Company Spotlight: Pretium Resources

Pretium Resources is a gold exploration company with two very promising projects in northern British Columbia. Pretium is run by the former CEO of Silver Standard, Bob Quartermain, and its two projects, Brucejack and Snowfield, are amongst the largest undeveloped gold resources in the world.

The Brucejack project

The Brucejack project, which is the company’s main focus, is a high-grade gold and silver project which is part of a largely unexplored land package of over 90,000 hectares (over 222,000 acres). The property is located approximately 65 kilometers north of Stewart in northwestern British Columbia.

From the company’s website: “Brucejack is comprised of high-grade, gold-rich veins within a larger bulk-tonnage gold-silver envelope, offering Pretivm a catalyst for near-term production as well as a scale-up development opportunity.”

In 2011 Pretium completed a 72,144 meter drill program at Brucejack which was focused on its Valley of the Kings Zone. The drill program produced some phenomenal results including one hole that intercepted grades of 18,755 grams per tonne of gold and 9,312 grams per tonne of silver. In total the program revealed 24 intervals in 17 holes with grades of over 1,000 grams per tonne of gold.

Drill core from Pretium’s Brucejack project

Drill core from Pretium’s Brucejack project

Drill core from Brucejack hole SU-155 showing visible veins of gold.

In February 2012 Pretium completed an updated Preliminary Economic Assessment (PEA) for the Brucejack Project which was based on total mineralized material of 11,828,000 tonnes grading 18.9 g/t gold and 59.8 g/t silver. The company is now proceeding with a full feasibility study for the high-grade resources which it expects to complete in Q1 2013.

In April 2012 Pretium reported a high-grade resource estimate for the Valley of the Kings and West Zone. Gold resources at the Valley of the Kings now comprise 4.9 million ounces of gold in the Indicated Resource category and 10.4 million ounces of gold in the Inferred Resource category at a 5.0 g/t gold equivalent cut-off. An updated resource estimate for Brucejack is expected to be completed in Q3 2012.

The exploration of Brucejack continues with the current phase focused on definition drilling of the shallow high-grade resources at the Valley of the Kings, as well as testing extensions of the Valley of the Kings and other high-grade zones. This drill program continues to produce impressive results. On 25 July this year Pretium announced that drilling at its Valley of the Kings Zone had intercepted grades of 41,582 grams of gold per tonne.

The Snowfield project

Adjacent to the Brucejack project lies Pretium’s Snowfield project, a near-surface, low-grade, bulk tonnage gold deposit which also contains copper, molybdenum and rhenium mineralisation.

Pretium’s Snowfield project

The Snowfield project

The Snowfield project has Measured and Indicated resources of 25.9 million ounces of gold, 75.8 million ounces of silver and 2.98 billion pounds of copper at a 5.0 g/t gold equivalent cut-off. It also has a further 9.0 million ounces of gold, 51.0 million ounces of silver and 1.10 billion pounds of copper in the Inferred category.

Pretium is focusing on delivering value through its Brucejack project, which means that Snowfield is somewhat on the backburner, though it does represent a longer-term opportunity for the company and fo shareholders.

Pretium’s Resources (millions of ounces)

Measured and Indicated

Inferred

Project

Gold

Silver

Gold

Silver

Brucejack

5.8

46.0

11.3

15.3

Snowfield

25.9

75.8

9.0

50.9

Total

31.7

121.8

20.3

66.2

Figures as of April 2012

Why Own It?

Pretium is a play on higher gold prices and it’s one with significant upside potential thanks to its huge resources. Together Brucejack and Snowfield boast an impressive 52 million ounces of measured, indicated and inferred gold, and 188 million ounces of silver. Pretium’s Measured and Indicated gold alone has an above ground value of US$33.7 billion.

A good management team is key to a junior resource company and they don’t come much better than Pretium’s which is headed up by CEO Robert Quartermain who ran Silver Standard for 25 years taking it from $0.50 to $50.

The company also has excellent upside potential from an exploration standpoint since its mineralisation remains open in all directions. The company is likely a buyout target for either Barrick Gold or Seabridge Gold, both of whom have properties in the area.

Pretium only has 100.7 million shares outstanding (on a fully diluted basis), and as of the end of Q2 2012 the company had $75,731,479 in working capital.

A 2 year chart of Pretium Resources

A 2 year chart of Pretium Resources

Chart courtesy of stockcharts.com

Pretium went public in December 2010 at $6.00 a share and is traded on both the Toronto and New York Stock Exchanges under ticker symbol PVG.

Company information

Company Name Pretium Resources Inc
Website www.pretivm.com
Exchange / Ticker TSE: PVG
Share Price CAD$14.59
1 Year Performance 37.4%
Current annualised dividend rate n/a
Dividend Yield n/a
Market Cap 1.37B
Shares Outstanding 93.68M
Earnings per Share (EPS) -0.18
P/E Ratio n/a
Beta -
52 Week Range 8.27 – 18.15

Source: Google Finance

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