Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”)
reports operating and financial results for the third quarter 2019,
Pretivm’s 9th consecutive quarter of positive adjusted earnings and
record operating cash flow.
All amounts are in US dollars unless otherwise
noted. This release should be read in conjunction with the
Company’s Financial Statements and Management’s Discussion and
Analysis (“MD&A”) for the three and nine months ended September
30, 2019 and 2018, available on the Company’s website and on SEDAR
and EDGAR.
Third Quarter 2019 Operating
Summary
- Production of 88,227 ounces of
gold.
- Mill feed grade of 9.1 grams per
tonne gold.
- Gold recovery rate of 97.0%.
- Ore milled 309,754 tonnes.
- Daily average ore milled 3,367
tonnes per day.
Third Quarter 2019 Financial
Summary
- Revenue of $132.7 million on 90,713
ounces of gold sold.
- Total cost of sales of $86.2
million or $950 per ounce of gold sold1.
- Earnings from mine operations of
$46.6 million.
- Achieved an average realized cash
margin1 of $784 per ounce of gold sold, with a total cash cost of
$640 per ounce of gold sold1.
- All-in Sustaining Cost (“AISC”)1 of
$878 per ounce of gold sold.
- Generated $77.8 million in cash
from operating activities.
- Net earnings of $6.3 million ($0.03
per share).
- Adjusted earnings1 of $34.0 million
($0.18 per share1).
- The Company paid $62.4 million (as
first of two tranches of payments) to repurchase the offtake
obligation, and repaid $16.7 million of the loan facility using
cash generated from operations.
- The Company has now achieved and
surpassed the initial debt repayment target of $140 million and is
on track to repay $180 million of debt in 2019.
1 Refer to the “Non-IFRS Financial
Performance Measures” section at the end of this news release.
“Brucejack generated $77.8 million in cash from
operating activities, our highest cash flow quarter yet,” said
Joseph Ovsenek, President & CEO of Pretivm. “During the third
quarter, we continued to focus on opening up the mine while
increasing grade to the mill. Pursuing both objectives
simultaneously while stope inventory was constrained proved to be
more challenging than anticipated, and we ended the quarter with
gold production below our own expectations. As a result of limited
stope inventory, we now expect that the fourth quarter will be
consistent with the third quarter and have adjusted our full-year
2019 production guidance to between 340,000 to 350,000 ounces of
gold production, an approximate 15% decrease from the midpoint of
our prior production guidance range of 390,000 to 420,000 ounces of
gold sold. We have adjusted our all-in sustaining cost
guidance range to $900 to $950 per ounce of gold sold, reflecting
the lower anticipated gold production and our spending, which is
lower than previously guided. We do expect another quarter of
robust cash flow in Q4, and with the repurchase of the offtake
agreement we are on track to repay $180 million of debt in 2019,
surpassing our initial target of $140 million.”
Third Quarter Production
Ramp-up
A combination of limited stope inventory and
operational issues resulted in lower-than-planned tonnes, grade and
ounces in September, which impacted third quarter gold
production.
Mining during the quarter focused on advancing
development to open up the mine to provide sufficient stope access
to operate at 3,800 tonnes per day on a steady state basis.
The additional focus for mining during the quarter was to increase
grade to the mill by limiting internal dilution through the
optimization of stope design - which reduces the amount of
lower-grade tonnes processed. However, the reduction in stope
tonnage as the quarter closed reduced our overall tonnage available
for processing. This also impacted our ability to maximize grade
through limiting internal dilution.
In addition, as mining progressed through
mid-September, operational issues with two stopes prevented
expected higher grade ore from being mined as planned. There was a
hang-up of a key production stope and complications with sequencing
another stope. As a result, readily available lower grade
tonnage from operating stopes was substituted for the expected
higher grade tonnage.
Due to limited stope inventory, production
mining in the fourth quarter will focus on maximizing tonnes to the
mill, and all stopes above cut-off grade of approximately 5.0 grams
per tonne gold will be mined and processed as they become
available. The updated life of mine plan, which is planned to
be released in the first quarter of 2020, will include a stope
inventory plan for steady state production at a rate of 3,800
tonnes per day (see 2020 Updated Mineral Resource and Mineral
Reserve Estimates and Life of Mine Plan below).
As planned at the outset of 2019, production
ramp-up is expected to supply the mill at 3,800 tonnes per day on a
consistent basis by year end, with steady state production at 3,800
tonnes per day slated for 2020.
