Mr. Joseph Ovsenek reports
PRETIVM REPORTS THIRD QUARTER 2018 RESULTS
Pretium Resources Inc. has released financial and operating results for the third quarter and first nine months of 2018.
All amounts are in U.S. dollars unless otherwise noted. This release should be read in conjunction with the company's financial statements and management's discussion and analysis available on the company's website and on SEDAR and EDGAR.
"Brucejack delivered another profitable quarter in a declining gold price environment, which speaks to the robust economics of the mine," said Joseph Ovsenek, president and chief executive officer of Pretium. "We have generated significant earnings from mine operations every quarter since achieving commercial production, and have built a cash balance of over $190-million. We remain on track to refinance our construction debt facility and repurchase the precious metals stream by year-end without issuing equity."
Third quarter 2018 summary:
Production of 92,641 ounces of gold at a mill feed grade of 12.4 grams per tonne gold;
Revenue of $110.1-million on 94,458 ounces of gold sold;
Total cost of sales $72.5-million or $767 per ounce of gold sold (1);
All-in sustaining cost (AISC) (1) of $709 per ounce of gold sold;
Net earnings of $10.7-million (six cents per share);
Adjusted earnings (1) of $26.3-million (14 cents per share);
Generated $52.4-million cash from operating activities;
Cash and cash equivalents balance of $190.3-million as at Sept. 30, 2018;
Notice was delivered to repurchase 100 per cent of the gold and silver stream that was sold as part of the construction financing package;
Subsequent to the end of the quarter, a commitment letter for a fully underwritten $480.0-million debt facility to refinance the existing construction credit facility was executed.
A non-international financial reporting standard performance measure.
Third quarter production overview:
Production totalled 92,641 ounces of gold and 95,741 ounces of silver compared with 82,203 ounces of gold and 83,233 ounces of silver in the third quarter 2017. Year-to-date 2018 production totalled 279,670 ounces of gold and 308,676 ounces of silver.
Mill feed grade averaged 12.4 grams per tonne gold compared with 10.5 grams per tonne gold in the third quarter 2017. Year-to-date 2018 mill feed grade averaged 12.0 grams per tonne gold.
Gold recoveries averaged 97.4 per cent compared with 96.5 per cent in the third quarter 2017. Year-to-date 2018 recoveries averaged 97.4 per cent.
Process plant throughput averaged 2,610 tonnes per day for a total of 240,122 tonnes of ore compared with 2,840 tonnes per day for a total of 261,262 tonnes of ore in the third quarter 2017. Year-to-date 2018 process plant throughput averaged 2,705 tonnes per day for a total of 738,555 tonnes of ore.
Mine development remained at a rate of approximately 700 metres per month during the quarter.
The sequence of the mine plan and the availability of stopes for optimal blending are the main drivers of the company's gold production. The company anticipates narrowing the range of grade variability as development advances.
Three months ended Nine months ended
Sept. 30, Sept. 30,
2018 2017 2018 2017 (1)
Ore mined t 255,227 271,534 772,072 271,534
Mining rate tpd 2,774 2,951 2,828 2,951
Ore milled t 240,122 261,262 738,555 261,262
Head grade g/t Au 12.4 10.5 12.0 10.5
Recovery % 97.4 96.5 97.4 96.5
Mill throughput tpd 2,610 2,840 2,705 2,840
Gold ounces produced oz 92,641 82,203 279,670 82,203
Silver ounces produced oz 95,741 83,233 308,676 83,233
Gold ounces sold oz 94,458 55,413 278,417 55,413
Silver ounces sold oz 87,110 19,846 289,710 19,846
The following abbreviations were used in the table: t (tonnes), tpd (tonnes per day),
g/t (grams per tonne), Au (gold) and oz (ounces).
(1) Data for the nine months ended Sept. 30, 2017, cover the period commencing from
July 1, 2017, the date the Brucejack mine achieved commercial production, to Sept.
Third quarter financial overview:
Revenue of $110.1-million compared with revenue of $70.9-million in the third quarter 2017. Revenue includes a loss on trade receivables at fair value related to provisional pricing adjustments of $1.6-million. The comparable period is the third quarter 2017, which was the company's first quarter of production after commercial production was achieved on July 1, 2017. Year-to-date 2018, the company generated revenue of $346.0-million.
