Pretium Resources Inc. (TSX:PVG) (NYSE:PVG) (“Pretivm” or the
“Company”) is pleased to report financial and operating results for
the first quarter ended March 31, 2018.
In the news release all quoted figures are in
USD$ unless otherwise noted. The Company uses the following
non-IFRS measures: total cash costs, all-in sustaining costs
(“AISC”), average realized gold price, average realized margin,
adjusted earnings (loss), and adjusted earnings (loss) per basic
share. Refer to the Company’s Management Discussion and Analysis
and the “Non-IFRS Financial Performance Measures” section at the
end of this news release for an explanation and discussion of these
non-IFRS measures.
“The implementation of operational grade control
has had a positive impact on our ability to consistently deliver
high-grade ore to the mill as we ramp-up production,” said Pretivm
President & CEO Joseph Ovsenek. The Brucejack Mine is
generating free cash flow, and we are on track to achieving H1 2018
guidance of $900 to $700 per ounce of gold sold. We remain
confident that we will deliver on our H1 2018 AISC guidance, as
well as our production guidance of 150,000 to 200,000 ounces of
gold and expect to achieve steady-state production by mid-to-late
2018.”
First Quarter Production
Overview
- Production totaled 75,689 ounces of
gold and 94,730 ounces of silver.
- 10.9 grams per tonne gold mill feed
grade for March; average 9.1 grams per tonne gold mill feed grade
for the quarter.
- Gold recoveries averaged
96.8%.
- Process plant throughput averaged
2,905 tonnes per day for a total of 261,443 tonnes.
Q1 2018 Monthly
Production:
|
|
Gold Production (oz) |
Gold Grade (g/t) |
Recovery (%) |
Ore Milled(t) |
|
March |
32,910 |
10.9 |
96.7 |
92,580 |
|
February |
27,636 |
11.4 |
97.1 |
77,763 |
|
January |
15,143 |
5.4 |
96.7 |
91,100 |
|
Q1 2018 |
75,689 |
9.1 |
96.8 |
261,443 |
- Mine development averaged over 800
meters per month during the quarter to prepare additional stopes
which will allow for management of ore grades feeding the
mill.
First Quarter Financial
Summary
- Revenue of $89.4 million was
generated on sale of 68,651 ounces of gold and 84,234 ounces of
silver.
- Total cost of sales was $72.6
million or $1,057 per ounce of gold sold. Total cash cost was $841
per ounce of gold sold and AISC was $1,009 per ounce of gold sold.
Total AISC for the first quarter was directly impacted by low gold
production during ramp-up in January, which resulted in low gold
sales recorded during the quarter and consequently higher total
AISC per ounce of gold sold. (Refer to table “Q1 2018 Monthly
Production” above.)
Production spending for the first quarter was
in-line with H1 2018 guidance. The Company is on track to achieving
H1 2018 guidance of $900 to $700 per ounce of gold sold. When
steady-state production is achieved, any fluctuations between
produced ounces and sold ounces should minimize and reduce the
timing discrepancy in AISC.
- As at March 31, 2018, there were
8,854 ounces of gold doré and 13,823 ounces of gold in concentrate
in finished goods inventory recorded at cost of $849 per ounce
which includes depreciation and depletion.
- Earnings from mine operations were
$16.8 million.
- Net loss was $8.1 million or $0.04
per share. Adjusted earnings were $5.8 million or $0.03 per
share.
- Cash and cash equivalents were
$70.5 million at March 31, 2018. The Company has working capital of
$63.4 million excluding the current portion of long-term debt as at
March 31, 2018 compared to $40.6 million December 31, 2017.
- Cash generated by operations was
$24.7 million.
