TICKERS: PVG

Pretium Is Looking Forward to Bringing In the Gold at Brucejack

Source:

Pretium has introduced ore to the commissioning process to prepare for production at its Brucejack mine.

In a May 1 announcement, Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced that its Brucejack mine's wet commissioning is approaching completion. The SAG mill feeders and conveyors, fresh water, instrument air, pump gland water and fire pumps have been commissioned and are in service. "We remain on track for the production of gold concentrate and doré in the coming weeks," the company stated. The construction team has successfully handed over underground development to the operations crew and "two long-hole drills are currently drilling off the stopes."

ROTH Capital Partners analyst Joe Reagor believes "Brucejack will begin initial gold production in the coming weeks and that it will steadily increase production over the remainder of 2017." He also explains that the company will "avoid running high value ore through the mill until it optimizes recoveries and throughput. . .estimating production of 41,000, 72,000, and 117,000 ounces of gold over the three remaining quarters of 2017, respectively." He stated that the firm's "valuation for PVG is USD$3.0 B or USD$15.69 per fully diluted share. We round this up to reach a $16 price target and we are maintaining a Buy rating."

Eric Zaunscherb, an analyst with Canaccord Genuity, explains that "over the next few months, much of the execution risk associated with mine building will be behind Pretium, likely making the current share price lull an attractive opportunity." He points out that the company should have enough resources in 2017 due to the unsecured convertible senior subordinated notes for US$100 million due 2022 issued in Q1/17. Maintaining the target price of $17.50 and reiterating a Buy recommendation, Zaunscherb highlights that "Pretium Resources is trading at a 0.67x P/NAV(5%). This is a premium to the means of peer covered development companies at 0.59x and covered small- to mid-cap producers at 0.58x. A premium is justified given the project's scale, scalability (exploration potential), low sovereign risk, and potential appeal as an M&A target."

BMO Capital Markets analyst Andrew Kaip notes that Pretium "continues to make positive progress at its Brucejack mine, with a number of components and services commissioned or moving thereto, and wet commissioning nearing completion. The company remains on track for the production of gold concentrate and doré in the coming weeks." He highlights that "PVG has over 187kt of ore stockpiled on surface and underground, up from ~163kt in late March" and rates Pretium as an Outperform with a target price of $19.50."

Pretium is currently trading at around $11.88.

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