Golden Triangle gold miner Pretium Resources on Wednesday lost more than one-fifth of its value, after the gold miner provided its 2020 guidance for the Brucejack mine and flagged lower production from the new Valley of the Kings deposit.
The company also announced that its president and CEO, Joseph Ovsenek, would make way for someone new, while chief geologist Warwick Board had resigned to pursue a new opportunity.
In 2019, the Brucejack mine beat the upper-end of its guidance, producing 354 405 oz at an all-in sustaining cost (AISC) of $888/oz. The mine’s guidance was lowered by 15% in October last year to between 340 000 oz and 350 000 oz of gold, owing to limited stope availability.
“Brucejack continues to be consistently profitable and a strong cash generator,” said Ovsenek. Pretium generated free cash flow of $184.2-million in 2019 and reduced its debt by $180.4-million.
For 2020, gold production at the Brucejack mine would be in the range of 325 000 oz to 365 000 oz. The production rate for 2020 is expected to be 3 800 t/d with an average gold grade of between 7.6 g/t and 8.5 g/t at a targeted gold recovery of 97%. The midpoint of 2020 gold production guidance is below 2019 actual production.
The AISC for 2020 is expected to range from $910/oz to $1 060/oz of gold sold, with the estimates including costs associated with continued lateral development at a rate of about 1 000 m a month through 2020.
Lateral development would focus on opening the mine on the 1080 level and Brucejack Fault Zone in the first half and stope development in the second half of 2020. The increased development should provide sufficient access to build the stope inventory required to allow mining operations to optimise stope blending and provide alternative stopes for mining if required, the company noted.
Beyond 2020, Pretium flagged a reduction in the estimated gold grade of the Valley of the Kings deposit at Brucejack. The miner would publish an updated life-of-mine plan and updated mineral resource and reserves estimate for the mine by March 31.
Based on preliminary data, Pretium said foreseeable average gold production while mining in the Valley of the Kings was expected to be in a range comparable with the gold production guidance range for 2020. The company previously said that the Valley of the Kings would produce about 525 000 oz/y over its mine life.
Pretium’s stock closed 22% lower at C$9.98 a share, giving the company a market capitalisation of C$1.85-billion.The stock movement wiped C$500-million off the market capitalisation of the company on Wednesday.