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."
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