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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

/X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
   For the fiscal year ended December 31, 20002002

   OR

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
   For the transition period from         to

Commission File Number 1-9025
                            ------------------------

                                VISTA GOLD CORP.

             (Exact Name of Registrant as Specified in its Charter)

                                                          
      CONTINUED UNDER THE LAWS OF THE YUKON TERRITORY                                    NONE
      (State or other Jurisdiction of Incorporation or                              (IRS Employer
        Incorporation or
                       Organization)                                            Identification Number)

               SUITE 5, 7961 SHAFFER PARKWAY
                    LITTLETON, COLORADO                                                 80127
          (Address of Principal Executive Offices)                                    (Zip Code)

                                                     (720) 981-1185
                                  (Registrant's Telephone Number, Including Area Code)
------------------------ SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B)12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Common shares without par value American Stock Exchange The Toronto Stock Exchange
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G)12(g) OF THE ACT: None. INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS); AND (2) HAS BEEN SUBJECT TO THE FILING REQUIREMENTS FOR THE PAST 90 DAYS: YES /X/ NO / / INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12B-2 OF THE ACT): Yes / / No /X/ INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K: /X// / AGGREGATE MARKET VALUE OF OUTSTANDING COMMON SHARES HELD BY NON-AFFILIATES: As of March 26, 2001,June 28, 2002, being the last business day of the Registrant's most recently completed second fiscal quarter, the aggregate market value of outstanding Common Shares of the registrant held by non-affiliates was approximately $8,164,354.$11,900,000. OUTSTANDING COMMON SHARES: As of March 26, 2001, 90,715,04019, 2003, 12,411,725 Common Shares of the registrant were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: To the extent herein specifically referenced in PartsPart III, and IV,portions of the Management Information andregistrant's definitive Proxy CircularStatement for the registrant's 20012003 Annual General Meeting.Meeting of Shareholders. See Parts III and IV.Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE -------- GLOSSARY.............................. 1 CURRENCY.............................. 3 METRIC CONVERSION TABLE............... 3 UNCERTAINTY OF FORWARD-LOOKING STATEMENTS.......................... 3 PART I ITEM 1. BUSINESS...................... 4 Overview............................ 4 Segmented Financial Information..... 4 Corporate Organization Chart........ 5 Significant Developments in 2000.... 5 Refining and Marketing.............. 7 Exploration and Business Development....................... 8 Property Interests and Mining Claims............................ 9 Reclamation......................... 9 Government Regulation............... 9 Environmental Regulation............ 10 Competition......................... 10 Employees........................... 10 Risk Factors........................ 10 ITEM 2. PROPERTIES.................... 13 Operations.......................... 13 Hycroft Mine........................ 13 Amayapampa.......................... 17 Capa Circa.......................... 22 Exploration Properties.............. 22 2000 Exploration, Property Evaluation and Holding Expenditures...................... 23 2001 Exploration Plan............... 2312 ITEM 3. LEGAL PROCEEDINGS............. 2320 ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS................. 23HOLDERS............................. 20 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............................. 24 Price Range of Common Shares........ 24 Dividends........................... 24 Exchange Controls................... 24 Certain Canadian Income Tax Considerations for Non-Residents of Canada......................... 2421 ITEM 6. SELECTED FINANCIAL DATA....... 25 Selected Financial Data............. 25 United States$/Canadian$ Exchange Rates............................. 26
PAGE -------- 23 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 26 Introduction........................ 26 Results of Operations............... 27 Going Concern....................... 32 Outlook............................. 32OPERATING RESULTS................... 23 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....... 33 Commodity Price Risk................ 33 Interest Rate Risk.................. 33 Foreign Currency Exchange Rate Risk.............................. 3426
PAGE -------- ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................ 34 Management's Responsibility for Financial Information............. 34 Report of Independent Accountants... 35 Consolidated Financial Statements... 36 Notes to Consolidated Financial Statements........................ 40DATA... 27 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE................ 54 PART III ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT.......................... 54 Directors........................... 54 Executive Officers.................. 55 Executive and Audit Committees...... 56 ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS............................ 5654 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.... 5754 ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS................ 5754 ITEM 14. CONTROLS AND PROCEDURES...... 54 PART IV ITEM 14.15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K... 58 Documents Filed as Part of Report... 58 Reports on Form 8-K................. 61 SUPPLEMENTAL INFORMATION.............. 61 SIGNATURES............................ 6255
i GLOSSARY "ADIT" means a horizontal or nearly horizontal passage driven from the surface for the working or dewatering of a mine. "AMALGAMATION" means the amalgamation of Granges and Da Capo effective on November 1, 1996. "ASSAY" means to test ores or minerals by chemical or other methods for the purpose of determining the amount of valuable metals contained. "BRECCIA" means rock consisting of fragments, more or less angular, in a matrix of finer-grained material or of cementing material. "CLAIM" means a mining title giving its holder the right to prospect, explore for and exploit minerals within a defined area. "COMMON SHARES" means common shares without par value of Vista Gold. "COMPUTERSHARE" means Vista Gold's registrar and transfer agent, Computershare Trust Company of Canada (formerly Montreal Trust Company of Canada). "CORPORATION" means the consolidated group consisting of Vista Gold Corp. and its subsidiaries Hycroft Resources & Development, Inc., Hycroft Lewis Mine, Inc., Vista Gold Holdings Inc., Vista Gold U.S. Inc., Vista Nevada Corp., Granges Inc., Vista Gold (Antigua) Corp., Minera Paredones Amarillos S.A. de C.V., Compania Inversora Vista S.A., Minera Nueva Vista, S.A., Compania Exploradora Vistex S.A., and Mineral Ridge Resources Inc. "CUT-OFF GRADE" means the minimum grade ofbelow which mineralized material or ore used to establish reserves. "DA CAPO" means Da Capo Resources Ltd., a predecessor of Vista Gold.will be considered waste. "DEPOSIT" means an informal term for an accumulation of mineral ores. "DIAMOND DRILL" means a rotary type of rock drill that cuts a core of rock and is recovered in long cylindrical sections, two centimeters or more in diameter. "DORE" means unrefined gold and silver bullion consisting of approximately 90% precious metals, which will be further refined to almost pure metal. "FLOTATION""FAULT" means a process whereby value minerals are separated from waste by attaching themfracture in rock along which there has been displacement of the two sides parallel to air bubbles in a pulp by the use of small amounts of chemicals. "GRANGES" means Granges Inc., a predecessor of Vista Gold.fracture. "HEAP LEACH" means a gold extraction method that percolates a cyanide solution through ore heaped on an impervious pad or base. "HYCROFT INC." means Hycroft Resources & Development, Inc., an indirect wholly-owned subsidiary of Vista Gold. "HYCROFT LEWIS" means Hycroft Lewis Mine, Inc., an indirect wholly-owned subsidiary of Vista Gold. "MERRILL-CROWE" means a process for recovering gold from solution by precipitation with zinc dust. "MINERALIZATION" means the concentration of metals within a body of rock. "MINERALIZED MATERIAL" is a mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve, until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material containing valuable minerals. "MINERAL RIDGE INC." means Mineral Ridge Resources Inc., an indirect wholly-owned subsidiary of Vista Gold.factors conclude legal and economic feasibility. "ORE" means material containing valuable minerals that can be economically extracted. 1 "OXIDE RESERVE" or "OXIDE RESOURCE""OXIDE" means mineralized rock in which some of the original minerals have been oxidized.oxidized (I.E., combined with oxygen). Oxidation tends to make the ore 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 RESERVES" means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. 1 "PROVEN RESERVES" means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well-established. "RECOVERY" means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage. "RESERVES" or "ORE RESERVES" mean that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. "RESOURCE" or "MINERAL RESOURCE" means a deposit or concentration of minerals for which there is sampling information and geologic understanding for an estimate to be made of the contained minerals. "RUN-OF-MINE" refers to mined ore of a size that can be processed without further crushing. "SAMPLING" means selecting a fractional, but representative, part of a mineral deposit for analysis. "STOPE""SEDIMENT" means an underground excavation that is madesolid material settled from suspension in a liquid. "STOCKWORK" means a rock mass interpenetrated by removing ore from the surrounding rock.small veins of mineralization. "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. "STRIKE LENGTH" means the longest horizontal dimension of an orebody or zone of mineralization. "STRIPPING RATIO" means the ratio betweenof waste andto ore in an open pit mine. "SULPHIDE" (or "SULFIDE") means a compound of sulfur and some other element. "TAILINGS" means material rejected from a mill after most of the valuable minerals have been extracted. "TRENCHING" means prospecting in which subsurface strata are exposed by digging pits across the strike of a lode. "VEIN" means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source. "VISTA GOLD" means Vista Gold Corp. "VOLCANICLASTIC" means derived by ejection of volcanic material from a volcanic vent. "WASTE" means rock lacking sufficient grade and/or other characteristics of ore. "YAMIN" means Sociedad Industrial Yamin Limitada, until February 7, 2000, a direct wholly-owned subsidiary of Vista Gold. "ZAMORA" means Zamora Gold Corp. 2 CURRENCY Unless otherwise specified, all dollar amounts in this report are expressed in United States dollars. The exchange rate at the end of each of the five years to December 31, 2000, and the average, the high and the low rates of exchange for each year in that five year period, are set forth in "Item 6. Selected Financial Data--United States $/Canadian $ Exchange Rates". These exchange rates are expressed as the amount of United States funds equivalent to one Canadian dollar, being the noon buying rates in New York City for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York. On March 26, 2001, this noon buying rate was $1.5545 (Cdn.$1.00 equals U.S.$0.6433). METRIC CONVERSION TABLE
TO CONVERT IMPERIAL MEASUREMENT UNITS TO METRIC MEASUREMENT UNITS MULTIPLY BY - ------------------------------------- --------------------------- ----------- Acres................................... Hectares................................ 0.4047 Feet.................................... Meters.................................. 0.3048 Miles................................... Kilometers.............................. 1.6093 Tons (short)............................ Tonnes.................................. 0.9071 Gallons................................. Liters.................................. 3.7850 Ounces (troy)........................... Grams................................... 31.103 Ounces (troy) per ton (short)........... Grams per tonne......................... 34.286
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS This document, including any documents that are incorporated by reference as set forth on the face page under "Documents incorporated by reference", contains forwarding-looking statements concerning, among other things, projected annual gold production, mineral resources,mineralized material, proven or probable reserves and cash operating costs. Such statements are typically punctuated by words or phrases such as "anticipates", "estimates", "projects", "foresees", "management believes", "believes" and words or phrases of similar import. Such statements are subject to certain risks, uncertainties or assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors that could cause actual results to differ materially from those in such forward-looking statements are identified in this document under "Item 1. Business--Risk Factors". Vista Gold assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such statements. 3 PART I ITEM 1. BUSINESS. OVERVIEW Vista Gold Corp. (the "Corporation") is currently engaged in the evaluation, acquisition, exploration and improvement of gold exploration and potential development projects. The Corporation's approach to acquisitions of gold projects has generally been to seek projects within political jurisdictions with well established mining, land ownership and tax laws, which have adequate drilling and geological data to support the completion of a third-party review of the geological data and to complete an estimate of the mineralized material. In addition, the Corporation looks for opportunities to improve the value of its gold projects through exploration drilling, and/or introducing technological innovations. The Corporation is engaged, directlyexpects that emphasis on gold project acquisition and through joint ventures,improvement will continue in the exploration for and the acquisition, development and operation of mineral properties in North and South America. Since 1971,future. Currently the Corporation owns or controls six gold properties: the Maverick Springs and its predecessor companies have held participating interests in seven mines, four of which were discovered by the Corporation. The Corporation has also operated five of the seven mines. During 2000, the Corporation's primary mining operation,Mountain View projects and the Hycroft mine, all in Nevada remained shut down pending improved gold prices. However,Nevada; the Hycroft mine continued to beLong Valley project in east central Califorina; the principal source of earnings because goldParedones Amarillos project in Baja, Mexico; and by-product silver continued to be produced from ore previously placed on the heaps. SeeAmayapampa project in Bolivia. Additional information about these projects is available in "Item 2. Properties--Hycroft Mine"Properties". In 1998, theThe Corporation acquired 100%also owns several exploration claims in Canada and approximately 25% of the shares of Mineral Ridge Inc.Zamora Gold Corp., the entity that owns the Mineral Ridge mine, a company exploring for gold property located in Nevada. During 1999, Mineral Ridge Inc., sought protection under the U.S. Bankruptcy Code in order to begin the process of a permanent cessation of all mining activities. By the end of 2000, the court appointed trustee had sold all the assets of Mineral Ridge Inc. and in January 2001, the bankruptcy case was dismissed. See "Item 3. Legal Proceedings".Ecuador. The Corporation owns the Amayapampadoes not produce gold property in Bolivia for which a feasibility study was completed in 1997commercial quantities and a revised feasibility study was completed in the first quarter of 2000. The Corporation's Capa Circadoes not currently generate operating earnings. Through fiscal 2002, funding to acquire gold property in Bolivia was sold on February 7, 2000. See "Item 2. Properties--Amayapampaproperties, explore and Capa Circa Properties". The Corporation has approximately 12 additional mineral properties in North and South America covering approximately 123,500 acres (50,000 hectares) in various stages of evaluation. Vista Gold owns a 26% equity interest in Zamora, a Canadian mineral exploration company with interests in mineral concessions in southern Ecuador. See "Item 2. Properties--Exploration Properties--Ecuador". As at March 26, 2001,to operate the Corporation has 17 full-time employees.been acquired through private placements of equity units consisting of the Corporation's common shares and warrants to purchase common shares. The Corporation derives allexpects to continue to raise capital through the exercise of its current revenues from the sale of gold extracted from the Hycroft mine. In fiscal 1998, 1999warrants and 2000, revenues from sales of gold were $37 million, $19 million and $4 million, respectively. Vista Goldthrough additional equity financings. The Corporation was originally incorporated on November 28, 1983 under the name "Granges Exploration Ltd.". In November 1983, Granges Exploration Ltd. acquired all the mining interests of Granges AB in Canada. On June 28, 1985, Granges Exploration Ltd. and Pecos Resources Ltd. amalgamated under the name "Granges Exploration Ltd." and on June 9, 1989, Granges Exploration Ltd. changed its name to "Granges Inc.". On May 1, 1995, Granges and Hycroft Resources & Development Corporation were amalgamated under the name "Granges Inc.". Effective November 1, 1996, Granges and Da Capo Resources Ltd. amalgamated under the name "Vista Gold Corp.". Effective December 19, 1997, Vista Gold was continued from British Columbia to the Yukon Territory, Canada under the BUSINESS CORPORATIONS ACT (Yukon Territory). The current addresses, telephone and facsimile numbers of the offices of Vista Goldthe Corporation are:
EXECUTIVE OFFICE REGISTERED AND RECORDS OFFICE ---------------- ----------------------------- Suite 5 - 7961 Shaffer Parkway 200 - 204 Lambert Street Littleton, Colorado, USA 80127 Whitehorse, Yukon Territory, Canada 80127 Y1A 3T2 Telephone: (720) 981-1185 Telephone: (867) 667-7600 Facsimile: (720) 981-1186 Facsimile: (867) 667-7885
SEGMENTED FINANCIAL INFORMATION The Corporation operates in the mining industry in Canada, the United States and Latin America. For information on the Corporation's sales, earnings from operations and identifiable assets by geographic 4 area see note 10 to the consolidated financial statements for the year ended December 31, 2000 under "Item 8. Consolidated Financial Statements and Supplementary Data--Notes to Consolidated Financial Statements". CORPORATE ORGANIZATION CHART The name, place of incorporation, continuance or organization, and percent of voting securities owned or controlled by Vista Gold asEMPLOYEES As of December 31, 2000 for each subsidiary2002, the Corporation had 8 full-time employees, of Vista Gold is set out below. [LOGO] - ------------------------ (1)which four were employed at the Hycroft mine and four were employed at the Corporation's executive office in Littleton, Colorado. The Corporation uses consultants with specific skills to assist with various aspects of its project evaluation, due diligence and acquisition initiatives. 4 SEGMENT INFORMATION Segment information is provided in the process of dissolving Mineral Ridge Resources Inc.Consolidated Financial Statements--Note 18. SIGNIFICANT DEVELOPMENTS IN 2000 HYCROFT MINE2002 In 2000,2002, the Hycroft mine produced 13,493 ouncesCorporation completed $6.8 million in equity private placement financings, with an additional equity private placement financing, for net proceeds of $3.0 million, completed subsequent to December 31, 2002. See the Consolidated Financial Statements--Notes 8 and 21(b). On June 19, 2002, the Corporation effected a 1-for-20 consolidation of its common shares. All references in this document to common shares and per-share amounts are on a post-consolidation basis, unless otherwise indicated. Through the use of cash and equity units, consisting of the Corporation's common shares and warrants to purchase common shares, as consideration, the Corporation began to build a portfolio of gold projects through a strategy that includes evaluation, acquisition, exploration and 38,418 ounces of silver. The Corporation suspended mining activities in December 1998 as a result of low gold prices. Productionimprovement of gold from ore stockpiled onexploration and potential development projects. As discussed under "Item 2. Properties", the heap leach pads during previous years is expectedCorporation acquired four gold projects in 2002 to continue in 2001. Gold production for 2001 is expectedadd to be in excess of 3,000 ounces. During 1999 andits two existing projects, as follows: - On August 29, the early part of 2000, Vista Gold completed a new studyCorporation acquired 100% of the ore reservesParedones Amarillos gold project in the Brimstone deposit,Mexican state of Baja California Sur from Viceroy Resource Corporation (Viceroy). To acquire the largest ore resource atproject, the Hycroft Mine. ProvenCorporation paid cash of Cdn $1.0 million and probable minable reserves containedissued 303,030 equity units to Viceroy; on August 29, 2003 the Corporation will pay Viceroy an additional Cdn $0.5 million. - On October 7, 2002, the Corporation completed the acquisition of a 100% interest in the planned Brimstone Pit contain 23,791,000 tons (21,581,000 tonnes) of ore with an average gold content of 0.020 ounces per ton (0.69 grams per tonne). Ore reserve calculations were based upon a gold price of US$300 per ounce and an economic cut-off grade equivalent to 0.007 ounces of gold per ton of ore (0.24 grams per tonne). Metallurgical recovery of gold from run-of-mine leaching of the Brimstone ore is projected to be 57% and the planned pit would have a stripping ratio of 1.2-to-1. 5 The planned pit contains an additional 2,349,000 tons (2,130,778 tonnes) of material classified as inferred resource containing an estimated 41,535 ounces of gold (average grade--0.018 ounces per ton (0.62 grams per tonne). Ore reserves and resources were estimated under the direction of Mr. Warren Bates, International Exploration Manager, and have been independently reviewed by Mineral Resources Development, Inc. ("MRDI"). The definition of "ore reserve" employed by Vista Gold is consistent with USGS Circular 831 and meets the standard for "probable mining reserve" under National Instrument 43-101 of the Canadian Securities Administrators. Stated inferred resources are equivalent to "inferred mineral resources" under National Instrument 43-101 of the Canadian Securities Administrators. MINERAL RIDGE MINE On December 10, 1999, Mineral Ridge Inc., the wholly-owned subsidiary of Vista Gold, that holds the Corporation's investment in the Mineral Ridge Mine, voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Gold production at the Mineral Ridge mine failed to meet expectations. Initially, mechanical difficulties inhibited production efforts, and as mining operations continued in the latter half of the year, the grade of the ore mined was less than that estimated in the ore reserve calculations. After reviewing the reserves with Independent Mining Consultants, Inc., an independent consultant, it was concluded that significant ore deficiencies in the future, compared with the original reserve estimates, were probable. The reduced gold production and ore reserves caused by the ore deficiencies together with low gold prices, resulted in the mine failing to meet its required cash-flow targets under Mineral Ridge Inc.'s loan agreement with Dresdner Bank AG. Although alternatives were considered, none were considered to be viable, and a protective bankruptcy filing was made. Early in 2000, the court appointed a Chapter 11 trustee and later in 2000, the trustee completed the court approved sale of the assets of Mineral Ridge Inc. In January 2001, the Chapter 11 case for Mineral Ridge Inc. was dismissed and the Corporation is in the process of dissolving Mineral Ridge Inc. in accordance with the applicable state corporation's code. AMAYAPAMPA AND CAPA CIRCA PROPERTIES In early 2000, a new feasibility study was completed for the Amayapampa property. The results of this study indicate that a gold price of $325 per ounce will be required for construction and development to commence and at this price, the project is expected to generate an after tax internal rate of return of 20%. In February 2000, an agreement was signed between six ministries in the government of Bolivia and the Corporation, which provides for the immediate refund of value added taxes and custom duties that would be paid by the Corporation during the construction period. These refunds are expected to total approximately $2.0 million, and while the Corporation would be entitled to the refunds over time anyway, the acceleration of these refunds would increase the project cash flows during construction. With low gold prices continuing throughout 2000, all the workers at Amayapampa were laid-off in April. However, the Corporation continued to provide limited community assistance during 2000, which included providing six teachers and a nurse and allowing restricted access to the old underground workings to some of the ex-miners. In February 2000, the Corporation sold Yamin, the company that owns the Capa Circa mine, to a miners co-operative. The Corporation believes that mineralization at Capa Circa is limited to narrow veins and that there are no proven reserves. As a result, the Corporation believes that is better suited to small scale underground mining. EXPLORATION Year 2000 exploration efforts were focused around the Corporation's Hycroft mine property in Nevada. Planned drilling has been deferred due to the depressed gold market, but a continuing program of 6 mapping, sampling and compilation of data collected during the mining of the Brimstone deposit has generated a number of promising targets for new ore development. These include the "Snyder zone", a silicified breccia zone with a strike length of 2,000 feet (610 meters) containing anomalousMaverick Springs gold and silver values (0.004 to 0.031 gold ounces per ton), located immediately south-west of the Brimstone pit. Mapping in the South end of the Central Fault Pit has revealed that quartz veins, carrying gold grades higher than typical ore grades from that pit, are exposed in the current pit floor. Re-logging of the cuttings from holes drilled in prior years has confirmed that two veins, with true widths varying from 5 to 25 feet (1.5 to 7.6 meters), extend over a strike length of at least 2,000 feet (610 meters) in the hanging wall of the Central Fault. REFINING AND MARKETING The Hycroft mine produces dore, which is processed by Metalor USA Refining Corporation in North Attleboro, Massachusetts. Gold and silver can be sold on numerous markets throughout the world,project and the market price is readily ascertainable. Alternate refiners for silverMountain View gold project from Newmont Mining Corporation (Newmont), and gold produced fromits wholly-owned subsidiary Newmont Capital Limited. To acquire the Hycroft mine are available if necessary. As a resultMaverick Springs project, the Corporation paid cash of $250,000 and issued of 141,243 equity units to Newmont and on October 7, 2003 the largeCorporation will issue $500,000 in common shares to Newmont, together with an equivalent number of available gold and silver purchasers,two year warrants. To acquire the Mountain View project the Corporation is not dependent upon the salepaid cash of $50,000 and issued 56,497 equity units to any one customer of either its gold or silver. GOLD AND SILVER SALES The profitability of gold and silver mining is directly relatedNewmont Capital Limited. - Pursuant to the market price of the metal compared with the cost of production. The following is a brief description of factors affecting, and historical trendstransaction initiated in the market prices of gold and silver, which account for most of the Corporation's revenue. A description of the Corporation's hedging and forward sales philosophy also follows. The Corporation's results are dependent on the price of gold. Gold prices fluctuate and are affected by numerous factors, including, but not limited to, expectations with respect to the rate of inflation, exchange rates (specifically, the U.S. dollar relative to other currencies), interest rates, global and regional political and economic circumstances and governmental policies, including those with respect to gold holdings by central banks. The demand for and supply of gold affect gold prices, but not necessarily in the same manner as demand and supply affect the prices of other commodities. The supply of gold consists of a combination of new mine production and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals. The demand for gold primarily consists of jewelry and investments. Additionally, hedging activities by producers, consumers, financial institutions and individuals can affect gold supply and demand. Gold can be readily sold on numerous markets throughout the world and its market value can be ascertained at any particular time. As a result, the Corporation is not dependent upon any one customer for the sale of its product. The price of silver, while related somewhat to the price of and affected to some extent by the same factors as gold, is more subject to normal supply and demand factors than the price of gold. Silver has a wide range of industrial uses on the demand side and is subject to both mine production and substantial secondary supply from scrap and dishoarding on the supply side. Silver inventories held by metal exchanges remained high during the 1980s and 1990s and lower industrial and consumer demand and relatively high interest rates continued to depress the price of silver during much of that period. 7 The following table sets out the annual high and low gold prices per troy ounce in the London bullion market in United States dollars for the years indicated:
HIGH LOW -------- -------- 2000................................................... $313 $264 1999................................................... 326 253 1998................................................... 313 273 1997................................................... 367 283 1996................................................... 415 367
On December 28, 2000, the afternoon fixing price of gold on the London bullion market was $274.45 per ounce. The following table sets out the annual high and low silver price per ounce (Handy & Harman New York Prices) in United States dollars for the years indicated:
HIGH LOW -------- -------- 2000.................................................. $5.45 $4.57 1999.................................................. 5.77 4.91 1998.................................................. 7.31 4.72 1997.................................................. 6.21 4.18 1996.................................................. 5.79 4.67
On December 28, 2000, the Handy & Harman price for silver was $4.595 per ounce. HEDGING AND METAL SALES The Corporation may from time to time protect against falling gold prices through forward sales of future production. Under this hedging process, the sale price of gold to be delivered at a future date is fixed at the time the forward sale is made, thus eliminating the effect of any future gold price fluctuations. Revenue from these forward sales is recognized when the gold is due to be delivered. At December 31, 2000, the Corporation had no forward sales commitments. Vista Gold's Board of Directors regularly reviews the Corporation's forward sales arrangements. The level of future forward sales will depend in part upon the Corporation's assessment of gold market conditions at the relevant time. EXPLORATION AND BUSINESS DEVELOPMENT The Corporation's exploration and business development activities are focused on gold. In the United States,November 2002, the Corporation has an explorationoption to acquire 100% of the Long Valley project atfrom Standard Industrial Minerals, Inc. ("Standard"). Under the Hycroft mine located in Nevada. In Bolivia,terms of the Amayapampa properties represent both development and exploration projects. The Corporation's exploration activities headquarters are in Littleton, Colorado, with one district exploration office in La Paz, Bolivia. The exploration department has a permanent staff of one geologist. Consultants and contract personnel are used for specific projects and tasks. The 2000 exploration program was focused at the Hycroft mine where a mapping and sampling program is ongoing and a revised ore reserve estimate was completed. During 2001,option agreement, the Corporation intends to spend $1.3 million on exploration if the necessary funding is obtained. The majority of the exploration expenditures will be madewould pay Standard $750,000 over five years in Nevada at the Hycroft mine.annual installments. The Corporation will continue to evaluate other opportunities. 8 has paid the first installment of $100,000. PROPERTY INTERESTS AND MINING CLAIMS In the United States, most of the Corporation's exploration activities are conducted in the state of Nevada. Mineral interests may be owned in Nevada by (i) the United States, (ii) the state of Nevada, or (iii) private parties. Where prospective mineral properties are owned by private parties, or by the state, some type of property acquisition agreement is necessary in order for the Corporation to explore or develop such property. Generally, these agreements take the form of long term mineral leases under which the Corporation acquires the right to explore and develop the property in exchange for periodic cash payments during the exploration and development phase and a royalty, usually expressed as a percentage of gross production or net profits derived from the leased properties if and when mines on the properties are brought into production. Other forms of acquisition agreements are exploration agreements coupled with options to purchase and joint venture agreements. Where prospective mineral properties are held by the United States, mineral rights may be acquired through the location of unpatented mineral claims upon unappropriated federal land. If the statutory requirements for the location of a mining claim are met, the locator obtains a valid possessory right to develop and produce minerals from the claim. The right can be freely transferred and, provided that the locator is able to prove the discovery of locatable minerals on the 5 claims, is protected against appropriation by the government without just compensation. The claim locator also acquires the right to obtain a patent or fee title to his claim from the federal government upon compliance with certain additional procedures. Mining claims are subject to the same risk of defective title that is common to all real property interests. Additionally, mining claims are self-initiated and self-maintained and therefore, possess some unique vulnerabilities not associated with other types of property interests. It is impossible to ascertain the validity of unpatented mining claims solely from an examination of the public real estate records and, therefore, it can be difficult or impossible to confirm that all of the requisite steps have been followed for location and maintenance of a claim. If the validity of a patented mining claim is challenged by the Bureau of Land Management or Forest Service on the grounds that mineralization has not been demonstrated, the claimant has the burden of proving the present economic feasibility of mining minerals located thereon. Such a challenge might be raised when a patent application is submitted or when the government seeks to include the land in an area to be dedicated to another use. RECLAMATION Although reclamation is conducted concurrently with mining whenever feasible, theThe Corporation generally is required to mitigate long-term environmental impacts by stabilizing, contouring, resloping, and revegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts are conducted in accordance with detailed plans, which have beenmust be reviewed and approved by the appropriate regulatory agencies. The Corporation's principal reclamation liability is the Hycroft mine. Management estimates the remaining reclamation costs for the Hycroft mine to be $2.9$4.1 million. These costs have been charged to earnings over the life of the mine and the provision as of December 31, 2000 was $3.1 million. An amended Crofoot/Lewis Mine Reclamation Plan that included the new Brimstone deposit was submitted to the Nevada Bureau of Land Management (the "BLM") in March 1994. In April 1995, the BLM approved the plan and a surety bond in the amount of $5.1 million was posted to secure reclamation obligations under the plan. GOVERNMENT REGULATION Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, Bolivia, Canada, Mexico and other jurisdictions, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. The Corporation has obtained or has pending applications for those licenses, permits or other authorizations currently required to conduct its operations.exploration and other programs. The Corporation believes that it is in compliance in all material respects with 9 applicable mining, health, safety and environmental statutes and the regulations passed thereunder in the United States, Canada, Bolivia, Mexico and the other jurisdictions in which the Corporation operates. There are no current orders or directions with respect to the foregoing laws and regulations. ENVIRONMENTAL REGULATION The Corporation's mining operations and exploration activitiesgold projects are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, as a general matter, are becoming more restrictive. The Corporation's policy is to conduct business in a way that safeguards public health and the environment. The Corporation believes that its operations are conducted in material compliance with applicable laws and regulations. Changes to current local, state or federal laws and regulations in the jurisdictions where the Corporation operates could require additional capital expenditures and increased operating and/or reclamation costs. Although the Corporation is unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could render certain mining operations uneconomic.impact the economics of its projects. During 2000,2002, there were no material environmental incidents or non-compliance with any applicable environmental regulations. The Corporation estimates that it will not incur material capital expenditures for environmental control facilities during the fiscal year. 6 COMPETITION The Corporation competes with other mining companies in connection with the acquisition of gold and other precious metals properties. There is noteworthy and increasing competition for the limited number of gold acquisition opportunities, some of which is with other companies having substantially greater financial resources than the Corporation. As a result, the Corporation may eventually be unable to acquirehave difficulty acquiring attractive gold mining properties.projects at reasonable prices. The Corporation believes no single company has sufficient market power to affect the price or supply of gold in the world market. EMPLOYEES As at December 31, 2000,RISK FACTORS An investment in the Corporation's Common Shares involves risk. The risks described below are not the only ones facing the Corporation. Additional risks not presently known to the Corporation had 17 full-time employees,or which management currently considers immaterial may also adversely affect the Corporation's business. Management has attempted to identify the major factors under the heading "Risk Factors" that could cause differences between actual and planned or expected results, and has included all material risk factors. If any of which seventhe following risks actually happen, the Corporation's business, financial condition and operating results could be materially adversely affected. MANAGEMENT CANNOT BE CERTAIN THAT THE CORPORATION'S ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES WILL BE COMMERCIALLY SUCCESSFUL. The Corporation currently has no properties that produce gold in commercial quantities. The Corporation's gold production has declined steadily since mining activities were employedsuspended at the Hycroft mine five were employed at the Amayapampa properties, one was employed in exploration activities in Littleton, Colorado1998. Gold production is now nominal and four were employed at Vista Gold's executive office (other than in exploration activities). The Hycroft mine has never experienced a loss of production dueis incidental to a work stoppage. The Corporation considers its relations with its employees to be satisfactory. RISK FACTORS FLUCTUATING PRICES The Corporation's revenues are expected to be, in large part, derivedheap leach pad rinsing activities. In these circumstances, proceeds realized from the mining and sale of gold and other precious metals or interests related thereto. The price of those commodities has fluctuated widely, and is affected by numerous factors beyond the control of the Corporation, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, central bank activities, interest rates, global or regional consumption patterns (suchare not reported as the development of gold coin programs), speculative activities and increased production due to new mine developments and improved mining and production methods. The effect of these factors on the price of precious metals, and therefore the economic viability of any of the Corporation's projects, cannot accurately be predicted. EXPLORATION AND DEVELOPMENT All of the mineral properties, which the Corporation owns, other than the Hycroft mine,revenues, but rather are in the exploration and development stages. Mineral exploration and development involves a high degree of risk and few properties, which are explored, are ultimately developed into producing mines. There is no assurance that the Corporation's mineral exploration and development activities will result in any 10 discoveries of commercial bodies of ore. The long-term profitability of the Corporation's operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors beyond the control of the Corporation.netted against operating costs. Substantial expenditures are required to acquire existing gold properties, to establish ore reserves through drilling and analysis, to develop metallurgical processes to extract metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits mayThere can be derived from the discovery of a major mineralized deposit, no assurance can be given that mineralsany gold reserves or mineralized material acquired or discovered will be discovered in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on a timely basis. THE PRICE OF GOLD IS SUBJECT TO FLUCTUATIONS, WHICH COULD ADVERSELY AFFECT THE REALIZABLE VALUE OF THE CORPORATION'S ASSETS AND POTENTIAL FUTURE RESULTS OF OPERATIONS AND CASH FLOW. The Corporation's principal assets are gold reserves and mineralized material. The Corporation intends to attempt to acquire additional properties containing gold reserves and mineralized material. The price that the Corporation pays to acquire these properties will be, in large part, influenced by the price of gold at the time of the acquisition. The Corporation's potential future revenues are expected to be, in large part, derived from the mining and sale of gold from these properties or from the outright sale of some of these properties. The value of these gold reserves and mineralized material, and the value of any potential gold production therefrom, will vary in direct proportion to variations in gold prices. The price of gold has fluctuated widely, and is affected by numerous factors beyond the control of the Corporation, including, but not limited to, international, economic and political trends, expectations of inflation, currency exchange fluctuations, central bank activities, interest rates, global or regional consumption patterns and speculative activities. The effect of these factors on the price of gold, and therefore the economic viability of any of the Corporation's projects, cannot accurately be predicted. Any drop in the price of gold would adversely affect the Corporation's asset values, cash flows, potential revenues and profits. 