Editorial: Is Pretium petering out? – by John Cumming (Northern Miner – November 6, 2013)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists. jcumming@northernminer.com

The Pretium saga brings to mind the old joke about the ever-optimistic geologist seeing that the glass is half full, while the mining engineer sees only that the glass should be reduced in size by 50%.

In 2010, Pretium had its initial public offering at $6 and bought its flagship Brucejack gold-silver project in remote, northwestern B.C. from Silver Standard for a cool $450 million in cash and shares.

Since then, the Vancouver-based junior, led by veteran geologist and former Silver Standard exec Robert Quartermain (Qvartermain?), has pushed the project forward at breakneck speed. It has so far brought drilling in the Valley of the Kings deposit to 200,000 metres; defined a probable reserve of 6.6 million oz. gold in 15.1 million tonnes grading 13.6 grams gold; completed a feasibility study showing potential to mine 321,500 oz. gold annually over a 22-year mine life, starting in 2016; and picked up the prestigious Bill Dennis discovery award from the Prospectors & Developers Association of Canada.

And after all that frenzied activity, Pretium’s market capitalization is only $323 million today, or 28% less than the Brucejack purchase price, and its shares are 47% below the IPO price.

What the heck happened?

Hopefully our extended interview with Quartermain in this issue will provide some insight. But the short answer lies with consulting firm Strathcona Mineral Services, and its highly respected co-founder and 2010 Canadian Mining Hall of Fame inductee, mining engineer Graham Farquharson.

On Oct. 8 Strathcona took the bold step of withdrawing as a secondary consultant on what has been one of the world’s most high-profile gold exploration “success” stories. In response, Pretium shares — which approached $18 in early 2012 — plunged from $7 to below $5, wiping out $235 million in market value.

At that time, when reached by reporters, Farquharson would not comment and pretty much dared Pretium to reveal the reasons Strathcona had given Pretium for the sudden exit.

To Pretium’s credit, they did just that in the end, and there are a couple of doozies in Pretium’s Oct. 22 release that quote Strathcona as saying that “there are no valid gold mineral resources for the VOK zone, and without mineral resources there can be no mineral reserves, and without mineral reserves there can be no basis for a feasibility study.” And further: “statements included in all recent press releases [by Pretium] about probable mineral reserves and future gold production [from the Valley of the Kings zone] over a 22-year mine life are erroneous and misleading.”
As the young people would say: “Boom!”

This is a devastating assessment from one of the most highly regarded consulting firms in Canada, headed by an individual with a sterling reputation for sobriety and competence. Of course, we weren’t the only ones to see that: Pretium’s stock has further plunged to $3.16, erasing another $145 million of market cap.

For the rest of this column, click here: http://www.northernminer.com/news/editorial-is-pretium-petering-out/1002705976/rq0wMrp3vyWrlxu0q82vM20/?ref=enews_NM&utm_source=NM&utm_medium=email&utm_campaign=NM-EN11072013

 

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