Vista Gold Announces Updated Mt Todd Preliminary Feasibility Study Showing Strong Returns At US$1300 Gold Price

2018-01-24

TSXV - TSX Venture Exchange · Silver · Gold · Copper · Canada

Canada NewsWire

DENVER, Jan. 24, 2018

DENVER, Jan. 24, 2018/CNW/ -- Vista Gold Corp. ("Vista" or the "Company") (NYSE American and TSX: VGZ) today announced the positive results of an updated preliminary feasibility study (the "PFS") for its Mt Todd gold project ("Mt Todd" or the "Project") in Northern Territory, Australia. The PFS is based on the results of a comprehensive review of all aspects of the Project and the re-design of elements of the process flow sheet, incorporating automated sorting and grinding circuit design changes in a 50,000 tonne per day ("tpd") project. The process improvement efforts have resulted in reduced operating costs, increased gold recovery and higher gold production at Mt Todd. Management of Vista believes that the design changes have allowed Vista to achieve a significant improvement in the Project's economics at the current gold price. The PFS was authored by Tetra Tech Inc. with Mine Development Associates, Resource Development Inc., Proteus EPCM Engineers (a Tetra Tech Company), and POWER Engineers, Inc. Unless otherwise specified, all $ amounts in this press release are expressed in US$.

Highlights of the updated PFS include:

Estimated proven and probable reserves of 5.85 million ounces of gold (221.0 million tonnes at 0.82 g Au/t) at a cut-off grade of 0.40 g Au/t, a decrease of 0.9% from the Company's May 2013PFS(1); Average annual production of 382,211 ounces of gold per year over the life of the Project, including average annual production of 479,450 ounces of gold per year during the first five years of operations; Life of mine average cash costs of $645per ounce, including average cash costs of $571per ounce during the first five years of operations; A 13 year operating life; Initial capital requirements of $839 million; and After-tax NPV5%of $679.0 millionand IRR of 20.5% at a $1,300per ounce gold price with a $0.80:AUD1.00 exchange rate.

| (1) | See Cautionary Note to United States Investors below. |

Vista's President and CEO, Frederick H. Earnest, commented, "In 2016, we began an effort to review all aspects of the Mt Todd development plan, focused on improving the economics of the Mt Todd gold project. The results of this updated PFS demonstrate that Mt Todd is a robust project at today's gold price and foreign exchange rate. We believe it is a world class project that enjoys long-standing government and community support. As we announced earlier this week, we have received the last major environmental permit for the Project. We believe this environmental authorization, together with the PFS results that we are announcing today provide a solid foundation for continued advancement of Mt Todd and an improved valuation for the Vista shareholder."

He added, "Through the comprehensive testing and design work completed over the past 18 months, we have significantly improved Mt Todd. The incorporation of automated sorting technology enabled us to improve the grade and reduce the quantity of feed to the newly designed grinding circuit. By using the excess capacity in the high pressure grinding roll ("HPGR") crushing circuit, and changing to a more efficient 2-stage grinding circuit, we are able to economically grind to 60 microns and achieve an expected gold recovery of 86.4% (net of solution losses). As a result, gold recovery is expected to increase 4.1% net of sorting losses. The reduced feed to the grinding circuit and efficiencies in the design of the grinding circuit result in lower operating costs, in part due to a 6% reduction in required power. The combination of increased gold recovery, higher gold production, and reduced power consumption, results in an economically robust, advanced stage gold development project with a 20.5% after-tax IRR at a $1,300gold price."

Vista's senior management team is attending the AME Mineral Exploration Roundup January 24-25, 2018in Vancouverand will be available to discuss these results at the conference.A conference call and webcast to discuss highlights of the PFS will be held Tuesday, January 30, 2018at 2:00 pm MST.Call-in details are located at the end of this release.

