DENVER, June 21, 2007 /PRNewswire-FirstCall via COMTEX/ -- Vista Gold Corp. (VGZ : vista gold corp com new) (CA:VGZ) ("Vista") is pleased to announce the results of an updated pre-feasibility study for the Paredones Amarillos gold project in Baja California Sur, Mexico. Vista undertook this study to confirm favorable project economics in light of the severe cost inflation which has occurred in the mining sector over the past few years, and in anticipation of making more significant expenditures on the project in 2007. The pre-feasibility study was originally completed for Vista on September 26, 2005, by Mine Development Associates (MDA) of Reno, Nevada, an independent consulting firm, in accordance with Canadian National Instrument 43-101 guidelines, under the supervision of Mr. Neil Prenn, P. Eng., a qualified person, as previously disclosed by Vista in a press release dated September 26, 2005. MDA was assisted in the study by Resource Development Incorporated (RDi) of Wheat Ridge, Colorado, in metallurgical testing, process redesign, and processing cost estimation, and by WLR Consulting (WLR) of Lakewood, Colorado, in mine design. The pre-feasibility study technical report entitled "Technical Report, Paredones Amarillos Project, Baja California Sur, Mexico" dated September 23, 2005, is available on SEDAR. The current pre-feasibility study prepared for Vista reflects mid-2007 costs and economic parameters and was completed on June 20, 2007, under the direction of Mr. Prenn, P. Eng. of MDA, with assistance from RDi.
Proven and probable mineral reserves, as reported in the September 26, 2005, press release, were determined in 2005 within a proposed open pit mine, which was designed employing a Lerchs-Grossmann optimization technique based on U.S. $400 per ounce gold price and costs prevailing in 2005. The updated study concluded that the mineral reserves are appropriate as the effects of cost inflation are more than offset by higher gold prices. The results, which have not been modified since 2005, are summarized in the following table.
Paredones Amarillos Mineral Reserve Estimate*
(0.38 g/t gold internal cutoff grade)
Classification Gold Grade Waste
Tonnes (Fire Assay Contained Tonnes Strip Ratio
(000's) g/t) Gold Ounces (000's) (Waste: Ore)
Proven(1) 11,699 1.11 419,000 -NA- -NA-
Probable(1) 37,247 0.97 1,158,000 -NA- -NA-
Totals(1) 48,946 1.00 1,577,000 170,292 3.48
* No dilution factor was applied to the mineral reserves estimated from
the block model and a 100% resource recovery factor was used.
(1) Cautionary Note to U.S. Investors concerning estimates of Proven and
Probable Reserves: The estimates of mineral reserves shown in this
table have been prepared in accordance with Canadian National
Instrument 43-101 ("NI 43-101"). The definitions of proven and
probable reserves used in NI 43-101 differ from the definitions in
U.S. Securities and Exchange Commission Industry Guide 7.
Accordingly, Vista's disclosure of mineral reserves herein may not be
comparable to information from U.S. companies subject to the reporting
and disclosure requirements of the U.S. Securities and Exchange
Commission.
The current updated study and the study in 2005 examined the technical and economic feasibility of developing the mineral reserve. Two alternatives were studied, a base case and an alternative with a shorter life but generating a higher return on investment. Both projects would employ an 11,000 tonne/day flotation/leach plant.
The base case would produce an average production of 113,000 ounces per year over a 12.5 year production life, at an average production cost of U.S. $10.39 per tonne or U.S. $358 per ounce. The pre-production capital costs are estimated to be U.S. $110 million and at a U.S. $550 per ounce gold price, the return on investment is estimated at 12.5%. At current gold prices of around U.S. $650 per ounce, the return on investment is estimated at 23.8% and net cash flow generated is estimated at U.S. $284 million on a pre-tax basis. The study also indicated the net cash flow on a pre-tax basis could increase by U.S. $55.5 million with an increase in gold price of U.S. $50 per ounce.
