Pretivm Reports Fourth Quarter and Year End 2017 Results
On track to achieve steady-state gold production by mid-to-late 2018
VANCOUVER, British Columbia, March 08, 2018 (GLOBE NEWSWIRE) -- Pretium Resources Inc. (TSX:PVG) (NYSE:PVG) ("Pretivm" or the "Company") is pleased to report financial and operating results for the fourth quarter and year end 2017.
In the news release all quoted figures are in USD$ unless otherwise noted. The Company uses the following non-IFRS measures: total cash costs, all-in sustaining costs ("AISC"), average realized gold price, average realized margin, adjusted earnings (loss), and adjusted earnings (loss) per basic share. Refer to the Company's Management Discussion and Analysis and the "Non-IFRS Financial Performance Measures" section at the end of this news release for an explanation and discussion of these non-IFRS measures.
Pretivm produced approximately 152,000 ounces of gold during the first six months of ramp-up at its Brucejack Mine, averaging 9.4 grams per tonne gold with an AISC of $852 per ounce of gold sold. The Company also reports significant progress in implementing its primary strategic objectives of optimizing operations and achieving operational grade control.
Pretivm President & CEO Joseph Ovsenek said, "Our financial performance was in line with our expectations for production ramp-up of Brucejack. Further, we have implemented several operational performance improvement initiatives, leveraging our experience in the fourth quarter of 2017.
"We are increasing our underground development rate to provide for optimal mining stope inventory, the integration of our grade control program is now underway and our financial health is robust. We expect to deliver on our H1 2018 production guidance of 150,000 to 200,000 ounces of gold, and to achieve steady-state production by mid-to-late 2018. We also anticipate we will see more momentum towards those achievements in Q2 2018 as our grade control program progresses. We remain confident in developing Brucejack into a premier low-cost intermediate gold producer by the end of 2019."
Fourth Quarter and Six Month Production Overview
- Production totaled 70,281 ounces of gold and 96,004 ounces of silver in the fourth quarter of 2017, for a total of 152,484 ounces of gold and 179,237 ounces of silver produced during the first six months of production ramp-up.
- Mill feed grade averaged 8.2 grams per tonne gold in the fourth quarter and 9.4 grams per tonne gold for the first six months of ramp-up.
- Gold recoveries averaged 95.8% in the fourth quarter of 2017 for an average gold recovery rate of 96.2% for the first six months of production ramp-up.
- Process plant throughput averaged 2,951 tonnes per day during the fourth quarter of 2017 for an average processing rate of 2,895 tonnes per day during the first six months of production ramp-up.
- Ore milled totaled 271,501 in the fourth quarter of 2017, for a total of 532,763 tonnes of ore milled during the first six months of production ramp-up.
- The Company submitted an application to increase the Brucejack Mine production rate to 3,800 tonnes per day in December.
Fourth Quarter Financial Summary
- Revenue of $107.1 million was generated on sale of 86,514 ounces of gold and 107,900 ounces of silver.
- Total cost of sales was $80.2 million or $927 per ounce of gold sold. Total cash cost was $700 per ounce of gold sold and AISC was $893 per ounce of gold sold. As production increases, total cash costs and AISC per ounce sold are expected to decrease.
- Earnings from mine operations were $26.9 million.
- Net loss was $2.7 million or $0.01 per share. Adjusted earnings were $12.7 million or $0.07 per share.
- Cash and cash equivalents were $56.3 million at December 31, 2017. The Company has working capital of $40.6 million excluding the current portion of long-term debt as at December 31, 2017.
- Cash generated by operations was $33.4 million.
Annual Financial Summary
- Revenue of $177.9 million was generated on sale of 141,927 ounces of gold and 127,746 ounces of silver.
- Total cost of sales was $125.1 million or $881 per ounce of gold sold. Total cash cost was $683 per ounce of gold sold and AISC was $852 per ounce of gold sold.
- Earnings from mine operations were $52.9 million.
- Net loss was $16.5 million or $0.09 per share. Adjusted earnings were $17.4 million or $0.10 per share.
- Cash generated by operations was $73.3 million.
|Three months ended December 31,||Year ended December 31,|
|Head grade||g/t Au||8.2||-||9.4||-|
|Gold ounces produced(1)||oz||70,281||-||152,484||-|
|Silver ounces produced||oz||96,004||-||179,237||-|
|Gold ounces sold||oz||86,514||-||141,927||-|
|Silver ounces sold||oz||107,900||-||127,746||-|
The following abbreviations were used above: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).
