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'Production Ramp-Up Is Progressing Strongly' and Garners an Outperform Rating

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Increased production and increased sales are leading to a cash-positive quarter at this gold miner's flagship project in northern British Columbia.

On Sept. 21, Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced that its 100%-owned Brucejack project's ramp-up continues to advance,  "targeting steady state production for the end of 2017."  The company says it expects to achieve positive working capital by the end of the quarter due to increased production and sale from doré and flotation concentrate.

Eric Zaunscherb, an analyst with Canaccord Genuity, noted in a Sept. 21 update that Pretium is "continuing to fire on all cylinders, as is apparent from the latest update in which the company announced production ramp-up is progressing strongly at the flagship Brucejack gold mine."

The analyst wrote that previously Pretium announced a "$12M working capital deficit which raised concerns with some investors. We have remained confident that through steady state production the company would easily overcome this shortfall and this appears to be the case."

Zaunscherb stated that "the +95% recoveries currently reported by the company are slightly above our modeled expectations. Further, previously reported metallic slag that was trapping some gold content has been eliminated, with gold recoveries from the shaker table improving overall."

Zaunscherb highlighted that Pretium will release Q3 production results in October and he "expects the company to continue to outpace many people's expectations." Canaccord reiterated a Speculative Buy recommendation with a price target of CA$18.50 per share.

BMO Capital Markets analyst Andrew Kaip echoed Canaccord's sentiments in a Sept. 21 report, stating, "the ramp-up at Brucejack continues to progress well, with the mill running exclusively on stope ore, and an increase in production contributing to an expectation of positive working capital by the end of the quarter. Q3/17 production is expected in October, which we expect will be a highly anticipated update and catalyst for the company."

Kaip detailed that "in the mine, the company is currently drilling new stopes at a rate of ~250m per day, with seven stopes currently operational, three available for drilling, and an additional 24 stopes in various stages of development." He concluded that "with stope development in a good position, we expect that this will increase flexibility to support grade blending given the number of active stopes."

BMO Capital Markets has Pretium at an Outperform recommendation with a target price of CA$19.50 per share.

Pretium is currently trading at CA$11.64 per share.

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1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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