Vista Gold's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Vista Gold Corporation (VGZ)

Q2 2012 Earnings Call

August 10, 2012 11:00 AM ET


Fred Earnest – President and CEO

Jack Engele – SVP and CFO


Marco Rodriguez – Stonegate Securities

Brian Post – ROTH Capital Partners

Jeff Wright – Global Hunter Securities

Adrian Day – Adrian Day Asset Management

Joseph Reagor – Global Hunter Securities



Good day, ladies and gentlemen. Welcome to Vista Gold Corp’s second quarter financial results conference call with management. At this time, all participants are in a listen-only mode. Following the discussion, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded. Today is Friday, August 10, 2012. It is now my pleasure to introduce your host, Mr. Fred Earnest, President and Chief Executive Officer. Please go ahead, Mr. Earnest.

Fred Earnest

Thank you, Valerie (ph). Good morning, ladies and gentlemen. Welcome to Vista Gold Corp’s second quarter results and corporate update conference call. I am pleased to be joined on this call by Jack Engele, Senior Vice President and CFO who joined our team at the end of May.

In general terms, the last six months have been very difficult for the junior gold miner sector with explorers and developers both suffering significant devaluations. I am pleased to report that Vista has fared much better. Since January 1, 2012, we have seen a 3.6% decrease in the value of our shares compared to a 1.2% increase in the price of gold since the start of the year.

And since July 1, 2011, we have seen an increase of 12.7% compared to a 9% increase in the price of gold for the same period. While we are pleased to be outperforming most of our peers, we are not satisfied with our share price and continue to work to increase shareholder value.

We continue to enjoy the strong support of our shareholders and believe that the execution of our business plan will result in increased shareholder value as the second half of the year progresses.

In the course of this call, we will be making forward-looking statements. 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.

Please refer to our latest Forms 10-K and 10-Q for a detailed discussion of risks and other important factors that could cause actual results to differ materially from those in our forward-looking statements.

I will now turn the time over to Jack Engele. Following his discussion of the financial results, I will provide an update on the status of our core projects.

Jack Engele

Thank you, Fred. Good morning, everyone, and thank you for joining us. I’d like to start by summarizing our recent financing.

After the end of the second quarter on July 30th, despite the difficult market, we closed a private placement equity offering which provided $15 million gross proceeds to the company. This was done through the sale of 5 million units mainly to long time Vista shareholders and supporters.

The units were priced at $3 US per unit. Each unit was comprised at one common share and one-half warrant (ph). Each full warrant will entitle the holder to purchase one common share at a price of $3.60 US for a period of 24 months.

In connection with this private placement, we’ve paid cash commission of $500,000 and issued 166,667 compensation warrants to certain finders in respective subscriptions for approximately 3.33 million units or about two-thirds of the total placement. The compensation warrants have an exercise price of $3.18 for a period of 24 months.

We use the net proceeds from this private placement to continue our technical evaluations, engineering studies, exploration and resource conversion drilling and water treatment at our Mt. Todd gold project and for general corporate purposes as well.

Looking at our balance sheet for June 30th, our cash and cash equivalents before the $15 million capital raise totaled $7.5 million. This didn’t include certain liquid investments.

This is down $7.3 million net in the quarter, up to $7.3 million cash used in the quarter. We used $6.6 million for drilling, permitting and development activities at our Mt. Todd gold project and for the exploration and preliminary economic assessment work at the Guadalupe de los Reyes gold-silver project.

We also used $1.8 million for general and administrative expenses and during the quarter the company received $1.1 million for the exercise of warrants.

Our working capital as of June 30th totaled $7.1 million. On a Pro Forma basis, when we include the net proceeds of the financing, this working capital number would have been about $21.5 million.

We continue to be debt free. The fair value of our investment in Midas Gold Corp was $77.5 million in June 30th. This is marked down to market value from a $112.5 million value at the end of March.

This decline in value of the Midas shares appears to be systemic, very consistent with the growing disconnect between gold sector values and the gold price.

Turning now to our statement of income and loss, we reported a net loss of $30.5 million or $0.42 a share for the three months ended June 30, 2012. The principle component of this loss is the unrealized $35 million mark-to-market loss and our investment in Midas that I just discussed. And this loss is partially offset by a $13.2 million deferred tax benefit. I want to emphasize that both of these are non-cash transactions.

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