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 $142.5 million as a result of our improved production at lower costs,” said Joseph Ovsenek, President & CEO of Pretivm. “In the first half of the year, we’ve reached steady state production, fully implemented our grade control program and met our production guidance. We intend to build on this positive momentum for the remainder of the year, firmly establishing Pretivm as a premier high-grade gold producer.”
Second Quarter 2018 Summary
1Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.
Second Quarter Production Overview
Gold production from March throughout the second quarter reflected the full integration of the operational grade control program. Grade control is critical for grade prediction and the refinement of stope shapes, which results in reduced dilution and optimized grade to the mill.
|Three months ended June 30,||Six months ended June 30,|
|Head grade||g/t Au||14.9||–||11.9||–|
|Gold ounces produced||oz||111,340||–||187,029||–|
|Silver ounces produced||oz||118,205||–||212,935||–|
|Gold ounces sold||oz||115,309||–||183,960||–|
|Silver ounces sold||oz||118,366||–||202,600||–|
|The following abbreviations were used above: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).
(1) No comparative data as the mine commenced commercial production as of July 1, 2017.
Second Quarter Financial Overview
1 Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.
The Company continues to evaluate options to refinance the credit facility and repurchase the precious metals stream.
|Three months ended June 30,||Six months ended June 30,|
|In thousands of USD, except for per ounce data||2018||2017||2018||2017|
|Earnings from mine operations (1,2)||$||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||)|
|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.