Jessica Spriet, Rex Bryan, and Erik Spilleron behalf of Tetra Tech, Thomas Dyer, on behalf of Mine Development Associates, Deepak Malhotra, on behalf of Resource Development Inc., and Zvon Ponos, on behalf of Proteus EPCM Engineers, all independent Qualified Persons as defined by Canadian National Instrument 43-101 ("NI 43-101"), prepared or supervised the preparation of the information that forms the basis for the scientific and technical information disclosed herein and they have reviewed this press release and consented to its release. Dr. Deepak Malhotrahas verified the metallurgical testing program and data in respect of the process improvements. For additional information on data verification, quality assurance and control, key assumptions and other matters relating to the Project, see Vista's Annual Report Form 10-K as filed on February 22, 2017.

Highlights

Highlights of the PFS are presented in the table below.

| 50,000 tpd @ $1,300/oz Au | Years 1-5 | Life of Mine ("LOM") (13 years) | | | | | Annual Average | Total | Annual Average | Total | | Average Milled Grade (g Au/tonne) | 0.98 | 0.82 | | | | Payable Gold (000's ozs) | 479 | 2,397 | 382 | 4,956 | | Gold Recovery | 86.4% | 85.8% | | | | Cash Costs ($/oz) | $571 | $645 | | | | Strip Ratio (waste:ore) | 2.83 | 2.52 | | | | Initial Capital ($ millions) | $839 | | | | | After-tax Payback (Production Years) | 3.2 | | | | | Pre-tax NPV5%($ millions) | $1,178 | | | | | After-tax NPV5%($ millions) | $679 | | | | | IRR (Pre-tax / After-tax) | 27.3% / 20.5% | | | |

| Note: Economics presented using $1,300/oz gold and a flat $0.80 USD : $1.00 AUD exchange rate and assumes deferral of certain Territory tax obligations as well as realization of equipment salvage values at the end of the mine life. |

Project Economics

The following table provides additional details of the Project's after-tax economics at variable gold prices and Australian dollar assumptions.

| Foreign

Exchange

(US$/AUD) | Gold Price | | | | | | | | | | | $1,100 | $1,200 | $1,300 | $1,400 | $1,500 | | | | | | | | IRR | NPV5 | IRR | NPV5 | IRR | NPV5 | IRR | NPV5 | IRR | NPV5 | | | 0.70 | 15.9% | $439 | 20.5% | $632 | 24.9% | $825 | 29.1% | $1,016 | 33.2% | $1,208 | | 0.75 | 13.8% | $366 | 18.3% | $559 | 22.6% | $752 | 26.8% | $944 | 30.8% | $1,136 | | 0.80 | 11.9% | $292 | 16.3% | $486 | 20.5% | $679 | 24.6% | $872 | 28.6% | $1,063 | | 0.85 | 10.1% | $222 | 14.3% | $412 | 18.5% | $606 | 22.5% | $799 | 26.4% | $991 | | 0.90 | 8.3% | $150 | 12.5% | $339 | 16.6% | $532 | 20.6% | $726 | 24.4% | $918 |

| Note: Changes in Foreign Exchange rates are only applied to operating costs and not applied to either initial or sustaining capital costs. |

Capital Costs

Key capital expenditures for initial and sustaining capital requirements are identified in the following table.

| Capital Expenditures ($Thousands) 50,000 tpd | Initial Capital | Sustaining Capital | | Mining | $144,278 | $385,207 | | Process Plant | $340,768 | $22,992 | | Project Services | $117,744 | $82,857 | | Project Infrastructure | $23,263 | $0 | | Site Establishment & Early Works | $19,723 | $0 | | Management, Engineering, EPCM Services | $85,941 | $0 | | Preproduction Costs | $11,127 | $0 | | Contingency | $95,988 | $3,189 | | Sub-Total5 | $838,832 | $494,245 | | Asset Sale and Salvage | $0 | ($141,788) | | Total Capital | $838,832 | $352,457 | | Total Capital per payable ounce gold | $169 | $71 |

| Note: may not add due to rounding. |

Operating Costs

The following table presents a breakdown of operating costs. The Project includes a 70MW power plant in the initial capital. Power is anticipated to be generated by gas-fired reciprocating engines (nominal 10MW capacity). The Project consumes all power generated during the operating life. Self-generated power creates significant savings in operating costs compared to a grid-sourced power solution. During the four years of reclamation and closure, the PFS assumes Vista will continue generating power and will sell 20MW of power into the Northern Territory electrical grid, for which there is a known market and indicative purchase rates have been provided by the government-owned utility.

