Vista Gold economics, capex edge higher in updated Mt Todd feasibility

Vista Gold (TSX: VGZ; NYSE-AM: VGZ) has released an updated feasibility study for its Mt Todd gold project in Australia that shows slightly better economics at a higher gold price than used in a study two years earlier. It also outline a higher initial capital cost of US$1 billion, up US$138 million. 

The updated feasibility also reflects changes in U.S.-Australian exchange rates and the company’s new royalty deal.

In late 2023, Vista sold a 1% gross revenue royalty on the project to Wheaton Precious Metals (TSX: WPM, NYSE: WPM; LSE: WPM) for US$20 million. The Mt Todd, in Northern Territory, is considered to be one of the country’s largest undeveloped gold ventures, capable of producing 479,000 oz. a year.

Compared to its previous study filed in February 2022, the new report shows an improved after-tax net present value (discounted at 5%) of US$1.13 billion, up US$131.5 million, and a similar internal rate of return at 20.4%.

The figures are calculated using a gold price of US$1,800 per oz. gold price and foreign exchange rate of 0.69, versus US$1,600 per oz. and 0.71 used two years ago.

At a higher gold price of US$2,100 per oz. and a 0.66 foreign exchange rate, which the company believes are more reflective of current market conditions, the after-tax NPV of the project would rise to US$1.9 billion, with an IRR of 29.6%.

The average all-in sustaining cost over an estimated 16-year mine life also rose to US$1,034 per oz., compared to US$928 per oz. previously. Average cash costs increased to US$913 per oz. from US$817 per oz.

“Mt Todd is a robust project with strong leverage to the gold price,” Frederick Earnest, CEO of Vista Gold, said in a release. “Project economics are approximately the same or slightly better than reported two years ago, inclusive of cost increases that have affected the entire gold mining sector.”

Vista says capital costs continues to reflect the use of a third-party owner/operator of the power plant at Mt Todd.

He added that “these results do not change our strategy for Mt Todd,” and the company will continue to work with CIBC Capital Markets to identify and advance interest in the project.

Shares of Vista Gold jumped 6.4% to 67¢ in afternoon trading, for a market capitalization of US$61 million.