Item 1. Business
ITEM 1. BUSINESS .
In this annual report on Form 10-K, unless the context otherwise requires, the terms “we”, “us”, “our”, “Vista”, “Vista Gold”, or the “Company” refer to Vista Gold Corp. and its subsidiaries. References to AUD or A$ refer to Australian currency and USD or $ refer to United States currency, all in thousands, unless specified otherwise, except per share-related, per tonne, and per ounce amounts.
Overview
Vista Gold Corp. and its subsidiaries operate in the gold mining industry. We are focused on evaluation, acquisition, exploration and advancement of gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements, option agreements, leases to third parties, joint venture arrangements with other mining companies, or outright sales of assets for cash and/or other consideration. We look for opportunities to improve the value of our gold projects through exploration drilling and/or technical studies focused on optimizing previous engineering work. We do not currently generate cash flows from mining operations.
The Company’s flagship asset is its 100% owned Mt Todd gold project (“Mt Todd” or the “Project”) in Northern Territory, Australia (“NT”). With the approval of the Mining Management Plan (“MMP”) in June 2021, all major operating and environmental permits for Mt Todd have been received. Mt Todd is the largest undeveloped gold project in Australia.
Vista recently completed the Mt Todd Feasibility Study (“2022 FS”), which is highlighted by:
● Estimated proven and probable mineral reserves of 6.98 Moz of gold (280 Mt at 0.77 g Au/t) using a gold price of $1,125 for the reserve estimate and a cut-off grade of 0.35 g Au/t (1)(2) ;
● Average annual production of 395,000 ounces of gold over a 16-year mine life;
● Life of Mine average cash costs of $817 per ounce;
● Initial capital requirements of $892 million, which assume an owner-operated mining fleet, power generated on-site by a third-party, and a locally based employee workforce;
● After-tax NPV 5% of $999.5 million and internal rate of return (“IRR”) of 20.6% at a gold price of $1,600 per ounce; and
● After-tax NPV 5% of $1,458 million and IRR of 26.7% at a price of $1,800 per ounce of gold.
(1) Note to investors: Proven and probable mineral reserves are estimated in accordance with S-K 1300 and CIM Definition Standards.
(2) See “Item 2. Properties – Mt Todd Gold Project, Northern Territory, Australia – Mineral Resources and Mineral Reserve Estimates” in this annual report on Form 10-K for additional information.
We have invested over $105 million to systematically explore, evaluate, engineer, permit and de-risk Mt Todd since we acquired it in 2006. In recent years, we have completed a number of optimization studies, which have been incorporated into the 2022 FS. This work has added substantial value to the Project and positions Mt Todd for near-term development. We believe the results will appeal to potential partners, investors and lenders and allow us to evaluate a range of development alternatives as we continue to focus on maximizing shareholder value in a cost-effective manner.
The 2022 FS includes reserve estimates pursuant to subpart 1300 of Regulations S-K (“S-K 1300”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and CIM Definition Standards based on mine plans developed using a gold price in line with current market conditions. The 2022 FS addresses recommendations from the 2019 pre-feasibility study and includes minor updates of the Project design to be consistent with the MMP, engineering and detailed costing in all areas of the Project.
The 2022 FS highlights a 19% increase in gold reserves from 5.85 million ounces to 6.98 million ounces, supporting an operation with average annual production of 479,000 ounces of gold during the first seven years of commercial operations
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and a low operating cost profile that delivers significant cashflows over a 16-year mine life. The 2022 FS reflects the inflationary pressures being faced currently by all operators in the mining industry. While management believes this inflationary trend is transitory, the resilience of Mt Todd is demonstrated by the project economics reflected in the 2022 FS. Mt Todd’s attributes, together with Vista’s deep understanding of the various project components create optionality in the approach to its development. For example, the Company decision to have a third-party build, own, and operate the power plant has resulted in capital cost savings and eliminated certain construction and operating risks while retaining attractive operating costs.
We believe this work has added substantially to the value of the Project, which reflects a $1.5 billion net present value (NPV 5% ) at the recent gold price of $1,800 per ounce and a 0.71 AUD:USD exchange rate and demonstrates near-term development potential. See the “Item 2. Properties – Gold Price and Foreign Exchange Sensitivity Table” below.
