Mr. Robert Quartermain reports
PRETIUM RESOURCES INC.: FIRST BULK SAMPLE CROSS-CUT PROCESSING RESULTS
Pretium Resources Inc. has released the initial processing results for the material excavated from the Valley of the Kings bulk sample program and has provided further details on the status of the program.
Results from processing 426585E crosscut
The preliminary mill results from the processing of the 2,167 tonnes of bulk sample material contained in the 426585E crosscut are presented in the associated table.
CROSSCUT 426585E PRELIMINARY MILL RESULTS
Tonnes Gold ounces Gold ounces Gold Total Total
milled gravity flotation ounces contained contained
(dry) concentrate concentrate tailings gold ounces silver ounces
2,167 94 174 13 281 532
Preliminary mill results are provided by Strategic Minerals LLC,
operator of the mill, and are subject to final establishment of weights and
assays and settlement.
Processing continuing on track
The processing of the excavated 10,000-tonne bulk sample is proceeding as planned at a rate of approximately 1,000 tonnes per week to produce gold/silver gravity and flotation concentrates. Processing of the 426555E crosscut is under way and is expected to be completed this week, followed by the 426645E crosscut. A total of 4,000 ounces of gold were projected to be produced in total from the material excavated for the program.
The amount of gold produced from the entire 10,000-tonne bulk sample will be used to reconcile the Valley of the Kings November, 2012, mineral resource estimate, prepared by Snowden Mining Industry Consultants. Snowden, one of the world's leading providers of technical consulting services, independent advice and technology solutions to the mining sector, was engaged by Pretium to produce the November, 2012, mineral resource estimate and review and sign off on the milling and processing component of the program.
Sample tower results for 426585E crosscut
Prior to resigning from the program, Strathcona Mineral Services Ltd. provided to Pretium preliminary assay results from the sample tower that included those for the 426585E crosscut, which averaged 2.08 grams per tonne gold. The assay results from the sample tower represent approximately 0.01 per cent of the material excavated from the 426585E crosscut. Based on a dry weight for the 426585E crosscut of 2,167 tonnes, a total of 145 ounces of gold were estimated by Pretium to be contained within the 426585E crosscut using the preliminary assay results from the sample tower. Consultants from Strathcona, also one of the world's leading providers of consulting services to the mining industry in Canada and internationally, were engaged in late 2012 as independent qualified persons to oversee the 10,000-tonne bulk sample and produce a report at the conclusion of the program once all data, including the assay results from the sample tower and the 16,789 metres of completed underground drilling, had been compiled.
Preliminary figures from the processing of the 426585E crosscut show the contained metal included 281 ounces of gold. It is the opinion of both Pretium and Snowden that there is a significant difference in the contained gold estimated by the selective sampling of the 426585E crosscut by the sample tower and the actual contained gold determined by milling the total 2,167 tonnes of material excavated from the 426585E crosscut (there is 94 per cent more gold produced from the mill than was estimated from the sample tower results for the same material). A related discussion on the sample tower component of the program, Strathcona's stated reasons for withdrawing from the program, and Snowden's response is set out below.
Crosscut 426585E in relationship to the November, 2012, Valley of the Kings mineral resource estimate
Snowden has advised Pretium that the November, 2012, mineral resource estimate is a bulk mining estimate, and that the grade of no single block should be used as a stand-alone estimate. As a result, the actual contained gold within the entire 10,000-tonne bulk sample determined by processing needs to be reconciled against the contained gold predicted for the 10,000-tonne bulk sample using the estimated gold grade for the bulk sample area from the November, 2012, mineral resource estimate, which is estimated to be approximately 4,000 ounces.
Crosscut 426585E in relationship to the minable stopes defined by the feasibility study
A net smelter returns royalty (NSR) cut-off grade of $180 per tonne of ore was used to define the mineral reserves for the Brucejack project feasibility study (see Pretium's news release dated June 11, 2013) at base case prices of $1,350 gold, $20 silver and United States/Canadian exchange rate at par. The $180 NSR provided a minimum $23.54 operating margin for feasibility study operating costs of $156.46 per tonne milled.
The 426585E crosscut excavation cuts through portions of three feasibility study stopes. The tonnage processed and the grade of the gold and silver produced from the material excavated from the 426585E development going through these stopes was estimated to be 1,451 tonnes grading 4.6 grams per tonne gold and 6.8 grams per tonne silver, based on the preliminary mill results estimated for the 426585E stopes. The value of the gold and silver produced from the 426585E stopes was estimated to be $204.03 per tonne at feasibility study base case metal prices providing an operating margin of $47.57 per tonne over feasibility study operating costs.
Strathcona's withdrawal from the program
As stated above, consultants from Strathcona were engaged in late 2012 as independent qualified persons to oversee the 10,000-tonne bulk sample and produce a report at the conclusion of the program once all data, including the assay results from sample tower and the 16,789 metres of completed underground drilling, had been compiled. The report was expected to reconcile the assay results from the sample tower against a local resource estimate prepared by Snowden based on the program drilling, which would provide an empirical grade prediction variance for a stope-sized tonnage that could be related to and used for resource classification. Strathcona's report on the program was expected in early 2014.
Strathcona withdrew from the program on Oct. 8, 2013, before any results from the processing of the bulk sample were available. In withdrawing from the program, Strathcona advised Pretium that "there are no valid gold mineral resources for the VOK zone, and without mineral resources there can be no mineral reserves, and without mineral reserves there can be no basis for a feasibility study." It also advised that "statements included in all recent press releases (by Pretium) about probable mineral reserves and future gold production (from the Valley of the Kings zone) over a 22-year mine life are erroneous and misleading." Snowden maintains its stance that the November, 2012, mineral resource estimate remains valid, and has taken steps to involve a third party peer review in its upcoming mineral resource update.