The company sold 94,458 ounces of gold at an average realized price of $1,169 per ounce generating $110.4-million in revenue. Treatment costs and refining charges associated with concentrate sales, in the amount of $4.3-million, were included within concentrate revenue. The average London Bullion Market Association AM and PM market price over the quarter ended Sept. 30, 2018, was $1,213 per ounce. In the comparable period, the sale of 55,413 ounces of gold contributed $71.0-million at an average realized price of $1,281 per ounce. Year-to-date 2018, the company sold 278,417 ounces of gold generating $345.1-million in revenue.
Total cost of sales was $72.5-million or $767 per ounce of gold sold. In the third quarter 2017, total cost of sales was $44.9-million or $810 per ounce of gold sold. Total cost of sales includes production costs, depreciation and depletion, royalties, and selling costs. Year-to-date 2018 total cost of sales was $231.4-million or $831 per ounce.
Total cash cost (1) was $568 per ounce of gold sold, and AISC was $709 per ounce of gold sold. In the third quarter 2017, total cash cost was $656 per ounce of gold sold, and AISC was $788 per ounce of gold sold. Year-to-date total cash cost was $627 per ounce of gold sold, and AISC was $758 per ounce of gold sold.
Sustaining capital expenditures amounted to $5.2-million compared with $3.5-million in the third quarter 2017. Year-to-date 2018 sustaining capital incurred was $12.8-million.
Earnings from mine operations (1) were $37.6-million compared with $26.0-million in the third quarter 2017. Year-to-date 2018 earnings from mine operations were $114.5-million.
Net earnings were $10.7-million compared with a net loss of $7.0-million in the third quarter 2017. Year-to-date 2018 net earnings were $33.8-million.
Adjusted earnings were $26.3-million compared with $14.0-million in the third quarter 2017. Year-to-date 2018 adjusted earnings were $79.2-million.
Cash generated from operating activities was $52.4-million compared with $47.5-million in the third quarter 2017. Year-to-date 2018 cash generated from operations was $154.4-million.
Cash and cash equivalents were $190.3-million as at Sept. 30, 2018, increasing $134.0-million from $56.3-million at Dec. 31, 2017.
On Sept. 24, 2018, the company provided notice of its intention to repurchase 100 per cent of the callable 8-per-cent precious metal stream for $237.0-million. The stream was sold by Pretium as part of the construction financing package for the Brucejack mine.
Subsequent to Sept. 30, 2018, the company signed a commitment letter for a fully underwritten $480.0-million debt facility to be drawn to refinance the existing construction credit facility of approximately $423.8-million due on Dec. 31, 2018, for the construction of the Brucejack mine. The debt facility will be available by way of a $250.0-million secured amortizing non-revolving credit facility and a $230.0-million senior secured revolving credit facility. Funds from the revolving facility will also be available for general corporate purposes, including, if necessary, to support the repurchase of 100 per cent of the precious metal stream. (See the news release dated Oct. 4, 2018.)
Upon completion of the debt settlement and refinancing transactions in the fourth quarter of 2018, the company expects that future operating and debt settlement requirements will be satisfied from operating cash flow.
(in thousands of U.S. dollars, except for per-ounce data)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2018 2017 2018 2017 (1)
Revenue $ $110,060 $70,875 $345,960 $70,875
Earnings from mine operations (2) $ 37,608 25,963 114,512 25,963
Net earnings (loss) for the period $ 10,734 (6,975) 33,773 (13,733)
Per share -- basic $/share 0.06 (0.04) 0.19 (0.08)
Per share -- diluted $/share 0.06 (0.04) 0.19 (0.08)
Adjusted earnings (2) $ 26,327 13,951 79,172 4,684
Per share -- basic (2) $/share 0.14 0.08 0.43 0.03
Total cash costs (2) $/oz 568 656 627 656
All-in sustaining costs (2) $/oz 709 788 758 -
Average realized price (2) $/oz 1,169 1,281 1,239 1,281
Average realized cash margin (2) $/oz 601 625 612 625
(1) Data for the nine months ended Sept. 30, 2017, cover the period commencing from July 1, 2017,
the date the Brucejack mine achieved commercial production, to Sept. 30, 2017.
