Earnings Call Transcript - VGZ Q4 2025

Operator, Operator

Good day, ladies and gentlemen, and welcome to Vista Gold's 2025 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. Today is Friday, March 13, 2026. It's now my pleasure to introduce Pamela Solly, Vice President of Investor Relations. Please go ahead.

Pamela Solly, Vice President of Investor Relations

Thank you, John, and good day, everyone. Thank you for joining the Vista Gold 2025 Financial Results and Corporate Update Conference Call. I'm Pamela Solly, Vice President of Investor Relations. On the call today is Fred Earnest, President and Chief Executive Officer; and Doug Tobler, Chief Financial Officer. On March 11, 2026, Vista reported its operating and financial results for the year ended December 31, 2025. Copies of the news release and the annual report on Form 10-K are available on our website at www.vistagold.com. 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-K for details of 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. I'll now turn the call over to Fred Earnest.

Frederick H. Earnest, President and Chief Executive Officer

Thank you, Pam, and thank you, everyone, for joining us on the call today. We'll begin with an overview of our 2025 achievements and then discuss our outlook for 2026. Our achievements in 2025 underscore our commitment to creating greater value for our shareholders and positioning Vista and Mt Todd for long-term success. 2025 was a pivotal year for our company. The completion of the Mt Todd feasibility study in July marked an important milestone for both the project and Vista. Throughout the year, we remained focused on safety, environmental stewardship, financial discipline and delivering value for our shareholders. In November, we surpassed 4 years without a workplace incident and maintained 0 reportable environmental events and ended the year with a strong treasury, further strengthened by a recent equity raise that will support permitting, technical studies and early engineering work as we continue to advance Mt Todd. Earlier this week, we closed a $44.85 million public offering, and we're pleased with the demand and broad range of interest from resource investors. We are committed to prioritizing the efficient use of our cash and creating value for our shareholders through disciplined execution of our strategy for the Mt Todd gold project. I will discuss some of these topics in greater detail later in the call, but I'll now turn the time over to Doug Tobler for a review of our financial results for the year ended December 31, 2025.

Douglas Tobler, Chief Financial Officer

Thank you, Fred. Thanks, everybody, for joining the call as well. My comments today will provide a recap of our financial position and results of operations as presented in our 2025 Form 10-K. For additional details about our audited financial statements, this 10-K is available for review at sec.gov or sedarplus.ca. And all of the amounts that I mention today will be in U.S. dollars. Vista ended 2025 with cash on hand of $13.6 million and has recently completed an equity offering with net proceeds of $41.9 million. Securing these funds comes at a very important time because it provides Vista with immediate ability to fund the programs that Fred will mention later in this discussion. We are now well positioned from a financial perspective to execute on our objective to begin detailed engineering in 2027. We also continue to have a clean balance sheet with no debt. Turning to our results of operations. 2025 concluded as we expected with the majority of our expenditures relating to Mt Todd, while we held our corporate costs consistent with 2024. Overall, Vista reported a net loss of $7.5 million for the year ended December 31, 2025. This compared to net income of $11.2 million for 2024. The swing between years is largely accounted for by three things. First, we recognized a $16.9 million gain in 2024 that related to our grant of a royalty interest to Wheaton Precious Metals. Secondly, during 2024, we capitalized $1.9 million of drilling and other cost expenditures that qualified as development costs. And lastly, we sold used mill equipment in 2024 for net proceeds of $800,000. Key components of our results of operations include Mt Todd-related expenditures and corporate administration. Our exploration and other expenses for Mt Todd were $5.6 million in 2025 compared to $3.5 million in 2024. This variance is mostly the result of having capitalized $1.9 million of development costs in '24, as I mentioned previously. Aside from our recurring site-related activities at Mt Todd, our priorities in '25 were largely associated with completing the 2025 feasibility study, while in '24, we carried out a drilling program in the area of the Batman pit and the South Cross Lode. And as I mentioned, we continue to hold our corporate administration expenses steady on a year-over-year basis. In 2025, these expenses totaled $3.6 million compared to $3.7 million for 2024. That concludes my remarks. I'll turn the call back to Fred now. Thank you.

