Pretium Resources Inc. (TSX:PVG) (NYSE:PVG) (“Pretivm” or the
“Company”) is pleased to report financial and operating results for
the fourth quarter and year end 2017.
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.
Pretivm produced approximately 152,000 ounces of
gold during the first six months of ramp-up at its Brucejack Mine,
averaging 9.4 grams per tonne gold with an AISC of $852 per ounce
of gold sold. The Company also reports significant progress
in implementing its primary strategic objectives of optimizing
operations and achieving operational grade control.
Pretivm President & CEO Joseph Ovsenek said,
“Our financial performance was in line with our expectations for
production ramp-up of Brucejack. Further, we have implemented
several operational performance improvement initiatives, leveraging
our experience in the fourth quarter of 2017.
“We are increasing our underground development
rate to provide for optimal mining stope inventory, the integration
of our grade control program is now underway and our financial
health is robust. We expect to deliver on our H1 2018
production guidance of 150,000 to 200,000 ounces of gold, and to
achieve steady-state production by mid-to-late 2018. We also
anticipate we will see more momentum towards those achievements in
Q2 2018 as our grade control program progresses. We remain
confident in developing Brucejack into a premier low-cost
intermediate gold producer by the end of 2019.”
Fourth Quarter and Six Month Production
Overview
- Production totaled 70,281 ounces of
gold and 96,004 ounces of silver in the fourth quarter of 2017, for
a total of 152,484 ounces of gold and 179,237 ounces of silver
produced during the first six months of production ramp-up.
- Mill feed grade averaged 8.2 grams
per tonne gold in the fourth quarter and 9.4 grams per tonne gold
for the first six months of ramp-up.
- Gold recoveries averaged 95.8% in
the fourth quarter of 2017 for an average gold recovery rate of
96.2% for the first six months of production ramp-up.
- Process plant throughput averaged
2,951 tonnes per day during the fourth quarter of 2017 for an
average processing rate of 2,895 tonnes per day during the first
six months of production ramp-up.
- Ore milled totaled 271,501 in the
fourth quarter of 2017, for a total of 532,763 tonnes of ore milled
during the first six months of production ramp-up.
- The Company submitted an
application to increase the Brucejack Mine production rate to 3,800
tonnes per day in December.
Fourth Quarter Financial
Summary
- Revenue of $107.1 million was
generated on sale of 86,514 ounces of gold and 107,900 ounces of
silver.
- Total cost of sales was $80.2
million or $927 per ounce of gold sold. Total cash cost was $700
per ounce of gold sold and AISC was $893 per ounce of gold sold. As
production increases, total cash costs and AISC per ounce sold are
expected to decrease.
- Earnings from mine operations were
$26.9 million.
- Net loss was $2.7 million or $0.01 per share. Adjusted earnings
were $12.7 million or $0.07 per share.
- Cash and cash equivalents were $56.3 million at December 31,
2017. The Company has working capital of $40.6 million excluding
the current portion of long-term debt as at December 31, 2017.
- Cash generated by operations was $33.4 million.
Annual Financial Summary
- Revenue of $177.9 million was
generated on sale of 141,927 ounces of gold and 127,746 ounces of
silver.
- Total cost of sales was $125.1
million or $881 per ounce of gold sold. Total cash cost was $683
per ounce of gold sold and AISC was $852 per ounce of gold
sold.
- Earnings from mine operations were
$52.9 million.
- Net loss was $16.5 million or $0.09 per share. Adjusted
earnings were $17.4 million or $0.10 per share.
- Cash generated by operations was $73.3 million.
