Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”)
reports operating and financial results for the second quarter
2019, Pretivm’s eighth consecutive quarter of positive adjusted
earnings.
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 (“MD&A”) for the three and six months ended June 30,
2019 and 2018, available on the Company’s website and on SEDAR and
EDGAR.
Second Quarter 2019 Operating
Summary
- Production of 90,761 ounces of
gold, on track to achieve 2019 annual guidance.
- Mill feed grade of 8.9 grams per
tonne gold.
- Gold recovery rate of 96.9%.
- Ore milled 324,171 tonnes.
- Daily average ore milled 3,562
tonnes per day.
Second Quarter 2019 Financial
Summary
- Revenue of $113.2 million on 85,953
ounces of gold sold.
- Total cost of sales of $83.4
million or $970 per ounce of gold sold1.
- Earnings from mine operations of
$29.8 million.
- Achieved an average realized cash
margin1 of $550 per ounce of gold sold, with a total cash cost of
$702 per ounce of gold sold1.
- All-in Sustaining Cost (“AISC”)1 of
$940 per ounce of gold sold, on track to achieve 2019 annual
guidance.
- Generated $41.2 million in cash
from operating activities.
- Net earnings of $10.4 million
($0.06 per share).
- Adjusted earnings1 of $17.0 million
($0.09 per share1).
- Reduced debt by $44.7 million using
cash generated from operations.
- Remaining debt of $415.3 million on
the $480 million loan facility.
1 Refer to the
“Non-IFRS Financial Performance Measures” section at the end of
this news release.
“We delivered another profitable quarter with
significant cash flow,” said Joseph Ovsenek, President & CEO of
Pretivm. “The robust economics of our Brucejack Mine allowed us to
eliminate $65 million of debt in the first half of 2019,
strengthening our balance sheet and advancing our debt repayment
goals as we continue to target debt reduction of $140 million this
year. We are successfully ramping up production and made additional
progress since the first quarter of the year. We expect this
positive trajectory to continue, to deliver higher grade and tonnes
through the remainder of the year and to meet our
guidance.”
2019 Production and Financial
Guidance
The Company remains on track to achieve its 2019
gold production guidance of 390,000 ounces to 420,000 ounces. The
production ramp-up from 2,700 tonnes per day to 3,800 tonnes per
day over the course of the year is advancing as planned. To achieve
the ramp-up, the Company increased the underground development rate
to 1,000 meters per month to improve access to a greater number of
stopes. As the mine plan continues to progress through a lower
grade area of the Valley of the Kings, all stopes above cut-off
grade of approximately 5.0 grams per tonne gold are being mined as
they become available for production. As a result, gold grade
over the first half of the year was 8.8 grams per tonne, with the
gold grade expected to average approximately 10.4 grams per tonne
for 2019. As previously guided, both grade and tonnes are expected
to be higher through the remainder of the year as the increased
rate of underground development opens the mine and further improves
access to reserves.
AISC in the first half of the year was $905 per
ounce of gold sold, above the annual guidance range of $775 to $875
per ounce of gold sold. However, as production increases through
the remainder of 2019 we expect AISC to be within full-year
guidance. AISC guidance for the year includes approximately $30.0
million for sustaining capital, of which approximately $11.6
million was spent in the first half of the year. Approximately
$15.0 million of the estimated sustaining capital is allocated for
non-recurring expenditures.
Second Quarter 2019 Ramp-up Production
Overview
- The production rate ramp-up is
advancing as planned; sequential comparison demonstrates the
progress achieved from the first to second quarter of 2019.
- Gold production totaled 90,761
ounces in the second quarter, representing a 14% increase compared
to 79,180 ounces in the first quarter of 2019.
- The mill feed grade average
improved slightly to 8.9 grams per tonne gold for the quarter
compared to 8.7 grams per tonne gold in the previous quarter. As
development underground progressed through lower grade areas, all
stopes that met the grade cut-off were processed. Both grade and
tonnes are expected to be higher through the remainder of the year
as the increased rate of underground development opens the mine and
further improves access to reserves.
- Underground development has
successfully advanced towards the targeted rate of 1,000 meters per
month, with 993 meters achieved for the month of June. Development
is expected to continue at approximately 1,000 meters per month for
the remainder of the year to ensure development remains ahead of
production requirements to achieve a mining rate of 3,800 tonnes
per day by year end.
