Vista Gold Corp. (VGZ) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Welcome to Vista Gold's Feasibility Study Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded today. It is now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Please go ahead.

Thank you, Tasha. Good day, everyone, and thank you for joining the Vista Gold Corp. Investor Conference Call and Webcast. I'm Pamela Solly, Vice President of Investor Relations. During the course of this call and the question-and-answer session, we will be making forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Vista to be materially different from results, performance or achievements expressed or implied by such statements. Please refer to our most recently filed Form 10-Q for details and risks and other important factors that could cause actual results to differ materially from those in our forward-looking statements and the cautionary note regarding estimates of mineral resources and mineral reserves. Today's presentation will be posted to the Vista Gold website at www.vistagold.com at the end of this call. I will now turn the call over to Fred Earnest, President and CEO.

Thank you, Pam, and thank you, everyone, for joining us today. We are pleased to welcome you to this investor conference call, where we will be presenting the results of our recently completed feasibility study for our Mt Todd gold project in Northern Territory Australia. I'm joined today by Doug Tobler, our Chief Financial Officer; and Maria Vallejo, our Director of Projects and Technical Services, both of whom have been instrumental in the completion of this feasibility study. Today marks an important milestone for our company. The feasibility study confirms the strong potential of the Mt Todd project validating the strategic vision we are pursuing and laying a solid foundation for advancing the project. The results are not only technically robust but also economically compelling, reinforcing our confidence and the long-term value this project can deliver to shareholders. We look forward to walking you through the key findings of the study, outlining our next steps and addressing any questions that you may have. With that as an introduction, let's just jump in. We will be making some forward-looking statements, as Pam has indicated. I think it's important just to set the stage for everyone to realize that this marks a paradigm shift in our development strategy for the Mt Todd gold project. Some of the very significant changes that have occurred as we have completed this feasibility study include a change in the size. Previously, our work had been concentrated and focused on a 50,000 tonne per day operation or 17.5 million tonnes per annum. Today, we're looking at a 15,000 tonne per day project or 5.3 million tonne per annum project. This has helped us to achieve a 59% reduction in initial CapEx, and we'll talk about what those numbers are here in a moment. We have prioritized grade over tonnes. We've incorporated contract mining in addition to contract power generation, which has been incorporated in previous studies. One of the outcomes of this study is a very consistent annual gold production profile over an extended mine life of the project. The plant itself has been designed with fit-for-purpose design principles, and we'll talk a little bit more about what that means. And we have balanced the workforce and now anticipate that somewhere between 80% and 90% of our workforce will be brought in on a fly-in fly-out basis rather than being based in the Northern Territory. So what does this all mean? What results have we generated? Well, I think that the big numbers are that the CapEx has been reduced from over $1 billion to $425 million. Annual average production is estimated to be 153,000 ounces of gold per year over the first 15 years to the mine life. This is achieved from an average grade of ore delivered to the crushing plant of 1.04 grams per tonne over the first 15 years of the life of the project to 0.97 life of mine. We now report 5.2 million ounces of mineral reserves. This is combined proven and probable reserves. There's a 10.6 million ounce total resource, and we refer you to some slides later in the deck for a breakdown of measured, indicated and inferred. The economics of the study have been completed using a $2,500 gold price and a $0.67 foreign exchange rate. The study estimates an after-tax net present value at a 5% discount rate of USD 1.1 billion. All of the numbers that we'll be talking about on the call today are going to be in U.S. dollars unless indicated otherwise. The after-tax IRR at $2,500 gold price is 27.8%. And if we look at those numbers on a gold price closer to spot, i.e., we've used $3,300, you see that. The after tax NPV 5 jumps to $2.2 billion and the after-tax IRR at that gold price is 44.7%. Our all-in sustaining cost is estimated to be $1,449 an ounce. We'll talk a little bit about the changes in how that number has evolved from our previous studies. And the mine life is now estimated to be 30 years. This is -- these numbers represent the significant changes that we've made reference to. If we try and summarize this perhaps in a little bit different light before getting into the details of the numbers. The Mt Todd project as it's now designed is a leading near-term development opportunity. It's designed as an Australian project. This may sound like a trite thing to say, but there's been some fundamental differences in the way we've approached the design of the project. As we look at a smaller project, we used smaller Western Australia gold operations as a model, and we've adopted a number of changes, contract mining being one, fit-for-purpose design being another. We've selected a group of engineers and Maria is going to talk about those engineers and consultants here in a moment, who have extensive experience bringing projects in the Western part of Australia through engineering design, all the way through construction, commissioning and into operation. We feel that the work that's been done to change the size of the project means that this is now rightsized with the right scope. 15,000 tonnes per day is a size of project where the equipment that will be used is very common in Australia. It's a very typical of gold operations in particularly the western part of the country. And we think that this makes this project little bit easier for one to be constructed. It makes it easier to find people to operate it. We have now come to the conclusion that with the competition for workers and the skills that are required that there will be a significant fly-in, fly-out component of our workforce, which will allow us to attract the people that we need and make us very comparable to many of our highly valued Australian peers. The development option that we've selected has resulted in, as I mentioned, a 59% reduction in the initial capital cost with the changes in cutoff grade, and I haven't mentioned these previously, but we are now using a 0.5 gram per tonne cutoff grade as the basis for the reserve estimation and the mine plans. By having a large deposit, like the Mt Todd project, we enjoy the flexibility of being able to consider a higher cutoff grade, which has allowed us to increase the reserve grade. This was done with the idea of achieving a 1 gram per tonne reserve grade, and I'm very pleased that we've hit that target. In the first years of the project, the first 15 years of the project will exceed that grade life of mine will be just a little bit below it. We also have a very competitive all-in sustaining cost as we've looked at our peers and Doug will review a comparison of how our all-in sustaining costs compared to our peers. We see that we are we're very competitive with similar sized operations. I think all of this leads to and lends itself to the credibility of the work that's been done by our consultants. We continue to maintain and the project continues to exhibit leverage to gold price that our shareholders have become accustomed to. I think you see that in the numbers going from $2,500 to $3,300 gold price where the NPV of the project doubles from $1.1 billion to $2.2 billion. We have not evaluated expansion opportunities as part of the development of the project. We have designed and prepared project layouts so that the project can be expanded and we believe that, that will likely happen, but it is not included in the work that's completed in this feasibility study. We now have established some bookends with the larger scale project evaluated previously and this smaller initial scale project, which can be expanded that demonstrate considerable optionality. And we think that this will play importantly into the development strategy. We've lowered the risk profile of the project by bringing in -- by using a contract mining evaluation or scenario as part of our evaluation. We minimize some of the risk of sourcing equipment, sourcing operators. We continue to use a third-party generator for -- or owner operator of the power plant to ensure that we have a reliable source of power using the natural gas pipeline that already exists, thereby lowering our cost of energy. All of these things roll into the feasibility study to allow us to report the results that have been summarized so far. So getting into those results in a little bit more detail, and I'm not going to read this table to you. But maybe I could just highlight a couple of things. We've already talked about average annual gold production of 153,000 ounces of gold over the first half of the life of the mine. It's 146,000 ounces per year life of mine. We've talked about gold, the grade of the ore delivered to the plant. Recoveries are now estimated to be roughly 88.5% that's on a life-of-mine basis. The cash cost or you're just shy of $1,400 an ounce for the first 15 years. We talked about all-in sustaining costs that at $1,449 for the first 15 years of the project and just shy of $1,500 an ounce life of mine. The stripping ratio has increased. We're now reporting a stripping ratio of 4:1 life of mine. That is a result of some changes in the pit slopes, particularly on the west side of the deposit, but also it's the result of raising the cutoff grade. I think one point that merits some discussion is that this intermediate grade waste mineralized material that we're choosing not to send to the plant, the 0.35 to 0.5 gram per tonne material will be segregated in the waste rock dump and will be available at some future time for processing should the economics of the project merits such. The initial capital, as we've indicated, is $425 million. This results in a capital efficiency, i.e. initial capital divided by total ounces produced of $97 an ounce for the life of the project. The cost benefit ratio, the NPV divided by the initial capital is 2.5:1. That's a significant improvement from our previous study. You see the numbers for sustaining capital and reclamation and closure costs. I'm very pleased with the results of the study and what we've demonstrated here. The after-tax payback is estimated to be 2.7 years. So just as a reminder, for those who may be new to the Mt Todd story, the map on the right-hand side shows the location of the Mt Todd project. It's located in the very Northern part of the Northern Territory. It's about 250 kilometers southeast of the capital in Port City of Darwin, approximately 10 kilometers east of the Stuart Highway with paved road access all the way to the front gate of the project. We believe that Mt Todd is one of the most easily accessible development stage projects in all of Australia and that obviously gives them some very distinct advantages. I'm going to turn the time over to Maria to talk about the team of engineers and consultants that we work with and some of their experience, and she will also walk us through the mining summary. Maria?

