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Oct. 7, 2013 /PRNewswire/ -- Vista Gold Corp. ("Vista" or the "Company") (NYSE MKT and TSX: VGZ) today announced that it has signed a binding agreement to sell its debt and equity participation in the Los Cardones gold project in
Baja California Sur, Mexico, to the Invecture Group ("Invecture") for
The Los Cardones gold project (formerly known as Paredones Amarillos) is subject to a 2012 earn-in agreement between Invecture and Vista whereby Invecture could earn a 62.5% interest in the project by completing certain activities. The agreement announced today will result in the termination of that earn-in agreement and the sale of 100% of its debt and equity participation in the project to Invecture for
US$13 million (
US$7 million of which will be paid at closing and
US$6 million of which will be paid in January 2014). The agreement provides that Invecture has the option to elect, in its discretion, to not make the second payment of
US$6 million; in which case, Vista will retain the
US$7 million already paid and the project. The transaction is subject to a number of conditions, including receipt of any required regulatory approvals. The agreement provides that the parties will execute the definitive documentation with respect to the sale of the project by
October 16, 2013, or such other date mutually agreed to by the parties.
Proceeds from the completed sale are anticipated to fund Vista's operations substantially through 2014. Approximately half of the proceeds will be used to reduce the outstanding balance of Vista's term loan with Sprott Resource Lending Partnership, resulting in an expected reduction of Vista's monthly interest payments by
Frederick H. Earnest, President and Chief Executive Officer, said, "The sale of the Los Cardones gold project is consistent with Vista's strategy to raise capital through the sale of non-core assets. This transaction preserves our shareholders' exposure and leverage to Vista's two core assets (the Mt. Todd gold project and Vista's ownership of Midas Gold Corp.) without diluting our shareholders."
Vista continues to list its Colomac mill equipment for sale through AM King Industries. A successful sale could provide sufficient additional capital for Vista to fund itself beyond 2014, complete the Feasibility Study of the Mt. Todd gold project, and fully repay its term loan with Sprott.