(2) Note the non-international financial reporting standard performance measure.
Second half 2018 outlook
Second half 2018 production guidance
Gold production at the Brucejack mine for the second half of 2018 is expected in the range of 200,000 to 220,000 ounces, for total 2018 gold production of 387,000 to 407,000 ounces. With the company's production of 92,641 ounces of gold in the third quarter, the company is on track to meet the lower end of the company's second half 2018 production guidance.
Second half 2018 financial guidance
All-in sustaining costs for the second half of 2018 are expected to range from $710 to $770 per ounce gold sold. With the company's AISC of $709 per ounce gold sold in the third quarter, the company is on track to meet the company's second half 2018 AISC guidance. As production has reached steady state at the Brucejack mine, an increased focus has been placed on operational efficiency to reduce costs.
Stream repurchase and debt refinancing
The company remain on track to repurchase 100 per cent of the precious metal stream and refinance the existing construction credit facility during the fourth quarter without issuing equity.
Organic growth opportunities
Application to increase production rate
On Dec. 20, 2017, the company submitted an application to the B.C. Ministry of Energy, Mines and Petroleum Resources and the B.C. Ministry of Environment and Climate Change Strategy to increase the Brucejack mine production rate to 3,800 tonnes per day. The increase would result in an annual average production rate of 1,387,000 tonnes, up from 990,000 tonnes (a daily average of 3,800 tonnes from 2,700 tonnes). Based on preliminary engineering, the capital cost to increase the mill capacity is estimated to be less than $25-million, which is expected to be incurred in 2019. The approval process is expected to be completed by year-end.
Lyle Morgenthaler, BASc, PEng, chief mine engineer, Pretium Resources, is the qualified person (QP) responsible for Brucejack mine development. Warwick Board, PhD, PGeo, PrSciNat, vice-president, geology, and chief geologist, Pretium Resources, is the QP responsible for the Brucejack mine grade control program and the Brucejack mine exploration drilling.
Regional grassroots exploration
The 2018 regional grassroots exploration program, which includes geophysical studies, continued regional prospecting, and mapping and diamond drilling on several high-priority gold targets with respect to the Bowser claims, is substantially complete. The 2018 program follows up on the comprehensive regional exploration that has previously been completed on the 1,250-square-kilometre, wholly owned property. To date, the program has resulted in the identification of several distinct areas that have the potential to host mineralized zones similar to the Valley of the Kings and Eskay Creek deposits. An 8,240-metre regional exploration drill program, which comprised 24 drill holes on five high-priority targets, was completed through this year's field season. The drilling was completed on Oct. 10, 2018. Assays and results from the program are anticipated later this year.
A private placement of 227,273 flow-through common shares of the company at a price of $13.20 (Canadian) per flow-through share was completed on July 25, 2018, for total gross proceeds of approximately $3.0-million (Canadian). The proceeds of the private placement of flow-through common shares were used to finance a portion of the 2018 grassroots exploration program.
Kenneth C. McNaughton, MASc, PEng, chief exploration officer, Pretium Resources, is the QP responsible for the regional grassroots exploration program.
The company's unaudited condensed consolidated interim financial statements and management's discussion and analysis for the three and nine months ended Sept. 30, 2018, are filed on SEDAR and EDGAR and are available on the company's website.
Webcast and conference call
Webcast and conference call to discuss the third quarter 2018 operational and financial results will take place Nov. 9, 2018, at 8 a.m. PT (11 a.m. ET).
Webcast and conference call details
Nov. 9, 2018, at 8 a.m. PT (11 a.m. ET)
Webcast: at the Pretium website
Toll-free (North America): 1-800-319-4610
International and Vancouver: 604-638-5340
A recorded playback will be available until Nov. 24, 2018.
Toll-free (North America): 1-800-319-6413
Access code: 2560
About Pretium Resources Inc.
Pretium is emerging as the premier low-cost intermediate gold producer with production at the high-grade underground Brucejack mine in Northern British Columbia now at steady state.
We seek Safe Harbor.
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