Vista Gold (VGZ) is the second of two free articles I am providing on the 2014 Denver Gold Forum. Background information on the pre-feasibility and sum of parts may be found in the archives. This post focuses on more recent developments. Vista’s full presentation is here.

VGZ’s Mt. Todd project is very advanced, and the company recently received its EIS from the Northwest Territories in Australia. The final mine permit is due in about six months.

It is the third largest deposit in Australia with 5.9 million ounces of reserves and an additional 7.9 million in resources giving it high optionality to gold prices. This is a brownfield project with existing infrastructure in place. Power is provided by existing natural gas pipelines.

Although Mt. Todd would be a substantial — approximately 12-year life-of-mine producer (at current prices) — and the capex is reasonable for this type of hard-rock development, it would be slightly marginal at $1,250 PoG, although highly responsive to a gold price move higher. The pre-feasibility established a sweet spot of 30,000-50,000 tpd processing. Notice that the lower capex 33,000 tpd plan used a PoG of only $925 an ounce.

Full feasibility is due in four to six months, which checks off the rest of the boxes, and it will re-quote equipment and other construction costs. CEO Earnest said no major changes are expected, but others are reporting lower capex costs (see True Gold). There are new drilling targets at Snow Drop and Golden Eye, and resources to reserves conversion of ounces at Quigley that could enhance project economics a notch or two.

The market valuation of VGZ can only be described as absurd. With 82.3 million shares out, the market cap is a mere $36 million. There is $5.7 million in cash, but Vista is also monetizing non-core assets. The $6 million payment from Invecture arrives in January, and the company is in advanced talks to sell a 10 tpd mill in Mexico for about $10 million. In addition, VGZ holds $10 million in Midas shares and a royalty interest. Earnest said they will not go to market short of $1.25. That share price might be the threshold for a development JV as well.

As you can see from the chart below, the sum of the parts cited above equals even more than current market cap with zero consideration given to Mt. Todd. Among the finite stable of development projects in good jurisdictions, Mt. Todd should rank high. Australia also recently rolled back its mining tax to give the industry some relief.

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