from the 2008
period resulted from the sale of securities that had a book value of $37.
At
March 31, 2009, we held marketable securities available for sale with a
quoted market value of $9,406. With the exception of our shares of Allied
Nevada Gold Corp. common stock, as discussed herein, we purchased the
securities for investing purposes with the intent to hold the securities until
such time it would be advantageous to sell the securities at a gain. Although there
can be no
16
Table of Contents
reasonable
assurance that a gain will be realized from the sale of the securities, we monitor
the market status of the securities consistently in order to mitigate the risk
of loss on the investment. At March 31, 2009, also included in marketable
securities were 1,529,848 shares of Allied Nevada Gold Corp. at a quoted market
value of $8,950. Subsequent to March 31,
2009, on April 3, 2009, we sold all 1,529,848 common shares of Allied
Nevada Gold Corp. for $9,016.
Interest income
During the three months
ended March 31, 2009 we realized $28 in interest income as compared to
$109 for the same period in 2008. The
decrease of $81 from the prior period is due to reduced cash balances for the
2009 period as well as falling interest rates in the market.
Income tax
(benefit)/expense
Effective
September 30, 2008, the Corporation adopted the Emerging Issues Committee
Abstract 172 (EIC 172), Income Statement Presentation of a Tax Loss
Carryforward Recognized Following an Unrealized Gain in Other Comprehensive
Income. EIC 172 provides guidance on
whether the tax benefit from the recognition of previously unrecognized tax
loss carryforwards consequent to the recording of unrealized gains in other
comprehensive income, such as unrealized gains on available-for-sale financial
assets, should be recognized in net income or in other comprehensive income. EIC 172 should be applied retrospectively,
with restatement of prior periods from January 1, 2007, the date of
adoption of CICA 3855.
During the three-month
period ended March 31, 2009, the future income tax benefit was $208
compared to a future income tax expense of $272 for the 2008 period. The recognition of a benefit as compared to
the expense from prior period is attributable to the market gaining during the
first quarter of 2009, in which we have had an unrealized gain as compared to
2008 where we had an unrealized loss.
Write-down of marketable
securities
The write-down of marketable
securities was $112 for the three-month period ended March 31, 2009. There were no write-downs reported during the
same period in 2008. At March 31,
2009, Vista Gold evaluated the market value of its available-for-sale
securities and found that certain securities had become impaired. These securities were written down to their
fair market value as of March 31, 2009.
Financial Position,
Liquidity and Capital Resources
Cash used in operations
Net cash used in operating
activities was $1,182 for the three-month period ended March 31, 2009,
compared to $1,207 for the same period in 2008.
The decrease of $25 is the result of a decrease of non-cash items of
$104 and a decrease in cash used for accounts payable, accrued liabilities and
other of $103, which is partially offset by a decrease in the consolidated net
loss of $22.
Investing activities
Net cash used in investing
activities decreased to $1,102 for the three-month period ended March 31,
2009, from $18,113 for the same period in 2008.
The decrease of $17,011 is mostly due to a decrease in the additions to
property, plant and equipment of $16,099. During 2008 we completed a brokered
private placement of $30,000 principal amount of the Notes (see Consolidated
Financial Statements Note 7) and we have used $16,000 of the proceeds towards
the purchase of gold processing equipment to be used at our Paredones Amarillos
project, which included the costs of relocating the equipment to Edmonton,
Alberta, Canada. There was no similar
purchase during the three-month period ended March 31, 2009.
Financing activities
There was no cash provided
by or used in financing activities for the three-month period ended March 31,
2009. Net cash provided by financing
activities was $31,544 for the three-month period ended March 31,
2008. During the three-month period
ended March 31, 2008 we completed a brokered private placement, in which
we offered and sold $30,000 principal amount of the Notes (see Consolidated
Financial Statements Note 7). Proceeds
to Vista after legal and other fees were $28,534. Also, during the three-month period ended March 31,
2008, warrants exercised produced cash proceeds of $2,941 and stock option exercises
produced cash proceeds of $69.
Liquidity and Capital Resources
At March 31, 2009,
our total assets were $76,604 compared to $75,765 at December 31, 2008,
representing an increase of $839. At March 31,
2009, we had working capital of $19,359 compared to $21,209 at December 31,
2008, representing a decrease of $1,850.
This decrease relates primarily to a reduction in cash balances from
year end, which is offset by an increase in our marketable
17
Table of Contents
securities balances due
to better market conditions.