Frederick H. Earnest, President and Chief Executive Officer

Thank you, Doug. As I indicated previously, in July of 2025, we completed a new feasibility study for our Mt Todd gold project that presents a new vision for the project as a 15,000 tonne per day operation. The completion of the new feasibility study was a defining moment for Mt Todd and Vista. The study demonstrates an achievable path to near-term production centered on a smaller, initial operation that prioritizes higher grade ore to the processing plant, significantly lowers initial capital costs and incorporates contract services to reduce development and operational risks. At the feasibility study gold price of $2,500 per ounce, the net present value at a 5% discount rate or NPV5 was estimated to be $1.1 billion. The internal rate of return was estimated to be 27.8%, and the payback period was 2.7 years. At a $3,300 gold price, the NPV5 was estimated to be $2.2 billion with an IRR or internal rate of return of 44.7% and a payback period of 1.7 years. At a $5,000 gold price, the NPV5 is estimated to be $4.5 billion, and the IRR is estimated to be 74.5% with a 1.3-year payback period. For additional information on the feasibility study results, please refer to Vista's news release dated July 29, 2025, and the feasibility study presentation, both of which can be found on our company website. Since completing the 2025 feasibility study, we have prioritized work to support the start of detailed engineering and design. Recent drilling has provided core for selective metallurgical testing to confirm grind size, gold recoveries and optimal selection and sizing of grinding equipment. We have completed a preliminary geotechnical review to assess the opportunity to steepen the west pit wall, reduce stripping and potentially convert additional mineral resources to mineral reserves. I'm pleased to report that based on this review, we plan to commence geotechnical drilling at the conclusion of the wet season at Mt Todd, in other words, in the next month or so, and complete a new geotechnical study for the Batman pit. During the fourth quarter of 2025, we began the process of modifying our existing key permits to align with the designs and operating plans in the 2025 Mt Todd feasibility study. Applications were submitted for several modifications with additional applications planned for this year. In January, we hired an approvals manager, Dr. Francis Kuranchie, to complement our operations team in Darwin. His primary responsibility is to manage the permit modification and approval processes. Talking for a moment about safety and ESG. Throughout 2025, we remained firmly committed to safety, environmental stewardship and the interest of our stakeholders. In November, we surpassed 4 consecutive years without a workplace incident, which is a testament to our strong safety culture. Our site team continued to successfully advance Mt Todd's environmental initiatives with 0 reportable incidents, and management continued its proactive engagement with the Jawoyn Aboriginal Association Corporation and other key stakeholders. In 2026, we are focused on building the technical and organizational foundation required for project execution. This includes advancing the technical studies I mentioned earlier, completing ongoing permit modification activities and building an Australian-based team to lead the development and operation of Mt Todd. This team is expected to include a small executive group based in Perth and a larger operational presence based in the Northern Territory. In addition to the recently hired approvals manager in February, we announced 2 key appointments to our Perth team, including an Executive General Manager of Projects and Technical Services and an Executive General Manager of External Relations and Social Performance. We expect to make additional announcements in the coming months as we continue to add to our project team. Completing this work is an important prerequisite to initiating detailed engineering and design, which we expect to begin in 2027. The decision to commence detailed engineering and design is expected to mark the start of an approximately 27-month period of design, construction and commissioning, culminating in first gold production. Looking ahead, we believe Mt Todd holds tremendous intrinsic value and represents an exceptional investment opportunity at conservative long-term gold prices. With an all-in sustaining cost of roughly $1,500 per ounce and a very conservative gold price of $3,300 per ounce, the Mt Todd project will generate $300 million of free cash flow annually. At a $2,500 gold price, the study net asset value per share is $7.31 per share on the currently number of issued and outstanding shares. And at a $3,300 gold price, the study net asset value per share is $14.89 per share, which is a little over 7 times our current share price. We are very pleased with our share price performance in 2025, which reflects not only the rising gold price but also the market's strong support of the new Mt Todd 15,000 tonne per day feasibility study. For the year ended 2025, Vista's shares increased almost 252% compared to the year-end 2024. Following our recent financing that closed earlier this week, our current market capitalization is approximately $300 million. We anticipate that sustained strength in the gold price will continue to positively influence Vista's share price performance. Today, with higher gold prices and growing investor interest, Mt Todd is positioned as one of the most attractive development stage projects in the gold sector. Its strong project economics, favorable jurisdiction, permitting status and existing infrastructure make it well suited for near-term development. We are confident that this is the right market environment in which to advance Mt Todd. In conclusion, Vista is committed to seeing Mt Todd developed in compliance with the highest mining and ESG standards, and we will work diligently toward that goal. For more information about Mt Todd and Vista Gold, I refer you to our corporate presentation, which can be found on our website at www.vistagold.com. We believe that Vista Gold represents an exceptional investment opportunity and at current prices represent a tremendous opportunity to establish a position or increase one's holdings in Vista Gold. This concludes my formal remarks, and we will now respond to any questions from participants on the call.

