UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2001
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------
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 (Not Applicable)
(State or other jurisdiction of incorporation or (IRS Employer
organization) Identification No.)
7961 Shaffer Parkway
Suite 5
Littleton, Colorado 80127
(Address of principal executive offices) (Zip Code)
(720) 981-1185
(Registrant's telephone number, including area code)
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 such filing
requirements for the past 90 days.
Yes X No
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
90,715,040
----------
Common Shares, without par value, outstanding at Aug 7, 2001
-----------------------
VISTA GOLD CORP.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2001
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
(i) Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000 3
(ii) Consolidated Statements of Loss for the three months and the six months ended 4
June 30, 2001 and June 30, 2000
(iii) Consolidated Statements of Deficit for the three months and six months ended 4
June 30, 2001 and June 30, 2000
(iv) Consolidated Statements of Cash Flows for the three months and six months 5
ended June 30, 2001 and June 30, 2000
(v) Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS 12
SIGNATURES 12
EXHIBIT INDEX 13
In this Report, unless otherwise indicated, all dollar amounts are
expressed in United States dollars.
-2-
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA GOLD CORP.
CONSOLIDATED BALANCE SHEETS
JUNE 30 December 31
(U.S. DOLLARS IN THOUSANDS) 2001 2000
---------------------------- ------ -----
(Unaudited) (Audited)
ASSETS:
Cash and cash equivalents $ 577 $ 96
Accounts receivable 909 760
Supplies and other 503 464
------------------------------
Current assets 1,989 1,320
Property, plant and equipment-Note 3 13,230 15,912
------------------------------
Total assets $ 15,219 $ 17,232
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 94 $ 218
Accrued liabilities and other 257 301
Current portion of long-term debt - Note 4 75 695
------------------------------
Current liabilities 426 1,214
------------------------------
Accrued reclamation and closure costs 3,264 3,339
Other liabilities - 6
------------------------------
Long-term liabilities 3,264 3,345
------------------------------
Total liabilities 3,690 4,559
------------------------------
Capital stock, no par value per share:
Preferred - unlimited shares authorized; no shares outstanding
Common - unlimited shares authorized; shares outstanding:
2001 and 2000 - 90,715,040 121,146 121,146
Deficit (108,129) (106,985)
Currency translation adjustment (1,488) (1,488)
------------------------------
Total shareholders' equity 11,529 12,673
------------------------------
Total liabilities and shareholders' equity $ 15,219 $ 17,232
==============================
Nature of operations and going concern -Note 2
Commitments and contingencies -Note 5
Approved by the Board of Directors
/s/ RONALD J. MCGREGOR /s/ JOHN CLARK
- --------------------------- ---------------------------
Ronald J. McGregor John Clark
Director Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
-3-
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF LOSS
Three Months Ended Six Months Ended
JUNE 30 JUNE 30
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 2001 2000 2001 2000
- ---------------------------------------------- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES:
Gold sales $ 272 $ 1,217 $ 623 $ 2,615
Other revenues 7 23 14 42
------------------------------------------------------
Total revenues 279 1,240 637 2,657
------------------------------------------------------
COSTS AND EXPENSES
Production costs 204 795 525 1,874
Depreciation, depletion and amortization 50 220 104 441
Provision for reclamation and closure costs - 6 - 15
Mineral exploration, property evaluation and holding costs 290 585 544 1,088
Corporate administration and investor relations 364 348 632 633
Interest expense 1 32 19 69
Gain on disposal of assets (13) 10 (40) (132)
Gain on sale of marketable securities - - - (280)
Other income (2) (1) (3) (134)
------------------------------------------------------
Total costs and expenses 894 1,995 1,781 3,574
------------------------------------------------------
Net loss before taxes (615) (755) (1,144) (917)
------------------------------------------------------
Net loss $ (615) $ (755) $ (1,144) $ (917)
======================================================
Weighted average shares outstanding 90,715,040 90,715,040 90,715,040 90,715,040
- ----------------------------------------------------------------------------------------------------------------
Net loss per share $ (0.01) $ (0.01) $ (0.01) $ (0.01)
- ----------------------------------------------------------------------------------------------------------------
VISTA GOLD CORP.