The principal component
of working capital at both March 31, 2009 and December 31, 2008, is
cash and cash equivalents of $10,982 and $13,266, respectively. Other components include marketable
securities (March 31, 2009 $9,406; December 31, 2008 $8,153) and
other liquid assets (March 31, 2009 - $551; December 31, 2008 -
$593).
As
a result of the delay in the issuance of the Change of Land Use Permit at the
Paredones Amarillos project and the current uncertainty in the resource and
financial markets, management has adopted a revised plan and budget for the
year 2009. The plan continues those programs necessary to expedite the
development of the Paredones Amarillos project, while minimizing expenditures
in other areas. We expect that in the event that financing for the Paredones
Amarillos project is not available on acceptable terms in 2009, Vista has
sufficient working capital to fund its planned operations at least through the
end of 2010, without additional financing. We will continue to examine
potential funding alternatives for the project, which may include project
financing, debt financing or equity financing.
On
April 17, 2009, we announced that we filed a preliminary short form base
shelf prospectus in Canada and a corresponding shelf registration statement in
the United States with the Securities and Exchange Commission (SEC). On April 27, 2009, we announced that we
filed a final short form base shelf prospectus in Canada and an amended Form S-3
with the SEC. The Form S-3 was
declared effective on April 30, 2009.
See Other Subsequent Events, below.
Off-Balance Sheet Arrangements
We have no off-balance
sheet arrangements required to be disclosed in this Quarterly Report on Form 10-Q.
Contractual Obligations
|
|
Payments due by period (in thousands)
|
|
Contractual Obligations
|
|
Total
|
|
Less than
1 year
|
|
1 to 3 years
|
|
3 to 5 years
|
|
More than
5 years
|
|
Long-term debt obligations(1)
|
|
$
|
36,750
|
|
$
|
3,000
|
|
$
|
33,750
|
|
$
|
|
|
$
|
|
|
Purchase obligations(2)
|
|
$
|
400
|
|
$
|
200
|
|
$
|
200
|
|
$
|
|
|
$
|
|
|
Operating lease obligations
|
|
$
|
42
|
|
$
|
42
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Total
|
|
$
|
37,192
|
|
$
|
3,242
|
|
$
|
33,950
|
|
$
|
|
|
$
|
|
|
(1)
Long-term debt obligations
including interest payments related to the Corporations issuance of the Notes,
are discussed in the Consolidated Financial Statements Note 7.
(2)
Purchase
obligations include option payments totaling $400 on the Guadalupe de los Reyes
and Long Valley projects. For the Guadalupe de los Reyes Project, we still have
outstanding $100, which is to be paid in less than a year. For the Long Valley
project, we still have outstanding $300, of which $100 is to be paid in less
than a year and $200 is to be paid in 1 to 3 years.
Other
Paredones Amarillos Gold Project
Permit Update
On
January 12, 2009, we announced an update to the permitting status at our
Paredones Amarillos gold project in Mexico. As previously announced
(see press releases dated July 2 and September 8, 2008), Vista
Gold indicated that it had decided to apply for a new Change of Land Use Permit
(CUSF). In a press release dated November 10, 2008, we indicated that we
had presented an application for a Temporary Occupation Permit (TOP) for the
use of the federal land which overlies the deposit. The TOP is a necessary
pre-requisite for the CUSF application. We have not yet received the TOP.
Communications with the office of the General Director of Mines in the Ministry
of Economy (the department responsible for awarding the TOP) indicate that
the approval process is proceeding normally. We have the necessary
environmental permit and have completed the other prerequisite studies for the
submittal of the CUSF permit application and will file that permit application
as soon as the TOP is received.
Mt. Todd Gold Project Technical
Study Results and Metallurgical Test Program Update
In
late January 2009, we announced the results of an updated Canadian
National Instrument 43-101 (NI 43-101) technical study on the Batman
Deposit completed for us by Tetra Tech MM, Inc. of Golden, Colorado. This
estimate was completed under the direction of Mr. John Rozelle, P.G., an
independent Qualified Person, utilizing standard industry software and estimation
methodology. The report is titled Mt Todd Gold Project Gold Resource Update,
Northern Territory, Australia and is dated
18
Table of Contents
February 27, 2009. It
is available on SEDAR. The updated estimate of mineralized material (mineral
resource estimate under Canadian guidelines) incorporates the results of
7,367 assay intervals from 14 drill holes (all core holes)
drilled by Vista Gold in 2008. These
results are in addition to the results of 100,685 assay intervals from
755 drill holes (250 core, 435 reverse circulation and
70 rotary drill holes) completed previously by Vista Gold and the previous
owners and/or operators of the properties, which were used in the previous
updates of the Mt. Todd resource estimate. Based on the report, under
SEC Industry Guide 7 guidelines, mineralized material for the Batman
deposit, above a cut-off grade of 0.015 gold ounces per ton, is estimated
at 165,985,000 tons grading 0.027 gold ounces per ton, and represents
an increase of 57% in mineralized material over the prior estimate.
