December 16, 2003

Special Report – Vista Gold Corporation

Favorable news on the U.S. economy was unable to prompt a rally in the U.S. Dollar but did help it gain strength off of its weakest levels of the session. Gold action was muted compared to recent volatile intraday activity. As gold traded around $410 in overnight sessions, positive U.S. economic data and stronger equity markets placed selling pressure on the metals durign COMEX trading. Gold did find good support at the $407 spot area. For the day, Feb. gold closed down $1.50 to 408.40 after touching $411.40 very early in COMEX and reaching $408.10 near the close. We now are just over 1% from 8-year highs placed on December 10^th and up 26.5% YTD. March Silver was down just over a penny after coming within two cents of fresh multi-year highs set also on December 10^th at $5.735 an ounce. YTD, silver is up 28.65%!

Posted today on GoldSeek.com is the second roundtable discussion. This discussion focuses on the question: Have Central Banks Won the War on Gold? (http://news.goldseek.com/GoldSeek/1071590333.php) – Contributors include: Sol Palha, Chris Sanders, George Paulos, Gale Bullock, Bill Murphy, Ed Bugos, John Tyler and Peter Spina. You will find some great information from a wide range of writers. I would like to share with you one quote by Alan Greenspan from the discussion. For those of you who have not read this quote or are new to the gold market, this statement by our own Federal Reserve Chairman (1966) is quite revealing and should affirm our beliefs in their fear of gold as a “revealer” of true value:

"This is the shabby secret of the welfare statists' tirades against Gold. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism towards the Gold Standard."
Alan Greenspan - Gold and Economic Freedom (1966) 

With gold losing its upwards momentum, gold and silver shares were not in favor Tuesday. With light to moderate volume for the day, the HUI index peaked within 15 minutes of trading before its downhill decent then stabilizing around the 232 area for most of the session. Technically, the HUI is still about 10 points from good support. With expectations of higher gold prices next year, currently a strong equity market and a very weak U.S. currency, gold still looks poised to reach $420 area soon. If gold stalls and fails at this time, a retracement decisively below $400 would likely bring the HUI down towards, and possibly under, the 200 mark - our 200 DMA is in the low 170's presently. Again, gold needs to shows its positive momentum to the market and the HUI should be again headed towards fresh, all-time highs in this scenario.

As we have focused on scaling back to a core position nearing $420, we still have a short-term trading investment from late last week’s weakness. We still feel confident gold we will be able to move higher at this time giving us the ability to hold on and add to our profits. Yet, any sell-off with high volume could send us south quickly and fast. Having purchasing ability would allow us to take an even larger position on a pullback at more attractive levels if positioned in a core holding. While it is hard to say when and if this pullback will occur, it still looks lucrative to keep our sort-term trading position intact in anticipation of $420 gold in the next weeks before liquidating. We will alert you if this situation looks like it is to change and/or major technical breaches occur.

Special Report – Vista Gold Corporation

Yesterday I had the pleasure to meet with the CEO of Vista Gold Corp. On a personal level (disclosure), I have a position in the company. I am baffled at the fact it has underperformed the gold sector recently and its market price appears quite undervalued. During my conversation with CEO McGregor, I was able to confirm my positive analysis of the corporation. For those of you unfamiliar with Vista Gold, here is a brief summary.

Overview: The company refers to itself as providing “Portfolio Protection with Gold in the Ground … Growth by acquiring & Adding Value to High Quality Resources in Low Risk Environments.” Indeed Vista Gold has done exactly this over the past few years with many of the properties located in the US. Here are some key points on Vista which I find extremely attractive: Fully diluted share basis of about 19 million, no debt, several million in cash with more potential from exercising of warrants, capital losses exceeding $100 million – providing future profits at tax-free rates, some 6 million in measured and indicated gold resources with another few million in inferred, not to mention great exploration opportunities on newly acquired and older properties.

Some history: Their former producing property, Hycroft Mine in Nevada, was placed on “standby” in 1999 after declining gold prices. Yet, during the late 1990s, they were producing over 100,000 ounces per year (large gold and silver deposits with great exploration potential) – cash cost runs around $186/ounce! Permitting, infrastructure – the whole thing is in place. A capital investment of around $25+ million may be required to get the mine back into production but it is sitting there just ready to resume production rather quickly. This is not an exploration company by any means.

Valuations: If we do some calculations, Vista has about 2/3rds an ounce in gold resources per share and .17 ounces per shares in mineable reserves! This means the market is valuing them at $24.53 market cap per mineable reserve. Mineweb.com reported market capitalizations of other non-producing companies with similar mineable reserves valued at $91 – meaning that if Vista Gold were to be priced at comparable valuations, their shares should be trading around $15.49! One could make a convincing argument Vista could be higher by the amount of 271% from today’s close of $4.17!

