On Feb. 14, Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced the closing of a US$100 million convertible senior subordinated notes offering, including the full exercise of the over-allotment option. Pretium will use the proceeds as working capital for its 100%-owned Brucejack gold mine project and for general corporate purposes. The news comes on the heels of the company's Feb. 3 announcement that the Brucejack project timeline had been accelerated "with dry commissioning now scheduled to commence in March 2017 and wet commissioning scheduled to commence in early April 2017."
Heiko Ihle of Rodman & Renshaw sees a big positive with the new schedule, highlighting in his Feb. 6 report, "that the updated timeline is ahead of our estimate for mid-year commissioning; therefore, we are increasing our gold production estimate for the year to just shy of 120,000 ounces from just over 93,000 ounces." Ihle also noted "although capital costs have risen, we continue to view Brucejack as one of the premier gold projects worldwide. . .we have rolled our NAV model into 2017, our price target is unaffected by the increase in total initial capital due to the fact that capital spent to date in 2016 is no longer factored into our model."
Joe Reagor, an analyst for ROTH Capital Partners, also believes the accelerated schedule was a good move, stating in his Feb. 3 report that "despite the increase in capital budget, we believe that the earlier start-up of the mill is more significant."
Byron King of the Gold Speculator was not surprised or concerned with the slight increase in capex costs, stating in the Feb. 7 issue that "capital costs are slightly higher than expected, which comes with the territory—literally, considering the difficulty of building a sophisticated mining camp deep and high in the mountains of British Columbia." He went on to say "there is ore stockpiled test-mining ongoing and systems checkout proceeding apace. Soon, I'll likely move Pretium from the Developer side of this list to the Producer side."
Of Pretium's Brucejack project, CIBC World Market's Jeff Killeen reported on Feb. 14 that "commercial production in early Q3 seems likely with development on track and process plant construction ~2 months ahead of schedule." CIBC anticipates "potential for head grade to vary, particularly in H2/17 as the number of available stopes progressively increases."
Andrew Kaip, an analyst for BMO Capital Markets, forecasts Pretium "to have adequate capital resources, including the remaining portion of its undrawn credit facility, to fund the remainder of capital construction as well as the required working capital during start-up." Kaip went on to say that "Pretium Resources one of the few advanced, sizeable, and permitted development projects positioned to benefit from the strength in the precious metals sector by advancing construction and/or attracting a takeover offer."
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Disclosures from Rodman & Renshaw, Pretium Resources Ltd., Feb. 6, 2017
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Heiko F. Ihle, CFA and Jake Sekelsky , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of (including, without limitation, any option, right, warrant, future, long or short position).
As of January 31, 2017 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Pretium Resources, Inc.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did receive compensation from Pretium Resources, Inc. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Pretium Resources, Inc. as of the date of this research report.
ROTH Capital Partners, Pretium Resources Inc., Feb. 5, 2017
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.
Within the last twelve months, ROTH has received compensation for investment banking services from Pretium Resources Inc.
ROTH makes a market in shares of Pretium Resources Inc. and as such, buys and sells from customers on a principal basis.
Within the last twelve months, ROTH has managed or co-managed a public offering for Pretium Resources Inc.
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.
CIBC, Pretium Resources Inc., Feb. 14, 2017
Analyst Certification: Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
Research analysts do not receive compensation based upon revenues from specific
investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers.
Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.
In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.
Pretivm Resources Inc. is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months.
CIBC World Markets Inc. has managed or co-managed a public offering of securities for Pretivm Resources Inc. in the past 12 months.
CIBC World Markets Inc. has received compensation for investment banking services from Pretivm Resources Inc. in the past 12 months.
CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Pretivm Resources Inc. in the next 3 months.
BMO Capital Markets, Pretium Resources, Feb. 14, 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
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 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.
Gold Speculator, Feb. 7, 2017
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