Adjusted 2019 Production and Financial
Guidance
Gold production in the first nine months of the
year was 258,168 ounces. As a result of limited stope availability,
gold production in the fourth quarter is expected to be in-line
with third quarter production. Accordingly, we have adjusted our
full year 2019 production guidance to between 340,000 ounces to
350,000 ounces of gold.
AISC in the first nine months of the year was
$896 per ounce of gold sold. As a result of the lower
production, annual AISC guidance has also been modified and now
ranges from $900 to $950 per ounce of gold sold. AISC guidance for
the year includes approximately $25.0 million for sustaining
capital, of which approximately $19.6 million has been spent to
date.
Third Quarter 2019 Ramp-up Production
Overview
- Gold production totaled 88,227
ounces in the third quarter, compared to 90,761 ounces in the
second quarter and 79,180 ounces in the first quarter of 2019.
- The mill feed grade average
improved slightly to 9.1 grams per tonne gold for the quarter
compared to 8.9 grams per tonne gold in the previous quarter.
- A total of 309,754 tonnes of ore,
equivalent to a throughput rate of 3,367 tonnes per day, was
processed. This represents a decrease of 4% from the previous
quarter, when a total of 324,171 tonnes of ore, equivalent to a
throughput rate of 3,562 tonnes per day, was processed.
- All critical modifications and
upgrades required to sustain processing at the increased production
rate of 3,800 tonnes per day are completed. The concentrate filter
press upgrade is now complete, as are all process-related pump
upgrades. Modifications to the flotation circuit and flocculent
systems continue and will be completed during regularly scheduled
shutdowns as the final components are delivered.
- Gold recoveries averaged 97.0% for
the quarter, a slight improvement over 96.9% in the previous
quarter.
Third Quarter 2019 Financial
Overview
- The Company generated revenue of
$132.7 million compared to revenue of $113.2 million in the second
quarter 2019. Revenue includes a gain on trade receivables at fair
value related to provisional pricing adjustments of $1.8 million
(Q2 2019 – $4.1 million).
- During the quarter the Company sold
90,713 ounces of gold at an average realized price1 of $1,486 per
ounce. In the previous quarter 85,953 ounces of gold were sold at
an average realized price of $1,319 per ounce.
- Total cost of sales was $86.2
million or $950 per ounce of gold sold. For the previous quarter,
total cost of sales was $83.4 million or $970 per ounce of gold
sold.
- Production costs for the third
quarter were $56.1 million or $181 per tonne of ore milled,
compared to $56.0 million or $173 per tonne of ore milled in the
previous quarter.
- Total cash cost was $640 per ounce
of gold sold resulting in an average realized cash margin of $784
per ounce of gold sold. In the second quarter 2019, total cash cost
was $702 per ounce of gold sold resulting in an average
realized cash margin of $550 per ounce of gold sold.
- AISC was $878 per ounce of gold
sold in the quarter compared to $940 per ounce of gold sold in the
previous quarter.
- Earnings from mine operations were
$46.6 million compared to $29.8 million in the previous
quarter.
- Net earnings were $6.3 million
compared to earnings of $10.4 million in the previous quarter.
Adjusted earnings were $34.0 million compared to $17.0 million in
the previous quarter.
- Cash generated by operations was
$77.8 million compared to $41.2 million in the previous
quarter.
- The Company repaid $16.7 million of
the $480.0 million loan facility with cash generated from
operations this quarter, for a total of $81.3 million this year
($398.7 million outstanding). The Company also paid $62.4 million
to repurchase of the Offtake Obligation using cash generated from
operations. The Company has now achieved and surpassed the initial
debt repayment target of $140 million and is on track to repay $180
million of debt in 2019.
2020 Updated Mineral Resource and
Mineral Reserve Estimates and Life of Mine Plan
The Company plans to release updated Mineral
Resource and Mineral Reserve estimates in the first quarter of
2020, as well as an updated life of mine plan. The Mineral
Resource will be updated with the results from underground drilling
completed by the end of the third quarter which includes 89,380
meters from 1,483 holes.
The updated life of mine plan will incorporate
longitudinal longhole stoping (mining along the direction of the
corridors of high-grade gold mineralization) as the mining method
in areas of the mine where corridors of high-grade gold
mineralization are defined. The mine plan, which will be
based on a production rate of 3,800 tonnes per day, will include a
plan for stope inventory. 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.