Vista continues to add reserves and resources to its portfolio. With such attractive properties like Paredones Amarillos – Mexico (mineable reserves of 1.5 million @ $223 cash cost), Hycroft - Nevada (mineable reserves of 500k @ $186 cash cost) and Amayapampa – Bolivia (mineable reserves of 500k @ $168 cash cost), I fail to see why Vista trades below $10/share with gold now above $400. The only explanation I believe, at this point, is that VGZ is a little, unknown treasure just waiting to be discovered and it may take an announcement the likes of which include the resumption of Hycroft being placed back into production to grab investors interest/attention. That is why I feel Gold Seeker readers should consider adding Vista Gold to their portfolios at this time.

Technical Look: Below, you can see a two-year chart of Vista. In my view, once this stock has been better recognized by the investing public, it will move up quickly (refer to BGO last months as it finally received the attention it deserved). Our personal targets were for a retest of $6 with $400 gold. Now with gold at $410, VGZ has sold-off from its recent $5.25 highs on much lighter volume than was seen back in 2002/2003, when it spiked up from the low $2s to $6. Technically, VGZ looks to be very well supported at the $4 area and withstanding any new developments, VGZ appears easily capable of heading for the $6 or higher with gold trading at $400+, if not higher!

I continue to add on every shakeout of the longs likes of which were seen yesterday when apparently, market markers executed a series of stop limit orders to drive the shares down to the $3.80s at the open. From watching Vista trade over the years, do NOT fall into the hands of these criminal market markers. They will FLUSH you out of your stops if you place them! You can play their game by placing some obscenely low bids and possibly pick some even better bargains when another one these suspicious events occurs. This approach has paid off quite well for me in the past several months and I could not be happier to buy the shares at these levels.

Vista is traded on the AMEX under symbol VGZ and on the Toronto exchange under symbol VGZ(.TO). You can find the above information and more details on the portfolio of properties on the companies website: http://www.vistagold.com

Our Recommendation: Strong Speculative Buy – If you feel gold is headed higher and especially much higher, Vista looks very attractive at around $4/share, well below relative valuations of similar companies. We will continue to closely follow VGZ for Gold Seeker readers and add it to our Gold Seeker portfolio: VGZ Buy at $4.17 December 12, 2003

Latest Press Release – December 16^th, 7:47 pm EST:

Vista Gold Corp. Announces Option Agreement to Sell Amayapampa Project, Bolivia

Completion of the transaction is subject to the receipt of all regulatory and other approvals, and completion of due diligence satisfactory to Luzon by June 1, 2004. During this due diligence period, Luzon has agreed to update the feasibility study, complete a technical report in compliance with Canadian National Instrument 43-101, and seek the required financing for the project. Luzon will issue Vista 50,000 common shares initially, and during the due diligence period, Luzon will pay Vista US$10,000 per month for the first four months, then US$15,000 per month for the fifth and sixth months. At completion of the due diligence period, provided Luzon elects to proceed, Luzon will pay Vista US$930,000 and issue Vista 2,000,000 common shares. At the earlier of start of construction or January 1, 2006 Luzon will pay Vista US$4,000,000 or at Vista's election, a combination of shares and cash based on Luzon's share price, not to exceed 5,200,000 shares or US$4,000,000 cash. Luzon will grant Vista a 3% NSR type royalty where the price of gold is less than US$450 per ounce and a 4% NSR type royalty where the price of gold is $450 per ounce or more.

Vista President and CEO, Ronald J. (Jock) McGregor commented, "The potential sale of Amayapampa for cash, shares and a royalty is in keeping with the Company's strategic plan of generating a royalty income stream for the Company. Selective disposition of some of our more advanced projects while minimizing exposure to debt, hedging, or other operational risks also fits our strategic plan by creating value for our shareholders. Luzon is a good choice for this potential sale as it is in the business of developing mining operations, has good management with a proven track record in mine development, and has a presence in Bolivia with its Liphichi property." - more

This could be the news jolt needed to get the attention to Vista Gold it deserves! Market perception of Vista Gold may have just changed for the better as the company now looks to have become a revenue generating company with a significant stake in Luzon Minerals as well as a Royalty company based on their NSR structure (if Luzon Minerals proceeds with development of this property in Bolivia after this initial due diligence review over the next several months). After many, many months of property acquisition and drill result news, this is the first announcement Vista Gold has made of progressing one of their properties into a wealth generating opportunity. 

WINNERS

LOSERS

Note: We do not track all gold/silver stocks in our winners and losers list as we stick to the larger cap equities.  If you want us to track one of your stocks, you may send us your considerations. Our new requests will be added shortly – we are working on including them into our screener this week.

