Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”)
reports financial and operating results for the fourth quarter and
year-end 2018 and outlook for 2019.
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”) available on the Company’s website and on
SEDAR and EDGAR.
“In our first full year of production we
generated almost $200 million in cash from operations, producing
376,012 ounces of gold with an average realized cash margin of $608
per ounce of gold sold,” said Joseph Ovsenek, President & CEO
of Pretivm. “Our All-In Sustaining Cost for the second half of 2018
was $745, which was well within our financial guidance of $710 to
$770 per ounce of gold sold. With fourth quarter adjusted earnings
of over $20 million, this is our sixth consecutive quarter with
positive adjusted earnings - every quarter since the start of
commercial production.”
Full-Year 2018 Financial
Summary
- Revenue of $454.6 million on
367,428 ounces of gold sold.
- Total cost of sales $303.9 million
or $827 per ounce of gold sold1.
- All-in Sustaining Cost (“AISC”)1 of
$764 per ounce of gold sold.
- Generated $197.2 million cash from
operating activities.
- Achieved an average realized cash
margin1 of $608 per ounce of gold sold.
- Earnings from mine operations1 of
$150.6 million.
- Net earnings of $36.6 million
($0.20 per share).
- Adjusted earnings1 of $99.3 million
($0.54 per share1).
- Cash and cash equivalents balance
of $45.4 million as at December 31, 2018.
Full-Year 2018 Milestones
- Production of 376,012 ounces of
gold at a mill feed grade of 11.9 grams per tonne gold.
- Repurchased 100% of the 8% gold and
silver stream that was sold as part of the construction financing
package for $237 million.
- Closed a $480.0 million debt
facility to refinance the existing construction credit
facility.
- Reduced total debt by approximately
$180 million with the repurchase of the stream and refinancing of
the construction credit facility and substantially reduced our
average financing cost.
- Received amended permits to
increase production 40% to an annual rate of 1.387 million tonnes
(daily average of 3,800 tonnes).
- Reconciliation to the Valley of the
Kings global resource model for 2018 was improved to approximately
90% from 75-80% in 2017.
Fourth Quarter 2018 Summary
- Production of 96,342 ounces of gold
at a mill feed grade of 11.5 grams per tonne gold.
- Revenue of $108.6 million on 89,011
ounces of gold sold.
- Total cost of sales $72.5 million
or $814 per ounce of gold sold1.
- AISC of $784 per ounce of gold
sold1.
- Earnings from mine operations1 of
$36.1 million.
- Net earnings of $2.8 million ($0.01
per share).
- Adjusted earnings1 of $20.2 million
($0.11 per share1).
- Generated $42.9 million cash from
operating activities.
- Achieved an average realized cash
margin1 of $594 per ounce of gold sold.
___________1 Refer to the “Non-IFRS
Financial Performance Measures” section at the end of this news
release for reconciliation.
2019 Outlook
“We are well-positioned to generate significant
free cash flow in 2019. With our permit to increase production in
hand, our focus in 2019 will be on building sustainable mining and
milling operations at 3,800 tonnes per day. The variable nature of
the Brucejack gold mineralization is well documented, and we are
leveraging the experience gathered from mining over 1.5 million
tonnes of ore to enable us to mine for maximum value.”
2019 production and financial guidance
Gold production at Brucejack for 2019 is
expected in the range of 390,000 ounces to 420,000 ounces with gold
production guidance accounting for the planned production ramp-up
from 2,700 tonnes per day to 3,800 tonnes per day over the course
of 2019. Production is expected to average 3,500 tonnes per
day in 2019, with production starting the year off at roughly 3,000
tonnes per day and ramping up to 3,800 tonnes per day by year
end. Gold grade is expected to average approximately 10.4
grams per tonne over the course of 2019. The lower grade in
2019 reflects the sequencing of stopes in the mine plan to achieve
the development ramp up to the 3,800 tonnes per day production
rate, working within geotechnical and ventilation constraints.
The average gold grade is representative of the areas to be
mined in 2019 and is not representative of the estimated life of
mine grade, which will be provided in the second quarter (see
Updated Mineral Resource and Mineral Reserve Estimates
below). Guidance for 2019 is subject to change contingent on
the success of production ramp-up, with grade and tonnes increasing
through the second half of the year.