Operating Results
|
Three months ended December 31, |
Year ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Ore mined |
t |
280,671 |
|
- |
|
552,205 |
|
- |
Mining rate |
tpd |
3,051 |
|
- |
|
3,001 |
|
- |
|
|
|
|
|
|
|
|
|
Ore milled |
t |
271,501 |
|
- |
|
532,763 |
|
- |
Head grade |
g/t
Au |
8.2 |
|
- |
|
9.4 |
|
- |
Recovery |
% |
95.8 |
|
- |
|
96.2 |
|
- |
Mill throughput |
tpd |
2,951 |
|
- |
|
2,895 |
|
- |
|
|
|
|
|
|
|
|
|
Gold ounces
produced(1) |
oz |
70,281 |
|
- |
|
152,484 |
|
- |
Silver ounces
produced |
oz |
96,004 |
|
- |
|
179,237 |
|
- |
|
|
|
|
|
|
|
|
|
Gold ounces sold |
oz |
86,514 |
|
- |
|
141,927 |
|
- |
Silver
ounces sold |
oz |
107,900 |
|
- |
|
127,746 |
|
- |
The
following abbreviations were used above: t (tonnes), tpd (tonnes
per day), g/t (grams per tonne), Au (gold) and oz (ounces).(1) Gold
ounces produced for the year ended December 31, 2017 excludes 8,510
ounces produced in the pre-commercial production period. |
Gold and silver production
During the six months ended December 31, 2017,
the Brucejack Mine produced 152,484 ounces of gold, which excludes
8,510 ounces of gold from pre-commercial production and 179,237
ounces of silver from low-grade stockpiles, development muck and
stope ore. There is no comparable information as the Brucejack Mine
achieved commercial production on July 1, 2017.
During the six months ended December 31, 2017,
the Company sold 141,927 ounces of gold and 127,746 ounces of
silver. As at December 31 2017, there were 7,716 ounces of gold
doré and 10,328 ounces of gold in concentrate in finished
goods.
Processing
During the six months ended December 31, 2017, a
total of 532,763 tonnes of ore, equivalent to a throughput rate of
2,895 tonnes per day, was processed.
The mill feed grade was 9.4 grams per tonne gold
and recovery was 96.2%. We continue to review the mill process to
optimize recoveries.
The main operating units in the mill building
are performing as expected. Planning is underway to replace
the concentrate bagging system which caused increased mill downtime
and maintenance requirements.
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 US$25 million. The
estimate will be updated when the engineering process is
complete.
Mining
During the six months ended December 31, 2017,
552,205 tonnes of ore were mined, equivalent to a mining rate of
3,001 tonnes per day.
During the fourth quarter, gold production was
lower than expected as higher-grade stopes scheduled to be mined in
December encountered operational issues (equipment down-time and
mining execution), that prevented them from being mined and
delivering higher grade ore to the mill. Both long-hole
drills went down and the stopes could not be drilled off in time.
Mining also encountered a hang-up when blasting a long-hole slot.
These issues, combined with the limited stope inventory (no other
high-grade stopes were accessible in the quarter) contributed to
the lower than expected gold production.
Pretivm has taken a number of steps to address
these operational issues. To improve access and build stope
inventory, the rate of underground development has been increased
to 700 meters per month for 2018, up from the 420 meters originally
contemplated in the Brucejack Feasibility Study. In addition,
a third long-hole drill is now on site to provide back-up and
contribute to the build-up of stope inventory.
During the third and fourth quarter of 2017, two
sills were established to open up two mining horizons for 2018, the
1200-meter Level to the 1320-meter Level and the 1320-meter Level
to the 1440-meter Level. With the continued extension of the mining
levels to the east and west within the two mining horizons and the
increase in rate of development, stope inventory is expected to
increase to 10 to 12 stopes with a range of grades by mid-year
2018. The availability of stopes representing a range of
grades, including multiple higher grade stopes, will allow mining
operations to optimize stope blending and provide alternative
stopes with comparable grades for mining if required. The increased
stope inventory is expected to improve the management of production
grades as the ramp-up continues.
Operational Grade Control
The grade control program, designed to refine
stope dimensions, reduce dilution and optimize grade, is underway.
The program comprises sampling and drilling, and is currently being
integrated into the mining process.
Stope Ring Sampling
As part of the grade control program, grade is
estimated on a ring-by-ring basis to refine the shape of the
long-hole stope prior to mining. Long-hole drill cuttings are
selectively collected from each ring within a stope and split into
a reduced sample size for assaying. Assayed data from each of the
rings is then fed back into the short-term mine planning cycle to
refine stope dimensions.
The upgraded and modified underground sample
splitting station is now functional. The sample splitting station
is used to further validate the sampling process.
Reverse Circulation Drilling
Another component of the grade control program,
reverse circulation (RC) drilling to optimize stope definition, has
commenced on a trial basis. The RC drill will cross-cut the stopes
drilling 5-meter to 7.5-meter centers to refine stope location and
dimensions prior to mining. The RC drilling will provide 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.