Operator, Operator

Our first question comes from Heiko Ihle from H.C. Wainwright.

Unknown Analyst, Analyst

It's Heiko Ihle from H.C. Wainwright. My first question is about the recent geopolitical events around the world. Could you provide some insights into the trend of discount rates for projects in geopolitically stable areas like yours?

Frederick H. Earnest, President and Chief Executive Officer

Doug, would you like to respond to that?

Douglas Tobler, Chief Financial Officer

Well, I think what you're going to see is for projects like Mt Todd sitting in the Northern Territory, which is really a Tier 1 jurisdiction. I think discount rates will be better. I think cost of debt will be better as we look to finance the project. And I think when you're looking at the NAV of the project, you can probably think in terms of a lower risk factor, so a lower discount rate. Anything that's within reach of the current conflicts and potential other conflicts, I think, will really struggle in the next couple of years.

Unknown Analyst, Analyst

And second question, we're still over $5,000 for gold and obviously, the value of Mt Todd is very sensitive to the price of gold. And in Australian dollar terms, we're pretty close to an all-time high. What kind of rumblings have you heard in regards to input cost changes given recent strength in gold price? And maybe if you could provide a bit of color on what concerns you may have with issues related to construction costs, if anything?

Frederick H. Earnest, President and Chief Executive Officer

That's an interesting question. It's something that all of us are continually watching. While the gold price has gone up in the last 9 months significantly, so far and with the exception of the last week or so in Australia, fuel prices have remained pretty constant. Obviously, what's going on in the Middle East right now is affecting global energy costs, and we will continue to watch that. That's obviously one area of concern. You'll know that we intend to generate power for the project using natural gas, which is produced in the Northern Territory. And so far, we don't see any indications that natural gas prices are being affected by what's happening there. So we continue to watch these events and as they unfold worldwide. Certainly, it's reasonable to expect some modest increase year-on-year in equipment costs and what will ultimately be the construction costs of the project. But at this point in time, we don't see any real significant changes that would dissuade our views on Mt Todd. I would just want to add one final comment, and that is that Mt Todd is very leveraged to the price of gold. And certainly, the gold prices that we are seeing today and have seen since we completed the study in July certainly highlight the tremendous leverage that we have to the gold price in a very positive way.

Operator, Operator

Our next question comes from the line of Mike Schultz from a private investor.

Unknown Attendee, Investor

My question is about the current strategy, which seems to focus on Vista mining Mt Todd independently while still being open to partnerships, especially given the indications of hiring a management team. Regarding production, 27 months has been mentioned as a potential timeline for when gold could start being produced, but this has been discussed over several months. So, from today, what would be the earliest possible time for the first ounce of gold to be produced if no partner comes forward? I understand this is just an estimate.

Frederick H. Earnest, President and Chief Executive Officer

Yes. Well, that's entirely dependent on the start of detailed engineering and design. What we've disclosed publicly is that looking at where we're at with the permit modification process that we expect that this will occur in 2027. I think our best estimate today would be that we'll be in a position to make that decision mid-2027. So if you want to add 27 months onto that date, that will give you a rough estimate of when we would expect to see first gold poured.

Operator, Operator

Our next question comes from the line of Michael Johnson, private investor.

Unknown Attendee, Investor

I have two questions. First, I noticed that you issued a number of additional outstanding shares to finance part of the project. If you do proceed, could you share your thoughts on financing options and address concerns from current shareholders about potential dilution?

Frederick H. Earnest, President and Chief Executive Officer

Yes, I'll let Doug answer that. What's your second question, so we can address them in an orderly manner here?

Unknown Analyst, Analyst

My second question is about Sun Valley Gold. I noticed they seemed to be selling a significant portion of their shares in Vista Gold. Do you have any information about that or any insights into why it might be happening?

Frederick H. Earnest, President and Chief Executive Officer

Yes, certainly. I'll respond to the second question, but first, let Doug respond to the question about financing.

