5 days ago
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New study could unlock Vista Gold's Mt Todd Projects' full potential
By Peter Kennedy
Vista Gold Corp. (TSX:VGZ) is generating renewed interest in its Mt Todd gold project in Australia by completing a new feasibility study that will dramatically reduce the cost of development. (Source: Resource World Magazine Inc.)
The new feasibility study (FS), which is expected to be released in July 2025, will be an update on an earlier FS completed in 2022, with material project costs updated in 2024, demonstrating strong economics for development of 50,000 tonnes per day, nominally 17.5 million tonnes per annum operation. The 2024 study pegged the development cost at over $1.0 billion, a target that deterred major gold industry players who might have been mulling a joint venture interest.
In December 2024, Vista launched a new Mt Todd feasibility study that aims to increase the reserve grade to 1 g/t gold using a higher cut-off grade and reduce the initial capex by 60% to about $400 million while achieving annual gold production ranging from 150,000 to 200,000 ounces from throughput rate of 15,000 tonnes per day or 5.2 million tonnes annually.
By using contract mining, third-party power generation, and construction practices commonly used in Australia, the company believes there is an opportunity to maintain high capital efficiency at this project scale.
'We believe the release of the 15,000 tpd feasibility study results will be well-timed in the current gold cycle and serve as a catalyst to accelerate value creation,'' said Vista Gold President and CEO Fred Earnest. 'Mt Todd has tremendous leverage to gold. If prices were to go higher, it would be a tremendous thing for shareholders.' Earnest has been CEO since 2012 and a senior officer at Vista since 2006. (Source: Resource World Magazine Inc.)
Vista has previously said its 100% owned Mt Todd project is positioned to be one of Australia's largest and lowest cost new gold producers. Located in Northern Territory, about 250 kilometres southeast of Darwin, Mt Todd contains more than 7.8 million ounces of gold resources in the measured and indicated categories. The project is in an area that the company has described as one of the world's most attractive mining jurisdictions.
Former owner/operator Pegasus Gold built an 8.0 million tonnes per year flotation carbon-in-leach plant to improve recoveries from the Batman Deposit that were achieved by a heap leach operation. The plant was commissioned in November 1996 but was shut down in mid-1997 when the price of gold fell below US$300 an ounce.
Vista Gold acquired Mt Todd in 2006 through a series of contracts with Pegasus Gold Australia, the Jawoyn Aboriginal Association Corp. (JAAC), the Northern Territory Government (NGT). The JAAC are the freehold owners of the surface land in the area of the Mt Todd project.
Completion of the new 15,000 tonne per day feasibility study is key to creating long term value for shareholders. It aims to demonstrate an achievable path for project development through a joint venture partnership. However, the company believes the project could be advanced on a stand-alone basis under the right market conditions. (Source: Resource World Magazine Inc.)
Speaking in an interview from his Colorado office, Earnest said the Mt Todd project has a lot going for it, including existing infrastructure that he believes will reduce the development risk and shorten the production timeline. They include paved roads to the mine site, connection to the electric grid and a natural gas pipeline to the site.
'Mt Todd is a permitted, ready-to-build development opportunity in the current environment of a strong gold market and diminishing major deposit discoveries,'' Earnest said.
However, he said the company has had to grapple with the fact that major industry players tend to choose projects that offer immediate cash flow. 'Presently this suggests that producers view operational risk as being easier to overcome than development risk,'' he explained.
However, it is worth noting that ready-to-build projects like Mt Todd are positioned as valuable assets in an environment of decreasing major gold discoveries. Since 2020, there have been only five major discoveries with a total of 17 million ounces of gold, according to S&P Gold Market Intelligence, August 8, 2024. Recent discoveries are scarce and smaller in size with an average of 3.5 million ounces compared to the 5.5-million-ounce average from 2010 to 2019.
As a result, Earnest takes the view that scarcity of new discoveries will drive greater focus on optimizing existing projects and acquiring advanced stage projects.
Watching the situation closely will be Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) which agreed in December 2023, to spend $20 million to acquire a royalty interest in the Mt Todd project.
Under the agreement, Wheaton pledged to acquire a royalty equal to 1.0% of gross revenue from the sale or disposition of minerals from the project, subject to certain adjustments. In return for the asset, Wheaton agreed to provide Vista with $20 million to advance Mt Todd and for general corporate purposes.
The royalty is at a rate of 1.0% of gross revenue from the project if completion objectives for the project are achieved by April 1, 2028. Thereafter, the royalty shall increase annually at a rate of 0.13% to a maximum of 2.0%. Any annual increases after April 1, 2028 shall be reduced on a pro rata basis to the extent that Mt Todd has initiated operations but has yet to achieve agreed upon completion objectives.
The Mt Todd project contains proven and probable reserves of 280.4 million tonnes with a grade of 0.77 g/t gold or 6.98 million ounces of gold. The measured and indicated resource stands at 299.1 million tonnes with a grade 0.82 g/t gold or 7.87 million ounces. That material is located in the Batman deposit, Heap Leach pad, and Quigley's deposit. Measured and indicated resources in the Batman Deposit currently stand at 7.36 million ounces of grade 0.82 g/t gold.
The company has said it sees district-scale exploration potential on its 1,581 square kilometres of exploration licenses. It said prior drilling within the boundaries of its mining licenses identified four promising targets on the 24-kilometre Batman Driffield Trend with potential to add 1.8 million to 3.5 million gold ounces to the resource base.
It is expected that the new feasibility study will be accompanied by a revised resource estimate that considers the higher cut-off grade.
On May 28, 2025, the shares traded at US$1.22 on NYSE American in a 52-week range of US$1.30 and US$0.46.
Resource World Magazine Inc. has prepared this editorial for general information purposes only and should not be considered a solicitation to buy or sell securities in the companies discussed herein. The information provided has been derived from sources believed to be reliable but cannot be guaranteed. This editorial does not take into account the readers investment criteria, investment expertise, financial condition, or financial goals of individual recipients and other concerns such as jurisdictional and/or legal restrictions that may exist for certain persons. Recipients should rely on their own due diligence and seek their own professional advice before investing.
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