Operating Results
|
Three months ended March 31, |
|
|
2018 |
|
2017(1) |
|
|
|
|
|
|
|
Ore mined |
t |
268,339 |
|
- |
|
Mining rate |
tpd |
2,982 |
|
- |
|
|
|
|
|
|
|
Ore milled |
t |
261,443 |
|
- |
|
Head grade |
g/t
Au |
9.1 |
|
- |
|
Recovery |
% |
96.8 |
|
- |
|
Mill throughput |
tpd |
2,905 |
|
- |
|
|
|
|
|
|
|
Gold ounces
produced |
oz |
75,689 |
|
- |
|
Silver ounces
produced |
oz |
94,730 |
|
- |
|
|
|
|
|
|
|
Gold ounces sold |
oz |
68,651 |
|
- |
|
Silver
ounces sold |
oz |
84,234 |
|
- |
|
(1) No
comparative data as the mine commenced commercial production as of
July 1, 2017. |
The
following abbreviations were used above: t (tonnes), tpd (tonnes
per day), g/t (grams per tonne), Au (gold) and oz (ounces). |
Gold and silver production
During the three months ended March 31, 2018,
the Brucejack Mine produced 75,689 ounces of gold and 94,730 ounces
of silver with gold production improving steadily through the first
quarter. There is no comparable information as the Brucejack Mine
achieved commercial production on July 1, 2017.
During the quarter, the Company sold 68,651
ounces of gold and 84,234 ounces of silver. As a result of our
production profile over the course of the first quarter of 2018,
there was a corresponding timing impact on our sales ounces. As at
March 31, 2018, there were 8,854 ounces of gold doré and 13,823
ounces of gold in concentrate in finished goods inventory recorded
at cost of $849 per ounce which includes depreciation and
depletion.
Processing
During the three months ended March 31, 2018, a
total of 261,443 tonnes of ore, equivalent to a throughput rate of
2,905 tonnes per day, was processed.
The mill feed grade averaged 9.1 grams per tonne
gold for the quarter and 10.9 grams per tonne for the month of
March (refer to the “Operational Grade Control” section below).
Gold recovery for the quarter was 96.8%. We continue to review the
mill process to optimize recoveries.
On December 20, 2017, the Company submitted an
application to the BC Ministry of Energy, Mines and Petroleum
Resources and the BC Ministry of Environment and Climate Change
Strategy to increase the Brucejack Mine production rate to 3,800
tonnes per day. The increase would result in an annual
average production rate of 1.387 million tonnes, up from 0.99
million tonnes (a daily average of 3,800 tonnes from 2,700 tonnes).
The approval process is expected to take approximately six to
twelve months. Engineering is underway to assess the mill
capacity upgrades required to increase the production rate.
Based on preliminary engineering, the capital cost to increase the
mill capacity is estimated to be less than $25.0 million. The
estimate will be updated when the engineering process is
complete.
Mining
During the three months ended March 31, 2018,
268,339 tonnes of ore were mined, equivalent to a mining rate of
2,982 tonnes per day.
To improve access and build stope inventory, the
rate of underground development has been budgeted to increase to
700 meters per month, up from the 420 meters considered in the 2014
Brucejack Feasibility Study. The development rate increase
began in January and has exceeded 800 meters per month during the
quarter; however, we expect to average 700 meters per month over
the course of 2018. A third long-hole drill is now on site to
support development and provide for back-up.
Stope inventory is expected to increase to 10 to
12 stopes. The availability of stopes representing a range of
grades, including multiple higher-grade stopes, allows mining
operations to optimize stope blending and provides alternative
stopes for mining if required. The increased stope inventory is
expected to improve the management of production grades.
Operational grade control
The grade control program is a data-driven and
iterative process that is being used to optimize stope shapes
resulting in reduced dilution and optimized grade to the
mill. The program comprises drilling, sampling and local
modelling with improved short-term grade prediction. March
production results reflect the first impact of grade control
integration into the mining process. In the second quarter, gold
production results are expected to continue to improve with the
full integration of the grade control program.
The absence of operational grade control and
limited stope optionality contributed to low gold production for
the month of January. Gold production subsequently increased
significantly in February with stopes planned for the fourth
quarter 2017 and other higher-grade stopes coming online.
Operational grade control: Infill drilling
As part of the grade control program, infill
drilling is required at 5-meter to 7.5-meter centers to refine
stope location and dimensions prior to mining. Currently, three
diamond drills and one reverse circulation (“RC”) drill are being
used for grade control drilling, with 11,100 meters completed as of
early April.