Hello, everybody. Thank you, Fred. So to share the group of consultants that supported the completion of all the technical studies for this feasibility report. We have GR Engineering Services. They are based in Perth. They have over 20 years of proven record of delivering reengineering and consulting and construction. They are an EPC company. The reason why we selected among others, is because they are quite experienced in processes of similar size. They have been participants of Bellevue, Mungari, Deflector, Gruyere Gold, King of the Hills, et cetera. They are in charge that study actors -- authors and they also in charge of major infrastructure and the process capital. We have Mining Plus as well with our 20 years of experience, Australian-based. They supported us with the research estimation, the mine plan and the schedule. Tetra Tech based here in Lakewood, Colorado, they support with the mineral reserves estimation, water management and the closure studies. They have been our consultants for over a decade. We have Tierra Group International based in Colorado, [indiscernible] Australian. Their reputation lies in third-party independent reviews. They have a critical eye. They work with corporations like Barigold, B2Gold and Newmont Gold as well. They supported us with the tailing management, the design as well as the waste rock dump geotechnical studies and the construction plan. We have WSP which supported us, based in Perth for all the geotechnical services. And one new item of this project, as Fred mentioned earlier, we have invited a mining contractor to provide us with cost estimation. This is done under confidentiality. One key item is this no [ budgetary ] quote. It's actually worked on using the data of Mt Todd and the third-party power generator pricing, as Fred mentioned earlier. Moving on to mining. The mine designs and schedules that we mentioned earlier were completed by Mining Plus. We completed optimized phases in order to prioritize higher grade. Materials being sent to the processing plant in the early years of the life of mine. We conducted extensive pit optimization and scale optimization, which is what is guaranteeing the nice production profile we have at the moment. This is a conventional truck and shovel pit operations with established conventional match in terms of this equipment. We also engage Orica which supported us with blast fragmentation study and provided us with detailed drill and blast parameters for every single material that we have at the mine -- at the pit. The strip ratio, as Fred mentioned earlier, is now we are looking at the life of mine strip ratio 4:1, and part of this is the addition of 71 million tonnes of material that at the moment are considered mineralized waste is segregated as the waste rock. but we have the potential to add almost 1 million ounces in contained gold.

