Although I believe that an investor’s first preference should be gold and silver in their possession and therefore outside the banking system, Pretium Resources (PVG) is a unique company. Their web-site is http://www.pretivm.com . I will make free periodic updates for my customers since information on a new company is scarce and not readily available. News was released on June 26th and July 18th on their website; both indicating additional bonanza grades of Gold and additional Silver are shown below.
“Pretium Resources Inc. is pleased to report initial results from the second phase of drilling at its high-grade gold Brucejack Project in northern British Columbia, where bonanza-grade gold continues to be intersected in the Valley of the Kings. Selected highlights from the Valley of the Kings include:
-- Hole SU-452 intersected 45,582 grams of gold per tonne uncut over 0.5 meters(1213 ounces gold per ton over 1.6 feet). This is one of the riches finds since the dawn of mankind!
-- Hole SU-376 intersected 6,142 grams of gold per tonne uncut over 0.65 meters(179 ounces gold per ton over 2.1feet); and
-- Hole SU-349 intersected 5,240 grams of gold per tonne uncut over 0.5 meters(161 ounces gold per ton over 1.6 feet).
-- Hole SU-407 intersected 11,067 grams of gold per tonne uncut over 0.5 meters (323 ounces gold per ton over 1.6 feet).
-- Hole SU-393 intersected 3,440 grams of gold per tonne uncut over 0.5 meters (100 ounces gold per ton over 1.6 feet).
The second phase of drilling at Brucejack is focused on high-grade definition drilling of the shallow high-grade resources at the Valley of the Kings, as well as testing extensions of the Valley of the Kings and other high-grade zones.”
Additional selected Brucejack Project Drill Results for June 2012 are also reported; all of which in my view continue to support the projections presented by me in previous articles on Pretium. As a result of these additional resource findings (directly from the Pretium website), I have not updated my previous rough estimates which, in my opinion, continue to be the best estimates available at this time. Total resources appear to expanding in area, with my best estimate now about 30 million ounces. The life of the mine appears to be increasing as well with the additional resources found to date. My estimate is for at least a 20 - 30 year life.
Cost and Revenues remain the same are calculated as follows:
Preliminary Cost Per Ton Calculation:
The Gold Mining Industry average of "All costs in" includes both mining costs plus all other costs such as administrative, royalties, depletion, etc. usually averages below $150 per ton mined for open pit mines and $200 for underground mines. Pretium's cost should be lower, but I have used the $171 per ton cost estimate of the company. Estimates by the company include reference to an initial 1,500 ton per day mill and mining operation. I have raised my production estimate in the future to 2,500 tons per day (see below) due to additional resources found and additional production anticipated, in my opinion, as a result.
Preliminary Revenue Per Ton Calculation:
I estimate that 10% of mining is from super high grades that approximate 1,000 to 18,000 grams per ton of gold and 1,000 to 9,000 grams per ton of silver. 10% of 2,500 tons = 150 tons at an assigned value (by SFC) of 1,000 grams of gold, and 100 tons at an assigned value of 1,000 grams of silver. I am using the lower cut-off grade of 1,000 grams to be conservative. I estimate that 90% of the remaining mining operation was taken at an average of 5 grams of gold per ton and 5 grams of silver per ton although Pretium’s resources appear to be running at 10 to 1 in favor of silver. No credits for other mineral resources have been included. The company is estimating that gold will yield 18.9 grams per ton and silver will yield 59.3 grams per ton on an overall basis. I believe these estimates are to low.
As a result of these assumptions, I have calculated estimated Pretium operations to be as follows based on a 350 day underground mining and milling operation per year with production allocation estimated at 60% Gold and 40% Silver. With continued high grades for both Gold and Silver, I have raised my estimates of total mining, milling and overall production from 1,500 tons to 2,500 tons per day. This estimate has not been raised by management as of this date, to my knowledge. Management is using an approximate 30% tax rate. I am using a 35% tax rate to be conservative and offset any other of my estimates. I also expect that in time Gold and Silver will trade in excess of $2,350 and $133 per ounce respectively.
Preliminary Revenues (using $1,750 gold and $34 silver):
10 % very high grade mining (VHG) or 250 tons at 1,000 grams
/32.15 grams = 31.1 oz. per ton.
Daily VHG Gold Revenue - 60% or 150 tons x $1,750 per oz equals
Daily VHG Silver Revenue - 40% or 100 tons x $34 per oz. equals
Total of VHG operation of 250 tons per day equals
90% of regular grade mining (RG) or 2,250 tons at 5 grams
/32.15 grams or 0.15552 oz. per ton.
Daily RG Gold Revenue - 60% or 1,350 tons x $1,750 per oz. equals
Daily RG Silver Revenue - 40% or 900 tons x $34 per oz. equals
Total of RG operation of 2,250 tons per day equals
Total Daily Revenues per day of mining operations equals
Less Total Daily cost of operations or 2,500 tons at $171 per ton equals ( 427,500)
Operating profit per day of mining operations or
Taxes (after recovery of all costs in years 3 to 5) at 35% estimated rate (2,874,958)
Preliminary Net profit per day of operations
Preliminary Estimated 350 mining days (all underground)
Estimated Net profit per full year (after taxes) of
Estimated # of outstanding shares outstanding (fully diluted)
Preliminary Estimated Earnings Per Share after Taxes and all costs
Estimated PE ratio of 25 (could be from 20 to 30) of
Do your own research. I am a CPA (retired), not an advisor and sometimes things do not work out. You must have physical gold and silver in your hands and outside of the banking system. You must not be caught as an unsecured holder of physical or paper shares if the banking system implodes. Visit Sheldon’s Finest Coins since we can meet all your needs at the lowest prices in the industry. We have the lowest overhead in the industry in the USA. See our web-site above for more reasons why you must have gold and silver, other information, updates on Pretium and other Gold and Silver news. All transactions are keep confidential and are not reportable at this time.
All the best, with a little glitter and shine in your life,
Ed Sheldon CPA (retired) http://www.SheldonsFinestCoins.com