DENVER, Aug. 4 /CNW/ -- Vista Gold Corp.
(Amex: VGZ; Toronto) announces that Canyon Resources Corporation (Amex: CAU)
has advised Vista that Canyon will not be exercising its option to acquire the
Hycroft mine near Winnemucca, Nevada. In January 2005, Canyon entered into a
six month option agreement with Vista to expend US$0.5 million for drilling,
engineering and due-diligence review to acquire the mine for US$4.0 million in
cash plus US$6.0 million in Canyon equity units consisting of one common share
and one warrant for half a share.
Canyon completed a 33-hole drilling program totaling 12,475 feet and
undertook a comprehensive study to restart operations at Hycroft. Assaying
was done by American Assay Laboratories of Sparks, Nevada. The drilling
program confirmed average grades for the ore body but Canyon noted that
increased costs, as well as shortages of labor and large mining equipment were
contributing factors in its decision not to proceed. Vista received the data
from Canyon's work at the time of notification and has not completed a review
of all the information. However, a resource study in accordance with Canadian
National Instrument 43-101 guidelines was completed by Ore Reserves
Engineering of Lakewood, Colorado, under the direction of Mr. Alan Noble, P.
Eng., a qualified person independent of Canyon or Vista.
The re-estimation of gold resources, based on 587 drill holes with a total
of 52,889 assay intervals covering 267,280 feet, resulted in increasing the
measured and indicated resources at the Brimstone deposit some 30% from the
previous estimate by Mine Development Associates of Reno, Nevada, as announced
by Vista in September 2004. The inferred gold resources decreased slightly
from the 2004 estimate to the current estimate. A comparison of the gold
resource estimates is shown in the following table.
Brimstone Gold Resources
(0.005 opt cyanide-soluble gold cutoff grade)
Mine Development Associates 2004
Resource Short Fire Assay Contained
Category Tons Gold Grade Gold Ounces
(millions) (opt)
Measured 1) 23.3 0.0165 385,100
Indicated 1) 24.2 0.0153 369,400
Total M&I 47.5 0.0159 754,600
Inferred 2) 12 0.0111 133,600
Brimstone Gold Resources
(0.005 opt cyanide-soluble gold cutoff grade)
Ore Reserves Engineering 2005
Resource Short Fire Assay Contained Difference
Category Tons Gold Grade Gold Ounces
(millions) (opt)
Measured 1) 17.2 0.02 351,000
Indicated 1) 35.5 0.018 627,000
Total M&I 52.7 0.019 978,000 30%
Inferred 2) 8.7 0.015 127,000 -5%
1) Cautionary Note to U.S. Investors concerning estimates of Measured and
Indicated Resources: This table uses the terms "measured 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.
2) 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, except in rare cases. U.S. investors are cautioned not to
assume that any part or all of an inferred resource exists or is
economically or legally mineable.
Mike Richings, Vista President and CEO, commented, "Although we believe
this is an excellent time for gold producers to expand or commence new gold
production, we can understand Canyon's concerns over the severe inflation in
mine production costs in the mining industry. One only has to look at recent
results from major mining companies, which are better able to deal with
inflation, to observe the impact of inflation on gold production costs. We
believe this will eventually affect gold supply, accelerating the onset of
higher gold prices. Vista will continue its strategy of acquiring and holding
gold resource properties, while waiting for higher gold prices, when
significant premiums from the sale, joint venture or gold production can be
realized from these properties. Vista will continue to hold the Hycroft mine
until an appropriately valued opportunity arises."
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 and 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, and the Awak Mas project in Indonesia.
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.