7 MINING EXPLORATION, DEVELOPMENT AND OPERATING HAZARDS AND RISKSACTIVITIES ARE INHERENTLY HAZARDOUS. Mineral exploration involves many risks that even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which the Corporation has direct or indirect interests will be subject to all the hazards and risks normally incidental to exploration, development and production of gold and other metals, any of which could result in work stoppages, damage to property and possible environmental damage. Although the Corporation has obtained liability insurance in an amount that they consider adequate, theThe nature of these risks is such that liabilities might exceed any liability insurance policy limits,limits. It is also possible that the liabilities and hazards might not be insurable, or, the Corporation mightcould elect not to insure itself against such liabilities due to high premium costs or other reasons, in which event, the Corporation could incur significant costs that could have a material adverse effect uponon its financial condition. MINORITY INTERESTRESERVE CALCULATIONS ARE ESTIMATES ONLY, SUBJECT TO UNCERTAINTY DUE TO FACTORS INCLUDING METAL PRICES AND RECOVERABILITY OF METAL IN PROPERTIES Third parties hold minority interests in certain of the Corporation's properties. Under Bolivian law, a minority interest in a mining concession is an undivided interest in that concession and the holder of such a minority interest may take action to restrict all exploration and development of the mining concessions by the holder of the majority interest if such exploration and development is conducted without the minority owner's permission. Furthermore, if the majority and minority parties wish to separate their interests, but are unable to agree as to the method of division or purchase of the property, the parties must file a request for division before a Bolivian civil court. CALCULATION OF RESERVES AND GOLD RECOVERYTHE MINING PROCESS. There is a degree of uncertainty attributable to the calculation of reserves and corresponding grades being mined or dedicated to future production. Until reserves are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of reserves and ore may vary depending on metal prices. Any material change in the quantity of reserves, mineralization, grade or stripping ratio may affect the economic viability of the Corporation's properties. In addition, there can be no assurance that gold recoveries or other metal recoveries in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production. THE CORPORATION'S EXPLORATION AND DEVELOPMENT OPERATIONS ARE SUBJECT TO ENVIRONMENTAL FACTORSREGULATIONS, WHICH COULD RESULT IN INCURRENCE OF ADDITIONAL COSTS AND OPERATIONAL DELAYS. All phases of the Corporation's operations are subject to environmental regulation. Environmental legislation is evolving in some countries or jurisdictions in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Corporation's projects. The Corporation is currently subject to environmental regulations with respect to its properties in Nevada, Bolivia and Mexico. The Hycroft mine in Nevada occupies private and public lands. The public lands include unpatented mining claims on lands administered by the U.S. Bureau of Land Management. These claims are governed by the laws and regulations of the U.S. federal government and the state of Nevada. U.S. FEDERAL LAWS The Bureau of Land Management requires that mining operations on lands subject to its regulation obtain an approved plan of operations subject to environmental impact evaluation under the National Environmental Policy Act. Any significant modifications to the plan of operations may require the completion of an environmental assessment or Environmental Impact Statement prior to approval. Mining companies must post a bond or other surety to guarantee the cost of post-mining reclamation. These requirements could add significant additional cost and delays to any mining project undertaken by the Corporation. Under the Resource Conservation and Recovery Act, mining companies may incur costs for generating, transporting, treating, storing, or disposing of hazardous waste, as well as for closure and post-closure maintenance once they have completed mining activities on a property. The Corporation's mining operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment which are subject to review, monitoring and/or control requirements under the Federal Clean 8 Air Act and state air quality laws. Permitting rules may impose limitations on the Corporation's production levels or create additional capital expenditures in order to comply with the rules. The Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, ("CERCLA") imposes strict joint and several liability on parties associated with releases or threats of releases of hazardous substances. Those liable groups include, among others, the current owners and operators of facilities which release hazardous substances into the environment and past owners and operators of properties who owned such properties at the time the disposal of the hazardous substances occurred. This liability could include the cost of removal or remediation of the release and damages for injury to the surrounding property. The Corporation cannot predict the potential for future CERCLA liability with respect to its Nevada property or surrounding areas. NEVADA LAWS At the state level, mining operations in Nevada are also regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection. Nevada state law requires the Hycroft mine to hold Nevada Water Pollution Control Permits, which dictate operating controls and closure and post-closure requirements directed at protecting surface and ground water. In addition, the Corporation is required to hold Nevada Reclamation Permits required under NRS 519A.010 through 519A.170. These permits mandate concurrent and post-mining reclamation of mines and require the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination, and landfill operations. 11Any changes to these laws and regulations could have an adverse impact on the Corporation's financial performance and results of operations by, for example, required changes to operating constraints, technical criteria, fees or surety requirements. BOLIVIA LAWS The Corporation is required under Bolivian laws and regulations to acquire permits and other authorizations before it could develop and mine the Amayapampa project. In Bolivia there is relatively new comprehensive environmental legislation, and the permitting and authorization process may be less established and less predictable than in the United States. There can be no assurance that the Corporation will be able to acquire necessary permits or authorizations on a timely basis. Delays in acquiring any permit or authorization could increase the development cost of the Amayapampa project, or delay the start of production. Under Bolivian regulations, the primary component of environmental compliance and permitting is the completion and approval of an environmental impact study known as Estudio de Evaluacion de Impacto Ambiental, or EEIA. The EEIA provides a description of the existing environment, both natural and socio-economic, at the project site and in the region; interprets and analyzes the nature and magnitude of potential environmental impacts that might result from project activities, and describes and evaluates the effectiveness of the operational measures planned to mitigate the environmental impacts. Baseline environmental conditions, including meteorology and air quality, hydrological resources and surface water, are the basis by which direct and indirect project-related impacts are evaluated and by which potential mitigation measures are proposed. If the Corporation's project is found to significantly adversely impact any of these baseline conditions, the Corporation could incur significant costs to correct the adverse impact, or delay the start of production. MEXICO LAWS The Corporation is required under Mexican laws and regulations to acquire permits and other authorizations before the Paredones Amarillos project could be developed and mined. Since the passage of Mexico's 1988 General Law on Ecological Equilibrium and Environmental Protection, a sophisticated 9 system for environmental regulation has evolved. In addition, North American Free Trade Agreement (NAFTA) requirements for regulatory standards in Mexico equivalent to those of the U.S. and Canada have obligated the Mexican government to continue further development of environmental regulation. Most regulatory programs are implemented by various divisions of the Environment, Natural Resources and Fisheries Secretariat (SEMARNAP). There can be no assurance that the Corporation will be able to acquire necessary permits or authorizations on a timely basis. Delays in acquiring any permit or authorization could increase the development cost of the Paredones Amarillos project, or delay the start of production. The most significant environmental permitting requirements, as they relate to the Paredones Amarillos project are: developing reports on environmental impacts; regulation and permitting of discharges to air, water and land; new source performance standards for specific air and water pollutant emitting sources; solid and hazardous waste management regulations; developing risk assessment reports; developing evacuation plans; and monitoring inventories of hazardous materials. If the Paredones Amarillos project is found to not be in compliance with any of these requirements, the Corporation could incur significant compliance costs, or delay the start of production. THE CORPORATION FACES INTENSE COMPETITION AND AGREEMENTS WITH OTHER PARTIESIN THE MINING INDUSTRY. The mining industry is intensely competitive in all of its phases,phases. As a result of this competition, some of which is with large established mining companies with substantial capabilities and with greater financial and technical resources than those of the Corporation, the Corporation may be unable to acquire additional attractive mining claims or financing on terms management considers acceptable. The Corporation competes with manyother mining companies possessing greater financial resourcesin the recruitment and retention of qualified managerial and technical facilities than themselves. Competition inemployees. If the mining business could adversely affectCorporation is unable to successfully compete for qualified employees, its exploration and development programs may be slowed down or suspended. The Corporation competes with other gold companies for capital. If the Corporation is unable to raise sufficient capital, its exploration and development programs may be jeopardized or it may not be able to acquire, develop or operate gold projects. THE CORPORATION MAY BE UNABLE TO RAISE ADDITIONAL CAPITAL ON FAVORABLE TERMS. The exploration and development of the Corporation's abilitydevelopment properties, specifically the construction of mining facilities and commencement of mining operations, may require substantial additional financing. Significant capital investment is required to acquire suitable producing propertiesachieve commercial production from each of the Corporation's non-producing properties. The Corporation will have to raise additional funds from external sources in order to restart mining activities at the Hycroft mine or prospects for mineral exploration inbegin construction and development activities at any of its other gold projects. There can be no assurance that additional financing will be available at all or on acceptable terms and, if additional financing is not available, the future.Corporation may have to substantially reduce or cease operations. 10 SOME OF THE CORPORATION'S DIRECTORS MAY HAVE CONFLICTS OF INTEREST Certain directorsAS A RESULT OF THEIR INVOLVEMENT WITH OTHER NATURAL RESOURCE COMPANIES. Some of the CorporationCorporation's directors are directors or officers and/or directors of or are associated with other natural resource companies that acquireor mining-related companies. Robert A. Quartermain is currently President and a director of Silver Standard Resources Inc., and is an officer and a director of Canplats Resources Corporation and of Pacific Sapphire Company Ltd. He is a director of Repadre Capital Corporation (which holds interests in mineral properties. Suchresource properties), Western Copper Holdings Ltd., Paso Rico Resources and Reliant Ventures Ltd. C. Thomas Ogryzlo is the President and Chief Executive Officer of Canatec Development Corporation. Michael B. Richings is President and a director of Kinrade Resources Limited. John Clark is a director of Impact Energy Inc. (an oil & gas exploration company). These associations may give rise to conflicts of interest from time to time. In the event that any such conflict of interest arises, a director who has such a conflict willis required to disclose the conflict to a meeting of the directors of the company in question and willto abstain from voting for or against approval of any matter in which such director may have a conflict. In appropriate cases, the company in question will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. In accordance with the laws of the Yukon Territory, the directors of all companies are required to act honestly, in good faith and in the best interests of a company for which they serve as a director. THERE MAY BE CHALLENGES TO THE CORPORATION'S TITLE TO ASSETS AlthoughIN ITS MINERAL PROPERTIES. There may be challenges to title to the Corporation has reviewed and is satisfied with the title for all mineral properties in which it hasthe Corporation holds a material interest. If there are title defects with respect to any of the Corporation's properties, the Corporation might be required to compensate other persons or perhaps reduce its interest there is no guarantee thatin the affected property. Also, in any such case, the investigation and resolution of title to such concessions will not be challenged or impugned.issues would divert management's time from ongoing exploration and development programs. THE CORPORATION'S PROPERTY INTERESTS IN BOLIVIA ARE SUBJECT TO RISKS FROM POLITICAL AND ECONOMIC INSTABILITY IN SOUTH AMERICA Certain of the Corporation's exploration and developmentTHAT COUNTRY. Vista Gold has property interests are in Bolivia, and Ecuador. As a result, the Corporationwhich may be affected by risks associated with political or economic instability in those countries.that country. The risks include, but are not limited to: military repression, extreme fluctuations in currency exchange rates, labor instability or militancy, mineral title irregularities and high rates of inflation. Changes in mining or investment policies or shifts in political attitude in the aforementioned countriesBolivia may adversely affect the Corporation's business. OperationsThe Corporation may be affected in varying degrees by government regulation with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. The effect of these factors cannot be accurately predicted. THE CORPORATION'S FINANCIAL POSITION AND RESULTS ARE SUBJECT TO FLUCTUATIONS IN FOREIGN CURRENCY The Corporation'sVALUES. Because the Corporation has mining exploration and development operations throughoutin North and South America, render the Corporationit is subject to foreign currency fluctuations, which may materially affect its financial position and results. The Corporation does not engage in currency hedging to offset any risk of currency fluctuations. CASH RESOURCES AND LIQUIDITY The Corporation believesmeasures and reports financial results in U.S. dollars. The Corporation has mining projects in Bolivia and Mexico, and is looking for other projects in Mexico and in Central and South America. Economic conditions and monetary policies in these countries can result in severe currency fluctuations. Currently all the Corporation's material transactions in Mexico and Bolivia are denominated in U.S. dollars. However, if the Corporation were to begin commercial operations in Mexico or Bolivia (or other Latin American countries) it is possible that it has sufficient financial resources to continue producing goldmaterial transactions incurred in the local currency, such as engagement of local contractors for major projects, will be settled at a U.S. dollar value that is 11 different from previously mined orethe U.S. dollar value of the transaction at the Hycroft mine. However,time it was incurred. This could have the Corporation will haveeffect of undermining profits from operations in that country. IT MAY BE DIFFICULT TO ENFORCE JUDGMENTS OR BRING ACTIONS OUTSIDE THE UNITED STATES AGAINST THE CORPORATION AND CERTAIN OF ITS DIRECTORS AND OFFICERS. Vista Gold is a Canadian corporation and certain of its directors and officers are neither citizens nor residents of the United States. A substantial part of the assets of several of these persons, and of Vista Gold, are located outside the United States. As a result, it may be difficult or impossible for an investor: - to raise additional funds from external sourcesenforce in ordercourts outside the United States judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws against these persons and Vista Gold; or - to restart mining activities atbring in courts outside the Hycroft mine or begin constructionUnited States an original action to enforce liabilities based upon United States federal securities laws against these persons and development activities at the Amayapampa project in Bolivia. There can be no assurance that additional financing will be available at all or on acceptable terms and, if additional financing is not available, the Corporation may have to substantially reduce or cease its operations. The Corporation is actively investigating various alternatives, including debt financing, the issuance of equity, mergers with other companies and the sale of property interests. 12 Vista Gold. ITEM 2. PROPERTIES. OPERATIONS Detailed information is contained herein with respect to the Hycroft mineMaverick Springs and the Amayapampa properties. Vista Gold holdsMountain View projects, the Hycroft mine, the Long Valley project, the Paredones Amarillos and Amayapampa projects. The Corporation holds the Maverick Springs, Mountain View and Long Valley projects through wholly-owned subsidiaries Vista Gold Holdings Inc. and Vista Nevada Corp.; the Hycroft mine is held through its wholly-owned subsidiaries, Vista Gold Holdings Inc., Hycroft Resources Development, Inc. and Hycroft Lewis Mine, Inc. Vista Gold holds the Bolivian properties; Paredones Amarillos is held through its wholly owned subsidiary Minera Paredones Amarillos S.A. de C.V.; Amayapampa is held through wholly-owned subsidiaries, Vista Gold (Antigua) Corp., Compania Inversora Vista S.A., Minera Nueva Vista S.A., and Compania Exploradora Vistex S.A. Estimates of reserves and productionmineralization herein are subject to the effect of changes in metal prices and to the risks inherent in mining and processing operations. MAVERICK SPRINGS The Maverick Springs project is located in northeast Nevada at the southeast end of the Carlin Trend belt of gold-silver mineralization, approximately half-way between Elko and Ely, Nevada. The property consists of 86 claims with a total area of approximately 3,900 acres. On October 7, 2002, the Corporation completed the acquisition of a 100% interest in the Maverick Springs gold and silver project and the Mountain View gold project (described below) from Newmont Mining Corporation (Newmont), and its wholly-owned subsidiary Newmont Capital Limited. To acquire the interest, the Corporation paid cash of $250,000 and issued of 141,243 equity units to Newmont. Newmont retains a 1.5% net smelter returns royalty; and on October 7, 2003 the Corporation will issue $500,000 in common shares to Newmont, together with an equivalent number of two year warrants. In addition, the Corporation must complete 20,000 feet of drilling before October 7, 2004 and an additional 30,000 feet of drilling before October 7, 2006. The Corporation may terminate this agreement at any time after October 7, 2004. After October 7, 2006, Newmont has a one-time right to acquire a 51% interest in the project, by paying to the Corporation twice the amount that the Corporation has spent on the project, including acquisition costs. In the event that Newmont exercises this right, Newmont will relinquish its 1.5% net smelter returns royalty. (See also Consolidated Financial Statements--Note 3). Maverick Springs is subject to a lease agreement, the Artemis lease, between Newmont and Artemis Explorations Ltd. The lease was entered into on October 1, 2001 and the key terms include: payment of advanced minimum royalties of $50,000 on October 1, 2003, and $100,000 on October 1, 2004 and each year thereafter while the agreement is in effect; work commitments of 6,400 feet of exploration drilling, on or before October 1 in each of 2002 (extended by agreement to November 15, 2002), 2003 and 2004, and a 12 preliminary economic evaluation is to be conducted by October 1, 2004; and a net smelter returns royalty based on a sliding scale ranging from 2% to 6%, depending on gold and silver prices at the time of production. On November 7, 2002, the Corporation entered into a non-binding letter of intent with respect to granting Silver Standard Resources Inc. (SSRI) an option to acquire the Corporation's interest in the silver resources hosted in the Maverick Springs project. The Corporation will retain its 100% interest in the gold resources. Completion of this transaction is subject to regulatory approvals, and negotiation and execution of a definitive agreement. The agreement with SSRI will be subject to the terms of the purchase agreement between Newmont and the Corporation. Under the proposed agreement, SSRI will pay $1.5 million over four years including a payment of $300,000 at closing. The remaining $1.2 million will be used to fund exploration programs, land holding costs and option payments. SSRI and the Corporation will form a committee through which they will jointly manage exploration of the Maverick Springs project. The Corporation will be the operator and have a 45% vote on the committee, and SSRI will have a 55% vote. After SSRI has completed its $1.5 million in payments, costs will be shared by the two corporations on the same ratio as established for operation of the management committee: Vista--45% / SSRI--55%, subject to standard dilution provisions. (See also Consolidated Financial Statements--Note 20). In November 2002, the Corporation completed a 7,020-foot drill program on its Maverick Springs project. The program consisted of seven vertical reverse circulation holes, stepped out 500 feet to 2,200 feet from previously identified mineralization. All seven holes encountered flat-lying mineralization, predominantly oxidized to depths of up to 900 feet. The program outlined continuous mineralization in a 2,200-foot by 1,200-foot area, immediately adjacent to known gold-silver mineralization. With additional in-fill drilling, this newly outlined mineralization has the potential to significantly increase the mineralized material. The Corporation expects to complete approximately 10,000 feet of drilling in 2003. GEOLOGY Maverick Springs can be classified as a Carlin-type or sediment/carbonate hosted disseminated silver-gold deposit. Sediment hosted deposits are common within northern Nevada, although the systems are usually gold dominated with relatively minor amounts of silver. Silver and gold mineralization at Maverick Springs has been interpreted as a roughly antiformal or arch-shaped zone with an axis that plunges shallowly to the south and seems to flatten to horizontal over the northern half of the deposit. The limbs of the arch dip shallowly to moderately at 10-30 DEG. to the east and west. Overall, the mineralized zone is elongate in the north-south direction with a length of over 6,000 feet, a width of up to 3,000 feet, and a thickness of commonly 100-300 feet. Mineralization consists of micron-sized silver and gold with related pyrite, stibnite and arsenic sulphides. It is usually associated with intense fracturing and brecciation, with or without accompanying whole-rock silicification or stockwork quartz. Alteration consists of pervasive decalcification, weak to intense silicification and weak alunitic argillization. Massive jasperoid is common in surface exposures and in drill core. Oxidation has affected all sulphides on surface and is pervasive to a depth of at least 400 feet, intermittent to 900 feet, and generally absent below 1,000 feet. Based on a third-party technical study completed by Snowden Mining Industry Consultants of Vancouver, British Columbia the Maverick Springs project contains approximately 97.1 million tons of mineralized material with an average grade of 0.011 ounces of gold per ton and 0.98 ounces of silver per ton at a cut-off grade of 0.005 ounces of gold per ton. MOUNTAIN VIEW The Mountain View property is located in northwest Nevada near the Blackrock Desert. The property is approximately 15 miles northwest of Gerlach, Nevada in Washoe County; it straddles the boundary 13 between the Squaw Valley and Banjo topographic quadrangles. The property currently consists of 127 claims with a total area of approximately 2,360 acres. The Corporation's acquisition of the Mountain View property was completed along with that of the Maverick Springs property, as described above. To acquire the interest, the Corporation paid cash of $50,000 and issued 56,497 equity units to Newmont Capital; and Newmont retains a 1.5% net smelter returns royalty. In addition, the Corporation must complete 4,000 feet of drilling before October 7, 2003 and an additional 4,000 feet of drilling before October 7, 2004. The Corporation may terminate this agreement at any time after October 7, 2003. After October 7, 2006, Newmont has a one-time right to acquire a 51% interest in the project, by paying to the Corporation twice the amount that the Corporation has spent on the project, including acquisition costs. In the event that Newmont exercises this right, Newmont will relinquish its 1.5% net smelter returns royalty (see also Consolidated Financial Statements--Note 3). Newmont's interest in the Mountain View property is subject to a lease known as the Wittkopp lease and two other royalty arrangements, the principal terms of which are: the Wittkopp lease grants a 50% interest to Newmont in all claims, with a few exceptions where a 5% interest is granted; and the lessee may purchase the remaining interest in the claims for $250,000 at any time. The lessee is obligated to purchase the remaining 50% for $250,000 on achieving commercial production. Also, the lessee shall pay a 1% net smelter returns royalty during production, with advance minimum payments of $25,000 per year. Advanced royalties are deductible from the net smelter returns royalty and cease upon purchase of the remaining interest from the Wittkopps. A 1% net smelter returns royalty also applies to certain other claims. The Corporation expects to complete 4,000 feet of drilling in 2003. GEOLOGY The dominant rock types in the area are Miocene volcanics and interbedded volcaniclastic sediments. Minor greenschist facies Permo-Triassic strata occur to the northeast and a large body of granodiorite makes up the bulk of the Granite Range to the east and south. The Miocene lithologies consist of mafic tuffs, rhyolite tuffs and flows, volcaniclastic sediments and basalts. These units are separated from the Granite Range to the east by a range front normal fault that dips steeply to the southwest. The gold mineralization is hosted by a unit known as the Severance rhyolite that is sandwiched between the range front fault to the northeast and older Tertiary tuffs, flows and volcaniclastic sediments to the southwest. Structure on the property is dominated by northwest and northeast trending faults. Major fault offsets occur along the range-front fault system and these are offset by the northeast trending structures. Recent alluvium is offset by the range front faults. Based on a third-party technical study completed by Snowden Mining Industry Consultants of Vancouver, British Columbia, the Mountain View project contains approximately 27.7 million tons of mineralized material with an average grade of 0.017 ounces of gold per ton at a cut-off grade of 0.006 ounces of gold per ton. HYCROFT MINE The Hycroft mine and related facilities are located 54 miles (86 kilometers) west of Winnemucca, Nevada. The mine is an open-pit, heap leaching operation that produces gold and by-product silver. In 1983, the Lewis Mine commenced operation as a small heap-leach gold mine. The Corporation acquired the Lewis mine in early 1987 and completed construction of the adjacent Crofoot mine project in April 1988. In early 1989, the two mines were consolidated into a single operation under an ore purchase agreement, with ore from both properties processed through the larger and more efficient Crofoot plant. Hycroft Inc. began stripping at the new Brimstone pit, located one mile to the east of the existing Central Fault pit, in April 1996 and commenced construction of a new 3 million-square-foot (280,000 square meter) leach pad and a 2,800 gallon-per-minute (10,598 liter-per-minute) leach solution processing plant in the summer of the same year. Ore from the Brimstone pit was hauled to the new leach pad beginning in September 1996 and the Brimstone plant commenced operation in February 1997. Mining operations at the Hycroft mine were suspended in December 1998.1998, and the site was placed on care and maintenance. Gold production, from continued leaching and rinsing of the heap leach pads, continued in 1999 and 2000 and is expected to continue in 2001. In 2000,2002 the amount of gold recovered was not material, as expected. The mine is currently on care and maintenance. 14 OPERATING STATISTICS Operating statistics for the Hycroft mine produced 13,493 ouncesfor the period 1998 to 2002 were as follows:
YEARS ENDED DECEMBER 31 ---------------------------------------------------- 2002 2001 2000 1999 1998 -------- -------- -------- -------- -------- Ore and waste material mined (000's of tons).......... Nil Nil Nil Nil 10,127 Strip ratio........................................... Nil Nil Nil Nil 0.42 Ore processed (000's of tons)(1)...................... Nil Nil Nil Nil 7,117 Ore grade (oz. gold/ton).............................. N/A N/A N/A N/A 0.018 Ounces of gold produced............................... Nil 3,232 13,493 40,075 112,685 Cash operating costs ($/oz. of gold)(2)............... N/A $210 $183 $277 $229
- ------------------------ (1) Ore processed means ore placed on pads but not necessarily leached during the year. (2) Cash operating costs are composed of goldall direct mining expenses including inventory changes, refining and 38,418 ounces of silver. Hycroft mine gold production for 2001 is expected to be in excess of 3,000 ounces. The Corporation will continue to pursue sources of funding or strategic alliances with other companies that will lead to the restart of operations. Reclamation will proceed in areas that will not be disturbed by future operations. DESCRIPTION OF PROPERTIES The Crofoot and Lewis properties together comprise approximately 12,230 (4,950 hectares). The Crofoot property, originally held under two leases, covers approximately 3,544 acres (1,434 hectares). The Lewis property, which virtually surrounds the Crofoot property, is held through a lease that covers approximately 8,686 acres (3,515 hectares). The mine is accessible by road and has access to adequate supplies of water and power. The major mining facilities consist of four leach pads, two Merrill-Crowe gold-silver recovery plants, two carbon plants and associated maintenance and support facilities.transportation costs, less by-product silver credits. GEOLOGY AND HISTORYORE RESERVES The Hycroft mine is located on the western flank of the Kamma Mountains. The deposit is hosted in a volcanic eruptive breccia and conglomerates associated with the Tertiary Kamma Mountain volcanics. The volcanics are mainly acidic to intermediate tuffs, flows and coarse volcaniclastic rocks. Fragments of these units dominate the clasts in the eruptive breccia. Volcanic rocks have been block-faulted by dominant north-trending structures, which have affected the distribution of alteration and mineralization. The Central Fault and East Fault control the distribution of mineralization and subsequent oxidation. A post-mineral range-front fault separates the orebody from the adjacent Pleistocene Lahontan Lake sediments in the Black Rock Desert. The geological events have created a physical setting ideally suited to the open-pit, heap-leach mining operation at the Hycroft mine. The heap leach method is widely used in 13 the southwestern United States and allows the economical treatment of oxidized low-grade ore deposits in large volumes. The known gold mineralization within the Crofoot and Lewis properties extends for a distance of three miles (4.8 kilometers) in a north-south direction by 1.5 miles (2.5 kilometers) in an east-west direction. Mineralization extends to a depth of less than 330 feet (100 meters) in the outcropping to near-outcropping portion of the deposit on the northwest side to over 990 feet (300 meters) in the Brimstone deposit in the east. Not all the mineralization is oxidized and the depth of oxide ore varies considerably over the area of mineralization. The determination of whether mineralization can be mined economically is dependent on the grade of mineralization, the depth of overburdenCrofoot and the degree of oxidation. In 1992, Hycroft Inc. exercised its options to convert its leasehold interests inLewis properties together comprise approximately 12,230 acres. The Crofoot property, originally held under two leases, covers approximately 3,544 acres. The Lewis property, which virtually surrounds the Crofoot property, intois held through a 100% ownership interest in the patented mining claims, a 100% possessory interest in the unpatented claimslease that covers approximately 8,686 acres. The mine is accessible by road and a 100% interest in the incidental rights thereto, all subjecthas access to 4% net profits royaltiesadequate supplies of water and excluding rights to sulfur. No royalty payments were made in 1995, 1994 and 1993 because minimum royalty payments made prior to 1993 aggregating $2.8 million were available for credit against the royalty obligations. The Crofoot lease/purchase agreement was amended in 1996 to provide for minimum advance royalty payments of $120,000 on January 1 of each year in which mining occurs. An additional $120,000 payment is due if ore production exceeds 5.0 million tons from the Crofoot property in any calendar year. All advance royalty payments are available as credit against the 4% net profit royalty. The aggregate acquisition cost to Hycroft Inc. was $6,881,481 and was financed by the issuance of Common Shares and the assumption of certain debts associated with the Lewis mine.power. The leasehold interest in the Lewis property extends until January 1, 2013 or for so long thereafter as Hycroft Lewis continues to conduct commercial mining operations continue on the property. The Lewis lease provides for the payment to the lessor of a 5% net smelter return royalty on gold production. The royalty increases for ore grades above 0.05 ounce per ton and is offset by annual advance minimum royalties. The Corporation has the right to commingle the ore from the Lewis property with ore from the adjoining Crofoot property under an agreement with the lessor of the Lewis property. The ore mined to date from the Brimstone deposit, which lies partially on the Crofoot property and partially on the Lewis property, was processed on both the Brimstone leach pad and the Crofoot leach pad. The allocation of metal produced from the commingled Crofoot and Lewis ores is calculated using methods consistent with industry standards. The same method will be employed during 2001 and in the future if mining is resumed. MINING AND PROCESSING During 2000, no ore was excavated at the Hycroft mine. Waste stripping was suspended in January 1998 and ore mining was suspended in December 1998. Until November 1996, higher-grade ore was crushed prior to treatment on the leach pads. From November 1996 to December 1998, all ore was hauled directly to the leach pads without crushing. Dilute alkaline cyanide solution is pumped from a pond to the heap surface and distributed evenly over the crushed and run-of-mine ore through a network of pipes and irrigation sprinklers or drip emitters. The solution percolates down through the layers of ore, preferentially leaching gold and silver from the rock. This pregnant solution, containing dissolved gold and silver, flows along the surface of the impervious leach pad to a collection ditch from which it drains into one of two pregnant solution ponds. The low-grade solutions are recirculated to the heaps to increase the amount of gold in the solution, and the high-grade solution is pumped directly to the recovery plant where the gold and silver are extracted. The process is a zero-discharge closed circuit. 14 The Crofoot recovery plant can process up to 3,000 gallons-per-minute (11,355 liters-per-minute) of solution from leach pads 1, 2, 3 and 5 (18,000 tons of solution per day) and the Brimstone recovery plant can process up to 2,800 gallons-per-minute (10,600 liters-per-minute) of solution from the Brimstone leach pad (also referred to as pad 4). This process includes filtering to remove particulates, de-aeration to remove dissolved oxygen and introduction of small quantities of zinc dust. The dissolved gold and silver precipitate out of the solution onto the zinc particles which are then removed by a second stage of filtration. The barren solution is returned to the leaching circuit. The precipitate is treated to remove and collect mercury for sale, then mixed with fluxes and smelted to yield a dore bar. Dore bars are shipped offsite for refining and sale. Metalor USA Refining Corporation refines gold and silver production from the Hycroft mine. Alternate refiners are available if necessary. Early in 2000 Hycroft purchased two used carbon adsorption plants; one with a nominal capacity of 500 gallons per minute and the other with a capacity of 1,500 gallons per minute. These plants are used to concentrate gold from leach solutions by adsorbing it onto activated carbon. Typically at Hycroft the carbon will load to around 100 ounces of gold per ton of carbon. Periodically a batch of the carbon is removed and shipped to Metals Research, an independent company in Idaho, which strips the gold off of the carbon, and produces a dore bar which is then shipped to Metalor for refining and sale. The Crofoot/ Merrill-Crowe plant was closed down in April 2000, and all of the gold production since April was via the 1,500 gpm carbon plant. The Brimstone/Merrill-Crowe plant was shut down at the end of October 2000 and all production from that time has been from the 500 gpm carbon plant. The Merrill-Crowe plants are available for restart once mining restarts, and the amount of gold, the volume of solutions and the reagent levels return to normal production levels. In the mean time, however, the carbon plants are the preferred method for continuing gold production as they function well with the current lower and variable flow rates, with the lower precious metals values in solution and with the lower reagent values in the solution. ORE RESERVES Gold production from the Brimstone deposit, the largest ore deposit at the Hycroft mine, hashad consistently exceeded projections, and duringprojections. During 1999 and 2000, the Corporation conducted a $0.6 million exploration program to determine the reasons for the excess gold production, and to re-estimate the grade and tons of the remaining reserves left in the Brimstone deposit. MRDI,Mineral Resources Development, Inc. ("MRDI"), an independent 15 consultant was retained to assist with the evaluation and to provide an independent review of the recalculated mineable reserves. During the period 1996 through 1998, gold mined from the north end of the Brimstone deposit exceeded planned production by 47,090 ounces, or 26%. The excess gold production was a result of mining 13% more ore tons at a 12% higher average grade than predicted in the exploration reserve model. To evaluate the potential for a similar favorable variance in the remaining Brimstone resource,mineralized material, nine diamond drill holes for a total of 4,870 feet (1,484 meters) and 11 reverse-circulation drill holes for a total of 5,540 feet (1,689 meters) were completed in the unmined southern portion of the Brimstone deposit. Seventeen of the 20 holes were twin holes, which were used to establish an adjustment (upgrade) factor for the remaining Brimstone resource.mineralized material. Working with MRDI engineers, a gold-grade enhancement of 25% was estimated. Based upon a reserve model developedon technical study completed by MRDI, Vista Gold hasBrimstone contains 56.0 million tons at an average grade of 0.0184 ounces of gold per ton, using a cut-off grade of 0.007 ounces per ton. In 2000, the Corporation completed a new study of the ore reserves in the Brimstone deposit. Proven and probable minable reserves contained inwithin the planned Brimstone Pit containmineralized material described above, total 23,791,000 tons (21,581,000 tonnes) of ore with an average gold content of 0.0200.0204 ounces per ton, (0.069 grams per tonne).containing 486,000 ounces of gold. Ore reserve calculations were based upon a gold price of US$300$300 per ounce and an economic cut-off grade equivalent to 0.007 ounces (0.024 grams per tonne)ton. Extraction dilution at the Hycroft mine is negligible due to the large size of gold per tonthe pit and the continuity of ore.the ore body. Metallurgical recovery of gold from run-of-mine leaching of the Brimstone ore is projected to be 57% and the planned pit would have a stripping ratio of 1.2-to-1. The planned pit contains an additional 2,349,000 tons (2,130,778 tonnes) of material classified as inferred resource containing an estimated 41,982 ounces of gold (average grade--0.018 ounces per ton (0.062 15 grams per tonne). Ore reserves were estimated under the direction of Mr. Warren Bates, International Exploration Manager, and have been independently reviewed by MRDI. The definition of "ore reserve" employed by Vista Gold is consistent with USGS Circular 831 and meets the standard for "Probable Mining Reserve" under National Instrument 43-101 of the Canadian Securities Administrators. Stated inferred resources are equivalent to "inferred mineral resources" under Canadian National Instrument 43-101. OPERATING STATISTICS Operating statistics for the Hycroft mine for the period 1996 to 2000 were as follows:
