Vista Gold (VGZ) – fundamentálny pohľad

VGZ považovaná za junior gold stock by nemala chýbať v portfóliu každého PMs investora.

VGZ has been one of the most popular junior gold stocks throughout this entire secular gold bull to date, de-servedly so. Since its low below $1.00 in late 2000, VGZ shares have soared over 2,000% to its recent bull-to-date high just above $13.00! And you can’t get more bullish on the future of gold than this Denver-based management team that has accumulated a portfolio that contains over 18 million ounces of gold resources. With a still-small market cap under $300 million, Vista Gold should have a lot more room to run as this gold bull gallops forward.


Vista Gold has a strategy that is far different from most juniors. As stated in its profile, its strategy is to acquire quality gold projects in low-risk environments, increase its gold resources through strategic drilling and work to im-prove the economics of its projects. This strategy comes across with normality, but whereas most juniors set their sights on transforming a gold deposit into a producing gold mine as soon as possible, Vista Gold wants to keep its gold in the ground as the price of gold continues to rise. In its 20-year history of exploration and actual production, Vista Gold has shifted its focus to capture the essence of this secular gold bull. Vista Gold claims to aim this strategy to-wards the investor looking for a continuous call option on gold. Seabridge Gold has a similar strategy that has also been very successful for its shareholders.


As mentioned, Vista Gold has a very strong portfolio of projects. It currently has 13 excellent gold projects that house a combined 13 million ounces of measured and indi-cated gold resources along with over 5 million ounces in the inferred category. Its current projects are spread all over the globe located in the U.S., Mexico, Bolivia, Indonesia and Australia. In the past several years VGZ has acquired these projects for dirt cheap due to management’s knack for patient and prudent decision making as they grow Vista’s portfolio. VGZ usually obtains projects that already have defined gold resources and then proceeds with its own technical studies, feasibility studies and continued explora-tion to further grow the resources. When VGZ decides to either develop, joint venture or outright sell its holdings, its goal is to make sure the project is primed for success.


Vista considers its gold a “natural” hedge against infla-tion with the mindset that in the ground it has more leverage and less risk. By less risk Vista Gold refers to the fact that it steers clear of production risk, hedging risk and exploration risk. And by exonerating itself from exploration risk, this refers to avoiding greenfields exploration risk. Greenfields exploration is the poke-and-find method of exploring a broad target area with initial favorable geology with little or no evidence of mineralization. This type of exploration iswhat many juniors as well as producers plow a lot of capital into with hopes of discovering an economically mineable deposit. Greenfields exploration is very necessary in the metals industry in order to maintain overall longevity. But there is obvious risk associated with it as there is a high probability there may not be a deposit worthy of exploitation in which all the invested capital put into initial exploration ends up good-for-naught. VGZ does perform continual ex-ploration on its defined deposits, but its exploration risks are more contained than most other gold explorers.


At each of its 13 gold projects, Vista Gold provides re-source estimates through technical reports performed by independent consultants. As it advances exploration on its projects, VGZ tries to continually revise its resources through updated technical reports. Each of these reports details resources that are NI 43-101 compliant. Now going off track a little, since many of the stocks I am covering are junior explorers that may not possess proven economically mineable reserves yet, when I refer to resources it is likely they are NI 43-101 compliant. Briefly, NI 43-101 is a rule developed by the Canadian Securities Administrators. This rule in essence governs how miners can disclose their resources to the public and by whom this technical and scientific information can be gathered and certified. The company or individual that is contracted by a miner to perform these studies must meet the 43-101 guidelines as a “qualified person”. Now I will give you a blanket warning about the risk that comes with the term resources. As mentioned, resources are not yet proven to be economically recoverable. In many cases an extensive feasibility study can upgrade resources to economically mineable reserves. But in general there is no guarantee that a resource will ever be mined. In fact, the U.S. Securities and Exchange Commission will not recognize resources as any measure of economic significance. As hinted at by this SEC stance, the lack of proven reserves stand as the largest risk in investing in junior explorers and a big reason why many juniors only list their stock on the Canadian stock exchanges. But with big risks the opportunities for big rewards are present with these juniors. If their resources eventually prove economical, legendary gains can be won by the prudent investors and speculators who performed their due diligence and deployed their capital in the right company at the right time.


