Shares of Pretium Resources (NYSE: PVG) rose today after the company reported first-quarter 2019 operating results. The gold miner generated $29 million in operating income from mine operations and $40 million in cash from operating activities, which allowed it to repay $20 million in debt ahead of schedule. It ended March with nearly $51 million in cash and cash equivalents. As of 11:39 a.m. EDT, the stock had settled to a 14% gain.
The strong results are expected to just be the beginning of a great year for the company. While Pretium Resources produced just 79,180 ounces of gold in Q1 2019 (an annual run rate of 317,000 ounces), it expects full-year 2019 production to settle between 390,000 ounces to 420,000 ounces of gold. A successful ramp-up at the Brucejack mine will be the driver of that impressive step up in production -- and so far, the business has executed.
Image source: Getty Images.
Pretium Resources delivered year-over-year increases of 15% and 73%, respectively, in revenue and operating income from mine operations. Importantly, the company lowered its all-in sustaining costs (AISC) to $868 per ounce of gold, marking a 14% decrease compared to the year-ago period. The boost to operating efficiency came just in time, as average realized selling prices actually decreased slightly year over year.
The business generated $4.2 million in quarterly net income as a result, or $0.02 in earnings per share (EPS). That's not significant, but if production volumes are successfully ramped through the end of 2019, then investors stand to benefit from the gold miner's focus on efficiency.
Pretium Resources thinks Brucejack can average 520,000 ounces of gold production annually for the first five years of its life. That would be enough to generate about $350 million in annual operating cash flow based on current market fundamentals. While selling prices can always change, there figures to be a lot of wiggle room for the business to achieve profitable operations if the mine delivers on its potential. All signs from Q1 2019 operations suggest it's on a promising trajectory, but there's still a ways to go.
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