YEARS ENDED DECEMBER 31 ---------------------------------------------------- 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- Ore and waste material mined (000's of tons)...... Nil Nil 10,127 37,531 36,882 Strip ratio....................................... Nil Nil 0.42 2.53 1.8 Ore processed (000's of tons)(1).................. Nil Nil 7,117 10,629 13,060 Ore grade (oz. gold/ton).......................... N/A N/A 0.018 0.020 0.018 Ounces of gold produced........................... 13,493 40,075 112,685 117,378 89,381 Cash operating costs ($/oz. of gold)(2)........... $183 $277 $229 $261 $359
- ------------------------ (1) Ore processed means ore placed on pads but not necessarily leached during the year. (2) Cash operating costs is composed of all direct mining expenses including inventory changes, refining and transportation costs, less by-product silver credits. Gold production for 2000 was down significantly from 1999. The decreased gold production was due to the suspension of mining activities at the Hycroft mine in December 1998 and the continued depletion by leaching and rinsing of gold contained in the heaps. All 2000 gold production was from ore that had been mined in previous years. MINE SITE EXPLORATION At the Hycroft mine in Nevada, nine diamond drill holes for 4,870 feet (1,485 meters) and 11 reverse-circulation drill holes for 5,540 feet (1,690 meters) were completed in the unmined southern portion of the Brimstone deposit in 1999. Seventeen of the 20 holes were twin holes, which were used to establish an upgrade factor for the remaining Brimstone resource. The upgrade program was necessary in light of the fact that historical gold production from the Brimstone deposit was 26% greater than predicted from the 1995 ore reserves. Over 525 reverse-circulation drill holes were re-logged in the Albert and Brimstone area, a new geologic model was built, and the current assay and geologic files were audited and re-entered into a new database. There is significant potential to extend the oxide mineralization to the south, along strike, at both the Central Fault and Brimstone deposits, but the greatest upside lies in the largely unexplored sulfide mineralization below the Brimstone deposit, as well as higher grade intercepts along the Central Fault. Current resourcesmineralized material at Brimstone areis limited to the oxide cap of an apparently large but previously unexplored gold-bearing sulfide system. Two diamond drill holes, drilled in 1996 and earlier, have intercepted mineralized sulfides averaging 0.023 ounces per ton gold and 0.5 ounces per ton silver over intervals exceeding 500 feet (153 meters) in thickness. In 1996, the Corporation also intercepted 30 feet (nine meters) of gold mineralization in drill hole 95-2728. This intercept assayed 0.155 ounces per ton gold at a true depth of 310 feet (94 meters) below surface. The hole terminated in this mineralization, somineralization; the true width of the mineralization is unknown. Vistanot known. LONG VALLEY The Long Valley gold project is located in the Inyo National Forest, about 7 miles east of the town of Mammoth Lakes, in Mono County, California. The property consists of 95 contiguous, unpatented mining claims that cover an area of approximately 1,800 acres. The Corporation has an option to acquire 100% of the Long Valley project from Standard Industrial Minerals, Inc. (Standard). Under the terms of the option agreement, the Corporation would pay Standard $750,000 over five years, with annual payments to be due as follows: $100,000 due on each of January 15, 2003, 2004, and 2005; $200,000 due on January 15, 2006, and $250,000 due on January 15, 2007. The Corporation has made the January 2003 payment (see Consolidated Financial Statements--Note 20). The Corporation retains the right to terminate the agreement at any time, and has no work commitments on the project. During the period of 1994 through 1997, Royal Gold, Inc. (Royal) drilled 615 reverse circulation and 10 core holes at the Long Valley property. During this time, Royal also completed metallurgical investigations, preliminary engineering studies, including resource estimations, and initiated baseline-type 16 environmental studies of the biological, water, and archeological resource of the area. The Corporation has acquired all related data from Royal in exchange for a 1% net smelter return royalty to Royal. The database contains 896 drill holes, totaling 268,275 feet. The majority of holes were drilled using reverse circulation methods. Gold was primarily analyzed by fire assay, with grade determinations by atomic absorption. GEOLOGY The Long Valley project claims are contained entirely within the early Pleistocene-age Long Valley Caldera, which has been dated at about 760,000 years old. The caldera is an elongated east-west oval depression measuring some 10 miles by 20 miles and is related to eruption of the Bishop Tuff, which are covered by younger rocks within the caldera. The Long Valley gold mineralization is located near the center of the caldera and is underlain by lithologic units related to the caldera formation and its subsequent resurgence. Associated with resurgent doming is a sequence of interbedded volcaniclastic sedimentary rocks which were deposited in a lacustrine setting within the caldera. These rocks consist of sediment (siltstones through conglomerates) and debris-flow deposits, with local deposits of intercalated silica sinter and rhyolite flows and dikes. All of these lithologies have been altered and/or mineralized to variable degrees. Intruding the generally flat-lying lake sediments are several rhyolite domes that have been dated form 200,000 to 300,000 years in age. The north-south trending Hilton Creek fault zone appears to define the eastern limit of the resurgent dome within the central part of the Long Valley Caldera and extends outside the caldera to the south. Offset along this fault appears to be variable and suggests that fault activity along this zone may be episodic in nature. Gold and silver mineralization at Long Valley appears to fall under the general classification of an epithermal, low sulfidation type deposit. Several areas, termed the North, Central, South, Southeast, and Hilton Creek zones, on the Long Valley property are mineralized with low grades of gold and silver. The mineralized zones are generally north-south trending, up to 8,000 ft in length with widths ranging from 500 ft to 1,500 ft. The tabular bodies are generally flat-lying or have a shallow easterly dip. Mineralization is typically from 50 to 200 ft thick and, in the South and Southeast zones, is exposed at or very near the surface. The top of the Hilton Creek zone is covered by 20 to 50 feet of alluvium. The majority of the mineralization discovered to date is located in the Hilton Creek zone. Gold and silver mineralization is quite continuous throughout the zones and is well defined above a cut-off grade of 0.010 ounces per ton. Within the continuous zones of low-grade gold mineralization (above 0.010 ounces per ton) are numerous zones of higher grade mineralization above 0.050 ounces per ton, particularly in the Hilton Creek zone, which may relate to zones of enhanced structural preparation. Mineralized zones are typically correlated with zones of more intense clay alteration or argillization and/or silicification. Based on a third-party technical study by Mine Development Associates of Reno, Nevada, the Long Valley project contains approximately 101.2 million tons of mineralized material with an average grade of 0.018 ounces of gold per ton at a cut-off grade of 0.010 ounces of gold per ton. PAREDONES AMARILLOS Paredones Amarillos is located 65 km southeast of the city of La Paz, in the Mexican state of Baja California Sur. The project area covers over 13,784 acres. The Corporation acquired 100% of the project on August 29, 2002 from Viceroy Resource Corporation (Viceroy). To acquire the project, the Corporation paid cash of Cdn $1.0 million and issued 303,030 equity units to Viceroy; on August 29, 2003 the Corporation will pay Viceroy an additional Cdn $0.5 million (see also Consolidated Financial Statements--Notes 3 and 20). 17 The Paredones Amarillos project has been a significant exploration target since the 1980s. In 1996, Echo Bay Mines Limited (EBM), completed a bankable feasibility study for an open pit mine on the project. The study was completed using a $375 per ounce gold price and included a proven and probable reserve of approximately 49 million tons with an average gold grade of 0.031 ounces per ton, containing approximately 1.5 million ounces. As a result of the subsequent decline in gold prices, start-up was postponed. EBM holds a 2% net profits interest on the project. The Corporation intends to investigate these targets when market conditionsreview the principal operating assumptions upon which the EBM study was based to identify opportunities to improve the economics of this project. The project holds environmental authorizations for the purpose of: project development including access road, power line, telephone communications, and fundinginfrastructure to supply water; construction and operation of a tailings dam; and disposal of tailings, construction of a mill, and installation of three pumping stations. GEOLOGY General geology consists of diorite roof pendants intruded by a granodiorite batholith with local low and high-angle fault zones. A north-east striking, south-east dipping low angle fault zone is available. 16 the main host of gold mineralization at Paredones Amarillos. Movement along this structure has been characterized as reverse, resulting from compression. Secondary, high angle faulting is thought to control the higher-grade mineralization at the project. The known gold mineralized material occupies an inverted U-shaped block with an approximate strike length of 3,600 feet east-west, a width of approximately 1,000 feet north-south, and a thickness of approximately 100 feet. The apex of the "U" is near the center of EBM's proposed pit with the legs forming the east and west pit lobes. Based on a third-party technical study completed by Snowden Mining Industry Consultants of Vancouver, British Columbia the Paredones Amarillos project contains approximately 67.4 million tons of mineralized material with an average grade of 0.030 ounces of gold per ton at a cut-off grade of 0.015 ounces of gold per ton. AMAYAPAMPA AMAYAPAMPA PROPERTY SUMMARY The Amayapampa project is located 186 miles southeast of La Paz in the Chayanta Municipality, Bustillos Province, Department of Potosi, in southwestern Bolivia. Access is via 167 miles of paved road from La Paz to Machacamarca near Oruro, followed by 62 miles of gravel road to Lagunillas, then nine miles of dirt road to Amayapampa. The Amayapampa property is situated within the moderately rugged Eastern Cordilleran region of Bolivia with elevations at the property varying from 12,300 to 13,450 feet above sea level. Amayapampa consists of 24 mining concessions covering 805 hectares (1,989 acres)1,989 acres plus an additional 6,800 hectares (16,803 acres)16,803 acres in regional exploration and exploitation concessions. The Corporationproject is currently on care and maintenance. GEOLOGY AND ORE RESERVES The Amayapampa deposit underlies a north-northwest trending ridge approximately 0.3 miles east of the town of Amayapampa. The deposit is defined by about 48 diamond drill holes; 96 reverse-circulation drill holes; and 315 underground channel samples totaling 17,585 feet from more than 200 accessible cross-cuts in the process43 different levels and sub-levels extending over a vertical distance of refiling the concessions as required by the new mining law.682 feet. The deposit is approximately 600 meters (1,970 feet)1,970 feet in strike length, 30 to 70 meters (9898 to 230 feet)feet in width and extendshas an overall dip of the mineralized envelope of 80 to over 200 meters (656 feet)90 degrees west. The depth extent of continuous mineralization is in excess of 656 feet to about the 12,795-foot elevation, although some mineralization is present below this depth. Gold occurs free and associated with sulfides in a structural zone in which quartz veins were emplaced then sheared prior to introduction of sulfides and gold mineralizing solutions. Prior18 The host rocks are composed of Ordovician black shales, sandstones, and siltstones, which were weakly metamorphosed to the Amalgamation, CEM (as defined below under "Ownership") mined the Amayapampa deposit using primarily open-stope methods at a rate of approximately 220 tons (200 tonnes) of ore per day,argillites, quartzites, and processed the ore in two mills on site. See "Ownership" and "History" below. Approval of the permit to construct and operate, called the DECLATORIA DE IMPACTO AMBIENTAL, under Article 24 of the Environmental Law was received on May 6, 1998. This permit was based on a 3,300-tonne-per-day (3,638-ton-per-day) ore processing project, and if financing arrangements for the project are obtained, the Corporation will request a modification of the permit to allow operation at the lower production rate. In the fall of 1999, with gold prices rising above $300 per ounce, an update and additional optimization of the feasibility study was begun. It was completed in the first quarter of 2000. Based on a gold price of $300 per ounce, the proven and probable reserves at Amayapampa were calculated by Mine Reserve Associates, Inc., an independent consultant, to be 9.3 million tonnes (10.2 million tons) grading 1.76 grams per tonne (0.051 ounces per ton) including dilution, containing 526,000 ounces of gold. Gold production during the first five years of operations is estimated to average approximately 47,400 ounces per year. The initial capital costs are estimated to be about $25 million, including contingency and necessary working capital. Average operating costs are estimated to be $7.99 per tonne ($7.25 per ton) of ore for a total cash cost of $168 per gold ounce. The Corporation is examining various development and production scenarios, and believes that a gold price of $325 per ounce will be required for construction and development to commence. At a gold price of $325 per ounce, the project is expected to generate an after-tax internal rate of return of 20%. In February 2000, the Corporation signed an agreement with the government of Bolivia, which provides for the timely refund of value-added taxes and customs duties that would be paid by the Corporation once the construction period starts. These refunds will be used to pay for certain improvements to infrastructure that are required by the project and will also benefit the inhabitants of the area. The Corporation would be entitled to a refund of these taxes and duties over time anyway, but the agreement accelerates the refund. The acceleration of these refunds will help the project's cash flows during construction. The refunds are expected to total approximately $2.0 million. LOCATION AND ACCESSsiltites, respectively. The Amayapampa property is located 300 kilometers (186 miles) southeast of La Paz in the Chayanta Municipality, Bustillos Province, Department of Potosi, in southwestern Bolivia (Latitude: 18 DEG.34.5"S, Longitude: 66 DEG.22.4"W). Access is via 268 kilometers (167 miles) of paved road from La Paz to Machacamarca near Oruro, followed by 100 kilometers (62 miles) of gravel road to Lagunillas, then 14 kilometers (nine miles) of dirt road to Amayapampa. Total driving time is about six hours. Charter air service is available to Uncia, 35 kilometers (22 miles) from the project. The Amayapampa property is situated within the moderately rugged Eastern Cordilleran region of Bolivia with elevations at the property varying from 3,750 meters to 4,100 meters (12,300 to 13,450 feet) above sea 17 level. The area is generally arid with a defined rainy season during the summer months of November through April. There is little or no precipitation during the rest of the year. OWNERSHIP On April 28, 1994, Da Capo entered into an agreement with Mr. David Anthony O'Connor of Casilla 11314, La Paz, Bolivia and La Compania Minera Altoro S.R.L. ("Altoro") of Casilla 11314, La Paz, Bolivia, both parties at arm's length to Da Capo, which was amended by agreements dated June 10, 1994 and July 15, 1994 (the "Altoro/O'Connor Agreement"), pursuant to which Mr. O'Connor and Altoro assigned to Da Capo: (a) Altoro's exclusive right and option to acquire a 51% interest in eight mining concessions that constitute a part of the Amayapampa property (and a further option to acquire an additional 19% interest in such concessions), pursuant to an option agreement dated March 22, 1994 (the "Amayapampa Option") between Altoro and Raul Garafulic Gutierrez ("R. Garafulic") of Ave. Argentina No. 2057, Casilla 9285, La Paz, Bolivia and Compania Exploradora de Minas S.A. ("CEM", and collectively with R. Garafulic, the "Amayapampa Vendors") of Calle San Salvador 1421, Casilla 4962, La Paz, Bolivia. The Amayapampa Vendors are both parties at arm's length to Da Capo; (b) Mr. O'Connor's exclusive right and option to acquire the Capa Circa property pursuant to an option agreement dated January 12, 1994 (the "Yamin Option Agreement") between Mr. O'Connor and Yamin. See "Capa Circa Property--Ownership"; and (c) a 100% interest in the Santa Isabel Property, for which an exploration concession application had been made on behalf of Altoro. As consideration for the assignment of the above interests, Da Capo issued a total of 1,000,000 Da Capo common shares to Mr. O'Connor between June 30, 1994 and April 16, 1996. On February 5, 1996, Da Capo exercised the Amayapampa Option and acquired a 51% interest in the eight mining concessions that constitute a part of the Amayapampa property in consideration for: (i) the cancellation of a loan in the amount of $2,425,000 which had been previously made by Da Capo to R. Garafulic on December 22, 1994; and (ii) payment of $75,000 by Da Capo to R. Garafulic between March 22, 1994 and September 22, 1994. On March 8, 1996, Da Capo entered into an agreement (the "Amayapampa Acquisition Agreement") with the Amayapampa Vendors to acquire the following interests in the Amayapampa property: (a) R. Garafulic's remaining 24% interest in two mining concessions (the Gran Porvenir and Chayentena concessions) that are part of the Amayapampa property; (b) R. Garafulic's 49% interest in six mining concessions that are part of the Amayapampa property; and (c) CEM's 100% interest in 16 mining concessions that are part of the Amayapampa property. In consideration for these interests, Da Capo: (a) issued 1,000,000 special warrants (the "Amayapampa Special Warrants"), each exercisable to acquire one Da Capo Common Share without further payment, to a nominee of the Amayapampa Vendors on April 11, 1996; and (b) made a non-recourse, interest-free loan of $3.24 million (the "Amayapampa Loan") to a nominee of the Amayapampa Vendors on April 11, 1996. The Amayapampa Loan was secured by an assignment of all proceeds from the sale of any of 1,000,000 Da Capo common shares held by such nominee. The Amayapampa Loan was canceled on April 29, 1996 upon 18 the sale of such Da Capo common shares and Cdn.$4,355,000 received from the proceeds of such sale on or before May 7, 1996. After being acquired by the Amayapampa Vendors, the Amayapampa Special Warrants were transferred to third parties at arm's length to Da Capo in transactions exempt from prospectus requirements under the relevant securities legislation. On August 14, 1996, Da Capo issued 1,000,000 Da Capo common shares without payment of any additional consideration upon the deemed exercise of the Amayapampa Special Warrants. All of Da Capo's interests in the Amayapampa property were transferred into the name of its subsidiary, Yamin, on April 11, 1996. As a result of the Amalgamation with Da Capo, Vista Gold acquired the Amayapampa property. During 1999 and subsequent to December 31, 1999 Yamin transferred these interests to Minera Nueva Vista. Ms. Elizabeth Mirabel, a resident of Bolivia at arm's length to Vista Gold, held the remaining 25% interest in the Gran Porvenir and Chayentena mining concessions, which constitute 603 hectares (1,488 acres) of the Amayapampa property. On June 28, 1996, Da Capo and Ms. Mirabel entered into a lease agreement (the "Lease") under which Ms. Mirabel granted a lease for her 25% interest in the two mining concessions in favor of Da Capo for a term of ten years commencing July 10, 1996 and renewable for an additional ten year term. During the first two years of the Lease, Da Capo will pay Ms. Mirabel $7,000 per month, and $10,000 per month for the subsequent eight years. On May 23, 1997, Ms. Mirabel transferred ownership of the La Chayantena and Gran Porvenir mining concessions to Mr. Agustin Melgarejo Zuleta. On March 1, 2000, Minera Nueva Vista S.A. and Mr. Agustin Melgarejo signed a "Lease with option to purchase" agreement for the 25% interest of Gran Porvenir and La Chayanena mining concessions, which supercedes the Leasing agreement of June 28, 1996 with Ms. Mirabel. The new lease agreement requires the payment of $2,000 per month for the first three years increasing to $10,000 per month in March 2003. The agreement expires in March 2006. At any time, Minera Nueva Vista S.A. may exercise the purchase option for $800,000. A legal dispute in Bolivia, in which a Mr. Estanislao Radic brought legal proceedings in the lower penal court in Bolivia against Raul Garafulic, resulted in comments in the Bolivian press questioning the validity of the Corporation's ownership of the Amayapampa property. In May 1998, a judge in the Bolivian penal court found that there was no justifiable case. In June 1998, a judge of the Superior Court of the District of Potosi dismissed the appeal of the case and indicated that there could be no further appeals on the matter in the Bolivian penal courts. In 1999, Radic filed a lawsuit against Garafulic in civil court, but the Corporation does not anticipate that the outcome will have any impact on its title to the Amayapampa property. See "Item 3. Legal Proceedings". HISTORY The Amayapampa district was initially mined on a very small scale by indigenous peoples prior to the arrival of the Spanish conquistadors and small-scale mining continued during the Spanish colonial period into modern times. Prior to the Amalgamation, CEM mined the Amayapampa deposit using primarily open-stope methods at a rate of about 220 tons (200 tonnes) of ore per day and processed the ore in two mills on site. At that time, the Amayapampa mine was one of the largest producing underground gold mines in Bolivia and consisted of 32 levels of underground development. Upper level, generally oxidized ore was removed via the upper Virtus Adit (4,100 meters/13,450 feet elevation) and trucked to the Porvenir mill, while lower sulfide ore was dropped by ore passes to the 850-meter-(2,790-foot-) long Virquicocha Adit (3,970 meters/13,025 feet elevation) and taken out by electric locomotives to the Virquicocha mill. At both mills, gold was recovered via amalgam plates and gravity tables. The lower mill included a flotation 19 circuit to upgrade the pyrite concentrate. Approximately 150 people worked at the mine and lived locally at the village of Amayapampa and at other small camps near the mine. Since the Amalgamation, mining has ceased and the old mills removed as per an agreement with the previous owner. The Corporation kept the miners employed in exploration, development and socio-economic projects during the period when the original feasibility study was being prepared. During 1999, the workforce was inactive, but was paid a subsistence allowance to promote good will and maintain social stability in the region. With low gold prices continuing into 2000, this subsistence allowance was discontinued in April 2000 and the Amayapampa workers were laid off. The Corporation continues to provide community assistance by providing teachers and a nurse and by allowing restricted access to the old underground workings to some of the ex-miners. GEOLOGY The Amayapampa propertyproject is located along the east flank of a north-south trending regional anticline near the top of the Ordovician sequence. The Amayapampa deposit underlies a north-northwest trending ridge approximately 0.5 kilometers (0.3 miles) east of the town of Amayapampa. The deposit is defined by about 48 diamond drill holes; 96 reverse-circulation drill holes; and 315 underground channel samples totaling 5,360 meters (17,585 feet) from more than 200 accessible cross-cuts in 43 different levels and sub-levels extending over a vertical distance of 208 meters (682 feet). The deposit is approximately 600 meters (1,969 feet) in strike length, 30 to 70 meters (98 to 230 feet) in width and has an overall dip of the mineralized envelope of 80 to 90 degrees west. The depth extent of continuous mineralization is in excess of 200 meters (656 feet) to about the 3,900-meter (12,795-foot) elevation, although some mineralization is present below this depth. Da Capo channel, core drill and reverse-circulation drill hole samples were analyzed at Bondar-Clegg Laboratories in Oruro, Bolivia, with check samples analyzed at Chemex Laboratories in Vancouver, British Columbia. Because of the coarse gold particles and concerns about nugget effect, all samples were processed using the Hammer Mill Process (similar to a metallic screen assay). In addition to check assaying, Vista Gold has continued to use Bondar-Clegg and the Hammer Mill Process to analyze its samples, and in addition, has had an on-going check assay program in place for samples generated by Vista Gold's exploration and development program. Approximately 225 random assay pulps were check-assayed by three laboratories (American Assay Laboratory in Reno, Nevada, Cone Geochemical Inc. in Lakewood, Colorado, and Rocky Mountain Geochemical in Salt Lake City, Utah) and compared to original pulp assays with generally good agreement. Approximately 600 reverse-circulation drill hole sample splits from the Da Capo program were assayed and used to verify assays obtained from the original reverse-circulation sample splits. Sample splits are duplicate samples taken at the drill rig at the time of drilling. Sample splits show good correlation with original samples with some dispersion expected for this type of deposit. Check assays show that assaying precision meets industry standards. The host rocks are composed of black shales, sandstones, and siltstones, which were weakly metamorphosed to argillites, quartzites, and siltites, respectively. Bedding dips are steep at 60 to 80 degrees west, with the east limb of the anticline being overturned and thus, also dipping steeply west. The mineralized envelope is best described as a structural zone, withinin which were emplaced quartz vein setswere emplaced along a preferential pre-quartz-vein fracture direction and post-quartz-vein faults and shears which were probably the conduits for gold-bearing fluids.direction. Most faults, shears and fractures are north-northeast to north-northwest trending and steeply dipping, both east and west, at 60 to 90 degrees. Quartz veins predominantly dip east. Locally, within the zone of mineralization, flat, thrust-like faults are present, which have offset quartz veins to a minor extent. These flat faults, commonly west-dipping at 40 to 45 degrees, are not generally mappable outside of the main structural zone, which hosts the gold mineralization. A west dipping, 45-degree fault projects into the pit 20 on the northeast side of the deposit and was intersected by two vertical, geotechnical core holes. The base of mineralization may also be slightly offset by a similar west-dipping, 45-degree fault. Oxidation effects are pervasive from the surface to depths of 20 to 30 meters (6666 to 98 feet),feet, with only partial oxidization below those depths. Hydrothermal alteration effects evident in fresh rock are minor, and occur as coarse sericite (muscovite) in thin (2 to 5 millimeter/0.08(0.08 to 0.20 inch) selvages along some quartz veins. In addition, chlorite is present in and adjacent to some quartz veins, but this presence may be a product of low-grade metamorphism. Alteration effects are minimal overall, except for surface oxidization. Mineralization is composed of quartz veins and sulfides and both constitute a visual guide to ore. Quartz veins actually pre-gold, are a locus for later gold mineralization. Quartz veins are typically a few centimeters to 0.5 meters (two feet)two feet in width and commonly occur as sub-parallel vein sets. The strike extent can be 50 to 75 meters (164164 to 246 feet)feet or more for any one vein or vein set, but the dip extent is not as well established and probably ranges up to 20 to 30 meters (6666 to 98 feet).feet. Multiple vein sets are present in the overall mineralized envelope and veins commonly pinch and swell along strike and down dip. Sulfide mineralization, entered thehosted by multiple fractures to depositis composed of predominantly pyrite within and adjacent to quartz veins, as sulfide veinlets in the host rocks and as clots of coarse sulfides and disseminations of sulfide grains along fractures in the black argillites. Locally, sulfide disseminations are more prevalent in the quartzite/siltite interbeds than in the argillites.veins. The total sulfide concentration for the overall mineralized zone is estimated at 33% to 5%. Petrographic examination of the sulfide mineralization shows pyrite to dominate at plus 95% of the total sulfides; arsenopyrite is also present, as are minor amounts of chalcopyrite, galena, sphalerite, stibnite and tetrahedrite. Gold is present as free gold in association with pyrite, on fractures within pyrite and attached to the surface of pyrite and is often visible as discrete grains on fractures in quartz and argillite. Gold grains exhibit a large size-range, with much of the gold being relatively coarse at 40 to 180 microns. All gold grains display irregular shapes with large surface areas. No gold was noted to be encapsulated in either quartz or sulfide. The content of gold grains was verified as over 97% gold by scanning-electron-microprobe analysis. EXPLORATION In 2000, no exploration was undertaken at Amayapampa. District-scale exploration potential exists for defining styles of gold mineralization similar to Amayapampa, which could be developed as satellite ore bodies. Specific targetsIn addition, at least 15 drill holes beneath the planned Amayapampa pit suggest the presence of four higher-grade shoots. In 2000 an update and additional optimization study was completed on the Corporation's properties include an untested surface geochemical target at Irpa Irpa, and raw exploration targets elsewhere within a 10-kilometre (six-mile) radius of Amayapampa. UPDATED FEASIBILITY STUDY The Corporation began updating and optimizing the feasibility study on the Amayapampa propertyoriginally completed in the fall of 1999 and completed this work during the first quarter of 2000.1997. Based on a gold price of $300 per ounce, the proven and probable reserves at Amayapampa were calculatedtechnical study completed by Mine Reserve Associates, Inc., an independent consultant, to be 9.3total mineralized material is 14.2 million tonnes (10.2tons with an average grade of 0.047 ounces of gold per ton. Included in this mineralization are proven and probable reserves of 10.2 million tons)tons grading 1.76 grams per tonne (0.0510.051 ounces per ton) including dilution,ton, containing 526,000 ounces of gold. These reserves are consistent with the definition of Proven and Probable ore reserves under USGS Circular 831 and are classified as Probable Minable Reserves under Canadian Instrument 43-101. Within thisThe reserve an optimized plan atcalculation is based on a gold price of $325$300 per ounce will generate an after-tax internal rateounce. Reserves include extraction dilution of return of 20%. The optimized study includes the same flow sheet consisting of a gravity and carbon-in-leach circuit with a projected metallurgical recovery of 84% and operating at a rate of 2,330 tonnes (2,563 tons) of ore per day. 21 Gold production the first five years of operations is estimated at approximately 47,400 ounces per year. The initial capital costs are estimated to be about $25 million, including contingency and necessary working capital. Average operating costs are estimated to be $7.99 per tonne ($7.25 per ton) of ore for a total cash cost of $168 per gold ounce. The Corporation is investigating means of obtaining financing in order to move the project into design and construction. Approval5% of the permit to constructtons and operate, called the DECLATORIA DE IMPACTO AMBIENTAL, under Article 241% of the Environmental Law was received on May 6, 1998. This permit was based on a 3,300-tonne- (3,638-ton-) per-day ore processing project, and if financing arrangements for the project are obtained, the corporation will request a modificationtotal ounces. Extraction dilution does not result in any losses of the permit to allow operation at the lower production rate. CAPA CIRCA The Capa Circa property, which was owned by the Corporation's wholly-owned subsidiary Yamin, consists of four partly overlapping mining concessions covering 117 hectares (289 acres). Mineralization on the Capa Circa property is similar to that of the Amayapampa deposit, but consists of discrete veins within a mineralized zone approximately 150 meters (490 feet) wide that can be traced for about 600 meters (1,970 feet) along strike. Because mineralization is limited to narrow veins, suited for small-scale underground mining, and there are no estimated mineable reserves, the decision was made to sell Capa Circa to a miners' cooperative. This sale was completed on February 7, 2000, through the sale of Yamin which owns the Capa Circa Mine. The terms of the sale agreement included approximately $300,000 in cash payments to Vista Gold, the assumption of Yamin debts and a production royalty. EXPLORATION PROPERTIES UNITED STATES The only exploration performed by the Corporation in the United States was at the Hycroft mine. See "Item 2. Properties--Hycroft Mine--Mine Site Exploration". ECUADOR Vista Gold currently owns 26% of Zamora. Compania Minera Gribipe S.A. ("Gribipe"), an Ecuadorian mineral exploration company controls and currently owns 58.2% of Zamora. Gribipe is one of the largest mineral exploration companies in Ecuador and has been involved in a number of important exploration projects in Ecuador. CANADA The Corporation holds interests in two properties in Canada, which continue to be explored by joint venture partners. They are the Manville project in Ontario and the Isle project in Manitoba. Falconbridge Limited performed initial drill testing on the Manville project and Phelps Dodge Corp. performed initial drill testing on the Isle project. 22recoverable gold. 19 2000 EXPLORATION, PROPERTY EVALUATION AND HOLDING EXPENDITURES In the last two completed financial years, the Corporation incurred expenditures of the following approximate dollar amounts on exploration and holding costs:
DESCRIPTION 2000 1999 - ----------- -------- -------- (IN MILLIONS) Mineral exploration, property evaluation and holding cost... $1.1 $2.0 Hycroft (mine-site)......................................... 0.8 0.6 Mineral Ridge............................................... -- 0.2 ---- ---- Totals...................................................... $1.9 $2.8 ==== ====
2001 EXPLORATION PLAN The 2001 exploration program will be limited by the amount of funds that the Corporation can obtain and make available for this purpose, which in turn will be a function of gold price and market conditions. The exploration focus in 2001 will be the Hycroft mine. The Corporation has prepared a plan for follow-up drilling on the targets derived from work performed during 2000. This program would investigate oxide and high-grade sulphide mineralization continuing to the south from known mineralization. Approximately $400,000 is required for the initial program and this would be followed up with a second program costing $900,000, if and when funding is available. ITEM 3. LEGAL PROCEEDINGS. Except as described below, the Corporation is not aware of any material pending or threatened litigation or of any proceedings known to be contemplated by governmental authorities which is, or would be, likely to have a material adverse effect upon the Corporation or its operations, taken as a whole. On December 10, 1999, Mineral Ridge Inc.,ESTANISLAO RADIC In April 1998, a legal dispute was initiated in Bolivia by a Mr. Estanislao Radic ("Radic") who brought legal proceedings in the lower penal court against Mr. Raul Garafulic ("Garafulic") and the Corporation, questioning the validity of the Garafulic's ownership of the Amayapampa property. Garafulic sold Amayapampa to a wholly owned subsidiary of Vista Gold, voluntarilythe Corporation. In May 1998, a judge in the Bolivian penal court found there was no justifiable case. In June 1998, a judge of the superior court of the district of Potosi dismissed the appeal of the case and indicated that there could be no further appeals on the matter in the Bolivian penal courts. In 1999, this time in civil court, Radic filed a second lawsuit against Garafulic, in Potosi, and Garafulic filed a civil lawsuit for protectiondamages against Radic in La Paz. Garafulic appealed to the Court to have both cases combined under the U.S. Bankruptcy Code. See "Item 2. Properties--Mineral Ridge Mine". Earlyjurisdiction of a judge in 2000, a trustee was appointed byLa Paz. Finally, in January 2001, the court to disposeCourt decreed that the lawsuits should be combined and heard in Potosi. The Corporation never has and does not now have direct ownership of the assets of Mineral Ridge Inc. Atdisputed property and is therefore uncertain as to why it was a named defendant in this lawsuit. The court in Potosi agreed with this assessment and annulled the end of 2000, all assets of Mineral Ridge Inc. had been disposed of andcase in June 2001. In September 2001, Radic appealed to the Mineral Ridge Inc. Chapter 11 case was dismissed. Mineral Ridge Inc.Supreme Court. The Corporation does not anticipate that there will be dissolved in accordance with the applicable state corporations code. On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed an action in the United States District Court against Vista Gold, Vista Gold Holdings, Inc., Stockscape.com Technologies, Inc., Cornucopia Resources, Inc., Red Mountain Resources, Inc. and Touchstone Resources, Inc. This action involves a General Contract of Indemnity in connection with the posting of a reclamation bond for mining activities by Mineral Ridge Inc. at Silver Peak, Nevada. In the action, USF&G seeks to compel all of the defendants to post additional collateral for the bond in the total amount of $793,583. Neither Vista Gold nor Vista Gold Holdings, Inc. was a party to the General Contract of Indemnity and have denied any liability in connection therewith. In November 2000, the parties stipulated to an agreed upon discovery plan and scheduling order. The maximum potential exposure tomaterial adverse impact on the Corporation isor the additional collateral requestedvalue of its holdings in the amount of $793,583, together with the attorneys fees and costs related to defense of the action. Other defendants, if found to be jointly liable could reduce the amount for which the Corporation has exposure.Bolivia. ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, by Vista Gold during the quarter ended December 31, 2000. 232002. EXECUTIVE OFFICERS OF THE CORPORATION The executive officers of the Corporation as of March 19, 2003, together with their age, length of service and business experience, are listed below.
