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Pretium Resources Inc. Message Board

  • investora2z investora2z Jun 15, 2013 2:16 PM Flag

    Range bound scenario is likely

    The stock is now up more than 40% from the low made in April. The overall sentiment for the sector is also little less scary, but it may take months to revert to positivity. Most of the gold stocks have tested recent lows again, and managed to bounce. Even gold / silver have become relatively more stable. However, there is always a possibility of news flow changing the situation pretty quickly. For Pretium, the results of the feasibility study from the Brucejack project provided support and strength. The potential of the mine is huge as the reserves are estimated at 7.1 million oz with an average annual production of around 321K per year for the life of the mine. In the first 10 years the production is likely to be much higher. The capital cost is estimated at $663 million and the pre-tax net present value is $2.7 billion. The pre-tax return is also high at 43%, and the payback period mentioned is only 2.1 years. For a company of Pretium's size, these figures are definitely encouraging. But the recent crash in gold / silver stocks has had a major impact on the valuations of the development stage companies. This has prompted bigger companies to make strategic investments in these companies with a long term view in mind. Coeur D'Alene has a 5% stake in Pershing Gold Corporation (PGLC), a development stage company expected to start production in 2014. Even streaming / royalty companies have taken advantage of the fallen prices to acquire contracts. For Pretium, the likely scenario is that it may remain range bound with $9.50 being a ceiling. Whenever the sentiments for the sector change, these stocks will definitely try to catch with their potential values. That may take time, and a lot of patience. Of course, if gold / silver prices crack for some reason, all bets are off.

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    • Investor,

      Well will all depends on Gold going forward and until a clear bottom for Gold will be set *1200's?
      PVG will be range bound, as you said, and I do not see more than 9 now, which was my last sell out.
      I was very impressed with the feasibility study so.
      Keep posting thank you
      I will trade the pps in this range and will look at Gold...I trade also IAG and GORO from time to time.
      By the way, a range bound stock is very good for traders and doesn't require any huge patience but a greed control when it come to sell.


    • I think you have to bet that the lows are in for gold. The reasons to buy gold have not softened only gotten stronger. And now Syria. The upside for the miners exceed the downside risk from here. PVG has already seen $5.50 and the new floor is $7. It will be very volatile to upside in the second half.

      A further break toward $1200-1250 will unleash even more demand for the physical from China, India, mints etc. And it will bounce quickly from there as the demand greatly exceeds immediate supply. Similar to the April 12-15 break from $1600 to $1321.

      • 1 Reply to lexmart002
      • Lexmart,

        You are too optimistic imho and your comment lack of balance if I may, you start to fall in love with gold/PVG and it is the MOST dangerous situation for an investor.
        The fact is that Gold is in bear territory and the outlook for Gold is bearish.
        If you do not see that then you will be in trouble with your gold investment. Also, PVG is in an early stage right now and we need a lot of hard facts going forward...Do you know how many high potential projects went down before?

        Before assuming any bounce for Gold you will have to look for a bottom set for Gold in the chart and I see the opposite. The low 1,200 is the next support but if it is not, then we will go to 1,000 or even lower.
        The huge correction in Gold was totally predictable and it will take a lot to reverse that.

        "that the evacuation of 10 tons will be increased to 35 -40 tons"

        what are you talking about? Is it the evaluation simple of the 10 tons? How do you think PVG will be able to reach the 35/40T and give sample results "later this year"? Why are you amplifying the situation with impossible figures like that, on what basis?
        I did not see anywhere the mill capacity and who owns it? can you clarify?

        The mine is planed with a processing rate of 2,700 TPD/14.2gr for the next 10 years. The 10T sample may push for a change of estimate in the study *probable* and is scheduled for end of this year. Numbers are encouraging but they are very high now and need to be confirmed with FACTS.

        A lot of risks here but sure some good rewards potential too...


    • The feasibility study was largely overlooked by the market due to the poor sentiment for anything gold mining related.

      At $7.94 it is a huge buy with a return to $14 by the end of the year pending more favorable drill results confirming the 16-18 g/ton find. My guess, too, is that they will soon announce (July) that the evacuation of 10 tons will be increased to 35 -40 tons so they can sell more gold and help finances to do more self funded engineering work and permitting (no more dilution to the share price) through early-mid 2014 timeframe. That will also help move the share price.

    • Yes, the study results point to Blackjack being self funded with only modest dilution to the share price.
      They said it could start as soon as late 2014 (gold will be $1800) and that would mean production in 2016 when gold will hit $2200 minimum. That will put payback in 1.3 years and easy financing based on this potential and cash flow. EPS may approach $3.50-$4.00/share, which means a share price well north of $ 40.

      Sentiment: Strong Buy

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