Pretivm Reports Second Quarter 2018 Results

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By peterc on August 9, 2018. No Comments

Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”) is pleased to report financial and operating results for the second quarter and first half of 2018.

All amounts are in US dollars unless otherwise noted. This release should be read in conjunction with the Company’s Financial Statements and Management’s Discussion and Analysis available on the Company’s website and on SEDAR.

“Our cash balance increased by more than $72 million through the quarter to $142.5 million as a result of our improved production at lower costs,” said Joseph Ovsenek, President & CEO of Pretivm. “In the first half of the year, we’ve reached steady state production, fully implemented our grade control program and met our production guidance. We intend to build on this positive momentum for the remainder of the year, firmly establishing Pretivm as a premier high-grade gold producer.”

Second Quarter 2018 Summary

  • Production of 111,340 ounces of gold.
  • Revenue of $146.5 million on 115,309 ounces of gold sold.
  • Total cost of sales $86.4 million or $749 per ounce of gold sold1.
  • AISC1 of $648 per ounce of gold sold.
  • Net earnings of $31.1 million ($0.17 per share).
  • Adjusted earnings1 of $47.0 million ($0.26 per share).
  • Cash and cash equivalents of $142.5 million as at June 30, 2018.
  • Achieved first half 2018 guidance with a total of 187,029 ounces of gold produced at an AISC of $783 per ounce of gold sold.

    1Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.

Second Quarter Production Overview

  • Production totaled 111,340 ounces of gold and 118,205 ounces of silver.
  • Mill feed grade averaged 14.9 grams per tonne gold for the quarter.
  • Gold recoveries averaged 97.7%.
  • Process plant throughput averaged 2,604 tonnes per day for total of 236,990 tonnes of ore.
  • Mine development averaged over 740 meters per month during the quarter to prepare additional stopes which will allow for optimization of ore grades feeding the mill.

Gold production from March throughout the second quarter reflected the full integration of the operational grade control program. Grade control is critical for grade prediction and the refinement of stope shapes, which results in reduced dilution and optimized grade to the mill.

Operating Results

  Three months ended June 30, Six months ended June 30,
  2018   2017(1)   2018   2017(1)
                 
Ore mined t 248,506     516,845  
Mining rate tpd 2,731     2,855  
                 
Ore milled t 236,990     498,433  
Head grade g/t Au 14.9     11.9  
Recovery % 97.7     97.4  
Mill throughput tpd 2,604     2,754  
                 
Gold ounces produced oz 111,340     187,029  
Silver ounces produced oz 118,205     212,935  
                 
Gold ounces sold oz 115,309     183,960  
Silver ounces sold oz 118,366     202,600  
The following abbreviations were used above: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).
(1) No comparative data as the mine commenced commercial production as of July 1, 2017.

Second Quarter Financial Overview

  • Revenue of $146.5 million was generated from mine operations.
  • The Company sold 115,309 ounces of gold at an average realized price1 of $1,278 per ounce generating $147.4 million in revenue. The Company sold 118,366 ounces of silver generating $1.6 million in revenue. Treatment costs and refining charges associated with concentrate sales, in the amount of $4.3 million, were included within concentrate revenue. The average London Bullion Market Association AM and PM market price over the quarter ended June 30, 2018 was $1,306 per ounce.
  • Total cost of sales was $86.4 million or $749 per ounce of gold sold.
  • Total cash cost was $548 per ounce of gold sold and AISC was $648 per ounce of gold sold.
  • Sustaining capital expenditures amounted to $3.2 million (including $1.1 million deferred development costs incurred during production).
  • Earnings from mine operations were $60.1 million.
  • Net earnings were $31.1 million or $0.17 per share.
  • Adjusted earnings1 were $47.0 million or $0.26 per share.
  • Cash generated from operating activities was $77.3 million.
  • Cash and cash equivalents were $142.5 million as at June 30, 2018 increasing $86.2 million from $56.3 million at December 31, 2017. The Company has working capital of $133.2 million excluding the current portion of long-term debt as at June 30, 2018 compared to $40.6 million as at December 31, 2017.

    1 Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.

The Company continues to evaluate options to refinance the credit facility and repurchase the precious metals stream.

