Vista buys Mineral Ridge from Cornucopia

Vista Gold (VGZ-T) has acquired the Mineral Ridge gold mine in southern Nevada from Cornucopia Resources (CNP-T).

In return, Vista has issued US$250,000 in stock to Cornucopia and purchased US$250,000 worth of that company’s stock. Vista also acquired all the shares of Mineral Ridge Resources, Cornucopia’s operating subsidiary, in exchange for 1.6 million Vista shares and a private placement for 2.8 million shares of Cornucopia.

The US$17-million facility poured its first gold in June 1997, only to close in December of that year, before commercial production could be achieved. Cornucopia had run out of capital, and the mine lay dormant until Vista came along.

Vista completed a technical review which concluded that the mining could resume at at profit provided certain modifications were made. These include enhancing the water supply and upgrading the crushing and agglomerating circuit.

The mine contains an estimated reserve of 4 million tons grading 0.06 oz. gold per ton, equivalent to nearly 243,000 contained ounces. The calculation is based on a mining model that utilizes a larger mining fleet than that used by Cornucopia. The new fleet will be mobilized from Vista’s Hycroft gold mine in northern Nevada, where operations are winding down. Valued at US$5 million, the fleet includes four 150-ton trucks and a 23-cubic-yard hydraulic shovel.

Mining could begin by the end of this year. As much as 55,000 oz. are scheduled to be produced for 1999 at a cash cost of US$226 per oz.

“We were able to acquire this property as a direct result of our demonstrated ability to mine and operate low-cost gold operations,” says Vista President Michael Richings.

The company has convinced Dresdner Bank to release Mineral Ridge’s hedge position to Vista. As part of the agreement, Vista will liquidate forward gold hedges on 58,000 oz. for US$3.5 million, which the company will use as working capital and to pay for capital improvements to Mineral Ridge.

The acquisition agreement calls for 70% of the cashflow from the mine to go toward repayment of the loan, leaving 30% for Vista. The company still retains hedge agreements covering 40,000 oz. at US$388 per oz., which could be used for production in 1999.

Meanwhile, the company’s Bolivian projects, Amayapampa and Capa Circa, remain on hold, pending financing.