At
the same cut-off grade, under NI 43-101, measured mineral resources are
estimated at 49,212,000 tons grading 0.029 gold ounces per ton,
indicated mineral resources are estimated at 116,773,000 tons grading
0.027 gold ounces per ton and inferred mineral resources are estimated at
73,551,000 tons grading 0.025 gold ounces per ton.
Cautionary Note to U.S. Investors
:
Mineral resources are not mineral reserves and there is no assurance that any
mineral resources will ultimately be reclassified as proven or probable
reserves. Mineral resources which are not mineral reserves do not have
demonstrated economic viability. U.S. Investors should read the Cautionary
Note to U.S. Investors Regarding Reserve and Resource Estimates contained
in our Annual Report on Form 10-K (as amended) for the year ended December 31,
2008, concerning the difference between resources and reserves.
A
metallurgical testing program using the core obtained in the 2007 and 2008
drilling programs is in progress. The goals of the program are to define the
process flowsheet for the processing the Mt. Todd ore and to determine other
key processing parameters, including energy requirements. As we announced in November 2008,
preliminary tests using high pressure grinding rolls have been successful,
indicating a reduction in crushing and grinding energy requirements compared to
conventional technologies of approximately 30%. We plan to conduct additional
studies in 2009 which will be used in the completion of a preliminary
feasibility study for a project similar in scope to that considered in the
previously published preliminary assessment (January 4, 2007).
Subsequent
events
Sale of
Allied Nevada Gold Corp. common shares
On April 3, 2009 Vista announced that it
had sold all of its 1,529,848 shares of Allied Nevada Gold Corp. (Allied) for
$9,016. These shares had a book value of
$2,194 and when sold, resulted in a realized gain of $6,822. In May 2007, Vista completed a
transaction that resulted in the formation of Allied and the transfer of Vistas
Nevada properties to Allied. The Allied shares sold by Vista were retained in
connection with this transaction to facilitate the payment of any taxes payable
by Vista in respect of the transaction.
Vista has determined that there are no other taxes payable by it in
respect of the transaction and made the decision to sell the Allied shares at
the appropriate time and use the cash for project development requirements.
Filing of short form based shelf prospectus and shelf registration
statement on Form S-3
On
April 17, 2009, Vista announced that it filed a preliminary short form
base shelf prospectus with the securities commissions in each province and
territory of Canada (other than Quebec) and a corresponding shelf registration
statement on Form S-3 with the SEC and on April 27, 2009, Vista
announced that it filed a final short form base shelf prospectus (collectively,
the Offering Documents). The Form S-3
was declared effective by the SEC on April 30, 2009. The Offering Documents will allow Vista to
make offerings of common shares, debt securities, warrants, subscription
receipts or units for initial aggregate proceeds of up to $200 million during
the next 25 months to potential purchasers in each province and territory
of Canada (other than Quebec) and the United States. Vista expects that it will need to fund the
initial capital requirements for the construction and development of its
Paredones Amarillos gold project, once necessary permits and approvals have
been received. Although the initial
financings under the Offering Documents are expected to be used for the
construction and development of our existing properties, the proceeds from
financings under the Offering Documents may also be used by Vista to fund
development of its other existing or acquired mineral properties, acquisitions,
working capital requirements, repayment of outstanding indebtedness from
time-to-time or for other general corporate purposes. The Offering Documents provide Vista with a
flexible and efficient approach for completing future financings for corporate
growth and development.