Financial Results

  Three months ended June 30,   Six months ended June 30,  
In thousands of USD, except for per ounce data 2018   2017     2018   2017  
                 
Revenue(1) $ 146,478       235,900    
Earnings from mine operations (1,2) $ 60,070       76,904    
Net earnings (loss) for the period $ 31,097   (2,495 )   23,039   (6,758 )
Per share – basic $/share 0.17   (0.01 )   0.13   (0.04 )
Per share – diluted $/share 0.17   (0.01 )   0.13   (0.04 )
                 
Adjusted earnings (loss) (2) $ 47,048   (3,178 )   52,845   (9,267 )
Per share – basic (2) $/share 0.26   (0.02 )   0.29   (0.05 )
                 
Total cash and  cash equivalents $ 142,495   55,311     142,495   55,311  
Cash generated from (used by)  operating activities   77,276   (4,824 )   101,995   (7,557 )
Total assets $ 1,731,950   1,649,593     1,731,950   1,649,593  
Long-term debt (3) $ 292,330   616,101     292,330   616,101  
                 
Total cash costs (1,2) $/oz 548       657    
All-in sustaining costs (1,2) $/oz 648       783    
                 
Average realized price (1,2) $/oz 1,278       1,276    
Average realized cash margin (1,2) $/oz 730       619    
(1) No comparative data as the mine commenced commercial production as of July 1, 2017.
(2) Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.
(3) Long-term debt does not include the current portion of the Company’s senior secured credit facility in the amount of $393,531 as at June 30, 2018.

Delivering on First Half 2018 Guidance

Production totaled 187,029 ounces of gold and 212,935 ounces of silver delivering on our first half 2018 production guidance of 150,000 to 200,000 ounces of gold.

Total cost of sales, which includes production costs, depreciation and depletion, royalties and selling costs was $159.0 million or $864 per ounce of gold sold and total cash cost was $657 per ounce of gold sold. AISC was $783 per ounce of gold sold within our first half 2018 AISC guidance range of $700 to $900 per ounce of gold sold.

Second Half 2018 Outlook

H2 2018 production guidance

Gold production at the Brucejack Mine for the second half of 2018 is expected in the range of 200,000 to 220,000 ounces, for total 2018 gold production of 387,000 to 407,000 ounces.

H2 2018 financial guidance

All-in sustaining costs for the second half of 2018 are expected to range from $710 to $770 per ounce gold sold. All-in sustaining costs do not include the estimated $25 million of capital cost required to increase the mill capacity to 3,800 tpd (see Organic Growth Opportunities below). As production has now reached steady state at the Brucejack Mine, an increased focus will be placed on operational efficiency to reduce costs.

Organic Growth Opportunities

Application to increase production rate

On December 20, 2017, the Company submitted an application to the BC Ministry of Energy, Mines and Petroleum Resources and the BC Ministry of Environment and Climate Change Strategy to increase the Brucejack Mine production rate to 3,800 tonnes per day. The increase would result in an annual average production rate of 1.387 million tonnes, up from 0.99 million tonnes (a daily average of 3,800 tonnes from 2,700 tonnes). Based on preliminary engineering, the capital cost to increase the mill capacity is estimated to be less than $25 million. The approval process is expected to be completed by year end.

Exploration drilling for resource expansion and porphyry source

The underground exploration drilling conducted to evaluate the potential extension of the Valley of the Kings to the east while assessing the potential for a porphyry source at depth was successfully completed (see news release dated June 18, 2018). Two holes, both over 1,500-meters in length and drilled east from the Valley of the Kings intersected alteration, veining, and mineralization throughout, confirming the presence of Brucejack-style mineralization starting from the eastern edge of the Valley of the Kings to beneath the Flow Dome Zone. Anomalous copper and molybdenum mineralization intersected at depth in both holes indicate proximity to porphyry-style mineralization at depth.

These drill results, along with a follow-up surface geophysical program and mineral chemistry evaluation, will be used for planning a future underground drill program focused on resource expansion of the Valley of the Kings to the east.

Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine Engineer, Pretium Resources Inc. is the Qualified Person (“QP”) responsible for Brucejack Mine development. Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Vice President, Geology and Chief Geologist, Pretium Resources Inc. is the QP responsible for the Brucejack Mine grade control program and the Brucejack Mine exploration drilling.

Regional grass-roots exploration

The 2018 regional grass-roots exploration program which includes geophysical studies, continued regional prospecting and mapping and diamond drilling on several high priority gold targets is currently underway. The 2018 program follows up on the comprehensive regional exploration that has previously been completed on the 1,250-square kilometer, wholly-owned property. To date, the program has resulted in the identification of several distinct areas that have the potential to host mineralized zones similar to the Valley of the Kings and Eskay Creek deposits.

Subsequent to the end of the quarter, a private placement of 227,273 flow-through common shares of the Company at a price of C$13.20 per flow-through share was completed on July 25, 2018 for total gross proceeds of approximately C$3.0 million. The proceeds of the private placement of flow-through common shares are being used to fund a portion of the 2018 grass-roots exploration program.

Kenneth C. McNaughton, M.A.Sc., P.Eng., Chief Exploration Officer, Pretium Resources Inc. is the QP responsible for the regional grass-roots exploration program.

Our unaudited condensed consolidated interim Financial Statements and Management’s Discussion and Analysis for the three and six months ended June 30, 2018 are filed on SEDAR and available on our website at www.pretivm.com.

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