Blueprint
February 3,
2017
|
News Release
17-01
|
Brucejack Commissioning Accelerated;
Forecast to Complete Mine Construction is US$811.1
million
Vancouver, British
Columbia February 3, 2017; Pretium Resources Inc. (TSX/NYSE:PVG)
(“Pretivm” or the “Company) is pleased to report
the acceleration of commissioning of the Brucejack Mine with dry
commissioning now scheduled to commence in March and wet
commissioning scheduled to commence in early April. In addition, an
updated forecast of the capital cost to complete construction of
the Brucejack Mine has been completed. The capital cost, including
working capital, is now estimated to be US$811.1 million, an
increase of 16% from the February 2016 capital cost
estimate.
Commissioning
Construction has
advanced ahead of schedule and dry commissioning of the mill is now
planned for March with wet commissioning expected in early April.
(Commissioning was previously planned for mid-2017.)
Over
110,000 tonnes of ore has been stockpiled on surface and
underground in preparation for mill commissioning. Underground
development is well advanced with eleven stopes crosscut on two
levels in preparation for long-hole drilling and cross cutting of a
further four stopes in progress. Long-hole drills are being
mobilized, with long-hole drilling expected to commence the second
week of March.
Highlights of Capital Cost Forecast
The
total project capital cost forecast (the “February 2017
Forecast”) to complete construction of the Brucejack Mine,
including contingencies, is US$811.1 million, an increase of 16%
from the February 2016 capital cost estimate of US$696.8 million.
The February 2017 Forecast includes US$68.8 million of working
capital for the first three months of production, but does not take
into account any revenue generated during this period.
Key
areas of capital cost increases from the February 2016 capital cost
estimate include: the transmission line (US$37.9 million); costs to
accelerate commissioning (US$13.9 million); new scope items
(US$21.7 million); construction overages (US$34.1 million); and
Indirects/Owner’s costs (US$31.4 million).
The
updated capital cost forecast to complete construction of the
Brucejack Mine, including contingencies, has been prepared on the
basis of: 97% committed of the February 2017 Forecast excluding
working capital (US$719.7 million of US$742.3 million), substantial
completion of engineering; award of all major contracts and
purchase orders; substantial completion of civil works;
approximately 95% completion of project wide concrete installation;
substantial completion of fabrication of structural steel;
approximately 60% completion of erection of site-wide structural
steel; approximately 75% completion of process tank installation;
approximately 15% completion of mechanical and piping installation
for the mill building and associated works; approximately 25%
completion of electrical and instrumentation installation for the
mill building and associated works, completion and energization of
the Stewart to Knipple substation transmission line works; and
approximately 90% completion of the Knipple substation to Brucejack
Mine transmission line.
A
summary of capital costs from the February 2017 Forecast in
comparison with the February 2016 capital cost estimate is shown in
Table 1 below.
Table 1: Capital Costs Summary Comparison(1)
|
February 2017
Forecast
(US$
million)
|
February 2016
Estimate
(US$
million)
|
Mine
underground
|
90.7
|
101.4
|
Mine
site(2)
|
250.4
|
165.3
|
Offsite
Infrastructure(3)
|
108.8
|
81.0
|
Total
Direct Costs
|
449.9
|
347.7
|
Indirect
Costs
|
78.3
|
97.5
|
Owner’s
Costs
|
209.0
|
160.3
|
Contingency
|
5.1
|
35.3
|
Total
Capital Cost
|
742.3
|
640.8
|
Working
Capital
|
68.8
|
56.0
|
Total
Construction Cost
|
811.1
|
696.8
|
(1)US$0.75:C$1
(2)Includes mine site, mine site process, mine site
utilities, mine site facilities, tailings facilities, mine site
temporary facilities and surface mobile equipment.
(3)Includes transmission line.
Working Capital
With
the remaining draw under the US$540 million construction financing
and available cash on hand, we have sufficient cash to complete the
construction of the Brucejack Mine and are assessing our working
capital requirements during the first three months of
production.
Project Construction
All
major components have been delivered to site and installation and
assembly is ongoing. Process tank installation is 75% complete. The
shell and heads for the SAG and Ball mills have been installed.
Electrical and instrumentation along with other mechanical and
piping installation within the mill building is
ongoing.
The
330-person camp which includes mine dry, offices, recreation
facilities, dining hall and kitchen has been commissioned and is
fully operational.
Construction
continues on the Valley of the Kings portal building. External
structural steel erection is substantially complete. The portal
will serve as the primary access point to convey the gold ore from
the underground crusher to the mill.
The
transmission line construction is nearing completion. As previously
reported, all of the towers are in place and the first 42
kilometers of the 57-kilometer transmission line is energized to
the Knipple substation. The final 15-kilometer section of the
transmission line is 90% complete and expected to be energized this
quarter. An additional six 2-megawatt diesel generators are fully
commissioned and, combined with our initial 5-megawatts of diesel
power, can provide adequate power to maintain full mill and
underground production in the event of any grid power
interruption.
Underground Development
Underground
development remains on schedule and contract mining crews have
completed over 10,000 meters of underground development to date.
Excavation of the major development infrastructure is now complete.
The third and final exhaust vent raise has broken through to
surface. Underground work is focused on continued ramp and level
development. Construction of underground infrastructure, including
the crusher, conveyor, and transfer tower continues.
