EQUITY RESEARCH
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Vista Gold Corporation BUY
(AMEX: VGZ; TSX: VGZ)
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Executive Summary
> Two Significant Gold Asse 5 the
Paredones Amarillos project in Mexico and the Mt, Todd project in Australi In the eurrent gold price
eavironment, both of Vista’s projects appear to be economicaily robust. Vista has a total of 17.5MM oz
of Resources, is actively pursuing permitting at Paredones Amavillos, and has a pre-feasibility study
underway at Mt. Todd,
High Value Potential and High Leverage: Based on our calculation of intrinsic value for the
company’s asseis, Vista appears to be trading st an extraordinarily low multiple vs. its peer group of |
junior miners with development assets at the pre-construction stage. Perhaps this is due in part to the
perceived risk in the development of its key assets due to permitting issues (Paredones Amarillos) or
perceived technical & politicaltax risk (Mt. Todd). In addition, shares offer artong the highest leverage
to changes in gold price by our methodology.
> Experienced Management: We believe that management has both the capability and perseverance to
bring Mt. Todd forward to feasibility construction and ultimately to production. In addition, with rising a
gold price (and a stable Mexican Peso), Paredones Amarillos continues to grow in value, incentivizing
‘management to pursue permitiing there despite the difficulties and disappointments experienced in the
past. Management has a proven track record for value creation as demonstrated by the spin-off of Allied
‘Nevadda in 2007,
Investment Thesis
Vista offers investors exposure (o two advancing development projects. While these gold projects are perceived as
challenged, we believe the company has the experience and perseverance to bring these assets forward and move
them into production, At current gold prices, these assets offer high returns, are trading at excessively low
‘multiples, and provide strong leverage to a rising gold price. We believe that Vista's assets will get revalued once
ignificant milestones are reached, the assets are devrisked, and the market becomes mote comfortable, Paredones
Amaiillos can move to construction once all permits are received, which has been the key impediment. A pre-
feasibility study at Mt, Todd is expected to be completed soon and Reserves are expected to be declared. Satellite
deposits at Mt. Todd are being tested and evaluated, Additional carly stage assets with existing Resources provide
1 Jonge- term pipeline.
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Key Drivers
tion has
and
> Receiving Permits: The perpetual delay of permitting at Paredones Amarillos and local oppo:
caused the markets to largely dismiss this project. While we understand the market's frustr
Project Development: We would expect the market to award shares with multiple expansion from
completing the pre-feasibility on Mt. Todd, completing any re-permitting needed for which existing
operation, and moving to construction, In our view, Mt. Todd appears robust at the current metal prices
even when factoring in a potential 40% tax rate and the impact of a stronger Australian dollar. Resources
and economics at Mt. Todd could increase materially with exploration at satellite deposits. With
permitting at Paredones Amarillos, moving to construction and production would also be a major driver.
> Gold Price: By our estimates, Vista maintains strong leverage to gold price through the growth in value
of their two principle projects, Higher diesel prices, a stronger Mexican peso and « stronger Australian
ollar would negatively impact company value. As gold prices reach new highs, larger miners should
become more acquisitive, thus bidding up the value of higher profile junior miners.
> Exploration Success: Exploration principally at Mt. Todd is ongoing to define additional extensions and
satellite ore bodies within the company’s large land package. As exploration results in expanded
Resources and longer mine life, the intrinsic value of enlarged Resources should be reflected in the
stock.
Risks
> Permitting/Environmental/Political: The company has su‘fered several delays at Paredones Amarillos
ue to the permitting process particular to that asset, While permitting in Mexico is usually straight
forvard, the CUSF particular to this asset has been unusually difficult to attain and has delayed project
construction. The company may be forced to write down the book value of this asset if they determine
‘that permits are unatiainable. Vista has inherited certain reclamation obligations for previous mining
‘operations at Mt. Todd, should they go ahead and re-open the rine. Australia has recently announced an
additional potential tax on miners of 40%, which we have factored into our model, The threat of higher
taxes could hinder both financing and attraction of a potential buyer.