With the operational grade control system now
functioning and continued high definition drilling, steady-state
gold production is now expected to be achieved by mid-to-late
2018.
Reconciliation of 2017 ramp-up production
Grade reconciliation to the reserve model for
the period August 1, 2017 to December 31, 2017 was approximately
75% to 80% and attributed to: (a) the small, relatively
unrepresentative sample size of production being analyzed, (b)
rudimentary grade control without the grade control program
operational and (c) lack of drill density in a significant area of
the contributing stopes. During the period, ore from the
stopes developed on the 1200-meter Level sill provided
approximately 25% of mill feed. These stopes were mined in
establishing the 1200-meter Level sill as part of the long-term
mine plan and had a lower drill density than stopes on other levels
of the mine. As the grade control program becomes operational and
mining moves up from the 1200-meter Level into areas with higher
drill density, reconciliation is expected to be more robust.
Exploration Drilling for Porphyry Source
An exploration drill program has been initiated
to test for a porphyry source and evaluate the potential extension
of the Valley of the Kings to the east. The drill program will
follow-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 500 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 has been set up underground
on the eastern edge of the 1200-meter Level of the Valley of the
Kings development. Two drill holes, each 1,600 meters long will
serve to provide a continuum of information from the Valley of the
Kings to the Flow Dome Zone. The drilling will also test below the
Flow Dome Zone where structural geology combined with a geophysical
anomaly suggests a potential porphyry source.
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
reconciliation of 2017 ramp-up production and the Brucejack Mine
exploration drilling.
Sustaining Capital
During the year ended December 31, 2017, the
Company spent $9.6 million on sustaining capital. Sustaining
capital expenditures included the paste booster station, the grade
control sampling station and gravity lab and normal course
capitalized development costs incurred during production.
Capitalized development includes 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 spring
2018.
The comprehensive regional exploration program
has included the collection of over 11,000 samples, regional
mapping, prospecting, airborne geophysics, ground geophysics,
hyperspectral mapping, and data compilation. To date, the
program has resulted in the identification of three distinct areas
that have the potential to host epithermal mineralization.
Several gold and silver epithermal targets have
been identified in the American Creek Zone located approximately 25
kilometers southeast of the Brucejack Mine. The American Creek
valley is dominated by kilometer-scale north-south structures and
localized east-west stockworks, which host elevated gold values of
up to 62.5 grams of gold per tonne in rocks of the Lower Hazelton
Group, Unuk River Formation, the same formation that hosts the
Brucejack Mine. Geophysical conductors identified in the American
Creek Zone are supported by coincident pathfinder minerals and
trace elements associated with epithermal mineralization.
The Koopa Zone, located approximately 30
kilometers east-southeast of the Brucejack Mine, is dominated by
intensely quartz-sericite pyrite altered Salmon River Formation
volcanics and Quock Formation sediments of the Upper Hazelton
Group. As no previous work had been completed at this zone, 2017
efforts focused on prospecting and mapping, with ground geophysical
surveys undertaken to assist with interpretations at depth and in
areas with limited exposure. Prospective precious and base metal
grab samples have been collected across the zone returning results
as high as 5.28 grams of gold per tonne, 1,460 grams of silver per
tonne, 9% lead and 25% zinc with geochemical signatures similar to
intrusion-related epithermal gold deposits.
Approximately 15 kilometers east of the
Brucejack Mine, numerous high-grade gold boulders have been sampled
at the Boulder Zone, with grades as high as 19.25 grams of gold per
tonne. Ground geophysics have been conducted over the area to find
the source of the boulders. Alteration, geochemistry and Upper
Hazelton Group rocks in the area do indicate the boulders are
potentially VMS related.
As results continue to be received, review and
analysis of the extensive regional database continues with the
expectation that additional high- priority areas will be
identified.
A private placement of 329,000 flow-through
common shares of the Company at a price of C$15.20 per flow-through
share was completed in two tranches on June 30 and
July 14, 2017 for total gross proceeds of $3.9 million
(C$5.0 million). A portion of the proceeds of the private placement
of flow-through common shares were used to fund the 2017
grass-roots exploration program. Planning is underway for the 2018
grassroots exploration program on the wholly-owned Bowser Claim
Group, which is expected to begin in late spring.
Kenneth C. McNaughton, M.A.Sc., P.Eng., Chief
Exploration Officer, Pretium Resources Inc. is the QP responsible
for the 2017 regional grass-roots exploration program.
