DENVER, Feb. 28 /CNW/ -- Vista Gold Corp.
(Amex: VGZ; TSX) is pleased to announce that it has signed agreements on
March 1 (Australia time) with Ferrier Hodgson, the Deed Administrators ("Deed
Administrators") for Pegasus Gold Australia Pty Ltd. ("Pegasus"), the
government of the Northern Territory of Australia ("Territory") and the Jawoyn
Association Aboriginal Corporation ("JAAC"), subject to regulatory approval,
to purchase the Mt. Todd gold mine in the Northern Territory, Australia. As
part of the agreements, Vista has agreed to undertake a technical and economic
review of the mine and possibly form one or more joint ventures with the JAAC.
The agreement negotiated with the Deed Administrators calls for Vista to
pay to Pegasus AUD $1,000,000 and for Vista to receive a transfer of the
mineral leases and certain mine assets together with an assignment of all
rights of Pegasus to the Mt. Todd property.
The agreement with the Territory is for an initial term of five years
commencing January 1, 2006, with an extension of five years at Vista's option
and three additional years possible at the option of the Territory. During
the first year of the term, Vista will undertake a comprehensive technical and
environmental review of the project to evaluate current site environmental
conditions to result in a program to stabilize environmental conditions and
minimize offsite contamination, review the water management plan with
recommendations, and produce a technical report for the re-start of
operations. During the term of the agreement, Vista will examine all
technical economic and environmental issues, estimate site rehabilitation
costs, explore and evaluate the potential of the project, and prepare a
technical and economic feasibility study for the potential development of
Mt. Todd.
Vista will pay the Territory's costs of management and operation of the
Mt. Todd site up to a maximum of AUD $375,000 during the first year of the
term, and assume site management and pay management and operation costs in
following years. In the agreement, the Territory acknowledges its commitment
to rehabilitate the site and that Vista has no rehabilitation obligations for
pre-existing conditions until it submits and receives approval of a Mine
Management Plan for the resumption of mining operations. Vista has retained
MWH, one of the world's largest engineering firms specializing in
environmental sciences, to assist with the preparation of the environmental
review and water management studies. In addition, Resource Development Inc.
of Colorado, a metallurgical consulting firm, has been retained to assist with
metallurgical testing, process design and process cost input necessary for the
technical review. Recognizing the importance placed by the Territory upon
local industry participation, Vista has agreed to use, where appropriate,
Northern Territory labor and services during the period of the agreement in
connection with the Mt. Todd property, and further, that when a production
decision is reached, to prepare and execute a local Industry Participation
Plan.
The agreement with the JAAC calls for Vista to issue common shares of
Vista with a value of CAD $1.0 million as consideration for the JAAC entering
into the agreement and for rent for the use of the surface overlying the
mineral leases during the period from the effective date until a decision is
reached to begin production. Vista will also pay the JAAC AUD $5,000 per
month in return for consulting with respect to Aboriginal, cultural and
heritage issues. The JAAC will provide Vista with an office in Katherine (a
regional center of population 11,000 approximately 50 kilometers from the mine
site) and with secretarial services for a minimum of AUD $2,000 per month.
If the Mt. Todd project proves feasible for economic development of the
mineral leases including a fully funded site reclamation bond, Vista will
establish a technical oversight committee with representatives of the
Territory and the JAAC. Additionally, Vista will offer the JAAC the
opportunity for joint venture participation in the operation on a 90% Vista /
10% JAAC basis. For rent of the surface during production, Vista (or the
Joint Venture if formed) will pay the JAAC an annual amount equal to 1% of the
annual value of production with an annual minimum of AUD $50,000. As part of
the agreement, Vista will endeavor to use services and labor provided by the
JAAC when feasible. Vista and the JAAC may form a 50 / 50 exploration joint
venture to explore JAAC lands outside the mineral leases.
Pegasus reported investing over U.S. $200 million to develop the Mt. Todd
mine and operated it from 1993 to 1997, when the project was closed as a
result of technical difficulties and low gold prices. The Deed Administrators
were appointed in December 1997. Pegasus, through the Deed Administrators,
sold the mine in March 1999 to a joint venture comprising Multiplex Resources
Pty Ltd and General Gold Resources Ltd. The mine was operated from 1999 to
2000 by this joint venture. Following cessation of operations in July 2000,
Pegasus, through the Deed Administrators, regained possession of various mine
assets so as to recoup the balance of the purchase price owed to it. Most of
the equipment and plant was sold in June 2001 and removed from the mine, but
the tailings facility and raw water supply facility remain.
