Actionable insights straight to your inbox

Equities logo

Vista Gold: Low-Priced, Small Cap Bargain?

The company is changing, but the market doesn’t recognize it yet.

For speculative investors who are comfortable investing in a low-priced, small cap mining stock, Adrian Day — a leading resources expert and editor of Global Investing — reiterates his Strong Buy rating on Vista Gold (VGZ).

The company is changing, but the market doesn’t recognize it yet. The miner reported progress at its Mt. Todd deposit in Australia, advancing towards an updated pre-feasibility study (PFS), expected in the first quarter.

The updated study should be strong, with CEO Fred Earnest telling investors “to expect improved recovery, sorting, power savings, and an improved currency exchange rate” which will combine to produce “a compelling rate of return at today’s gold price.”

This is significant because Mt. Todd has a reputation as a deposit that requires a higher gold price to be economic. Earnest said Vista is “no longer just a call option on the price of gold, but owners of a large-scale, economically viable gold project.”

Indeed, Mt. Todd is the largest undeveloped gold project in Australia and the third-largest reserve package in that country. It could be among the top five producing mines in Australia, with costs in the lowest quartile.

Separately, Vista optioned its Guadalupe de los Reyes deposit to Minera Alamos for four payments totaling C$6 million, with Vista retaining a royalty and the right to a 49% interest in any future underground mine. It is a very attractive deal for Vista in my mind, and, being Vista’s last significant asset outside of Mt. Todd, further focuses the company on that asset.

Vista has C$21 million cash, which can be supplemented by the completion of the Guadalupe sale and the sale of its mill and Midas shares. In all, it is a very strong balance sheet.

Despite the progress and very optimistic comments about the upcoming revised PFS, the stock hardly moved. For various reasons, it seems to be a “show-me” story.

The updated PFS, however, if it confirms the optimistic assessment, should finally make the stock move, giving us an opportunity now to buy the stock (and Mt. Todd) at a bargain level. Once the PFS is out, we suspect the company (or the deposit) will be a most attractive target. Vista is a Strong Buy.

Adrian Day is editor of Global Investing.

Subscribe to Adrian Day’s Global Analyst here…

About Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.