| Operating Cost – 50,000 tpd | First 5 Years | LOM Cost | | | | | Per tonne processed | Per ounce | Per tonne processed | Per ounce | | Mining | $7.06 | $260.23 | $6.08 | $270.97 | | Processing | $6.66 | $245.30 | $6.72 | $299.50 | | Site General and Administrative | $1.18 | $43.43 | $1.22 | $54.40 | | Jawoyn Royalty | $0.35 | $12.93 | $0.29 | $12.91 | | Water Treatment | $0.07 | $2.74 | $0.09 | $3.58 | | Tailings Management | $0.08 | $2.91 | $0.08 | $3.51 | | Refining Costs | $0.09 | $3.13 | $0.07 | $3.11 | | Power Credit | 0 | $0.00 | -0.062 | -2.67 | | Total Cash Costs | $15.49 | $570.68 | $14.48 | $645.33 |

| Note: Jawoyn Royalty and refinery costs calculated at $1,300 per ounce gold. May not add due to rounding. |

Mining and Production

The mine plan contains 207.7 million tonnes of ore mined from the Batman open pit plus 13.4 million tonnes of ore from the existing heap leach pad that is processed through the mill at the end of the mine life. The mine plan contemplates that together, 221.0 million tonnes of ore containing 5.848 million ounces of gold at an average grade of 0.82 g Au/t are to be processed over the 13-year operating life of the Project. Total gold recovered is expected to be 4.956 million ounces. Average annual gold production over the life of the Project is expected to be 382,211 ounces, averaging 479,450 ounces during the first five years of operations, with 582,032 ounces produced in the first year of operations. Commercial production is anticipated to begin after two years of construction and commissioning.

Estimated Annual Production

The table below highlights the production schedule.

| Years | Ore Mined (kt) | Waste Mined (kt) | Strip Ratio (W:O) | Milled Ore (kt) | Milled Grade (g/t) | Contained Ounces (kozs) | Mill Production (kozs) | | -1 | 10,437 | 16,850 | 1.61 | - | - | - | - | | 1 | 13,174 | 27,284 | 2.07 | 17,750 | 1.19 | 682 | 582 | | 2 | 23,679 | 32,692 | 1.38 | 17,750 | 0.83 | 473 | 404 | | 3 | 20,112 | 74,220 | 3.69 | 17,799 | 0.95 | 543 | 463 | | 4 | 34,149 | 54,933 | 1.61 | 17,750 | 1.00 | 570 | 487 | | 5 | 10,843 | 98,928 | 9.12 | 17,750 | 0.95 | 542 | 462 | | 6 | 6,427 | 71,318 | 11.10 | 17,750 | 0.56 | 317 | 270 | | 7 | 10,429 | 53,987 | 5.18 | 17,799 | 0.55 | 317 | 270 | | 8 | 14,965 | 43,800 | 2.93 | 17,750 | 0.61 | 349 | 298 | | 9 | 22,633 | 33,942 | 1.50 | 17,750 | 0.78 | 448 | 382 | | 10 | 37,943 | 14,990 | 0.4 | 17,750 | 1.24 | 709 | 605 | | 11 | 2,895 | 47 | 0.02 | 17,799 | 0.84 | 481 | 411 | | 12 | - | - | - | 17,750 | 0.49 | 278 | 224 | | 13 | - | - | - | 7,895 | 0.54 | 137 | 98 | | Total | 207,687 | 522,990 | 2.52 | 221,041 | 0.82 | 5,848 | 4,956 |

| Note: May not add due to rounding. Total milled ore includes material from the heap leach pad that is planned to be processed at the end of the mine life. |