NAME, POSITION AND AGE HELD OFFICE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS - ---------------------- ----------------- ----------------------------------------------- RONALD J. MCGREGOR September 8, 2000 President and Chief Executive Officer of Vista PRESIDENT, CHIEF EXECUTIVE Gold from September 8, 2000 to present; Vice OFFICER AND DIRECTOR President Development and Operations for Vista Age--55 Gold from July 1, 1996 to September 8, 2000. JOHN F. ENGELE May 1, 2001 Vice President Finance and Chief Financial VICE PRESIDENT FINANCE AND Officer of Vista Gold from May 1, 2001 to CHIEF FINANCIAL OFFICER present; Director of Accounting, Vista Gold, Age--51 from March 2001 to April 2001; Director of Planning, Analysis and Operations Accounting, Echo Bay Mines Ltd. from June 1996 to February 2001. WILLIAM F. SIRETT January 1, 1996 Lawyer; Partner, Borden Ladner Gervais LLP, a SECRETARY law firm. Age--52
There are no family relationships by blood, marriage or adoption among any of the above executive officers of the Corporation. None of the above executive officers has entered into any arrangement or understanding with any other person pursuant to which he was or is to be elected as an executive officer of Vista Gold or a nominee of any other person. 20 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. PRICE RANGE OF COMMON SHARES The Common Shares of Vista Gold are listed on the American Stock Exchange and The Toronto Stock Exchange under the symbol VGZ. The following table sets out the reported high and low sale prices on the American Stock Exchange and on The Toronto Stock Exchange for the periods indicated as reported by the exchanges:exchanges. All prices give effect to the Corporation's June 19, 2002 1-for-20 share consolidation.
AMERICAN STOCK THE TORONTO STOCK EXCHANGE (US$) EXCHANGE (CDN$) ------------------------ ------------------------ HIGH LOW HIGH LOW -------- -------- -------- -------- 19992001 1st quarter................................... 0.19 0.13 0.25 0.20quarter................................. 2.60 1.00 3.40 1.20 2nd quarter................................... 0.22 0.13 0.28 0.21quarter................................. 3.00 1.40 3.60 2.00 3rd quarter................................... 0.22 0.13 0.25 0.18quarter................................. 2.20 1.40 3.00 1.80 4th quarter................................... 0.22 0.09 0.30 0.13 2000quarter................................. 2.00 1.00 3.00 1.60 2002 1st quarter................................... 0.16 0.09 0.22 0.13quarter................................. 2.60 1.20 3.80 2.00 2nd quarter................................... 0.13 0.09 0.16 0.13quarter................................. 10.40 1.80 15.60 2.80 3rd quarter................................... 0.11 0.06 0.18 0.10quarter................................. 6.20 2.51 9.63 3.71 4th quarter................................... 0.25 0.03 0.14 0.04quarter................................. 4.10 2.40 6.40 3.72
On March 26, 2001,19, 2003, the last reported sale price of the Common Shares of Vista Gold on the American Stock Exchange was $0.09$3.21 and on The Toronto Stock Exchange was Cdn$0.14.Cdn $4.80. As at March 26, 2001,19, 2002, there were 90,715,04012,411,725 Common Shares issued and outstanding, and Vista Goldthe Corporation had 900868 registered shareholders of record. DIVIDENDS Vista GoldThe Corporation has never paid dividends. While any future dividends will be determined by the directors of Vista Goldthe Corporation after consideration of the earnings, and financial condition of Vista Gold and other relevant factors, it is currently expected that available cash resources will be utilized in connection with the ongoing acquisition, exploration and development programs of the Corporation. EQUITY COMPENSATION PLAN INFORMATION The information in the table below is as of December 31, 2002. See also the Consolidated Financial Statements--Note 10.
NUMBER OF SECURITIES NUMBER OF SECURITIES WEIGHTED-AVERAGE REMAINING AVAILABLE FOR TO BE ISSUED UPON EXERCISE PRICE OF FUTURE ISSUANCE UNDER EQUITY EXERCISE OF OUTSTANDING OPTIONS, COMPENSATION PLANS OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (EXCLUDING SECURITIES REFLECTED WARRANTS AND RIGHTS $ CDN IN COLUMN (A)) PLAN CATEGORY (A) (B) (C) - ------------- -------------------- -------------------- ------------------------------- Equity compensation plans approved by security holders............. 172,500 $4.19 52,500 Equity compensation plans not approved by security holders.... 489,500 4.37 n/a Total............................. 662,000 $4.32 52,500
21 Under the current terms of the Corporation's Stock Option Plan, a maximum of 225,000 common shares may be issued. The Board of Directors has proposed an increase in the plan to 1 million shares and has approved the issuance of 489,500 options under the proposed increase, subject to shareholder approval which will be sought at the Corporation's Annual General Meeting. EXCHANGE CONTROLS There are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-resident holders of the securities of Vista Gold, other than a Canadian withholding tax. See "Item 5. Certain Canadian Income Tax Considerations for Non-Residents of Canada". CERTAIN CANADIAN INCOME TAX CONSIDERATIONS FOR NON-RESIDENTS OF CANADA Canadian withholding tax at a rate of 25% (subject to reduction under the provisions of any relevant tax treaty) will be payable on dividends paid to a holder of Common Shares who is not resident in Canada. The rate of withholding tax applicable to dividends paid on the Common Shares to a resident of the United States who beneficially holds such Common Shares would generally be reduced to 15% or, if the non-resident holder is a corporation that owns at least 10% of the Common Shares, to 5%. It is the Canada Customs and Revenue Agency's present published policy that entities (including certain limited liability companies) that are treated as being fiscally transparent for United States federal income tax purposes will not qualify as residents of the United States under the provisions of the Canada-United States Income Tax Convention. 24 Upon a disposition or deemed disposition of Common Shares, a capital gain (or loss) will generally be realized by a non-resident holder to the extent that the proceeds of disposition are greater (or less) than the aggregate of the adjusted cost base of the Common Shares to the non-resident holder thereof immediately before the disposition and any reasonable costs of disposition. Capital gains realized on a disposition of Common Shares by a non-resident shareholder will not be subject to Canadian tax unless the non-resident holder and/or persons with whom the non-resident holder did not deal at arm's length, at any time within the five-year period before the disposition, owned or had an option to acquire 25% or more of the issued Common Shares of any class or series of Common Shares of Vista Gold. Under the Canada-United States Income Tax Convention, a resident of the United States who does not carry on a business from a permanent establishment or fixed base in Canada and who realizes a capital gain on the disposition of Common Shares that is otherwise subject to tax in Canada, will be exempt from Canadian income tax. It is the Canada Customs and Revenue Agency's present published policy that entities (including certain limited liability companies) that are treated as being fiscally transparent for United States federal income tax purposes will not qualify as residents of the United States under the provisions of the Canada-United States Income Tax Convention. RECENT SALES OF UNREGISTERED SECURITIES On December 27, 2002, the Corporation completed a private placement financing in which it issued 1,000,000 equity units at a price of $2.35 per unit, for an aggregate offering price of $2,350,000. All of the purchasers in the placement were "accredited investors" as such term is defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"). Each unit consisted of one common share and one warrant, exercisable over a two-year period from the issuance date, to purchase one common share for $3.04 during the first year and $3.45 during the second year. The securities were issued in reliance upon the exemption from the registration requirements of the Securities Act specified by the provisions of Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. See also the Consolidated Financial Statements--Note 8. 22 ITEM 6. SELECTED FINANCIAL DATA. SELECTED FINANCIAL DATA The selected financial data in Table Ibelow have been derivedselected in part, from the consolidated financial statements of the Corporation, which have been prepared in accordance with accounting principles generally accepted in Canada. The selected financial data should be read in conjunction with those financial statements and the notes thereto. See "Item 8. Consolidated Financial Statements and Supplementary Data". TABLE I
YEARS ENDED DECEMBER 31 ---------------------------------------------------- 2002 2001 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- (IN THOUSANDS,(U.S. $ 000'S, EXCEPT LOSS PER SHARE DATA)SHARE) RESULTS OF OPERATIONS Gold sales.................................revenues.................................. $ -- $ 890 $ 3,757 $ 19,496 $ 37,083 $ 40,123 $ 34,847$19,496 $37,083 Net earnings (loss)loss before write-downs..... (2,283) (11,481) (1,640) (5,292) (11,826)write-downs.................... 2,775 3,275 2,283 11,481 1,640 Net earnings (loss)........................ (13,209) (27,700) (1,640) (54,019) (11,826) Net earnings (loss)loss....................................... 2,775 3,275 13,209 27,700 1,640 Basic and diluted loss per share.............. (0.15) (0.31) (0.02) (0.61) (0.21)
AT DECEMBER 31 ---------------------------------------------------- 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- (IN THOUSANDS) share (restated for years prior to 2002, see Consolidated Financial Statements--Note 8)................ 0.41 0.72 2.91 6.11 0.37 FINANCIAL POSITION Working capital(1)............................capital................................ $ 3,507 $ (199) $ 106 $ 2,972 $10,282 $ (237) $ 18,702$10,285 Total assets..................................assets................................... 20,688 13,889 17,232 33,429 80,878 79,028 123,316 Long-term debt and other non-current liabilities.................................liabilities..... 4,665 3,134 3,345 5,229 19,629 4,568 3,929 Shareholders' equity..........................equity........................... 15,425 9,401 12,673 25,889 53,530 55,075 109,173
- ------------------------ (1) Including current portion of long-term debt of $695--2000; $481--1999; $2,372--1998; and $13,000--1997. Had the consolidated financial statements of the Corporation been prepared in accordance with accounting principles generally accepted in the United States, certain selected financial data would have been reported as shown in Table II. 25 TABLE IIfollows (see also Note 19 of the Consolidated Financial Statements).
YEARS ENDED DECEMBER 31 ---------------------------------------------------- 2002 2001 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- (IN THOUSANDS,(U.S. $ 000'S, EXCEPT LOSS PER SHARE DATA)SHARE) RESULTS OF OPERATIONS Gold revenues................................. $ -- $ 971 $ 3,526 $ 19,496 $37,083 Net earnings (loss)......................... $(20,978) $(13,716) $........................... (5,773) (3,194) (20,978) (13,716) 1,561 $(71,643) $(35,187) Basic and diluted earnings (loss)loss per share..................................... (0.23) (0.15) 0.02 (0.80) (0.62)
2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- (IN THOUSANDS) share (restated for years prior to 2002, see Consolidated Financial Statements--Note 8)............... (0.85) (0.70) (4.63) (3.02) 0.35 FINANCIAL POSITION Total assets................................... $9,364 $33,330assets.................................. $12,814 $ 6,102 $ 9,364 $ 33,330 $66,551 $61,500 $123,316 Shareholders' equity........................... 4,805 25,646equity.......................... 7,551 1,614 4,808 25,786 39,203 37,546 109,172
See note 12 to the consolidated financial statements for the year ended December 31, 2000 under "Item 8. Consolidated Financial Statements and Supplementary Data--Notes to Consolidated Financial Statements". UNITED STATES$/CANADIAN$ EXCHANGE RATES (1)(3)
AT DECEMBER 31 ---------------------------------------------------- 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- As at December 31.............................. $0.6669 $0.6925 $0.6504 $0.6999 $0.7301 Average(2)..................................... 0.6725 0.6730 0.6740 0.7220 0.7331 High........................................... 0.6969 0.6925 0.7105 0.7487 0.7515 Low............................................ 0.6410 0.6535 0.6341 0.6945 0.7215
- ------------------------ (1) Exchange rates are expressed as the amount of United States funds equivalent to one Canadian dollar, being the noon buying rates in New York City for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York. (2) The yearly average rate means the average of the exchange rates on the last day of each month during a year. (3) On March 26, 2001, the noon buying rate as quoted by the Federal Reserve Bank of New York was 1.5545 (Cdn.$1.00 equals U.S.$0.6433). ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. INTRODUCTION This discussion should be read in conjunction with the consolidated financial statements of the Corporation for the three years ended December 31, 20002002 and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles ("GAAP") in Canada. Differences from United States GAAP are described in note 12Note 19 to the consolidated financial statements. During 2000, 1999 and 1998,23 RESULTS OF OPERATIONS SUMMARY The Corporation's 2002 net loss was $2.8 million ($0.41 per share), compared to the Corporation's primary mining operation and principal source2001 net loss of earnings was$3.3 million ($0.72 per share). The improvement in 2002 is a result of reduced holding costs at the Hycroft mine; lower depreciation and amortization costs; and a 2001 non-recurring charge of $0.8 million for settlement of a law suit, net of related $0.2 million cost recoveries in 2002; offset by an expense to increase the provision for reclamation at Hycroft. GOLD PRODUCTION AND REVENUE The Hycroft mine in Nevada, which began gold production in 1987. In December 1998, miningis on care and maintenance. Mining activities were suspended at Hycroft in 1998 and, as expected, gold production has declined steadily since that time. Currently, solution is being circulated over the heap leach pads to enhance evaporation. As the solution is circulated over the heap leach pads, it is passed through a carbon plant, where small amounts of gold are adsorbed onto activated carbon. Subsequently the gold is stripped from the carbon, refined and sold. Effective at the beginning of fiscal 2002, gold production was considered incidental to the activities at the Hycroft mine.mine and reporting the associated sales proceeds as revenue was no longer warranted. Accordingly, gold sales proceeds of approximately $0.6 million in 2002 have been accounted for as an offset to exploration, property evaluation and holding costs. Gold processing and recovery continued from previously mined orerevenues in 1999 and 2000 and is expected2002 therefore were nil, compared to continue$0.9 million in 2001. The 2001 gold revenues were a result of 3,232 ounces of gold production. Gold production in 2001 withwas 3,232 ounces compared to 13,493 ounces in 2000; 2001 gold revenues of $0.9 million were down, as expected, from $3.8 million in 2000. The decline in gold revenues in 2001 reflects the decrease in gold production for 2001 estimated to befrom 2000. Of this $2.9 million reduction in excess of 3,000 ounces. 26 On December 10, 1999, Mineral Ridge Inc., a wholly-owned subsidiary ofrevenue, substantially the Corporation, voluntarily filed for protection under the U.S. Bankruptcy Code after the Mineral Ridge mine failed to meet minimum cash flow levels required under Mineral Ridge Inc.'s loan with Dresdner Bank due to ore reserve deficiencies and low gold prices. The loan was not guaranteed by, and the lender has no recourse to, the Corporation. The Corporation recognized no revenue, production or operating expenses at Mineral Ridge Inc. in the year 2000. RESULTS OF OPERATIONS 2000 COMPARED WITH 1999 The 2000 net loss was $13.2 million as compared to the 1999 net loss of $27.7 million. The 2000 net loss included a $10.9 million write-down of mineral properties and other assets and a $0.3 million gainentire difference resulted from sale of assets and marketable securities. In 1999, the net loss included a $16.2 million write down of mineral properties. Excluding the write-down of mineral properties and disposal of assets, the 2000 net loss of $2.3 million decreased $9.2 million from the 1999 loss of $11.5 million. The $9.2 million decrease in net losses in 2000 was due to substantially lower operating costs partially offset by lower gold revenues, both of which reflect the Corporation's lower gold production and operating levels in 2000 as compared2001. Slightly lower gold prices in 2001 ($275 per ounce average vs. $278 average in 2000) accounted for approximately $10,000 of the $2.9 million reduction in revenue. COSTS AND EXPENSES As discussed above, effective at the beginning of fiscal 2002, gold production was considered incidental to 1999. The Corporation's average gross realized price declined in 2000 reflecting the absence of any benefitactivities at the Hycroft mine, accordingly gold production costs, which approximately offset the $0.6 million proceeds received from forward sales. Gold sales of $3.8 million in 2000 decreased $15.7 million, or 81%, from $19.5 million in 1999. The decrease in gold sales, was primarily because of lower goldare no longer recorded as production combined withcosts, but are accounted for as exploration, property evaluation and holding costs. Recorded 2002 production costs are therefore nil. Production costs at the lower average gold price realized by the Corporation.
2000 1999 -------- -------- Average gross realized price............................... $ 278 $ 298 Average spot price......................................... $ 279 $ 279 Gold sales (000s).......................................... $3,757 $19,496 Gold production (ounces)................................... 13,493 65,468
Gold productionHycroft mine decreased 51,975 ouncesto $0.7 million ($210 per ounce) in 2001 from 65,468 in 1999 to 13,493 ounces$2.6 million ($183 per ounce) in 2000. The decrease in gold production was attributable to the closure of the Mineral Ridge Mine in 1999 and the progressive depletion of recoverable gold in the leach pads at the Hycroft Mine. Gold production from the two mines was as follows.
2000 1999 -------- -------- (OUNCES) Hycroft mine................................................ 13,493 40,075 Mineral Ridge mine.......................................... -- 25,393 ------ ------ Total gold production..................................... 13,493 65,468 ====== ======
There was no ore mined at the Hycroft mine in 2000. All gold production from the Hycroft mine was from previously mined ore. Operating costs from mining operations decreased $18.0 million from $20.6 million in 1999 to $2.6 million in 2000. Mining, processing and other costs accounted for $4.3 million, $9.0 million and $4.7 million of the decrease in operating costs, respectfully. The decrease was primarily due to the closure of the Mineral Ridge Mine, and the progressive reduction of leach solution volume processed at the Hycroft Mine,mine, with related reductions in manpower, in consumption of materials and supplies, and in the consumption of reagents and electricelectrical power. 27 Operating costs at the two mines were as follows.
2000 1999 -------- -------- (IN THOUSANDS) Hycroft mine............................................... $2,560 $11,307 Mineral Ridge mine......................................... -- 9,271 ------ ------- Total operating costs.................................... $2,560 $20,578 ====== =======
The cash operating costincrease in per ounce at the two minescosts was as follows.
1999 1998 -------- -------- (PER OUNCE) Hycroft mine................................................ $183 $277 Mineral Ridge mine.......................................... -- 358 ---- ---- Cash operating costs...................................... $183 $309 ==== ====
Mining costs in 2000 were zero due to the closure of the Mineral Ridge Mine in 1999 and the prior suspension of mining activity at the Hycroft Mine in 1998. Processing costs, including changes in inventory, decreased $9.0 million in 2000 due to the closure of the Mineral Ridge Mine in 1999 and the progressive reduction in the volume of leach solution processed at the Hycroft mine during the year. The Corporation processed no newly mined ore in the year 2000. Processing activities at the Hycroft Mine continued throughout the year as previously mined ore was treated for gold extraction. Other operating costs including mine administration, refining and freight costs, and silver credits decreased $4.7 million in 2000. Excluding silver credits, other operating costs decreased $5.5 million reflecting the closure of the Mineral Ridge Mine in 1999 and a reduced operating level at the Hycroft Mine. However, lower silver production and sales offset $0.8 million of the decrease.production. Depreciation, depletion and amortization (DD&A) in 2000 of $0.9 million decreased $3.5 million from $4.4costs at Hycroft were $0.1 million in 1999. At2002 compared to $0.3 million in 2001 and $0.8 million in 2000. This downward trend reflects the fact that a significant portion of the Hycroft mine, DD&A decreased $1.4 millionproperty plant and wasequipment has been sold, and a resultsubstantial portion of the write-downremaining equipment has been fully depreciated. Consistent with Bureau of certain depreciable assetsLand Management, Nevada State Office mandated procedures, in 2002 the prior year andCorporation commissioned a third-party comprehensive review of the sale of assets including crushing and conveying equipment during the year. DD&Aestimated reclamation costs at the Mineral Ridge mine decreased $2.1Hycroft mine. Based on this review, the Corporation increased by $1.0 million its obligation accrued to nil as a resultDecember 31, 2002. No such adjustments were made in 2001 and 2000. 24 Exploration, property evaluation and holding costs were $0.6 million in 2002, compared to $1.2 million in 2001. Holding costs at Hycroft comprise substantially all of the bankruptcy of Mineral Ridge Inc. in 1999. The Corporation did not have any major equipment leases. Mineral$0.6 million exploration, property evaluation and holding costs werein 2002, and it accounts for $1.1 million of the 2001 costs, Amayapampa accounted for the remaining $0.1 million in 2001. The 2002 Hycroft cost reductions resulted principally from manpower reductions and generally lower levels of activity at the Hycroft site. 2002 net holding costs at Amayapampa are negligible as a result of the collection of royalties accruing from the sale in 2000 of the Capa Circa mine. Exploration, property evaluation and holding costs of $1.2 million in 2001 compared to $1.9 million in 2000 as2000. Of these amounts, Hycroft accounted for 1.1 million in 2001, and a similar amount in 2000. Holding costs for Amayapampa were $0.1 million, compared to $2.8 million in 1999. The 2000 costs included $0.7 million in holding2000. This reduction is mainly a result of manpower reductions effected in April 2001, and resulting reduced office and administration costs for the Corporation's Bolivian properties as compared to $1.7in Bolivia. Corporate administration and investor relations costs were $1.3 million in 1999.2002, slightly higher than the $1.2 million in 2001. The Corporation incurred these holding costs while maintainingincrease reflects investor relations and protectingbusiness development programs, consistent with its property interestsincreased level of gold project acquisition and private placement financings in Bolivia. Also included in the 2000 costs were $0.8 million for exploration and evaluation work and holding costs at the Hycroft mine, and $0.4 million of other exploration and evaluation expenditures.2002. Corporate administration and investor relations costs were $1.2 million in 2000, unchanged from 1999. 2000 expenses included approximately $0.2 million of one-time expenses related2001, similar to the closing of Mineral Ridge Inc. and merger and acquisition studies. Interest$1.2 million incurred in 2000, as expected. The Corporation incurred $14,000 in interest expense in 20002002, in connection with its convertible debenture issuance, which closed on March 19, 2002. The debentures had an annual interest rate of 1% and were converted automatically, pursuant to their terms, on September 19, 2002 (see Consolidated Financial Statements--Note 8). 2001 interest expense of $21,000 was lower than $0.1 million asincurred in 2000 because the Corporation repaid most of its debt in the first quarter of 2001. Net gains from disposals of Hycroft equipment in 2002 totalled $30,000, compared to $1.1net gains of $0.1 million in 1999, reflecting2001. 2002 net gains from disposals of assets include a gain of $53,000 from the Corporation's lower average debt balance during the year. The decreasedisposal of Canadian exploration claims. Net gains from disposal in the average debt balance was directly related to the bankruptcy of Mineral Ridge Inc. and paying down of debt at the Hycroft Mine. In 2000 thewere $41,000. A gain on the sale of assets and marketable securities of $0.3 million was $0.3 million.realized in 2000; no similar gain was realized or realizable in 2001. In 2001, the Corporation recorded a non-recurring provision of $0.8 million for the settlement of the USF&G lawsuit as discussed in Consolidated Financial Statements--Note 5. There was no similar gain or lossprovision in 2000. The Corporation received from Golden Phoenix Minerals, Inc. ("GPMI"), the disposalcurrent owner of assetsthe Mineral Ridge Mine, 628,931 common shares in 1999. 28 Other incomeconsideration for benefits GPMI received in 2000 included insurance settlements totaling $0.2 million. Thereas a direct result of the Corporation's facilitation of the USF&G settlement. These shares had a fair value of $220,000 when received. In addition, the final settlement amount for the USF&G lawsuit was no similar settlement in 1999.approximately $20,000 less than provided for. An $85,000 write-down to fair value has been made to reflect an estimated $135,000 fair value of the GPMI shares. Management regularly reviews the carrying values of its long-lived assets and investments. These evaluations indicated thatassets. In 2000, based on these reviews, management wrote down the carrying values of certain properties and investments were overstated at December 31, 2000 and, accordingly, were written down to estimated recoverable amounts. Based upon management's evaluation, $10.9 million was written downAmayapampa property in 2000, of this,Bolivia by $10.6 million, was related to the Bolivian mineral properties and other Boliviancertain Hycroft assets by $0.3 million. No similar write-downs were deemed necessary in 2002 and $0.3 million was related to Hycroft equipment. $16.2 million was written down in 1999, including Bolivian mineral properties--$13.2 million; Mineral Ridge mine net assets--$2.9 million; and Zamora accounts receivable--$0.1 million. Additionally in 1999, the Corporation wrote off its remaining investment of $0.6 million in Zamora, reflecting its decreased levels of ownership and control. Income tax in 2000 was a $33,000 refund of Canadian Income tax, as compared to nil in 1999. 1999 COMPARED WITH 19982001. The 1999 net loss was $27.7 million as compared to the 1998 net loss of $1.6 million. The 1999 net loss included a $16.2$10.6 million write-down of mineral properties. There was no similar write-downthe Amayapampa project in 1998. The 1998 net loss includedBolivia in 2000 resulted from a one-time gain oncarrying value review wherein the liquidationpreviously assumed long-term gold price of gold futures of $3.2 million and a $0.8 million gain from the disposal of assets, while there were no similar gains in 1999. Excluding the write-down of mineral properties and the gains from the liquidation of gold futures and disposal of assets, the 1999 net loss of $11.4 million increased $5.8 million from the 1998 loss of $5.6 million. The $5.8 million increase in net losses$325 per ounce, as assumed in 1999, was duereduced to substantially lower gold revenues partially offset by lower operating costs, both of which reflect the Corporation's lower gold production and operating levels$300 per ounce in 1999 as compared to 1998.2000, consistent with industry practice. The Corporation's average gross realized price continued to decline in 1999 reflecting the lower average spot price of gold for 1999. Gold sales of $19.5 million in 1999 decreased $17.6 million, or 48%, from $37.1 million in 1998. The decrease in gold sales was primarily due to lower gold production combined with the lower average gold prices realized by the Corporation.