With the expected increase in the confidence
level resulting from the Mineral Resource update and the transition
to longitudinal longhole stoping in certain areas, we anticipate
improved grade predictability and management of internal dilution,
which will in turn allow for improved production
forecasting.
Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Vice
President, Geology and Chief Geologist, Pretium Resources Inc. is
the Qualified Person (“QP”) responsible for the Brucejack Mine
reserve definition, expansion 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 QP responsible for
Brucejack Mine development, and has reviewed and approved the
scientific and technical information contained in this news release
relating thereto.
Our unaudited condensed consolidated interim
Financial Statements and MD&A for the three and nine months
ended September 30, 2019 and 2018 are filed on SEDAR and EDGAR and
are available on our website at www.pretivm.com.
Webcast and Conference Call
The webcast and conference call to discuss the
third quarter 2019 operating and financial results will take place
Thursday, October 31, 2019 at 8:00 am PT (11:00 am
ET).
Webcast and conference call details:
Thursday, October 31, 2019 at 8:00 am PT
(11:00 am ET) |
Webcast |
www.pretivm.com |
Toll Free (North America) |
1-800-319-4610 |
International and Vancouver |
604-638-5340 |
A recorded playback will be available until November 14,
2019:
Toll Free
(North America) |
1-800-319-6413 |
Access Code |
3558 |
About Pretivm
Pretivm is a low-cost intermediate gold producer
with the high-grade underground Brucejack Mine in northern British
Columbia.
For further information contact:
Joseph OvsenekPresident & 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.)
Operating Results
|
Three months endedSeptember 30, |
Nine months endedSeptember 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Ore mined (wet tonnes) |
t |
325,228 |
|
255,227 |
|
970,659 |
|
772,072 |
Mining rate |
tpd |
3,535 |
|
2,774 |
|
3,556 |
|
2,828 |
|
|
|
|
|
|
|
|
|
Ore milled (dry tonnes) |
t |
309,754 |
|
240,122 |
|
929,047 |
|
738,555 |
Head grade |
g/t Au |
9.1 |
|
12.4 |
|
8.9 |
|
12.0 |
Recovery |
% |
97.0 |
|
97.4 |
|
96.9 |
|
97.4 |
Mill throughput |
tpd |
3,367 |
|
2,610 |
|
3,403 |
|
2,705 |
|
|
|
|
|
|
|
|
|
Gold ounces produced |
oz |
88,227 |
|
92,641 |
|
258,168 |
|
279,670 |
Silver ounces produced |
oz |
124,958 |
|
95,741 |
|
368,989 |
|
308,676 |
|
|
|
|
|
|
|
|
|
Gold ounces sold |
oz |
90,713 |
|
94,458 |
|
258,100 |
|
278,417 |
Silver
ounces sold |
oz |
108,250 |
|
87,110 |
|
309,666 |
|
289,710 |
The following abbreviations were used above: t
(tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold)
and oz (ounces). |
|
Financial Results
|
Three months endedSeptember 30, |
Nine months endedSeptember 30, |
In thousands of USD, except for per ounce data |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
132,735 |
|
110,060 |
|
349,056 |
|
345,960 |
Earnings from mine operations |
$ |
46,585 |
|
37,608 |
|
105,526 |
|
114,512 |
Net earnings for the period |
$ |
6,259 |
|
10,734 |
|
20,868 |
|
33,773 |
Per share – basic |
$/share |
0.03 |
|
0.06 |
|
0.11 |
|
0.19 |
Per share – diluted |
$/share |
0.03 |
|
0.06 |
|
0.11 |
|
0.19 |
|
|
|
|
|
|
|
|
|
Adjusted earnings(1) |
$ |
34,024 |
|
26,327 |
|
67,564 |
|
79,172 |
Per share - basic(1) |
$/share |
0.18 |
|
0.14 |
|
0.37 |
|
0.43 |
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents |
$ |
16,583 |
|
190,318 |
|
16,583 |
|
190,318 |
Cash generated from operating activities |
|
77,813 |
|
52,364 |
|
158,940 |
|
154,358 |
Total assets |
$ |
1,579,105 |
|
1,771,543 |
|
1,579,105 |
|
1,771,543 |
Long-term debt(2) |
$ |
413,222 |
|
140,357 |
|
413,222 |
|
140,357 |
|
|
|
|
|
|
|
|
|
Production costs (milled) |
$/t |
181 |
|
207 |
|
178 |
|
211 |
|
|
|
|
|
|
|
|
|
Total cash costs(1) |
$/oz |
640 |
|
568 |
|
675 |
|
627 |
All-in sustaining costs(1) |
$/oz |
878 |
|
709 |
|
896 |
|
758 |
|
|
|
|
|
|
|
|
|
Average realized price(1) |
$/oz |
1,486 |
|
1,214 |
|
1,378 |
|
1,284 |
Average realized cash
margin(1) |
$/oz |
784 |
|
601 |
|
639 |
|
612 |
(1) Refer to the
"Non-IFRS Financial Performance Measures" section at the end of
this news release.(2) Long-term debt does not include the current
portions of the Company’s loan facility in the amount of $64,423 as
at September 30, 2019. For the comparable period in 2018, long-term
debt does not include the current portions of the Company’s
then-outstanding credit facility and stream obligation in the
amount of $641,468. |
|
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS
measures in this new release. Refer to the Company’s MD&A for
an explanation, discussion and reconciliation of non-IFRS measures.