- Company News -

Coeur Announces Registration Statement Declared Effective by SEC "Coeur d'Alene Mines Corporation (NYSE: CDE) today announced that the "universal shelf" registration statement on Form S-3 it filed on December 11, 2003 was declared effective by the Securities and Exchange Commission. The Company filed the registration statement to register the offer and sale by the Company from time to time of up to $150,000,000 of various securities, which may include debt securities, preferred stock, common stock and or warrants."
PRN   Tuesday, December 16

Apolo Gold Inc. Announces Significant Property Acquisition "Apolo Gold Inc. (OTC BB: APLL), the Company announces that after extensive negotiations it has executed an Agreement for the acquisition of a property known as "KBU" owned by PT Karya Bukit Utama and PT Metro Astatama, and located in the Region of Babakan Loa, District of Kedondong, South Lampung, Southern Sumatra, Indonesia. This property consists of 933.3 hectares and is directly adjoining the current property NUP that the Company acquired by Agreement dated April 16, 2002. The KBU has 2 KP Production Permits in place, and has had significant previous work performed on it. When combined with the NUP, the Company will have 1,667 hectares of property containing favorable gold and silver mineralized horizons."
IW   Tuesday, December 16

Vista Gold Corp. Announces Option Agreement to Sell Amayapampa Project, Bolivia "Completion of the transaction is subject to the receipt of all regulatory and other approvals, and completion of due diligence satisfactory to Luzon by June 1, 2004. During this due diligence period, Luzon has agreed to update the feasibility study, complete a technical report in compliance with Canadian National Instrument 43-101, and seek the required financing for the project. Luzon will issue Vista 50,000 common shares initially, and during the due diligence period, Luzon will pay Vista US$10,000 per month for the first four months, then US$15,000 per month for the fifth and sixth months. At completion of the due diligence period, provided Luzon elects to proceed, Luzon will pay Vista US$930,000 and issue Vista 2,000,000 common shares. At the earlier of start of construction or January 1, 2006 Luzon will pay Vista US$4,000,000 or at Vista's election, a combination of shares and cash based on Luzon's share price, not to exceed 5,200,000 shares or US$4,000,000 cash. Luzon will grant Vista a 3% NSR type royalty where the price of gold is less than US$450 per ounce and a 4% NSR type royalty where the price of gold is $450 per ounce or more."
PRN   Tuesday, December 16

Pan American Silver appoints Robert G. Doyle as Chief Financial Officer "Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) announces that Robert G. Doyle has been appointed Chief Financial Officer of the Company, effective January 1, 2004. He replaces Mr. Tony Hawkshaw who has resigned to pursue other business opportunities. Mr Doyle is a Chartered Accountant and Chartered Financial Analyst. After working with one of the world's largest accounting firms, Mr Doyle spent the last eight years at Standard Bank, most recently as Senior Vice President - Mining Finance and Metals Marketing in New York. Mr Doyle brings to Pan American particular expertise in cash and foreign currency management, corporate and project debt financing, and precious and base metal trading and sales."
PRN   Tuesday, December 16

Gammon Lake Reports Second Round of Step-out and In-fill Drilling Results From 65,000-metre Drill Program; Extends Tunnelling on Planned 6 Km. Ramp "Gammon Lake Resources Inc. (GAM:TSX; AMEX: GRS) is pleased to release the results from 28 new step- out and in-fill drill holes at its 100%-owned Ocampo project area. The results are from the second round of drilling - from surface at the Las Animas Zone and from underground ramps in the Aventurero Zone - under the Company's 65,000- metre drilling/development program. The 28 holes produced 29 intercepts above underground grade cut-off over 3 grams/tonne gold-equivalent."
PRN   Tuesday, December 16

Crown Resources Completes Feasibility Study on Its High-Grade Buckhorn Mountain Gold Project "--Crown Resources Corporation (OTCBB:CRCE; "Crown") reported today it has completed a feasibility study on its Buckhorn Mountain Gold Project prepared by SRK Consultants, Toronto, ON, Canada ("SRK"), an independent mining and engineering consulting firm."
BW   Tuesday, December 16

Goldcorp Declares First Regular Monthly Dividend Payment For 2004 "GOLDCORP INC. (NYSE:GG; TSX:G) is pleased to declare its first regular monthly dividend payment for 2004 of $0.015 per share. Shareholders of record at the close of business on Tuesday, January 6, 2004 will be entitled to receive payment of this dividend on Tuesday, January 13, 2004. Goldcorp intends to make twelve (12) monthly payments of $0.015 per share in 2004 for a total annual dividend payment of $0.18 per share."
BW   Tuesday, December 16