Annual report on the Mt Todd Project area for the lease year March 2006 through March 2007

Abstract

This report is an update of the report entitled 'ANNUAL REPORT ON THE MT. TODD PROJECT AREA FOR THE CALENDAR YEAR 2006, MLN 1070, MLN 1071, MLN 1127, December 31, 2006' and by this reference incorporates that report and all of its attachments. From early 1987 until April 1992, the Mt. Todd Project Area was explored and evaluated by the Mt. Todd Joint Venture between Billiton Australia Gold Pty Ltd and Zapopan NL, with Billiton acting as project operator and manager. The Batman deposit at Mt. Todd was discovered in May 1988. In April 1992, Zapopan acquired Billiton's 50% equity in the project through a placement of shares to Pegasus Gold Australia Pty Ltd which progressively increased its shareholding until Pegasus acquired full ownership of Zapopan in July 1995. Pegasus commenced construction of a heap leach project to treat oxide ores from the Batman deposit in March 1993 with commissioning of the treatment plant in October 1993. Initial ore production was at the rate of 4 million tonnes per annum and expanded to 6 million tonnes per annum in late 1994. Gold was recovered by heap leach processing until August 1996, with oxide ores from the small Tollis and Golf open pits added late in the life. Phase II, which was designed to treat sulfide ore from the Batman deposit by crushing, grinding, flotation and cyanide leaching of the flotation concentrate and tails at a design rate of 8 million tonnes per annum, was commissioned beginning in November 1995 at a capital cost of A$232 million (US$181 million). Technical problems and a falling gold price led to the mine being closed and placed on care and maintenance on November 14, 1997. Technical problems included an inadequate crushing circuit, which resulted in a maximum throughput of just under 7 million tonnes per annum achieved by mid 1997. A high content of copper soluble in cyanide and the build-up of cyanide in the tailings water which was recycled to the flotation circuit and caused the depression of sulfides reduced gold recovery and necessitated the closure of the flotation circuit. This closure resulted in further reduced gold recovery, as only a whole-ore leach was employed at this point in time. Operating costs were higher than those predicted in the feasibility study. The spot price of gold deteriorated from over US$400 per ounce in early 1996 to below US$300 per ounce during 1997. As part of bankruptcy proceedings, administrators were named for Pegasus Gold Australia and the administrators undertook an extended sale process during 1998, with a sale finalized on March 18, 1999, to the Yimuyn Manjerr Joint Venture (Multiplex Resources Pty Ltd 93%, General Gold Resources NL 2%, Pegasus Gold Australia Pty Ltd 5%). General Gold placed the Batman deposit into production using a crush, grind and whole-ore cyanide leach circuit in March 1999, and operated until July 2000, when falling gold prices again caused the project to fail. Pegasus, through the Deed Administrators, Ferrier Hodgson, regained possession of the mine assets in order to recoup the balance of the purchase price owed it. Most of the equipment was sold in June 2001 and removed from the mine. From 2000 to June 2006, Ferrier Hodgson, the Northern Territory Government (NTG) and the Jawoyn Association Aboriginal Corporation (JAAC) held the property. The NTG managed the site and implemented measures to control the generation of acid rock drainage during this period and throughout 2006. On March 1, 2006, Vista Gold Australia Pty Ltd. and Vista Gold Corp. (collectively, Vista) signed agreements with Ferrier Hodgson, the NTG and the JAAC to purchase the Mt. Todd property consisting of three tenements, MLN's 1070, 1071 and 1127. The purchase was completed on June 16, 2006. Vista will be responsible for site management including acid rock drainage control efforts beginning January 1, 2007. Upon acquisition of the project, Vista began work on a metallurgical and processing review to develop a conceptual flowsheet for a possible project restart, a mineral resource estimate under Canadian National Instrument 43-101 guidelines, a prefeasibility study on a possible project restart, an environmental assessment of the project in its current status, a water management study, a closure report assuming mining resumes and the Batman deposit is mined to economic completion, and a tailing storage facility scoping study in support of the prefeasibility study. In June of 2006 Vista completed an updated resource estimate entitled, Technical Report On The Mt. Todd Gold Project, Northern Territory, Australia. Prepared by John Rozelle of Gustavson Associates LLC. In late December of 2006 Vista completed a Preliminary Economic Assessment entitled, Preliminary Economic Assessment, Mt. Todd Gold Project, Northern Territory, Australia. Prepared by Gustavson Associates LLC. In February of 2007 Vista began a diamond drill program in and near the Batman gold deposit. The program was still in progress at the end of the Lease Year and a comprehensive report on the results will be included in Vista's 2007-2008 Annual Report. The program consisted of approximately 10,000 meters of diamond core drilling in and around the Batman pit. The purpose of the drilling includes verifying continuity of mineralization, obtaining fresh core for metallurgical sampling and expanding the resource both along strike and at depth as well as serving other goals related to engineering design to support mine planning.