PROFIT & LOSS

Pretium 'on track' as it reaches key turning point

Shares in Pretium Resources jumped on Friday as the Canada-based miner said it remained on track to achieve annual guidance and had reached a "key turning point" with cash exceeding debt.

 Pretium Resources’ Brucejack mine in British Columbia

Pretium Resources’ Brucejack mine in British Columbia

Despite "challenging circumstances" and lower production than a year ago, president and CEO Jacques Perron said the company was on track to produce 325,000-365,000 ounces at all-in sustaining costs of US$1,060-$1,190/oz sold.

Production of 83,083oz of gold for the June quarter was below the 90,419oz of a year earlier, due to the "residual effects of the COVID-19 outbreak in the first quarter, as well as performance issues with several stopes during and following the outbreak".

Adjusted earnings per share of 15c were above Canaccord Genuity's estimate of 12c and consensus of 13c.

"The beat was the result of a higher-than-expected head grade of 8.6g/t gold vs the Q2 outlook for a head grade below that of the annualised guidance range (7.5-8.5g/t gold)," analyst Kevin MacKenzie said.

The variable head grade has plagued the Brucejack mine in the past and Pretium reported achieving annual guidance for the first time in 2020.

Revenue for the June quarter was down 8.6% on the previous corresponding period to $152.3 million due to an 11.9% drop in ounces sold, while EBITDA of $72.7 million and free cash flow of $50.7 million was lower than last year's $86.1 million and $82.7 million respectively.

However Perron said the company accomplished another profitable quarter and "reached a key turning point where our cash position now exceeds our debt."

It ended the quarter with $202.5 million in cash and equivalents, against long-term debt of $195.2 million.

It had $400.8 million in available liquidity, including the undrawn revolving portion of a senior secured loan facility.

The company then refinanced its loan facility last week, to a $100 million amortizing, non-revolving term credit facility and a $250 million revolving facility, increasing liquidity and reducing quarterly repayments from $16.7 million to $5.9 million.

MacKenzie said Canaccord maintained a target price of C$15.50 per share and reiterated a buy recommendation.

"The main catalyst for Pretium remains centred on continued operational execution at Brucejack over multiple successive quarters," he said.

"In our view, this would not only serve to further de-risk the Brucejack asset, but also provide the basis for future potential M&A."

Pretium shares (TSX: PVG) hit a one-year low last week but closed up 16.8% on Friday to $12.36, valuing it at $2.3 billion (US$1.8 billion).

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.