Thank you, Maria. Moving on to metallurgy. The ore body at Mt Todd that contains free milling nonrefractory ore, the gold particle sizes vary between 5 and 25 microns and is found in quartz-calcite-sulfide veins. We continue to treat the Mt Todd ore body as a very hard ore body. You see some of the bond work index information on this slide. But I think it's important to note that we continue to maintain an ore sorting step in the process flow sheet. We've reduced that from 2 stages to 1 stage, and that allows us to get rid of some of the harder material in the ore body prior to it being delivered to the grinding circuit. There's been an extensive amount of test work completed to first of all, determine, evaluate and then ultimately confirm the process flow sheet. We'll talk about that flow sheet in just a moment, but there's been mellurgical testing conducted in both Australia and the United States or sorting test work has been undertaken in Germany and the United States. HPGR testing has taken place in Europe and also here in the U.S. We anticipate that the amount of material that we reject from the ore sorting process has dropped a little bit instead of 10%, it's gone down to about 8% with about a 1.7% gold loss. I would note that the grades of material that's being rejected from the sorting plant is something in the range of 0.1 to 0.15 grams per tonne. So it's certainly well below the cutoff grade and uneconomic. The process flow sheet is -- and I'm just going to change to the flow sheet is, again, a very conventional gold recovery circuit. It has 3 stages of crushing, gyratory primary crusher, secondary cones, HPGR third-stage crushers, just like our previous study, we have eliminated the laser sorting from the sorting circuit. We now just have a single X-ray transmission circuit as part of the sorting product from the crushing circuit goes to 2 stages of grinding, ball mill for the course part of the crusher product and then goes to a fine grinding circuit where we're currently designed using the vertimills as the fine grinding. From there, the material goes to a CIL circuit leached with cyanide. Gold has recovered on carbon. And ultimately, we produce a doré product, which will be sold to a refinery. In the past, we have upsized much of the equipment. We believe that we have enough experience today that we've designed the project on a fit-for-purpose basis, allowing us to be more selective with the equipment sizing and also to build the project in a more efficient basis. This is a very, very important change from previous and we have a great deal of confidence in the work that GRES has done in identifying those parts of the process plant where we can optimize the -- not just the flow sheet, but the equipment selection based on these principles. The gold production profile, I'm going to turn some time over to Doug to talk about the production profile and some of the project economics as estimated in the study.

