The Gold Report - Tue, Jan 9, 2018

Gold Project Could Be One of the 'Top Five Producing Mines in Australia'

As this gold explorer continues to test its Australian property, an updated preliminary feasibility study is expected this quarter.

Mt. Todd Gold Project

Vista Gold Corp.'s (VGZ:NYSE.MKT; VGZ:TSX) principal asset is the Mt. Todd gold project in Australia's Northern Territory, where the company is undertaking metallurgical testing. At the end of November, Vista Gold announced that its test work has led to improved gold recoveries; automated sorting and a two-stage grinding circuit would "enable the project to achieve a finer grind size, higher gold recoveries/higher gold production, and lower processing costs with no material increase in project capital."

Heiko Ihle, an analyst with H.C. Wainwright & Co., noted in a Nov. 28 update on Vista Gold that his firm expects "a reduction in grinding, leaching, and tailings handling costs due to lower volume of material processed, and reiterate[s] the potential for these changes to reduce the above costs by around 10%."

"We expect the improvement in recoveries to translate to greater production and profitability at Mt Todd," Ihle wrote.

The company is now updating the preliminary feasibility study (PFS), which it plans to release this quarter. "We continue to expect an updated PFS for Mt Todd to be completed in 1Q18 and expect the study to reflect a project that can provide value to shareholders at the current gold price, rather than a potentially higher price in the future," Ihle noted.

Fund manager Adrian Day of Adrian Day Asset Management, wrote in Global Analyst on Nov. 20 that "the updated study should be strong, with CEO Fred Earnest telling investors 'to expect improved recovery, sorting, power savings, and an improved currency exchange rate,' which will combine to produce 'a compelling rate of return at today's gold price.'"

"This is significant," Day noted, "because Mt Todd has a reputation as a deposit that requires a higher gold price to be economic. Earnest said Vista is 'no longer just a call option on the price of gold, but owners of a large-scale, economically viable gold project.' Indeed, Mt Todd is the largest undeveloped gold project in Australia and the third-largest reserve package in that country. It could be among the top five producing mines in Australia, with costs in the lowest quartile."

Adrian Day included Vista Gold in his short list of Best Buys on Dec. 19.

Analyst Ihle also discussed the Vista's valuation: "We view the current share price as a buying opportunity and believe that recent metallurgical testing should meaningfully improve the economics of the project. In our opinion, the Vista Gold share price thus far has not reflected these improvements."

"We continue to expect an updated PFS for Mt Todd to be completed in 1Q18 and expect the study to reflect a project that can provide value to shareholders at the current gold price, rather than a potentially higher price in the future," Ihle concluded.

Adrian Day shared the sentiment in his Nov. 20 report. "Despite the progress and very optimistic comments about the upcoming revised PFS, the stock hardly moved. For various reasons, it seems to be a "show-me" story. The updated PFS, however, if it confirms the optimistic assessment, should finally make the stock move, giving us an opportunity now to buy the stock (and Mt Todd) at a bargain level. Once the PFS is out, we suspect the company (or the deposit) will be a most attractive target. Vista is a strong buy," Day commented.

H.C. Wainwright & Co. has a Buy rating on Vista Gold and a target price of US$2.25. The shares are currently trading at around US$0.72.

Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Vista Gold. Streetwise Reports does not accept stock in exchange for its services. Click below for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Vista Gold, a company mentioned in this article.

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