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Pretium Hits Bonanza Grades in BC
~By Ted Niles - August 24 2011
Gold and silver equities continue to disappoint, but Pretium Resources and its Bruce- ounce. Capital costs would be $281 million.
jack and Snowfield gold-silver projects are a conspicuous exception. Pretium—or
Pretivm as the company prefers it to be spelled, the better to evoke the word’s Latin The importance of the high-grade aspect of the project cannot be overemphasized, as
meaning of ‘value’—made its initial public offering of $6 per share in December 2010. it offsets the drawbacks of Brucejack’s location. As Louis James told the Gold Report,
Eight months later, shares have risen 48%. On August 12, Casey Research’s Louis “I had been aware of Snowfield/Brucejack when it was still in Silver Standard. We never
James lauded Pretium as “a clear value proposition.” On July 18, analyst Brian Quast bought because we just weren’t sure a mine would ever actually get built in this remote
announced that CIBC World Markets had initiated coverage of the company, com- part of the world, especially with the low grades. But when you have really high grades,
menting, “Pretium represents one of the best call options in the gold developer space.” you can build a mine anyplace. Places like Eskay Creek were once very remote, but
And while Face the Analyst’s Jay Taylor can’t actually be seen swooning during his average grade was over an ounce per ton. That’s what it took to operate in that area.
July interview with Bob Quartermain, it should be noted that the camera isn’t always Grade solves a lot of problems, and Brucejack certainly has that potential.”
on him.
Pretium is undertaking a 70,000-metre drill program, consisting roughly 80% to 90% of
infill drilling, which Quartermain expects to be finished no later than October. He says,
“Once all that drilling is completed, we will then go through it and do a new resource
calculation; both a high-grade resource calculation of the Brucejack area, as well as
a resource on the bulk-tonnage, one-gram material surrounding the high grade. With
those two resources, which we hope to have 4Q 2010 or 1Q 2011, we would go back
and update the preliminary economic study on Brucejack.”
August 22 assays from Brucejack’s Valley of the Kings zone include 2,810 grams per
tonne gold and 1,030 g/t silver over 0.5 metres and 1,094 g/t gold and 263.5 g/t silver
over 2 metres. August 11 assays include 6,670 g/t gold and 3,630 g/t silver over 0.5
metres, 1,640 g/t gold and 423 g/t silver over 0.5 metres and 1,200 g/t gold and 686
How to explain Pretium’s highly auspicious rollout? Louis James gives us the first g/t silver over 0.5 metres. July 27 assays included 4,060 g/t gold and 1,660 g/t silver
reason: Pretium has “the right people in place.” The most important being Bob over 0.5 metres and 1,070 g/t gold and 255 g/t silver over 0.5 metres. June 8 results
Quartermain, Pretium’s President and CEO. Quartermain earned his reputation with included one interval of a whopping 18,755 g/t gold and 9,312 g/t silver over 0.6
Silver Standard Resources—a company which, when he joined as President in 1985, metres. Quartermain remarks, “We’re very encouraged by the results. We continue to
had a market cap of $1.5 million; this exceeded $2 billion when he retired in 2010. have high-grade, visible-gold hits in the Valley of the Kings. They are showing that we
Most notable of his accomplishments at Silver Standard was the development of the are getting some continuity of this high-grade mineralization, which will certainly help
Pirquitas Mine in Argentina. Pirquitas started commercial silver and tin production in in supporting a high-grade underground operation at Brucejack.”
December 2009 and ranks among the largest silver mines worldwide. Notice, too, that
Quartermain’s current management team at Pretium includes many of Quartermain’s Regarding production, Quartermain admits that Snowfield would require “a much
Silver Standard colleagues. bigger partner.” But as for Brucejack, “With the management team that has come over
in part from Silver Standard—and with the work we did at Silver Standard previously in
The second reason, as you might have guessed, is the resource. Pretium acquired building the Pirquitas mine—the construction and building of the high-grade opportu-
the Brucejack and Snowfield projects—both located 65 kilometres north of Stewart, nity at Brucejack is certainly something that we have the capacity to do.”
BC—from Silver Standard with the proceeds of its December IPO, and the properties’
already impressive resources were updated by Pretium in February 2011. At a 0.3 g/t “If someone were to approach us about the opportunity of partnering up in the
cut-off, Brucejack contains 8.18 million ounces gold and 116.2 million ounces silver high-grade, we’d certainly look at that,” Quartermain says. “We’ll see how the project
measured and indicated, and 12.56 million ounces gold and 151.2 million ounces evolves.”
silver inferred. At the same cut-off, Snowfield contains an astonishing 25.92 million
ounces gold, 75.8 million ounces silver and 2.98 billion pounds copper measured and Quartermain concludes, “I’m very encouraged. I entered into negotiations with Silver
indicated, as well as 9.03 million ounces gold, 50.9 million ounces silver and 1.1 billion Standard to buy the property in October and basically purchased it in December.
pounds copper inferred. We’ve been working on it a little more than six months, and during that time we’ve
increased resources by 35% and have had some of the highest gold intersections on
Thus was Pretium able to IPO at the price that it did. Quartermain explains, “In consul- the property to date. And, fortunately, with the money we raised on the IPO and a small
tation with our financial advisors, the suggestion was that this was a reasonable share flow through we did in July, we have all of the cash that we need to drill the project this
price. It’s a function of the value we had in it. The asset, with the 40-somewhat million year and hopefully advance it almost through to feasibility next year. We don’t have to
ounces of gold justifies the price, and the market was willing to pay for it.” go back to the market in the near term, so we can manage shareholder solutions. In
that respect, we’re protected from the volatility of the market.”
“
He continues, “With the Brucejack and Snowfield projects we have one of the world’s
largest undeveloped gold projects—about the fifth-largest in North America. That’s At press time, Pretium had 86.9 million shares trading at $9.85 for a market cap of
what we wanted: a large project that gave our shareholders insurance in a rising gold $855.6 million.
environment. As gold prices continue to stay strong and improve there will be more
recognition coming to Pretium because of the large in-ground resource we have, and
the potential for the development of a small high-grade project going forward.” With the Brucejack and Snowfield projects
we have one of the world’s largest unde-
Brucejack, particularly that “high-grade project” contained within it, is now the focus of
Pretium’s attention. A June 2011 preliminary economic assessment of the high-grade
veloped gold projects—about the fifth-
resource estimated production of 173,200 ounces gold and 1.12 million ounces silver largest in North America
annually for the first 10 years, with a total mine life of 16 years. The pre-tax net present
value of the resource was estimated at $662 million, with an internal rate of return –Bob Quartermain
of 27.1%—assuming a gold price of $1,100 per ounce and a silver price of $21 per
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