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Pretium – Catch-22

Author: Published on: Published in: Pretium TSE/NYSE:PVG

Viceroy addresses Pretium’s revised ARR and presents new evidence supporting overmining thesis. (PVG:TSX / PVG:NYSE)

Download link – Pretium’s Catch 22

SEPTEMBER 11, 2018 – On 6 September, 2018, Viceroy research published its first report on Pretium Resources detailing what we believe is a scheme to distort the company’s mining results and inflate the projected reserves of the company’s Brucejack mine.

On September 10 Pretium issued a press release correcting its 2017 Annual Reclamation Report, the contents of which were used in Viceroy’s original report. We believe this is a badly thought-out attempt at damage control for the following reasons:

  • Pretium’s new ARR figures are internally inconsistent and imply that Pretium misreported the Brucejack mine underground void by the volume of 140 Olympic-size swimming pools.
  • The decrease in the change of underground void volume continues to present major discrepancies to Pretium’s feasibility study, particularly around expected and historical bulk density figures obtained from the Brucejack mine
  • If investors choose to accept that no overmining has occurred, a Pandora’s box of serious operational issues continues to plague Pretium. Specifically, it becomes inexplicable that Pretium’s COGS and Capex have blown totally out of proportion and why explosive has dramatically exceeded expectation.
  • Viceroy present new evidence of accelerated mine development from comments by Pretium management in last week’s Rodman Conference. Pretium appear to have accelerated stoping by 18-24 months, moving well into the VOK lower zone well ahead of schedule. If investors choose to accept no overmining has occurred, Pretium’s accelerated mine development and excess dore recoveries imply the company is selectively mining high grade deposits, and has already exhausted a large portion of these in the VOK-lower/upper zones.
  • Viceroy present new evidence of excess waste generated by Pretium throughout its development phase. Pretium sought indefinite extension of time to dispose of excess waste in extracted from its mines. Viceroy’s consultants confirm This is further evidence that the rate of mining and development at Brucejack mine far exceeds the design of the mine site, given that as far back as 2015 it was clear that Pretium lacked the correct equipment to dispose of waste ore.

Investors must seriously consider the implications of Pretium’s financial and operational figures should they choose to accept that no overmining has occurred. Further, they should question management as to their responses to our findings, instead of confining their responses to fireside chats with sell-side analysts.

Viceroy continue to believe that Pretium’s grades will fall significantly, operating metrics/analysis has been distorted, and assets will be seized by its secured creditors as collateral as the company is overburdened by debt.

Viceroy maintains its belief that Pretium’s equity is likely worthless.

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