Pretium Resources is ramping up Brucejack ahead of schedule and the $100
million offering the company just closed will fund working capital
requirements for its start-up.
On Feb. 14, Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced the closing of a US$100 million convertible senior
subordinated notes offering, including the full exercise of the
over-allotment option. Pretium will use the proceeds as working capital for
its 100%-owned Brucejack gold mine project and for general corporate
purposes. The news comes on the heels of the company's Feb. 3 announcement that the Brucejack project timeline had been
accelerated "with dry commissioning now scheduled to commence in March
2017 and wet commissioning scheduled to commence in early April 2017."
Heiko Ihle of Rodman & Renshaw sees a big positive with the new
schedule, highlighting in his Feb. 6 report, "that the updated timeline
is ahead of our estimate for mid-year commissioning; therefore, we are
increasing our gold production estimate for the year to just shy of 120,000
ounces from just over 93,000 ounces." Ihle also noted "although capital
costs have risen, we continue to view Brucejack as one of the premier gold
projects worldwide. . .we have rolled our NAV model into 2017, our price
target is unaffected by the increase in total initial capital due to the fact
that capital spent to date in 2016 is no longer factored into our
model."
Joe Reagor, an analyst for ROTH Capital Partners, also believes the
accelerated schedule was a good move, stating in his Feb. 3 report that
"despite the increase in capital budget, we believe that the earlier
start-up of the mill is more significant."
Byron King of the Gold Speculator was not surprised or concerned
with the slight increase in capex costs, stating in the Feb. 7 issue that
"capital costs are slightly higher than expected, which comes with the
territory�literally, considering the difficulty of building a sophisticated
mining camp deep and high in the mountains of British Columbia." He went
on to say "there is ore stockpiled test-mining ongoing and systems
checkout proceeding apace. Soon, I'll likely move Pretium from the Developer
side of this list to the Producer side."
Of Pretium's Brucejack project, CIBC World Market's Jeff Killeen reported
on Feb. 14 that "commercial production in early Q3 seems likely with
development on track and process plant construction ~2 months ahead of
schedule." CIBC anticipates "potential for head grade to vary,
particularly in H2/17 as the number of available stopes progressively
increases."
Andrew Kaip, an analyst for BMO Capital Markets, forecasts Pretium
"to have adequate capital resources, including the remaining portion of
its undrawn credit facility, to fund the remainder of capital construction as
well as the required working capital during start-up." Kaip went on to
say that "Pretium Resources one of the few advanced, sizeable, and
permitted development projects positioned to benefit from the strength in the
precious metals sector by advancing construction and/or attracting a takeover
offer."