Resources and reserves growth potential at Mt Todd includes a number of opportunities. There is potential to convert additional known mineral resources to mineral reserves, and both the Batman and Quigleys deposits remain open. Recent drilling demonstrates the continuity of mineralization between these two deposits, and Vista controls 1,650 sq. km of exploration licenses at the southeast end of the Pine Creek Mining District.
In addition to the technical advancements of the Project, with the recent approval of the MMP, Vista now has all major operating and environmental permits for the development of Mt Todd. We have invested significant resources in water treatment and management, environmental, and social programs. We believe this has benefited our relationships with the traditional landowners, local communities, and NT Government, creating a strong social license.
Vista has successfully monetized a number of non-core assets to support continuing operations in a non-dilutive manner. This includes cash proceeds to the Company totaling $14,090 during 2020, 2021 and January 2022. The Company continues to focus on monetizing a royalty interest in a U.S. exploration-stage project and used mill equipment.
Vista was originally incorporated on November 28, 1983 under the name “Granges Exploration Ltd.” It amalgamated with Pecos Resources Ltd. during June 1985 and continued as Granges Exploration Ltd. In June 1989, Granges Exploration Ltd. changed its name to Granges Inc. Granges Inc. amalgamated with Hycroft Resources & Development Corporation during May 1995 and continued as Granges Inc. Effective November 1996, Da Capo Resources Ltd. and Granges, Inc. amalgamated under the name “Vista Gold Corp.” and, effective December 1997, Vista continued from the Province of British Columbia to the Yukon Territory, Canada under the Business Corporations Act (Yukon Territory). On June 11, 2013, Vista continued from the Yukon Territory, Canada to the Province of British Columbia, Canada under the Business Corporations Act (British Columbia). The current addresses, telephone and facsimile numbers of our offices are:
Executive Office
Registered and Records Office
7961 Shaffer Parkway, Suite 5
1200 Waterfront Centre – 200 Burrard Street
Littleton, Colorado, USA 80127
Vancouver, British Columbia, Canada V7X 1T2
Telephone: (720) 981-1185
Telephone: (604) 687-5744
Facsimile: (720) 981-1186
Facsimile: (604) 687-1415
Human Capital Management
As of December 31, 2021, we had 17 full-time and no part-time employees globally. In addition, we use consultants with specific skills to assist with various aspects of our corporate affairs, project evaluation, due diligence, corporate governance and property management.
Our compensation programs are designed to align compensation of our employees with Vista’s corporate objectives and performance, and are designed to provide proper incentives to attract, retain and motivate employees to achieve superior results. The structure of our compensation programs balances competitive wages, benefits and incentive earnings for both short-term and long-term performance.
The health and safety of our employees and others is a high priority in the way we manage our business. Oversight is provided by the Company’s Board of Directors through the Health, Safety, Environment and Social Responsibility
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Committee. Management utilizes the principles set out in our Health & Safety Policy to administer health and safety programs. Employees and others entering our workplaces are provided with relevant orientation and required to adhere to established site protocols. In addition to recurring health and safety considerations, we follow COVID-19 mitigation measures recommended by government and health agencies in the jurisdictions where we operate.
Vista’s priority to maintain a culture of ethical performance as a core value is reflected in the Company’s Code of Business Conduct and Ethics and other related policies. Oversight is provided by the Company’s Board of Directors and, for specific areas of performance, by committees of the Board of Directors. Employees are required to review the Code of Business Conduct and Ethics and acknowledge their understanding of the content and intent to comply on a periodic basis. Our compensation programs also include consideration of ethical performance in determining incentive awards.
Vista values the diversity and talents of its team, collectively working together in an inclusive environment to achieve corporate goals and personal and professional development objectives. We cultivate a culture that is sensitive to the importance of diversity and inclusion in the workplace and are committed to continuous improvement in these areas.