Changes in
Accounting Policies
and Recent Accounting
Pronouncements
Changes in accounting policies
Effective
September 30, 2008, we adopted the Emerging Issues Committee Abstract 172
(EIC 172), Income Statement Presentation of a Tax Loss Carryforward
Recognized Following an Unrealized Gain in Other Comprehensive Income. EIC 172 provides guidance on whether the tax
benefit from the recognition of previously unrecognized tax los carryforwards
consequent to the
19
Table of Contents
recording
of unrealized gains in other comprehensive income, such as unrealized gains on
available-for-sale financial assets, should be recognized in net income or in
other comprehensive income. EIC 172
should be applied retrospectively, with restatement of prior periods from January 1,
2007, the date of adoption of CICA (as defined below) Section 3855, Financial
Instruments Recognition and Measurement.
The
adoption of EIC 172 resulted in a reclassification of $1,132 of income tax
recovery from the accumulated other comprehensive income balance to the
accumulated deficit as of December 31, 2007. It also increased the Corporations
three-month loss for the period ended March 31, 2008 by $272.
Effective
January 1, 2009, we adopted the following standards updates by the
Canadian Institute of Chartered Accountants (CICA). These new standards have been adopted on a
prospective basis with no restatement to prior period financial statements.
In February 2008,
the CICA issued Section 3064, Goodwill and Intangible Assets, which
replaces Section 3062, Goodwill and Intangible Assets, and results
in a withdrawal of CICA Section 3450, Research and Development
Costs, and amendments to Accounting Guideline (AcG) 11, Enterprises in the
Development Stage, and CICA Section 1000, Financial Statement Concepts.
The standard intends to reduce the differences with International Financial
Reporting Standards (IFRS) in the accounting for intangible assets and
results in closer alignment with U.S. GAAP. Under current Canadian
standards, more items are recognized as assets than under IFRS or
U.S. GAAP. The objectives of CICA Section 3064 are to reinforce the
principle-based approach to the recognition of assets only in accordance with
the definition of an asset and the criteria for asset recognition; and clarify
the application of the concept of matching revenues and expenses such that the
current practice of recognizing assets that do not meet the definition and
recognition criteria are eliminated. The standard will also provide guidance
for the recognition of internally developed intangible assets (including
research and development activities), ensuring consistent treatment of all
intangible assets, whether separately acquired or internally developed. This
standard will be effective for fiscal years beginning on or after October 1,
2008. The Corporation has determined there is no impact on its current
financial statements.
Certain U.S. Federal Income Tax Considerations
NOTICE PURSUANT TO IRS CIRCULAR 230: NOTHING CONTAINED IN
THIS SUMMARY CONCERNING ANY U.S. FEDERAL TAX ISSUE IS INTENDED OR WRITTEN
TO BE USED, AND IT CANNOT BE USED, BY A U.S. HOLDER (AS DEFINED IN
MATERIAL REFERENCED BELOW), FOR THE PURPOSE OF AVOIDING U.S. FEDERAL TAX
PENALTIES UNDER THE CODE (AS DEFINED BELOW). THIS SUMMARY WAS WRITTEN TO
SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED BY
THIS DOCUMENT. EACH U.S. HOLDER SHOULD SEEK U.S. FEDERAL TAX ADVICE,
BASED ON SUCH U.S. HOLDERS PARTICULAR CIRCUMSTANCES, FROM AN INDEPENDENT
TAX ADVISOR.
Vista has been
a passive foreign investment company (PFIC) as defined under Section 1297
of the U.S. Internal Revenue Code of 1986, as amended (the Code), in recent
years and expects to continue to be a PFIC in the future. Current and prospective United States
shareholders should consult their tax advisors as to the tax consequences of
PFIC classification and the U.S. federal tax treatment of PFICs. Additional information on this matter is
included in Vistas Annual Report on Form 10-K for the year ended December 31,
2008, as amended, under Part II.
Item 5. Market for Registrants
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
U.S. Federal Income Tax Consequences.