The Company believes that these measures, in addition to measures
prepared in accordance with IFRS, provide readers with an improved
ability to evaluate the underlying performance of the Company and
to compare it to information reported by other companies. The
non-IFRS measures are intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with International
Financial Reporting Standards (“IFRS”). These measures do not have
any standardized meaning prescribed under IFRS, and therefore may
not be comparable to similar measures presented by other
issuers.
Forward-Looking Information
This news release contains “forward-looking
information”, “forward looking statements”, “future oriented
financial information” and/or “financial outlook” within the
meaning of applicable Canadian and United States securities
legislation (collectively herein referred to as “forward-looking
information”). The purpose of disclosing future oriented
financial information and financial outlook is to provide a general
overview of management’s expectations regarding the anticipated
results of operations and costs thereof and readers are cautioned
that future oriented financial information and financial outlook
may not be appropriate for other purposes. Wherever possible, words
such as “plans”, “expects”, “guidance”, “projects”, “assumes”,
“budget”, “strategy”, “scheduled”, “estimates”, “forecasts”,
“anticipates”, “believes”, “intends”, “modeled”, “targets” and
similar expressions or statements that certain actions, events or
results “may”, “could”, “would”, “might” or “will” be taken, occur
or be achieved, or the negative forms of any of these terms and
similar expressions, have been used to identify forward-looking
information. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance are not statements of historical fact and may be
forward-looking statements. Forward-looking information may
include, but is not limited to, information with respect to:
production and cost guidance and our expectations around achieving
such guidance; our future operational and financial results,
including estimated cash flows, and the timing thereof; the
expected grade of gold and silver production; the Brucejack Mine
production rate and the ramp-up to and achievement of steady state
production at 3,800 tonnes per day production rate; capital
modifications and upgrades, underground development, and estimated
expenditures and timelines in connection therewith, including with
respect to the ramp-up to 3,800 tonnes per day production rate; the
repurchase of our Offtake Obligation; payment of debt, operating
and other obligations and requirements, including timing and
source of funds; our mining (including mining methods), expansion,
exploration and development activities, including our longitudinal
longhole stoping initiatives, infill, expansion and underground
exploration drill programs and our grassroots exploration program,
and the results, costs and timing thereof; our operational grade
control program, including plans with respect to our infill drill
program and our local grade control model; grade reconciliation,
updated geological interpretation and mining initiatives with
respect to the Brucejack Mine; our operational plans and strategy;
capital, sustaining and operating cost estimates and timing
thereof; the future price of gold and silver; our liquidity and the
adequacy of our financial resources (including capital resources);
our intentions with respect to our capital resources; capital
allocation plans; our financing activities, including plans for the
use of proceeds thereof; the estimation of Mineral Reserves and
Resources including any updates thereto; realization of Mineral
Reserve and Resource estimates; our estimated life of mine and life
of mine plan for the Brucejack Mine; production and processing
estimates; estimated economic results of the Brucejack Mine,
including net cash flow and net present value; predicted
metallurgical recoveries for gold and silver; geological and
mineralization interpretations; development of our Brucejack Mine
and timing thereof; results, analyses and interpretations of
exploration and drilling programs; timelines and similar statements
relating to the economic viability of the Brucejack Mine, including
mine life, total tonnes mined and processed and mining operations;
updates to our Mineral Reserves and Resources and life of mine plan
for the Brucejack Mine, and the timing and anticipated effects
thereof; timing, receipt, and anticipated effects of, and
anticipated capital costs in connection with approvals, consents
and permits under applicable legislation; our executive
compensation policy, approach and practice; our relationship with
community stakeholders; litigation matters; environmental matters;
our effective tax rate and the recognition of our previously
unrecognized income tax attributes; new accounting standards
applicable to the Company, including methods of adoption and the
effects of adoption of such standards; statements regarding United