Environmental, Social, and Governance Responsibility
Vista is committed to implementing and continuing to develop business practices that are designed to mitigate environmental impacts of our operating activities, support the people and communities within our areas of influence, and appropriately manage the business affairs of our organization. We believe part of being a good corporate citizen requires a dedicated focus on how we affect the environment and fulfill our responsibilities to stakeholders. In particular, through our planning for development of Mt Todd, we have worked closely with governmental entities in the NT and local groups, including the Jawoyn Association Aboriginal Corporation (the “Jawoyn”), to strive towards an environmentally sound and socially responsible development plan.
Segment Information
We have one reportable segment, consisting of evaluation, acquisition and exploration activities which are focused principally in Australia. We evaluate, acquire, explore and advance gold exploration and potential development projects, which may lead to gold production or value adding strategic transactions such as earn-in right agreements, option agreements, leases to third parties, joint venture arrangements, or outright sales of assets. We reported no mining operating revenues during the years ended December 31, 2021 and 2020. Geographic location of mineral properties and plant and equipment is provided in Notes 4 – Mineral Properties and 5 – Plant and Equipment to our Consolidated Financial Statements under the section heading “Item 8. Financial Statements and Supplementary Data” below.
Reclamation
The Mt Todd site was not reclaimed by the predecessor owners when the mine closed in 2000. Liability for the reclamation of the environmental conditions existing prior to the 2006 commencement of Vista’s involvement with the Project is presently the responsibility of the NT Government. After it provides notice to the NT Government that it intends to proceed with development, the Company will then assume these historical rehabilitation liabilities currently estimated by the NT Government at approximately A$73 million. Vista does not expect to give such notice until a project development decision has been made, major project permits are confirmed to be in alignment with the final development plan, and project financing is arranged.
We generally will be required to mitigate long-term environmental impacts, including any of those existing prior to 2006 that are not otherwise mitigated during the mine life, by stabilizing, contouring, re-sloping and re-vegetating various portions of the Project after mining and mineral processing operations are completed. Reclamation programs will be conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies.
Additionally, Vista maintains a $240 provision for potential reclamation costs attributable to certain mining claims previously held by the Company should no other viable potentially responsible parties be identified.
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Government Regulation
Our exploration and development activities and other property interests are subject to various national, state, provincial and local laws and regulations in Australia and other jurisdictions, which govern prospecting, development, mining, mine safety, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, the use and disposal of hazardous substances, and other matters. We have obtained all major authorizations and have pending applications for other minor licenses, permits or other authorizations currently required to conduct our exploration, development, and other programs. We believe we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and regulations in all of the jurisdictions in which we operate.
Australian Laws
Mineral projects in the NT are subject to Australian federal and NT laws and regulations regarding environmental matters and the use and disposal of hazardous wastes and materials. As with all mining projects, Mt Todd is expected to have a variety of environmental impacts should development proceed. In Australia, environmental legislation plays a significant role in the mining industry. We are required under Australian laws and regulations (federal and territorial) to acquire permits and other authorizations before Mt Todd can be developed and mined. In September 2014, the environmental impact statement (“EIS”) for Mt Todd was approved. The Environmental Protection Agency of the Northern Territory Government (“NTEPA”) advised that it had assessed the environmental impacts of the proposed gold mine at Mt Todd and authorized the Company to proceed with development, subject to a number of recommendations as outlined in the assessment report (the “Assessment Report”). The Assessment Report included a request for Vista to secure an authorization under the federal Environmental Protection and Biodiversity Conservation Act 1999 (“EPBC”) as it relates to the Gouldian Finch. In January 2018, the authorization required by the EPBC was approved by the Australia Department of the Environment and Energy. We must comply with the terms of our Authority Certificate under the Northern Territory Aboriginal Sacred Sites Act 1989 which deals with the handling of archeological material and sacred sites. We are also subject to statutory requirements under the Mining Management Act, which includes the requirement to receive authorization of an MMP before the start of mining operations. The Mt Todd MMP was approved by the Northern Territory Department of Industry, Tourism and Trade (“DITT”) in June 2021 and will be amended to align with the larger-scale design in the 2022 FS.
Environmental Regulation
Mt Todd is subject to various federal, territorial and local laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material compliance with applicable laws and regulations.