CONSOLIDATED STATEMENTS OF DEFICIT
Three Months Ended Six Months Ended
JUNE 30 JUNE 30
(U.S. DOLLARS IN THOUSANDS) 2001 2000 2001 2000
- ---------------------------------------------- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Deficit, beginning of period $ (107,514) $ (93,938) $ (106,985) $ (93,776)
Net loss (615) (755) (1,144) (917)
------------------------------------------------------
Deficit, end of period $ (108,129) $ (94,693) $ (108,129) $ (94,693)
======================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
-4-
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Six Months Ended
JUNE 30 JUNE 30
---------------------------------------------------------------
2001 2000 2001 2000
(U.S. DOLLARS IN THOUSANDS) ---------------------------------------------------------------
-------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the period $ (615) $ 755) $ (1,144) $ (917)
ADJUSTMENTS TO RECONCILE LOSS FOR THE PERIOD TO CASH
PROVIDED BY (USED IN) OPERATIONS:
Depreciation, depletion and amortization 50 220 104 441
Provision for reclamation and closure costs - 6 - 15
Reclamation and closure costs (19) (298) (76) (690)
Gain on disposal of assets (13) 10 (40) (132)
Loss (gain) on currency translation 1 (13) - -
Other non-cash items (3) (4) (6) (6)
-----------------------------------------------------------
(599) (834) (1,162) (1,289)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Marketable securities - - - 77
Accounts receivable (1) (376) (149) (210)
Gold inventory - 70 - 117
Supplies inventory and prepaid expenses (7) 265 (39) 336
Accounts payable and accrued liabilities (15) (368) (167) (861)
-----------------------------------------------------------
Net cash used in operating activities (622) (1,243) (1,517) (1,830)
-----------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment - (1) - (117)
Proceeds on disposal of fixed assets and supplies 22 137 2,617 313
Other assets - 23 - (41)
-----------------------------------------------------------
Net cash provided by (used in ) investing activities 22 159 2,617 155
-----------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt - (118) (619) (233)
-----------------------------------------------------------
Net cash used in financing activities - (118) (619) (233)
-----------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (600) (1,202) 481 (1,908)
Cash and cash equivalents, beginning of period 1,177 1,625 96 2,331
-----------------------------------------------------------
Cash and cash equivalents, end of period $ 577 $ 423 $ 577 $ 423
===========================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
-5-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands unless specified otherwise)
1. General
The consolidated interim financial statements of Vista Gold Corp. (the
"Corporation") for the six months ended June 30, 2001, have been prepared by the
Corporation without audit and do not include all of the disclosures required by
generally accepted accounting principles in Canada for annual financial
statements. In the opinion of management, all of the adjustments necessary to
fairly present the interim financial information set forth herein have been
made. The results of operations for interim periods are not necessarily
indicative of the operating results of a full year or of future years. These
interim financial statements should be read in conjunction with the financial
statements and related footnotes included in the Corporation's annual report,
filed on form 10-K, for the year ended December 31, 2000. These interim
financial statements follow the same accounting policies and methods of their
application as the most recent annual financial statements.
2. Nature of operations and going concern
(a) NATURE OF OPERATIONS
The Corporation is engaged in gold production in the United States, and gold
exploration activities in the United States, Canada, and Latin America.
The Corporation's results are dependent on the price of gold. Gold prices
fluctuate and are affected by numerous factors, including, expectations with
respect to the rate of inflation, currency 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 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 is primarily driven by its use in jewelry and investment.
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 on any one
customer for the sale of its product.
(b) GOING CONCERN
These consolidated financial statements have been prepared on the basis of
accounting principles applicable to a going concern that assume the realization
of assets and the discharge of liabilities in the normal course of business. The
Corporation's consolidated cash balance was $0.6 million and working capital was
$1.6 million as of June 30, 2001. Management estimates total consolidated net
cash expenditures of $0.4 million through the remainder of 2001, including
$75,000 in debt repayments, with an estimated December 31, 2001 cash balance of
$0.2 million, assuming no additional financing is acquired.