Updated Project Economic Metrics
An
updated summary of the Brucejack economic results by metal price is
shown in Table 2 below. Based on the February 2017 Forecast,
Project Economics Net Cash Flows and Net Present Values have
decreased slightly and Internal Rates of Return and Payback have
improved marginally in comparison to the Project Economics from
February 2016.
Table
2: Summary of Brucejack Economic Results by Metal Price –
February 2017 Update(4,5)
|
|
|
|
Gold Price
(US$/ounce)
|
$800
|
$1,100
|
$1,400
|
Silver Price
(US$/ounce)
|
$10.00
|
$14.00
|
$18.00
|
Net Cash Flow (US$)
|
$2.11
billion (pre-tax)
$1.47
billion (post-tax)
|
$4.22
billion (pre-tax)
$2.82 billion
(post-tax)
|
$6.32
billion (pre-tax)
$4.17 billion
(post-tax)
|
Net Present Value(6)
(5.0% discount)
(US$)
|
$1.05
billion (pre-tax)
$0.69
billion (post-tax)
|
$2.34
billion (pre-tax)
$1.53 billion
(post-tax)
|
$3.62
billion (pre-tax)
$2.36 billion
(post-tax)
|
Internal
Rate of Return
|
19.9%
(pre-tax)
16.5%
(post-tax)
|
34.4%
(pre-tax)
28.5%
(post-tax)
|
47.5%(pre-tax)
39.1%
(post-tax)
|
Payback(from start of production
period)
|
5.0 years
(pre-tax)
5.2
years (post-tax)
|
3.3 years
(pre-tax)
3.5 years
(post-tax)
|
2.5 years
(pre-tax)
2.7 years
(post-tax)
|
Exchange Rate
(US$:C$)
|
0.75
|
0.75
|
0.75
|
(4)Includes impact from financing announced Sept 15,
2015.
(5)Financing impact assumes repayment of debt facility at
maturity, exercise of maximum buyout options for offtake and stream
facilities at December 31, 2018.
(6)NPV is discounted to December 31, 2015.
Lyle
Morgenthaler, B.A.Sc., P.Eng., Chief Mining Engineer, Pretium
Resources Inc. is the Qualified Person (“QP”)
responsible for Brucejack Project development and has reviewed and
is responsible for the technical and scientific information in this
news release.
About
Pretivm
Pretivm
is constructing the high-grade underground Brucejack gold mine in
northern British Columbia with commercial production targeted for
2017.
For
further information contact:
Joseph
Ovsenek |
Troy
Shultz |
President &
CEO
|
Manager, Investor
Relations &
|
|
Corporate
Communications |
Pretium
Resources Inc.
Suite
2300, Four Bentall Centre, 1055 Dunsmuir Street
PO Box
49334 Vancouver, BC V7X 1L4
(604)
558-1784
(877)
558-1784
invest@pretivm.com
(SEDAR
filings: Pretium Resources Inc.)
Forward-Looking
Statements
This
News Release contains “forward-looking information” and
“forward looking statements” within the meaning of
applicable Canadian and United States securities legislation.
Statements contained herein that are not based on historical or
current fact, including without limitation statements containing
the words “anticipates,” “believes,”
“may,” “continues,”
“estimates,” “expects,” and
“will” and words of similar import, constitute
“forward-looking statements” within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking information may include, but is not limited to,
information with respect to our planned exploration and development
activities, the accuracy of our mineral resource estimates; capital
and operating cost estimates; production and processing estimates;
the results, the adequacy of Pretivm's financial resources, the
estimation of mineral reserves and resources including the 2016
Valley of the Kings Mineral Resource estimate and the Brucejack
Mineral Reserve estimate, realization of mineral reserve and
resource estimates and timing of development of Pretivm's Brucejack
Project, costs and timing of future exploration, results of future
exploration and drilling, production and processing estimates,
capital and operating cost estimates, timelines and similar
statements relating to the economic viability of the Brucejack
Project, timing and receipt of approvals, consents and permits
under applicable legislation, Pretivm's executive compensation
approach and practice, and adequacy of financial resources.
Wherever possible, words such as “plans”,
“expects”, “projects”,
“assumes”, “budget”,
“strategy”, “scheduled”,
“estimates”, “forecasts”,
“anticipates”, “believes”,
“intends”, “targets” and similar
expressions or statements that certain actions, events or results
“may”, “could”, “would”,
“might” or “will” be taken, occur or be
achieved, or the negative forms of any of these terms and similar
expressions, have been used to identify forward-looking statements
and information. Statements concerning mineral reserve and resource
estimates may also be deemed to constitute forward-looking
information to the extent that they involve estimates of the
mineralization that will be encountered if the property is
developed. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance are not
statements of historical fact and may be forward-looking
information. Forward-looking information is subject to a variety of
known and unknown risks, uncertainties and other factors that could
cause actual events or results to differ from those expressed or
implied by the forward-looking information, including, without
limitation, those risks identified in Pretivm's Annual Information
Form dated March 28, 2016 filed on SEDAR at www.sedar.com and in
the United States on Form 40-F through EDGAR at the SEC's website
at www.sec.gov. Forward-looking information is based on the
expectations and opinions of Pretivm's management on the date the
statements are made. The assumptions used in the preparation of
such statements, although considered reasonable at the time of
preparation, may prove to be imprecise. We do not assume any
obligation to update forward-looking information, whether as a
result of new information, future events or otherwise, other than
as required by applicable law. For the reasons set forth above,
prospective investors should not place undue reliance on
forward-looking information. Neither the TSX nor the NYSE has
approved or disapproved of the information contained
herein.