Changes to current local, territorial, or federal laws and regulations in the jurisdictions where we have exploration and development activities could require additional capital expenditures and increase operating and/or reclamation costs. We are unable to predict what additional legislation, if any, might be proposed or enacted, or what additional regulatory requirements could impact the economics of Mt Todd.
During 2021, Mt Todd did not have any material non-compliance occurrences with any applicable environmental laws and regulations. See “Item 1. Business – Reclamation” above.
Competition
We compete with other mining companies to acquire, explore, finance and develop gold properties and to retain expert consultants required to complete our geological and project development studies. We also compete with other mining companies to hire mining engineers, geologists and other skilled personnel in the mining industry, and for exploration and development services. Some of these competing mining companies have substantially greater financial and technical resources than Vista. As a result, we may have difficulty acquiring attractive gold projects at reasonable prices, engaging skilled consultants, and attracting and retaining qualified personnel.
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Gold Price History
The price of gold is volatile and is affected by numerous factors, all of which are beyond our control, such as the sale or purchase of gold by various central banks and financial institutions, inflation, recession, fluctuation in the relative values of the U.S. dollar and foreign currencies, changes in global gold supply and demand, and political and economic conditions.
The following table presents the high, low and average London Bullion Market Association PM Fix prices in U.S. dollars per troy ounce of gold over the past five years:
Year
High
Low
Average
2017
$
1,346
$
1,151
$
1,257
2018
$
1,355
$
1,178
$
1,269
2019
$
1,546
$
1,270
$
1,393
2020
$
2,067
$
1,474
$
1,770
2021
$
1,943
$
1,684
$
1,799
2022 (to February 14, 2022)
$
1,866
$
1,788
$
1,818
Data Source: www.lbma.org.uk/prices-and-data/precious-metal-prices#/
Available Information
We make available, without charge, on or through our website at www.vistagold.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934. Our website and the information contained therein or connected thereto are not intended to be, and are not, incorporated into this annual report on Form 10-K.
Metric Conversion Tabl e
To Convert Metric Measurement Units
To Imperial Measurement Units
Multiply by
Hectares
Acres
2.4710
Meters
Feet
3.2808
Kilometers
Miles
0.6214
Tonnes
Tons (short)
1.1023
Liters
Gallons
0.2642
Grams
Ounces (troy)
0.0322
Grams per tonne
Ounces (troy) per ton (short)
0.0292
Glos sary
“ acid rock drainage ” results from the interaction of meteoric water with oxidizing sulfide minerals.
“ bedding ” means the characteristic structure of sedimentary rock in which layers of different composition, grain size or arrangement are layered one on top of another in a sequence with oldest on the bottom and youngest at the top.
“ comminution ” means the process in which ore is broken into small fragments by crushing, grinding, and other processes.
“ conglomerate ” refers to clastic sedimentary rock that contains rounded particles that are greater than two millimeters in diameter. The space between the pebbles is generally filled with smaller particles and/or a chemical cement that binds the rock together.
“ cut-off grade ” means the grade (i.e., the concentration of metal or mineral in rock) that determines whether mined mineralized material will be processed or considered waste.
“ deposit ” is an informal term for an accumulation of mineralized material.
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“ development stage issue r” is an issuer that is engaged in the preparation of mineral reserves for extraction on at least one material property.
“ development stage property ” is a property that has mineral reserves disclosed, pursuant to S-K 1300, but no material extraction.
“ feasibility study ” is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified or economically viable. The results of a feasibility study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of a project. The confidence level of a feasibility study is higher than that of a preliminary feasibility study.
“ foliation ” means planar arrangement of structural or textural features in any rock type.
“ g Au/t ” means grams of gold per tonne.
“ geosyncline ” means a major trough or downwarp of the Earth’s crust, in which great thicknesses of sedimentary and/or volcanic rocks have accumulated.
“ indicated mineral resource ” and “ indicated resource ” mean “indicated mineral resource” defined by S-K 1300 as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may be converted only to a probable mineral reserve.
“ inferred mineral resource ” and “ inferred resource ” mean “inferred mineral resource” defined by S-K 1300 as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve.
