In a news release, Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced that an update of its mineral reserves, mineral resources and life-of-mine plan for Brucejack in British Columbia, shows "continued robust economics of the long-life underground operation."
The updated life-of-mine plan for the Valley of the Kings and West zone regions at Brucejack is based on the newly updated mineral reserve and resource estimates. According to the plan, average annual gold production for the first 10 years will exceed 357,000 ounces. Average annual post-tax free cash flow is estimated to be $181 million at $1,300 per ounce ($1,300/oz) gold.
Using the same gold price and applying a 5% discount, the net present value after tax is an estimated $1.50 billion and pretax, $1.80 billion, the company stated.
For the same 10-year period, average operating costs are forecast to be $164 per ton milled and for the mine life, $163 per ton milled. At the mine level, average sustaining costs are projected to be $702/oz of gold for the first 10 years, and for the life of mine, $691/oz. At the corporate level, the company estimates average all-in sustaining costs of $747/oz of gold for the first 10 years and $743/oz over the life of the mine.
"At a gold price of $1,600, Brucejack now has an estimated after-tax net present value at a 5% discount rate of $2.13 billion over the 13-year mine life. Since achieving commercial production in July 2017, Brucejack has generated over $500 million of cash flow and is expected to generate strong cash flow well into the future," Pretium President and CEO Joseph Ovsenek said in the release.
As for the updated mineral resource, only that for the Valley of the Kings zone was updated, to reflect results from 2019 drilling in an area there. Also, the mineral cutoff was lowered to 3.5 g/t gold to better resemble the grades of material recently mined from the zone. The results are more tons in the Measured and Indicated categories and a lower reported grade.
The Proven and Probable (2P) mineral resource in that region now stands at about 3.6 million ounces (3.6 Moz) of gold, or 12.8 million tons (12.8 Mt) grading 8.8 grams per ton (8.8 g/t) gold after application of the mine call factor. This reconciliation factor "is determined by applying an upper limit to the reserve stope grade, where the upper limit is determined by the average diamond drill hole spacing of the reserve shape," the release explained.
As for the Brucejack underground mine, its 2P mineral resource is now about 4.2 Moz of gold, or 15.7 Mt at 8.4 g/t gold after the mine call factor is applied.
According to the release, "over the next three years, estimated gold production of over 1.1 Moz of gold is expected to generate cash flows of $700 million at $1,600 gold, which is more than sufficient to pay down the scheduled debt maturities of approximately $480 million."
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