DENVER, Jan. 16, 2014 /PRNewswire/ -- Vista Gold Corp.
(TSX & NYSE MKT: VGZ) ("Vista" or the "Company") today
announced that it has signed a non-binding letter of intent (the
"LOI") to option its interest in the Guadalupe de los Reyes gold
and silver project in Sinaloa,
Mexico (the "GdlR Project") to Cangold Limited
("Cangold").
The LOI provides that a non-refundable US$50,000 payment be made to Vista for which
Cangold will have a 90 day period of exclusivity (the "Exclusivity
Period") to complete due diligence and negotiate and enter into a
definitive option agreement with Vista (the "Option
Agreement").
The LOI contemplates that the Option Agreement (if entered into)
will provide that Cangold may earn a 70% interest in the GdlR
Project by:
- making payments totaling US$5,000,000 in five payments over a three-year
period, with payments totaling US$1,000,000 in the first year, US$1,500,000 in the second year and US$2,500,000 in the third year;
- operating the GdlR project, maintaining the concessions
comprising the GdlR Project in good standing; and
- fulfilling all of the obligations of Vista's wholly-owned
subsidiary, Minera Gold Stake, S.A.
de C.V. ("MGS") to the Ejido La Tasajera (the "Ejido") as set out in the temporary occupation
contract between MGS and the Ejido.
The Option Agreement is expected to further provide that all
cash payments are non-refundable and optional to Cangold, and in
the event Cangold fails to pay any of the required amounts on the
scheduled dates or fails to comply with its other obligations, the
Option Agreement will terminate and Cangold will have no interest
in the GdlR Project. Provided it is not in breach of the Option
Agreement, Cangold may at its discretion advance the above payment
schedule and exercise the initial option for a 70% interest in the
GdlR Project any time during the three-year period.
Subject to Cangold earning a 70% interest in the GdlR Project,
pursuant to the Option Agreement Cangold will be granted an
additional option to earn the remaining 30% interest in the GdlR
Project, by notifying Vista of a production decision and by making
a cash payment to Vista of US$3,000,000 plus an additional cash payment
based on a formula that includes the growth, if any, in estimated
NI 43-101 compliant Measured and Indicated mineral resources of the
GdlR Project, and the then prevailing spot gold price ("Escalator
Payment").
Should Cangold determine not to put the GdlR Project into
production, the Option Agreement will provide Vista the right to
buy back Cangold's 70% interest in the GdlR Project for a cash
payment of US$5,000,000 plus an
additional cash payment based on the same formula for the Escalator
Payment described above. If Vista does not exercise its
buyback option, Vista will still retain a right of first refusal
should Cangold elect to sell its 70% interest in the GdlR Project
to a third party.
The Option Agreement will also contain terms to provide that
Cangold will be the operator of the GdlR Project and set forth the
responsibilities and obligations of Cangold in this respect.
Cangold is a junior exploration company engaged in the
exploration and development of gold projects in Mexico and Canada. Cangold trades on the TSX Venture
Exchange under the symbol CLD.
The LOI and the Option Agreement are subject to the approval of
the TSX Venture Exchange and to the Board of Directors of Cangold
and Vista.
About Vista Gold Corp.
Vista's principal assets
include its flagship Mt. Todd gold project in Northern Territory,
Australia, and a 24.9% holding in
Midas Gold Corp. In addition to non-core projects in Mexico and California, Vista holds royalty interests in
projects in Bolivia and
Indonesia. For more information
about our projects, including technical studies and resource
estimates, please visit our website at www.vistagold.com.
Forward Looking Statements
This press release contains forward-looking statements within the
meaning of the U.S. Securities Act of 1933, as amended, and U.S.
Securities Exchange Act of 1934, as amended, and forward-looking
information within the meaning of Canadian securities laws. All
statements, other than statements of historical facts, included in
this press release that address activities, events or developments
that Vista expects or anticipates will or may occur in the future,
including such things as the successful completion of Cangold's due
diligence review of the GdlR Project, the negotiation and execution
of the Option Agreement within the Exclusivity Period, the terms
and conditions of the Option Agreement, Cangold complying with its
obligations under the LOI and the Option Agreement (including
making contemplated payments and maintaining the concessions),
Cangold's potential decision to put the GdlR project into
production, approval of the Option Agreement by the TSX Venture
Exchange and the respective board of directors of the parties and
other such matters are forward-looking statements and
forward-looking information. The material factors and assumptions
used to develop the forward-looking statements and forward-looking
information contained in this press release include the following:
ability of Cangold to make payments contemplated in the LOI and the
Option Agreement, approved business plans, anticipated and
estimated costs and budget expenditures to continue to optimize and
advance the Company's core assets, the perceived extent and
duration of the current weakness of gold equity securities and
other such matters. When used in this press release, the
words "optimistic," "potential," "indicate," "expect," "intend,"
"hopes," "believe," "may," "will," "if," "anticipate," "would,"
"could," and similar expressions are intended to identify
forward-looking statements and forward-looking information.
These statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of Vista to be materially different from any future
results, performance or achievements expressed or implied by such
statements. Such factors include, among others, risks
relating to Cangold's ability to obtain financing (if at all),
risks related to Cangold's determination to put the GdlR Project
into production, uncertainty of resource estimates, estimates of
results based on such resource estimates; risks relating to
completing metallurgical testing; risks relating to cost increases
for capital and operating costs; risks related to the timing
and the ability to obtain approval of the environmental impact
statement and the necessary permits for the Mt. Todd gold project,
risks of shortages and fluctuating costs of equipment or supplies;
risks relating to fluctuations in the price of gold; the inherently
hazardous nature of mining-related activities; potential effects on
Vista's operations of environmental regulations in the countries in
which it operates; risks due to legal proceedings; risks relating
to political and economic instability in certain countries in which
it operates; as well as those factors discussed under the headings
"Note Regarding Forward-Looking Statements" and "Risk Factors" in
Vista's Annual Report Form 10-K as filed on March 14, 2013 and other documents filed with the
U.S. Securities and Exchange Commission and Canadian securities
regulatory authorities. Although Vista has attempted to
identify important factors that could cause actual results to
differ materially from those described in forward-looking
statements and forward-looking information, there may be other
factors that cause results not to be as anticipated, estimated or
intended. Except as required by law, Vista assumes no
obligation to publicly update any forward-looking statements or
forward-looking information; whether as a result of new
information, future events or otherwise.
For further information, please contact Connie Martinez at (720) 981-1185, or visit the
Company's website at www.vistagold.com.
SOURCE Vista Gold Corp.