Pretium Resources is ramping up Brucejack ahead of schedule and the $100 million offering the company just closed will fund working capital requirements for its start-up.
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 …read more