Financial Results
|
Three months ended December 31, |
Year ended December 31, |
(In thousands of US dollars, except per share or per
oz) |
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
107,058 |
|
|
- |
|
|
177,933 |
|
|
- |
|
Earnings from mine
operations(1) |
$ |
26,890 |
|
|
- |
|
|
52,853 |
|
|
- |
|
Net loss for the
period |
$ |
(2,720 |
) |
|
(8,564 |
) |
|
(16,453 |
) |
|
(61,212 |
) |
Per share
- basic |
$/share |
(0.01 |
) |
|
(0.05 |
) |
|
(0.09 |
) |
|
(0.35 |
) |
Per share
- diluted |
$/share |
(0.01 |
) |
|
(0.05 |
) |
|
(0.09 |
) |
|
(0.35 |
) |
|
|
|
|
|
|
|
|
|
Adjusted earnings
(loss) (1) |
$ |
12,742 |
|
|
(6,869 |
) |
|
17,426 |
|
|
(11,324 |
) |
Per share
- basic (1) |
$/share |
0.07 |
|
|
(0.04 |
) |
|
0.10 |
|
|
(0.07 |
) |
|
|
|
|
|
|
|
|
|
Total cash and
cash equivalents |
$ |
56,285 |
|
|
141,791 |
|
|
56,285 |
|
|
141,791 |
|
Cash generated from
(used by) operating activities |
$ |
33,408 |
|
|
(4,924 |
) |
|
73,321 |
|
|
(12,205 |
) |
Total assets |
$ |
1,671,537 |
|
|
1,450,436 |
|
|
1,671,537 |
|
|
1,450,436 |
|
Long-term debt |
$ |
293,029 |
|
|
501,160 |
|
|
293,029 |
|
|
501,160 |
|
|
|
|
|
|
|
|
|
|
Total cash costs
(1) |
$/oz |
700 |
|
|
- |
|
|
683 |
|
|
- |
|
All-in sustaining costs
(1,2) |
$/oz |
893 |
|
|
- |
|
|
852 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Average realized price
(1) |
$/oz |
1,211 |
|
|
- |
|
|
1,239 |
|
|
- |
|
Average
realized cash margin (1) |
$/oz |
511 |
|
|
- |
|
|
556 |
|
|
- |
|
(1) Refer to the "Non-IFRS Financial Performance Measures"
section for a reconciliation of these amounts.(2)All-in sustaining
costs for the year ended September 30, 2017 were not disclosed as
commercial production only commenced on July 1, 2017 |
Working Capital and Liquidity
Cash generated by operations of $73.3 million
for the year ended December 31, 2017 reflects the first two
quarters with revenue as we achieved commercial production on July
1, 2017.
Our cash and cash equivalents as at December 31,
2017 totaled $56.3 million decreasing $85.5 million from $141.8
million at December 31, 2016. The decrease in cash is largely
attributable to the completion of construction of the Brucejack
Mine offset by cash flow from operations in the third and fourth
quarters, the completed offering of convertible notes and the final
advance under the senior secured term credit facility.
As at December 31, 2017, the Company has working
capital of $40.6 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 $365.9 million. The credit facility is due
at maturity on December 31, 2018; however, if necessary,
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 within the next year.
Working capital items other than cash and cash
equivalents consisted of inventories of $25.7 million (valued at
cost), receivables and other of $19.6 million, offset by accounts
payable and accrued liabilities of $60.4 million and the current
portion of long-term debt of $375.0 million without considering the
option to extend the credit facility to December 31, 2019.
Three months ended December 31, 2017
compared to the three months ended
December 31, 2016
Net loss for the three months ended December 31,
2017 was $2.7 million compared to $8.6 million for the comparable
period ended December 31, 2016. The decrease in the loss was mainly
attributed to earnings generated from operations offset by an
increase in interest and finance expense. Earnings from mine
operations were $26.9 million for the quarter ended December 31,
2017 compared to nil in the comparable period as the Company did
not have mine operations in 2016.
Net comprehensive loss for the three months
ended December 31, 2017 was $2.7 million compared to net
comprehensive loss of $27.7 million for the comparable period ended
December 31, 2016. In the comparable period, comprehensive loss
included $19.1 million from the translation of CAD functional
currency results into the USD presentation currency. Foreign
currency translation adjustments will not recur in future periods
with the change in functional currency to USD commencing
January 1, 2017.