AISC for the 2019 fiscal year is expected to
range from $775 per ounce gold sold to $875 per ounce gold sold.
AISC includes $15 million for one-time sustaining capital
expenditures such as access road and camp upgrades, an underground
maintenance shop and a back-up underground paste booster pump. AISC
also includes approximately $23 million for growth-oriented
expenses such as resource expansion drilling and an additional 300
meters per month of underground development associated with the
production ramp-up from 2,700 to 3,800 tonnes per day (an increase
from 700 meters per month to 1,000 meters per month).
Debt and Debt Reduction
On December 18, 2018, the Company completed a
$480.0 million senior secured loan facility with a syndicate of
financial institutions to refinance the existing construction
credit facility. The loan facility is comprised of a $250.0 million
senior secured amortizing non-revolving credit facility and a
$230.0 million senior secured revolving credit facility.
In December 2018 we reduced our total debt
by approximately $180 million and substantially reduced our cost of
debt.
The Company is targeting debt reduction of
approximately $140 million from operating cash flow during 2019,
based on a gold price of $1,250 per ounce and a USD:CAD exchange
rate of 0.78.
Under the senior secured loan facility, up to
$40 million is available annually, commencing in 2020, to
repurchase shares or pay dividends, subject to compliance with
certain financial covenants.
Updated Mineral Resource and Mineral Reserve
Estimates
Updated Mineral Resource and Mineral Reserve
estimates for the Valley of the Kings and an updated life of mine
plan for the Brucejack Mine will be provided early in the second
quarter of 2019.
A webcast technical session with management is
planned to coincide with the release of these updates and will also
provide an overview of grade reconciliation, updated geological
interpretation and mining initiatives among other things.
2018 Reconciliation
Reconciliation to the Valley of the Kings global
resource model for the period January 1, 2018 to December 31, 2018
was approximately 90%. The modeled ounces for the areas mined
during 2018 were predicted to be 424,760 ounces (delivered to the
mill) at 13.23 grams per tonne and 998,854 tonnes; while the actual
ounces for the areas mined were determined to be 384,889 ounces
(delivered to the mill) at 11.90 grams per tonne and 1,005,603
tonnes. The reconciliation to the resource model for the
period April 1, 2018 to December 31, 2018 improved to approximately
92% when the grade control program became fully operational.
The modeled gold ounces for the areas mined for this nine
month period were predicted to be 331,672 ounces (delivered to the
mill) at 13.08 grams per tonne and 788,480 tonnes; while the actual
gold ounces for the areas mined were determined to be 308,073
ounces (delivered to the mill) at 12.88 grams per tonne and 744,160
tonnes. Reconciliation improved in 2018 compared to the
period August 1, 2017 to December 31, 2017 when reconciliation to
the resource model was approximately 75% to 80%. In 2018, ore
was mined from 47 stopes over eight levels from the 1200-meter to
the 1410-meter level across a distance ranging 290 meters east to
west and 155 meters north to south.
Fourth Quarter and Full-Year 2018
Production Overview
- Production totaled 96,342 ounces of
gold and 113,886 ounces of silver in the fourth quarter 2018. Gold
production increased 37% to the comparable period in 2017 when
70,281 ounces of gold were produced. Annual 2018 production totaled
376,012 ounces of gold and 422,562 ounces of silver. There is no
comparable data for 2017 as the mine operations only include
production for the six months in 2017 after commercial production
was achieved on July 1, 2017.
- Process plant throughput averaged
2,903 tonnes per day for a total of 267,048 tonnes of ore in the
fourth quarter 2018 compared to 2,951 tonnes per day for a total of
271,501 tonnes of ore in the fourth quarter 2017. The 2018 process
plant throughput averaged 2,755 tonnes per day for a total of
1,005,603 tonnes of ore.
- Mill feed grade averaged 11.5 grams
per tonne gold in the fourth quarter 2018 compared to 8.2 grams per
tonne gold in the fourth quarter 2017. The increase in mill feed
grade was the result of the improved stope availability and an
operational grade control system. The mill feed grade averaged 11.9
grams per tonne gold in 2018.
- Gold recoveries increased to 97.0%
in the fourth quarter 2018 from 95.8% in the fourth quarter 2017 as
a result of mill optimization. Annual 2018 recoveries averaged
97.3%.