> Project Development/Technical Risk: Constructing a mine and putting it into operation is not without
its risks. Our valuation model relies on the company’s ability to develop projects according to our
envisioned time table, capital budget, and forecasted operating costs. Delays to time table or significant
cost over-runs could impair our valuation, The Mt, Todd project plan continues to be revised as results
come in from the detailed engineering and metallurgical studies. Previous mining at Mt. Todd was
negatively impacted by copper contamination in the ore, and because of the ore hardness and an under
designed process, The company believes it has solved these issues with its current design plan,
> Exploration RiskiCash Burn: Exploration and development can be a capital intensive business. Even
after a discovery is made, a large amount of capital is offen required to proveup the resource, construct
the mine, and move it into operation,
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Company Overview
Vista Gold Corp. is an international gold mining company based in Littleton, CO that is traded on both the TSX
and NYSE — Amex exchange, From 2006 to 2007, the company completed transactions that resulted in divesture
of its Nevada assets inio Allied Nevada Corp, (AMEX & TSX: ANV; BUY, $29.50/sh ~ June 17, 2010). The
ANV property consists of the Hyeroft producing mine, with an estimated 1.3MM oz of gold of Proven and
Probable Reserves, 128MM oz of gold of Measured and Indicated Resources and 4,6MM Inferred oz of gold.
Vista has since advanced exploration and development programs al the Paredones Amarillos gold project in Baja
California Sur, Mexico and the Mt. Todd gold project in Australia. The company also has interests in the Yellow
Pine project in Idaho, the Guadalupe de Los Reyes gold project in Mexico, the Long Valley gold project in
California and the Awak Mas gold project in Indonesia. The company is also led by an experienced management
team with both international and domestic experience within both senior and junior mining companies.
Mexico
Paredones Amarillos
‘The Patedones Amarillos project is located in the state of Baja California Sur, Mexico, An access roed from the
site to ahighway is approximately 11 miles and includes both gravel and paved roads. ‘The city of La Paz. has port
facilities, and electrical power forthe site would be supplied via an 11 mile 115kW line from La Paz,
Gold mineralization occurs primarily within cataclasite (a rock composed of angular fragments/pieces within a
finer matrix) along a low-angle shear zone. Gold occurs as native gold end electrum and is associated with sulfides,
Gold grades vary with sulfide content,
‘The site currently contains 13MM oz of gold Reserves and 800,000 oz of Resources at an average grade of 0.031
‘oziton of Proven and Probable Reserves. These Reserves were based upon $771/oz gold prize and 0.011 oz/ton
cutoff grade. A PEA was performed in Sept. 2009 based upon the above Reserve figures. Results from that
analysis show capital costs are estimated at $150MM, cash operating costs are estimated to be $406/0z over the 9.3
‘year life-of-mine and a 2.9 year payback period: Annual production is expected to be 143,000 07 of gold per year
for the first five years and the company expects carbon-in-pulp recovery to be 91.5%. Gold production is expected
to begin approximately one year after permits are received.