“ intrusives ” refers to igneous rocks that crystallize below the earth’s surface.
“ measured mineral resource ” and “ measured resource ” mean “measured mineral resource” defined by S-K 1300 as that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.
“ mineral reserve ” is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.
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“ mineral resource ” is a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
“ ore ” means material containing minerals in such quantity, grade and chemical composition that they can be economically extracted.
“ ore sorting ” means technology that separates “ore” and “waste” based on physical and/or chemical properties of the material being sorted.
“ oxide ” means mineralized rock in which some of the original minerals have been oxidized ( i.e. , combined with oxygen). Oxidation tends to make the rock more porous and permits a more complete permeation of cyanide solutions so that minute particles of gold in the interior of the minerals will be more readily dissolved.
“ probable mineral reserves ” under S-K 1300 is the economically mineable part of an indicated and, in some cases, a measured mineral resource.
“ proven mineral reserves ” under S-K 1300 is the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource.
“ qualified person ” as defined under S-K 1300 is an individual who is: (1) A mineral industry professional with at least five years of relevant experience in the type of mineralization and type of deposit under consideration and in the specific type of activity that person is undertaking on behalf of the registrant; and (2) An eligible member or licensee in good standing of a recognized professional organization at the time the technical report is prepared. For an organization to be a recognized professional organization, it must: (i) Be either: (A) An organization recognized within the mining industry as a reputable professional association; or (B) A board authorized by U.S. federal, state or foreign statute to regulate professionals in the mining, geoscience or related field; (ii) Admit eligible members primarily on the basis of their academic qualifications and experience; (iii) Establish and require compliance with professional standards of competence and ethics; (iv) Require or encourage continuing professional development; (v) Have and apply disciplinary powers, including the power to suspend or expel a member regardless of where the member practices or resides; and (vi) Provide a public list of members in good standing.
“ recovery ” means that portion of the metal contained in the ore that is successfully extracted by processing and is expressed as a percentage.
“ sampling ” means selecting a fractional, but representative, part of a mineral deposit for analysis.
“ scats ” means material in a ball mill or semi autogenous grinding mill (“SAG Mill”) that has become rounded and no longer susceptible to additional size reduction. This material is commonly rejected from the grinding circuit for additional crushing because it contributes to higher energy consumption within the mill.
“ strike ” when used as a noun, means the direction, course or bearing of a vein or rock formation measured on a level surface and, when used as a verb, means to take such direction, course or bearing.
“ sulfide ” means a compound of sulfur and some other element. From a metallurgical perspective, sulfide rock is primary rock that has not been oxidized. Both ore and waste may contain sulfide minerals.
“ tailings ” means material rejected from a mill after most of the valuable minerals have been extracted.
“ tpd ” means tonnes per day.
“ tuffs ” are a type of rock consisting of consolidated volcanic ash ejected from vents during a volcanic eruption.
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“ vein ” means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source.
“ waste ” means rock lacking sufficient grade and/or other characteristics of ore.
Cautionary Note to Investors Regarding Estimates Of Measured, Indicated And Inferred Resources And Proven And Probable Mineral Reserves
We are subject to the reporting requirements of the Exchange Act and applicable Canadian securities laws, and as a result we report our mineral reserves and mineral resources according to two different standards. U.S. reporting requirements are governed by S-K 1300. Canadian reporting requirements for disclosure of mineral properties are governed by NI 43-101. Both sets of reporting standards have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but the standards embody slightly different approaches and definitions.
In our public filings in the U.S. and Canada and in certain other announcements not filed with the SEC, we disclose proven and probable reserves and measured, indicated and inferred resources, each as defined in S-K 1300 and NI 43-101. As currently reported, there are no material differences in our disclosed proven and probable reserves and measured, indicated and inferred resource under each of S-K 1300 and NI 43-101. The estimation of measured resources and indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves, and therefore investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into S-K 1300-compliant or NI 43-101-compliant reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources, and therefore it cannot be assumed that all or any part of inferred resources will ever be upgraded to a higher category. Therefore, investors are cautioned not to assume that all or any part of inferred resources exist, or that they can be mined legally or economically.