All right. So in terms of gold production, what you see on this graph here is the first year of operation is really a 9-month period. We've got 2 years of construction and then about a 3-month period as they wrap up commissioning before we hit first gold port. Once we get through that ramp-up period and move into years 2 through 4, the grade there is actually the best grade that we process on a consistent basis through the life of the project. And that's a result of using stockpiles to bring the higher grade material into the processing plant early and then those stockpiles are processed later in the life of the project. From there, we go into a period where we're averaging right out of gram and that runs out -- really runs out through year 18. I think here we've only shown detail on the first 15 years. But we have a very nice consistent profile that delivers a nice cash flow, which you'll see in the next slide. And in terms of all-in sustaining costs, you can see the effect of the higher grades. So obviously, the ramp-up here, you always get hit because you've got your full staff on board, but your production is not quite at full speed. Then you can see the drop in our all-in sustaining costs as we hit those nice higher-grade materials. And then again, a very steady all-in sustaining cost in that kind of $1,450 to $1,500 range through the balance of that period. Now converting that into what it does to us from a cash flow perspective. We put together a chart here. There's a lot on here to unpack, so I'll give you a little bit of a framework, and then we can talk through it. The gold bars represent annual cash flow at the feasibility study base case of $2,500 gold. The silver bars represent the incremental cash flow that occurs if you raise the assumption of the gold price from $2,500 up to $3,300. The blue line is the cumulative cash flows at the $2,500. The dotted line is the cumulative cash flows at the $3,300. So walking through this quickly. The first 2 years, obviously not affected by gold price because there's no production in those years. But the cumulative cash outflow is the $425 million that we've talked about is the initial capital cost of the project. Year 1, you see the ramp-up. And then years 2 through 4, you can see the effect of that higher grade on cash flows. And just as a point, at the end of year 3, 2.7 years into the project, we hit payback. So after that, the initial capital has been recovered. Now you can see the balance out through year 18, which represents that stable grade that we talked about on the previous slide. And after that, we need to make a couple of investments to continue the extension of mine life. There's 2 things that happen when you see the cash flow dip there starting in year 19. First off, we're moving away from TSF 1, and we now need to construct TSF 2. So we've got the initial construction costs in year 19. And then we also have to do a layback to access the orders that you see on the cash flow that you see in the latter part of this chart. We then get another roughly 10 good years of operation, not quite as stable, but there's some very nice grade ore out there in those later years. In terms of closure, those numbers look relatively small, which you would think for a project of this scale. And there's a reason for that, and that's because in the closure period, one of the first things that we'll be doing is reprocessing the material that's on the heap leach pad that was produced by others in the past. And there's about 160,000 ounces that could be produced. They'll produce a cash operating margin on a pretax basis of about $88 million. So that $88 million combined in with the final reclamation and closure costs, keep that number at the back end relatively small. Just a little bit on capital cost real quickly. Talk through some of these numbers. You can see the $425 million is our initial capital. And then we have another $442 million, which is both our sustaining capital and then, of course, our reclamation and closure costs over the life of the project. With regard to mining, I'll just point out that even though we're using contract mining, they'll be providing the fleet and all the things that they need for operation in the fleet in terms of moving the ore to the processing plant. The $22 million is really just limited to facilities that we will provide, and they will be part of our capital cost exclusive of what the mining contractor delivers. Processing plant. Again, that's an area that GR Engineering Services produced. We're very, very pleased with what they came up with, but we also think that it's a very robust number in terms of the type of plants that we've designed. Project infrastructure, that's just all the other things around the site. We've also got site establishment, which is our camp and then the basically admin buildings and our power distribution. You can see the cost for the management and EPC services. And then we've also got our preproduction costs included in here. The majority of that $48 million is really our Vista staff ramping up. We'll have some staff, obviously, from the very outset of the project. And then beginning in the year before we first produced gold, we'll continually ramp up our staff by the time first gold occurs we've got all of our personnel on site. And finally, just talk about the final major component of the costing structure is our operating costs. And without going through a lot of detail here, you can see what our mining costs are. This is on a contract mining basis. So it's, as Maria discussed, we kick off the first 15 years at $3 a tonne per mine basis, that obviously goes up later in the mine life as the pit becomes deeper. Then we've shown the processing costs on a per ton basis, coming to $41, $41.5 for the first 15 years, a little bit lower in the latter half because we've got a little bit lower mining costs once we start simply reprocessing those lower-grade stockpiles in the last 3 years of the mine life. That all converts on an ounce basis to $1,449 on an all-in sustaining cost basis in the first 15 years, and that goes up just a bit in the latter part of the mine life, so that in total, we're at $1,499. On this next chart, we've converted all of that into what it means in terms of our NPV and IRR. Obviously, our base case was the $2,500. We've gone down $400 -- up $400 from that and then we've actually shown the current spot price on this chart as well. So you can see a nice steady increase as we move through the different gold grades. I think what it really emphasizes is, as you look at the base case, those numbers are very solid. But when you start thinking about what the project would produce in the current gold price environment, there's tremendous opportunity there to create value from the current gold environment. There's a lot of discussion about where gold prices will go from here, but you can pretty well extend these lines and bars and understand how this looks if you see gold prices move up higher in the coming years and months.