Project Mineral Reserves and Resources

The table below illustrates the updated reserve and resource estimate for the Project. The effective date of the Batman and Quigleys deposits resource estimates is January 24, 2018. The effective date of the heap leach resource estimate is July 9, 2014.

| Mt. Todd Gold Project Reserves – 50,000tpd, 0.40 g Au/t cut-off and $1,250 per ounce gold | | | | | | | | | | | | | | | Batman Deposit | Heap Leach Pad | Quigleys Deposit | Total | | | | | | | | | | | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | | Proven | 72,672 | 0.88 | 2,057 | - | - | - | - | - | - | 72,672 | 0.88 | 2,057 | | Probable | 135,015 | 0.82 | 3,559 | 13,354 | 0.54 | 232 | - | - | - | 148,369 | 0.79 | 3,791 | | Proven & Probable | 207,687 | 0.84 | 5,616 | 13,354 | 0.54 | 232 | - | - | - | 221,041 | 0.82 | 5,848 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mt. Todd Gold Project Resources | | | | | | | | | | | | | | | Batman Deposit | Heap Leach Pad | Quigleys Deposit | Total | | | | | | | | | | | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | Tonnes (000s) | Grade (g/t) | Contained Ounces (000s) | | Measured | 77,725 | 0.88 | 2,191 | - | - | - | 457 | 1.27 | 19 | 78,182 | 0.88 | 2,210 | | Indicated | 200,112 | 0.80 | 5,169 | 13,354 | 0.54 | 232 | 5,743 | 1.12 | 207 | 219,209 | 0.80 | 5,608 | | Measured & Indicated | 277,837 | 0.82 | 7,360 | 13,354 | 0.54 | 232 | 6,200 | 1.13 | 225 | 297,391 | 0.82 | 7,818 | | Inferred | 61,323 | 0.72 | 1,421 | - | - | - | 1,600 | 0.84 | 43 | 62,923 | 0.72 | 1,464 |

| Note: Measured & indicated resources include proven and probable reserves. Batman and Quigleys resources are quoted at a 0.40g Au/t cut-off grade. Heap Leach resources are the average grade of the heap, no cut-off applied. Economic analysis conducted only on proven and probable reserves. Rex Bryan of Tetra Tech is the Qualified Person responsible for the geologic resource estimates. Thomas Dyer of Mine Development Associates is the Qualified Person responsible for developing reserves for the Batman deposit. Deepak Malhotra of Resource Development Inc. is the Qualified Person responsible for the metallurgical data and program, and for developing reserves for the heap leach. See Cautionary Note to United States Investors below. |

Project Description

Gold mineralization in the Batman deposit at the Project occurs in sheeted veins within silicified greywackes/shales/siltstones. The Batman deposit strikes north-northeast and dips steeply to the east. Higher grade zones of the deposit plunge to the south. The core zone is approximately 200-250 meters wide and 1.5 km long, with several hanging wall structures providing additional width to the deposit. Mineralization is open at depth as well as along strike, although the intensity of mineralization weakens to the north and south along strike.

In addition to the Mt Todd mining licenses, Vista controls over 1,100 sq. km of contiguous exploration licenses – all of which are located at the southeast end of the Pine Creek District. Various gold targets have been identified in early-stage, grass roots exploration programs along the Cullen-Australis and Batman-Driffield structural corridors, the latter of which is the host to the Batman deposit. To-date, Vista's exploration efforts have primarily focused on the Batman deposit. The Company is now in a position to expand its exploration activities in search of new deposits.

The Project is designed to be a conventional, owner-operated, large open-pit mining operation that will utilize large-scale mining equipment in a blast/load/haul operation. Ore is planned to be processed in a large comminution circuit consisting of a gyratory crusher, two cone crushers, two HPGR crushers, and primary grinding by two ball mills and secondary grinding by six horizontal IsaMills as discussed in greater detail below. Vista plans to recover gold in a conventional carbon-in-pulp ("CIP") recovery circuit.