- Mining rate averaged 3,078 tonnes
per day for a total of 283,136 tonnes of ore mined in the fourth
quarter 2018 compared to 3,051 tonnes per day for a total of
280,671 tonnes of ore mined in the fourth quarter 2017. The 2018
mining rate averaged 2,891 tonnes per day for a total of 1,055,208
tonnes of ore mined.
- On December 14, 2018, the Company
received the amended permits to increase the Brucejack Mine
production rate to 3,800 tonnes per day. The amended permits allow
for a production increase to an annual rate of 1.387 million tonnes
from 0.99 million tonnes (daily average of 3,800 tonnes from 2,700
tonnes).
- Mine development advanced at a rate
of approximately 820 meters per month during the quarter. Mine
development will increase to approximately 1,000 meters per month
to support the ramp-up to a 3,800 tonnes per day production rate by
year end.
- Minor mill upgrades to support the
production rate increase will be completed during regularly
scheduled mill shutdowns in 2019 with a corresponding ramp-up to
3,800 tonnes per day production rate by year end. These upgrades
are estimated to cost less than $15 million.
Operating Results
|
Three months ended December 31, |
For the year ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017(1) |
|
|
|
|
|
|
|
|
|
Ore mined |
t |
283,136 |
|
280,671 |
|
1,055,208 |
|
552,205 |
Mining rate |
tpd |
3,078 |
|
3,051 |
|
2,891 |
|
3,001 |
|
|
|
|
|
|
|
|
|
Ore milled |
t |
267,048 |
|
271,501 |
|
1,005,603 |
|
532,763 |
Head grade |
g/t
Au |
11.5 |
|
8.2 |
|
11.9 |
|
9.4 |
Recovery |
% |
97.0 |
|
95.8 |
|
97.3 |
|
96.2 |
Mill throughput |
tpd |
2,903 |
|
2,951 |
|
2,755 |
|
2,895 |
|
|
|
|
|
|
|
|
|
Gold ounces
produced |
oz |
96,342 |
|
70,281 |
|
376,012 |
|
152,484 |
Silver ounces
produced |
oz |
113,886 |
|
96,004 |
|
422,562 |
|
179,237 |
|
|
|
|
|
|
|
|
|
Gold ounces sold |
oz |
89,011 |
|
86,514 |
|
367,428 |
|
141,927 |
Silver
ounces sold |
oz |
82,380 |
|
107,900 |
|
372,090 |
|
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) Data for the year ended December 31, 2017
covers the period commencing from July 1, 2017, the date the
Brucejack Mine achieved commercial production, to December 31,
2017. |
|
Fourth Quarter Financial
Overview
- Revenue of $108.6 million compared
to revenue of $107.1 million in the fourth quarter 2017. Revenue
includes a gain on trade receivables at fair value related to
provisional pricing adjustments of $0.3 million. The Company
generated $454.6 million in revenue in 2018. There is no comparable
data for 2017 as the Company did not start mine operations until
commercial production was achieved on July 1, 2017.
- The Company sold 89,011 ounces of
gold at an average realized price1 of $1,204 per ounce generating
$107.2 million in revenue. Treatment costs and refining charges
associated with concentrate sales, in the amount of $4.5 million,
were included within concentrate revenue. The average London
Bullion Market Association AM and PM market price over the quarter
ended December 31, 2018 was $1,227 per ounce. In the comparable
period in 2017, the sale of 86,514 ounces of gold contributed
$104.8 million at an average realized price of $1,211 per ounce. In
2018, the Company sold 367,428 ounces of gold at an average price
of $1,231 per ounce, generating $452.3 million in revenue.
- Total cost of sales was $72.5
million or $814 per ounce of gold sold. In the fourth quarter 2017,
total cost of sales was $80.2 million or $927 per ounce of gold
sold. Total cost of sales includes production costs, depreciation
and depletion, royalties and selling costs. 2018 total cost of
sales was $303.9 million or $827 per ounce.
- Total cash cost1 was $610 per ounce
of gold sold and AISC was $784 per ounce of gold sold. In the
fourth quarter 2017, total cash cost was $700 per ounce of gold
sold and AISC was $893 per ounce of gold sold. In 2018 total cash
cost was $623 per ounce of gold sold and AISC was $764 per ounce of
gold sold.
