Long-Term Investments

3 Months Ended

Mar. 31, 2012

7. Long-Term Investments

Midas Gold Corp. Combination

In April 2011, Vista completed a combination (the "Combination") with Midas Gold, Inc. As part of the Combination, each party contributed their respective interests in gold assets in the Yellow Pine-Stibnite District in Idaho to a new Canadian private company named Midas Gold Corp. ("Midas Gold"). In exchange for the contribution of its equity interests in Idaho Gold Holding Company, Vista Gold U.S., Inc. ("Vista US") was issued 30,402,615 common shares in the capital of Midas Gold ("Midas Gold Shares"). Concurrently with the Combination, Midas Gold completed a private placement of 6,129,800 Midas Gold Shares at a purchase price of C$2.50 ($2.59 based on the exchange rate on April 6, 2011) per share to raise gross proceeds of C$15,325 ($15,876 based on the exchange rate on April 6, 2011) (the "Private Placement"). We purchased 1,400,000 Midas Gold Shares through the Private Placement for an aggregate purchase price of C$3,500 ($3,632 based on the exchange rate on April 6, 2011). Following completion of the Combination and the Private Placement, Vista and Vista US together held 31,802,615 Midas Gold Shares representing as at April 6, 2011 approximately 37.4% (basic) and 34.2% (fully diluted basis) of the issued and outstanding Midas Gold Shares.

On July 14, 2011, Midas Gold successfully completed an initial public offering ("IPO"), issuing 13,930,855 Midas Gold Shares. Midas Gold Shares began trading on the Toronto Stock Exchange ("TSX") under the symbol "MAX." As of December 31, 2011, Midas had 105,281,936 common shares outstanding of which Vista owns 31,802,615 common shares or 30.2% of the issued and outstanding Midas Gold Shares.

Upon initial recognition of its investment in the Midas Gold Shares, Vista elected to apply the fair value option, and as such, the investment is recorded at fair value in the Consolidated Balance Sheet. Subsequent changes in fair value are recorded in the Consolidated Statement of Income/(Loss) in the period in which they occur. The difference between the fair value of the 30,402,615 Midas Gold Shares and the carrying value of our Yellow Pine assets has been recorded as a gain on disposal of mineral property given that Vista ceased to have a controlling financial interest in the Yellow Pine gold project upon completion of the Combination.

The Combination with Midas Gold was a tax-free reorganization for U.S. tax purposes. However, upon completion of the Combination, Vista US received Midas Gold Shares with a fair value that was determined to be $78,872. The corresponding estimated deferred tax expense of $29,675 at the time of the Combination exceeded the valuation allowance of $6,086 for Vista US. Therefore, the valuation allowance against Vista US's deferred tax asset was released upon receipt of the Midas Gold Shares. At March 31, 2012, the deferred tax liability of $32,531 contemplates the deferred tax benefit for our unrealized loss on the Midas Gold Shares. During the three months ended March 31, 2012, we recorded an unrealized loss on the Midas Gold Shares of $7,365 with a corresponding tax benefit of $2,737. The tax calculation is based on an effective rate of 38.87% (US Federal - 35% and state - 3.87%). As of March 31, 2012, the fair value of the Midas Gold Shares was $112,486.

Because management intends on holding this investment for the long term, we have classified our investment in the Midas Gold Shares as a long-term investment.

Summarized financial information for Midas as of December 31, 2011 and for the twelve months then ended, which represents Midas Gold's latest available financial data as of the filing date of this quarterly report, prepared in accordance with International Financial Reporting Standards for interim financial statements is as follows.

	December 31, 2011
Assets
Current assets
Cash and cash equivalents	$	36,954
Trade and other receivables		277
Prepaid and other assets		111
Total current assets		37,342
Non-current assets
Buildings and equipment		2,700
Exploration and evaluation assets		116,407
Other non-current assets		18
Total non-current assets		119,125
Total assets	$	156,467

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	3,461
Current portion of notes payable		181
Accrued interest		13
Total current liabilities		3,655
Long-term portion of notes payable		562
Shareholders' equity
Share capital		155,548
Equity reserve		10,990
Deficit		(14,288	)
Total shareholders' equity		152,250
Total liabilities and shareholders' equity	$	156,467

	Three Months Ended
	December 31,			September 30,			June 30,			March 30,
	2011			2011			2011			2011

Operating income/(expense)	$	(3,950	)	$	(2,988	)	$	(3,349	)	$	(981	)
Other income/(expense)		1,645			(3,768	)		(52	)		5
Net loss	$	(2,305	)	$	(6,756	)	$	(3,401	)	$	(976	)

Net loss per share, basic and diluted	$	(0.02	)	$	(0.07	)	$	(0.04	)	$	(0.02	)

Weighted average number of shares outstanding, basic and diluted		105,248,000			102,557,000			86,903,000			43,848,000

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References+ Details