Note
Regarding Forward-Looking Statements
This
document and any document (or portion thereof) incorporated by reference into
this document, contain forward-looking statements within the meaning of Section 27A
of the U.S. Securities Act of 1933, as amended, and 21E of the U.S. Securities
Exchange Act of 1934, as amended, and forward-looking information under
Canadian securities laws, that are intended to be covered by the safe harbor
created by such legislation. All
statements, other than statements of historical facts, included in this
document, our other filings with the SEC and Canadian securities commissions
and in press releases and public statements by our officers or representatives,
that address activities, events or developments that we expect or anticipate
will or may occur in the future are forward-looking statements and
forward-looking information, including, but not limited to, such things as
those listed below:
·
estimates of future
operating and financial performance;
·
potential funding
requirements and sources of capital;
·
the timing, performance and
results of feasibility studies;
20
Table of Contents
·
timing and receipt of
required land use, environmental and other permits for the Paredones Amarillos
gold project and timing for starting and completion of drilling and testing
programs at the Paredones Amarillos gold project;
·
plans to confirm the
validity of the Change of Land Use Permit for the Paredones Amarillos gold
project and timing and outcome for confirmation of the status of this permit
and timing and outcome for alternative application for an interim Change of
Land Use Permit for the drilling program and a new Change of Land Use Permit
for the Paredones Amarillos gold project;
·
timing and outcome for
application for the Temporary Occupation Permit for mining activities at the
Paredones Amarillos gold project;
·
plans to purchase remaining
surface land or obtain rights-of-way required by the Paredones Amarillos gold
project;
·
capital and operating cost
estimates for the Paredones Amarillos gold project, and anticipated timing of
commencement of construction at the Paredones Amarillos gold project;
·
plans for evaluation of the
Mt. Todd gold project, including estimates of silver, copper and
gold resources;
·
preliminary assessment
results and plans for a pre-feasibility study at the Mt. Todd
gold project;
·
results of drilling programs
and prospects for exploration and conversion of resources at the Mt. Todd
gold project;
·
potential for gold
production at the Amayapampa gold project, timing and receipt of future payments
in connection with the disposal of the Amayapampa gold project and status of
legal proceedings in Bolivia;
·
ongoing debt service
requirements for the Notes and potential redemption or conversion of
the Notes;
·
future gold prices;
·
future business strategy,
competitive strengths, goals and expansion and growth of our business;
·
Vistas potential status as
a producer;
·
plans and estimates
concerning potential project development, including matters such as schedules,
estimated completion dates and estimated capital and operating costs;
·
plans and proposed
timetables for exploration programs and estimates of exploration expenditures;
·
estimates of mineral
reserves and mineral resources; and
·
future share price and
valuation for Vista and for marketable securities held by Vista.
The
words estimate, plan, anticipate, expect, intend, believe, will, may
and similar expressions are intended to identify forward-looking statements and
forward-looking information. These statements involve known and unknown risks,
uncertainties, assumptions and other factors which may cause our actual
results, performance or achievements to be materially different from any
results, performance or achievements expressed or implied by such forward-looking
statements and information. These factors include risks such as:
·
our likely status as a passive
foreign investment company for U.S. federal tax purposes;
·
feasibility study results
and preliminary assessment results and the estimates on which they are based;
·
economic viability of a
deposit;
·
delays in commencement of
construction on the Paredones Amarillos gold project;
·
status of our required
governmental permits for the Paredones Amarillos gold project;
21
Table of Contents
·
increased costs that affect
our financial condition;
·
a shortage of equipment and
supplies;
·
whether our acquisition,
exploration and development activities will be commercially successful;
·
fluctuations in the price of
gold;
·
inherent hazards of mining
exploration, development and operating activities;
·
calculation of mineral
reserves, mineral resources and mineralized material and the fluctuations
thereto based on metal prices, inherent vulnerability of the ore and
recoverability of metal in the mining process;
·
environmental regulations to
which our exploration and development operations are subject;
·
our receipt of future
payments in connection with our disposal of the Amayapampa gold project;
·
leverage as a result of our
outstanding Notes;
·
intense competition in the
mining industry;
·
our potential inability to
raise additional capital on favorable terms, if at all;
·
conflicts of interest of
some of our directors as a result of their involvement with other natural
resource companies;
·
potential challenges to our
title to our mineral properties;
·
political and economic
instability in Mexico, Bolivia and Indonesia;
·
fluctuation in foreign
currency values;
·
trading price of our Common
Shares and our ability to raise funds in new shares offerings due to future
sales of our Common Shares in the public or private market;
·
difficulty in bringing
actions or enforcing judgments against us and certain of our directors or
officers outside of the Untied States;
·
recent market events and
conditions; and
·
general economic conditions.
For
a more detailed discussion of such risks and other important factors that could
cause actual results to differ materially from those in such forward-looking
statements and forward-looking information please see the risk factors
contained in our Annual Report on Form 10-K (as amended) for the year
ended December 31, 2008, under Part IItem 1A. Risk Factors.