Recently, the company had received their Temporary Occupation Permits ("TOP"), The TOP (one for each of the
seven mining concessions that cover the area of the Paredones Amauilles gold project) had granted Minera
Paredones Amarillos S.A, de C.V. (“MPA”), Vista’s wholly owned Mexican subsidiary, the right to use the surface
land in the project area owned by the Mexican federal government. With the TOP received, the company will have
had all of the documents necessary to file its application for the Change of Forest Land Use Permit (*CFLUP” or
“CUSF”) which is required before the company can commence development of the Paredones Amarillos gold
project; however, in February 2010, MPA received notice from the Mexican Secretariat of Environmental and
Notural Resources (“SEMARNAT”) that it dismissed MPA’s application for the CUSF for the Paredones
Amauillos gold project on administrative grounds. SEMARNAT dismissed the CUSF application without a review
of its merit for MPA’s alloged failure to satisfy certain procedural and informational requirements. SEMARNAT
also noted thai they do not recognize the Temporary Occupation Permits granted to MPA by the Mexican General
Direction of Mines on the basis that the project is located in an environmentally protected aren over which the
ican General Direction of Mines does not have jurisdiction. In addition to re-filing its CUSF application, the
company is working with its legal counsel and political expers in Mexico on a broader strategy for the
advancement of the permitting process for the Paredones Project This includes a potential court challenge to
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SEMARNAT’s dismissal of the CUSF appli
dismissal was incorrect,
mn as the company's advisors believe the legal basis for the
In May 2010, Viste appointed Hector Araya as Vice President, General Manager and Legal Representative of
Minera Paredones Amarillos S.A. de C.V, Mr. Araya will be responsible for advancing the permitting process at
nes Amarillos, local, regional and national government relations and overseeing the day-to-day development
is for the Paredones Amarillos gold project. The company is undertaking technical studies to support a new
CUSF application and expects to present the new CUSF application in 3Q10,
Exhibit 1: Vista Gold — Paredones Amarillos Pro
ee
“Soeee Pasdones Arvin a1) Teil Report -Sep-2009
Guadalupe de los Reyes
‘The Guadalupe de los Reyes project is located in the Sima Madre Range in the state of Sinaloa Mexicy. Bused
‘upon ar: NI 43-101 report in Jul 2009, the project contains 484,000 oz of Measured and Indicated gold and 317,000
0z of Inferred gold. Additionally, it coniains over 8M oz of MAl silver and 9.4MM oz of Inferced silver. The
company has noted they expect fo commence an exploration program at the site in 2010.
Australia
Mi. Todd
‘The Mt, Todd project is located in the Northem Territory, Australia and was acquired for $1.6MM in June 2006.
‘Access to the property is via a two-lane paved road and is 155 miles southeast of Darwin, NT.
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‘An updated NI 43-101 report was completed in 2009 which estimated combined Mesured and Indicated gold
Resources of 5,1MM oz of gold at an average grade of 0.024 oz/ion; Inferred Resources are estimated at 2.2MM oz
of gold at an average grade of 0.021 oz/ton. The updated NI 43-101 included 14 core holes drilled in 2008 and
based upon a cutoff grade of 0.014 oziton. These were in addition to the 755 previously drilled holes, of which 250
were cere, 435 were reverse circulation, and 70 were rotary drill holes, completed previously by BHP Resources
Pty Ltd, Zapopan NL, Pegasus Gold Australia Pty Lid., and Vista.
Pegasus Gold hed previously attempted to mine the Mt Todd asset from 1993 to 1997 after investing over
$200MM; however, dus to technical difficulties processing the ore and low gold prices it was sold to another joint
venture. Pegasus then regained the asset and liquidated the equipment on site. Viste acquired the property in 2006,
Gold ~ Mt. Todd Proj
‘ovrces My Todd #101 Techatcl Report Tore 2009
‘The technical issues at Mt. Todd primarily concemed the metallurgical and processing techniques of the Mt. Todd
ore type. The previous operator had experienced higher operating costs due high copper content that robbed the
impregnated cyanide of its gold molecules, thus inereasing cyanide consumption and lowering gold recovery, and
thus increasing operating costs. Vista has since completed a drilling program totaling over 62,000-ft of drilling.
Results have indicated a less cyanide soluble copper remaining in the resouree, thus making the project amendable
to heap leaching, The ote was also noted to have been much harder and required significanily more power to grind
to subsequent gold processing liberation size, The company has since investigated High Pressure Grind Roll
(HPGR) testing could result in 82% gold recovery with a 46% reduction in energy costs. HPGR consists of a fixed
roll anda floating roll where the feed and speed of the rolls is controlled to optimize throughput size, whereas the
alternative grinding application, a SAG mill, rotates the ore in a drum where the ore is broken by other ore wit
the chamber and hardened steel media in the rotation drum. The HPGR allows better control of the grinding
process, thus allowing grinding variability for specific types of ore, rather than a one-size-fts-all option fiom the
standard SAG mill, Additionally, the previous company had poor tailings management for which the company now
believes they are addressing. Finally, prices of gold have appreciated considerably sirce prices in 2000 where
robust economies were generated using $750/0z gold,
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Based upon a June 2009 PEA, the company reported a pre-tax NPV@8% of $237MM using the following
parameters: An assumed gold price of $750/oz and an annual production Life-OfMine ("LOM") of 15 years and
‘annual production of 245,000 oz, cash costs are expected to average $453/0z. over the LOM with production
starting in 2013. The project would require capital costs of $323MM and yield the company an average annual
cash flow of 870MM.
