Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Shares in Canadian precious miner Pretium Resources (TSX, NYSE:PVG) fell more than eight percent Tuesday in both Toronto and New York despite it announcing increased gold production at its Brucejack gold mine, located in the Canadian western province of British Columbia.
The Vancouver-based company said output at the gold mine climbed 13 percent in the third quarter of the year to 92,641 ounces, compared to 82,203 ounces in the same period last year. While milling went down to 240,122 tonnes, from 261,262 tonnes, the grade improved to 12.4 g/t and the gold recovery rate increased to 97.4%, it noted.
President and chief executive Joseph Ovsenek said the company added $48 million to its cash on hand during the period, adding it was on track to meeting gold production guidance of 200,000 to 220,000 ounces for the second half of 2018.
Pretrium says is on track to meeting gold production guidance of 200,000 to 220,000 ounces for the second half of 2018.
The company’s stock dropped 8.71 percent in Toronto after the news to C$9.64 at 11:46 a.m., while the New York traded shares were down 8.44 percent to $7.38 by 12:01 p.m. EDT.
Pretium was hammered in January after announcing disappointing production and cost forecasts.
Doubts about the grade and quantity of gold at Brucejack mine hit the company’s shares again last month, as short-seller Viceroy Research said the asset had less gold than claimed and that the company would run into problems with its debt payments within 12 months.
Since short sellers make money from bets that a company’s stock price will fall, many investors remain skeptical, trusting in the treasures hidden at BC’s Golden Triangle, a remote mountainous region near the province’s northern coast.
The area, mined for more than a century, has been the target of recent upgrades, including a paved highway, deep-water port and a $700 million electric transmission line, all of which is transforming a not-long-ago isolated area.
Even though Pretium’s Brucejack mine has been operating since mid-2017 and has already produced more than 200,000 ounces of gold in 2018, questions about the deposit were raised even before the mine was built.
In 2013, Pretrium hired Strathcona Mineral Services Limited — the consultancy that spotted fraud at Bre-X Minerals in 1997 — to confirm the grade of gold from a bulk sample. Strathcona disagreed about the quality of the grades and resigned, something short-seller Viceroy played well in its 47-page report against the Vancouver miner.
Pretrium is scheduled to release full third-quarter operational and financial results on November 8.
5 Comments
Mark
Just a sign of the times, that a company that does nearly everything “right” gets slammed. This is easily a $20-$25 stock, especially if acquired and added to the portfolio of a major at current market prices.
Bob Quartermain’s record is solid.
Art Easian
Viceroy Research is ignorant of NI 43-101 and SEDAR where resource and reserve reports and the 10,000 tonne bulk sample report is lodged for the knowledgeable to read. There are nine technical reports on SEDAR prepared by teams of engineers and geologists that trump Viceroy research allegations and expertise.
esqualido
If Pretium really wants to shake the short-selling fleas, it should issue a dividend.
Mark
Short sellers keep the shares cheap to acquire. If you’re accumulating.
Ace Ventura
Production down significantly on the previous Q and why is that? No question boyos are high grading. Some say they are working 37 stopes, whereas that too wonderful ‘plan’ called for 10. If this drop is applied to NEXT QUARTER a body knows to take a hike. Half a freakin billion in debt and that mountain leaves not much for shareholders if operations are going downhill.