Back to Vista Gold, included in its current portfolio are three advanced projects that not only host economically mineable reserves but come equipped with mining permits. The Paredones Amarillos project serves as its flagship asset. Located just south of La Paz, Mexico, this excellentproject just recently went through an updated feasibility study that revealed gold reserves of over 1.5 million ounces that are mineable at cash costs of around $300 per ounce. This potential mine should be very attractive when Vista decides to market it as it is expected to produce 113,000 ounces of gold annually over a mining life of nearly 13 years. Interestingly, Paredones Amarillos was acquired at the beginning of this gold bull for what amounts to a mere $1 per ounce of gold resource. What a deal!


VGZ’s next advanced project is its Amayapampa project in Bolivia. A 2000 feasibility study revealed over 500,000 ounces of gold reserves that could be mined for cash costs under $200 per ounce. VGZ is currently in agreement to sell this project to Luzon Minerals for cash, shares and a royalty. Luzon is in the process of updating the feasibility study and finalizing the agreement. VGZ’s third advanced project is its Hycroft mine located in Nevada. Hycroft was actually an operating gold mine until it was put on care-and-maintenance in 1998. This mine sits on a huge deposit that has the potential to contain up to 6 million ounces of gold and 150 million ounces of silver. An updated feasibility study was completed earlier this year showing the economicsare primed for a mine restart. It has nearly 700,000 ounces of identified reserves and is expected to produce 75,000 ounces annually over its first five years of renewed operations.


With continued efforts to improve the economics of its projects, at a glance Vista Gold has the looks of a soon-to-be gold producer. But in sticking with its theme of acquiring and growing its resources while holding them in the ground waiting for higher gold prices, VGZ continually tries to in-crease its leverage and attractiveness to investors. In addi-tion to its recent dealings with Amayapampa, Vista has kept active by recently entering into an agreement to divest all of its Nevada properties, including Hycroft. In an interesting move, VGZ plans to spin off its Nevada holdings and combine them with the Nevada holdings of a private investment group. These combined assets will then establish the base for a new publicly-traded company called Allied Nevada Gold Corp. This is actually quite an interesting arrangement as this combined portfolio of properties would represent one of Nevada’s largest exploration land holdings. And much of these exploration properties lie within the famous Carlin, Cortez and Battle Mountain trends.


By performing this en-deavor, Vista Gold believes its Nevada properties will get the market recognition they deserve with its interest in the new company being an excellent investment. If this indeed goes through, which is supposed to happen by the end of the year, Vista Gold will surrender sole ownership of its 5 million ounces of Nevada resources. But this actually looks to be a pretty good deal for shareholders. VGZ sharehold-ers would receive new shares of VGZ in addition to shares of Allied Nevada which should turn out to be very popular in the junior gold world considering the renewed interest in Nevada explorers. Though the new Vista Gold would have less assets than before, it would still be a top-tier junior with over 13 million ounces of total gold resources. And the Allied Nevada investment should make a nice compliment.


Vista Gold’s fundamental growth throughout this gold bull has been very impressive. From 2002 through 2005, VGZ has spent $24 million in acquiring 13 million ounces of gold. This amounts to Vista paying $1.83 per ounce with its total resources now pegging each outstanding share of VGZ stock to the equivalent of about 0.6 ounce of gold. The bot-tom line is Vista Gold’s unique business plan has worked very well thus far and it should continue to stay this path intothe future. With its solid balance sheet and excellent management, Vista Gold has ample cash and ambition to continue to fund acquisitions, exploration and continued technical and feasibility studies to improve its portfolio of assets. VGZ will likely remain one of the top gold juniors for the duration of this gold bull and should be highly considered in one’s junior gold-stock portfolio.


23.04.2007

Watch in 2009 :  GMO, LPSN, URZ, USU, SDA, GNVC, HNT, SRLM a mining juniors 

                                   

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