Vista Gold Corp. (TSX: VGZ; NYSE-AM: VGZ) has completed a new prefeasibility study on its 100% owned Mt Todd gold project in Australia’s Northern Territory that shows the project has the capacity to become the country’s fourth largest gold mine.
Vista acquired the project, located 250 km southeast of Darwin, in 2006, already decked out with infrastructure. Since then it has tripled the resource and invested over US$100 million into the property.
“Whether you look at it and say Vista paid about $2 million to acquire Mt Todd and all we got was infrastructure, or whether you say we spent that money and we got 3 million ounces of resource that we were able to triple, it’s a toss-up in my mind,” says Vista Gold President and CEO Frederick Earnest. “But how ever you look at it, we got a phenomenal buy.”
Mt Todd’s resource now stands at 297 million measured and indicated tonnes grading 0.82 gram gold per tonne for 7.82 million oz. gold across its Batman and Quigleys deposits. An additional 63 million tonnes in the inferred category are grading 0.72 grams gold for 1.46 million oz. gold. This resource includes a reserve estimate for the Batman deposit of 221 million proven and probable tonnes grading 0.82 grams gold for 5.85 million oz. gold.
In what is now an outdated plan, Vista believed it needed a gold price of US$1,600 per oz. to achieve an internal rate of return higher than 20%. And so, it began looking at ways to improve the fundamental performance and economics of the project, and ended up taking “a long, hard look at automated sorting.”
Earnest explains that because sulphide minerals are denser than sedimentary rocks, Vista will be able to use x-ray sorting.
With this off-the-shelf but underused technology, Vista would x-ray rocks moving across a conveyor belt. The sedimentary rocks show up as grey silhouettes whereas the sulphide mineralization shows up as white spots within the rocks. A sensor transmits images to a computer, which analyzes the shapes and sorts out those with a certain percentage of bright white spots.
The technology would reject approximately 10% of the plant feed, and reduce the grinding, leaching, tailings and handling costs proportionally. The average grade of the rejected material in testwork varies between 0.07 and 0.23 gram gold per tonne. Vista’s lower cut off for economic ore is 0.4 gram gold per tonne, so this is material that would cost more money to process than Vista would recover in gold.
“The challenge for us in the gold industry is that we’re not sorting gold,” says Earnest. “We can’t detect the gold, and so we have to sort something that the gold is associated with, and that’s why this works.
“We are not in the business of funding R&D and developing technology. We have achieved a significant step forward by evaluating proven technology and applying it to the challenges present in our project. Our goal is to incorporate proven, off-the-shelf technology and generate results with minimal project risk.”
Earnest says that with this technology, Vista has a project that is economically viable, with an after tax IRR of 20.5% at a US$1,300 per oz. gold price and a $0.80 USD:AUD exchange rate.
In 2014 Vista got approval for the project’s environmental impact statement, but shortly after, the Commonwealth government intervened with concerns around the safety of a small bird native to the area called the Gouldian finch.
In mid-January 2018, Vista received that environmental approval. It now has all the major environmental permits for the project to go forward.
“The Commonwealth government is very interested in making sure that we’ve addressed even the smallest questions,” says Earnest. “Ultimately we maintained open lines of communication and met with people on a regular basis. We felt that they were truly seeking to help us get a permit that genuinely protects the species.”
Vista now intends to continue building value in its brand. It still has some drilling and metallurgical work to carry out at its smaller Quigleys deposit, which has higher grades and higher stripping requirements than the Batman deposit.
Mt Todd has a three-year stripping spike built into its mine plan. During that period, Vista would process lower grade material from the Batman deposit. It intends to define a pit shape at Quigleys that it hopes could start supplementing the mill feed at the start of the stripping spike.
“Mt Todd is now positioned with several strategic options. We are not going to rush into a development decision,” says Earnest. “We want to get value in the company. We want to answer a couple of these last questions and we want to have confidence that the gold price is going to stay in the range where it is today.”
Shares of Vista Gold are valued at $1.02 with a 52-week range of 77¢ to $1.61. The company has a market cap of $105 million.
— The preceding Joint Venture Article is promoted content sponsored by Vista Gold Corp. and written in conjunction with The Northern Miner. Visit www.vistagold.com to learn more.