In a Dec. 18, 2018, research note, BMO Capital Markets analyst Andrew Kaip reported that Pretium Resources Inc. (PVG:TSX; PVG:NYSE) bought back the 8% gold and silver stream on the Brucejack mine for US$237 million and refinanced the company's existing construction credit facility, both made possible by the closing on a US$480 million debt vehicle. Pretium owns and operates Brucejack.
The new debt facility has two components. One is a US$250 million senior secured amortizing term facility, which Pretium is to repay in equal quarterly installments starting at the end of Q2/19. The other is a US$230 million senior revolving facility, which will be lowered to US$200 million in June 2019.
Kaip explained that "both facilities are available in the form of U.S. dollar LIBOR loans with an interest rate from LIBOR of +2.5–3.5% based on the company's net leverage ratio or USD base rate loans with a 1.5–2.5% interest rate over the administrative base rate."
BMO has an Outperform rating and has a target price of CA$17.50 per share. The company's stock is currently trading at around CA$11.13 per share.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from BMO Capital Markets, Pretium Resources, December 18, 2018
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Pretium Resources and Osisko Gold Royalties.
Disclosure 6C: Pretium Resources and Osisko Gold Royalties are clients (or were clients) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 8A: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of Pretium Resources and Osisko Gold Royalties.
Disclosure 16: A research analyst has extensively viewed the material operations of Pretium Resources.
Disclosure 17: Pretium Resources has paid or reimbursed some or all of the research analyst's travel expenses.
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