Metallurgy, Processing and Infrastructure

Vista has completed extensive metallurgic test work that was announced in separate press releases dated May 22, 2013, July 21, 2017and November 24, 2017.

Vista's metallurgic test work programs support: (1) ore hardness estimates at the Batman deposit that are consistent and do not change at depth; (2) the selection of HPGR, automated sorting and 2-stage grinding technologies as part of the comminution circuit; (3) estimated gold recovery rates based on optimized grind size and leach conditions; and (4) the processing of material from the historic heap leach pad at the end of the proposed mine life.

Significant improvements to the Project have been achieved through design changes in the comminution circuit. Vista plans to screen the HPGR crusher product at 16 mm (5/8") and use automated sorting technology (both x-ray transmission and laser) to remove the material that is sub-economic. Testing indicates that approximately 10% of the run-of-mine plant feed can be eliminated with only a 1.3% gold loss using automated sorting. The excess capacity in the HPGR circuit will be employed to create a final product that is nominally 3.5 mm (1/8") or, approximately 50% smaller than previously planned. This material will be wet screened and then classified to provide feed to the redesigned primary and secondary grinding circuits. The Company has selected smaller, more energy efficient ball mills for the primary grinding circuit and horizontal IsaMills for the secondary grinding circuit. Together, these mills are expected to efficiently produce a final product that is nominally 60 microns in size (a 33% reduction from previous studies). Leaching tests conducted at this finer grind size indicated that an overall gold recovery of 86.4% (net of solution losses) can be expected, a significant improvement from the previous 81.7% recovery. This results in a 4.1% increase in total gold production (net of sorting losses).

The robust comminution circuit is designed to process material with an average bond-work index 5% in excess of actual rock hardness based on the test work completed. Gold will be recovered through a traditional CIP circuit. Recovery rates are based on the results of 41 tests recently completed at present design conditions in addition to the tests completed in 2013.

Because the Project was an operating mine, infrastructure exists that reduces initial capital expenditure and significantly reduces capital risk related to infrastructure construction, which has been a major source of capital overruns in the mining industry over the last decade. Existing mining infrastructure items include:

an existing tailings storage facility that will receive two raises and is expected to contain 62 million tonnes of material processed; an existing fresh water storage reservoir that will receive a two-meter dam raise and will harvest stormwater sufficient to provide process water for year-round operations; a natural gas pipeline at site that can supply sufficient natural gas to meet the Project's energy requirements and would save considerably on project operating costs compared to grid-supplied power; a paved road to site; current electrical connection to the Northern Territory electric grid; and process plant location has been cleared and graded, resulting in reduced earthworks costs due to the process plant location being the same as the previous process plant.

Other benefits of Mt Todd's Northern Territory location include:

the Stuart highway – the main North / South highway in the Northern Territory is less than 15 km from the project site; rail line parallel to the Stuart highway; and the regional center of Katherine (population approximately 12,000) less than 60 km from site and the Territory capital of Darwin less than 300 km from site, which has port access.

Vista continues to work with the communities of Katherine and Pine Creek to develop a community-based project as opposed to the more typical fly-in, fly-out project, which is generally more expensive and limits the economic benefits of projects to local communities.

Opportunities for Additional Project Improvement

The PFS uses a natural gas price derived from east coast gas pricing. Historically the Northern Territory gas grid was isolated from the national market and pricing was based on local supply and demand. With the construction of the Northern Gas Pipeline (presently in progress), producers of natural gas will be able to sell gas to higher value markets on the east coast of Australia. Presently there is little demand for NT gas on the east coast. Vista has used a natural gas price derived from the east coast market. The Company believes that there is significant opportunity to achieve a lower gas price when it is able to commit to the delivery of gas.