- Sustaining capital expenditures
amounted to $3.7 million compared to $4.5 million in the fourth
quarter 2017. Full year 2018 sustaining capital incurred was $16.5
million.
- Earnings from mine operations1 were
$36.1 million compared to $26.9 million in the fourth quarter 2017.
Full year 2018 earnings from mine operations were $150.6
million.
- Net earnings were $2.8 million
compared to a net loss of $2.7 million in the fourth quarter 2017.
Full year 2018 net earnings were $36.6 million.
- Adjusted earnings were $20.2
million compared to $12.7 million in the fourth quarter 2017. Full
year 2018 adjusted earnings were $99.3 million.
- Cash generated from operating
activities was $42.9 million compared to $33.4 million in the
fourth quarter 2017. Full year 2018 cash generated from operations
was $197.2 million.
- Average realized cash margin was
$594 per ounce of gold sold compared to $511 per ounce of gold sold
in the fourth quarter of 2017. Full year 2018 average realized cash
margin was $608 per ounce of gold sold.
- Cash and cash equivalents were
$45.4 million as at December 31, 2018 compared to $56.3 million at
December 31, 2017.
- On December 18, 2018 the Company
repurchased 100% of the callable 8% precious metals stream for
$237.0 million. The stream was sold by Pretivm as part of the
construction financing package for the Brucejack Mine.
- On December 18, 2018, the Company
completed a $480.0 million senior secured loan facility with a
syndicate of financial institutions to refinance the existing
construction credit facility. The loan facility is comprised of a
$250.0 million senior secured amortizing non-revolving credit
facility and a $230.0 million senior secured revolving credit
facility.
- Under the senior secured loan
facility, up to $40 million is available annually, commencing in
2020, to repurchase shares or pay dividends, subject to compliance
with certain financial covenants.
Financial Results
In
thousands of USD, |
Three months ended December 31, |
Year ended December 31, |
except for per ounce data |
2018 |
|
2017 |
|
|
2018 |
|
2017(1) |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
108,596 |
|
107,058 |
|
|
454,556 |
|
177,933 |
|
Earnings from mine
operations (2) |
$ |
36,117 |
|
26,890 |
|
|
150,629 |
|
52,853 |
|
Net earnings (loss) for
the period |
$ |
2,847 |
|
(2,720 |
) |
|
36,620 |
|
(16,453 |
) |
Per share
- basic |
$/share |
0.01 |
|
(0.01 |
) |
|
0.20 |
|
(0.09 |
) |
Per share
- diluted |
$/share |
0.01 |
|
(0.01 |
) |
|
0.20 |
|
(0.09 |
) |
|
|
|
|
|
|
|
|
|
Adjusted earnings
(2) |
$ |
20,177 |
|
12,742 |
|
|
99,349 |
|
17,426 |
|
Per share
- basic (2) |
$/share |
0.11 |
|
0.07 |
|
|
0.54 |
|
0.10 |
|
|
|
|
|
|
|
|
|
|
Total cash and cash
equivalents |
$ |
45,407 |
|
56,285 |
|
|
45,407 |
|
56,285 |
|
Cash generated from
operating activities |
|
42,886 |
|
33,408 |
|
|
197,244 |
|
73,321 |
|
Total assets |
$ |
1,613,418 |
|
1,671,537 |
|
|
1,613,418 |
|
1,671,537 |
|
Long-term debt (3) |
$ |
456,254 |
|
293,029 |
|
|
456,254 |
|
293,029 |
|
|
|
|
|
|
|
|
|
|
Total cash costs
(2) |
$/oz |
610 |
|
700 |
|
|
623 |
|
683 |
|
All-in sustaining costs
(2) |
$/oz |
784 |
|
893 |
|
|
764 |
|
852 |
|
|
|
|
|
|
|
|
|
|
Average realized price
(2) |
$/oz |
1,204 |
|
1,211 |
|
|
1,231 |
|
1,239 |
|
Average
realized cash margin (2) |
$/oz |
594 |
|
511 |
|
|
608 |
|
556 |
|
(1) Data for the year ended December 31, 2017 covers
the period commencing from July 1, 2017, the date the Brucejack
Mine achieved commercial production, to December 31, 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 Company’s senior secured loan facility
and the offtake obligation in the amount of $85,961 as at December
31, 2018. |
|
2019 Brucejack Mine Drill Program
Valley of the Kings Resource Expansion
Drilling
The 2019 underground exploration drill program
will be primarily focused on expanding the current mineral resource
and reserve at the Valley of the Kings. Zones at depth, to the
east, west and north-east of the Valley of the Kings resource will
be drilled as part of an approximately 70,000-meter drill program
planned for 2019.
