Increased production and increased sales are leading to a cash-positive quarter at this gold miner's flagship project in northern British Columbia.
On Sept. 21, Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced that its 100%-owned Brucejack project's ramp-up continues to advance, "targeting steady state production for the end of 2017." The company says it expects to achieve positive working capital by the end of the quarter due to increased production and sale from doré and flotation concentrate.
Eric Zaunscherb, an analyst with Canaccord Genuity, noted in a Sept. 21 update that Pretium is "continuing to fire on all cylinders, as is apparent from the latest update in which the company announced production ramp-up is progressing strongly at the flagship Brucejack gold mine."
The analyst wrote that previously Pretium announced a "$12M working capital deficit which raised concerns with some investors. We have remained confident that through steady state production the company would easily overcome this shortfall and this appears to be the case."
Zaunscherb stated that "the +95% recoveries currently reported by the company are slightly above our modeled expectations. Further, previously reported metallic slag that was trapping some gold content has been eliminated, with gold recoveries from the shaker table improving overall."
Zaunscherb highlighted that Pretium will release Q3 production results in October and he "expects the company to continue to outpace many people's expectations." Canaccord reiterated a Speculative Buy recommendation with a price target of CA$18.50 per share.
BMO Capital Markets analyst Andrew Kaip echoed Canaccord's sentiments in a Sept. 21 report, stating, "the ramp-up at Brucejack continues to progress well, with the mill running exclusively on stope ore, and an increase in production contributing to an expectation of positive working capital by the end of the quarter. Q3/17 production is expected in October, which we expect will be a highly anticipated update and catalyst for the company."
Kaip detailed that "in the mine, the company is currently drilling new stopes at a rate of ~250m per day, with seven stopes currently operational, three available for drilling, and an additional 24 stopes in various stages of development." He concluded that "with stope development in a good position, we expect that this will increase flexibility to support grade blending given the number of active stopes."
BMO Capital Markets has Pretium at an Outperform recommendation with a target price of CA$19.50 per share.
Pretium is currently trading at CA$11.64 per share.
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Additional disclosures about the sources cited in this article
Disclosures from Canaccord Genuity, Pretium Resources, Flash Update, Sept. 21, 2017
Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.
Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Pretium Resources Inc. currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Pretium Resources Inc..
In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Pretium Resources Inc.
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Pretium Resources Inc. in the next three months.
An analyst has visited the material operations of Pretium Resources Inc.. Partial payment was received for the related travel costs.
Up-to-date disclosures may be obtained here.
Disclosures from BMO Capital Markets, Pretium Resources, Sept. 21, 2017
Analyst's Certification: 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 1: BMO Capital Markets has undertaken an underwriting liability with respect to Pretium Resources within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Pretium Resources within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Pretium Resources within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Pretium Resources within the past 12 months.
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.
Disclosure 6A: Pretium Resources is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Pretium Resources is a client (or was a client) 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.
Disclosure 8C: BMO Capital Markets or an affiliate has a financial interest in 0.5% or more in the issued share capital of Pretium Resources.
Disclosure 16: A BMO Nesbitt Burns Inc. research analyst has extensively viewed the material operations of Pretium Resources.
Disclosure 17: Pretium Resources has paid or reimbursed some or all of the BMO Nesbitt Burns Inc. analysts travel expenses.
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