Vista Gold Corporation (NYSE:VGZ) has a storied history as a junior gold miner. In 2012 new management, led by CEO, Fred Earnest, took control of the operations and has been advancing the Mt. Todd gold project, which is the largest undeveloped gold project in Australia.
Mt. Todd contains nearly 6 million ounces of gold reserve (proven/probable). A Preliminary Feasibility Study updated in 2018 shows a project with 381,000 ozs of annual production over a 13-yr mine life (479,000 ozs/yr for first 5 years), an after-tax IRR of 20% and after-tax NPV of $679 million. The current market cap of the stock is $57 million (100 million shares outstanding). As an operating mine, it would be the fourth largest gold mine in Australia and one of the largest new gold mines in the world over the last several years.
I’m not sure why VGZ trades at a huge discount to its peers and to its “intrinsic value.” To be sure, the Mt. Todd Project has a checkered history. But this is primarily attributable to inept management by previous owners. On the surface, the resource grade may appear low (.82 grams per tonne), but VGZ has successfully tested and implemented high-tech ore sorting technology. This has improved the throughput grade by as much as 50% (1.2 grams per tonne) and has taken heap leach recovery rates north of 90%.
The Mt Todd Project will be converted eventually to a mine. I suspect that, as the price of gold rises, a large mining company will either invest in the project and take over operational control or acquire Vista outright. The Company has signed recent non-disclosure agreements with mining companies interested in the project. Until an “exit strategy” event unfolds, this stock is an easy double from its current price.