Areas at depth below, to the east and to the
north-east of the currently defined mineral resource are considered
highly prospective for additional resource expansion. Previous
drilling programs indicated the continuation of high grade gold
mineralization vertically below the deposit, as well as to the
east. Furthermore, a re-interpretation of previous drill results
indicates the presence of a repetition, through faulting, of the
key stratigraphy that hosts high-grade gold mineralization in the
Valley of the Kings.
Underground Exploration Drilling for Porphyry
Source
In 2018, two 1,500-meter holes drilled east from
the Valley of the Kings intersected Brucejack-style mineralization
throughout (see news release dated June 18, 2018). Drilling
demonstrated mineralization continuity between the Valley of the
Kings and the Flow Dome Zone, an area approximately 1,000 meters
east of the Brucejack Mine.
In addition, the drilling intersected anomalous
copper and molybdenum mineralization, which coupled with
mineralogical indicators, suggest proximity to porphyry-style
mineralization at depth. Over the summer of 2018, a surface
geophysical program along with mineral chemistry evaluation was
conducted to follow-up on the successful underground exploration
drilling.
The drill results, along with geophysics and
mineral chemistry, are currently being integrated to refine
targeting of this zone for subsequent drilling. Plans are to
drill two targeted holes to further test the porphyry potential
below the Flow Dome Zone.
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
reconciliation of 2018 production along with the Brucejack Mine
resource and exploration drilling, and has reviewed and approved
the scientific and technical information contained in this news
release relating thereto.
Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine
Engineer, Pretium Resources Inc. is the Qualified Person (“QP”)
responsible for Brucejack Mine development, and has reviewed and
approved the scientific and technical information contained in this
news release relating thereto.
Our audited consolidated Financial Statements
and MD&A for the years ended December 31, 2018 and 2017 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
fourth quarter and full year 2018 operational and financial results
will take place Friday, February 15, 2019 at 7:00 am PT
(10:00 am ET).
Webcast and conference call details:
Friday, February 15, 2019 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 1, 2019:
Toll Free (North America) |
1-800-319-6413 |
Access Code |
2560 |
About Pretivm
Pretivm is emerging as the premier low-cost
intermediate gold producer with production at the high-grade
underground Brucejack Mine in northern British Columbia now at
steady state.
For further information contact:
Joseph
OvsenekPresident & CEO |
|
Troy
ShultzManager, 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.)
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 and discussion of non-IFRS measures. The Company
believes that these measures, in addition to measures prepared in
accordance with IFRS, provide readers 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.
Cost of sales per ounce of gold sold
The Company reports cost of sales on a gold
ounce sold basis. Management uses this metric as a tool to monitor
total operating cost performance which includes non-cash items such
as depreciation and depletion and site share-based
compensation.
The following table reconciles these non-IFRS
measures to the most directly comparable IFRS measure disclosed in
the financial statements.
For the three months ended |
For the year ended |
In thousands of
USD,except for per ounce data |
|
December
31,2018 |
|
December
31,2017 |
|
December 31,
2018 |
|
December 31,
2017(1) |
|
|
|
|
|
|
|
|
|
Gold ounces sold |
|
89,011 |
|
86,514 |
|
367,428 |
|
141,927 |
|
|
|
|
|
|
|
|
|
Cost of sales per ounce sold reconciliation |
|
|
|
|
|
|
Cost of sales |
$ |
72,479 |
$ |
80,168 |
$ |
303,927 |
$ |
125,080 |
Cost of sales per ounce of gold sold |
$ |
814 |
$ |
927 |
$ |
827 |
$ |
881 |
|
|
|
|
|
|
|
|
|
(1) Data for the year ended December 31, 2017
covers the period commencing from July 1, 2017, the date the
Brucejack Mine achieved commercial production, to December 31,
2017.
Total 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 readers 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 these non-IFRS
measures to the most directly comparable IFRS measure disclosed in
the financial statements.