Note Regarding Forward-Looking Statement s
This annual report, including all exhibits hereto and any documents that are incorporated by reference as set forth on the face page under “Documents incorporated by reference”, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 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 annual report on Form 10-K, 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, those listed below:
Operations
● our belief that the 2022 FS has added substantial value to the Mt Todd gold project (“Mt Todd” or the “Project”) and positions the Project for near-term development;
● our continued focus on improving the economic potential of the Project and increasing shareholder value in a cost-effective manner;
● our belief that our investments to systematically explore, evaluate, engineer, permit and de-risk the Project have added to the underlying value of the Project and demonstrate strong development potential;
● our plans and available funding to continue to identify and study potential Mt Todd optimizations, project improvements and efficiencies;
● the results of the 2022 FS and its related estimates and projections, including projected free cash flow, future exchange rates and commodity prices;
● our belief that the results of the 2022 FS will appeal to potential partners, investors, and lenders and allow us to pursue a range of development alternatives as we continue to focus on maximizing shareholder value;
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● the feasibility of Mt Todd and the timing, performance and results of the 2022 FS;
● our belief that fine grinding will improve gold recoveries and favorably impact project economics;
● estimates of future operating and financial performance;
● future drilling plans;
● our expectation of Mt Todd’s impact, including environmental and economic impacts;
● plans and estimates concerning potential Mt Todd development, including access to an adequate supply of water, the availability of natural gas on acceptable terms, as well as the ability to obtain all required permits;
● our expectation that dewatering of the pit will not present any major issues when resuming operations in the Batman pit;
● estimates of mineral reserves and mineral resources;
● our intention to improve the value of our gold projects;
● the potential that development projects may lead to gold production or value-adding strategic transactions;
● management belief that the inflationary trend is transitory, and that the resilience of Mt Todd is demonstrated by the project economics reflected in the 2022 FS;
● our belief that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and regulations in all of the jurisdictions in which we operate and that our operations are conducted in material compliance with applicable laws and regulations;
● our estimates with respect to historical mine production at Mt Todd;
● our expectation that plus 5/8” HPGR (as defined below) crusher product at Mt Todd is harder than the minus 5/8” crushed product and that the hardness of ore in the Batman deposit is relatively consistent;
● our expectation that the use of HPGR crushers at Mt Todd will produce a product that can be ground more efficiently and reduce energy requirements as compared to a SAG Mill design;
● the expectation that reclamation of the heap leach pad at Mt Todd will include disposal of pad liner and regrading of the area occupied by the heap leach pad only as the material on the existing heap leach pad will be processed through the mill at the end of mine life; and
● our expectation that existing infrastructure at Mt Todd will reduce initial capital expenditure and significantly reduce capital risk related to infrastructure construction.
Business and Industry
● our expectation that existing working capital as of December 31, 2021, together with other potential future sources of non-dilutive financing, will be sufficient to fully fund our currently planned corporate expenses, Project holding costs and discretionary programs for at least 12 months;
● our belief that the ATM Program (as defined below) will provide additional financing flexibility at a low cost;
● the potential monetization of our non-core assets, including a royalty on a U.S. exploration-stage project and our used mill equipment which is for sale;
● potential expenditures, funding requirements and sources of capital, including near-term sources of additional cash;
● our expectation that the Company will continue to incur losses and will not pay dividends for the foreseeable future;
● our potential entry into agreements to find, lease, purchase, option or sell mineral interests;
● our belief that we maintain reasonable amounts of insurance;
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● our expectations related to potential changes in regulations or taxation initiatives;
● our expectation that we will continue to be a passive foreign investment company;
● the potential that we may grant options and/or other stock-based awards to our directors, officers, employees and consultants;
● preliminary estimates of the reclamation and other related costs that would be incurred if we were to notify the NT Government that we intend to proceed with development and assume rehabilitation liability for Mt Todd;
● the efficacy of the measures we have implemented to mitigate the risks of COVID and the detrimental effects it may have on our operations; and
● the potential that future expenditures may be required for compliance with various laws and regulations governing the protection of the environment.