Thanks, Doug. Well, speaking about increasing value. This next slide gives you an idea of our valuation compared to some of our producer peers in Australia. And the chart here shows market caps on the vertical access annual gold production across the horizontal access axis. And the size of the reserves that are reported by each of the companies is represented by the size of the ball in this chart. And so what you see is that with the Mt Todd project and even though the reserves have decreased from our previous studies where we had 7 million ounces, and we now report 5.2 million ounces. We have a very, very large project with the potential to have a very significant rerating as the project moves into development and production. We would hope that people can see that at a very minimum, getting to the point that we're valued something like a Bellevue or catalyst metals that there would be a tremendous upside opportunity for Vista shareholders. And as production is established, the valuation could continue to rise approaching what we see in valuations for Gold Road, Capricorn and Genesis. We're very excited about the potential that this feasibility study represents. Obviously, we're benefited by current gold price and that has a lot to do with it. But again, it comes back to having the right-sized operation with the right strategy for developing the project itself. Now while not necessarily part of the feasibility study work nonetheless important to the project is the water supply and water management. I think it's important for everyone to note that the project already has a freshwater storage reservoir, you see a picture of it. They're on the right side of the slide. That reservoir has capacity for 4.7 gigaliters of water or 4.7 million cubic meters of water. This reservoir fills up annually during the wet season at Mt Todd. We have the option to raise the dam which you see off on the very right side, you see the spillway kind of in the bottom center of the picture and the dam is over on the right. We have the opportunity and the option to raise the dam in the spillway by 2 meters, which would significantly increase the capacity. They're those familiar with the project will know that there are some acid-rock drainage point sources on the project, the existing waste rock dump and we currently manage that. We plan to construct and operate a water treatment plant during operations to treat acid rock drainage and to be able to discharge clean water. Also, well, again, not necessarily part of the feasibility study, but important to the development of the project. We want to note that all of the major environmental and operating permits have been approved for a 50,000 tonne per day project. There's been some changes in legislation. Our mining management plan is now referred to as a deemed mining license and we are in the process of converting those deemed licenses to mining licenses is the terminology of the new act. Our environmental impact statement was approved for the larger size as was our federal environmental authorization. We have additionally Aboriginal Areas Protection Authority Certificate, waterway diversion authorizations as well as the rights or the authorization to use the water in the freshwater storage reservoir. We believe that while we complete the amendments to align the mining management plan now deemed license with the 2024 feasibility study that other modifications may be required to align our permits with the 15,000 tonne per day operation that we've evaluated as part of this feasibility study. And we further estimate that it may take 12 to 18 months to complete and obtain the approvals as for the smaller scale project. So to summarize the outcomes and the results of this feasibility study, we continue to responsibly advance or are responsibly advancing one of Australia's largest undeveloped gold projects. As I pointed out at the very start, this is designed as an Australian project. We've included a very strong team of Australian engineers and consultants as well as some with extensive international experience to design the Mt Todd project. We're very confident that this is -- the project as designed and reported in this feasibility study will be a project that potential partners, whether that's joint venture or transaction partners will be able to understand and very quickly get their arms around the design principles and the decisions that have been made in the design of the project. We believe that, again, that we have rightsized the project with the right scope. The combination of size, fit-for-purpose design have driven a tremendous change in the initial CapEx of the project. And we're very pleased that this is $425 million initial CapEx, a very competitive capital cost number. We think that the other changes that have been made with regards to changing the cutoff grade, having the luxury of being able to raise the cutoff grade place some of that low grade material in the waste rock dump and focus on the better part of the deposit allows us to say that the truly grade pays and tonnes cost and by prioritizing grade we have been able to achieve a reserve grade, that's very close to 1 gram per tonne, which in turn drives steady gold production over nearly the entire life of the project. We're very pleased that the project continues to demonstrate sustained leverage to the gold price. We would be among the first to acknowledge that the gold prices that were used in the previous studies that the CapEx and the NPV and IRR were -- we're not as attractive as they are today, but today, we're very pleased to be able to report an after-tax NPV at the steady price of $2,500 a $1.1 billion. That's roughly 2.5x the initial CapEx of the project, the capital efficiency of slightly under $100 per ounce. This represents a tremendous amount of work, and we're very pleased with the results. Again highlighting what is the project -- what would be the project economics at spot price, $2.2 billion NPV 5 on an after-tax basis and an IRR of 44.7%. I highlight that we did not specifically address expansion opportunities, but we have prepared the layout of the plant to allow for the expansion of the plant and whether that would take place at a 50% expansion, a doubling of the throughput, there are decisions that we feel will best be made in the future. We've not tried to account for those in the design of the primary crusher or any other aspects of the plant, we have designed a fit-for-purpose process plant with the idea that the project will be built. It will establish itself as an economic gold producer. And based on market conditions, decisions about expansion we've made at a future time. This study certainly opens the door to various development alternatives, and we will be very busy in the next 8 to 12 weeks, helping many, many different potential partners and investors understand the opportunity that this represents, whether that ends up taking the form of a joint venture. And certainly, at a smaller scale and smaller CapEx, there's more companies that could be potential partners or whether we move down the path of a transaction involving either the asset itself or the corporation or whether we decide to with the market's general support and the support of our shareholders, to build the team and ultimately develop Mt Todd on a stand-alone basis owned and operated by Vista Gold. All of these are options that are available to us at this point and the next 6 months will be very important in determining what that ultimate path is. I'd like to leave and close with the point that our focus and what we -- what's a priority for us is determining the best pathway for project development and value realization, and that will ultimately guide and direct the decisions that we make as a board as to how we advance the Mt Todd project. So with that as an overview and in some cases, a bit of a detailed look at the results of the feasibility study. We'd like to open the call up for questions from those who are on the call and have, in many instances, been following Vista Gold for quite some time.

So it looks like our first question comes from Heiko Ihle with [indiscernible].

Awesome. Obviously, so the CapEx is now down 59%, $425 million in a pretty inflationary environment. Things are smaller. But I mean, maybe if you would like to provide some color on the key component of this [Technical Difficulty]. I mean you mentioned the third-party power generation and you talked about the contract earlier on this call. But I mean, besides that, any.

I thought you broke up a little bit. Can you just repeat the question from the point of, can we highlight -- I think you're asking, can we highlight some of the details and major components of the initial capital?

Is that correct? Yes, there's been an echo throughout this call. I assume it was on your end, maybe it's on mine. But you can. Perfect. So there's been some -- obviously, this whole thing is a little bit smaller now. Your CapEx is down 59%. Maybe just go through some of the key components for the decreased CapEx besides the third-party power generation and obviously, the contract mine that you have discussed earlier on this call.