For the three months ended |
For the year ended |
In
thousands of USD,except for per ounce data |
|
December 31,2018 |
|
|
December 31, 2017 |
|
|
December 31,2018 |
|
|
December 31, 2017(1) |
|
|
|
|
|
|
|
|
|
|
Gold ounces sold |
|
89,011 |
|
|
86,514 |
|
|
367,428 |
|
|
141,927 |
|
|
|
|
|
|
|
|
|
|
Total cash
costs reconciliation |
|
|
|
|
|
|
|
|
Cost of sales |
$ |
72,479 |
|
$ |
80,168 |
|
$ |
303,927 |
|
$ |
125,080 |
|
Less: Depreciation and
depletion |
|
(16,524 |
) |
|
(17,272 |
) |
|
(67,340 |
) |
|
(25,378 |
) |
Less: Site share-based
compensation |
|
(523 |
) |
|
(703 |
) |
|
(2,332 |
) |
|
(827 |
) |
Less: Silver
revenue |
|
(1,150 |
) |
|
(1,670 |
) |
|
(5,362 |
) |
|
(1,994 |
) |
Total cash costs |
$ |
54,282 |
|
$ |
60,523 |
|
$ |
228,893 |
|
$ |
96,881 |
|
Total cash costs per ounce of gold sold |
$ |
610 |
|
$ |
700 |
|
$ |
623 |
|
$ |
683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Data for the year ended December 31,
2017 covers the period commencing from July 1, 2017, the date the
Brucejack Mine achieved commercial production, to December 31,
2017.
All-in sustaining costs
The Company believes that AISC more fully
defines the total costs associated with producing gold. AISC is
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. The
Company calculates AISC as the sum of total cash costs (as
described above), sustaining capital expenditures (excluding
expansion capital related to the 3,800 tonne per day expansion
project), 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.
Effective January 1, 2019, the Company will
adopted the WGC’s revised definition for AISC which will include
cash payments from sustaining leases to account for the adoption of
IFRS 16, Leases.
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 these non-IFRS
measures to the most directly comparable IFRS measures disclosed in
the financial statements.
For the three months ended |
For the year ended |
In thousands of
USD, except for per ounce data |
|
December 31,
2018 |
|
December 31,
2017 |
|
December 31,
2018 |
|
December 31,
2017(1) |
Gold ounces sold |
|
89,011 |
|
86,514 |
|
367,428 |
|
141,927 |
All-in
sustaining costs reconciliation |
|
|
|
|
|
|
|
|
Total cash costs |
$ |
54,282 |
$ |
60,523 |
$ |
228,893 |
$ |
96,881 |
Sustaining capital
expenditures(2) |
|
3,720 |
|
4,533 |
|
16,533 |
|
8,059 |
Accretion on
decommissioning and restoration provision |
|
136 |
|
137 |
|
568 |
|
283 |
Treatment and refinery
charges |
|
4,410 |
|
5,705 |
|
16,797 |
|
6,749 |
Site share-based
compensation |
|
523 |
|
703 |
|
2,332 |
|
827 |
Corporate
administrative costs(3) |
|
6,728 |
|
5,669 |
|
15,662 |
|
8,153 |
Total all-in sustaining costs |
$ |
69,799 |
$ |
77,270 |
$ |
280,785 |
$ |
120,952 |
All-in sustaining costs per ounce of gold
sold |
$ |
784 |
$ |
893 |
$ |
764 |
$ |
852 |
|
|
|
|
|
|
|
|
|
(1) Data for the year ended December 31, 2017
covers the period commencing from July 1, 2017, the date the
Brucejack Mine achieved commercial production, to December 31,
2017.(2) Sustaining capital expenditures includes deferred
development costs.(3) Includes the sum of corporate administrative
costs per the statement of earnings (loss) and comprehensive
earnings (loss), excluding depreciation within those figures.
Average realized price and average realized cash
margin
Average realized price and average realized cash
margin per ounce sold are used by management and readers 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 cash margin represents average
realized price per gold ounce sold less total cash costs per ounce
sold.
The following table reconciles these non-IFRS
measures to the most directly comparable IFRS measures disclosed in
the financial statements.