Douglas Tobler, Chief Financial Officer

Sure. So if you look at the production profile for Mt Todd, it's one of the better projects I've seen in terms of structuring for financing. And financing in this day and age can take many different forms. It doesn't have to be just traditional bank debt, but that's obviously a very common source. And frankly, there's a lot of deals getting done that way as well. But if you take a project that's got the Mt Todd production profile, which is 3 years of roughly 175,000 ounces and then about 15 more years after that at very steady 150,000 ounces, that's exactly what lenders like to see. They like to see big cash flow upfront, so they can get paid back and then that puts the shareholders in line after that. So we're at the very front end of that process of looking at what avenue of leverage we'll put on the project, but early numbers would tell us that something in the order of 65% to 70% of the project can be financed, I'll call it debt, but levered. And then the balance of that would have to be equity. So when we look at what that does on a shareholder basis, on a per share basis, one of the critical things for us is making sure that we get to pay back quickly for shareholders and also that when we're done with the financing, it's accretive. So even though we will still have to issue shares for that additional 30-odd percent of the project financing, we look at it from the standpoint of where are we today. And then if we look at what our potential net asset value can be once the project is built and cash flowing and you actually switch from somewhat of an NAV model to more of a times free cash flow basis, we see the uplift as very, very significant. And when you divide that new valuation once you're in operations by an estimate of what your shares would be, it's still quite accretive to see the project go into operations. And you can see that with a number of other companies that as they ramp up towards production and get into production, their share prices move quite dramatically upward. So that's the direction that we're trying to head. So yes, there will be more shares out, but we're very focused on making sure the outcome of that on a per share basis is actually accretive, not dilutive.

Frederick H. Earnest, President and Chief Executive Officer

And Michael, with regard to your question about Sun Valley Gold, we are aware that the Sun Valley Gold Fund, who was previously a large shareholder of Vista Gold has been converted to a family office and that managed funds have been redistributed to individual investors or may have been sold. And we don't know the exact numbers. What we can disclose is what's publicly available is that Peter Palmedo, who was the President of Sun Valley Gold Fund personally holds about 933,000 shares and there's another 2.6 million shares or so that are held in Palmedo Holdings LLP. We believe that there are several tranches of a couple of million shares that were distributed to investors that continue to hold those shares in Vista Gold. But I think that the important answer to your question is that this was not necessarily Sun Valley Gold selling shares because they no longer liked Vista Gold, but rather Sun Valley Gold Fund winding down and redistributing. But because of the reporting requirements, that reporting showed up as sales when, in fact, it may not have been. So Peter Palmedo individually continues to be a very strong holder of Vista Gold as manifested by the roughly 3.5 million shares that he continues to hold as a personal investment. And the rest of that holding was obviously managed money, and we don't know with certainty whether those funds were ultimately sold or continue to be held. I hope that helps.

Operator, Operator

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

Frederick H. Earnest, President and Chief Executive Officer

Thank you, John, and thank you to everyone who has joined the call today. Reflecting on 2025, we recognize it was a very successful and pivotal year for both the project and Vista Gold, as well as for the sector due to the significant increase in gold prices. The feasibility study we completed in July has changed the direction for developing Mt Todd. We have an exciting year ahead. As mentioned, we are expanding our team to establish the technical and organizational foundation needed to advance and operate Mt Todd. I am very pleased with the talented individuals we have attracted and look forward to making announcements about our team in the coming months. We have begun modifying our permits to align with the designs and operational plans outlined in the July 2025 feasibility study. I am thrilled to have Dr. Kuranchie as our approvals manager overseeing these efforts; we have filed some modification applications and will submit more in the near future. Additionally, we are conducting technical studies that are essential for detailed engineering and design, providing final answers to questions raised in the feasibility study. The core samples have been prepared for shipment to the assay lab in the coming weeks. The drilling contractor has been selected for the geotechnical program, and we are waiting for favorable weather conditions to start onsite drilling. We will also conduct tests related to the design of a water treatment plant for the site. All these efforts are progressing well. I appreciate the strong support shown to our management team and the project through financing. We welcome several new core shareholders and value their support as we foster an ongoing relationship with each of them. I am excited about the potential this year holds, and I believe as we move forward, we will witness significant growth in the share price and value for Vista Gold. I am grateful that you took the time to join us this morning. If you have further questions, please reach out to Pamela Solly, our Vice President of Investor Relations, who can connect you with the appropriate technical personnel or others in the company to provide clarity and answers. Thank you once again for being part of this journey towards value creation. There is a tremendous opportunity ahead of us. I wish you all a pleasant and happy day.

Operator, Operator

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