Management continues to pursue cost-cutting measures and is actively pursuing
additional sources of capital, including debt financing, the issuance of equity,
mergers with other companies, and the sale of property interests and other
assets. Management estimates that the Corporation will have sufficient cash
resources to continue its current level of activity through the end of March
2002. The Hycroft mine is the Corporation's principal source of operating cash
flows. Mining activities at Hycroft were suspended in 1998. The Hycroft mine is
currently producing gold from previously mined ore on the leach pads, a process
that will continue through 2001. However, the amount of recoverable gold
remaining in the leach pads is decreasing and as a result, the rate of gold
production will 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 plans to restart the Hycroft
mine and develop the Amayapampa project will depend on management's ability to
raise additional capital for these purposes. Although management has been
successful in raising such capital in the past, there can be no assurance that
it will be able to do so in the future. Because of these uncertainties, there is
substantial doubt about the ability of the Corporation to continue as a going
concern beyond March 2002. These financial statements do not give effect to any
adjustments, which may be necessary should the Corporation be unable to continue
as a going concern.
-6-
3. Property, plant and equipment
Property, plant and equipment is comprised of the following:
JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
ACCUMULATED ACCUMULATED
DEPRECIATION, DEPRECIATION,
AMORTIZATION AND AMORTIZATION AND
COST WRITE-DOWNS NET COST WRITE-DOWNS NET
---- ----------- --- ---- ----------- ---
Hycroft Mine $ 54,266 $51,956 $ 2,310 $ 60,953 $ 55,974 $ 4,979
Bolivian mineral properties 58,027 47,260 10,767 58,029 47,260 10,769
Corporate assets 466 313 153 467 303 164
-------- ------- ------- -------- -------- -------
$112,759 $99,529 $13,230 $119,449 $103,537 $15,912
======== ======= ======= ======== ======== =======
DISPOSAL OF ASSETS
During the first three months of 2001, Hycroft mining equipment with an original
cost of $6.6 million and a net book value of $2.6 million was sold for $2.6
million.
4. Current portion of long-term debt
The Corporation has a $75,000 term note, bearing 4.5% interest, which is due
October 31, 2001.
In January 2001, the $0.6 million term loan, which was collateralized by certain
mobile assets of the Hycroft mine was repaid from the proceeds of the sale of
mining equipment.
5. Commitments and contingencies
On August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed
an action in the United States District Court against Vista Gold Corp., 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., the Corporation's
wholly owned subsidiary that holds the investment in the Mineral Ridge mine, 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 Corp. 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. On March 12, 2001 Stockscape.com Technologies, Inc.,
Cornucopia Resources, Inc., and Red Mountain Resources, Inc. filed a cross-claim
against the Corporation relating to the same issues but referring to the Share
Purchase and Sale Agreement between Cornucopia Resources Ltd. and Vista Gold
Corp. 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.
6. Geographic and segment information
The Corporation is engaged in gold production in the United States, and gold
exploration activities in the United States, Canada, and Latin America. Its
major product and only identifiable segment is gold, and all gold revenues and
operating costs are derived in the United States.
-7-
7. Differences between Canadian and United States generally accepted
accounting principles
The Corporation prepares its financial statements in accordance with accounting
principles generally accepted in Canada. These differ in some respects from
those in the United States. The effect of these GAAP differences on the
consolidated statements of loss were as follows:
CONSOLIDATED STATEMENTS OF LOSS
Three Months Ended Six Months Ended
JUNE 30 JUNE 30
------- -------
(U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 2001 2000 2001 2000
---------------------------------------------- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net loss- Canadian GAAP $ (615) $ (755) $ (1,144) $ (917)
Amortization reduction - 17 - 99
Revenue recognition 77 - 37 -
Cumulative impact of adopting SAB 101 - - - (59)
------------------------------------------------------------
Net loss-U.S. GAAP $ (538) $ (738) $ (1,107) $ (877)
------------------------------------------------------------
Comprehensive loss-U.S. GAAP $ (538) $ (738) $ (1,107) $ (877)
============================================================
Basic loss per share- U.S. GAAP $ (0.01) $ (0.01) $ (0.01) $ (0.01)
- ---------------------------------------------------------------------------------------------------------------
The Corporation recognizes revenue upon adsorption of gold onto carbon. US GAAP
under SAB 101, the revenue recognition standard effective January 1, 2000,
requires that revenue not be recorded before title is passed.
The effect of GAAP differences on the consolidated balance sheets were as
follows:
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
PER CDN. CDN./U.S. PER U.S. Per Cdn. Cdn./U.S. Per U.S.