In addition, Strathcona advised that, "The infrequent high-grade intercepts reported in the press releases have been shown in the underground exposures of the bulk sample program to usually be of very narrow width (0.5 metre) and associated with narrow geological structures that occasionally have minable continuity as in the case of the Cleopatra vein." The results from Valley of the Kings program drilling have been, from the outset, consistent with results from prior exploration drilling in the Valley of the Kings. Drilling has frequently intersected extreme-grade mineralization over narrow widths, with 47 intersections grading greater than 1,000 grams of gold per tonne from underground drilling (on average there is one in every 550 metres of 2013 drilling) and 125 intersections in total to date grading greater than 1,000 grams of gold per tonne for the Valley of the Kings. The program was initiated, among other reasons, to determine the bulk minability of the Valley of the Kings mineralization. These reasons and the form of mineralization were discussed with Strathcona prior to its engagement.
When it withdrew, Strathcona advised Pretium that it had previously asserted similar views critiquing the Snowden resource model for the Valley of the Kings, accompanied with recommendations for public disclosure of the preliminary bulk sample data supporting its conclusions. At one point, these assertions, conclusions and recommendations were made on the basis of approximately 20 per cent of the underground drilling results, no assay results from the sample tower and no results from production.
Snowden has consistently and repeatedly advised in response to all comments from Strathcona that the true test of the resource estimate will only come from the reconciliation results between the ultimate grade of the bulk sample (as defined by produced metal and metal accounting) and the grade of the resource estimate for the same volume. Strathcona resigned before Snowden had an opportunity to formally respond to its assertions.
Both Pretium's management and Snowden share a number of significant concerns with respect to Strathcona's conclusions. They contend that the Strathcona conclusions are based on: the interpretation of preliminary data, the interpretation of too few data, and the incorrect interpretation and application of preliminary local data for comparison with the resource estimate model. Pretium management and Snowden also share significant concerns that the sampling tower approach for the Valley of the Kings deposit may be flawed.
Given the heterogeneous nature of the Valley of the Kings mineralization, Snowden has consistently advised Pretium that the entire 10,000-tonne bulk sample needs to be processed prior to completing a reconciliation that can be considered robust. Dr. Simon Dominy of Snowden is reviewing the sample theory underlying Strathcona's sampling protocols for the sample tower and will be providing a formal expert opinion to Pretium. Dr. Dominy has noted that he concurs with the current approach of submitting the entire bulk sample (as batches) for full processing through the Montana plant, and has advised that such an approach is always the best route to fully evaluate bulk samples and/or trial mining parcels.
Dr. Dominy has provided a preliminary report to Pretium that covers several areas of consideration for the evaluation of the design of the sampling program. This includes the appropriate application of mineralization characterization study, and the difficulties in achieving representative samples in a high-nugget coarse gold environment.
Dr. Dominy is a dual qualified mining geologist engineer with 25 years of experience, across mine operations, academic research and consulting. He has an extensive global record of auditing, designing and managing gold sampling and assaying programs. He is a leader in the sampling of coarse gold deposits, and consulted, lectured and published widely on the topic. Recent sampling assignments have included: audits and reviews; integrated studies of ore characterization, gold deportment and metallurgical testing; sample size determination; sample protocol design and optimization; the application of the theory of sampling; metallurgical plant sampling; metallurgical sampling; and grade control systems. He also has extensive practical experience in surface and underground bulk sampling/trial mining program design, planning, management and interpretation.
Pretium maintains that it conceived of the Valley of the Kings bulk sample excavation and associated work as an opportunity to compile and analyze all the possible data which could be generated by a multitiered exploration program constrained by the proscribed legislated limit of a 10,000-tonne excavation. Integral to the program design is the element of corroboration and assimilation for all input data to ensure that any analysis of the deposit will result in robust conclusions about the nature and the extent of the gold mineralization in the Valley of the Kings. It was on this basis that it engaged Strathcona and Snowden, two well-regarded firms, to fulfill their roles as independent experts and act in collaboration on the program.
"We are disappointed by Strathcona's decision to withdraw prematurely from the bulk sample program," said Robert Quartermain, Pretium's chief executive officer. "We are satisfied with the results of the initial bulk sample processing, and are confident that the results from the mill will provide the conclusive outcome that our investors expect. The underground drilling and associated development to date has demonstrated that the Valley of the Kings deposit contains significant high-grade gold mineralization."
Independent qualified persons from Snowden are responsible for the review and sign-off of the milling and processing component of the program, and will issue a final report on its completion.
As previously disclosed, the total amount of gold and silver produced by the mill will be reported on the completion of processing. An updated mineral resource estimate for the Valley of the Kings incorporating all 2013 underground and surface drilling and milling results will be prepared following the receipt of all assay data. The updated resource estimate will incorporate learnings from the bulk sample evaluation as well as from additional drilling completed during the underground program so that the confidence and the robustness of the mineral resource estimate can be maximized.
Ivor Jones (FAusIMM(CP)) of Snowden is an independent qualified person, as defined by National Instrument 43-101 and is responsible for the resource evaluation at the project. Ian I. Chang, MASc, PEng, vice-president, project development, Pretium Resources, is the qualified person responsible for the bulk sample program processing and feasibility study. Kenneth C. McNaughton, MASc, PEng, chief exploration officer, Pretium Resources, is the qualified person responsible for the Brucejack project exploration program. The information in this release which relates to the Brucejack project has been reviewed and approved for release by Mr. Chang, Mr. McNaughton and Mr. Jones, and they have consented to the inclusion of the information in this press release in the form and context in which it appears.
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