The primary arca of historic mining and the current area of resource focus has been the Batman Deposit st Mt.
‘Todd, However, the Batman deposit appears open at depth and in both to the noith and to the south. Parallel
structures and mineralization may exist to the east of the Batman deposit. The Quigleys and Golf-Tollis deposits
and other areas of mineralization in proximity to Batman may prove to be economic with additional work and infill
deilling
Vista expects to complete an updated Preliminary Feasibility Study at Mt. Todd in 2H110.
Exhibit 3: Vista Gold — Mt, Todd Processing Techniques
Fottguat
tide tas
‘rnin ntaist
lpia ats ete
Shem
(@) SAG Mill (b)HPGR Mill
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Exhibit 4: Mt, Todd — District Expansion Targets
‘Boece Company pension
Indonesia
Awak Mas
‘The Awak Mas deposit is located in Sulawesi, Indonesia with the closest major tows approximately 25 miles
away. The nearest port town is approximately 42 miles away. The project area is mountainous with steep ridges
and sloze gradients. The project itself is nt an elevation of 11,200 feet. Finally, the area is covered by primary
rainforests and receives over 120 inches of rainfall per year.
Gold mineralization is mesothermal (formed st high-temperature), which is atypical of the more ubiquitous low-
tempersture (epithermal) precious metal mineralization within many island are environments in Indonesia, The
majority of the gold mineralization is predominantly hosted within dipping geologic structures. Furthermore, gold
mineralization is associated with abundant quartz veining and silica-albite-pyrite alteration; however, some quartz
veins are noted to have been barren of mineralization. The two main styles of mineralization are first represented
by shallow-dipping zones of shected and stockwork quartz veining and associated alternation. The other style
consists of steeper dipping zones of quartz veining and breccias associated with high-angle faults.
A previous feasibility study was performed in 1997 to determine the optimal processing techniques to be used for
the Awak Mas ore, Run-of-mine (ROM) ore would be crushed, ground and classified where coarse gold would be
recovered and finer gold associated with sulfur would be sent to a flotation plant, Concentrate from the flotation
process would be sent to carton-in-leach tanks to further increase recovery.
The property contains Measured and Indicated Resources of 16MM oz of gold at an average grade of 0.036
coalton, Vista noted that they have recently reached an agreement with Pan Asia Resources Corporation who may
carn upto a 60% interest by extending the Contract of Work (COW) with the Indonesia government by completing
environmental and feasibility studies required under COW. Additionclly, Pan Asia must spend $3MM within the
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next 30 months and complete an environmental impact assessment and feasibility study as well as issue 2MM
‘shares of Pan Asia and the right to purchase an additional 2MM shares of Pan Asia in the event of an initial public
offering
Ex
Vista Gold
Mas Property
‘Sources Avak Blas ropeny 45101 Totaled Repos fan 0S
USA
Yellow Pine, Idaho
‘The Yellow Pine project is located in the Stibnite mining district, 60 miles east of the town of McCall, Idaho. The
istrict is reported to have produced more than 750,000 oz of gold to dats, of which 400,000 oz of gold were
mined as by-product of antimony and/or tungstsn from sulfide ores.