1999 1998 -------- -------- Average gross realized price.............................. $ 298 $ 329 Average spot price........................................ $ 279 $ 294 Gold sales (000s)......................................... $19,496 $37,083 Gold production (ounces).................................. 65,468 112,838
Gold production decreased 47,370 ounces from 112,838 in 1998 to 65,468 ounces in 1999. The decrease in gold production was attributable to the suspension of mining activities at the Hycroft mine in 1998, which was partially offset by the start up of mining activities at the Mineral Ridge mine in 1999. Gold production from the two mines was as follows.
1999 1998 -------- -------- (OUNCES) Hycroft mine............................................... 40,075 112,685 Mineral Ridge mine......................................... 25,393 153 ------ ------- Total gold production.................................... 65,468 112,838 ====== =======
There was no ore mined at the Hycroft mine in 1999. All gold production from the Hycroft mine was from previously mined ore. At the Mineral Ridge mine, 1.1 million tons of ore were mined in 1999, as compared to 0.1 million tons of ore in 1998. The average grade of the ore mined in 1999 was 0.05 ounces of gold$25 per ton. During the initial mining and processing start up activities at Mineral Ridge Inc., various mechanical 29 problems were encountered. These problems, primarilyounce change in the crushing plant, inhibited the mine's ability to place ore onto the heaps for leaching and gold extraction. As the mine continued to operate in 1999, the mechanical problems were addressed and crusher production improved in the third quarter of 1999 to an average of 100,000 tons per month, which was in line with Corporation's projections. However, the mine then began to experience ore deficiencies during mining operations, as compared to original ore reserve estimates, and gold production failed to meet expectations. Operating costs from mining operations decreased $6.4 million from $27.0 million in 1998 to $20.6 million in 1999. Mining, processing and other costs accounted for $5.2 million, $1.1 million and $0.1 million of the decrease in operating costs, respectfully. The decrease was primarily due to the elimination of mining activities at the Hycroft mine, which was partially offset by the commencement of mining activities at the Mineral Ridge mine. Operating costs at the two mines were as follows.
1999 1998 -------- -------- (IN THOUSANDS) Hycroft mine.............................................. $11,307 $26,257 Mineral Ridge mine........................................ 9,271 752 ------- ------- Total operating costs................................... $20,578 $27,009 ======= =======
The cash operating cost per ounce at the two mines was as follows.
1999 1998 -------- -------- (PER OUNCE) Hycroft mine................................................ $277 $229 Mineral Ridge mine.......................................... 358 --(1) ---- ---- Total operating costs..................................... $309 $235 ==== ====
- ------------------------ (1) The cash operating costs at the Mineral Ridge mine for the two months ended December 31, 1998 have been omitted because the mine was in the initial start-up phase and, accordingly, it is not possible to accurately determine the true cash operating costs. Mining costs in 1999 decreased $5.2 million as a result of mining fewer tons at a lower average cost per ton. Total tons mined, including waste tons, decreased to 6.4 million tons in 1999 from 10.4 million tons in 1998. The average cost per ton mined decreased to $0.70 in 1999, as compared to $0.80 in 1998. In 1998, inefficiencies associated with the reduction in mining activities at the Hycroft mineprice assumption resulted in a higher average mining cost per ton. In 1999, there was no mining at the Hycroft mine and all mining activities occurred at the Mineral Ridge mine. Processing costs, including changes in inventory, decreased $1.1reduction of approximately $10 million in 1999 as a resultexpected future cash flows from the Amayapampa project. Accordingly an impairment loss was recognized. 25 LIQUIDITY AND CAPITAL RESOURCES As of treating fewer tons of ore asDecember 31, 2002, the Corporation had $3.5 million in working capital compared to 1998. Ore tons processed decreased to 1.0 million tons in 1999 from 7.2 million tons in 1998. At the Hycroft mine, while no additional ore was placed on the heaps in 1999, processing activities still continued throughout the year as previously mined ore was treated for gold extraction. Processing activities at the Mineral Ridge mine included placing and treating 1.0 million tons of ore in 1999. Other operating costs including mine administration, refining and freight costs, and silver credits decreased $0.1 million in 1999. Excluding silver credits, other operating costs decreased $0.5 million reflecting the efficiencies of combining the administrative functions of the two mines and the Corporation's efforts to minimize costs. However, lower silver production and sales offset $0.4 million of the $0.5 million decrease. 30 DD&A in 1999 of $4.4 million decreased $1.9 million from $6.3 million in 1998. At the Hycroft mine, DD&A decreased $3.8 million and was directly related to the suspension of mining activities in 1998. DD&A at the Mineral Ridge mine increased $1.9 million reflecting the start up of mining activities in 1999. The provision for reclamation and closure costsa working capital deficiency of $0.2 million in 1999 decreased significantly from $2.4 million in 1998. In 1998, the higher provision compensated for the revised Hycroft mine plan, which called for the reduction and subsequent suspensionas of mining activities in December 1998. In 1999, the provision31, 2001. The principal component of $0.2 million was solely from the Mineral Ridge mine. Operating lease costs in 1999 decreased to $44,000 as compared to $1.1 million in 1998. During 1998, the leases on several large pieces of mobile mining equipment terminated and the equipment was purchased at the end of the leases. During 1999, the Corporation did not have any major equipment leases. Mineral exploration, property evaluation and holding costs were $2.8 million in 1999 as compared to $2.6 million in 1998. The 1999 costs included $1.7 million in holding costs for the Corporation's Bolivian properties as compared to $2.0 million in 1998. The Corporation incurred these holding costs while maintaining and protecting its property interests in Bolivia. Also included in the 1999 costs were $0.6 million for exploration and evaluation work at the Hycroft mine, $0.2 million for exploration at the Mineral Ridge mine, and $0.3 million of other exploration and evaluation expenditures. Corporate administration and investor relations decreased $0.3 million in 1999 to $1.2 million as the Corporation continued to reduce its overhead and administrative costs. Interest expense in 1999 was $1.1 million as compared to $0.7 million in 1998, reflecting the Corporation's higher average debt balance during the year. The increase in the average debt balance was directly related to the additional debt of Mineral Ridge Inc. In 1998, the gain on the disposal of assets was $0.8 million and primarily consisted of the sales of surplus mining equipment from the Hycroft mine and the sale of the Corporation's non-producing Tartan mine in Canada. There was no similar gain or loss from the disposal of assets in 1999. Management regularly reviews the carrying values of its long-lived assets and investments. These evaluations indicated that the carrying values of certain properties and investments were overstated and, accordingly, were written down. Based upon management's evaluation, $16.2 million was written down in 1999, including Bolivian mineral properties--$13.2 million; Mineral Ridge mine net assets--$2.9 million; and Zamora accounts receivable--$0.1 million. Additionally, the Corporation wrote off its remaining investment of $0.6 million in Zamora, reflecting its decreased levels of ownership and control. There were no similar write-downs in 1998. Income tax expense in 1999 was nil as compared to $0.2 million in 1998. The 1998 income tax expense was primarily the result of U.S. alternative minimum taxes, which limited the Corporation's ability to utilize existing loss carry forwards. LIQUIDITY AND CAPITAL RESOURCESworking capital is cash. The Corporation's consolidated cash balance at December 31, 20002002 was $0.1$3.4 million, a decreasean increase of $2.2$2.7 million from the end of 2001. This increase resulted from the previous year. During 2000, operating activities consumed $2.8 million, as follows.
2000 -------------- (IN THOUSANDS) Hycroft mine................................................ $ 407 Bolivian properties......................................... 631 Corporate activities........................................ 1,688 ------ Net operating activities.................................... $2,726
31 The Hycroft mine consumed $0.4two private placement financings, which provided $6.8 million in operating activities net of $1.0 million for reclamation costs. Before reclamation, the mine generated $0.6 million of cash.proceeds (see Consolidated Financial Statements--Note 8). In December 1998, mining activities were suspended at the Hycroft mine. Gold processing and gold recovery continued in 2000 from previously mined ore. The mine produced 13,493 ounces in 2000, at a cash operating cost of $183 per ounce. Bolivian and corporate activities required $0.6 million and $1.7 million in cash, respectively. During 2000,addition, the Corporation held and maintained its Bolivian properties, and at the same time steps were undertaken to minimize future property holding costs. The Corporation continues to investigate alternatives to reduce its corporate overhead. Investing activities provided $1.2raised $0.2 million in 2000 mainly from the sale of Hycroft crushing and conveyingmining equipment and spare parts.Canadian mining claims. The Corporation used $1.5 million as partial consideration in acquiring gold projects (see Consolidated Financial Statements--Note 3), $0.8 million to settle the USF&G lawsuit (see Consolidated Financial Statements--Note 5), and $2.0 million was used in operating activities. In 2001 the Corporation raised no cash from financings, used $0.7 million to repay debt; made no acquisitions of property, plant and equipment, raised $3.0 from the sale of idle mining equipment and used $1.7 million in operating activities. Subsequent to December 31, 2002, the Corporation completed a private placement equity unit financing for net proceeds of $3.0 million (see Consolidated Financial Statements--Note 21). Cash consumed in operating activities in 2001 was $1.7 million, compared to $2.8 million in 2000. The $1.1 million improvement in 2001 is comprised mainly of the reduction in reclamation and mine closure costs: $0.2 million compared to $1.0 million in 2001 and 2000 respectively. The remainder of the cash improvement reflects the Corporation's successful cost reduction efforts, offset by a reduction in gold revenues. The Corporation made no capital expenditures in 2001, and no material capital expenditures in 2000. In 2000, financing activities used $0.6 million to reduce the long-term equipment loan from Finova Inc. RECLAMATION AND ENVIRONMENTAL COSTSOUTLOOK Management estimates the current reclamation and closure costs forhas estimated that the Corporation's Hycroft mine to be $2.9 million. These costs have been charged to earnings over the life$3.5 million of the mine and the provision for reclamationworking capital as of December 31, 20002002, will be adequate to meet its corporate administrative and property obligations for the coming year. In 2003, the Corporation is $3.1 million.committed to approximately $300,000 in capital expenditures relating to exploration and land holding costs for those projects acquired in 2002. The Corporation expects that emphasis on gold project acquisition will continue in the future. In April 1995,support of this strategy, the Nevada BureauCorporation has available, in addition to its current working capital, approximately $3.0 million net proceeds, from a financing completed subsequent to December 31, 2002. The Corporation does not currently generate operating cash flows. Subject to sustained higher gold prices, management expects that it can generate revenues and cash flows, in the future, from its portfolio of Land Management ("BLM") approved an amended Hycroft mine reclamation plangold projects by several means, including, but not limited to: options or leases to third parties, joint venture arrangements with other gold producers, outright sale for cash and/or royalties. The Corporation does not have adequate cash to begin development of any its projects, and would need to seek additional financing in order to construct and operate a gold mine. Although the Corporation has been successful in obtaining such financing in the past, there can be no assurance that includedit will be able to do so in the Brimstone deposit, and an uncollateralizedfuture. The Corporation has provided a surety bond in the amount of $5.1 million was posted to secureensure reclamation obligations under an approved reclamation plan at the plan. REGULATORY COMPLIANCE AND OTHER MATTERS During 2000, there were no material environmental incidents or non-compliance with any applicable environmental regulations. GOING CONCERNHycroft mine. The Corporation's consolidated cash balanceBureau of Land Management, Nevada State Office, has requested an additional bond of $443,279 for interim fluid management and working capital balance were both $0.1it is probable that the State will request that the Corporation increase the total surety bond amount to an estimated $6.7 million, asinclusive of December 31, 2000. $2.6 millionthe interim fluid management bond. Furthermore, the Corporation has been realized from the sale of mining equipmentrequested to pledge collateral in the first quarter of 2001. Management estimates consolidated total cash expenditures of $2.4 million for 2001, including debt repayments of $0.7 million with an estimated December 31, 2001 cash balance of $0.3 million. Management continuesorder to pursue cost-cutting measures and is actively pursuing additional sources of capital, including debt financing, the issuance of equity, mergers with other companies,provide this surety bond. The amount and the salenature of property interests and other assets. Management estimatesthe collateral will be subject to negotiation. There can be no assurance that the Corporation will have sufficient cash resources to continue its current level of activity through tobe successful in providing acceptable collateral and thus posting the end of March 2002. The Corporation relies on the Hycroft mine as its only current source of operating cash flows. Mining activities at Hycroft were suspended in 1998. During 2000, Hycroft produced gold from previously mined ore on the leach pads, a process that will continue through 2001. However, Hycroft's remaining gold inventory is decreasing and, therefore, gold production will continue to decrease throughout the year 2001. The Corporation is investigating the economic feasibility of restarting the Hycroft mine and developing the Amayapampa project in Bolivia. The Corporation's ability to restart the Hycroft mine and develop the Amayapampa project is dependent upon its ability to raise additional capital. OUTLOOK Following a brief rally in February 2000 and a minor readjustment in June, the price of gold has continued to remain low, finishing the year at approximately $270 per ounce. Amayapampa cannot be developed economically at current gold prices. The resumption of mining at Hycroft, although economic at current gold prices, would attract more favorable financing terms and yield a greatly improved return for shareholders at a gold price over $300. The Corporation is reluctant to deplete its valuable gold resources before ensuring a higher return on the necessary investment. Hycroft 32 continues to produce gold at higher than anticipated rates and will continue to produce gold into 2001. Gold production, however, is dropping and management expects to produce about 3,000 ounces in 2001. To enhance the Corporation's gold resource position, management has rigorously re-evaluated the Brimstone reserve at the Hycroft mine under the scrutiny of an independent consulting firm and continues to systematically re-log drill hole data and compile all existing exploration data for the Hycroft property. This exercise together with some additional field-work, by the Corporation's in-house geologist, has identified several areas on the property for additional exploration as well as firming up drill targets to add additional oxide reserves and explore for high-grade feeder zones. The Corporation will be in a position, if funding is available, to restart operations immediately if the price of gold recovers above $300 per ounce or to start a comprehensive drilling program to expand the reserve. In Bolivia, holding costs have been reduced by the sale of Yamin and Capa Circa to a worker's co-operative and by the elimination of the stand-by work force at Amayapampa. Development of Amayapampa will require initial capital of $25 million and a gold price of around $325 per ounce. Again, this project is dependent on a higher gold price and in the meantime the Corporation continues to explore every avenue to maintain the asset at minimum cost until the gold price improves. At the corporate level, management has reduced staff, moved into more economic office space and continues to explore all avenues to ensure the future of Vista Gold and to protect and enhance shareholder value. In the first quarter of 2001, four haul trucks and a shovel from the Hycroft mine were sold to provide an additional $2.6 million in operating capital, without shareholder dilution. This will allow the Corporation to continue on the present course into 2002, and continue to pursue merger or acquisition opportunities and promote company growth.surety bond. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. COMMODITY PRICE RISK The Corporation is engaged in gold mining and related activities, including exploration, extraction, processing, and refining and reclamation. Gold bullion is the Corporation's principal product. Changes in the price of gold could affect the Corporation's profitability and cash flows. Gold prices may fluctuate widely from time to time. For a description of factors that affect gold prices, see note 1(a) to the consolidated financial statements for the year ended December 31, 2000 under "Item 8. Consolidated Financial Statements and Supplementary Data--Notes to Consolidated Financial Statements". Using current 2001 estimates of production, a $10 change in the gold price would result in a corresponding change in net income and cash flows of approximately $30,000. The Corporation occasionally utilizes derivative commodity instruments for purposes other than trading purposes to manage the Corporation's exposure to the risks associated with fluctuations in the price of gold by protecting the selling price of a portion of its production. The market risk of these commodity instruments to the Corporation's cash flow is related to the possible failure of all counterparties to honor their contractual obligations. Also, precious metals contracts between the Corporation and various counterparties involve the requirement that the Corporation deliver gold to the counterparty at agreed-upon prices. If the counterparty is unable to fulfill its purchase obligations, there is no guarantee that the Corporation will be able to receive the agreed-upon sales price in the open market. If the Corporation is unable to produce sufficient gold to meet its hedging contract obligations, it may be obligated to purchase such gold at the then market price. At December 31, 2000,2002, the Corporation's had no outstanding forward sales contracts. INTEREST RATE RISK At December 31, 2000, the Corporation hadregistrant was a $75,000"small business issuer" as such term note bearing a fixed rate of interest at 4.5%. Management does not believe that the Corporation is exposed to major interest rate risk and the Corporation does not utilize market risk sensitive instruments to manage its exposure to this risk. 33 FOREIGN CURRENCY EXCHANGE RATE RISK The price of gold is denominateddefined in U.S. dollars, and allRule 12b-2 of the Corporation's revenuesExchange Act, and a majority of its expenses are incurred in U.S. dollars. As a result, management doesaccordingly is not believe thatrequired to provide the Corporation is exposed to any noteworthy foreign currency exchange rate risk and the Corporation does not utilize market risk sensitive instruments to manage its exposure toinformation under this risk.Item. 26 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION To the Shareholders of Vista Gold Corp. The consolidated financial statements are the responsibility of the Board of Directors and management. The accompanying consolidated financial statements of the Corporation have been prepared by management based on information available through February 23, 2001, and28, 2003; these consolidated financial statements are in accordance with Canadian generally accepted accounting principles, and have been reconciled to United States generally accepted accounting principles as presented in Canada.Note 19. A system of internal accounting and administrative controls is maintained by management in order to provide reasonable assurance that financial information is accurate and reliable, and that the Corporation's assets are safeguarded. Limitations exist in all cost-effective systems of internal controls. The Corporation's systems have been designed to provide reasonable but not absolute assurance that financial records are adequate to allow for the completion of reliable financial information and the safeguarding of its assets. The Corporation believes that the systems are adequate to achieve the stated objectives. Regular testing of these systems is employed to ensure continued effectiveness of the controls, and actions are taken when necessary to correct deficiencies when they are identified. The Audit Committee of the Board of Directors is comprised of fourthree outside directors, and meets regularly with management and the independent auditors to ensure that management is maintaining adequate internal controls and systems and to approverecommend to the Board of Directors approval of the annual and quarterly consolidated financial statements of the Corporation. The committee also reviews the audit plan ofmeets with the independent auditors and discusses the results of their audit and their report prior to submitting the consolidated financial statements to the Board of Directors for approval. The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants, who arewere appointed by the shareholders. The auditors' report outlines the scope of their examination and their opinion on the consolidated financial statements. /s/ DAVID R. SINCLAIRRONALD J. MCGREGOR /s/ ROBERT L. FOLENJOHN F. ENGELE ---------------------------- ---------------------------- David R. Sinclair Robert L. Folen Chairman of the Board ViceRonald J. McGregor John F. Engele President and Vice President Finance and Chief Executive Officer Chief Financial Officer
3427 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders of Vista Gold Corp. We have audited the consolidated balance sheets of Vista Gold Corp. as of December 31, 20002002 and 19992001 and the consolidated statements of loss, deficit and cash flows for the years ended December 31, 2000, 19992002, 2001 and 1998.2000. These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Canada and the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Corporation as of December 31, 20002002 and 1999,2001 and the consolidated results of its operations and cash flows for the years ended December 31, 2000, 19992002, 2001 and 19982000 in accordance with Canadian generally accepted accounting principles. /s/ PRICEWATERHOUSECOOPERS LLP - ---------------------------- Chartered Accountants Vancouver, British Columbia, Canada February 23, 2001 Comments by the Auditors for U.S. Readers on Canada-U.S. Reporting Difference In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Corporation's ability to continue as a going concern such as those described in Note 1 of the consolidated financial statements. Our report to the shareholders dated February 23, 2001, is expressed in accordance with Canadian reporting standards, which do not permit a reference to such conditions and events in the auditors' report when these are adequately disclosed in the financial statements. /s/ PRICEWATERHOUSECOOPERS LLP Chartered Accountants Vancouver, British Columbia, Canada February 23, 2001 3528, 2003 28 CONSOLIDATED FINANCIAL STATEMENTSVISTA GOLD CORP. CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31 ---------------------------- 2000 1999----------------------------- 2002 2001 ----------- --------------------- (U.S. DOLLARS IN THOUSANDS) ASSETS: Cash and cash equivalents...................................equivalents--Note 15.......................... $ 963,443 $ 2,297674 Marketable securities.......................................securities--Note 14.............................. 135 -- 77 Accounts receivable......................................... 760 1,571 Gold inventory in process................................... -- 117185 180 Supplies inventory and prepaid expenses..................... 464 1,221other.......................................... 342 301 --------- ----------------- Current assets.............................................. 1,320 5,2834,105 1,155 Mineral properties--Note 3.................................. 14,919 10,730 Plant and equipment--Note 4................................. 1,664 2,004 --------- ----------------- Property, plant and equipment--Note 3....................... 15,912 28,124 Other assets................................................ -- 22equipment............................... 16,583 12,734 --------- -------- 15,912 28,146 --------- -------- Total assets................................................ $ 17,23220,688 $ 33,42913,889 ========= ================= LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable............................................ $ 218228 $ 744145 Accrued liabilities and other............................... 301 1,086370 1,209 --------- --------- Current portion of long-term debt--Note 4................... 695 481 --------- -------- Current liabilities......................................... 1,214 2,311 --------- -------- Long-term debt--Note 4......................................liabilities--Note 5................................. 598 1,354 Payables to be settled with equity--Note 6.................. 510 -- 801 Accrued reclamation and closure costs--Note 5............... 3,339 4,411 Other liabilities........................................... 6 177............... 4,155 3,134 --------- -------- 3,345 5,229 --------- -------- Total liabilities........................................... 4,559 7,5405,263 4,488 --------- -------- SHAREHOLDERS' EQUITY:--------- Capital stock, no par value per share--Note 6:8: Preferred--unlimited shares authorized; no shares outstanding Common--unlimited shares authorized; shares outstanding: 20002002--10,744,613 and 1999--90,715,040...............................2001--4,535,752.................... 129,575 121,146 121,146Warrants--Note 9............................................ 345 -- Options--Note 10............................................ 25 -- Deficit..................................................... (106,985) (93,776) Currency translation adjustment............................. (1,488) (1,481)(114,520) (111,745) --------- ----------------- Total shareholders' equity.................................. 12,673 25,88915,425 9,401 --------- ----------------- Total liabilities and shareholders' equity.................. $ 17,23220,688 $ 33,42913,889 ========= ======== Nature of operations and going concern--Note 1========= Commitments and contingencies--Note 713 Subsequent events--Note 1321
Approved by the Board of Directors /s/ DAVID R. SINCLAIRC. THOMAS OGRYZLO /s/ PETER WALTONJOHN M. CLARK -------------------------- -------------------------- David R. Sinclair Peter Walton ChairmanC. Thomas Ogryzlo John M. Clark Director Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3629 VISTA GOLD CORP. CONSOLIDATED STATEMENTS OF LOSS
YEARS ENDED DECEMBER 31 ------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 ------------- ------------- ----------------------- ---------- ---------- (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) REVENUES: Gold sales............................................sales--Note 11................................... $ 3,757-- $ 19,496890 $ 37,083 Other revenues........................................ 48 109 3,350 ---------- ---------- ---------- Total revenues........................................ 3,805 19,605 40,4333,757 ---------- ---------- ---------- COSTS AND EXPENSES: Mining operations.....................................Production costs--Note 11............................. -- 746 2,560 20,578 27,009 Depreciation, depletion and amortization.............. 74 301 867 4,421 6,270 Provision for reclamation and closure costs........... 1,048 -- 232 2,442 Operating leases...................................... -- 44 1,094 Mineral exploration,Exploration, property evaluation and holding costs...............................................costs.... 642 1,246 1,875 2,802 2,596 Corporate administration.............................. 1,046 926 1,278 Investor relations.................................... 198 257 209administration and investor relations....... 1,257 1,158 1,244 Interest expense...................................... 14 21 114 1,146 660 Loss (gain)Gain on disposal of assets.....................assets............................ (83) (105) (41) 5 (775) Gain on saledisposal of marketable securities................. (280)securities............. -- -- Equity in loss and impairment(280) Other income.......................................... (22) (16) (266) Provision for settlement of Zamora Gold Corp.....USF&G suit--Note 5........ -- 601 427 Other (income) expense................................ (218) 74 692814 -- Cost recoveries related to USF&G lawsuit--Note 12..... (240) -- -- Write-down of mineral properties and other assets--Note 3......................................assets..... -- -- 10,926 16,219Write-down of marketable securities................... 85 -- -- ---------- ---------- ---------- Total costs and expenses.............................. 17,047 47,305 41,9022,775 4,165 16,999 ---------- ---------- ---------- Loss before income taxes..............................taxes..................................... (2,775) (3,275) (13,242) (27,700) (1,469) Income taxes--Note 9..................................taxes.......................................... -- -- (33) -- 171 ---------- ---------- ---------- Loss for the year.....................................Net loss.............................................. $ (13,209)(2,775) $ (27,700)(3,275) $ (1,640)(13,209) ========== ========== ========== Weighted average number of shares outstanding................... 90,715,040 90,715,040 89,456,478outstanding (restated--Note 8).................................. 6,760,755 4,535,752 4,535,752 - ------------------------------------------------------------------------------------------------------- Loss---------------------------------------------------------------------------------------------- Basic and diluted loss per share........................................share (restated--Note 8)... $ (0.15)(0.41) $ (0.31)(0.72) $ (0.02)(2.91) - -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3730 VISTA GOLD CORP. CONSOLIDATED STATEMENTS OF DEFICIT
YEARS ENDED DECEMBER 31 ------------------------------ 2002 2001 2000 1999 1998 -------- -------- -------- (U.S. DOLLARS IN THOUSANDS) Deficit, beginning of year..................................year--Note 2(d)....................... $111,745 $108,470 $ 93,776 $66,076 $64,437 Loss for the year...........................................95,261 Net loss.................................................... 2,775 3,275 13,209 27,700 1,640 -------- ------- --------------- -------- Deficit, end of year........................................ $106,985 $93,776 $66,076period...................................... $114,520 $111,745 $108,470 ======== ======= =============== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3831 VISTA GOLD CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31 ------------------------------ 2002 2001 2000 1999 1998 -------- -------- -------- (U.S. DOLLARS IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Loss for the year...........................................period......................................... $(2,775) $(3,275) $(13,209) $(27,700) $ (1,640) ADJUSTMENTS TO RECONCILE LOSS FOR THE YEARPERIOD TO CASH PROVIDED BY (USED IN) OPERATIONS: Depreciation, depletion and amortization.................... 74 301 867 4,421 6,270 Amortization of deferred stripping.......................... -- -- 1,169 Deferral (recognition) of hedging gains..................... -- (1,150) 1,426 Provision for reclamation and closure costs................. 1,048 -- 232 2,442-- Reclamation and closure costs...............................costs paid.......................... (27) (163) (982) (1,800) (592) Loss (gain)Gain on disposal of assets...........................assets.................................. (83) (105) (41) 5 (775)Cost recoveries related to USF&G lawsuit--Note 12........... (240) -- -- Write-down of marketable securities......................... 85 -- -- Gain on disposal of marketable securities................... (280) -- -- Equity in loss and impairment of Zamora Gold Corp........... -- 601 427 Loss (gain)(280) Gain (loss) on currency translation......................... -- 3 (7) 59 (181) Write-down of mineral properties............................properties and other assets........... -- -- 10,926 16,219 -- Other non-cash items........................................ 70 142 -- (11) (5) -------- -------- -------- (2,726) (9,124) 8,541 CHANGES IN OPERATING ASSETS AND LIABILITIES: Marketable securities....................................... -- 13 42 Accounts receivable......................................... (5) 580 461 1,723 (1,759) Gold inventory.............................................. 117 3,397 5,399 Realization of hedging gains acquired....................... -- 3,041 -- Supplies inventory and prepaid expenses..................... 391 (133) 452(41) 4 508 Accounts payable............................................ (526) (294) (2,047) Accrued liabilitiespayable and other............................... (513) (370) (141) -------- --------accrued liabilities.................... (953) 804 (1,039) ------- ------- -------- Net cash provided by (used in)used in operating activities.........activities....................... (2,847) (1,709) (2,796) (1,747) 10,487 -------- --------------- ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment..................mineral properties............................. (1,457) -- (7) (1,917) (4,552) Acquisition of Mineral Ridge Inc............................ -- -- 4,639 Proceeds on disposal of fixed assets and supplies........... 810 86 5,758246 2,982 832 Proceeds on disposal of marketable securities............... 357 -- -- Investment in and advances to Zamora Gold Corp.............. -- (30) (141) Other assets................................................ 22 139 (204) -------- --------357 ------- ------- -------- Net cash provided by (used in) investing activities......... (1,211) 2,982 1,182 (1,722) 5,500 -------- --------------- ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt........................................... -- (695) (587) (520) (13,000)Net proceeds from private placements--Note 8................ 6,848 -- -- Costs to issue equities for other transactions.............. (55) -- -- Proceeds from debt..........................................the exercise of stock options................. 34 -- 1,500 -- -------- --------------- ------- -------- Net cash provided by (used in) financing activities......... 6,827 (695) (587) 980 (13,000) -------- --------------- ------- -------- Net increase (decrease) in cash and cash equivalents........ 2,769 578 (2,201) (2,489) 2,987 Cash and cash equivalents, beginning of year................period.............. 674 96 2,297 4,786 1,799 -------- --------------- ------- -------- Cash and cash equivalents, end of year...................... $ 3,443 $ 674 $ 96 $ 2,297 $ 4,786 ======== =============== ======= ======== Supplemental cash flow disclosure--Note 8disclosure and material non-cash transactions--Note 15
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3932 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA.AS OTHERWISE STATED. 1. NATURE OF OPERATIONS AND GOING CONCERN (a) NATURE OF OPERATIONS Vista Gold Corp. (Vista Gold) is engagedThe Corporation operates in the gold mining sector; it does not currently produce gold in the United States,commercial quantities. The Corporation evaluates, acquires and improves gold exploration activities in the United States, Canada and Latin America.potential development projects. The Corporation's results are dependent on the price of gold. Gold prices fluctuate and are affected by numerous factors, including, expectations with respectapproach to the rate of inflation, exchange rates, interest rates, global and regional political and economic circumstances and governmental policies, including those with respect to gold holdings by central banks. The demand for and supplyacquisitions of gold affect gold prices, but not necessarily inprojects has generally been to seek projects within political jurisdictions with well established mining, land ownership and tax laws, which have adequate drilling and geological data to support the same manner as demand and supply affect the prices of other commodities. The supply of gold consistscompletion of a combinationthird-party review of new mine productionthe geological data and existing stocksto complete an estimate of bullionmeasured and fabricatedindicated gold held by governments, public and private financial institutions, industrial organizations and private individuals. The demand for gold primarily consists of jewelry and investments. Additionally, hedging activities by producers, consumers, financial institutions and individuals can affect gold supply and demand. Gold can be readily sold on numerous markets throughout the world and its market value can be ascertained at any particular time. As a result,mineralization. In addition, the Corporation is not dependent on any one customerlooks for opportunities to improve the salevalue of its product. (b) GOING CONCERN These consolidated financial statements have been prepared ongold projects through exploration drilling, and/or reengineering the basis of accounting principles applicable to a going concern and assumesoperating assumptions underlying previous engineering work. Although the realization of assets and the discharge of liabilities in the normal course of business. The Corporation's consolidated cash balance and working capital were both $0.1 million as of December 31, 2000. $2.6 millionCorporation has been realized from the sale of mining equipment, in the first quarter of 2001 (Note 13). Management estimates consolidated total cash expenditures of $2.4 million for 2001, including debt repayments of $0.7 million with an estimated December 31, 2001 cash balance of $0.3 million. Management continues to pursue cost-cutting measuresreviewed and is actively pursuing additional sources of capital, including debt financing,satisfied with the issuance of equity, mergers with other companies, and the sale of property interests and other assets.title for all mineral properties in which it has a material interest, there is no guarantee that title to such concessions will not be challenged or impugned. Management estimateshas estimated that the Corporation will have sufficient cash resources to continue its current level of activity throughadequate funds from existing working capital and from the private placement subsequent to the end of March 2002. Theyear-end (Note 21) to meet its corporate administrative and property obligations for the coming year. If the Corporation relies on the Hycroft mine asis to advance or develop its only current source of operating cash flows. Mining activities at Hycroft were suspended in 1998. During 2000, the Hycroft mine produced gold from previously mined ore on the leach pads, a process thatmineral properties further, it will continue through 2001. However, the amount of recoverable gold remainingbe necessary to obtain additional funding. Although in the leach pads is decreasing and, therefore, gold production will continue to decrease throughoutpast the year 2001. The Corporation is investigating the economic feasibility of restarting the Hycroft mine and developing the Amayapampa project in Bolivia. The plans to restart the Hycroft mine and develop the Amayapampa project will depend on management's ability to raise additional capital for these purposes. While management has been successful in raising such capital in the past,obtaining financing, there can be no assurance that it will be able to do sosuccessful in the future. BecauseThe Corporation has provided a surety bond in the amount of these uncertainties, there$5.1 million to ensure reclamation obligations under an approved reclamation plan at the Hycroft mine. The Bureau of Land Management, Nevada State Office has requested an additional bond of $443,279 for interim fluid management and it is substantial doubt aboutprobable that the abilityState will request that the Corporation increase the total surety bond amount to an estimated $6.7 million, inclusive of the Corporation to continue as a going concern beyond March of 2002. These financial statements do not give effect to any adjustments, which may be necessary shouldinterim fluid management bond. Furthermore, the Corporation has been requested to pledge collateral in order to provide this surety bond. The amount and the nature of the collateral will be unablesubject to continue as a going concern. 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA.negotiation. Although in the past the Corporation has been successful in arranging bonding, there can be no assurance that the Corporation will be successful in providing acceptable collateral and thus posting the surety bond. 2. SIGNIFICANT ACCOUNTING POLICIES (a) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The consolidated financial statements of the Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in Canada. TheseFor the purposes of these financial statements these principles differconform, in certainall material respects, from thosewith generally accepted accounting principles generally accepted in the United States. The differences areStates, except as described in note 12.Note 19. 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Vista Goldthe Corporation and its subsidiaries. Vista Gold'sAll material intercompany transactions and balances have been eliminated. The Corporation's subsidiaries and its percentage ownership in these entities as of December 31, 20002002 are:
OWNERSHIP --------- Vista Gold Holdings Inc. and its wholly-owned subsidiaries.............................................. 100% Hycroft Resources & Development, Inc. and its wholly-owned subsidiary Hycroft Lewis Mine, Inc. Mineral Ridge Resources Inc.(1) Vista Gold U.S. Inc. Vista Nevada Corp......................................... 100% Granges Inc. (previously called Granges (Canada) Inc.)...... 100% Minera Paredones Amarillos S.A. de C.V...................... 100% Vista Gold (Antigua) Corp. and its wholly-owned subsidiary................................................ 100% Compania Inversora Vista S.A. and its wholly-owned subsidiary................................................ 100% Compania Inversorasubsidiaries Minera Nueva Vista S.A. and its wholly-owned subsidiaries Minera Nueva Vista S.A. Compania Exploradora Vistex S.A. The Corporation sold its wholly owned subsidiary Sociedad Industrial Yamin Limitada (Yamin) on February 7, 2000.