The RC drill is part of a trial program for
underground drilling. The RC drilling provides a larger sample per
meter and is expected to be faster and more cost effective than
core drilling, which has been used for infill drilling to date.
Operational grade control: Local grade control
model
A local grade control model, which is based on
data from drilling, is now being implemented for stope optimisation
in areas of near-term production. The model is informed by
tightly-spaced infill drilling (with areas drilled at 7.5 meters or
better) and has a resolution of approximately 2.5 meters. The local
grade control model is being used for stope shape optimization and
estimating production grade and will ultimately be used for
medium-term planning for future production areas.
Operational grade control: Stope ring
sampling
Another component of the grade control program,
stope ring sampling, provides grade information on a ring-by-ring
basis to refine the shape of the long-hole stope prior to mining.
Long-hole drill cuttings are collected from each ring within a
stope and assayed. Assayed data from each of the rings is then fed
back into the stope design to refine short-term mine planning.
Exploration drilling for porphyry source
The exploration drill program to test for a
porphyry source and evaluate the potential extension of the Valley
of the Kings to the east has been successfully completed and assay
results are currently pending. The drill program follows-up on the
success of the 2015 regional grass-roots exploration drill program.
High-grade gold was intersected in the Flow Dome Zone, located
approximately 1,000 meters east of the Brucejack Mine, confirming
the presence of either a new stockwork zone or an extension of the
Valley of the Kings deposit (see news release dated October 8,
2015). A drill was set up underground on the eastern edge of the
1200-meter Level of the Valley of the Kings development. Two drill
holes, each approximately 1,600 meters long were drilled to provide
a continuum of information from the Valley of the Kings to the Flow
Dome Zone. The drilling also tested below the Flow Dome Zone where
structural geology combined with a geophysical anomaly suggested a
potential porphyry source. A follow-up geophysical program has been
initiated which will include surface geophysics when the snow has
cleared.
Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine
Engineer, Pretium Resources Inc. is the Qualified Person (“QP”)
responsible for Brucejack Mine development. Warwick Board, Ph.D.,
P.Geo, Pr.Sci.Nat., Vice President, Geology and Chief Geologist,
Pretium Resources Inc. is the QP responsible for the Brucejack Mine
grade control program and the Brucejack Mine exploration
drilling.
Sustaining capital
During the three months ended March 31, 2018,
the Company spent $4.5 million on sustaining capital. Sustaining
capital expenditures included the Smithers warehouse, the grade
control sampling station and gravity lab and normal course
capitalized development costs incurred during production.
Capitalized development include costs to build new ventilation
raises and ramps that enable the Company to physically access ore
underground.
Regional exploration
An extensive regional exploration campaign was
initiated in 2015 to identify mineralized zones on the
1,250-square-kilometer, wholly-owned property similar to the Valley
of the Kings and Eskay Creek deposits. A final data analysis is
underway to refine high-priority targets for drilling in summer
2018.
Kenneth C. McNaughton, M.A.Sc., P.Eng., Chief
Exploration Officer, Pretium Resources Inc. is the QP responsible
for the regional grass-roots exploration program.