The project has Measured and Indicaied Resources of 2.2MM oz of gold at an average grade of 0.06 oz/ton and
Inferred Resources of 819,000 oz of gold according to a Dec. 2006 NI 43-101 report. A PEA compleied in 2006
noted a the project would have a 10 year mine life using a 8,600 short-ton per day (“TPD") plant and produce
190,000 o2.of gold per year at an initial capital cost of $150MM. Furthermore the project would have net eash flow
‘of $266 per year over the life of the project. This PEA was based ona very conservative gold price of $630/o2, The
company is advancing permitting in 2010 as well as collcting environmental baseline data for permitting. The
‘company believes that the district may contain up to SMM oz on a consolidated basi
Long Valley, California
The Loag Valley project is an epithermal deposit and is located 30 miles northwest of Bishop in Mono County,
California, Vista had an NI 43-101 report completed in 2008 that showed the project contained M&I Resources of
12MM oz of gold 0.029 cz/ton and Inferred Resources of 572,000 or of gold st an average grade of 0.016 oz/ton.
Vista also completed 2 PEA in 2008 which showed the site could operate utilizing a heap leach at gold prices
above $5560/07. The project also showed positive economics at NPV@S% of $7MM at $550/o7. gold. The project
‘would require at least 862MM in eapital costs and would operate at a cash cost $415/07 based upon 2008 input
prices.
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Model Overview and Valuation
Our model for Vista Gold Corp. utilizes NAV methodology (see Section 1: Investment Methodology and
‘Valuation of the fl initition report) to determine a discounted cash flow value for each ofthe advanced projects.
Forward curves were utilized for metal prices and Key cost inputs to determine future cash flows where possible.
‘We generally assume full conversion of Resources to Reserves when determining mine life, with the qualification
that annual free cash flows must be positive under current pricing and cost assumptions.
Exhibit 6: Model Summary and Key Assumptions for Vista Gold
aredanes Amarilos Mesto)
‘Average Geld rodacioa (evenge LON) o 134900
‘Toul Gast Cons cwerage LOM) Socaw sss99
Exyected Set Up Date year 2013
Mine Lite yeas rr
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‘Average Ged Drodnetin (everage LON) = 206 400
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‘While only summary numbers are presented in Exhibits 6 and 7, we fully model out each project on an annual
production basis. All of the company's mines are discounted at our derived rates for base or precious metal
projects. We have modeled mine life to the end of current Resources and Reserves. However, we believe itis likely
that Resources and mining would ultimately extend well beyond current Resources, as these ore bodies extend
beyond the pit shells calculated at lower gold prices. For Mt. Todd in Australia, we have assumed a 40% cash tax
raie and have increased the upfiont capital to 442MM to account for a stronger Australian dollar and higher cost
design clements (such as the tailings treatment and impoundment),
Exhibit 7: Vista Gold Model Results Summary
"ADVANCED PROJECTS WAVIShare
Paredones Amatlos (Mexico) 128
Mt-Todd (Austral) 144
RESOURCES.
‘Guadalupe de os Reyes (Merleo} 08
‘Yelow Pine (kaho) 212
Long Valley (caters) 1
‘Arak Mas (indonesia) 14
Total OperetngNAY 27
NAV los Net Debt $26.84
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Exhibit 8: Calculated Vista Gold NAV Matris for Major Price Inputs
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Exhibit 9: Vista Gold Modeled Gold Production Profile
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Management Overview
Directors and Management
> Michael B. Richings, Chief Executive Officer & Director: Mt, Richings has over 35 years experience in
the development and operations in the mining industry and is also the Executive Chairman and Disector for
Vista Gold. He was previously President of Atlas Comp. and President of Lac South America in Santiago,
Chile, Mr, Richings graduated from the Cambome School of Mines and has a Master's degree from
Queens University in Canada.
» Gregory G. Manlier, Chief Financial Officer: Mr. Marlier has over 25 years experience in corporate
finance, accounting and securities regulatory compliance, primarily within the mining industry. He joined
‘Vista in June 2004 and graduated from John Carroll University
> Frederick H, Earnest, President and Chief Operating Officer & Director: Mr. Earnest has over 20 years
experience in the mining industry. He recently served as President of Pacific Rim El Salvador and as
General Manager and Legal Representative for Compaitia Minera Dayton in Chile. Mr. Earnest graduated
from the Colorado Schoo! of Mines with a BS. in Mining Engineering.