- A total of 324,171 tonnes of ore,
equivalent to a throughput rate of 3,562 tonnes per day, was
processed. This represents an increase of 10% from the previous
quarter, when a total of 295,122 tonnes of ore, equivalent to a
throughput rate of 3,279 tonnes per day, was processed.
- The modifications and upgrades
required to sustain processing at the increased production rate of
3,800 tonnes per day are progressing on schedule. The most
significant upgrade was the shift from concentrate bagging to a
bulk loading system. The bulk loading system is now installed in
its permanent location and is operating as a fully integrated
component of the concentrate process. Modifications to the
flotation circuit which include upgraded pumps and piping and an
additional cleaning cell for the flotation circuit will continue
during regularly scheduled shutdowns as the final components are
delivered.
- Gold recoveries averaged 96.9% for
the quarter, a slight improvement over 96.8% in the previous
quarter.
Second Quarter 2019 Financial
Overview
- The Company generated revenue of $113.2 million compared to
revenue of $103.1 million in the first quarter 2019. Revenue
includes a gain on trade receivables at fair value related to
provisional pricing adjustments of $4.1 million (Q1 2019 – loss of
$0.7 million).
- Over the quarter the Company sold 85,953 ounces of gold at an
average realized price1 of $1,252 per ounce. In the previous
quarter 81,434 ounces of gold were sold at an average realized
price of $1,257 per ounce. The average realized price was reduced
by treatment costs and refining charges related to concentrate gold
sales.
- Total cost of sales was $83.4 million or $970 per ounce of gold
sold. For the previous quarter, total cost of sales was $74.0
million or $908 per ounce of gold sold. Total cost of sales was
impacted by an increase in depreciation and depletion related to
the updated Mineral Reserve in April 2019 and in production costs
primarily due to additional development and drilling.
- Production costs for the second quarter were $56.0 million or
$173 per tonne of ore milled, compared to $53.0 million or $180 per
tonne of ore milled in the previous quarter. Production costs
include mining, processing, surface services and mine general and
administrative costs.
- Total cash cost was $702 per ounce of gold sold resulting in an
average realized cash margin of $550 per ounce of gold sold. In the
first quarter 2019, total cash cost was $686 per ounce of gold
sold resulting in an average realized cash margin of $571 per ounce
of gold sold.
- AISC was $940 per ounce of gold sold and remains on track to
meet our 2019 financial guidance of $775 to $875 per ounce of gold
sold, as production is expected to be higher in the second half of
the year. In the first quarter 2019, AISC was $868 per ounce of
gold sold. The increase over the previous quarter is related to
timing of sustaining capital expenditures, growth-oriented expenses
and the increased rate of underground development associated with
the production ramp-up to 3,800 tonnes per day.
- Earnings from mine operations were $29.8 million compared to
$29.2 million in the previous quarter.
- Net earnings were $10.4 million compared to earnings of $4.2
million in the previous quarter. Adjusted earnings were $17.0
million compared to $16.5 million in the previous quarter.
- Cash generated by operations was $41.2 million compared to
$39.9 million in the previous quarter.
- The Company repaid $44.7 million of the $480.0 million loan
facility with cash generated from operations this quarter, for a
total of $64.7 million this year ($415.3 million outstanding).
Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine
Engineer, Pretium Resources Inc. is the Qualified Person
responsible for Brucejack Mine development, and has reviewed and
approved the scientific and technical information contained in this
news release relating thereto.
Pretivm Expands Management
Team
Pretivm has added to its leadership team with
the appointment of Mr. John Hayes as Senior Vice President,
Corporate Development and Investor Relations. Mr. Hayes has over 30
years of experience in capital markets and the mining sector. Mr.
Hayes has served as a mining analyst and Managing Director for BMO
Capital Markets and prior to that worked as a professional
geologist. Mr. Hayes graduated from Memorial University of
Newfoundland with an Honours Bachelor of Science in Geology (1989)
and a Master of Science in Geology (1997). He also holds an MBA
from Dalhousie University (2003) and is a member (P. Geo.) of the
Professional Engineers and Geoscientists of Newfoundland and
Labrador.
