Pretium launches unusual trading probe

The Pretium Resources Brucejack Mine in northwestern British Columbia. Source: Pretium Resources Inc.

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By Peter Kennedy

The Pretium Resources Brucejack Mine in northwestern British Columbia. Source: Pretium Resources Inc.

Pretium Resources Inc. [PVG-TSX, NYSE] said Friday January 11 that it has retained an independent legal counsel to launch an investigation of unusual trading activity in its shares.

Stock price charts show that Pretium shares have been in freefall in recent days, tumbling from $11.73 on January 8, 2019, to $9.29 on Friday, when the shares were down 3.53% or 34 cents on volume of 1.53 million.

News of the investigation comes after Pretium released a January 9, 2019 production update, saying output at its Brucejack Mine in British Columbia came in below targets set by the company.

In the fourth quarter of 2018, Pretium produced 96,342 ounces of gold, bringing the total to 189,000 in the second half of the year. That was below the company’s second half target of 200,000.

Brucejack produced 376,000 ounces of gold in 2018, which was also below guidance of 387,000.

The Brucejack Mine is a 2,700 tonne-per-day high-grade underground operation located in northwestern B.C., about 65 km north of Stewart. Commercial production began in July 2017.

All-In Sustaining Costs for the second half of 2018 were expected to range from US$710 an ounce to US$770.

“As we have discussed in the past, the high variability of the gold mineralization throughout the Valley of the Kings deposit is a key characteristic of the Brucejack Mine, and gold production is managed with grade control, the sequence of the mine plan and availability of stopes for optimal grade blending,” said Pretium President and CEO Joseph Ovsenek.

Pretium is in the process of refining the grade control program and mining methods (possibly using longitudinal long-hole stoping) in order to reduce dilution and optimize grade to the mill.

In a report, Scotiabank precious metals analyst Ovais Habib said he views the 2018 production results as mixed. “While Pretium produced 376,000 ounces  of gold in the first full year of production (still pretty impressive), lower quarter/quarter grades contributed to lower-than-modeled fourth quarter production that may lead some investors adopting a wait-and-see approach pending further clarity on costs, grade reconciliation and future outlook,” Habib said.

In December 2018, Pretium said it has received amended permits to increase the Brucejack Mine production rate to 3,800 tonnes per day from the provincial government.

A specific timeline for ramp-up to the 3,800 tonnes per day production rate, along with production and cost guidance for 2019 is expected later in the quarter, Pretium said.

Minor mill upgrades (estimated to cost $25 million) to support the production rate increase are required and will be completed during regularly scheduled mill shutdowns, the company said.

Pretium repurchased 100% of the callable 8% gold and silver stream that was sold as part of the mine construction financing to Osisko Gold Royalties. The stream was repurchased for $237 million. Pretium also closed a $480 million bank debt facility, leaving the company with $45 million cash at the end of 2018.

The company said it plans to release its fourth quarter and year-end 2018 operational and financial results after the close of trading on February 14, 2019.

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