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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1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Disclosures from ROTH Capital Partners, Pretium Resources Inc., Flash Note, May 1, 2017
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Pretium Resources Inc. and as such, buys and sells from customers on a principal basis.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
Canaccord Genuity, Pretium Resources Inc., Flash Update, May 1, 2017
Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.
Required Company-Specific Disclosures (as of date of this publication): Pretium Resources Inc. currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Pretium Resources Inc.
In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Pretium Resources Inc. Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Pretium Resources Inc. in the next three months.
Up-to-date disclosures may be obtained here.
BMO Capital Markets, Pretium Resources, Flash, May 1, 2017
Analyst's Certification: I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures:
Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to Pretium Resources within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Pretium Resources within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Pretium Resources within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Pretium Resources within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Pretium Resources.
Disclosure 6A: Pretium Resources is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Pretium Resources is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 8A: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of Pretium Resources.
Disclosure 16: A BMO Nesbitt Burns Inc. research analyst has extensively viewed the material operations of Pretium Resources.
Disclosure 17: Pretium Resources has paid or reimbursed some or all of the BMO Nesbitt Burns Inc. analysts travel expenses.
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