Our unaudited condensed consolidated interim
Financial Statements and MD&A for the three and six months
ended June 30, 2019 and 2018 are filed on SEDAR and EDGAR and are
available on our website at www.pretivm.com.
Webcast and Conference Call
The webcast and conference call to discuss the
second quarter 2019 operating and financial results will take place
Friday, August 2, 2019 at 8:00 am PT (11:00 am
ET).
Webcast and conference call details:
Friday, August 2, 2019 at 8:00 am PT (11:00 am
ET) |
Webcast |
www.pretivm.com |
Toll Free (North America) |
1-800-319-4610 |
International and Vancouver |
604-638-5340 |
A recorded playback will be available until August 16, 2019:
Toll Free (North America) |
1-800-319-6413 |
Access Code |
3256 |
About Pretivm
Pretivm is a low-cost intermediate gold producer
with the high-grade underground Brucejack Mine in northern British
Columbia.
For further information contact:
Joseph
Ovsenek |
Troy
Shultz |
President & CEO |
Manager, Investor Relations & |
|
Corporate Communications |
Pretium Resources Inc.Suite 2300, Four Bentall Centre, 1055
Dunsmuir StreetPO Box 49334 Vancouver, BC V7X 1L4(604)
558-1784invest@pretivm.com(SEDAR filings: Pretium Resources
Inc.)
Operating Results |
|
Three months ended June 30, |
Six months ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Ore mined (wet tonnes) |
t |
337,044 |
|
248,506 |
|
645,431 |
|
516,845 |
Mining rate |
tpd |
3,704 |
|
2,731 |
|
3,566 |
|
2,855 |
|
|
|
|
|
|
|
|
|
Ore milled (dry tonnes) |
t |
324,171 |
|
236,990 |
|
619,293 |
|
498,433 |
Head grade |
g/t Au |
8.9 |
|
14.9 |
|
8.8 |
|
11.9 |
Recovery |
% |
96.9 |
|
97.7 |
|
96.9 |
|
97.4 |
Mill throughput |
tpd |
3,562 |
|
2,604 |
|
3,422 |
|
2,754 |
|
|
|
|
|
|
|
|
|
Gold ounces produced |
oz |
90,761 |
|
111,340 |
|
169,941 |
|
187,029 |
Silver ounces produced |
oz |
135,797 |
|
118,205 |
|
244,031 |
|
212,935 |
|
|
|
|
|
|
|
|
|
Gold ounces sold |
oz |
85,953 |
|
115,309 |
|
167,387 |
|
183,960 |
Silver
ounces sold |
oz |
104,442 |
|
118,366 |
|
201,416 |
|
202,600 |
The following abbreviations were used above: t
(tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold)
and oz (ounces). |
Financial Results |
|
Three months ended June 30, |
Six months ended June 30, |
In
thousands of USD, except for per ounce data |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
113,202 |
|
146,478 |
|
216,321 |
|
235,900 |
Earnings from mine operations |
$ |
29,789 |
|
60,070 |
|
58,941 |
|
76,904 |
Net earnings for the period |
$ |
10,443 |
|
31,097 |
|
14,609 |
|
23,039 |
Per share – basic |
$/share |
0.06 |
|
0.17 |
|
0.08 |
|
0.13 |
Per share – diluted |
$/share |
0.06 |
|
0.17 |
|
0.08 |
|
0.13 |
|
|
|
|
|
|
|
|
|
Adjusted earnings(1) |
$ |
17,013 |
|
47,048 |
|
33,540 |
|
52,845 |
Per share - basic(1) |
$/share |
0.09 |
|
0.26 |
|
0.18 |
|
0.29 |
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents |
$ |
34,281 |
|
142,495 |
|
34,281 |
|
142,495 |
Cash generated from operating activities |
|
41,183 |
|
77,276 |
|
81,127 |
|
101,995 |
Total assets |
$ |
1,609,644 |
|
1,731,950 |
|
1,609,644 |
|
1,731,950 |
Long-term debt(2) |
$ |
411,595 |
|
292,330 |
|
411,595 |
|
292,330 |
|
|
|
|
|
|
|
|
|
Production costs (milled) |
$/t |
173 |
|
215 |
|
176 |
|
213 |
|
|
|
|
|
|
|
|
|
Total cash costs(1) |
$/oz |
702 |
|
548 |
|
694 |
|
657 |
All-in sustaining costs(1) |
$/oz |
940 |
|
648 |
|
905 |
|
783 |
|
|
|
|
|
|
|
|
|
Average realized price(1) |
$/oz |
1,252 |
|
1,278 |
|
1,255 |
|
1,276 |
Average realized cash
margin(1) |
$/oz |
550 |
|
730 |
|
561 |
|
619 |
(1) Refer to the
"Non-IFRS Financial Performance Measures" section at the end of
this news release.(2) Long-term debt does not include the current
portions of the Company’s loan facility and offtake obligation in
the amount of $75,609 as at June 30, 2019. For the comparable
period in 2018, long-term debt does not include the current
portions of the Company’s then-outstanding credit facility and
offtake obligation in the amount of $399,719. |
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS
measures in this new release. Refer to the Company’s MD&A for
an explanation, discussion and reconciliation of non-IFRS measures.
