Vancouver — In an effort to improve the market value of its Nevada mineral project portfolio, Vista Gold (VGZ-T, VGZ-X) will spin off its landholdings in the western U.S. state, including the past-producing Hycroft mine, into a new, publicly listed company that will also hold the projects of a large private landholder.
A letter of intent has been signed with the Pescio Group (comprising Carl and Janet Pescio, Greg Hryhorchuk and Robert Lipsett) whereby a new company will receive all of Vista’s Nevada mineral projects, and then acquire all the private group’s projects in the state.
Vista’s main contribution will be its Hycroft mine in northwestern Nevada, where open-pit heap-leach operations produced more than 1.1 million oz. gold from 1987 until 1998, when mining was suspended due to low gold prices and it was placed on care and maintenance. Proven and probable cyanide-soluble reserves of about 30 million tonnes grading 0.69 gram gold per tonne (663,000 contained ounces gold) were reviewed earlier this year using a 0.16-gram gold cutoff and a 1.52:1 strip ratio.
Other Vista projects in Nevada include: Hasbrouck-Three Hills near Tonopah, where an indicated resource of 23.6 million tonnes grading 0.79 gram gold has been outlined; Maverick Springs, located about 80 km southeast of Elko, which hosts a measured and indicated resource of 63.2 million tonnes averaging 0.34 gram gold plus an additional 77.6 million tonnes at 0.27 gram gold; Mountain View in northwestern Nevada, which contains a measured and indicated resource of 21 million tonnes grading 0.46 gram gold plus an additional 4 million inferred tonnes of 1.34 grams gold; and Wildcat in Pershing Cty., where an indicated and inferred resource of 60 million tonnes at 0.58 gram gold has been defined.
In addition, in late 2005, Vista acquired private company F.W. Lewis, which held a royalty on Hycroft plus title to 52 other mineral properties, mostly in Nevada.
The Pescio Group holds interests in 53 mineral projects throughout north-central Nevada totalling over 560 sq. km. The package also includes royalty interest on a number of the projects with US$1.6 million of advanced royalty payments realized in 2005.
Subject to all the conditions and regulatory requirements, the proposed transaction will involve Vista exchanging its current common stock for shares of the new company and new Vista shares. It is expected that the new company will also look to raise at least US$40 million through a private placement financing. About 60% of the total consideration payable by the new company for the asset acquisition would be paid (as new shares) to Vista shareholders and 40% will be paid to Pescio (in shares and US$15 million in cash).
The new company will hold one of the larger exploration land positions in Nevada totalling about 770 sq. km of mineral claims.
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