For the three months ended |
For the year ended |
In
thousands of USD, except for per ounce data |
|
December 31, 2018 |
|
|
December 31,2017 |
|
|
December 31,2018 |
|
|
December 31, 2017(1) |
|
|
|
|
|
|
|
|
|
|
Revenue from contracts
with customers(2) |
$ |
108,311 |
|
$ |
106,464 |
|
$ |
457,615 |
|
$ |
177,787 |
|
Less:
Silver revenue |
|
(1,150 |
) |
|
(1,670 |
) |
|
(5,362 |
) |
|
(1,994 |
) |
Gold revenue(3) |
$ |
107,161 |
|
$ |
104,794 |
|
$ |
452,253 |
|
$ |
175,793 |
|
Gold
ounces sold |
|
89,011 |
|
|
86,514 |
|
|
367,428 |
|
|
141,927 |
|
Average
realized price |
$ |
1,204 |
|
$ |
1,211 |
|
$ |
1,231 |
|
$ |
1,239 |
|
Less:
Total cash costs per ounce of sold |
|
(610 |
) |
|
(700 |
) |
|
(623 |
) |
|
(683 |
) |
Average realized cash margin per ounce of gold
sold |
$ |
594 |
|
$ |
511 |
|
$ |
608 |
|
$ |
556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Data for the year ended December 31, 2017
covers the period commencing from July 1, 2017, the date the
Brucejack Mine achieved commercial production, to December 31,
2017. (2) Revenue from contracts with customers is recognized net
of treatment costs and refinery charges on revenue generated from
concentrate sales in the amount of $4,474 (2017 – $5,704) and
$17,074 (2017 – $6,748) for the three months and year ended
December 31, 2018, respectively. The portion of these treatment
costs and refinery charges related to gold concentrate sales were
$4,410 (2017 – $5,597) and $16,797 (2017 - $6,623) for the three
months and year ended December 31, 2018, respectively.(3) Gold
revenue excludes the gain (loss) on trade receivables at fair value
related to provisional pricing adjustments in the amount of a gain
of $285 (2017 – $594) and a loss of $3,059 (2017 - gain of $146)
for the three months and year ended December 31, 2018,
respectively.
Adjusted earnings and adjusted basic earnings
per share
Adjusted earnings and adjusted basic earnings
per share are used by management and readers to measure the
underlying operating performance of the Company. Presenting these
measures helps management and readers evaluate earning trends more
readily in comparison with results from prior periods.
Adjusted earnings is defined as net earnings
adjusted to exclude specific items that are significant, but not
reflective of the underlying operations of the Company, including:
loss on financial instruments at fair value, amortization of
discount on senior secured term credit facility, amortization of
loan facility transaction costs, accretion on convertible notes,
impairment provisions and reversals and deferred income tax expense
(recovery). Adjusted basic earnings per share is calculated using
the weighted average number of shares outstanding under the basic
method of earnings per share as determined under IFRS.
The following table reconciles these non-IFRS
measures to the most directly comparable IFRS measures disclosed in
the financial statements.
|
For the three months ended |
|
For the year ended |
|
In
thousands of USD, except for per ounce data |
|
December 31,2018 |
|
|
December 31,2017 |
|
|
December 31, 2018 |
|
December 31,2017 |
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
183,708,408 |
|
|
181,994,244 |
|
|
182,905,004 |
|
181,208,295 |
|
|
|
|
|
|
|
|
|
Adjusted
earnings and adjusted basic earnings per share
reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) for
the period |
$ |
2,847 |
|
$ |
(2,720 |
) |
$ |
36,620 |
$ |
(16,453 |
) |
Adjusted for: |
|
|
|
|
|
|
|
|
Loss on
financial instruments at fair value |
|
10,736 |
|
|
8,460 |
|
|
17,113 |
|
26,430 |
|
Amortization of discount on credit facility |
|
7,234 |
|
|
6,007 |
|
|
27,285 |
|
11,664 |
|
Amortization of loan facility transaction costs |
|
95 |
|
|
- |
|
|
95 |
|
- |
|
Accretion
on convertible notes |
|
1,403 |
|
|
1,403 |
|
|
5,568 |
|
2,807 |
|
Deferred
income tax expense (recovery) |
|
(2,138 |
) |
|
(408 |
) |
|
12,668 |
|
(7,022 |
) |
Adjusted earnings |
$ |
20,177 |
|
$ |
12,742 |
|
$ |
99,349 |
$ |
17,426 |
|
Adjusted basic earnings per share |
$ |
0.11 |
|
$ |
0.07 |
|
$ |
0.54 |
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from mine operations
Earnings from mine operations provides useful
information to management and readers 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 gain (loss),
(loss) on financial instruments at fair value, interest and finance
income and expense and taxation.