The Company believes that these measures, in addition to measures
prepared in accordance with IFRS, provide readers with an improved
ability to evaluate the underlying performance of the Company and
to compare it to information reported by other companies. The
non-IFRS measures are intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with International
Financial Reporting Standards (“IFRS”). These measures do not have
any standardized meaning prescribed under IFRS, and therefore may
not be comparable to similar measures presented by other
issuers.
Forward-Looking Information
This news release contains “forward-looking
information”, “forward looking statements”, “future oriented
financial information” and/or “financial outlook” within the
meaning of applicable Canadian and United States securities
legislation (collectively herein referred to as “forward-looking
information”). The purpose of disclosing future oriented
financial information and financial outlook is to provide a general
overview of management’s expectations regarding the anticipated
results of operations and costs thereof and readers are cautioned
that future oriented financial information and financial outlook
may not be appropriate for other purposes. Wherever possible, words
such as “plans”, “expects”, “guidance”, “projects”, “assumes”,
“budget”, “strategy”, “scheduled”, “estimates”, “forecasts”,
“anticipates”, “believes”, “intends”, “modeled”, “targets” and
similar expressions or statements that certain actions, events or
results “may”, “could”, “would”, “might” or “will” be taken, occur
or be achieved, or the negative forms of any of these terms and
similar expressions, have been used to identify forward-looking
information. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance are not statements of historical fact and may be
forward-looking statements. Forward-looking information may
include, but is not limited to, information with respect to:
production and cost guidance and the Company’s expectations around
achieving such guidance; our future operational and financial
results, including estimated cash flows, and the timing thereof;
the expected grade of gold and silver production; the Brucejack
Mine production rate and the ramp-up to 3,800 tonnes per day
production rate; capital modifications and upgrades,
underground development, and estimated expenditures and timelines
in connection therewith, including with respect to the ramp-up to
3,800 tonnes per day production rate; payment of debt, operating
and other obligations and requirements, including timing and
source of funds; our mining (including mining methods), expansion,
exploration and development activities, including our infill,
expansion and underground exploration drill programs and our
grassroots exploration program, and the results, costs and timing
thereof; our operational grade control program, including plans
with respect to our infill drill program and our local grade
control model; grade reconciliation, updated geological
interpretation and mining initiatives with respect to the Brucejack
Mine; our operational strategy; capital, sustaining and operating
cost estimates and timing thereof; the future price of gold and
silver; our liquidity and the adequacy of our financial resources;
our intentions with respect to our capital resources; capital
allocation plans; our financing activities, including plans for the
use of proceeds thereof; the estimation of Mineral Reserves and
Resources including any updates thereto; realization of Mineral
Reserve and Resource estimates; our estimated life of mine and life
of mine plan for the Brucejack Mine; production and processing
estimates; estimated economic results of the Brucejack Mine,
including net cash flow and net present value; predicted
metallurgical recoveries for gold and silver; geological and
mineralization interpretations; development of our Brucejack Mine
and timing thereof; results, analyses and interpretations of
exploration and drilling programs; timelines and similar statements
relating to the economic viability of the Brucejack Mine, including
mine life, total tonnes mined and processed and mining operations;
updates to our Mineral Reserves and Resources and life of mine plan
for the Brucejack Mine, and the timing thereof; timing,
receipt, and anticipated effects of, and anticipated capital costs
in connection with approvals, consents and permits under applicable
legislation; our executive compensation policy, approach and
practice; our relationship with community stakeholders; litigation
matters; environmental matters; our effective tax rate and the
recognition of our previously unrecognized income tax attributes;
new accounting standards applicable to the Company, including
methods of adoption and the effects of adoption of such standards;
statements regarding United States dollar cash flows, currency
fluctuations and the recurrence of foreign currency translation