The alternative case which considered the development of a subset of the reserves (34.1 million tonnes compared to the total reserve of 48.9 million tonnes) would produce an average production of 117,000 ounces per year over a 9.5 year production life. The pre-production capital costs are estimated to be U.S. $108 million and production costs estimated to be U.S. $334 per ounce and the project would generate an estimated 17.4% return on investment at a gold price of U.S. $550 per ounce. At current prices of around U.S. $650 per ounce of gold, the return is estimated at 31.1% and the net cash flow generated is estimated at U.S. $236 million on a pre-tax basis.
No known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other issues are expected to materially affect the mineral resource and mineral reserve estimates.
Mike Richings, President and CEO, commented, "While costs have increased in the two years since the original study was prepared, these increases have been more than offset by the gold price increase. We believe that the results of the study are clearly favorable and give us the necessary encouragement to continue our investments on the project to complete a bankable feasibility study over the next 12 months."
Richings continued, "The potential pre-tax net cash flow generated by this project is significant at current gold prices. The implied potential value at Paredones Amarillos, together with the value of Vista's other projects including Mt. Todd and Yellow Pine, and considering other factors, would appear to support our goal of achieving a higher share price for VGZ."
The resource model used to estimate the mineral reserves was originally reported by Vista in a press release dated August 29, 2002, based on an independent technical report entitled "Technical Report for the Paredones Amarillos Project" dated August 20, 2002, prepared by Snowden Mining Industry Consultants of Vancouver, British Columbia, in compliance with Canadian National Instrument 43-101. In connection with the pre-feasibility study and the updated pre-feasibility study, Mr. Prenn, P. Eng. of MDA is of the opinion that it is reasonable to rely on this resource model for the purposes of the mineral resource and mineral reserve estimates. The mineral resources have been estimated using a three-dimensional block model and ordinary kriging. No additional drilling or sampling has occurred in the resource area since the mineral resource estimate was first completed in August of 2002. The mineral resource estimate above a 0.5 grams gold per tonne cut-off at the Paredones Amarillos Project is summarized below:
Paredones Amarillos Measured and Indicated Mineral Resource Estimate
(0.5 g/t gold cutoff)
Classification Tonnes Gold Grade Contained
(000's) (Fire Assay g/t) Gold Ounces
Measured resources(1) 11,498 1.17 431,000
Indicated resources(1) 44,170 1.02 1,451,000
Total measured and
indicated
resources(1)(2) 55,668 1.05 1,882,000
(1) Cautionary Note to U.S. Investors concerning estimates of Measured and
Indicated Resources: This table uses the terms "measured resources"
and "indicated resources". We advise U.S. investors that while these
terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S.
investors are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.
Mineral resources that are not "mineral reserves" do not have
demonstrated economic viability.
(2) Mineral reserves are included in this mineral resource estimate.
Paredones Amarillos Inferred Mineral Resource Estimate
(0.5 g/t gold cutoff)
Classification Tonnes Gold Grade Contained
(000's) (Fire Assay g/t) Gold Ounces
Inferred resources(1) 5,495 0.79 140,000
(1) Cautionary Note to U.S. Investors concerning estimates of Inferred
Resources: This table uses the term "inferred resources". We advise
U.S. investors that while this term is recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does
not recognize it. "Inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or prefeasibility
studies. U.S. investors are cautioned not to assume that any part or
all of an inferred resource exists or is economically or legally
mineable.
Mr. Prenn, P. Eng. of MDA, an independent qualified person supervised the preparation of the technical information in this press release.
Since 2001, Vista has acquired a number of discovered gold projects with the expectation that higher gold prices would significantly increase their value. As gold prices have risen, Vista has completed various preliminary economic evaluations with encouraging results on some of the projects at today's gold prices, and these projects warrant further study. Currently, Vista is undertaking technical programs to bring the most advanced projects to the point where decisions can be made to put these projects into production, either by Vista, or through sale or joint venture to other mining companies. Vista's holdings include the Paredones Amarillos and Guadalupe de los Reyes Projects in Mexico, Mt. Todd Project in Australia, Yellow Pine Project in Idaho, Awak Mas Project in Indonesia, Long Valley Project in California, and the Amayapampa Project in Bolivia.
