Vista Gold Corp. Acquires Hycroft Mine Royalty and Ownership Interest in 53 Properties in Nevada and Colorado
14 Dezember 2005 - 3:22AM
PR Newswire (US)
DENVER, Dec. 13 /PRNewswire-FirstCall/ -- Vista Gold Corp. (Amex:
VGZ; TSX) announces that on December 13, a subsidiary of Vista
acquired all of the outstanding shares of F.W. Lewis, Inc., the
assets of which include 55 mineral properties in Nevada and
Colorado. The acquisition was made by exercise of a purchase option
originally held by Century Gold LLC of Spring Creek, Nevada.
Century Gold assigned the option to Vista pursuant to an assignment
and assumption agreement effective December 9, 2005. Under the
terms of the assignment agreement, Vista paid Century Gold U.S.
$150,000 in cash and also reimbursed it for the U.S. $250,000 it
paid the owners of F.W. Lewis, Inc. toward the option exercise
price of U.S. $5.1 million. In addition, subject to regulatory
approval, Vista has agreed to issue to Century Gold 250,000 common
shares of Vista. To complete the exercise of the option, Vista paid
the owners of F.W. Lewis, Inc., the remaining U.S. $4.85 million of
the outstanding purchase price. Century Gold will retain a 100%
interest in two properties and a 50% interest in two other
properties. The 53 properties to be retained by Vista include a
total of 9,280 acres of patented and 11,616 acres of unpatented
mineral claims, the majority having gold, silver or copper
discoveries or old mines located on the properties. F.W. Lewis,
Inc. owns a production royalty interest in the Hycroft Mine. The
production royalty (applying to approximately 70% of the reported
reserves) was 5% Net Smelter Return (NSR) on gold and 7.5% NSR on
other minerals, including silver. The production royalty on gold
escalated on ore over 0.05 ounces per ton (opt) to a maximum of 10%
NSR on ore grades over 0.14 opt. The Hycroft Mine has been leased
by a subsidiary of Vista and the production royalty payable to F.W.
Lewis, Inc. will no longer apply by virtue of this acquisition.
Vista (or predecessor companies) operated the Hycroft Mine,
producing 1,075,000 ounces of gold from 1987 to 1998, when
operations were suspended due to low gold prices. In September
2004, Vista reported results of an updated feasibility study for
the Hycroft Mine by Mine Development Associates (MDA) of Reno,
Nevada, an independent consulting firm, in accordance with Canadian
National Instrument 43-101 guidelines. The study was filed on SEDAR
on September 22, 2004. As reported by Vista, the study estimated
mineral reserves using a U.S. $375 gold price at 32.4 million tons
at 0.0175 opt of gold, for 566,500 ounces of contained gold. Also,
as reported in the study but not separately reported by Vista, it
was estimated that from the 566,500 ounces of contained gold,
358,000 ounces could be produced together with 1,433,000 ounces of
silver. Included in the package (100% retained by Vista) is a
property in the Battle Mountain, Nevada Mining District, adjacent
to and on trend with Newmont's Phoenix-Fortitude property, although
similar mineralization cannot be assured. This property is subject
to pre-existing agreements with Madison Minerals Inc. (formerly
Madison Enterprises Corp.) and Great American Minerals Exploration
(Nevada), LLC. These agreements involve payments of U.S. $3,000 per
month minimum royalty payments to F.W. Lewis, Inc., minimum
exploration commitments of U.S. $250,000 per year, and an option to
purchase the property for U.S. $2.0 million payable by December 31,
2007, with a retained 5% gross royalty on gold and a 4% NSR royalty
on other metals, and with annual advance minimum royalty payments
of U.S. $60,000 commencing on exercise of the purchase option.
Madison and Great American also have an option to purchase the
royalties from F.W. Lewis, Inc. for U.S. $4.0 million in the first
year following the date of exercise of the purchase option and
escalating by U.S. $500,000 each year thereafter. Mike Richings,
Vista President and CEO, commented, "We are very pleased to have
purchased the Hycroft royalty and ownership interest. It is no
secret that we believe the Lewis royalty has deterred major mining
companies from entering into an arrangement to explore the deep,
high-grade potential of the Hycroft deposit. Additionally, we
anticipate that the purchase of the Lewis interest at Hycroft will
significantly improve the overall economics of restarting
operations at the Hycroft mine. At recent prices of $500 and $8 per
ounce for gold and silver, respectively, the royalty would be worth
US$6.9 million on 70% of the potential production of 358,000 ounces
of gold and 1,433,000 ounces of silver from the reported mineral
reserves. We are currently updating last year's National Instrument
43-101 study to reflect today's higher gold prices, the increased
measured and indicated resource estimate (reported August 4, 2005)
and current cost data. We also look forward to the opportunities
that this excellent package of exploration properties will afford
to Vista to increase value for our shareholders." Vista Gold Corp.,
based in Littleton, Colorado, evaluates and acquires gold projects
with defined gold resources. Additional exploration and technical
studies are undertaken to maximize the value of the projects for
eventual development. The Corporation's holdings include, in
addition to the properties newly acquired with the acquisition of
F.W. Lewis, Inc., the Maverick Springs, Mountain View, Hasbrouck,
Three Hills, Wildcat projects and Hycroft mine, all in Nevada, the
Long Valley project in California, the Yellow Pine project in
Idaho, the Paredones Amarillos and Guadalupe de los Reyes projects
in Mexico, the Amayapampa project in Bolivia and the Awak Mas
project in Indonesia. Cautionary Note to U.S. Investors concerning
estimates of Proven and Probable Reserves: Estimates of mineral
reserves herein have been prepared in accordance with Canadian
National Instrument 43-101. The definitions of proven and probable
reserves used in NI 43-101 differ from the definitions in SEC
Industry Guide 7. Accordingly, the Corporation's disclosure of
mineral reserves herein may not be comparable to information from
U.S. companies subject to the SEC's reporting and disclosure
requirements. The statements that are not historical facts are
forward-looking statements involving known and unknown risks and
uncertainties that could cause actual results to vary materially
from targeted results. Such risks and uncertainties include those
described from time to time in the Corporation's periodic reports,
including its latest annual report on Form 10-K filed with the U.S.
Securities and Exchange Commission. The Corporation assumes no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
For further information, please contact Greg Marlier at (720)
981-1185, or visit the Vista Gold Corp. website at
http://www.vistagold.com/ DATASOURCE: Vista Gold Corp. CONTACT:
Greg Marlier of Vista Gold Corp., +1-720-981-1185 Web site:
http://www.vistagold.com/
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