Yes, certainly. And I'll invite Doug to chime in as well. You've obviously identified 2. I note that the power generation, we used a third-party power generator in the previous study as well. But the contract mining has certainly reduced our initial capital costs. There's been a significant reduction in initial capital resulting from the change in size as we've dropped from 50,000 tonnes a day down to 15,000 tonnes per day. Obviously, there's a couple of things that play into that. One is just the equipment selection itself. With smaller crushers, smaller ball mills, fewer vertimills, fewer pieces of equipment in the ore sorting circuit. All of that contributes to lower capital cost, the weight of material that we have to transport, there's just a number of factors. The change in the design philosophy from being basically a very robust N+1 plus 2 fit-for-purpose design has also allowed us to achieve certain economies in the capital cost. For example, the previous design with the very large crushing plant we had incorporated a significant amount of concrete foundations, pillars, crushers were set up on concrete. There was a lot of concrete work that went into the previous design. Now with smaller equipment, not needing the same heights, the same clearances. We've been able to do things like a big part of the crushing circuit will be mounted on structural steel. And so we won't have a lot of concrete sticking up above the ground. We've used Gabion construction for the retaining walls instead of massive concrete retaining walls. Another area of savings is on the tailings storage facility and some of the work that needs to be done there. Certainly, on sustaining costs, our -- the new tailings storage facility won't be built until year 19, whereas previously construction started in the second or third year of the operation. And so there's been a number of areas like that where we've achieved capital savings that are related to the size of the project. One area that's perhaps gone a little bit the other way and ultimately, we think it's the right decision, but we will now have a permanent camp and that was not something that was contemplated in the previous study. And so there's going to be a small amount of money that's spent upfront. Some of the support facilities, the water treatment plant is not the same size as what we saw in the previous study has been reduced. So going to a smaller scale, adopting fit-for-purpose design principles have resulted in some very significant contributions to this reduction in CapEx, Heiko.

Perfect. And then something completely different. And just for a frame reference, in your release, you stated you'll segregate the 0.35 to 0.5 gram material, the things that do have economic potential. Just out of curiosity, how much work do you think this will add to incremental assaying of what exactly you got additional truck tours to haul stuff to a separate area? I just -- I mean, I don't need real answer. I just -- like scientifically, like how much approximately are we looking at? Is this even any extra -- I mean it's definitely an extra effort, I would assume, but like how meaningful measurable is it?

I thought the materials got to come out of the mine anyway. And so it's really a matter of does it go to a stockpile or does it go to a specific part of the waste rock dump. Ultimately, I don't believe that it's going to drive any real significant additional effort all of the blast holes will be assayed. There won't be any difference in that regard. We'll be assaying every blast hole to determine or in waste boundaries and it will simply come into play as we define the boundaries of where big lines are in the operation and ultimately, where trucks go to as they leave the pit. So this is segregating. It will -- it's created a little bit more extra work for Mining Plus. We've always known that scheduling the waste rock dump takes more effort than scheduling the pit. It's a very dynamic and detailed exercise as we try to balance material movement and make sure that reclamation is able to keep up with the mining and placement of material in the waste rock dump. But -- and I don't think that it adds significantly or materially to the complexity of the operation in the pit itself or to operating cost, Heiko.

Okay. Fair enough. Yes, I just never really modeled anything like this out. I guess if you were in my shoes, you'd just essentially leave it off the model.

Yes, exactly. It's going to be treated as waste, and that's an opportunity for the future of the mine. If you get to the end of the life of the mine or you get to the point that you're starting to think about reprocessing the heap leach pad. And there's this other material there, you may make a decision to process the material that stockpiled in the dump before you process the heap leach pad. No economic benefits to that material at the present time.

Our next question comes from Adrian Day with Adrian Day Asset Management.

I've got 4 questions. Maybe I'll follow Heiko's lead and ask 2 and then get back in the queue. I think I know the answer to this one, but you talked about the expansion, and you haven't designed this -- you haven't designed this to allow for ready expansion. My question is will any of the ore be sterilized under this plan?

No. I mean, well, Adrian, just to be perfectly honest, here, you're aware that previously we reported a 7 million-ounce reserve and now we're reporting a 5.3 million ounce reserve. And so by using a higher cutoff, we have a -- and using different costs, the combination of the cutoff grade and the costs that we're using as part of this study. The pit is not the same size. It's not the same pit as what we had previously. And so there's -- you can't say that they are an apples-to-apples comparison on a pit-to-pit basis. And so we made the conscious decision that we felt that 5 million ounces at a gram per ton would be much more highly valued than 7 million ounces at 0.77. And so there is some ore in the bottom of the pit that is not mined in this evaluation that was mined in the previous and so while we say, no, we haven't sterilized any ore, please bear in mind that the mine plans and the mine shapes are different and we've had some additions to the pit in the form of success in drilling in 2024 on the Southcross load. And so there's been some additions and some tractions, but the mine plans are not the same.

I got you. Okay. Okay. My other question, if I may. When -- I think it was at the end of 2023 that you first announced you were going to do this feasibility study. And at that point, you would estimate CapEx of under $400 million is -- I'm just wondering if there are any major differences that account for the cost increase. I mean the Australian dollar is about the same. Is it just general inflation or are there specific things?

Adrian, it's Doug. A couple of things. Obviously, inflation, although it has slowed down, it's not as big a factor as it was in '22. But the other thing is when we moved in the prior studies and including what you're speaking to of a smaller case, we anticipated a largely community-based program. So we didn't need a full time. We didn't need a camp. And putting the camp in here, I think the number is about $30 million. So that's a 250-bed camp. It's the commissary facilities, and it's obviously the rec center, all the things that go with modern day camp. So that's probably the single biggest addition to what we didn't have previously. I'd say other things that maybe have contributed would be a little bit more robust in terms of costing of our staffing ramp-ups and some things like that. But the camp is probably the biggest...

[Operator Instructions] The next question comes from Daniel McConvey with Rossport Investments.