Revenue
Revenue for the three months ended December 31,
2017 were $107.1 million compared to nil in the comparable period
as the Company did not have mine operations in 2016. Revenue
includes a $0.6 million gain on revaluation of derivatives in trade
receivables.
The Company sold 86,514 ounces of gold at an
average realized price of $1,211 per ounce generating $104.8
million in revenue from contracts with customers. The Company sold
107,900 ounces of silver which generated $1.7 million in revenue.
Treatment costs and refining charges associated with concentrate
sales, in the amount of $5.7 million, were included within
concentrate revenue. The average London Bullion Market Association
(“LBMA”) AM and PM market price over the quarter ended
December 31, 2017 was $1,276 per ounce.
Cost of sales
Cost of sales for the three months ended
December 31, 2017 was $80.2 million or $927 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
December 31, 2017 were $58.5 million. Production costs include
mining, processing, maintenance, site administration costs and site
share-based compensation.
A majority of production costs were incurred in
Canadian dollars. During the quarter ended December 31, 2017, the
average foreign exchange rate was CAD$1.27 to US$1.00.
Depreciation and depletion
Depreciation and depletion for the three months
ended December 31, 2017 was $17.3 million. The majority of the
Company’s depreciation and depletion is determined using the units
of production method based on total ounces mined over the estimated
proven and probable reserves.
Royalties and selling costs
During the three months ended December 31, 2017,
the Company incurred $4.1 million in selling costs and $0.3 million
in royalty expense. Selling costs included transportation costs
which were $3.5 million.
Total cash costs and AISC
Total cash costs for the three months ended
December 31, 2017 were $700 per ounce of gold sold. AISC for the
three months ended December 31, 2017 totaled $893 per ounce of gold
sold. Sustaining capital expenditures amounted to $4.5 million
(including $1.2 million deferred development costs incurred during
production).
Corporate administrative costs
Corporate administrative costs for the three
months ended December 31, 2017 were $5.7 million compared to $4.6
million in the comparable period.
Share-based compensation for the three months
ended December 31, 2017 was $1.8 million compared to $1.0 million
in the comparable period. The increase in share-based compensation
was due mainly to an increase in the Company’s share price during
the period.
Interest and finance expense (income)
During the three months ended December 31, 2017,
the Company incurred interest and finance expense of $15.4 million
compared to interest income of $0.2 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 $13.3 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 $2.0 million in interest
and finance 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.
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 December 31, 2017, 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, a
decrease in interest rates and changes to the estimated production
schedule.
The change in fair value of the offtake
obligation resulted in a loss of $2.5 million (2016 – gain of $0.4
million) and the change in fair value of the stream obligation
resulted in a loss of $5.7 million (2016 - $8.3 million). The
prepayment and extension options in the senior secured term credit
facility decreased in value due to a decrease in interest rate and
the passage of time resulting in a loss of $0.3 million
(2016 - $0.3 million).
As the stream is in substance a debt instrument,
the effective interest on the debt host was capitalized as a
borrowing cost during the construction of the Brucejack Mine. We
capitalized nil (2016 - $5.0 million) of interest on the stream
obligation to mineral properties, plant and equipment. The
capitalized interest was reclassified from the loss on financial
instruments at fair value recorded in the statement of loss.
Current and deferred income taxes
For the three months ended December 31, 2017,
current income tax expense was $1.0 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 December 31, 2017,
we recorded a deferred income tax recovery of $0.4 million compared
to $1.4 million for the comparable period. The difference is
related to the unrealized loss on financial instruments at fair
value including the offtake obligation and stream obligation and
recognition of 2017 non-capital losses.
Year ended December 31, 2017 compared to
the year ended December 31, 2016
Net loss for the year ended December 31, 2017
was $16.5 million compared to $61.2 million for the comparable year
ended December 31, 2016. The decrease in the loss was mainly
attributed to operating earnings generated from production at the
Brucejack mine and a considerable decrease in the loss on financial
instruments offset by an increase in interest and finance
expense.
Net comprehensive loss for the year ended
December 31, 2017 was $16.5 million compared to net comprehensive
loss of $40.6 million for the comparable year ended December 31,
2016. In the comparable year, comprehensive income included $20.6
million from the translation of CAD functional currency results
into the USD presentation currency. Foreign currency translation
adjustments will not recur in future periods with the change in
functional currency to USD commencing
January 1, 2017.
