Why Vista Gold May Triple From Current Levels
In a prior article here at Wall St. Cheat Sheet, I outlined why Vista Gold (NYSEMKT:VGZ) is a takeover target in the gold mining sector and is a good buy for 2014. Since then, shares are only up 6 percent while gold and silver are up about 5 percent and 9 percent, respectively. However, shares are substantially undervalued. I cannot stress this enough. Given the reserves at the Mount Todd site, the actions the company has taken in cleaning up its debt load, sales of properties and interests in Midas gold, and ongoing efforts to push its Mount Todd site to development, I think once the company secures permits and production begins, revenue will skyrocket significantly higher and reward shareholders with subsequent share price appreciation in future quarters.
Remember, Mount Todd is located in the Northern Territory of Australia in a very mining-friendly jurisdiction with excellent existing infrastructure. Mount Todd is of significant size and Vista Gold has exploration permits for a very large section of the site. At the site, there are confirmed deposits of gold, silver, copper, and lead, among other metals and minerals. According to the company’s best-case estimates, Vista Gold estimates an average annual production of 369,850 ounces of gold per year, with a higher amount of production in the first five years. In that timeframe there would be an average annual production of 481,316 ounces of gold per year. Turning to cost, it would be estimated to cost $773 per ounce produced over the life of the mine, with only $662 average cost for the first five years. Vista estimates a 13-year operating life that would require $1.04 billion in capital.
Recent updates you need to know about
1. Extension of Los Cardones $6 million payment
At the end of January, Vista Gold announced that it agreed to extend the due date for the second and last $6 million payment for the Los Cardones gold project in Mexico by six months to July 31. In October, Vista announced the closing of sale of the Los Cardones $13 million. Recall that the sale included $7 million paid at closing to Vista and an optional second payment of $6 million due by January 30.