A couple of questions. Just on the camp. Just the 250 beds, is that -- what will be the maximum number of people at site during peak construction? And is that -- how do you fit that in?

So the 250 bed is the permanent count, but we also have a construction camp. So the construction camp is already accounted for in the 425 and it will be decommissioned within the first 6 months of operation.

Okay. And how much is that is in the line item for just it doesn't show as a line item, but that is not a major cost, Maria.

Exactly. Exactly, it's accounted for in the -- it's accounted for in the site establishment facility, so there you have as well as the construction camp that has 200 beds. So basically, between construction camp and the permanent camp, the last 6 months of construction and the first 6 months of production, if you will, you have over 400 beds.

Okay. So your peak is not -- you downsize the size of the construction. But what will be the peak number of people at the site during a week, like 500 or so.

No. So we are looking at a peak of 420 and this is after year 19 as Fred and Doug mentioned, this is what we are doing a layback of the pit. So we have to bring more people and this only last for 2 years. But the average number of people is around 380 at site at all times.

Okay. But during the construction, will it be a similar number, 500 or so?

Similar number 420, 430, I think it is for construction of pit.

Okay. Power costs, what are you estimating for your power cost? I know are you going through an independent power producer your -- so your estimated kilowatt hour cost should be roughly what?

So 0.133 per kilowatt hour.

AUD 0.13 per kilowatt hour.

And last question, just with the high pressure grinding mill. Is there any redundancy built into that? Just I understand these mills are very effective for hard rock, but they tend to -- the availability has not been perfect in these. But has that been factored in at all?

The availability of the HPGR correctors has been factored into the availability of the total crushing circuit, Dan. We have a stockpile in the design.

Next question comes from Brendan Hayes with Ragged Mountain Capital.

Hey, can you hear me?

We can.

Perfect. So 3 questions, if I may. In the universe of Australian mine, not yet in production, where does Mt Todd stack up?

In what sense are you asking a question, how do we stack up size or reserve base or -- help me understand your question just a little bit more.

Really both Fred, the overall opportunity size, reserve base and kind of production ounce potential.

Yes. So obviously, the biggest project in Australia today that's contemplated is the De Grey, well, now it's Northern Star, they merged, the Hemi project. And that project is roughly 11 million ounces of total resource. They're probably in the 7 million to 8 million-ounce reserve range. That's the largest project that's out there and their -- De Grey is planning contemplated building it and immediately starting to expand it within the first several years. That's the biggest project that's out there. And so we're within a couple of million ounces of reserves compared to that development project. I don't know, Maria, is there any others that you would add? Obviously, we know that Capricorn Metals is advancing. 2 things. One is the development of their Mount Gibson project, the other is an expansion of Karlawinda.

Okay. That's good context. And then my second 1 was in the early years of the project, if I -- from the slide that Doug walked through, if I heard you all right, you expect the project would generate a $2,500 gold prices over $150 million in cash flow per year that puts you all today your market cap at less than 1x that potential cash flow generation. Do I have that right?

That would be correct. For those first 3 years, our stabilized cash flow is closer to $100 million, between $80 million and $100 million. But that is correct.

Okay. And then my last one is kind of coming back to the expansion opportunities and then maybe framing that a bit more. And so if we fast forward 5 years and Mt Todd is operating, Fred, what advice do you give to the operator of the project at that time? Are you advising them to conduct more exploration drilling? Are you starting to think about some of the ounces that you have behind in the feasibility study? Where is the go-forward opportunity then? What approach might you advise an operator to take?

I think the answer, Brendan, is yes. All of the above. As soon as the project starts to free cash flow, I think that there will be a certain amount of the money after paying off debt that will be dedicated to exploration. I would suggest that within the first year or two that we'll be beginning to evaluate at least on a desktop basis, what an expansion scenario might look like both with regards to size and timing. Maria and the Mining Plus team have just done a phenomenal job to optimize the mine schedule to give us the best production in the first 3 years of the project after ramp-up and commissioning and then a very stable production profile after that. And that there could be a change in thinking in that regard if there was an expansion that was contemplated. Obviously, the advantages of the expansion would be the economies of scale that would be realized would allow us to drop the cutoff grade. There would be more ounces being produced. There's a number of things that would come into play. But I think that once the project is up running, producing gold at expected levels that there will be a number of different activities going on looking at how do we further optimize and ultimately expand the Mt Todd project. And that will include exploration close to the Batman deposit. It will include exploration that's been deferred on exploration licenses. I think that it will be an exciting period of time.

The last question comes from Adrian Day with Adrian Day Asset Management.

Well, I've got 2 questions, as I said. The first one, if I may, -- so what is your cash balance? And what is the budget, let's say, for the rest of the year, the burn rate and then any other programs that you have for the balance of the year?

Adrian, it's Doug again. Yes. So our cash balance, you could project out from our last published number, which was March 31, but just the typical straight line that Vista has, it will be about $12 million as we get to June 30. And then our overall run rate is really about the same. It kind of looks like $6 million a year in terms of...

So not really coming down. Now you publish this just okay about the same.

Yes. It comes after the study is done, we're still -- obviously, we have work to do to get the final documents published. But it will come back. The $6 million is our historic run rate, and that really hasn't changed.