Revenue
Revenue for the year ended December 31, 2017
were $177.9 million compared to nil in the comparable year as the
Company did not have mine operations in 2016. Revenue includes a
$0.1 million gain on revaluation of derivatives in trade
receivables.
The Company sold 141,927 ounces of gold at an
average realized price of $1,239 per ounce generating $175.8
million in revenue from contracts with customers. The Company sold
127,746 ounces of silver which generated $2.0 million in revenue.
Treatment costs and refining charges associated with concentrate
sales, in the amount of $6.7 million, were included within
concentrate revenue. The average LBMA AM and PM market price over
the six months ended December 31, 2017 was $1,277 per
ounce.
Cost of sales
Cost of sales for the year ended December 31,
2017 was $125.1 million or $881 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 year ended December 31,
2017 were $92.4 million. Production costs include mining,
processing, maintenance, site administration costs and site
share-based compensation.
A majority of production costs were incurred in
Canadian dollars. During the quarter ended September 30, 2017, the
average foreign exchange rate was CAD$1.30 to US$1.00.
Depreciation and depletion
Depreciation and depletion for the year ended
December 31, 2017 was $25.4 million. The majority of the Company’s
depreciation and depletion is determined using the units of
production method based on total ounces mined over the estimated
proven and probable reserves.
Royalties and selling costs
During the year ended December 31, 2017, the
Company incurred $6.0 million in selling costs and $1.3 million in
royalty expense. Selling costs included transportation costs which
were $5.4 million.
Total cash costs and AISC
Total cash costs for the year ended December 31,
2017 were $683 per ounce of gold sold. AISC for the year ended
December 31, 2017 totaled $852 per ounce of gold sold. Sustaining
capital expenditures amounted to $8.1 million (including $2.1
million deferred development costs incurred during production).
Our audited consolidated Financial Statements
and Management Discussion and Analysis for the year ended December
31, 2017 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
fourth quarter and year-end 2017 operational and financial results
will take place Friday, March 9, 2018 at 7:00 am PT (10:00 am
ET).
Webcast and conference call details:
Friday, March 9, 2018 at 7:00 am PT (10:00 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
March 23, 2018:
Toll Free
(North America) |
1-800-319-6413 |
Access
Code |
2004 |
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
Troy Shultz President &
CEO
Manager, 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 December 31, |
|
The year ended December 31 |
(In
thousands of US dollars, except for per oz data) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Gold ounces sold |
|
86,514 |
|
|
- |
|
|
141,927 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Cost of sales per ounce sold reconciliation |
|
|
|
|
|
|
|
Cost of sales |
$ |
80,168 |
|
$ |
- |
|
$ |
125,080 |
|
$ |
- |
Cost of sales per ounce of gold sold |
$ |
927 |
|
$ |
- |
|
$ |
881 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Total cash
costs reconciliation |
|
|
|
|
|
|
|
|
|
Cost of sales |
$ |
80,168 |
|
$ |
- |
|
$ |
125,080 |
|
$ |
- |
Less: Depreciation and
depletion |
|
(17,272 |
) |
|
- |
|
|
(25,378 |
) |
|
- |
Less: Site share-based
compensation |
|
(703 |
) |
|
- |
|
|
(827 |
) |
|
- |
Less: Silver
revenue |
|
(1,670 |
) |
|
- |
|
|
(1,994 |
) |
|
- |
Total cash costs |
$ |
60,523 |
|
$ |
- |
|
$ |
96,881 |
|
$ |
- |
Total cash costs per ounce of gold sold |
$ |
700 |
|
$ |
- |
|
$ |
683 |
|
$ |
- |
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 December 31, |
|
Six months ended December 31, |
(In
thousands of US dollars, except per share or per oz) |
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
Gold ounces sold |
|
86,514 |
|
- |
|
|
141,927 |
|
- |
All-in
sustaining costs reconciliation |
|
|
|
|
|
|
|
|
|
Total cash costs |
$ |
60,523 |
$ |
- |
|
$ |
96,881 |
$ |
- |
Sustaining capital
expenditures (1) |