- ------------------------ (1) In 1999, Mineral Ridge Resources Inc. voluntarily filed for protection under the U.S. Bankruptcy Code. Accordingly, effective 1999 the Corporation ceased consolidating the investment in Mineral Ridge Resources Inc. (c) USE OF ESTIMATES The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Significant areas requiring the use of estimates include mine closure and reclamation obligations, useful lives for asset depreciation purposes, and impairment of mineral properties. Actual results could differ from those reported.these estimates. (d) FOREIGN CURRENCY TRANSLATION Sales revenuesThe Corporation has restated the financial statements and atransferred an amount of $1.485 million from the currency translation adjustment (CTA) account to deficit. This amount represents the cumulative exchange gains and losses arising on the translation of the assets and liabilities of the Corporation's Canadian self-sustaining operations. The Corporation has determined that it had liquidated substantially all of the assets held within Canadian entities prior to the periods presented in these financial statements. The Corporation believes that this adjustment is not material as it has no impact on net income or cash flows for any of the periods presented. A significant portion of the Corporation's expenses, and while in production, revenue from gold sales, are denominated in U.S. dollars. The focus of the Corporation is increasingly on international operating activities and the Corporation's executive office is located in Littleton, Colorado. The U.S. dollar is the principal currency of the Corporation's business. Accordingly, theall amounts in these consolidated financial statements of the Corporation are expressed in U.S. dollars. 41dollars, unless otherwise stated. 34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA.AS OTHERWISE STATED. 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The accounts of self-sustaining foreign operations are translated using the current rate method. Under this method, assets and liabilities are translated at the rate of exchange on the balance sheet date, and revenue and expenses at the average rate of exchange during the period. Exchange gains and losses are deferred and shown as a currency translation adjustment in shareholders' equity until transferred to earnings when the net investment in the foreign operation is reduced or settled. Foreign currency denominatedThe accounts of integrated foreign operations are translated using the temporal method. Under this method, monetary items of the Corporation, excluding its foreign operations,assets and liabilities are translated at the year-end rate of exchange, rate. Exchangenon-monetary assets and liabilities are translated at the rates prevailing at the respective transaction dates, and revenue and expenses, except for depreciation, are translated at the average rate of exchange during the year. Translation gains and losses on these items are recognized in earningsreflected in the year they arise.loss for the year. (e) REVENUE RECOGNITION Since ceasingGold production has gradually declined since mining operationsactivities were suspended at the Hycroft mine in 1998. Effective at the beginning of fiscal 2002, gold production is considered incidental to the activities at the Hycroft mine, and reporting the associated sales proceeds as revenue is no longer warranted. Accordingly, proceeds from gold sales, are netted against costs. In 2001 and 2000, the Corporation recognizesrecognized revenue upon adsorption of gold onto carbon. (f) MINERAL EXPLORATION Exploration expenditures on mineral properties are expensed when incurred. Holding costs to maintain a property on a stand-by basis are charged to expense as incurred. (g) CASH EQUIVALENTS Cash equivalents are represented by investments in short-term investment funds consisting of highly liquid debt instruments such as certificates of deposit, commercial paper, and money market accounts purchased with an originalinitial maturity date of less than three months. The Corporation's policy is to invest cash in conservative, highly rated instruments and limit the amount of credit exposure to any one institution. (h) MARKETABLE SECURITIES Marketable securities are carried at the lower of cost(g) INVENTORIES Materials and market value. (i) INVENTORIES Gold inventory is valued at the lower of average cost and net realizable value. The direct cash costs associated with ore placed in stockpiles and on leach pads are inventoried and charged to operations as the contained gold is recovered. Based upon actual metal recoveries, ore grades and operating plans, management continuously evaluates and refines estimates in determining the carrying values of costs associated with gold inventories. Although all gold estimated to be recoverable from the leach pads had been recovered, as of December 31, 2000, the leach pads continue to produce gold. Gold production from the leach pads is expected to continue throughout the year 2001. Supplysupplies inventories are valued at the lower of average cost and net replacement value. (j) PROPERTY, PLANT AND EQUIPMENTThe Corporation recovered more gold than anticipated from the heap leach pads at the Hycroft mine; accordingly heap leach pad inventory has been fully recognized in prior years. (h) MARKETABLE SECURITIES Marketable securities are stated at the lower of cost or fair value, with unrealized losses included in net loss. (i) DevelopedMINERAL PROPERTIES Acquisition cost and exploration and development expenditures incurred on non-producing mineral properties Property acquisitionidentified as having development potential, are deferred until the viability of the property is determined. Option payments received are treated as a recovery of mineral property costs. Option payments are at the discretion of the optionee and development costsaccordingly are carried at cost less accumulated amortization and write-downs. Amortizationaccounted for on a cash basis or when receipt is provided on the units-of-production method based on proven and 42reasonably assured. 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA.AS OTHERWISE STATED. 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) probable reserves. Holding costs to maintain a property on a stand-bycare and maintenance basis are charged to expenseexpensed as incurred. Management reviews the carrying value of the Corporation's interest in each property quarterlyquarterly. Where information and where necessary,conditions suggest impairment, these properties are written down to their estimatednet recoverable amount, determinedbased on an undiscounted basis.estimated future cash flows. Management's estimates of gold price, recoverable proven and probable reserves, operating, capital and reclamation costs are subject to risks and uncertainties affecting the recoverability of the Corporation's investment in property, plant and equipment. Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur in the near term that could adversely affect management's estimate of net cash flows expected to be generated from its operating properties and the need for possible asset impairment write-downs. (ii) PlantWhere estimates of future net cash flows are not available and equipmentwhere other conditions suggest impairment, management assesses if carrying value can be recovered. Property acquisition and development costs are carried at cost less accumulated amortization and write-downs. Amortization during production is provided on the units-of-production method based on proven and probable reserves. (j) PLANT AND EQUIPMENT Plant and equipment are recorded at cost and depreciated using the units-of-production method or the straight-line method over their estimated useful lives. The cost of normal maintenance and repairs is charged to expense as incurred. Significant expenditures, which increase the life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. Upon sale or retirement of assets, the costs and related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gains or losses are reflected in operations. (k) PROVISION FOR FUTURE RECLAMATION AND CLOSURE COSTS AllMinimum standards for mine site reclamation and closure have been established by various government agencies that affect certain operations of the Corporation's operations are subject to reclamation, site restoration and closure requirements. Costs related to ongoing site restoration programs are expensed when incurred. A provision for mine closure and site restoration costs is charged to earnings over the lives of the mines on a units-of-production basis.Corporation. The Corporation calculates its estimates of the ultimate reclamation liability based on current laws and regulations and the expected future costs to be incurred in reclaiming, restoring and closing its operating mine sites. It is possible that the Corporation's estimate of its ultimate reclamation, site restoration and closure liability could change in the near term due to possible changes in laws and regulations and changes in cost estimates. (l) ESTIMATES OF PROVEN AND PROBABLE RESERVES Management's calculation of provenDuring mine production, a provision for reclamation and probable reservesmine closure is based upon engineering and geological estimates and financial estimates including gold prices and operating costs. The Corporation depreciates some of its assets and accrues for reclamationcharged to earnings over the mine life on a units-of-production basis over proven and probable reserves. Changes in geological interpretations of the Corporation's ore bodies and changes in gold prices and operating costs may change the Corporation's estimate of proven and probable reserves. It is possible that the Corporation's estimate of proven and probable reserves could change in the near term and could result in revised charges for depreciation and reclamation in future reporting periods. 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) HEDGING The Corporation may from time to time protect against falling gold prices through forward sales of future production. Revenue from these forward sales is recognized when the gold is due to be delivered. At December 31, 2000, the Corporation had no forward sales commitments. (n)basis. (l) LOSS PER SHARE Loss per share is calculated by dividing the loss for the year by the weighted average number of common shares outstanding during the year. FullyBasic and diluted losslosses per share is not disclosed asare the same because inclusion of common share equivalents would be anti-dilutive. (o) FINANCIAL INSTRUMENTS The recorded value of the Corporation's cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to the relatively short periods to maturity. The fair value of long term-debt is disclosed in Note 4. (p) STOCK BASED COMPENSATION The Corporation has a stock-based compensation plan, which is described in note 6. No compensation expense is recognized for the plan when stock or stock options are issued to employees. Any consideration paid by employees on the exercise of stock options or the purchase of stock is credited to share capital. 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is comprised of the following:
2000 1999 ----------------------------------- ----------------------------------- ACCUMULATED ACCUMULATED DEPRECIATION, DEPRECIATION, AMORTIZATION AMORTIZATION AND AND COST WRITE-DOWNS NET COST WRITE-DOWNS NET -------- ------------- -------- -------- ------------- -------- Hycroft mine................... $ 60,953 $ 55,974 $ 4,979 $ 63,083 $56,418 $ 6,665 Bolivian mineral properties.... 58,029 47,260 10,769 60,561 39,307 21,254 Corporate assets............... 467 303 164 482 277 205 -------- -------- ------- -------- ------- ------- $119,449 $103,537 $15,912 $124,126 $96,002 $28,124 ======== ======== ======= ======== ======= =======
WRITE-DOWN OF MINERAL PROPERTIES Management regularly performs property evaluations to assess the recoverability of the carrying value of its mining properties and investments and other long-lived assets. In 2000, the Corporation based its evaluation of the recoverability of the carrying value of its mining properties upon a gold price of U.S. $300 per ounce (1999 U.S. $325 per ounce). 4436 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA.AS OTHERWISE STATED. 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) STOCK-BASED COMPENSATION The Corporation has a stock-based compensation plan, which is described in Note 10. On January 1, 2002, the Corporation adopted the new recommendations of the Canadian Institute of Chartered Accountants, CICA 3870, for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services. As permitted under the recommendations, the Corporation has elected not to follow the fair value method of accounting for stock options granted to directors and employees, and follows the intrinsic value method. Any consideration paid by directors, employees and non-employees on the exercise of stock options or the purchase of stock is credited to capital stock. Stock-based compensation on options granted to non-employees is recorded as an expense at the earlier of completion of performance or vesting of the options granted, based upon the estimated fair value on the grant date. (n) WARRANTS Warrants issued as consideration for mineral properties are recorded at fair value. The value of equity units, consisting of common shares and warrants, issued in a cash financing is assumed to be substantially attributable to the value of the common shares; no portion of the amount paid is assigned to the warrants. 3. PROPERTY, PLANT AND EQUIPMENTMINERAL PROPERTIES
DECEMBER 31, 2002 DECEMBER 31, 2001 ---------------------------------- ---------------------------------- ACCUMULATED ACCUMULATED AMORTIZATION AMORTIZATION AND AND COST WRITE-DOWNS NET COST WRITE-DOWNS NET -------- ------------ -------- -------- ------------ -------- ($ 000'S) MINERAL PROPERTIES Maverick Springs, United States......................... $ 1,521 $ -- $ 1,521 $ -- $ -- $ -- Mountain View, United States..... 303 -- 303 -- -- -- Long Valley, United States....... 48 -- 48 -- -- -- Hycroft mine, United States...... 21,917 21,917 -- 21,917 21,917 -- Paredones Amarillos, Mexico...... 2,317 -- 2,317 -- -- -- Amayapampa, Bolivia.............. 57,624 46,894 10,730 57,624 46,894 10,730 ------- ------- ------- ------- ------- ------- $83,730 $68,811 $14,919 $79,541 $68,811 $10,730 ------- ------- ------- ------- ------- -------
37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) These evaluations indicated thatTHE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 3. MINERAL PROPERTIES (CONTINUED)
2001 2002 ------------ ---------------------------------------- DECEMBER 31, ACQUISITION EXPLORATION DECEMBER 31, NET COSTS COSTS NET ------------ ----------- ----------- ------------ ($ 000'S) Maverick Springs, United States................ $ -- $1,332 $189 $ 1,521 Mountain View, United States................... -- 303 -- 303 Long Valley, United States..................... -- 48 -- 48 Hycroft mine, United States.................... -- -- -- -- Paredones Amarillos, Mexico.................... -- 2,317 -- 2,317 Amayapampa, Bolivia............................ 10,730 -- -- 10,730 ------- ------ ---- ------- $10,730 $4,000 $189 $14,919 ======= ====== ==== =======
The recoverability of the carrying values of the followingCorporation's mineral properties wereis dependent upon the successful start-up and commercial production from or sale of these properties. Further development and/or start-up of any of these projects will depend, among other things, on management's ability to raise additional capital for these purposes. Although the Corporation has been successful in excessraising such capital in the past, there can be no assurance that it will be able to do so in the future. MAVERICK SPRINGS The Maverick Springs gold and silver project, southeast of their estimated net recoverable amountsElko, Nevada, was acquired on October 7, 2002 from Newmont USA Limited (Newmont). The total cost for the Maverick Springs project included cash payments of $250,000; the issuance of 141,243 equity units, each unit comprised of one common share and accordingly were written down by $10.9 milliona two year warrant, valued at $500,000 (Notes 8 and 9); and the issuance of $500,000 in 2000 and by $16.2 millioncommon shares in 1999 as follows:
2000 1999 1998 -------- -------- -------- Bolivian mineral properties................................. $10,607 $13,248 -- Hycroft mine equipment...................................... 319 -- -- Zamora accounts receivable.................................. -- 111 -- Mineral Ridge mine net assets............................... -- $ 2,860 $ -- ------- ------- ------- $10,926 $16,219 $ -- ======= ======= =======
DISPOSAL OF ASSETS During 2000, Hycroft mining equipmentOctober 2003, together with an originalequivalent number of two year warrants which will be valued as an additional cost at the time of $2.1 millionissue (Note 6). The Corporation is committed to completing 20,000 feet of drilling on this project before October 7, 2004 and an additional 30,000 feet of drilling before October 7, 2006. Newmont retains a 1.5% net smelter returns royalty or the right to acquire 51% of the project after four years by paying the Corporation cash equaling 200% of the aggregate expenditures made by the Corporation on the project. Maverick Springs is subject to a lease agreement with the underlying leaseholder, Artemis Exploration Company, which includes payments of advanced minimum royalties of $50,000 on October 1, 2003 and $100,000 on October 1, 2004 and each year thereafter while the agreement is in effect and a net book valuesmelter returns royalty based on a sliding scale ranging from 2% to 6%, depending on gold and silver prices at the time of $0.5 million, was sold for $0.5 million. During 2000,production. In November, 2002, the Corporation disposedgranted to Silver Standard Resources Inc., subject to the terms of its Bolivian subsidiary Yaminthe Newmont agreement, an option to acquire the silver resources hosted in the Maverick Springs project in exchange for aggregate future cash payments on $1.5 million (Note 20). MOUNTAIN VIEW The Mountain View gold project, located west of the Hycroft mine, was acquired on October 7, 2002 from Newmont Capital Limited (NCL). The total cost for the Mountain View project included cash payments of $50,000, the issuance of 56,497 equity units, each unit comprised of one common share and realized a gaintwo year 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 3. MINERAL PROPERTIES (CONTINUED) warrant, valued at $200,000 (Notes 8 & 9). The Corporation is committed to completing 4,000 feet of drilling on disposalthis project before October 7, 2003 and an additional 4,000 feet of $0.1 million. ROYALTIESdrilling before October 7, 2004. NCL retains a 1.5% net smelter returns royalty or the right to acquire 51% of the project after four years by paying the Corporation cash equaling 200% of the aggregate expenditures made by the Corporation on the project. LONG VALLEY The Corporation has a letter agreement with Standard Industrial Minerals, Inc. (Standard), to acquire Standard's 100% interest in the Long Valley gold project in east central California, for an aggregate purchase price of $750,000 which would be made over a five-year period, with annual payments to be due as follows: $100,000 due on each of January 15, 2003, 2004, and 2005; $200,000 due on January 15, 2006, and $250,000 due on January 15, 2007 (Note 21). The Corporation retains the right to terminate the agreement at any time. HYCROFT MINE The Corporation acquired the Hycroft gold mine, west of Winnemucca, Nevada, in 1987. Mining activities at the Hycroft mine were suspended in 1998. The mine is being held on care and maintenance pending a sustained improvement in gold prices. Holding costs are expensed. The Crofoot property at the Hycroft mine is subject to a 4% net profit royalty. During 2000royalty and 1999, there was no mining activity and as a result the Corporation did not pay any Crofoot royalties. In 1998, the Corporation paid royalty payments of $240,000 per year. The Lewis property at the Hycroft mine is subject to a 5% net smelter royalty. During 2000, only nominal minimum royalties were requiredPAREDONES AMARILLOS The Corporation acquired the Paredones Amarillos gold project in relationMexico from Viceroy Resource Corporation on August 29, 2002 (Note 20). The total cost of this project included cash payments of $786,000 for acquisition and related costs, the issuance of 303,030 equity units with a fair value of $1,211,000 (Notes 8 and 9) and a future cash payment of $320,000 due August 29, 2003. The Paredones Amarillos project is subject to this property. During 1999a 2% net profits interest retained by a former owner. AMAYAPAMPA The Corporation acquired the Amayapampa gold project, in Bolivia, in 1996. The project is being held on care and 1998 royalties paid were $123,000 and $344,000 respectively.maintenance pending a sustained improvement in gold prices. Holding costs are expensed. 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 4. LONG TERM DEBT During 2000,PLANT AND EQUIPMENT
DECEMBER 31, 2002 DECEMBER 31, 2001 ---------------------------------- ---------------------------------- ACCUMULATED ACCUMULATED DEPRECIATION DEPRECIATION AND AND COST WRITE-DOWNS NET COST WRITE-DOWNS NET -------- ------------ -------- -------- ------------ -------- ($ 000'S) Hycroft mine, United States...... $11,982 $10,318 $ 1,664 $13,275 $11,394 $ 1,881 Corporate, United States......... 331 331 -- 467 344 123 ------- ------- ------- ------- ------- ------- $12,313 $10,649 $ 1,664 $13,742 $11,738 $ 2,004 ------- ------- ------- ------- ------- -------
5. CURRENT LIABILITIES
DECEMBER 31, ------------------- 2002 2001 -------- -------- ($ 000'S) USF&G settlement............................................ $ -- $ 814 Trade payables and other accruals........................... 598 540 ---- ------ $598 $1,354 ==== ======
On April 23, 2002, the Corporation repaid $0.6 million undersettled the USF&G lawsuit, for which it had previously provided approximately $814,000. 6. PAYABLES TO BE SETTLED WITH EQUITY Pursuant to the terms of the acquisition agreement with respect to the Maverick Springs project, in October, 2003 the Corporation will issue common shares with an approximate market value of $500,000, together an equivalent number of two year warrants. The warrants will be valued at the time of issue. (Note 3). Pursuant to an agreement with Endeavour Financial Corporation Inc., Endeavour is to provide financial advisory services to the Corporation for a $1.3 million term loan,monthly fee of $10,000, which was collateralizedis payable by certain mobile assetsthe issuance to Endeavour of a convertible promissory note, which is automatically converted into common shares of the Hycroft mine. The loan bears 10.61% interest and is repayable in monthly installmentsCorporation (Note 8). As of $49,000 terminating April 2002. In January 2001,December 31, 2002, payment for the loan was repaid from the proceedsmonth of the sale of mining equipment and has thereforeDecember had not been classified as short term (Note 13). The Corporation also has a $75,000 term note, bearing 4.5% interest, which is due October 31, 2001. 5.made. 7. ACCRUED RECLAMATION AND CLOSURE COSTS AtThe Corporation's aggregate obligation accrued to December 31, 2000,2002, net of the Corporation's futureactual cost of reclamation activities performed to December 31, 2002, is $4.1 million (2001: $3.1 million). Substantially all of this estimate relates to final reclamation and mine closure costs areof the Hycroft mine. Consistent with Bureau of Land Management, Nevada State Office mandated procedures, in 2002 the Corporation commissioned a third-party comprehensive review of the estimated to be $3.1 million, $2.9 million of which comprises environmental reclamation costs at the Hycroft mine. The remainder comprises mainly severancemine and other mine closure costs.increased the obligation accrued by $1.0 million (Note 13). Estimated reclamation and mine closure costs are determined using management's best estimates of the scope and the cost of required activities. These estimates mayare subject to change, based on future changes in operations, regulatory requirements or costs to complete the reclamation activity. Reclamation and closure costs are charged to earnings over the life of the mine on a units-of-production basis. The aggregate 45Estimated reclamation 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 5.AS OTHERWISE STATED. 7. ACCRUED RECLAMATION AND CLOSURE COSTS (CONTINUED) obligation accruedand closure costs had been charged to December 31, 2000, netearnings over the life of the actual cost of reclamation activities performedmine on a units-of-production basis; after mining was suspended in 1998, adjustments to December 31, 2000, is $3.3 million (1999: $4.4 million). 6.the estimate have been reflected in net loss. 8. CAPITAL STOCK Common Shares issued and outstanding:COMMON SHARES ISSUED AND OUTSTANDING
NUMBER OF CAPITAL STOCK SHARES AMOUNT ---------------- -----------ISSUED ($ 000'S) ------------- ------------- AtAs of December 31, 2001, 2000 and 1999 (Restated)........... 4,535,752 $121,146 Private placement February-March 2002, net.................. 3,999,986 3,593 Warrants exercised from February-March 2002 private placement................................................. 679,736 1,020 Private placement December 2002, net........................ 1,000,000 2,235 Shares issued for acquisition of gold properties, net....... 500,770 1,527 Shares issued for services, net............................. 10,869 20 Exercise of stock options................................... 17,500 34 ---------- -------- Issued in 2002............................................ 6,208,861 $ 8,429 ---------- -------- As of December 31, 2002..................................... 10,744,613 $129,575 ========== ========
On June 19, 2002, the Corporation effected a 1-for-20 consolidation of its common shares. The number of common shares outstanding, on a pre-consolidation basis, at December 31, 2001, of 90,715,040 has been restated as 4,535,752 shares, giving effect to the consolidation. All references in this document to common shares, loss per share and value per share or value per unit, are on a post-consolidation basis, unless otherwise indicated. PRIVATE PLACEMENT FEBRUARY-MARCH 2002, NET The Corporation effected a two-step private placement financing in February and March 2002. In the first step of the private placement, completed in February, the Corporation issued 1,000,000 units at a price of $1.026 per unit for an aggregate purchase price of $1,026,000. Each unit consisted of one common share and one share purchase warrant (Note 9) exercisable for one additional common share at $1.50, until February 1, 2007. The Corporation also issued 80,000 units to an agent as consideration for its services in connection with the unit offering. In the second step of the private placement, completed in March, the Corporation issued $2,774,000 aggregate principal amount of convertible debentures. The debentures were convertible into debenture units at a price of $1.026 per debenture unit, each consisting of one common share and one 5-year warrant entitling the holder to purchase one common share at a price of $1.50 until March 18, 2007, with the common share component representing substantially all of the unit value. The Corporation issued to an agent special warrants exercisable for 216,296 units, with each unit consisting of one common share and one warrant with the same terms as the share and warrant components, respectively, of the debenture units. The Corporation incurred approximately $207,000 in direct costs connected with both steps of this private placement. On September 19, 2002, a Registration Statement on Form S-3 filed under the Securities Act of 1933 for the registration for resale of 7,999,974 common shares (including shares already issued as well as shares to be issued, all in connection with the private placement), was declared effective by the SEC. As a result of 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 8. CAPITAL STOCK (CONTINUED) this registration statement becoming effective, the Corporation's $2,774,000 convertible debentures issued in the second step of the private placement were automatically converted, pursuant to their terms, into 2,703,690 common shares and the same number of debenture warrants. The registration included 3,999,986 shares issuable upon the exercise of warrants (Note 9), including the warrants issued in the first step of the private placement and the debenture warrants, having the respective expiration dates as noted in the preceding paragraph. WARRANTS EXERCISED FROM FEBRUARY-MARCH 2002 PRIVATE PLACEMENT As of December 31, 2002, 679,736 of the warrants issued in the Private placement February-March 2002 have been exercised, for an aggregate purchase price of $1,019,604 (Note 9). PRIVATE PLACEMENT DECEMBER 2002, NET On December 27, 2002, the Corporation completed a private placement financing in which the Corporation issued 1,000,000 equity units at a price of $2.35 per unit, for an aggregate purchase price of $2,350,000. Each equity unit consisted of one common share and one warrant (Note 9), exercisable over a two-year period from the issuance date, to purchase one common share for $3.04 during the first year and $3.45 during the second year. As of December 31, 2002, none of these warrants have been exercised. The Corporation incurred approximately $115,000 in direct costs connected with this private placement. SHARES ISSUED FOR ACQUISITION OF GOLD PROPERTIES, NET On August 29, 2002, the Corporation issued 303,030 equity units priced at Cdn $4.95 (approximately U.S.$3.17) with each unit comprised of one common share and one two-year warrant to purchase one common share at a price of Cdn $6.88 (approximately U.S.$4.40), as partial consideration for the acquisition of the Paredones Amarillos gold project (Note 3 and 20). The fair value of the equity units was Cdn $1.9 million (approximately U.S. $1.2), with Cdn $1.5 million (approximately U.S. $962,000) attributed to common shares and Cdn $390,000 (approximately U.S. $250,000) attributed to warrants (Note 9). As of December 31, 2002, none of these warrants have been exercised. The Corporation incurred approximately $18,000 in direct costs connected with the issuance of these shares. On October 7, 2002, the Corporation issued 197,740 equity units priced at $3.54 with each unit including one common share and one two-year warrant to purchase one common share at a price of $4.43, as partial consideration for the acquisition of the Maverick Springs and Mountain View gold projects (Note 3). The fair value of the equity units was $700,000, with $605,000 attributed to common shares and $95,000 attributed to warrants (Note 9). As of December 31, 2002, none of these warrants have been exercised. The Corporation incurred approximately $22,000 in direct costs connected with the issuance of these units. SHARES ISSUED FOR SERVICES, NET Pursuant to an agreement with Endeavour Financial Corporation Inc. (Endeavour). Endeavour is to provide financial advisory services to the Corporation for a monthly fee of $10,000. The monthly fee is payable by the issuance to Endeavour of a non-transferable convertible promissory note, which is automatically converted into common shares of the Corporation at a price per share equal to the weighted average closing price of the shares on the American Stock Exchange on the last 10 trading days of the month prior to the business day on which the fee becomes due. As of December 31, 2002, the Corporation 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 8. CAPITAL STOCK (CONTINUED) had issued 10,869 common shares valued at $35,000 to Endeavour under the terms of this agreement. The Corporation incurred approximately $15,000 in direct costs connected with the issuance of shares under this agreement. 9. WARRANTS Further to Note 8, warrants granted and outstanding in 2002 are summarized in the following table.