GAAP ADJ. GAAP GAAP ADJ. GAAP
---- ---- ---- ---- ---- ----
(Unaudited) (Audited)
Current assets $ 1,989 $ (192) $ 1,797 $ 1,320 $ (231) $ 1,089
Property, plant and equipment 13,230 (7,637) 5,593 15,912 (7,637) 8,275
Common shares 121,146 76,754 197,900 121,146 76,754 197,900
Contributed surplus - 2,786 2,786 - 2,786 2,786
Deficit (108,129) (87,371) (195,500) (106,985) (87,408) (194,393)
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(U.S. dollars in thousands, unless specified otherwise)
RESULTS OF OPERATIONS
The Hycroft mine remains the principal source of earnings and operating cash
flows. In December 1998, mining activities were suspended at the Hycroft mine.
Currently, gold is recovered from previously mined ore that had been placed on
the heap leach pads.
THREE MONTHS ENDED SIX MONTHS ENDED
HYCROFT MINE JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 2001 JUNE 30, 2000
------------- ------------- -------------- -------------
Gold ounces produced 956 4,212 2,343 9,139
Average revenue per ounce produced $ 284 $ 289 $ 266 $ 286
Cash operating cost per ounce $ 195 $ 186 $ 209 $ 203
The reduction in gold production reflects the expected gradual decrease in
recoverable gold in the Hycroft mine heap leach pads. Accordingly, gold revenues
of $0.3 million for the three months ended June 30, 2001 decreased $1.0 million
from the same period in 2000. Similarly, gold revenues of $0.6 million for the
six months ended June 30, 2001 have decreased $2.0 million from the same period
in 2000.
Cash operating costs at the Hycroft mine totaled $0.2 million ($195 per ounce of
gold produced) for the three months ended June 30, 2001, compared to total cash
operating costs of $0.8 million ($186 per ounce of gold produced), for the same
period in 2000. For the six months ended June 30, 2001, cash operating costs at
the Hycroft mine totaled $0.5 million ($209 per ounce of gold produced),
compared to total cash operating costs of $1.9 million ($203 per ounce of gold
produced), for the same period in 2000. The reduction in total spending is a
direct result of the decreasing level of activity at the Hycroft mine; the
increased cost per ounce results from the relatively lower level of production
in 2001.
Depreciation, depletion and amortization (DD&A) for the three months ended June
30, 2001 totaled $0.1 million compared to $0.2 million in the same period in
2000. DD&A for the six months ended June 30, 2001 totaled $0.1 million compared
to $0.4 million in the same period in 2000. A significant portion of the
property, plant and equipment at the Hycroft mine has been fully depreciated.
Mineral exploration, property evaluation and holdings costs totaled $0.3 million
for the three months ended June 30, 2001, $0.5 million for the six months ended
June 30, 2001 compared with $0.6 million and $1.1 million respectively, for the
same periods in 2000. 2001 costs reflect a reduction in expenditures in Bolivia
and in discretionary spending.
2001 corporate administration and investor relation costs remain similar to 2000
costs.
Net loss for the three months ended June 30, 2001 was $0.6 million, compared to
a net loss of $0.8 million for the same period in 2000. Net loss for the six
months ended June 30, 2001 was $1.1 million, compared to a net loss of $0.9
million for the same period in 2000. The primary reason for the increase in net
loss was the lower level of activity at the Hycroft mine, which resulted in
lower gold production, offset partially by lower operating costs and lower
mineral exploration, property evaluation and holding costs. In addition, the
2000 net loss was reduced by $0.1 million other income, composed of an insurance
recovery.
Net cash used in operating activities was $0.6 million for the three months
ended June 30, 2001, compared to $1.2 million used in operating activities for
the same period in 2000. Net cash used in operating activities for the six
months ended June 30, 2001 was $1.5 million, $0.3 million less than the $1.8
million used in operating activities for the same period in 2000. The reduction
in cash used in operations reflects the lower levels of activity at the Hycroft
mine. During the six months ended June 30, 2001, $2.6 million net cash was
provided from the sale of idle mining equipment from the Hycroft mine. $0.6
million was used to repay the long-term equipment loan.
-9-
FINANCIAL CONDITION
The Corporation's consolidated cash balance as of June 30, 2001, was $0.6
million compared to $0.1 million at December 31, 2000 and working capital was
$1.6 million as of June 30, 2001 compared to $0.1 million at December 31, 2000.
This improvement is a result of selling some idle Hycroft mining equipment for
$2.6 million net cash. Management estimates total net cash requirements of $0.4
million through the remainder of 2001, including $75,000 in debt repayments,
with an estimated December 31, 2001 cash balance of $0.2 million, assuming no
additional financing is acquired.