Financial Results
|
Three months ended March 31, |
|
(In thousands of US dollars, except per share or per
oz) |
2018 |
|
|
2017(1) |
|
|
|
|
|
|
Revenue |
$ |
89,422 |
|
|
- |
|
Earnings from mine
operations(1,2) |
$ |
16,834 |
|
|
- |
|
Net loss for the
period |
$ |
(8,058 |
) |
|
(4,263 |
) |
Per share
- basic |
$/share |
(0.04 |
) |
|
(0.02 |
) |
Per share
- diluted |
$/share |
(0.04 |
) |
|
(0.02 |
) |
|
|
|
|
|
Adjusted earnings
(loss) (2) |
$ |
5,797 |
|
|
(6,089 |
) |
Per share
- basic (2) |
$/share |
0.03 |
|
|
(0.03 |
) |
|
|
|
|
|
Total cash and
cash equivalents |
$ |
70,540 |
|
|
171,945 |
|
Cash generated from
(used by) operating activities |
$ |
24,719 |
|
|
(2,733 |
) |
Total assets |
$ |
1,678,657 |
|
|
1,633,083 |
|
Long-term debt(3) |
$ |
292,906 |
|
|
601,344 |
|
|
|
|
|
|
Total cash costs
(2) |
$/oz |
841 |
|
|
- |
|
All-in sustaining costs
(1,2) |
$/oz |
1,009 |
|
|
- |
|
|
|
|
|
|
Average realized price
(1,2) |
$/oz |
1,271 |
|
|
- |
|
Average
realized cash margin (1,2) |
$/oz |
430 |
|
|
- |
|
(1) No
comparative data as the mine commenced commercial production as of
July 1, 2017. |
(2) Refer
to the "Non-IFRS Financial Performance Measures" section for a
reconciliation of these amounts. |
(3)
Long-term debt does not include the current portion of the senior
secured credit facility in the amount of $379,383 as at March 31,
2018. |
Working capital and liquidity
We generated cash from operations of $24.7
million for the three months ended March 31, 2018. For the three
months ended March 31, 2018, the Company delivered 75,447 ounces of
gold into the offtake agreement. The settlement of gold ounces
resulted in a decrease in the Offtake obligation of $0.7 million
due to the realized loss attributable to the final settlement price
in the defined pricing period and the gold spot price on the date
of delivery.
Our cash and cash equivalents as at March 31,
2108 totaled $70.5 million increasing $14.3 million from $56.3
million at December 31, 2017. The increase in cash was attributable
to cash flows generated from operations of the Brucejack Mine
offset by sustaining capital expenditures and payment of
construction related payables.
As at March 31, 2018, the Company has working
capital of $63.4 million excluding the current portion of long-term
debt. The current portion of long-term debt includes the senior
secured term credit facility including principal and accumulated
interest totaling $379.4 million. The credit facility is due at
maturity on December 31, 2018. The Company has the option to extend
the maturity date to December 31, 2019 upon payment of an extension
fee of 2.5% of the principal amount including accumulated interest.
The Company’s intention is to re-finance the credit facility this
year.
Working capital items other than cash and cash
equivalents consisted of inventories of $28.7 million (valued at
cost), receivables and other of $17.2 million offset by accounts
payable and accrued liabilities of $53.0 million and the current
portion of long-term debt of $388.1 million without considering the
option to extend the credit facility to December 31, 2019.
Three months ended March 31, 2018
compared to the three months ended March 31, 2017
Net loss for the three months ended March 31,
2018 was $8.1 million compared to $4.3 million for the comparable
period ended March 31, 2017. The increase in loss was mainly
attributed to an increase in interest and finance expense and
deferred income tax expense offset by earnings generated from
operations and a decrease in corporate administrative costs.
Earnings from mine operations were $16.8 million for the three
months ended March 31, 2018 compared to nil, as the Company did not
have mine operations in the comparable period.
Net comprehensive loss for the three months
ended March 31, 2018 was $6.1 million compared to net comprehensive
loss of $4.3 million for the comparable period ended March 31,
2017. The increase in comprehensive loss was attributed to the gain
in fair value attributable to the change in credit risk of
financial instruments designated at fair value through profit or
loss net of deferred tax. This adjustment was the result of the
adoption of IFRS 9, Financial Instruments without restatement of
the prior period.
Revenue
Revenue for the three months ended March 31,
2018 was $89.4 million compared to nil in the comparable period as
the Company did not have mine operations for the three months ended
March 31, 2017. Revenue includes a $0.8 million gain on trade
receivables at fair value.
The Company sold 68,651 ounces of gold at an
average realized price of $1,271 per ounce generating $87.3 million
in revenue from contracts with customers. The Company sold 84,234
ounces of silver which generated $1.3 million in revenue. Treatment
costs and refining charges associated with concentrate sales, in
the amount of $4.0 million, were included within concentrate
revenue. The average London Bullion Market Association AM and PM
market price over the quarter ended March 31, 2018 was $1,330 per
ounce.
Cost of sales
Cost of sales for the three months ended March
31, 2018 was $72.6 million or $1,057 per ounce of gold sold. Cost
of sales includes production costs, depreciation and depletion,
royalties and selling costs and changes in inventories to reflect
the difference between produced and sold ounces.