> Frank K, Fenne, Head of Exploration: Mr, Fenne has over 25 years of experience in exploration, project
development and mine operations. Prior to Vista, he had worked for Kinross Gold Corp., Union Carbide,
Cyprus Mines, Altas Precious Metals and Echo Bay Mines, He holds « BS. in Geology from the
University of California and a MS. in Geology from the University of Idsho and is a Professional
Geologist registered in the State of Idaho.
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> Thomas J. DeMull, Senior Vice President off Project Development: Mr. DeMull has over 30 years of
mineral processing and project management experience. He has been involved in the development of ten
projects, six of which beeame operating mines. Mr. DeMull holds a M.S. in Metallurgical Engineering.
> John M. Claris, Director: Mr. Clark is « chartered accountant and has been President of Investment and
Technical Management Corp. since 1999. He is a director of Alberta Clipper Energy Inc., Marketvision
Direct Inc, and CFO and Direetor of Polaris Geothermal Ine, He was previously Executive Chairman of
Laurasia Resources Ltd., an cil and gas company, from 1988 until iis merger with Startech Energy Inc. in
1997,
> W.Darand Eppler, Director: Mr. Eppler is a founding partner at Sierra Partners, LLC. He has served in
vatious senior management positions, including President of New World Adviso:s, since August 2004 and
was the Chief Executive Officer and a Director of Coal Intemational PLC, from 2005 to 2008. He is also a
Director of Augusta Resource Corp., Allied Nevada Gold Corp. and Northern Energy and Mining Inc.
Previously, with Newmont Mining Corporation, he held positions of Vice President of Newmont Capital,
Ltd., President of Newmont Indonesia, Vice President of Corporate Development and Vice President of
Corporate Planning,
> C. Thomas Ogryzlo, Director: Mr. Ogryzlo also currently serves as President, CEO and Director of
Polaris Geothermal Inc; he is also a Director of Baja Miniag Corp. and was previously the President and
CEO of Canatec Development Corp., Black Hawk Mining Inc. and its subsidiary Triton Mining Corp,
> Tracy A, Stevenson, Director: Mr. Stevenson has over 26 years of experience in the mining sector and
hhad previously worked for Rio Tinto, He was Global Head of Information and Technology and Global
Head of Business Process Improvement. Formerly, he was Executive Vice President, CRO and Director of
Comaleo Ltd., and a Director of Kennecott Corporation.
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Ownership Profile
Asof June 17, 2010 the top 15 holders of Vista Gold Corp. were institutional investors and company insiders who
hold 15.01% of the 44,600,000 outsianding shares of the company according to Exhibit 11. Low institutional
ownership and Street coverage vs. its peer group, may suggest further upside potential with increased institutional
exposure. The average institutional ownership for the Hunting the Big Game II peer group is 36.80%; the average
institutional ownership of the Dahlman Rose Precious Metals and Emerging Miners group is 46.49%; the average
institutional ownership for the stocks that compose the Dow Jones Industrial Average is 68.10%,
Vista Gold's Management and Directors, or Insiders, hold 0.37% of the company as shown in Exhibit 12. The
average insider ownership for the Hunting the Big Game I peer group is 2.79%; the average insider ownership of
the Dahiman Rose Precious Metals and Emerging Miners group is 837%; the average insider ownership for the
stocks that compose the Dow Jones Industrial Average is 2.44%,
Exhibit 11: Vista Gold Corp. - Major Shareholders
Tnittional Owners
Holder Name AmtHeld____% Out
sche | ___ 1861885) 1
Wan Eck Associates Ca. 4527562) 342% |
Blackrock rsttutional Trust 867201 | 1828 |
‘Commonwoath of Pemsyivara Publ 442461 | 090% |
PR Herzig & Co. lao 267330 | 058%
| Renaissance Technologies Cap 74000) 052% |