$1.5 million a quarter.

And I assume no advance on sell in the mill.

No. We sold a few pieces, but there's been no additional activity on that old mill that we have.

Okay. And that's really the last sort of other asset that you have to sell? Is that there's no other -- or am I missing? I mean there's no other joint ventures or royalties or partnerships or no. Okay. Okay. And then my last question, if I may. I'm just wondering, when you first had the process with CIBC part of -- I don't want to say lack of interest, I don't mean that. Part of the issue, if you like, was the gold price and not active M&A. Obviously, in the last -- is it 3 years we've had a high gold price, and we've had more M&A. So my question would be -- I mean, a, is CIBC still an adviser? And as -- with the increase in the gold price and with the increase in M&A, has there been any more interest? Or is anyone just waiting for this feasibility?

Yes. CIBC continues to be an adviser, first of all. And second of all, there has been kind of renewed interest since the first of the year when we announced that we were undertaking this new feasibility study. We have signed a number of confidentiality agreements in the last 6 weeks. We expect that there will be other confidentiality agreements that are signed in the coming weeks. Doug and I are leaving Friday night to travel to Australia for diggers and dealers, and we expect to be talking to a number of the Australian gold producers about Mt Todd. You raised the issue about an increase in M&A. And certainly, if we look at M&A as a big bucket, we would agree. But when we look at the amount of M&A involving development stage projects, it's actually been quite modest that most of the M&A activity has been producers acquiring other producers at all different levels through the production profile. And that's something that we really hadn't anticipated. And as I've talked to others, that's been a little bit of a surprising outcome as the gold price has risen is that there's been a very strong preference toward consolidation amongst producers and not much interest in developers. It's our opinion, our belief that, that can't go on indefinitely. And that at some point, there's got to be a bit more of a shift in focus to the producers starting to look at worthwhile projects in the development space, not all projects will be considered. But we've designed Mt Todd, and I think that we have the jurisdiction permitting status and now the size and the capital cost structure where we become, we become very relevant and very, very competitive in that arena.

Yes. No, good point about developers. Yes. Okay. Okay. Well, that's good. Well, good luck, diggers and whatever is called dealers.

Diggers and dealers. Fine Australian institution.

There are no further questions at this time. So I will now turn the call over to Fred Earnest for closing remarks. Please continue.

Thank you, Natasha. We really appreciate everyone's interest today. The questions that have been asked have been excellent. I close with the following thought. We have been advancing and working on Mt Todd for a considerable period of time. We've done an extensive amount of work to understand the deposit, the geology, the metallurgy, and with this study, we have embarked on what we believe is a very significant paradigm shift in developing the project. The decision to raise the cutoff grade has increased the grade of reserves. We think that that's a very, very important decision resizing and rightsizing the project has allowed us to achieve a tremendous reduction in the initial capital of the project. The work that's been done by a very dedicated, experienced, well-qualified group of engineers and consultants, firms that have just tremendous track records in advancing, evaluating, designing and ultimately building projects in Western Australia has given us great confidence in the results of the feasibility study. And I'm very pleased that we're now at a point where we're able to discuss a project with an initial CapEx that we believe is achievable, both from a realistic being able to build it for that price point of view, but also from a perspective of being able to finance that number. We're very pleased with the economic results, the NPV 5 after tax of $1.1 billion at a $2,500 gold price and double that at spot with IRRs of 27.8% and 44.8% or 44.7%, respectively. I think speak very powerfully to economics of the project and the sustained leverage to the price of gold that we enjoy at Mt Todd. We're very excited about the development opportunities and the potential and we look forward to the next 6 to 8 weeks or 12 weeks, and the work that we're going to be doing to broadly raise awareness of the Mt Todd project. This is an exciting period of time. We haven't -- we have a strong gold price. We're very, very optimistic about the interest that's already been shown in the project, and we hope to generate more and be able to make a decision ultimately that will create and realize the most value for Vista shareholders. We've not talked a lot about all-in sustaining costs, but our all-in sustaining costs, I think, is another, it's a very defendable number. It's not at the low end of the curve. It's not at the high end, at $1,450 roughly an ounce this provides an exceptional amount of opportunity for margin and profitability, and I think that, that's shown in the economic results that we reported today. I'd just like to close with an expression of gratitude to and acknowledgment of the considerable efforts of Maria and Doug and Glen on our team and all of the consultants that worked on this. They've done an incredible amount of work. I believe it's been very good work, high-quality work. It's not a lot of times where you can embark on a feasibility study and 7.5 months later, deliver results. And I think they've done a tremendous job. And so we look forward to communicating and spreading the word, the results of this feasibility study. We will be attending as we indicated, Diggers and Dealers in Australia. We'll be at the Precious Metals Conference in Beaver Creek, the Gold Forum Americas in Colorado Springs in September, and we'll be participating in a number of different interviews, podcasts and other forums to publicize the work. We invite questions. If you have any questions, please feel free to reach out directly to Pamela Solly. And if Pam can't answer it, she will get the right people on the phone call to answer your questions. We think that this represents a turning point in the valuation of Vista Gold and we're excited to be able to deliver these results and embark on a journey that we think will create greater value for our shareholders. So with that, I thank all of you for your time, and we wish you all a very pleasant day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.