adjustments; and management and board of directors succession
plans. Forward-looking information is subject to a variety of
known and unknown risks, uncertainties and other factors that could
cause actual results, actions, events conditions, performance or
achievements to materially differ from those expressed or implied
by the forward-looking information, including, without limitation,
those related to: uncertainty as to the outcome of legal
proceedings; the effect of indebtedness on cash flow and business
operations; the effect of restrictive covenants in our agreements;
our ability to satisfy commitments under our offtake agreement;
assumptions regarding expected capital costs, operating costs and
expenditures, production schedules, economic returns and other
projections; our production and production cost estimates,
including the accuracy thereof; commodity price fluctuations,
including gold price volatility; the accuracy of our Mineral
Resource and Reserve estimates (including with respect to size,
grade and recoverability) and the geological, operational and price
assumptions on which they are based; uncertainties relating to
Inferred Mineral Resources being converted into Measured or
Indicated Mineral Resources; our ability to maintain or increase
our annual production of gold at the Brucejack Mine or discover,
develop or acquire Mineral Reserves for production; dependency on
the Brucejack Mine for our future operating revenue; the
development of our properties; general economic conditions; the
inherent risk in the mining industry; significant governmental
regulations, including environmental regulations; currency
fluctuations, and such other risks, uncertainties and other factors
as are identified in Pretivm’s Annual Information Form dated March
28, 2019, Form 40-F dated March 28, 2019, MD&A and other
disclosure documents as filed in Canada on SEDAR at www.sedar.com
and in the United States through EDGAR at the SEC’s website at
www.sec.gov (collectively, the “Pretivm Disclosure Documents”). Our
forward-looking information is based on the assumptions, beliefs,
expectations and opinions of management on the date the statements
are made, many of which may be difficult to predict and beyond our
control. In connection with the forward-looking information
contained in this news release, we have made certain
assumptions about, among other things: our business and that no
significant event will occur outside of our normal course of
business; planned exploration and development activities and
the costs and timing thereof; future prices of gold and silver and
other metal prices; the accuracy of our Mineral Resources and
Mineral Reserve estimates; the geology and mineralization of the
Brucejack Project; operating conditions; capital and operating cost
estimates; production and process estimates; the results,
costs and timing of future exploration and drilling; timelines and
similar statements relating to the economic viability of the
Brucejack Project; timing and receipt of governmental, regulatory
and third party approvals, consents, licenses and permits;
obtaining required renewals for existing approvals, consents,
licenses and permits; the geopolitical, economic, permitting and
legal climate that we operate in; the adequacy of our financial
resources and our ability to raise any necessary additional capital
on reasonable terms; our ability to satisfy the terms and
conditions of our debt obligations; commodity prices; currency
exchange rates and interest rates; political and regulatory
stability; requirements under applicable laws; market competition;
sustained labour stability and availability of equipment; positive
relations with local groups; favourable equity and debt capital
markets; stability in financial and capital markets, and such other
factors and assumptions as are identified in the other Pretivm
Disclosure Documents. Although we believe that the assumptions
inherent in the forward-looking information are reasonable as of
the date of this news release, they are subject to significant
business, social, economic, political, regulatory, competitive and
other risks and uncertainties, contingencies and other factors that
could cause actual actions, events, conditions, results,
performance or achievements to be materially different from those
projected in the forward-looking information. Forward-looking
information is not a guarantee of future performance. There can be
no assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. We do not
assume any obligation to update forward-looking information,
whether as a result of new information, future events or otherwise,
other than as required by applicable law. For the reasons set forth
above, readers should not place undue reliance on forward-looking
information. Neither the TSX nor the NYSE has approved or
disapproved of the information contained herein.
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