What Now for Gold Miner Pretium Resources (PVG)?

Pretium now selling for about $7 has the potential to rise to $96 within 3- 5 years. Here is why this stock is the only gold miner to own after you have secured physical gold and silver first in your possession.
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LINCOLN PARK, N.J. - April 8, 2013 - PRLog -- What Now for Gold Miner Pretium Resources (PVG)?

Homestake (the leader at the time during the 1930’s) rose more than 10 fold on only a 65% increase in gold prices. That was a 10 x price  move on an underlying rise of 65%. What will PVG do on a price rise from $1,600 to $8,000+? A similar move today would be a 500% increase from here in the gold price vs. only a 65% increase in 1933. This would correspond to a 5 times price increase of gold stocks today compared with their results in the1930’s or an anticipated % increase of 5000% (1000% x 5). Accordingly, the potential of PVG is to go from about $7 per share to 50 times its present price or about $350 per share is about equal my original price projection of $467, before dilution of additional stock issuance.

Assay results from the 2011 and 2012 drilling program were outstanding, of which 29 are for the Valley of the Kings Zone grading over 1,000 grams per ton of gold. Pretium will continue to report results as they are received, and has updated the gold mineral resource estimate for their combined Brucejack project of the Valley of the Kings (VOK)  and West  Zone (WZ) to 11.8 Metric tons. Of that amount, Gold is estimated at 13.1 million oz. per ton. In addition, their Silver mineral resource estimate for their combined Brucejack project is 63.5 million oz. Additional resources are expected in the Galena Hill, Gossan Hill, Bridge Zone, Shore Zone and other adjacent areas. Snowfield and other projects have not been included. As a result, 75.8 million oz of gold and 51.0 million oz. of silver have not been included. We are currently awaiting the full results from the 2012 drilling season to be released in the second quarter of 2013.

As a result of these additional resource findings (directly from the Pretium website), I have updated my previous production estimates shown below.

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 $150 per ton mined. Pretium's cost as estimated by management are $171 per ton which is reasonable. I have raised my production estimate to 2,700 tons per day to agree with management due to additional resources found and additional production anticipated as a result.

Preliminary Revenue Per Ton Calculation:
I estimate that 10% of mining is from super high grades that approximate 1,000 to 45,000 grams per ton of gold and 1,000 to 13,000 grams per ton of silver. 10% of 2,700 tons = 270 tons at an assigned value (by SFC) of using an average high grade of 2,000 grams of gold, and 2000 grams of silver. I estimate that  the whole mining operation is taken at an average of 18.9 grams of gold per ton and 59.8 grams of silver per ton. No credits for other mineral resources have been included. Snowfield and other projects have not been included. As a result, 75.8 million oz of gold and 51.0 million oz. of silver at Snowfield have not been included.

Earnings Potential:
My revised estimates for initial earnings at Pretium Resources, Inc. showed the potential upside for Pretium is to earn about $3.86 per share for a value of the shares of approximately $96 per share with gold at $1,600 per ounce and silver at $30 per ounce. The shares are currently priced around $7, so that the upside is approximately a 13.7 fold upside from here. Once resource estimates are updated and a better handle on production is arrived at, together with dramatically higher prices for gold and silver, I believe that a more realistic value per share can be determined. A value  between $50 and $100 per share within 3 – 5 years; with potential upside once production is reached in 2016 at $200 to $300 per share as calculated below. See periodic updates at http://www.SheldonsFinestCoins.com If Snowfield and other properties are fully explored and developed, then additional values for Pretium can be realized. My estimates for gold and silver prices are for them to rise until at least $5,000 gold and $333 silver is attained. Potentially, gold could rise to $10,000 and silver to $806 per ounce in this stressed environment.

As a result of these assumptions, I have calculated estimated low-side Pretium operations to be as follows based on a 350 day underground mining and milling operation per year with production allocation estimated at 32% Gold and 68% Silver of which 10% or 270 tons is very high grade (VHG) and 90% or 2,430 tons is regular grade (RG) accordingly. Silver resources are currently running 4.5 to one over gold at the present time.

Preliminary Revenues (using $1,600 gold and $30 silver):
928.57  oz. per day of gold and 4,500 ounces of Silver per day.
Daily Gold Revenue – 928.57 oz. x $1,600 per oz                                            $1,485,712
Daily Silver Revenue – 4,500 oz. x $30 per oz.                                                        135,000
Total Daily Revenues per day of mining operations                           1,620,712

Less Total Daily cost of operations or 2,700 tons at $171 per ton               ( 461,700)
Operating profit per day of mining operations                             1,159,012

Taxes estimated rate $0 - 1st 5 years                                                                          0
Preliminary Net profit per day of operations                                     $1,159,012
Preliminary Estimated 350 mining days                                                       x 350
Estimated Net profit per full year                                                                $405,654,200

Estimated # of outstanding shares outstanding                          105,000,000
Preliminary Estimated Earnings Per Share                                                   $3.86
Estimated PE ratio of 25                                                                      $96.58

Do your 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. Accordingly, I recommend that all shares be owned outright and not on margin. If shares can be directly registered in your own name and in your own possession, do so. Visit http://www.SheldonsFinestCoins.com 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)
President & CEO
Sheldon’s Finest Coins

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