The foregoing section of our 2008 Form 10-K (as amended) is incorporated
in this filing and investors should refer to it. Although we have attempted to identify
important factors that could cause actual results to differ materially from those
described in forward-looking statements and forward-looking information, there
may be other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that these statements will prove to be
accurate as actual results and future events could differ materially from those
anticipated in the statements. Except as required by law, we assume no
obligation to publicly update any forward-looking statements and
forward-looking information, whether as a result of new information, future
events or otherwise.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are engaged in the
acquisition of gold projects and related activities including exploration
engineering, permitting and the preparation of feasibility studies. The value of our properties is related to the
price of gold and changes in the price of gold could affect our ability to
generate revenue from our portfolio of gold projects.
Gold prices may fluctuate
widely from time to time and are affected by numerous factors, including the
following: expectations with
22
Table of Contents
respect to the rate of
inflation, exchange rates, interest rates, global and regional political and
economic circumstances and governmental policies, including those with respect
to gold holdings by central banks. The
price of gold fell to a 20-year low of $253 in July 1999 and has risen
significantly since that time to reach a level of $865 by December 31,
2008 and was $917 at March 31, 2009 and $885 at May 1, 2009. The demand for, and supply of, gold affect
gold prices, but not necessarily in the same manner as demand and supply affect
the prices of other commodities. The
supply of gold consists of a combination of new mine production and existing
stocks of bullion and fabricated gold held by governments, public and private
financial institutions, industrial organizations and private individuals. The demand for gold primarily consists of
jewelry and investments. Additionally,
hedging activities by producers, consumers, financial institutions and
individuals can affect gold supply and demand.
While gold can be readily sold on numerous markets throughout the world,
its market value cannot be predicted for any particular time.
Because we have
exploration operations in North America, Indonesia and Australia we are subject
to foreign currency fluctuations. We do
not engage in currency hedging to offset any risk of currency fluctuations as
insignificant monetary amounts are held in foreign currencies for land holding
costs related to the properties owned.
On March 7,
2008, we announced the closing of a private placement in which we offered and
sold $30 million in aggregate principal amount of the Notes (see
Consolidated Financial Statements Note 7). The Notes bear interest at a rate
of 10% per annum (calculated and payable semi-annually in arrears) and will
mature on March 4, 2011. We do not consider our interest rate risk
exposure to be significant at this time.
ITEM 4.
CONTROLS
AND PROCEDURES
DISCLOSURE
CONTROLS AND PROCEDURES
The principal executive
officer and principal financial officer have evaluated the effectiveness of the
Corporations disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act) as of
March 31, 2009. Based on the evaluation, the principal executive officer
and principal financial officer concluded that the disclosure controls and
procedures in place are effective to ensure that information required to be
disclosed by the Corporation, including consolidated subsidiaries, in reports
that the Corporation files or submits under the Exchange Act, is recorded,
processed, summarized and reported on a timely basis in accordance with
applicable time periods specified by the U.S. Securities and Exchange
Commission rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Corporation in the reports that it
files or submits under the Exchange Act is accumulated and communicated to the
Corporations management, including its principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
CHANGES
IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There has been no change
in the Corporations internal control over financial reporting during the
quarter ended March 31, 2009, that has materially affected, or is
reasonably likely to materially affect, the Corporations internal control over
financial reporting.
PART II - OTHER INFORMATION
ITEM
1.
LEGAL
PROCEEDINGS
We are
not aware of any material pending or threatened litigation or of any
proceedings known to be contemplated by governmental authorities which are, or
would be, likely to have a material adverse effect upon us or our operations,
taken as a whole.
ITEM 1A.
RISK
FACTORS
There have been no
material changes from the risk factors set forth in our 2008 Form 10-K.
ITEM 2.
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3.
DEFAULTS
UPON SENIOR SECURITIES
None.
23
Table of Contents
ITEM
4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5.
OTHER
INFORMATION
None.
24
Table of Contents
ITEM 6.
|
|
EXHIBITS
|
|
|
|
|
|
(a)
|
|
Exhibits
|
|
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934
, as amended
|
|
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934
, as amended
|
|
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley
Act of 2002
|
|
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley
Act of 2002
|
|
|
|
|
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
|
|
VISTA GOLD CORP.
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date: May 6, 2009
|
|
By:
|
/s/
Michael B. Richings
|
|
|
|
Michael B. Richings
|
|
|
|
Executive Chairman and Chief Executive
Officer
|
|
|
|
|
|
|
|
|
Date: May 6, 2009
|
|
By:
|
/s/
Gregory G. Marlier
|
|
|
|
Gregory G. Marlier
|
|
|
|
Chief Financial Officer
|
25
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