Production costs
Production costs for the three months ended
March 31, 2018 were $53.9 million. Production costs include mining,
processing, maintenance, site administration costs and site
share-based compensation. During the quarter, costs were incurred
to develop at over 800 meters per month in order to accelerate
stope optionality.
A majority of production costs were incurred in
Canadian dollars. During the three months ended March 31, 2018, the
average foreign exchange rate was CAD$1.2647 to US$1.00.
Depreciation and depletion
Depreciation and depletion for the three months
ended March 31, 2018 was $13.0 million. The majority of the
Company’s depreciation and depletion is determined using the units
of production method based on total ounces produced over the
estimated proven and probable reserves.
Royalties and selling costs
During the three months ended March 31, 2018,
the Company incurred $5.7 million in selling costs and $0.1 million
in royalty expense. Selling costs included transportation costs
which were $5.2 million.
Total cash costs and AISC
Total cash costs for the three months ended
March 31, 2018 were $841 per ounce sold. AISC for the three months
ended March 31, 2018 totaled $1,009 per ounce sold. Sustaining
capital expenditures amounted to $4.5 million (including $0.7
million deferred development costs incurred during production).
Total AISC for the first quarter was directly
impacted by low gold production during ramp-up in January, which
resulted in low gold sales recorded during the quarter and
consequently higher total AISC per ounce of gold sold. Production
spending for the first quarter was in-line with H1 2018 guidance.
At the current level of gold production, total AISC is approaching
the range of H1 2018 guidance of $900 to $700 per ounce of gold
sold. When steady-state production is achieved, any fluctuations
between produced ounces and sold ounces should minimize and reduce
the timing discrepancy in AISC.
Corporate administrative costs
Corporate administrative costs for the three
months ended March 31, 2018 were $2.5 million compared to $8.0
million in the comparable period.
Salaries and benefits for the three months ended
March 31, 2018 were $0.9 million as compared to $5.2 million in the
comparable period. The decrease was primarily due to $4.5 million
expensed in the comparable period related to the retirement
allowance clause in the employment agreement executed with the
Executive Chairman; refer to the “Related Party Transactions”
section below.
Share-based compensation for the three months
ended March 31, 2018 was $0.2 million compared to $1.6 million in
the comparable period. The decrease in share-based compensation was
due to the decline in the Company’s share price used to value
cash-settled restricted share units.
Interest and finance expense (income)
During the three months ended March 31, 2018,
the Company incurred interest and finance expense of $15.4 million
compared to interest income of $0.04 million in the comparable
period. All interest and finance expenses incurred prior to July 1,
2017 were capitalized as borrowing costs to the Brucejack Mine.
The Company incurred $13.5 million in interest
expense related to the credit facility. The 7.5% per annum cash
interest payable associated with the credit facility is not settled
until maturity.
The Company incurred $1.9 million in interest
expense related to the convertible notes of which $0.6 million was
interest at a rate of 2.25% per annum and $1.4 million was
accretion of the convertible note. During the quarter, the Company
paid interest in the amount of $1.1 million to the holders of the
convertible notes.
Loss on financial instruments at fair value
The September 2015 construction financing
includes prepayment and term extension options on the credit
facility, the offtake obligation and the stream obligation which
are recorded on our statement of financial position at fair value.
During the three months ended March 31, 2018, the changes in fair
value of the offtake obligation and stream obligation were a
function of increases in the gold price, increase in market
expectations of future gold prices, gold price volatility, an
increase in interest rates and changes to the estimated production
schedule.
The change in fair value of the offtake
obligation resulted in a gain of $1.8 million (2017 – loss of $0.03
million) and the change in fair value of the stream obligation
resulted in a loss of $2.0 million (2017 - $8.0 million). Of the
change in fair value, a fair value loss of $4.6 million (2017 -
$8.0 million) was recognized in the statement of loss and a fair
value gain due to the impact of change in the Company’s credit risk
on the stream obligation of $2.7 million (2017 – nil) was
recognized in other comprehensive earnings (loss).
The prepayment and extension options in the
senior secured term credit facility increased in value due to an
increase in interest rate and the passage of time resulting in a
gain of $0.2 million (2017 – loss of $0.2 million).