Management continues to pursue cost-cutting measures and is actively pursuing
additional sources of capital, including debt financing, the issuance of equity,
mergers with other companies, and the sale of property interests and other
assets. Management estimates that if no additional capital is raised, the
Corporation will have sufficient cash resources to continue its current level of
activity through the end of March 2002.
GOING CONCERN
The Hycroft mine is the Corporation's principal source of operating cash flows.
Mining activities at Hycroft were suspended in 1998. The Hycroft mine is
currently producing gold from previously mined ore on the leach pads, a process
that will continue through 2001. However, the amount of recoverable gold
remaining in the leach pads is decreasing and as a result, the rate of gold
production will 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 plans to restart the Hycroft
mine and develop the Amayapampa project will depend on management's ability to
raise additional capital for these purposes. Although management has been
successful in raising such capital in the past, there can be no assurance that
it will be able to do so in the future. Because of these uncertainties, there is
substantial doubt about the ability of the Corporation to continue as a going
concern beyond March 2002.
OUTLOOK
At the Hycroft mine, gold production continues to exceed expectations and the
overall recovery from the Brimstone heap is now over 79 percent of cyanide
soluble gold compared to previous estimates of 75 percent. Re-circulation of
solutions and gold recovery will continue through 2001. In addition to the 2,343
ounces of gold recovered in the first six months of 2001, management expects to
recover 660 ounces of gold through the remainder of the year.
At current gold prices, the Corporation continues to operate in a standby mode,
keeping costs to a minimum. There is good potential to add oxide reserves and
discover high-grade zones at Hycroft. Exploration drilling requires additional
expenditures and management continues to explore all avenues to find the
necessary funding. Hycroft is a large epithermal gold system with multiple
targets for high-grade mineralization making it a very valuable asset. It
remains one of the most under-explored systems in Nevada.
In Bolivia, the Amayapampa project is on standby and costs are being kept to a
minimum. The proven and probable reserves at Amayapampa contain over 500,000
ounces of gold, but the Corporation believes that a gold price of $325 per ounce
will be required before the project can be financed and developed.
-10-
PART II - OTHER INFORMATION
ITEM 1. 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 August 25, 2000, United States Fidelity & Guarantee Company ("USF&G") filed
an action in the United States District Court against Vista Gold Corp., 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., the Corporation's
wholly owned subsidiary that holds the investment in the Mineral Ridge mine, 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 Corp. 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. On March 12, 2001 Stockscape.com Technologies, Inc.,
Cornucopia Resources Inc. and Red Mountain Resources, Inc., filed a cross-claim
against the Corporation relating to the same issues but referring to the Share
Purchase and Sale Agreement between Cornucopia Resources Ltd. and Vista Gold
Corp. 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.
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 the 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 damages against
Radic in La Paz. Garafulic appealed to the Court to have both cases combined
under the jurisdiction of a judge in La Paz. Finally, in January 2001, the Court
decreed that the lawsuits should be combined and heard in Potosi. The
Corporation never has and does not now have direct ownership of the disputed
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 case
in June 2001. An appeal may be possible but the Corporation does not anticipate
that there will be any material adverse impact on the Corporation or the value
of its holdings in Bolivia.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
-11-
99.01 Second Quarter 2001 Report to Shareholders
(b) Reports on Form 8-K
The following documents were filed under cover of Form 8-K during the
quarter ended June 30, 2001
1. Report dated May 23, 2001 regarding changes to the Corporation's
Board of Directors.
2. Report dated April 30, 2001 regarding the Corporation's first
quarter 2001 results.
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This document, including any documents that are incorporated by reference,
contains forward-looking statements concerning, among other things, projected
annual gold production, mineral resources, 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 the
Corporation's form 10-K under "Item 1. Business-Risk Factors". The Corporation
assumes no obligation to update these forward-looking statements to reflect
actual results, changes in assumptions, or changes in factors affecting such
statements.
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
Date: Aug 7, 2001 By: /s/ RONALD J. MCGREGOR
----------------------------------
Ronald J. McGregor
President and Chief Executive Officer
Date: Aug 7, 2001 By: /S/ JOHN F. ENGELE
---------------------------------
John F. Engele
Vice President Finance
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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99.01 Second Quarter 2001 Report to Shareholders
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