Forward-looking statements and forward-looking information have been based upon our current business and operating plans, as approved by the Company’s Board of Directors (the “Board”); our cash and other funding requirements and timing and sources thereof; results of preliminary feasibility and feasibility studies, the accuracy of mineral resource and reserve estimates and assumptions on which they are based; the results of economic assessments and exploration activities; current market conditions and project development plans. The material assumptions used to develop the forward-looking statements and forward-looking information included in this annual report on Form 10-K include: our expectations of metal prices; our forecasts and expected cash flows; our projected capital and operating costs; accuracy of mineral resource estimates and resource modeling and preliminary feasibility and feasibility study results; expectations regarding mining and metallurgical recoveries; timing and reliability of sampling and assay data; anticipated political and social conditions; expected Australian national, provincial and local government policies, including legal reforms, successful advancement of the Company’s required permitting processes; ability to successfully raise additional capital. 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 forward-looking information. These factors include risks such as:
Operating Risks
● feasibility study results and the accuracy of estimates and assumptions on which they are based;
● mineral resources and reserves estimates, the accuracy of such estimates and the accuracy of sampling and subsequent assays and geologic interpretations on which they are based;
● technical and operational feasibility and the economic viability of deposits;
● our ability to raise sufficient capital on favorable terms or at all to meet the substantial capital investment at Mt Todd;
● our ability to obtain, renew or maintain the necessary authorizations and permits for Mt Todd, including its development plans and operating activities;
● delays in commencement of construction at Mt Todd;
● increased costs that affect our operations or our financial condition;
● our reliance on third parties to fulfill their obligations under agreements with us;
● whether projects not managed by us will comply with our standards or meet our objectives;
● whether our acquisition, exploration and development activities, as well as the realization of the market value of our assets, will be commercially successful and whether any transactions we enter into will maximize the realization of the market value of our assets;
● the success of future joint ventures, partnerships and other arrangements relating to our properties;
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● perception of potential environmental impact of Mt Todd;
● known and unknown environmental and reclamation liabilities, including reclamation requirements at Mt Todd;
● potential challenges to the title to our mineral properties;
● opposition to construction or operation of Mt Todd;
● future water supply issues at Mt Todd;
● litigation or other legal claims; and
● environmental lawsuits.
Financial and Business Risks
● fluctuations in the price of gold;
● lack of adequate insurance to cover potential liabilities;
● the lack of cash dividend payments by us;
● our history of losses from operations;
● our ability to attract, retain and hire key personnel;
● volatility in our stock price and gold equities generally;
● our ability to raise additional capital or raise funds from the sale of non-core assets on favorable terms, if at all;
● general economic conditions adverse to Mt Todd development or operation;
● the potential acquisition of a control position in the Company for less than fair value as a result of industry consolidation or otherwise;
● lack of success in our efforts to find an acceptable partner, external financing or other acceptable alternatives to move forward with development of Mt. Todd;
● evolving corporate governance and public disclosure regulations;
● intense competition in the mining industry;
● tax initiatives on domestic and international levels;
● fluctuation in foreign currency values;
● our likely status as a PFIC (as defined below) for U.S. federal tax purposes;
● delays, potential losses and inability to maintain sufficient working capital due to business interruptions or global economic slowdowns caused by the COVID-19 pandemic;
● cybersecurity breaches that threaten or disrupt our information technology systems;
● anti-bribery and anti-corruption laws;
● direct and indirect consequences of the COVID-19 pandemic; and
● potential conflicts of interest arising from certain of our directors and officers serving as directors and officers of other companies in the natural resources sector.
Industry Risks
● inherent hazards of mining exploration, development and operating activities;
● a shortage of skilled labor, equipment and supplies;
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● the accuracy of calculations of mineral reserves and mineral resources and fluctuations therein based on metal prices, estimated costs, and inherent vulnerability of the ore and recoverability of metal in the mining process;
● changes in environmental regulations to which our exploration and development operations are subject; and
● changes in climate change regulations could result in increased operating costs.
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 “Item 1A. Risk Factors” below in this annual report on Form 10-K. 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 to be materially different than anticipated, estimated or intended. There can be no assurance that these forward-looking 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.