IFA independant Fund Nlansgemont 79430|—05t% |
Puplava Financial Senicas 724340) 050% |
Perit Capital Nanagemert 202000 | 045%
organ Stanly & Co 173336) 039%
“Torenio orion Baie e100 | 036% |
(California Public Emploees (CALPERS) i2goiT | 029%
Folly Haragement 116040) 0268 |
{Bank of New York Melon ioaito) 023% |
|eode Captal Management I 87308) 020% |
“Top 15 Holders $Sot%
TaneBboes
Exhibit 12: Vista Gold Corp, ~ Insider Holders
Insider Owners
HollerName Amt Held Out Latest Change _ File Date
Tchings, i T rT] T = 1
|ayzlo, Charles 45,162 C.10% = | rere007 |
|Eppler, W. Duand i744) 008% =| fovasia007 |
(Eames, Frederick 14750) 0.03% | =| fe iR008 |
Total asrh 000
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Institutional
] | Insider
Ownership*
| Tieter |
\cuyana Goldielés uy | erm | to2e% |
|ote: Resour Cop. ra | 355% | | 40% |
[ot Tene Hi noe TM aso | |S ago
[Mista Gold Corp. voz | wore | | osm |
|osisko Ming Co. osk | 52% | | tare |
|Dotou Cad Co. pec | asm || 1mm |
|erane Nets Core Tex | 24% || 10% |
|Teseho Mines Lid | tKo | 187% | 2% |
| Centemin Egypt Ltd. | cee | asm | | omem |
|Estrre Gold Mines Ut xe | tee | | one |
DRCO HBGII Avg 36.81% 279%
——
‘Tare Dillon Rowe Company
Future Development
In February 2010, Vista Gold received notice from the Mexican Secretariat of the Environmental and Natural
Resources (SEMARNAT) has dismissed, on administrative grounds, the company’s application for the Change of
Forest Land Use Permit (CUSF) for the company’s Paredones Amarillos gold project in Baja California Sur,
Mexico. Specifically, SEMARNAT dismissed the CUSF application due to the company’s alleged feilure to satisfy
certain procedural and information requirements. SEMARNAT also refused (o recognize the validity ofthe
‘Temporary Occupation Permits granted to MPA by the Mexican General Direction of Mines, which are a pre~
requisite to filing for a CUSF, on the basis thatthe project is located in an environmentally protected area over
hich the Mexican General Direction of Mines does not have jutisdiction, The company noted that they will
continue to work with their Mexican representatives and officials from the Mexican federal government to resolve
this issue and obtain the CUSF permit required for the project.
In regards to Paredones Amarillos, Vista management reports that they are working at both the federal, regional,
and local levels to complete new studies in order to satisfy the regional office of SEMARNAT. The company is
working with threc regional universities to complete new environmental studies and could re-submit for its CUSF
as carly as July, Should the CUSF be received by 4Q10, permits could be in place to begin construction at
Paredones Amatillos as early as 1HII1, with frst production by 3Q12. Vista recently hired a new General Monager
and Legal Representative for Paredones Amarillos, Hector Araya, who will be responsible for advancing the
permitting process at Paredones Amarillos, government relations, and operations. Mr. Araya has a wealth of
experience building and operating mines in Latin America,
Vista Gold is currently performing activities to produce a pre-feasibility study at Mt. Todd and is actively drilling
to both upgrade and grow Resources. The satellite Quigleys deposit of roughly 150,000 07 of high grade resource
on MEMBER: FINRA/SIPC
96 wivwdahimanrose.comEQUITY RESEARCH
nan
(2.3e/t gold grade), could perhaps be used as a starter pit to shorten the payback period. The company is further
evaluating metallurgical and processing results and expects a pre-feasibility report in early 2H10.
‘The company has noted they expect to commence an exploration program at the Guadalupe de los Reyes project in
2010, as well as advancing permitting in 2010 at the Yellow Pine project with baseline environmental data being.
collected as well
MEMBER: FINRAYSIPC
vnwwdahlmanrose.comaan
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