In 1995, a resource estimate for the Batman ore body down to a level of
302 meters below sea level was prepared by Mining and Resource Technology Pty.
Ltd. ("MRT") for Zapopan NL (a predecessor company to Pegasus). MRT estimated
that, prior to the commencement of mining, the measured and indicated
resources in the Batman deposit were 190.92 million tonnes at a grade of
0.94 grams per tonne gold and containing 5.75 million ounces of gold. Based
on a review of project files, Vista believes that approximately 24.6 million
tonnes grading 1.05 grams per tonne gold and containing 826,000 ounces of gold
were extracted between 1996 and the termination of mining in 2000. Other
resource estimates have been made in the past, the most recent by General Gold
in March 2000 just prior to mine closure and reflecting previously mined
material. This estimate reported the measured and indicated resources to a
level of 130 meters below sea level (172 meters shallower than the earlier
estimate) to be 68 million tonnes at 0.99 grams per tonne gold and containing
2.17 million gold ounces (see Note 1). These estimates were prepared using
similar methodologies; involving the preparation of a computer resource model,
in which the volumes of mineralized material were estimated based on the
chemical and statistical analyses of samples obtained from drill holes, taking
into account geology, mineralization and alteration information obtained from
surface mapping and examination of the drill samples. In the first estimate,
63,190 samples and in the second estimate, 47,029 samples were used from
diamond drill core and percussion drill chip samples. In each report
presenting the estimate, the effectiveness of sampling and assaying procedures
were reviewed.
It is important to note that the estimates reported above were carried out
prior to the establishment of Canadian National Instrument 43-101 standards.
Vista believes the historical estimates were made in accordance with
professional standards existing at the time, but has no way to judge the
validity of these estimates with respect to current standards of resource
estimation. A Qualified Person has not done sufficient work to qualify these
historical estimates as current mineral resources, and Vista is not treating
the estimates as current mineral resources as defined in sections 1.2 and
1.3 of Canadian National Instrument 43-101. These estimates should not be
relied upon. Vista intends to prepare a new estimate of mineral resources in
accordance with Canadian National Instrument 43-101 standards and has retained
Gustavson Associates of Boulder, Colorado, to complete the study. Mr. John
Rozelle, a Qualified Person, has visited the site on behalf of Vista and
expressed the opinion that there is adequate data and technical support to
complete a 43-101 compliant estimate.
Mike Richings, Vista President and CEO, stated "We know that the Batman
deposit at Mt. Todd has had significant historical gold resource estimates,
and that the mineral leases acquired by Vista have other discovered and
drilled gold deposits. We intend to proceed with a technical study to
determine the current gold resources on the mineral leases under Canadian
National Instrument 43-101 standards. The Vista team is very pleased with the
working relationships that have been established with the Jawoyn and the
Northern Territory government and to have reached agreements that work for all
parties. In time, with the right gold price, economic conditions and
technology, we believe the Mt Todd gold mine can be rebuilt and operated
profitably with appropriate environmental safeguards."
Vista Gold Corp., based in Littleton, Colorado, evaluates and acquires
gold projects with defined gold resources. Additional exploration and
technical studies are undertaken to maximize the value of the projects for
eventual development. The Corporation's holdings include the Maverick
Springs, Mountain View, Hasbrouck, Three Hills, Wildcat projects, the F.W.
Lewis, Inc. properties and the Hycroft mine, all in Nevada, the Long Valley
project in California, the Yellow Pine project in Idaho, the Paredones
Amarillos and Guadalupe de Los Reyes projects in Mexico, the Amayapampa
project in Bolivia and the Awak Mas project in Indonesia.
Note 1. Cautionary Note to U.S. Investors concerning estimates of Measured
and Indicated Resources: This press release uses the terms "measured and
indicated resources." The Corporation advises U.S. investors that while these
terms are recognized and required by Canadian regulations (under Canadian
National Instrument 43-101), 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.
The statements that are not historical facts are forward-looking
statements involving known and unknown risks and uncertainties that could
cause actual results to vary materially from targeted results. Such risks and
uncertainties include those described from time to time in the Corporation's
periodic reports, including its latest annual report on Form 10-K filed with
the U.S. Securities and Exchange Commission. The Corporation assumes no
obligation to publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise.
For further information, please contact Greg Marlier at (720) 981-1185, or
visit the Vista Gold Corp. website at www.vistagold.com