Current and deferred income taxes
The Company is subject to Canadian federal and
British Columbia (“B.C.”) provincial income taxes with an aggregate
rate of 27%. The Company is also subject to the B.C. Mineral Tax,
which is accounted for as an income tax. The B.C. Mineral Tax
requires initial payments of 2% of net current proceeds until
initial construction tax pools are utilized, after which a rate of
13% applies. The B.C. Mineral Tax is calculated in CAD. Once the
mine reaches steady-state operations and previously unrecognized
tax benefits are recorded, the anticipated effective tax rate on
mine operating earnings is 36.5%. Corporate administrative costs,
interest and finance expense (income) and other items will be
deductible for federal and provincial income taxes only.
For the three months ended March 31, 2018,
current income tax expense was $0.6 million related to the 2% net
current proceeds portion of the BC Mineral Tax compared to nil in
the comparable period.
During the three months ended March 31, 2018, we
recorded a deferred income tax expense of $3.6 million compared to
a recovery of $5.1 million for the comparable period. The
difference is primarily related to the foreign exchange impact on
the BC Mineral Tax pools. This CAD to USD foreign exchange effect
will recur in future quarters until the mineral tax pools are
utilized.
Our unaudited condensed consolidated interim
Financial Statements and Management Discussion and Analysis for the
three months ended March 31, 2018 are filed on SEDAR and available
on our website at www.pretivm.com.
Webcast and Conference Call
The webcast and conference call to discuss the
first quarter 2018 operational and financial results will take
place Friday, May 11, 2018 at 8:00 am PT (11:00 am ET).
Webcast and conference call details:
Friday, May 11, 2018 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 May 25, 2018: |
|
Toll Free
(North America) |
1-800-319-6413 |
|
|
Access
Code |
2186 |
About Pretivm
Pretivm is ramping-up gold production at the
high-grade underground Brucejack mine in northern British
Columbia.
For further information contact:
Joseph Ovsenek President & CEO
Troy ShultzManager, Investor Relations & Corporate
Communications
Pretium Resources Inc. Suite 2300, Four Bentall Centre, 1055
Dunsmuir Street PO Box 49334 Vancouver, BC V7X 1L4 (604) 558-1784
invest@pretivm.com (SEDAR filings: Pretium Resources Inc.)
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS
measures in this news release. The Company believes that these
measures, in addition to measures prepared in accordance with IFRS,
provide investors 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 IFRS. These measures do not have any
standardized meaning prescribed under IFRS, and therefore may not
be comparable to other issuers.
Total cost of sales and cash costs
Total cash costs is a common financial
performance measure in the gold mining industry but has no standard
meaning. The Company reports total cash costs on a gold ounce sold
basis. The Company believes that, in addition to measures prepared
in accordance with IFRS, such as revenue, certain investors can use
this information to evaluate the Company’s performance and ability
to generate operating earnings and cash flow from its mining
operations. Management uses this metric as an important tool to
monitor operating cost performance.
Total cash costs include cost of sales such as
mining, processing, maintenance and site administration, royalties
and selling costs and changes in inventories less non-cash
depreciation and depletion, site share-based compensation and
silver revenue divided by gold ounces sold to arrive at total cash
costs per ounce of gold sold. Other companies may calculate this
measure differently. The following table reconciles this non-IFRS
measure to the most directly comparable IFRS measure disclosed in
the financial statements.