The following table reconciles this non-IFRS
measure to the most directly comparable IFRS measures disclosed in
the financial statements.
For the three months ended |
For the year ended |
In thousands of
USD |
|
December 31,
2018 |
|
December 31,
2017 |
|
December 31,
2018 |
|
December 31,
2017(1) |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
108,596 |
|
107,058 |
|
454,556 |
|
177,933 |
Cost of sales |
|
72,479 |
$ |
80,168 |
$ |
303,927 |
$ |
125,080 |
Earnings from mine operations |
$ |
36,117 |
$ |
26,890 |
$ |
150,629 |
$ |
52,853 |
|
|
|
|
|
|
|
|
|
(1) Data for the year ended December 31, 2017
covers the period commencing from July 1, 2017, the date the
Brucejack Mine achieved commercial production, to December 31,
2017.
Forward-Looking Statements
This news release contains “forward-looking
information”, “forward looking statements”, “future oriented
financial information” and/or “financial outlooks” within the
meaning of applicable Canadian and United States securities
legislation (collectively herein referred to as “forward-looking
statements” or “forward-looking information”). The purpose of
disclosing future oriented financial information and financial
outlooks 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 statements and
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; expected financial results, including
cash flow; the expected grade of gold produced; the ramp-up of the
Brucejack Mine to 3,800 tonnes per day production rate, including
capital upgrades, estimated capital expenditures and an updated
mine plan in connection therewith, and a timeline therefor; payment
of operating and debt obligations, including timing thereof and
source of funds; our planned mining, exploration and development
activities and the costs and timing thereof; our operational grade
control program, including plans with respect to our infill drill
program and our local grade control model; our operational
strategy; capital and operating cost estimates and timing thereof;
production and processing estimates; the future price of gold and
silver; our liquidity and the adequacy of our financial resources;
our intentions with respect to our capital resources; our financing
activities, including plans for the use of proceeds thereof; the
estimation of mineral reserves and resources including the 2016
Valley of the Kings Mineral Resource Estimate Update and the 2016
Brucejack Mineral Reserve Estimate; the updates to our mineral
reserves and mineral resources estimates and our life of mine plan
and the anticipated timing thereof; realization of mineral reserve
and resource estimates; timing of further development of our
Brucejack Mine; results of future exploration and drilling;
timelines and similar statements relating to the economic viability
of the Brucejack Mine, including mine life, total tonnes mined and
processed and mining operations; timing, receipt, and anticipated
effects of, and anticipated capital costs in connection with
approvals, consents and permits under applicable legislation; our
executive compensation 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; and statements regarding USD
cash flows, currency fluctuations and the recurrence of foreign
currency translation adjustments. Statements concerning
mineral resource estimates may also be deemed to constitute
forward-looking statements to the extent that they involve
estimates of the mineralization that will be encountered if the
property is developed. 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 materially differ from
those expressed or implied by the forward-looking statements,
including, without limitation, those related to: 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; commodity price
fluctuations, including gold price volatility; general economic
conditions; the inherent risk in the mining industry; significant
governmental regulations; currency fluctuations, and such other
risks as are identified in Pretivm’s Annual Information Form dated
March 28, 2018, Form 40-F dated March 28, 2018, 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 statements are 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 statements
contained in this news release, we have made certain assumptions
about our business, including about our exploration, development
and production activities, and the results, costs and timing
thereof; timing and receipt of approvals, consents and permits
under applicable legislation; the geopolitical, economic,
permitting and legal climate that we operate in; the price of gold
and other commodities; exchange rates; market competition; the
adequacy of our financial resources, and such other material
assumptions as are identified in the other Pretivm Disclosure
Documents. We have also assumed that no significant events will
occur outside of our normal course of business. Although we believe
that the assumptions inherent in the forward-looking statements are
reasonable as of the date of this news release, forward-looking
statements are not guarantees of future performance and,
accordingly, undue reliance should not be put on such statements
due to the inherent uncertainty therein. We do not assume any
obligation to update forward-looking statements, 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 statements. Neither the TSX nor the NYSE has
approved or disapproved of the information contained herein.
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