With a name that contains the Latin word for ‘value’, Pretium Resources is aiming to create value for its shareholders. The way it plans to do this is with projects that provide a short-term route to gold production as well as longer-term revenue through a bulk project.
President and CEO Robert Quartermain started the company after being President of Silver Standard Resources Inc. for 25 years. He took Silver Standard from a $2 million market cap to $2.5 billion and from being a silver explorer and developer into a company with producing mines. However, the change didn’t altogether fit in with what he wanted to do. Around two years ago, he still wanted to maintain the exploration tempo but the company’s board preferred to concentrate on developing the current assets.
Moving On
“We felt it might be best for me to look at moving on,” comments Robert. “So I kind of ‘retired’. There wasn’t really a retirement from business. But, because of the viewpoint differences with the Silver Standard board, I chose to move on.”
He still retains shares in Silver Standard, with a bigger holding than any of the directors or managers, and still believes in its future. Nevertheless, he took a year off and was tempted back into the business when he heard Silver Standard was considering selling off its Snowfield and Brucejack assets. These had been drilled by Newhawk Gold Mines in the 1980s and 1990s but were bought by Silver Standard in 1999 when falling gold and silver prices meant Newhawk couldn’t finance further work.
Little happened for the next few years but, as Robert recounts, when it did, the results were more than promising: “In 2006, with the increase in the gold price, we decided to go back and drill those assets. They are in Canada, which is a good jurisdiction, and we knew there was exploration potential on the project. What we didn’t realize was the extent of potential mineralization. The resources on the project had been 400,000 ounces of gold and 16 million ounces of silver but now we’re looking at 56 million ounces of gold, 400 million ounces of silver and three billion pounds of copper in all categories so it’s a huge mineral system now.”
The 56 million ounces of gold is comprised of 34 million ounces of measured and indicated resource plus 22 million ounces of inferred resource. Since Pretium Resources was established and acquired the projects, further drilling was carried out in 2011, and the project resource estimate is expected to be updated in the fourth quarter.
High Grade
The two mineralized areas are being considered for separate development. Snowfield is a large bulk tonnage project of about 1.3 billion tonnes at around 0.6 grams gold, giving 26 million ounces measured and indicated. “That’s a really large capital cost project,” remarks Robert. “We’re undertaking engineering studies with Seabridge Gold, which is located adjacent to us, to see if there maybe some commercial synergies between our projects. They’ve got 28 million ounces of proven and probable reserves identified and they’re at the pre-feasibility stage, so a little further advanced than we are. In essence, we have this long-term call option on gold in a big project to develop down the road.”
Brucejack, on the other hand, is a high grade deposit and Pretium is concentrating on drilling in the newly discovered Valley of the Kings Zone as well as the established West Zone. Robert says: “Based on the February resource calculation, using a five gram cut off, we’ve got about 3.7 million tonnes grading about 7.7 grams of gold per tonne and 186 grams of silver, which gives us about 900,000 ounces of gold and about 22 million ounces of silver in the measured and indicated category. And then there’s about 4.7 million tonnes of around twelve grams of gold and about 49 grams of silver in the inferred category. That gives us about 1.9 million ounces of gold and seven million ounces of silver.”
The overall outcome is some eight million tonnes with almost three million ounces of gold in it, most of it being inferred. The aim of the drilling is to move this up to measured and indicated as well as adding to the resource. “Most of our focus now is on defining this potentially high grade underground gold mine,” says Robert, “which we can develop much quicker because it’s going to need a much smaller plant than Snowfield and less capital for infrastructure.”
“In June, we announced the completion of a preliminary economic assessment that was done by Wardrop. They determined that a 1,500 tonne a day plant could produce about 173,000 ounces of gold and one million ounces of silver in the first ten years of production at the project. The capital for that would be about $280 million. It’s certainly something that’s palatable for our company and something that we can do as a management group. So, the high-grade in the Valley of the Kings Zone is the real focus. Let’s get the high grade up and running and that could then be the catalyst for the development of a much larger bulk opportunity.”
Full Feasibility
The company has around $40 million in the bank as of June 30 and expects to have some $20-25 million left by the end of the year at the current rate of spending. It may need more capital to get to full feasibility but has plans in place.
There is an existing underground development and the plan is to de-water it and then see what needs to be done to rehabilitate the project. The existing road is to be restored; a new one built to the highway and power provided by generator sets or linking into power lines.
Although the projects are in northern British Columbia, which has sufficient snow to affect mine operations, the underground mine working will reduce the impact. And anyway, Robert believes the projects have many more favorable factors: “We have the third largest undeveloped gold resource in North America.
“We’ve got a good gold resource in a safe jurisdiction and within it we have two opportunities. There’s a long-term call option on a bulk tonnage resource. But, much more favorably, we have spectacular high grade gold results in identifiable underground gold structures, which can be advanced to production much quicker than a larger bulk project. We have a well seasoned management group that actually owns 5% of the company, with our interests aligned with the shareholders. It’s all about creating value for shareholders through gold.”
Michelle Romero
Investor Relations Director
Pretium Resources Inc. | Pretivm Value through Gold
Direct Tel: 604 566-8782 | Mobile: 604 603-2508
#1600 – 570 Granville Street | Vancouver BC Canada | V6C 3P1
Tel: 604-558-1784 | Toll Free: 1877-558-1784 | Fax: 604-558-4784
mromero@pretivm.com | www.pretivm.com | TSX: PVG