Three months ended March 31, |
|
(In thousands of US dollars, except for per oz
data) |
2018 |
|
|
2017 |
|
|
|
|
|
|
|
Gold ounces sold |
|
68,651 |
|
|
- |
|
|
|
|
|
|
|
Cost of sales per ounce sold reconciliation |
|
|
|
Cost of sales |
$ |
72,588 |
|
$ |
- |
|
Cost of sales per ounce of gold sold |
$ |
1,057 |
|
$ |
- |
|
|
|
|
|
|
|
Total cash
costs reconciliation |
|
|
|
|
|
Cost of sales |
$ |
72,588 |
|
$ |
- |
|
Less: Depreciation and
depletion |
|
(12,992) |
|
|
- |
|
Less: Site share-based
compensation |
|
(551) |
|
|
- |
|
Less: Silver
revenue |
|
(1,321) |
|
|
- |
|
Total cash costs |
$ |
57,724 |
|
$ |
- |
|
Total cash costs per ounce of gold sold |
$ |
841 |
|
$ |
- |
|
All-in sustaining costs
The Company believes that AISC more fully
defines the total costs associated with producing gold. The Company
calculates AISC as the sum of total cash costs (as described
above), sustaining capital expenditures, accretion on
decommissioning and restoration provision, treatment and refinery
charges netted against concentrate revenue, site share-based
compensation, and corporate administrative costs, all divided by
the gold ounces sold to arrive at a per ounce amount.
Other companies may calculate this measure
differently as a result of differences in underlying principles and
policies applied. Differences may also arise due to a different
definition of sustaining versus non-sustaining capital.
The following table reconciles this non-IFRS
measure to the most directly comparable IFRS measure disclosed in
the financial statements.
Three months ended March 31, |
|
(In thousands of US dollars, except per share or per
oz) |
2018 |
|
2017 |
|
Gold ounces sold |
|
68,651 |
|
- |
|
All-in
sustaining costs reconciliation |
|
|
|
|
|
Total cash costs |
$ |
57,724 |
$ |
- |
|
Sustaining capital
expenditures (1) |
|
4,471 |
|
- |
|
Accretion
on decommissioning andrestoration provision |
155 |
|
83 |
|
Treatment and refinery
charges |
|
3,891 |
|
- |
|
Site share-based
compensation |
|
551 |
|
- |
|
Corporate
administrative costs (2) |
|
2,466 |
|
7,975 |
|
Total all-in sustaining costs |
$ |
69,258 |
|
8,058 |
|
All-in sustaining costs per ounce of gold
sold |
$ |
1,009 |
|
- |
|
(1)Sustaining capital expenditures includes
deferred development costs(2)Includes the sum of corporate
administrative costs per the statement of loss and comprehensive
loss, excluding depreciation within those figures.
Total cash costs and AISC reconciliation
Total cash costs and AISC are calculated based
on the definitions published by the World Gold Council (“WGC”) (a
market development organization for the gold industry comprised of
and funded by 18 gold mining companies from around the world). The
WGC is not a regulatory organization.
Average realized price and average realized cash
margin
Average realized price and average realized cash
margin per ounce sold are used by management and investors to
better understand the gold price and cash margin realized
throughout a period.
Average realized price is calculated as revenue
from contracts with customers less silver revenue divided by gold
ounces sold. Average realized margin represents average realized
price per gold ounce sold less total cash costs per ounce sold.
The following table reconciles this non-IFRS
measure to the most directly comparable IFRS measure disclosed in
the financial statements.
Three months ended March 31, |
|
(In
thousands of US dollars, except per share or per oz) |
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
Revenue from contracts
with customers(1) |
$ |
88,589 |
|
$ |
- |
|
Less:
Silver revenue |
|
(1,321) |
|
|
- |
|
Gold revenue(2) |
$ |
87,268 |
|
$ |
- |
|
Gold
ounces sold |
|
68,651 |
|
|
- |
|
Average
realized price |
$ |
1,271 |
|
$ |
- |
|
Less:
Total cash costs per gold ounce sold |
|
(841) |
|
|
- |
|
Average realized cash margin per gold ounces of gold
sold |
$ |
430 |
|
$ |
- |
|
(1) Revenue from contracts with customers is
recognized net of treatment costs and refinery charges on revenue
generated from concentrate sales in the amount of $3,968 for the
three months ended March 31, 2018. (2) Gold revenue excludes the
gain on trade receivables at fair value related to provisional
pricing adjustments in the amount of $833 for the three months
ended March 31, 2018.
Adjusted earnings (loss) and adjusted basic
earnings (loss) per share
Adjusted earnings (loss) and adjusted basic
earnings (loss) per share are used by management and investors to
measure the underlying operating performance of the Company.
Presenting these measures helps management and investors evaluate
earning trends more readily in comparison with results from prior
periods.