States dollar cash flows, currency fluctuations and the recurrence
of foreign currency translation adjustments; and management and
board of directors succession plans. Forward-looking
information is subject to a variety of known and unknown risks,
uncertainties and other factors that could cause actual results,
actions, events conditions, performance or achievements to
materially differ from those expressed or implied by the
forward-looking information, including, without limitation, those
related to: uncertainty as to the outcome of legal proceedings; the
effect of indebtedness on cash flow and business operations; the
effect of restrictive covenants in our agreements; assumptions
regarding expected capital costs, operating costs and expenditures,
production schedules, economic returns and other projections; our
production and production cost estimates, including the accuracy
thereof; commodity price fluctuations, including gold price
volatility; the accuracy of our Mineral Resource and Reserve
estimates (including with respect to size, grade and
recoverability) and the geological, operational and price
assumptions on which they are based; uncertainties relating to
Inferred Mineral Resources being converted into Measured or
Indicated Mineral Resources; our ability to maintain or increase
our annual production of gold at the Brucejack Mine or discover,
develop or acquire Mineral Reserves for production; dependency on
the Brucejack Mine for our future operating revenue; the
development of our properties; general economic conditions; the
inherent risk in the mining industry; significant governmental
regulations, including environmental regulations; currency
fluctuations, and such other risks, uncertainties and other factors
as are identified in Pretivm’s Annual Information Form dated March
28, 2019, Form 40-F dated March 28, 2019, MD&A and other
disclosure documents as filed in Canada on SEDAR at www.sedar.com
and in the United States through EDGAR at the SEC’s website at
www.sec.gov (collectively, the “Pretivm Disclosure Documents”). Our
forward-looking information is based on the assumptions, beliefs,
expectations and opinions of management on the date the statements
are made, many of which may be difficult to predict and beyond our
control. In connection with the forward-looking information
contained in this news release, we have made certain
assumptions about, among other things: our business and that no
significant event will occur outside of our normal course of
business; planned exploration and development activities and
the costs and timing thereof; future prices of gold and silver and
other metal prices; the accuracy of our Mineral Resources and
Mineral Reserve estimates; the geology and mineralization of the
Brucejack Project; operating conditions; capital and operating cost
estimates; production and process estimates; the results,
costs and timing of future exploration and drilling; timelines and
similar statements relating to the economic viability of the
Brucejack Project; timing and receipt of governmental, regulatory
and third party approvals, consents, licenses and permits;
obtaining required renewals for existing approvals, consents,
licenses and permits; the geopolitical, economic, permitting and
legal climate that we operate in; the adequacy of our financial
resources and our ability to raise any necessary additional capital
on reasonable terms; our ability to satisfy the terms and
conditions of our debt obligations; commodity prices; currency
exchange rates and interest rates; political and regulatory
stability; requirements under applicable laws; market competition;
sustained labour stability and availability of equipment; positive
relations with local groups; favourable equity and debt capital
markets; stability in financial and capital markets, and such other
factors and assumptions as are identified in the other Pretivm
Disclosure Documents. Although we believe that the assumptions
inherent in the forward-looking information are reasonable as of
the date of this news release, they are subject to significant
business, social, economic, political, regulatory, competitive and
other risks and uncertainties, contingencies and other factors that
could cause actual actions, events, conditions, results,
performance or achievements to be materially different from those
projected in the forward-looking information. Forward-looking
information is not a guarantee of future performance. There can be
no assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. We do not
assume any obligation to update forward-looking information,
whether as a result of new information, future events or otherwise,
other than as required by applicable law. For the reasons set forth
above, readers should not place undue reliance on forward-looking
information. Neither the TSX nor the NYSE has approved or
disapproved of the information contained herein.
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