|
4,533 |
|
- |
|
|
8,059 |
|
- |
Accretion on
decommissioning and restoration provision |
|
137 |
|
58 |
|
|
283 |
|
203 |
Treatment and refinery
charges |
|
5,705 |
|
- |
|
|
6,749 |
|
- |
Site share-based
compensation |
|
703 |
|
- |
|
|
827 |
|
- |
Corporate
administrative costs (2) |
|
5,669 |
|
4,592 |
|
|
8,153 |
|
2,894 |
Total all-in sustaining costs(3) |
$ |
77,270 |
|
4,650 |
|
$ |
120,952 |
$ |
2,956 |
All-in sustaining costs per ounce of gold
sold |
$ |
893 |
|
- |
|
$ |
852 |
$ |
- |
(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.(3)All-in sustaining costs for the year ended
December 31, 2017 were not disclosed as commercial production only
commenced on July 1, 2017. |
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 December 31, |
For the year ended December 31, |
(In thousands of US dollars, except per share or per oz) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Revenue from contracts with customers(1) |
$ |
106,464 |
|
$ |
- |
|
$ |
177,787 |
|
$ |
- |
Less: Silver revenue |
|
(1,670 |
) |
|
- |
|
|
(1,994 |
) |
|
- |
Gold revenue(2) |
$ |
104,794 |
|
$ |
- |
|
$ |
175,793 |
|
$ |
- |
Gold ounces sold |
|
86,514 |
|
|
- |
|
|
141,927 |
|
|
- |
Average realized price |
$ |
1,211 |
|
$ |
- |
|
$ |
1,239 |
|
$ |
- |
Less: Total cash costs per gold ounce sold |
|
(700 |
) |
|
- |
|
|
(683 |
) |
|
- |
Average realized cash margin per gold ounces of gold
sold |
$ |
511 |
|
$ |
- |
|
$ |
556 |
|
$ |
- |
(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 $5,705 and $6,749 for the
three months and year ended December 31, 2017, respectively.(2)Gold
revenue excludes the gain on revaluation of derivatives in trade
receivables related to provisional pricing adjustments in the
amount of $594 and $146 for the three months and year ended
December 31, 2017, respectively. |
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 endedDecember 31, |
|
Year endedDecember 31, |
|
(In
thousands of US dollars, except per share or per oz) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
181,994,244 |
|
|
179,865,369 |
|
|
181,208,295 |
|
|
172,805,201 |
|
|
|
|
|
|
|
|
|
|
Adjusted loss and adjusted basic loss per share
reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period |
$ |
(2,720 |
) |
$ |
(8,564 |
) |
$ |
(16,453 |
) |
$ |
(61,212 |
) |
Adjusted for: |
|
|
|
|
|
|
|
|
Loss on financial
instruments at fair value |
|
8,460 |
|
|
3,106 |
|
|
26,430 |
|
|
69,668 |
|
Amortization of
discount on senior secured term credit facility |
|
6,007 |
|
|
- |
|
|
11,664 |
|
|
- |
|
Accretion on
convertible notes |
|
1,403 |
|
|
- |
|
|
2,807 |
|
|
- |
|
Deferred income
taxes |
|
(408 |
) |
|
(1,411 |
) |
|
(7,022 |
) |
|
(19,780 |
) |
Adjusted earnings (loss) |
$ |
12,742 |
|
$ |
(6,869 |
) |
$ |
(17,426 |
) |
$ |
(11,324 |
) |
Adjusted basic earnings (loss) per share |
$ |
0.07 |
|
$ |
(0.04 |
) |
$ |
0.10 |
|
$ |
(0.07 |
) |
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 exploration and development activities, the accuracy of our
mineral resource estimates; capital and operating cost estimates;
production and processing estimates; the future price of gold and
silver; results, the adequacy of Pretivm's 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, results of future
exploration and drilling, production and processing estimates,
capital and operating cost estimates, timelines and similar
statements relating to the economic viability of the Brucejack
Mine, including mine life, total tonnes mines and processed and
mining operations; completion of ramp-up to steady state
production; timing and receipt of approvals, consents and permits
under applicable legislation, Pretivm's executive compensation
approach and practice, 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 information. Forward-looking
information is 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
30, 2017 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 information is 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.
Pretium Resources (TSX:PVG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Pretium Resources (TSX:PVG)
Historical Stock Chart
From Jul 2023 to Jul 2024