Adjusted earnings (loss) is defined as net
income (loss) adjusted to exclude specific items that are
significant, but not reflective of the underlying operations of the
Company, including: gain (loss) on financial instruments at fair
value, amortization on senior secured term credit facility,
accretion on convertible notes, impairment provisions and reversals
and deferred income taxes. Adjusted basic earnings (loss) per share
is calculated using the weighted average number of shares
outstanding under the basic method of earnings (loss) per share as
determined under IFRS. The following table reconciles this non-IFRS
measure to the most directly comparable IFRS measure disclosed in
the financial statements.
Three months ended March 31, |
|
|
(In thousands of US dollars, except per share or per
oz) |
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding |
182,378,707 |
|
|
180,656,271 |
|
|
|
|
|
|
|
|
Adjusted loss and adjusted basic loss per share
reconciliation |
|
|
|
|
|
|
|
|
Net loss for the
period |
$ |
(8,058) |
|
$ |
(4,263) |
|
|
Adjusted for: |
|
|
|
|
|
Loss on
financial instruments at fair value |
2,637 |
|
|
3,229 |
|
|
Amortization of discount on senior secured term credit
facility |
6,234 |
|
|
- |
|
|
Accretion on
convertible notes |
|
1,373 |
|
|
- |
|
|
Deferred income taxes
(recovery) |
|
3,611 |
|
|
(5,055) |
|
|
Adjusted earnings (loss) |
$ |
5,797 |
|
$ |
(6,089) |
|
|
Adjusted basic earnings (loss) per share |
$ |
0.03 |
|
$ |
(0.03) |
|
|
Additional non-IFRS financial measures
“Earnings from mine operations” provides useful
information to management and investors as an indication of the
Company’s principal business activities before consideration of how
those activities are financed, sustaining capital expenditures,
corporate administrative costs, foreign exchange gains (losses),
derivative costs, interest and finance income and expense and
taxation.
“Working capital” is defined as current assets
less current liabilities and provides useful information to
management and investors about liquidity of the Company.
Forward-Looking Statements
This News Release contains “forward-looking
information” and “forward looking statements” within the meaning of
applicable Canadian and United States securities legislation.
Statements contained herein that are not based on historical or
current fact, including without limitation statements containing
the words “anticipates,” “believes,” “may,” “continues,”
“estimates,” “expects,” and “will” and words of similar import,
constitute “forward-looking statements” within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking information may include, but is not limited to,
information with respect to: production and cost guidance; our
planned mining, exploration and development activities; capital and
operating cost estimates; production and processing estimates; the
future price of gold and silver; the adequacy of our financial
resources; the estimation of mineral reserves and resources
including the 2016 Valley of the Kings Mineral Resource estimate
and the Brucejack Mineral Reserve estimate; realization of mineral
reserve and resource estimates and timing of development of
Pretivm's Brucejack Mine; costs and timing of future exploration
and development; results of future exploration and drilling;
capital and operating cost estimates; timelines and similar
statements relating to the economic viability of the Brucejack
Mine, including mine life, total tonnes mined and processed and
mining operations; completion of ramp-up to steady state production
and positive cash flow; timing and receipt of approvals, consents
and permits under applicable legislation; our relationship with
community stakeholders; litigation matters; environmental matters;
and statements regarding USD cash flows currency fluctuations and
the recurrence of foreign currency translation adjustments.
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 statements and information. Statements
concerning mineral reserve and resource estimates may also be
deemed to constitute forward-looking information to the extent that
they involve estimates of the mineralization that will be
encountered if the property is developed. 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
statements are subject to a variety of known and unknown risks,
uncertainties and other factors that could cause actual events or
results to differ from those expressed or implied by the
forward-looking information, including, without limitation, those
risks identified in Pretivm's Annual Information Form dated March
29, 2018 filed on SEDAR at www.sedar.com and in the United States
on Form 40-F through EDGAR at the SEC's website at www.sec.gov.
Forward-looking statements are based on the expectations and
opinions of Pretivm's management on the date the statements are
made. The assumptions used in the preparation of such statements,
although considered reasonable at the time of preparation, may
prove to be imprecise. 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, prospective
investors 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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