(1) Gold ounces produced for the year ended December 31, 2017 excludes 8,510 ounces produced in the pre-commercial production period.
Gold and silver production
During the six months ended December 31, 2017, the Brucejack Mine produced 152,484 ounces of gold, which excludes 8,510 ounces of gold from pre-commercial production and 179,237 ounces of silver from low-grade stockpiles, development muck and stope ore. There is no comparable information as the Brucejack Mine achieved commercial production on July 1, 2017.
During the six months ended December 31, 2017, the Company sold 141,927 ounces of gold and 127,746 ounces of silver. As at December 31 2017, there were 7,716 ounces of gold doré and 10,328 ounces of gold in concentrate in finished goods.
During the six months ended December 31, 2017, a total of 532,763 tonnes of ore, equivalent to a throughput rate of 2,895 tonnes per day, was processed.
The mill feed grade was 9.4 grams per tonne gold and recovery was 96.2%. We continue to review the mill process to optimize recoveries.
The main operating units in the mill building are performing as expected. Planning is underway to replace the concentrate bagging system which caused increased mill downtime and maintenance requirements.
On December 20, 2017, the Company submitted an application to the BC Ministry of Energy, Mines and Petroleum Resources and the BC Ministry of Environment and Climate Change Strategy to increase the Brucejack Mine production rate to 3,800 tonnes per day. The increase would result in an annual average production rate of 1.387 million tonnes, up from 0.99 million tonnes (a daily average of 3,800 tonnes from 2,700 tonnes). The approval process is expected to take approximately six to twelve months. Engineering is underway to assess the mill capacity upgrades required to increase the production rate. Based on preliminary engineering, the capital cost to increase the mill capacity is estimated to be less than US$25 million. The estimate will be updated when the engineering process is complete.
During the six months ended December 31, 2017, 552,205 tonnes of ore were mined, equivalent to a mining rate of 3,001 tonnes per day.
During the fourth quarter, gold production was lower than expected as higher-grade stopes scheduled to be mined in December encountered operational issues (equipment down-time and mining execution), that prevented them from being mined and delivering higher grade ore to the mill. Both long-hole drills went down and the stopes could not be drilled off in time. Mining also encountered a hang-up when blasting a long-hole slot. These issues, combined with the limited stope inventory (no other high-grade stopes were accessible in the quarter) contributed to the lower than expected gold production.
Pretivm has taken a number of steps to address these operational issues. To improve access and build stope inventory, the rate of underground development has been increased to 700 meters per month for 2018, up from the 420 meters originally contemplated in the Brucejack Feasibility Study. In addition, a third long-hole drill is now on site to provide back-up and contribute to the build-up of stope inventory.
During the third and fourth quarter of 2017, two sills were established to open up two mining horizons for 2018, the 1200-meter Level to the 1320-meter Level and the 1320-meter Level to the 1440-meter Level. With the continued extension of the mining levels to the east and west within the two mining horizons and the increase in rate of development, stope inventory is expected to increase to 10 to 12 stopes with a range of grades by mid-year 2018. The availability of stopes representing a range of grades, including multiple higher grade stopes, will allow mining operations to optimize stope blending and provide alternative stopes with comparable grades for mining if required. The increased stope inventory is expected to improve the management of production grades as the ramp-up continues.
Operational Grade Control
The grade control program, designed to refine stope dimensions, reduce dilution and optimize grade, is underway. The program comprises sampling and drilling, and is currently being integrated into the mining process.
Stope Ring Sampling
As part of the grade control program, grade is estimated on a ring-by-ring basis to refine the shape of the long-hole stope prior to mining. Long-hole drill cuttings are selectively collected from each ring within a stope and split into a reduced sample size for assaying. Assayed data from each of the rings is then fed back into the short-term mine planning cycle to refine stope dimensions.
The upgraded and modified underground sample splitting station is now functional. The sample splitting station is used to further validate the sampling process.
Reverse Circulation Drilling
Another component of the grade control program, reverse circulation (RC) drilling to optimize stope definition, has commenced on a trial basis. The RC drill will cross-cut the stopes drilling 5-meter to 7.5-meter centers to refine stope location and dimensions prior to mining. The RC drilling will provide a larger sample per meter and is expected to be faster and more cost effective than core drilling, which has been used for infill drilling to date.