WEIGHTED AVERAGE WEIGHTED EXERCISE AVERAGE WARRANTS VALUATION WARRANTS WARRANTS PRICE REMAINING GRANTED(1) (000'S) EXERCISED OUTSTANDING (U.S. $) EXPIRY DATE LIFE (YRS) ---------- --------- --------- ----------- --------- ----------- ---------- As of December 31, 2001, 2000 and 1998......................... 90,715,040 $121,1461999................. -- $ -- -- -- $ -- -- -- Private placement February-March 2002................. 3,999,986 -- (679,736) 3,320,250 1.50 Feb-Mar 07 4.2 Private placement December 2002........ 1,000,000 -- -- 1,000,000 3.04(2) Dec-04 1.9 Acquisition of Paredones Amarillos............ 303,030 250 -- 303,030 4.40 Aug-04 1.7 Acquisition of Maverick Springs & Mtn. View................. 197,740 95 -- 197,740 4.43 Oct-04 1.8 --------- ---- -------- --------- ----- Total 2002........... 5,500,756 345 (679,736) 4,821,020 2.12 --------- ---- -------- --------- ----- As of December 31, 2002................. 5,500,756 $345 (679,736) 4,821,020 $2.12 ========= ==== ======== ========= =====
(1) Each warrant entitles the holder to purchase one common share (2) The exercise price increases to $3.45 in December 2003 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 10. OPTIONS TO PURCHASE SHARES COMMON SHARE OPTIONS ISSUED TO NON-EMPLOYEES Under the Corporation's Stock Option Plan, 20,000 fully vested stock options were granted to non-employee consultants of the Corporation in December 2002 and have been recorded at estimated fair value of $24,602 using the Black-Scholes option pricing model. COMMON SHARE OPTIONS Under the Vista Gold'sCorporation's Stock Option Plan (the "Plan")Plan), Vista Goldthe Corporation may grant options to directors, officers, employees and employeesconsultants of the Corporation or its subsidiaries, for up to 4,500,000 Common Shares.225,000 common shares. In addition, in January 2003, the Board of Directors approved, subject to regulatory and shareholder approvals, an increase to the Plan of 775,000 options. Under the Plan, the exercise price of each option shall not be less than the market price of the Corporation's stock on the date preceding the date of grant, and an option's maximum term is 10 years or such other shorter term as stipulated in a stock option agreement between the Corporation and the optionee. Options and vesting periods under the Plan are granted from time to time at the discretion of the Board of Directors. Options granted under the proposed 775,000 option increase may not be exercised until after regulatory and shareholder approvals have been acquired. At December 31, 2000, 1,758,333 Common Shares2002, 662,000 common shares were reserved for issuance under options granted to directors, officers, employees and management employees.non-employees. These options expire as follows:
YEAR OF EXPIRATION NUMBER OF OPTIONS2005 2006 2007 2008 2009 2010 2011 2012 TOTAL - ------------------ ------------------------- -------- -------- -------- -------- -------- -------- -------- -------- 2001... Number of Options....... 3,750 8,571 614,679 2,500 5,000 10,000 2004... 5,715 2005... 302,143 2006... 419,761 2007... 460,714 2008... 185,000 2009... 100,000 2010... 275,000 --------- Total.. 1,758,33312,500 5,000 662,000
The following tables summarize information about stock options under the Plan:
2002 2001 2000 1999 1998 ------------------------- ------------------------- ------------------------- WEIGHTED- WEIGHTED- WEIGHTED-WEIGHTED WEIGHTED WEIGHTED NUMBER OF AVERAGE PRICE NUMBER OF AVERAGE PRICE NUMBER OF AVERAGE SHARES EXERCISE PRICE SHARES EXERCISE PRICE(CDN $) SHARES EXERCISE PRICE (000)'S (CDN.$) (000)'S (CDN.$) (000)'S (CDN.$) -------- -------------- -------- -------------- -------- --------------(CDN $) SHARES (CDN $) --------- ------------- --------- ------------- --------- ------------- RESTATED--NOTE 8 RESTATED--NOTE 8 Outstanding--beginning of year... 2,308 $0.237 2,270 $1.630 2,937 $1.61 Cancelled........................year.................. 75,000 $3.63 87,900 $4.24 115,400 $4.74 Granted.................... 649,500 4.37 21,250 2.40 13,750 1.40 Exercised.................. (17,500) 3.07 -- -- (2,270) 1.630 -- -- Granted.......................... 275 0.07 2,500 0.237 125 0.20 Forfeited........................ (825) 0.235 (192) 0.235 (792) 1.43Expired.................... -- -- -- -- (4,285) 4.70 Forfeited.................. (45,000) 4.37 (34,150) 4.44 (36,965) 4.70 ------- ----- ------ ------ ------------- ----- ------- ----- Outstanding--end of year......... 1,758 $0.212 2,308 $0.237 2,270 $1.63year... 662,000 $4.32 75,000 $3.63 87,900 $4.24 ------- ----- ------- ----- ------- ----- Exercisable................ 172,500 $4.19 75,000 $3.63 87,900 $4.24 ======= ===== ====== ====== ============= ===== ======= =====
44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 10. OPTIONS TO PURCHASE SHARES (CONTINUED)
OPTIONS OUTSTANDING OPTIONS EXERCISABLE - ------------------------------------------------- ------------------------------------------------- WEIGHTED WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE NUMBER REMAINING AVERAGE EXERCISE NUMBER REMAINING EXERCISE PRICE OUTSTANDING AT CONTRACT LIFE PRICE EXERCISABLE AT CONTRACT LIFE (CDN $) DEC. 31/02 (YEARS) (CDN$) DEC. 31/02 (YEARS) - ---------------- -------------- ------------- ---------------- -------------- ------------- $1.40 10,000 7.9 $1.40 10,000 7.9 2.40 7,500 8.8 2.40 7,500 8.8 2.40 5,000 8.4 2.40 5,000 8.4 2.80 5,000 9.2 2.80 5,000 9.2 4.37 574,500 4.5 4.37 85,000 4.5 4.70 35,000 4.2 4.70 35,000 4.2 5.00 5,000 6.2 5.00 5,000 6.2 5.19 20,000 4.9 5.19 20,000 4.9 ----- ------- ----- ------- $4.32 662,000 $4.19 172,500 ===== ======= ===== =======
Under the Corporation's Stock Option Plan, 10,000 stock options (200,000 on a pre-consolidation basis) were issued to directors of the Corporation in March 2002. In addition, subject to regulatory and shareholder approval, 619,500 stock options (all on a post-consolidation basis) were issued to directors, officers and employees in July 2002, half of which were vested immediately and half of which will vest in July 2003. Had compensation been recorded using the fair-value method for these stock option grants, the Corporation's loss and loss per share for Canadian GAAP would have been adjusted to the pro forma amounts indicated below:
YEAR ENDED DECEMBER 31, 2002 - ------------------------------------------------------------- Net loss--as reported (000's)...................... $(2,775) Net loss--pro forma (000's)........................ (3,261) Loss per share--as reported........................ $ (0.41) Loss per share--pro forma.......................... $ (0.48)
The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions used for the grants:
MARCH JULY DECEMBER OPTIONS OPTIONS OPTIONS(1) -------- -------- ---------- Expected volatility............................. 50.00% 50.00% 50.00% Risk-free interest rate......................... 3.50% 3.50% 3.50% Expected lives (years).......................... 5 3 3 Dividend yield.................................. 0% 0% 0%
(1) Options granted to non-employees 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 11. GOLD SALES AND PRODUCTION COSTS Gold production has gradually declined since mining activities were suspended at the Hycroft mine in 1998. Effective at the beginning of fiscal 2002, gold production is considered incidental to the activities at the Hycroft mine, and reporting the associated sales proceeds as revenue is no longer warranted. Accordingly, proceeds from gold sales of approximately $0.6 million, are netted against 'Exploration, property evaluation and holding costs.' Similarly, gold production costs, which approximately offset the proceeds from gold sales, are included in 'Exploration, property evaluation and holding costs.' 12. COST RECOVERIES RELATED TO USF&G LAWSUIT The Corporation received from Golden Phoenix Minerals, Inc. (GPMI), the current owner of the Mineral Ridge Mine, 628,931 common shares, valued at $220,000 at the time of receipt, in consideration for benefits GPMI received as a direct result of the Corporation's facilitation of the USF&G settlement (Note 5). In addition, the final settlement amount for the USF&G lawsuit was approximately $20,000 less than originally estimated and provided for. 13. COMMITMENTS AND CONTINGENCIES The Corporation has provided a surety bond in the amount of $5.1 million to ensure reclamation obligations under an approved reclamation plan at the Hycroft mine. The Bureau of Land Management, Nevada State Office has requested an additional bond of $443,279 for interim fluid management and it is probable that the State will request that the Corporation increase the total surety bond amount to an estimated $6.7 million, inclusive of the interim fluid management bond. Furthermore, the Corporation has been requested to pledge collateral in order to provide this surety bond. The amount and the nature of the collateral will be subject to negotiation. There can be no assurance that the Corporation will be successful in providing acceptable collateral and thus posting the surety bond. The $6.7 million surety bond estimate for the Hycroft mine includes scope of work and pricing estimates which assume execution of the reclamation work under the direction of the Bureau of Land Management. However, the Corporation assumes that it will complete this reclamation itself after mining has been completed and, based on this assumption, estimates that the work will be completed to mandated standards for a total cost of $4.1 million as accrued in these financial statements (Note 7). 14. FINANCIAL INSTRUMENTS The recorded value of the Corporation's cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities and other, approximate their fair values due to the relatively short periods to maturity. At December 31, 2002, the fair value of marketable securities is $135,000. 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 6. CAPITAL STOCK (CONTINUED)
OPTIONS OUTSTANDING - ------------------------------------------------------------------------------------------------------------ NUMBER WEIGHTED- WEIGHTED- NUMBER WEIGHTED- RANGE OF OUTSTANDING AT AVERAGE AVERAGE EXERCISABLE AT AVERAGE EXERCISE PRICES DEC. 31, 2000 REMAINING EXERCISE PRICE DEC. 31, 2000 EXERCISE PRICE (CDN.$) (000)'S CONTRACTUAL LIFE (CDN.$) (000)'S (CDN.$) - --------------------- -------------- ---------------- -------------- -------------- -------------- $0.07 275 10 years $ 0.07 275 $ .07 $0.235 - 0.25.. 1,483 6.5 years $0.238 1,382 $0.253 ----- ------ ----- ------ 1,758 $0.212 1,657 $0.223 ===== ====== ===== ======
7. COMMITMENTS AND CONTINGENCIES (a) On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed an action in the United States District Court against Vista Gold, Vista Gold Holdings, Inc., Stockscape.com Technologies, Inc., Cornucopia Resources, Inc., Red Mountain Resources, Inc. and Touchstone Resources, Inc. This action involves a General Contract of Indemnity in connection with the posting of a reclamation bond for mining activities by Mineral Ridge Inc. at Silver Peak, Nevada. In the action, USF&G seeks to compel all of the defendants to post additional collateral for the bond in the total amount of $793,583. Neither Vista Gold nor Vista Gold Holdings, Inc. was a party to the General Contract of Indemnity and both have denied any liability in connection therewith. In November 2000, the parties stipulated to an agreed upon discovery plan and scheduling order. The maximum potential exposure to the Corporation is the additional collateral requested in the amount of $793,583, together with the attorneys' fees and costs related to the defense of the action. Other defendants, if found to be jointly liable, could reduce the amount for which the Corporation has exposure. 8.AS OTHERWISE STATED. 15. SUPPLEMENTAL CASH FLOW DISCLOSURE AND MATERIAL NON-CASH TRANSACTIONS As of December 31, 2002 and 2001, all of the Corporation's cash was held in liquid bank deposits.
YEARS ENDED DECEMBER 31 ------------------------------ SUPPLEMENTAL CASH FLOW DISCLOSURE ($ 000'S) 2002 2001 2000 1999 1998- ------------------------------------------- -------- -------- -------- Cash paid (received) during the year for: Interest.................................................... $14 $21 $114 $1,146 $451 Income taxes................................................ -- -- (33) 196 --
47 NOTES
NON-CASH CONSIDERATION GIVEN DURING 2002 --------------------------------------------------------- FUTURE SETTLEMENT EQUITY EQUITY FUTURE CASH OF A MATERIAL NON-CASH TRANSACTIONS ($000'S) UNITS UNITS(1) PAYMENTS(2) LIABILITY TOTAL - --------------------------------------- -------- -------- ----------- ---------- -------- INVESTING ACTIVITIES: Paredones Amarillos.......................... $1,212 $ -- $320 $ -- $1,532 Maverick Springs............................. 500 500 -- -- 1,000 Mountain View................................ 200 -- -- -- 200 Asset disposal............................... -- -- -- (103) (103) ------ ---- ---- ----- ------ $1,912 $500 $320 $(103) $2,629 ====== ==== ==== ===== ======
(1) Included in PAYABLES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 9.BE SETTLED WITH EQUITY (2) Included in ACCRUED LIABILITIES AND OTHER There were no significant non-cash transactions during the year's ended December 31, 2001 and 2000. 16. INCOME TAXES (a) A reconciliation of the combined Canadian federal and provincial income taxes at statutory rates and the Corporation's effective income tax expenses (recovery) is as follows:
YEARS ENDED DECEMBER 31 ------------------------------ 2002 2001 2000 1999 1998 -------- -------- -------- Income taxes at statutory rates............................. $ (5,959) $(12,440) $ (661)$(1,141) $(1,412) $(5,959) Increase (decrease) in taxes from: Permanent differences..................................... 2 2 (149) (84) (125) U.S. Alternative Minimum Tax.............................. -- -- 141 Differences in foreign tax rates.......................... 198 270 2,214 1,592 (77) Prior year's losses of a subsidiary applied for tax purposes................................................ -- -- (1,685) Benefit of losses not recognized.......................... 941 1,140 3,894 10,932 2,548 Large Corporations Tax.................................... -- -- (33) -- 30 -------- -------- ------- $ (33)------- ------- $ -- $ 171 ======== ========-- $ (33) ======= ======= =======
The significant components of the Corporation's future tax assets are as follows:
2000 -------- Future income tax assets Excess tax value over carrying value of property, plant and equipment........................................... 9,649 Operating loss carryforward............................... 15,672 Accrued reclamation provision............................. 1,111 -------- 26,432 Valuation allowance for future tax assets................... (26,432) -------- Total....................................................... -- ========
The Corporation has incurred income tax losses in prior periods of $42.2 million, which may be carried forward and applied against future taxable income when earned. 4847 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 9.AS OTHERWISE STATED. 16. INCOME TAXES (CONTINUED) (b) Future income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the company's future tax assets as at December 31, are as follows:
DECEMBER 31 ------------------- FUTURE INCOME TAX ASSETS 2002 2001 - ------------------------ -------- -------- Excess tax value over carrying value of property, plant and equipment................................................. $ 9,152 $ 9,383 Operating and capital loss carryforwards.................... 15,606 15,859 Accrued reclamation provision............................... 1,404 1,057 -------- -------- 26,162 26,299 Valuation allowance for future tax assets................... (26,162) (26,299) -------- -------- Total....................................................... -- -- ======== ========
(c) The Corporation has available income tax losses of $43.8 million, which may be carried forward and applied against future taxable income when earned. The losses expire as follows:
CANADA UNITED STATES TOTAL -------- ------------- -------- 2001........................................................2003........................................................ $ 742409 $ 1,2955,418 $ 2,037 2002........................................................ 454 1,358 1,812 2003........................................................ 428 5,418 5,8465,827 2004........................................................ 1,7631,684 1,373 3,1363,057 2005........................................................ 7,9817,621 -- 7,9817,621 2006........................................................ 655625 -- 655625 2007........................................................ 495456 -- 495456 2008........................................................ --458 388 388846 2009........................................................ --911 11 11922 2010........................................................ -- 5,106 5,106 2011........................................................ -- 9,415 9,415 2019........................................................ -- 5,301 5,301 2020........................................................ -- 310 310 2021........................................................ -- 1,965 1,965 2022........................................................ -- 2,327 2,327 ------- ------- ------- $12,518 $29,665 $42,183$12,164 $31,614 $43,778 ======= ======= =======
10.17. RETIREMENT PLANS The Corporation sponsors a qualified tax-deferred savings plan in accordance with the provisions of Section 401(k) of the U.S. Internal Revenue Service code,Code, which is available to permanent U.S. employees. The Corporation makes contributions of up to 4% of eligible employees' salaries. The Corporation's contributions were as follows: 2002--$20,796; 2001--$28,764; and 2000--$56,000; 1999--$126,000; and 1998--$179,000. 4956,000. 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 11.AS OTHERWISE STATED. 18. SEGMENT INFORMATION The Corporation operates in theCorporation's core business is evaluating, acquiring, exploring and improving gold mining industry in the United States, and has exploration and potential development propertiesprojects. These activities are focused principally in the United States, CanadaNorth and LatinSouth America. Its major product and only identifiable segment is gold, andSubstantially all gold revenues and operatingrelated costs are derived in the United States.
2000 1999 1998 -------- -------- -------- Gold revenues U.S....................................................... $3,757 $19,496 $37,083 Operating (loss) profit(1) U.S....................................................... $ 330 $(5,779) $ 268
- ------------------------ (1) Includes goldThe Corporation reported no revenues less mining operations, depreciation, depletionin 2002; all 2001 and amortization, provision for reclamation2000 revenues were earned in the United States. Geographic segmentation of capital assets is provided in Notes 3 and closure costs, and operating leases.
2000 1999 1998 -------- -------- -------- Assets by geographic region Canada.................................................... $ 57 $ 406 $ 973 U.S....................................................... 6,321 11,329 44,594 Latin America............................................. 10,854 21,694 35,311 ------- ------- ------- $17,232 $33,429 $80,878 ======= ======= =======
12.4. 19. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The significant differences between generally accepted accounting principles ("GAAP")(GAAP) in Canada and in the United States, as they relate to these financial statements are as follows: (a) Under Canadian corporate law, the Corporation underwent a capital reduction in connection with the amalgamation of Granges and Hycroft whereby share capital and contributed surplus were reduced to eliminate the consolidated accumulated deficit of Granges as of December 31, 1994, after giving effect to the estimated costs of the amalgamation. Under U.S. corporate law, no such transaction is available and accordingly is not allowed under U.S. GAAP. (b) In 1999 and 2000 the carrying values of certain long-lived assets exceeded their respective undiscounted cash flows. Following Canadian GAAP, the carrying values were written down using the undiscounted cash flow method. Under U.S. GAAP, the carrying values were written down to their fair values using the discounted cash flow method, giving rise to a difference in the amounts written down. Amortization of the remaining carrying valueswhen properties are in subsequent periodsproduction, following Canadian GAAP, mustwould be reduced to reflect the difference in the amounts written down following U.S. GAAP. (c) Under U.S. GAAP, items such as foreign exchange gains and losses and unrealized gains and losses on marketable securities are required to be shown separately in the derivation of comprehensive income. (d) In 2000 and 2001 the Corporation recognized revenue upon adsorption of gold onto carbon. In accordance with U.S. GAAP, revenue is not recorded before title is passed. In 2002, proceeds from gold sales of $150,000 were recognized for U.S. GAAP and credited to 'Exploration, property evaluation and holding costs'. (e) Special warrants issued to the agent as compensation for its services in connection with the March 2002 Debenture Offering (Note 8) are valued and included as a financing cost of the related debentures. The conversion feature of the Debenture Offering (the Beneficial Conversion Feature) was in the money at the date of issue. The debentures were fully converted on September 19, 2002 (Note 8); accordingly the fair value of the Beneficial Conversion Feature is recognized as a charge to net loss and as an addition to contributed surplus. (f) As described in note 2(d), the Corporation has reclassified an amount of $1.485 million from accumulated other comprehensive loss to deficit. The Company believes that this adjustment is not material as it has no impact on net income or cash flows for any of the periods presented. (g) In accordance with U.S. GAAP, exploration, mineral property evaluation, holding costs, option payments and related acquisition costs for mineral properties acquired under an option agreement are expensed as incurred. When proven and probable reserves are determined for a property and a bankable feasibility study is completed, then subsequent exploration and 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 19. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED) development costs on the property would be capitalized. Total capitalized cost of such properties is measured periodically for recoverability of carrying value under SFAS No. 144. The significant differences in the consolidated statements of loss relative to U.S. GAAP were:
YEAR END DECEMBER 31 ------------------------------ (U.S. $ 000/S, EXCPET PER SHARE DATA) 2002 2001 2000 - ------------------------------------- -------- -------- -------- Net loss--Canadian GAAP..................................... $(2,775) $(3,275) $(13,209) Impairment of mineral properties (b)........................ -- -- (7,637) Amortization reduction (b).................................. -- -- 99 Unrealized loss on marketable securities (c)................ 85 -- -- Revenue recognition (d)..................................... -- 81 (172) Cumulative impact of adopting SAB 101 (d)................... -- -- (59) Exploration, property evaluation and holding costs (d,g).... (87) -- -- Financing costs (e)......................................... (222) -- -- Beneficial conversion feature (e)........................... (2,774) -- -- ------- ------- -------- Net loss--U.S. GAAP....................................... (5,773) (3,194) (20,978) Unrealized (loss) gain on marketable securities (c)......... (85) -- 144 ------- ------- -------- Comprehensive loss--U.S. GAAP............................. $(5,858) $(3,194) $(20,834) ======= ======= ======== Basic and diluted loss per share (restated--Note 8)--U.S. GAAP...................................................... $ (0.85) $ (0.70) $ (4.63)
The significant differences in the consolidated balance sheets as at December 31, 2002 and 2001 relative to U.S. GAAP were: CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 DECEMBER 31, 2001 ------------------------------- --------------------------------- PER CDN. CDN/U.S. PER U.S. PER CDN. CDN./U.S. PER U.S. (U.S. $ 000'S) GAAP ADJ. GAAP GAAP ADJ. GAAP - -------------- -------- -------- --------- --------- --------- --------- Current assets (d)............ $ 4,105 $ -- $ 4,105 $ 1,155 $ (150) $ 1,005 Property, plant and equipment (b,g)............. 16,583 (7,874) 8,709 12,734 (7,637) 5,097 -------- -------- --------- --------- -------- --------- Total assets................ $ 20,688 $ (7,874) $ 12,814 $ 13,889 $ (7,787) $ 6,102 ======== ======== ========= ========= ======== ========= Current liabilities........... 598 -- 598 1,354 -- 1,354 Long term liabilities......... 4,665 -- 4,665 3,134 -- 3,134 -------- -------- --------- --------- -------- --------- Total liabilities........... 5,263 -- 5,263 4,488 -- 4,488 Capital stock (a)............. 129,575 76,754 206,329 121,146 76,754 197,900 Special warrants (e).......... -- 222 222 -- -- -- Contributed surplus (a,c)..... -- 5,560 5,560 -- 2,786 2,786 Warrants and options.......... 370 -- 370 -- -- -- Other comprehensive loss (c)......................... -- (85) (85) -- -- -- Deficit (a,b,d,f,g)........... (114,520) (90,325) (204,845) (111,745) (87,327) (199,072) -------- -------- --------- --------- -------- --------- Total shareholders' equity.................... 15,425 (7,874) 7,551 9,401 (7,787) 1,614 -------- -------- --------- --------- -------- --------- Total liabilities & shareholders' equity........ $ 20,688 $ (7,874) $ 12,814 $ 13,889 $ (7,787) $ 6,102 ======== ======== ========= ========= ======== =========
50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED) (d) The Corporation recognizes revenue upon adsorption of gold onto carbon. US GAAP under SAB 101, the revenue recognition standard introduced effective January 1, 2000, requires that revenue not be recorded before title is passed. The significant differences in the consolidated statements of loss relative to U.S. GAAP were as follows:
YEAR ENDED DECEMBER 31 ------------------------------ 2000 1999 1998 -------- -------- -------- Loss for the year--Canadian GAAP............................ $(13,209) $(27,700) $(1,640) Impairment of mineral properties (b)........................ (7,637) 13,248 -- Amortization reduction (b).................................. 99 736 3,201 Revenue Recognition (d)..................................... (172) -- -- Cumulative impact of adopting SAB 101 (d)................... (59) -- -- -------- -------- ------- Earnings (loss) for the year before comprehensive income adjustments............................................... (20,978) (13,716) 1,561 Unrealised (gains) losses on marketable securities (c)...... 144 (21) (132) -------- -------- ------- Comprehensive income (loss)................................. $(20,834) $(13,737) $ 1,429 ======== ======== ======= Earnings (loss) per share before adoption of SAB 101........ $ (0.23) $ (0.15) $ (0.02) ======== ======== ======= Earnings (loss) per share before comprehensive income adjustments............................................... $ (0.23) $ (0.15) $ (0.02) ======== ======== =======
The significant differences in the balance sheets as at December 31, 2000 and 1999 relative to U.S. GAAP were:
2000 1999 --------------------------------- -------------------------------- PER CDN. CDN./U.S. PER U.S. PER CDN. CDN./U.S. PER U.S. GAAP ADJ. GAAP GAAP ADJ. GAAP --------- --------- --------- -------- --------- --------- Current assets................. $ 1,320 $ (231) $ 1,089 $ 5,283 $ -- $ 5,283 Property, plant and equipment (b).......................... 15,912 (7,637) 8,275 28,146 (99) (28,047) Common shares (a).............. 121,146 76,754 197,900 121,146 76,754 197,900 Contributed surplus (a)........ -- 2,786 2,786 -- 2,786 2,786 Deficit (a, b, d).............. (106,985) (87,408) (194,393) (93,776) (79,639) (173,415) Other comprehensive income..... -- -- -- -- (144) (144)
51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 12.AS OTHERWISE STATED. 19. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED) STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY UNDER U.S. GAAP
NUMBER OF CUMULATIVEWARRANTS AND OTHER COMMON SHARETOTAL CAPITAL SPECIAL CONTRIBUTED TRANSLATION COMPREHENSIVE SHARES CAPITALSHAREHOLDERS' (U.S. $ 000'S) STOCK WARRANTS OPTIONS SURPLUS ADJUSTMENT DEFICIT INCOME ----------LOSS EQUITY - -------------- -------- ----------- ------------------- -------- -------- --------- ------------- ------------- Balance at December 31, 1997..................... 89,152,540 197,624 2,786 (1,360) (161,260) 9 Shares issued on acquisition of Mineral Ridge Inc. (Notes 1 and 3)....................... 1,562,500 2761999.......... $197,900 $ -- $ -- $2,786 $(174,900) $ -- $25,786 Net Loss.............................. -- (20,978) -------- ---- ---- ------ --------- ---- ------- Balance at December 31, 2000.......... $197,900 $ -- $ -- $2,786 $(195,878) $ -- $ 4,808 Net Loss.............................. -- -- -- -- Currency translation adjustment...............(3,194) -- -------- ---- ---- ------ --------- ---- ------- Balance at December 31, 2001.......... $197,900 $ -- $ -- (180)$2,786 $(199,072) $ -- -- Comprehensive income (c)...$ 1,614 See Note 8............................ 8,429 -- -- -- -- -- (132) Earnings...................Special warrants (e).................. -- 222 -- -- -- -- 1,561Contributed surplus (e)............... -- ---------- -------- ------ ------- --------- ----- Balance at December 31, 1998..................... 90,715,040 197,900 2,786 (1,540) (159,699) (123) Currency translation adjustment...............-- 2,774 -- -- Warrants & options.................... -- -- 370 -- -- -- 59 -- -- Comprehensive income (c)...Other comprehensive loss (e).......... -- -- -- -- -- (21)(85) Net Loss...................Loss.............................. -- -- -- -- (13,716)(5,773) -- ---------- -------- ---- ---- ------ ------- --------- --------- ------- Balance at December 31, 1999..................... 90,715,040 197,900 2,786 (1,481) (173,415) (144) Currency translation adjustment............... -- -- -- (7) -- -- Comprehensive income (c)... -- -- -- -- -- 144 Net Loss................... -- -- -- -- (20,978) -- ---------- -------- ------ ------- --------- ----- Balance at December 31, 2000..................... 90,715,040 $197,900 $2,786 $(1,488) $(194,393)2002.......... $206,329 $222 $370 $5,560 $(204,845) $(85) $ 0 ==========7,551 ======== ==== ==== ====== ======= ========= ========= =======
STOCK BASED COMPENSATION PLANS The Corporation applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its plans in its U.S. GAAP presentations. If compensation cost for the Corporation's stock-based compensation plans had been determined based on the fair value at the grant dates for awards under the plans consistent with the method described in SFAS No. 123, the Corporation'sCorporation would have recorded compensation expense of $486,000, $20,000 and $15,000 in 2002, 2001 and 2000 respectively. Accordingly, the consolidated net loss and loss per share under U.S. GAAP would have been increased to the pro forma amounts indicated below:
(U.S. $ 000'S, EXCEPT PER SHARE DATA) 2002 2001 2000 1999 1998- ------------------------------------- -------- -------- -------- Net earnings (loss)loss under U.S. GAAP.................GAAP As reported $(5,773) $(3,194) $(20,978) $(13,716) $1,561 Pro forma (6,259) (3,214) (20,993) (14,077) 1,229 Loss per share under U.S. GAAP...................... As reported (0.23) (0.15) 0.02$ (0.85) $ (0.70) $ (4.63) Pro forma (0.23) (0.16) 0.02(0.93) (0.71) (4.63)
52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA. 12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED) The fair value of each option grant is estimated on the date of grant for all plans using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2000, 19992002, 2001 and 1998:2000:
2002 2001 2000 1999 1998----------- -------- -------------- --------- --------- Expected volatility.................................... 61.9% 61.9%volatility................... 50.0% 75.0% 61.9% Risk-free interest rate................................rate............... 3.5% 5.0% 5.09% to 5.74% 4.81% 5.46% Expected lives.........................................lives (years)................ 3 to 5 2 years 4.5 years 4.5 years2 Dividend yield.........................................yield........................ 0% 0% 0%
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In June 1998, theThe FASB has issued SFAS No. 133,143, "Accounting for Derivative InstrumentsAsset Retirement Obligations." This statement addresses financial accounting and Hedging Activities", which is effectivereporting for all fiscal years commencing after June 15, 2000. SFAS No. 133obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded eacha liability for an asset retirement obligation be recognized in the period in current earnings or other comprehensive income, depending on whetherwhich it is incurred if a derivative is designatedreasonable estimate of 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 19. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED) fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The corporation is analyzing the impact of SFAS No. 143 and expects that the impact on the Corporation's consolidated financial position or result of operations will not be material when the company adopts the standard on January 1, 2003. The CICA has approved, subject to written ballot, a hedge transactionnew Handbook section, "Asset Retirement Obligations," to replace the current guidance on future removal and if itsite restoration costs included in the CICA accounting standard 3061, "Property, Plant and Equipment." The standard, which is similar to SFAS 143, is effective for years beginning on or after January 1, 2004. The standard requires recognition of a liability at its fair value for the typeobligation associated with the retirement of hedge transaction. At December 31, 2000,a tangible long-lived asset. A corresponding asset retirement cost would be added to the carrying amount of the related asset and amortized to expense over the useful life of the asset. The company is analyzing the impact of this new standard, which will be adopted on January 1, 2003. The Accounting Standards Board of the Canadian Institute of Chartered Accountants (CICA) has issued CICA 3063 "Impairment of Long-Lived Assets". This statement establishes standards for the recognition, measurement and disclosure of the impairment of long-lived non-monetary assets, including property, plant and equipment, intangible assets with finite useful lives, deferred pre-operating costs and long-term prepaid assets. The corporation does not expect that the implementation of these guidelines will have a material impact on its consolidated financial position or results of operations. 20. RELATED PARTY TRANSACTIONS PAREDONES AMARILLOS In August 2002, the Corporation didacquired 100% of the shares of Minera Paredones Amarillos S.A. de C.V. from Viceroy Resource Corporation (Viceroy). The Corporation and Viceroy had a common director at the time of the transaction. The Corporation paid to Viceroy Cdn $1.0 million (approximately U.S. $641,000) at closing, together with 303,030 equity units priced at Cdn $4.95 (approximately U.S. $3.17), being 90% of the weighted average closing price of the Corporation's common shares on the five trading days immediately preceding the date of the definitive purchase agreement, with each unit comprised of one common share and one two-year warrant to purchase one common share at a price of Cdn $6.88 (approximately U.S. $4.40), or 125% of the weighted average closing price of the Corporation's common shares on the five trading days immediately preceding the date of the definitive purchase agreement. A final cash payment of Cdn $0.5 million (approximately U.S. $320,000) is due in August 2003. MAVERICK SPRINGS In November, 2002, the Corporation entered into a non-binding letter of intent to grant to Silver Standard Resources Inc., (Silver Standard) an option to acquire the Corporation's interest in the silver resources hosted in the Maverick Springs project in Nevada. The Corporation and Silver Standard have a common director. Under the terms of the proposed agreement, which is subject to regulatory approvals and the completion of a definitive agreement, the Corporation will retain its 100% interest in the gold resources, Silver Standard will pay the Corporation $1.5 million over four years including a cash payment of $300,000 at closing. The remaining $1.2 million will be used to fund exploration programs, land holding costs and option payments on the Maverick Springs project. An amount of $188,890 in exploration programs has been incurred by the Corporation in 2002, which will be recoverable from Silver Standard on completion of this agreement. Silver Standard and the Corporation will jointly manage exploration of the Maverick 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) THE TABULAR INFORMATION SET OUT BELOW IS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE STATED. 20. RELATED PARTY TRANSACTIONS (CONTINUED) Springs project through a management committee, with the Corporation as operator. The Corporation will have 45% of the vote on the committee, Silver Standard will have a 55% vote. After Silver Standard has completed its $1.5 million in payments to the Corporation, costs will be shared by the two corporations on the same ratio as established for operation of the management committee, subject to standard dilution provisions. The definitive agreement has not have any derivative instruments or hedging activities. 13.yet been finalized. 21. SUBSEQUENT EVENTS In(A) LONG VALLEY ACQUISITION On January 2001,22, 2003, the Corporation realizedpaid to Standard the first $100,000 installment for the purchase of the Long Valley project (Note 3). (B) PRIVATE PLACEMENT On February 7, 2003, the Corporation completed a $3.4 million private placement financing. The gross proceeds were placed in escrow pending shareholder approval. On February 27, 2003, at a Special General Meeting of the Shareholders, shareholders voted in favor of the financing and on February 28, 2003, the gross proceeds were released to the Corporation from escrow. Through the private placement, the Corporation raised proceeds, net proceeds of $1.8 million fromcommissions and costs, of approximately $3.0 million. The private placement consisted of the sale of four haul trucks from1.4 million special warrants, each priced at $2.43. The special warrants were automatically converted into equity units upon shareholder approval. Each equity unit consists of one common share and a warrant, exercisable over a four-year period, to purchase one common share for $3.14 during the Hycroft mine,first year, $3.56 during the second year, $3.92 during the third year and $4.28 during the fourth year. Starting on the second anniversary of which $0.6 million was used to retire a long-term equipment loan (note 4). In March 2001,the closing of this private placement, if the common shares of the Corporation soldtrade at a hydraulic shovelvalue of 150% or more of the respective exercise price for net proceedsa period of $0.8 million. 53 15 consecutive trading days on the American Stock Exchange, then the Corporation has the option to request that the warrants be exercised. If the warrants are not exercised within 15 business days following this request, they will be cancelled. A 10% cash finder's commission was paid in connection with the private placement. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 53 PART III ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT. DIRECTORS TheInformation concerning the Corporation's directors will be contained in the Corporation's definitive Proxy Statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of Vista Gold are elected each year at1934 for the annual general meeting2003 Annual General Meeting of shareholdersShareholders (the "Proxy Statement") under the caption "Particulars of Matters to be Acted Upon--Election of Directors" and hold office until their successors are elected or appointed. The present directors of Vista Gold, together withis incorporated herein by reference. Information concerning the location of their residences, age, length of service and business experience, are described below.
NAME, RESIDENCE, PRINCIPAL OCCUPATION, POSITION AND AGE DIRECTOR SINCE BUSINESS OR EMPLOYMENT - ---------------- ------------------ ---------------------------------------------- DAVID R. SINCLAIR.............. May 1, 1995 Chartered Accountant; Corporate Director; Nanoose Bay, British Columbia Director, Cominco Ltd., a mining company. DIRECTOR AND CHAIRMAN Age - 71 ROSS J. BEATY.................. November 12, 1996 Geologist; Chairman of Pan American Silver Vancouver, British Columbia Corp., a mining company, 1994 to present; DIRECTOR AND VICE CHAIRMAN formerly, President of Equinox Age - 49 Resources Ltd., a mining company. RONALD J. MCGREGOR............. May 19, 1999 President and Chief Executive Officer from Littleton, Colorado September 2000 to present; Vice President, DIRECTOR Development and Operations of the Corporation Age - 53 from July 1, 1996 to September 8, 2000; Metallurgist, Vice President, Project Development of Cambior USA Inc., a mining company, from 1991 to 1996. Vice President, Project Development of Westmont Mining Inc. from 1984 to 1991. MICHAEL B. RICHINGS............ May 1, 1995 Mining engineer; formerly, President and Chief Littleton, Colorado Executive Officer of the Corporation from DIRECTOR June 1995 to September 2000; formerly, Age - 56 President of Atlas Corporation, a mining company, from January 1995 to May 1995; Group Executive and President of Lac Minerals Ltd. South America, a mining company, from 1993 to 1995; Vice President of Operations of Atlas Corporation from 1990 to 1992.
54
NAME, RESIDENCE, PRINCIPAL OCCUPATION, POSITION AND AGE DIRECTOR SINCE BUSINESS OR EMPLOYMENT - ---------------- ------------------ ---------------------------------------------- C. THOMAS OGRYZLO.............. March 8, 1996 President and Chief Executive Officer Canatec Toronto, Ontario Development Corporation, a resource management DIRECTOR and development company; Previously from Age - 61 March 8, 1996, President and Chief Executive Officer of Black Hawk Mining Inc. and its subsidiary, Triton Mining Corporation. Both companies are gold producers; formerly, President of Kilborn SNC-Lavalin Inc.; and President of the Kilborn Group of Companies, providing engineering and construction services. KEITH E. STEEVES............... September 29, 1995 Chartered Accountant; Consultant; Director of Richmond, British Columbia Teck Corporation and Cross Lake DIRECTOR Minerals Ltd., mining companies; formerly, Age - 68 Senior Vice President, Commercial of Teck Corporation, a mining company. ALAN G. THOMPSON............... December 1, 1989 Businessman; President and Chief Executive West Vancouver, Officer of A.G.T. Financial Corporation, an British Columbia investment company. DIRECTOR Age - 73 PETER WALTON................... May 24, 1989 Self-employed business consultant. West Vancouver, British Columbia DIRECTOR Age - 71
NoneCorporation's executive officers is furnished in Part I hereof under a separate unnumbered caption ("Executive Officers of the aboveCorporation"). Information concerning certain filing obligations under the federal securities laws applicable to directors has entered into any arrangement or understanding with any other person pursuant to which he was or is to be elected as a director of Vista Gold or a nominee of any other person, except as disclosed herein. EXECUTIVE OFFICERS Theand executive officers of Vista Gold are appointed bythe Corporation, and hold office at the pleasureholders of more than 10% of the Board of Directors of Vista Gold. The executive officers of Vista Gold during 2000, together with their age, length of serviceCorporation's common shares, will be contained in the Proxy Statement under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" and business experience, are described below.
NAME, POSITION AND AGE HELD OFFICE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS - ---------------------- ------------------ ---------------------------------------------- RONALD J. MCGREGOR............. September 8, 2000 President and Chief Executive Officer of Vista PRESIDENT, CHIEF EXECUTIVE Gold from September 8, 2000 to present; Vice OFFICER AND DIRECTOR President Development and Operations for Vista Age - 53 Gold from July 1, 1996 to September 8, 2000; Vice President Project Development, Cambior USA Inc., a mining company.
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NAME, POSITION AND AGE HELD OFFICE SINCE BUSINESS EXPERIENCE DURING PAST FIVE YEARS - ---------------------- ------------------ ---------------------------------------------- ROBERT L. FOLEN................ September 15, 2000 Vice President Finance of Vista Gold from VICE PRESIDENT FINANCE September 15, 2000 to present. Accounting Age - 49 Manager of Hycroft Resources and Development Inc. and Mineral Ridge Resources Inc., from October 1998 to September 2000; Accounting Manager of Hayden Hill Mine, Sleeper Mine, and Wind Mountain Mine for Amax Gold Inc., from December 1994 to September 1998. MICHAEL B. RICHINGS............ June 1, 1995 President and Chief Executive Officer of Vista DIRECTOR AND FORMER PRESIDENT Gold from June 1995 to September 8, 2000; AND CHIEF EXECUTIVE OFFICER. Mining engineer; President of Atlas RESIGNED AS PRESIDENT AND CHIEF Corporation, a mining company, from EXECUTIVE OFFICER AS OF January 1995 to May 1995; Group Executive and SEPTEMBER 8, 2000 President of Lac Minerals Ltd. South America, Age - 56 a mining company, from 1993 to 1995; Vice President of Operations of Atlas Corporation from 1990 to 1992. ROGER L. SMITH................. March 6, 1998 Vice President Finance of Vista Gold from FORMER VICE PRESIDENT FINANCE March 1998 to September 15, 2000; Corporate (RESIGNED AS OF SEPTEMBER 15, Controller of Vista Gold from December 1995 to 2000) March 1998; Vice President Finance of Ramrod Age - 43 Gold (U.S.A.) Inc., a mining company, from May 1994 to December 1995; Vice President Finance of Westmont Gold Inc., a mining company from July 1991 to May 1994. WILLIAM F. SIRETT.............. January 1, 1996 Lawyer; Partner, Borden Ladner Gervais LLP, a SECRETARY law firm. Age - 50
None of the above executive officers has entered into any arrangement or understanding with any other person pursuant to which he was or is to be elected as an executive officer of Vista Gold or a nominee of any other person. EXECUTIVE AND AUDIT COMMITTEES Vista Gold does not have an executive committee. Vista Gold is required to have an audit committee under section 173 of the BUSINESS CORPORATIONS ACT (Yukon Territory). Vista Gold's audit committee consists of the following directors: David R. Sinclair, Keith E. Steeves, Peter Walton and Alan G. Thompson.incorporated herein by reference. ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS. DuringInformation concerning this item will be contained in the financial year ended December 31, 2000,Proxy Statement under the aggregate cash compensation paid by the Corporation to all directorscaption "Executive Compensation" and officers of Vista Gold, as a group was $464,732. This sum includes compensation paid to executive officers pursuant to the cash incentive plan and retirement savings plan described below. Information specified in this Item for individually named directors and officers is incorporated herein by reference from pages 6 to 14 of the Management Information and Proxy Circular prepared in connection 56 with Vista Gold's Annual General Meeting to be held on May 18, 2001, filed with the Securities and Exchange Commission concurrently with the filing of this report. Pursuant to the terms of the Corporation's incentive policy adopted by the Corporation in 1989 or certain employment contracts, executive officers and senior employees of the Corporation are eligible to receive incentive payments. The Corporation did not make any incentive payments to executive officers or senior employees under this plan in 2000. Any incentive payments are awarded at the discretion of the Board of Directors based on recommendations from the compensation committee. There is no established formula utilized in determining these incentive payments. The award of incentive payments is motivated by the Corporation's desire to reward past services rendered to the Corporation and to provide an incentive for continued service to the Corporation. Incentive payments to be made during 2001, which may include amounts related to performance during a portion of 2000, have not yet been determined. The Corporation has not made any restricted stock awards during the last three fiscal years. During the fiscal year ended December 31, 2000, the Corporation set aside or accrued a total of $13,246 to provide pension, retirement or similar benefits for directors or officers of Vista Gold pursuant to plans provided or contributed to by the Corporation. As a part of the aggregate cash compensation disclosed above, the Corporation sponsors a qualified tax-deferred savings plan in accordance with the provisions of section 401(k) of the United States Internal Revenue Service Code which is available to permanent United States-based employees. Under the terms of this plan, the Corporation makes contributions of up to 4% of eligible employees' salaries. In addition, the Corporation contributes between 2% and 4% of permanent Canadian-based employees' salaries, including executive officers, depending on length of service and to a maximum of Cdn.$3,500 per year, to the individual's registered retirement savings plan. There are no other such plans to which the Corporation made any contribution in relation to its directors or officers in 2000.reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information specifiedExcept as to the information concerning securities authorized for issuance under equity compensation plans, which is furnished in Item 5 of Part II hereof under the caption "Equity Compensation Plan Information", the information concerning this Item for individually named directorsitem will be contained in the Proxy Statement under the caption "Ownership of the Corporation's Common Shares" and officers is incorporated herein by reference from pages 3 to 5 and 12 to 13 of the Management Information and Proxy Circular prepared in connection with Vista Gold's Annual General Meeting to be held on May 18, 2001, filed with the Securities and Exchange Commission concurrently with the filing of this report.reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. During 2000, there have been no transactions, or seriesInformation concerning this item will be contained in the Proxy Statement under the captions "Interest of similar transactions, or any currently proposed transactions or seriesManagement and Others in Material Transactions" and "Indebtedness of similar transactions,Directors and Senior Officers" and is incorporated herein by reference. ITEM 14. CONTROLS AND PROCEDURES. (A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Based on their evaluation as of a date within 90 days prior to which Vista Gold or anythe filing date of its subsidiaries was or is a party in whichthis Annual Report on Form 10-K, the amount involved exceeds $60,000 and in which any director orCorporation's principal executive officer any nominee for election as a director, any security holder knownand principal financial officer have concluded that the Corporation's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that information required to be disclosed by the Corporation in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. (B) CHANGES IN INTERNAL CONTROLS. There were no significant changes in the Corporation's internal controls or in other factors that could significantly affect these controls subsequent to the Corporation to own of record or beneficially more than 5% of the Corporation's Common Shares, any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. During 2000, there were and are no relationships regarding directors or nominees for director as stipulated by this item and no director or executive officer, nominee for election as a director, any memberdate of their immediate family orevaluation, including any corporation or organization in which any of them, directly or indirectly, beneficially owns 10% or more of any class of equity securities was indebtedcorrective actions with regard to Vista Gold. 57significant deficiencies and material weaknesses. 54 PART IV ITEM 14.15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. DOCUMENTS FILED AS PART OF REPORT FINANCIAL STATEMENTS The following consolidated financial statements of the Corporation are filed as part of this report: 1. Report of Independent Accountants dated February 23, 2001.28, 2003. 2. Consolidated Balance Sheets--At December 31, 20002002 and 1999.2001. 3. Consolidated Statements of Loss--Years ended December 31, 2000, 1999,2002, 2001, and 1998.2000. 4. Consolidated Statements of Deficit--Years ended December 31, 2000, 1999, 1998.2002, 2001 and 2000. 5. Consolidated Statements of Cash Flows--Years ended December 31, 2000, 1999,2002, 2001, and 1998.2000. 6. Notes to Consolidated Financial Statements. See "Item 8. Consolidated Financial Statements and Supplementary Data". FINANCIAL STATEMENT SCHEDULES No financial statement schedules are filed as part of this report because such schedules are not applicable or the required information is shown in the consolidated financial statements or notes thereto. See "Item 8. Consolidated Financial Statements and Supplementary Data". 55 EXHIBITS The following exhibits are filed as part of this report:
EXHIBIT NUMBER DESCRIPTION --------------------- ------------------------------------------------------------ 3.01 Articles of Continuation filed as Exhibit 2.01 to the Form 20-F for the period ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 3.02 By-Law No. 1 of Vista Gold filed as Exhibit 2.01 to the Form 20-F for the period ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 3.03 Share Certificate of Vista Gold (File No. 1-9025) 3.04 Amended By-Law No. 1 of Vista Gold (File No.1-9025) 10.01 Lease and Option dated July 1, 1985 between Henry C. Crofoot, trustee, and Hycroft Resources--DevelopmentResources - Development Inc. (Crofoot Patented Claims), as amended, filed as Exhibit 10.8 to Granges' Registration Statement on Form S-1, as amended, and incorporated herein by reference (File No. 33-17974) 10.02 Lease and Option dated July 1, 1985, between Henry C. Crofoot, trustee, and Hycroft Resources--DevelopmentResources - Development Inc. (Crofoot Unpatented Claims), as amended, filed as Exhibit 10.9 to Granges' Registration Statement on Form S-1, as amended, and incorporated herein by reference (File No. 33-17974) 10.03 Lewis Mine Lease and Assignment Agreement included in the Assignment of Mining Lease dated January 23, 1987 among Standard Slag Company, Hycroft Lewis, Hycroft Resources Corporation and Granges, filed as Exhibit 10.7 to Granges' Registration Statement on Form S-1, as amended, and incorporated herein by reference (File No. 33-17974) 10.03 Lewis Mine Lease and Assignment Agreement included in the Assignment of Mining Lease dated January 23, 1987 among Standard Slag Company, Hycroft Lewis, Hycroft Resources Corporation and Granges, filed as Exhibit 10.7 to Granges' Registration Statement on Form S-1, as amended, and incorporated herein by reference (File No. 33-17974)
58
EXHIBIT NUMBER DESCRIPTION -------------- ------------------------------------------------------------ 10.04 Amendment Agreement dated January 14, 1988, among Henry C. Crofoot et al and Hycroft Resources--DevelopmentResources - Development Inc. filed as Exhibit 10.13 to Granges' Annual Report on Form 10-K for the fiscal year ended December 31, 1988, as amended, and incorporated herein by reference (File No. 1-9025) 10.05 Lewis Hycroft Agreement dated January 10, 1989, among Frank W. Lewis, Hycroft Lewis and Hycroft Resources--DevelopmentResources - Development Inc. filed as Exhibit 10.16 to Granges' Annual Report on Form 10-K for the fiscal year ended December 31, 1988, as amended, and incorporated herein by reference (File No. 1-9025) 10.06 Second Amendment Agreement dated March 3, 1989, among Henry C. Crofoot et al and Hycroft Resources--DevelopmentResources - Development Inc. filed as Exhibit 10.24 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.07 Second Lewis-Hycroft Agreement dated March 15, 1991 among Frank W. Lewis, Granges, Hycroft Resources--DevelopmentResources - Development Inc. and Hycroft Lewis filed as Exhibit 10.20 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.08 Third Amendment Agreement dated August 16, 1991 among Henry C. Crofoot et al, Hycroft Resources & Development Inc. and Blackrock Properties, Inc. filed as Exhibit 10.25 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.09 Agreement dated May 13, 1994 between Granges and Atlas Corporation filed as Exhibit 2.01 to the Form 20-F for the period ended December 31, 1994 and incorporated herein by reference (File No.1-9025)
56
EXHIBIT NUMBER DESCRIPTION ------- ------------------------------------------------------------ 10.10 Purchase and Sale Agreement dated June 24, 1994 between Granges and Hudson Bay Mining and Smelting Co., Limited filed as Exhibit 10.10 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.11 Amalgamation Agreement dated February 24, 1995 between Granges and Hycroft Inc. included in the Joint Management Information Circular of Granges and Hycroft Inc. filed as Exhibit 20.1 to the Form 8-K dated May 1, 1995 and incorporated herein by reference (File No. 1-9025) 10.12 Agreement dated February 24, 1995 between Granges and Atlas Corporation filed as Exhibit 2.03 to the Form 20-F for the period ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.13 Employment Agreement dated June 1, 1995 between Granges and Michael B. Richings filed as Exhibit 10(i) to the Form 10-Q for the quarterly period ended June 30, 1995 and incorporated herein by reference (File No. 1-9025) 10.14 Private Placement Subscription Agreement dated August 25, 1995 between Granges and Zamora filed as Exhibit 10.10 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.15 Letter of Intent between Granges and Atlas Corporation dated as of October 4, 1995 to enter into an Exploration Joint Venture Agreement filed as Exhibit 10.14 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025)
59
EXHIBIT NUMBER DESCRIPTION -------------- ------------------------------------------------------------ 10.16 Registration Agreement between Granges and Atlas Corporation dated as of November 10, 1995 filed as Exhibit 10.12 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.17 Indemnification Agreement between Granges and Atlas Corporation dated as of November 10, 1995 filed as Exhibit 10.13 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.18 Commitment letter dated November 14, 1995 between Granges and Deutsche Bank AG filed as Exhibit 10.09 to the Form 20-F/A for the year ended December 31, 1994 and incorporated herein by reference (File No. 1-9025) 10.19 Exploration and Purchase Option Agreement effective June 7, 1996 between Granges and L.B. Mining filed as Exhibit 2.01 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.20 Special Warrant Indenture dated June 7, 1996 between Granges and Montreal Trust filed as Exhibit 2.02 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.21 Warrant Indenture dated June 7, 1996 between Granges and Montreal Trust filed as Exhibit 2.03 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.22 Stock Option Plan of Vista Gold dated November 1996 (File No. 1-9025) 10.23 Supplemental Warrant Indenture made as of November 1, 1996 between Vista Gold and Montreal Trust with respect to the Warrant Indenture dated April 25, 1996 between Granges and Montreal Trust filed as Exhibit 1.01 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025)
57
EXHIBIT NUMBER DESCRIPTION ------- ------------------------------------------------------------ 10.24 Supplemental Warrant Indenture made as of November 1, 1996 between Vista Gold and Montreal Trust with respect to the Warrant Indenture dated June 7, 1996 between Granges and Montreal Trust filed as Exhibit 1.02 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.25 Establishment of Operating Credit Facility dated November 22, 1996 from The Bank of Nova Scotia to Vista Gold and accepted by Vista Gold on November 26, 1996 filed as Exhibit 2.05 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.26 Termination Agreement dated January 10, 1997 between Granges (U.S.) Inc. and Atlas filed as Exhibit 1.03 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.27 Credit Agreement dated as of February 20, 1997 between The Bank of Nova Scotia and Hycroft Inc. filed as Exhibit 2.06 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025) 10.28 Guaranty dated as of February 20, 1997 by Vista Gold in favor of The Bank of Nova Scotia filed as Exhibit 2.07 to the Form 20-F for the year ended December 31, 1997 and incorporated herein by reference (File No. 1-9025)
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EXHIBIT NUMBER DESCRIPTION -------------- ------------------------------------------------------------ 10.29 Amendment No. 1 dated as of September 30, 1997 between The Bank of Nova Scotia and Hycroft Inc. Credit Agreement dated as of February 20, 1997 between The Bank of Nova Scotia and Hycroft Inc. filed as Exhibit 1.01 to the Form 20-F for the year ended December 31, 1998 and incorporated herein by reference (File No. 1-9025) 10.30 Letter Agreement of Private Placement dated April 24, 1998 between Zamora and Gribipe and Amendment dated June 1, 1998 to Letter Agreement of Private Placement Agreement dated April 24, 1998 (File No. 1-9025) 10.31 Share Purchase Agreement dated October 21, 1998 among Cornucopia Resources Ltd., Cornucopia Resources Inc., Vista Gold Holdings Inc. and Vista Gold (File No. 1-9025) 10.32 Restated and Amended Loan Agreement dated as of October 21, 1998 between Mineral Ridge Inc. and Dresdner Bank AG, New York and Grand Cayman Branches (File No. 1-9025) 10.33 Stock Option Plan of Vista Gold dated November 1996 as amended in November 1998 (File No. 1-9025) 10.34 Loan and Security Agreement dated as of April 12, 1999 between Hycroft Resources & Development, Inc. and Finova Capital Corporation. (File No. 1-9025) 10.35 Voluntary Petition under Chapter 11 of the U.S. Bankruptcy Code dated December 10, 1999 filed by Mineral Ridge Resources Inc. (File No. 1-9025) 10.36 Sale Agreement dated January 31, 2000 on one hand between David O'Connor and Vista Gold and on the other hand Empresa Minera Multiple Capacirca. (File No. 1-9025) 10.37 Employment Agreement dated September 8, 2000 between Vista Gold and Ronald J. McGregor. 11.01 Statement of Computation of Per Share Earnings of(File No. 1-9025) 10.38 Agency Agreement dated February 1, 2002 between Vista Gold 24.01and Global Resource Investments Ltd. (File No. 1-9025) 10.39 Amendment Agreement dated March 18, 2002 between Vista Gold and Global Resource Investments Ltd. (File No. 1-9025) 21 Subsidiaries of the Corporation
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EXHIBIT NUMBER DESCRIPTION ------- ------------------------------------------------------------ 23 Consent of PricewaterhouseCoopers LLP, independent auditors 24 Powers of Attorney 99.01 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.02 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
REPORTS ON FORM 8-K The following reports were filed under cover of Form 8-K during the quarter ended December 31, 2000:2002: 1. Report dated NovemberOctober 8, 20002002, as amended under cover of Form 8-K/A filed as of October 31, 2002, pursuant to Item 5, regarding the Corporation's resultscompletion of the acquisition of the Maverick Springs and Mountain View gold projects. 2. Report dated November 5, 2002, pursuant to Item 5, regarding the completion of technical studies on the Maverick Springs and Mountain View gold projects. 3. Report dated November 7, 2002, pursuant to Item 5, regarding the letter of intent to grant an option for the quarter ended September 30, 2000. SUPPLEMENTAL INFORMATION Additional information, including directors' and officers' remuneration and indebtedness, principal holderssilver resources at the Maverick Springs project. 4. Report dated November 20, 2002, pursuant to Item 5, regarding acquisition of an option to acquire the Long Valley gold project; the Corporation's securities, optionsthird quarter results; and resignation of a director. 5. Report dated December 16, 2002, pursuant to purchase securities and interestsItem 5, regarding a $2.3 million private placement. 6. Report dated December 16, 2002, pursuant to Item 5, regarding the results of insiders in material transactions, where applicable, is contained inexploration drilling at the Management Proxy and Information Circular for the annual general meeting of shareholders held on May 18, 2001. 61Maverick Springs project. 59 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VISTA GOLD CORP. Dated: March 26, 200119, 2003 By: /s//S/ RONALD J. MCGREGOR --------------------------------------------------------------------------------------- Ronald J. McGregor, PRESIDENT AND CHIEF EXECUTIVE OFFICERPresident and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated: Dated: March 26, 200119, 2003 By: /s//S/ RONALD J. MCGREGOR --------------------------------------------------------------------------------------- Ronald J. McGregor, PRESIDENT AND CHIEF EXECUTIVE OFFICER
President and Chief Executive Officer (Principal Executive Officer) Dated: March 26, 200119, 2003 By: /s/ ROBERT L. FOLEN ------------------------------------------ Robert L. Folen VICE PRESIDENT FINANCE/S/ JOHN F. ENGELE --------------------------------------------- John F. Engele Vice President Finance and Chief Financial Officer (Principal Financial and Accounting Officer)
62 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SIGNATURE CAPACITY DATE - --------- -------- ---- * ------------------------------------------- Chairman of the Board and Director March 26, 2001 David R. Sinclair Director * ------------------------------------------- Vice-Chairman of the Board and March 26, 2001 Ross J. Beaty Director /s/ RONALD J. MCGREGOR ------------------------------------------- President and Chief Executive March 26, 200119, 2003 - -------------------------------------- Ronald J. McGregor Officer and Director * ------------------------------------------- Director March 26, 200119, 2003 - -------------------------------------- John M. Clark * Director March 19, 2003 - -------------------------------------- C. Thomas Ogryzlo * ------------------------------------------- Director March 26, 200119, 2003 - -------------------------------------- Michael B. Richings * ------------------------------------------- Director March 26, 2001 Alan G. Thompson * ------------------------------------------- Director March 26, 2001 Peter Walton * ------------------------------------------- Director March 26, 2001 Keith Steeves19, 2003 - -------------------------------------- Robert A. Quartermain
* On his own behalf and pursuantPursuant to a Power of Attorney dated March 26, 2001,10, 2003, the undersigned by signing his name hereby signs this report in the name and on behalf of the foregoing directors.
/S/ RONALD J. MCGREGOR - -------------------------------------------- RONALD J. MCGREGOR
60 CERTIFICATION I, Ronald J. McGregor, certify that: 1. I have reviewed this annual report on Form 10-K of Vista Gold Corp.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: March 19, 2003 /s/ RONALD J. MCGREGOR ------------------------------------------------------------------------------------------------------ Ronald J. McGregor, President and Chief Executive Officer (Principal Executive Officer)
6361 CERTIFICATION I, John F. Engele, certify that: 1. I have reviewed this annual report on Form 10-K of Vista Gold Corp.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: March 19, 2003 /s/ JOHN F. ENGELE ----------------------------------------------------------- John F. Engele, Vice President Finance and Chief Financial Officer (Principal Financial and Accounting Officer)
62